For far too long, football fans and taxpayers have been into shelling out billions of their tax dollars to publicly finance stadiums with threats of losing their hometown teams—while the league itself remains tax-exempt; blackout rules keep taxpayers from seeing games in stadiums they fund; TV images made in those publicly financed stadiums are privatized; all the profits are kept by team owners; and the league is walled off behind a moat of antitrust exemptions.
Instead of being on the side of taxpayers and football fans that would not be any less passionate about their favorite teams if the NFL paid its fair share, politicians have been all too willing to carry the league’s water.
What Got us To this Point?
The NFL Becomes a Tax-exempt Nonprofit
The NFL is classified as a 501(c)6 tax-exempt nonprofit, thanks to a special exception in the tax code carved out by Congress in the 1960s.
The exemption for football stems from lobbying efforts by Pete Rozelle in the 1960’s to earn an antitrust exemption for the merger of the NFL and AFL. This action effectively granted the NFL a license to print money and ultimately shift uncounted millions in tax obligations to ordinary taxpayers.
In the decades since, the NFL has become the most profitable sports league in the world and one of the most heavily subsidized industries in American history.
For-Profit Teams Get 70% of Stadium Costs From Taxpayers
In addition to the NFL’s nonprofit status, the teams get their own additional heavy subsidies in the form of taxpayer incentives for constructing or renovating stadiums—bringing the total amount to one billion dollars the NFL and its franchise owners receive each year in government assistance.
Citing the work of Judith Grant Long, a Harvard University professor of urban planning, Gregg Easterbrook, author of "The King of Sports: Football's Impact on America, writes, “70 percent of the capital cost of NFL stadiums have been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, by providing power, sewer services, other infrastructure, and stadium improvements.”
Additionally, contrary to arguments from the NFL and its owners, many economists agree subsidized stadiums provide little, if any, return on investment to the communities relative to construction costs alone.
Most stadiums are financed by tax increases. Localities and states frequently raise hotel, rental car or other taxes to provide some or all of the hundreds of millions of dollars needed to build a modern sports stadium.
Twelve teams have actually turned a profit on stadium subsidies alone—receiving more money than they needed to build their facilities.
In stadiums, such as CenturyLink Field, where the Seattle Seahawks play, Washington State taxpayers provided $390 million of the $560 million construction cost. The Seahawks, owned by Paul Allen, one of the richest people in the world, pays the state just $1 million annually in rent in return for roughly $200 million generated in revenue each year.
In stadiums such as AT&T Stadium where the Dallas Cowboys play, the team escapes having to pay any property taxes on an asset appraised at nearly a billion dollars. In effect, this saves Cowboys owner Jerry Jones about $17 million a year at the current property-tax rate.
Including the Cowboys’ Jones, there are 21 NFL owners whose teams play in stadiums built or renovated in the past quarter- century using tax-free public borrowing.
As noted in Forbes, “when a stadium is publicly financed, it might be assumed that local governments are simply making an investment in a revenue-generating structure. However, most publicly financed projects allow teams to keep virtually all ticket, concession, and parking revenue. The public is building stadiums for wealthy team owners, and then essentially passing all the benefits of the new facility to the team.”
NFL also owners benefit from keeping all the money they receive as a result of game images being creating in publicly funded stadiums, which are then broadcast over public airwaves.
One solution per Gregg Easterbrook, author of "The King of Sports: Football's Impact on America, “70 percent of the capital cost of NFL stadiums have been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, “If football images created in places funded by taxpayers became public domain, the league would respond by paying the true cost of future stadiums—while negotiating to repay construction subsidies already received. To do otherwise would mean the loss of billions in television-rights fees.”
The NFL Does Not Need Additional Government Assistance
According to Forbes, the NFL’s 32 teams are worth, on average, $1.17 billion, 5% more than last year. “The NFL’s financial superiority is underpinned in three broad areas: Therichest television deals in sports with Fox, NBC, CBS and ESPN and DirecTV; state of the art art stadiums in almost every market; and a hard salary cap for players. The league is most likely far from peaking financially given its game plan for using technology to create new apps and increase live content for hand-held devices, make the game more enjoyable to attend live and watch on television, and the huge interest in fantasy football.”
Enclosed are links additional reports, studies, supporting materials.
[Andrew B. Delaney, Taking a Sack: The NFL and its Undeserved Tax-Exempt Status, Soc. Science Research Network (May 11, 2010), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1605281]
[The N.F.L. Plays, the Public Pays, The New York Times, 9.7.10]
[As Stadiums Vanish, Their Debt Lives On – The New York Times, 9.7.10]
[Stadiums Cost Taxpayers Extra $10 Billion, Harvard’s Long Finds, Bloomberg, By 11.6.12]
[The PRO Sports Act (S. 1524), Fact Sheet, U.S. Senator Tom Coburn, M.D. (R-OK) 9.18.13]