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Thursday, October 27, 2016

It turns out professional teams and leagues aren’t the only billion-dollar sports entities getting big breaks on their tax bills.

The New York Times reports that ESPN, the self-proclaimed “worldwide leader in sports” whose headquarters are located in Bristol, CT, has received nearly $260 million in state tax breaks and credits over the past decade. According to the Times, the incentives include a $25 million contribution toward the construction of the Digital Center 2, a 193,000-square-foot building set to open in the spring. The boon is the result of a sophisticated lobbying scheme: ESPN has reportedly spent $1.2 million on lobbying expenses since 2007 and counts Connecticut governor Dannel Malloy and Bristol mayor Ken Cockayne among its main supporters.

Malloy and Cockayne contend that the economic growth the company generates is integral to Connecticut; they point to the devastating impact ESPN’s departure would have on the local economy. To be sure, ESPN’s benefit to Bristol is undeniable: It is the 25th-largest employer in the state and by far the largest employer in the city. Since 2000, ESPN has spent $1 billion on construction in Bristol, adding more than 2,700 jobs in a state whose workforce has consistently shrunk in the past decade.

The question is whether such tax incentives are necessary to keep ESPN in Bristol. Politicians repeatedly state that these kinds of breaks deter companies from fleeing to other states, but ESPN has never actually threatened to leave Connecticut. Furthermore, the Institute on Taxation and Economic Policy concluded that tax credits don’t give a state any influence over businesses’ behavior when it comes to hiring and investing. Such incentives might actually be a detriment to a local economy by displacing smaller businesses, and in order to pay for incentives, the public services that companies rely on to conduct their day-to-day operations often have to be reduced.

The most glaring aspect of the Times’ report, however, isn’t that the world’s most profitable media company receives tax breaks — it’s the hypocrisy of the entire arrangement. ESPN generates an estimated $6 billion a year on cable subscriptions alone, thanks to channel bundling that effectively charges every subscriber an average of $5.54 a month whether or not he or she watches the network. Forbes reports that fewer than 5 percent of cable households watch ESPN, yet the channel is available in 100 million homes. ESPN and cable providers thus levy a kind of tax on the majority of non-sports-watching homes in order to subsidize those of us who actually watch it.

Even worse, ESPN earns these monstrous revenues while condemning other organizations for enjoying the exact same benefits. Back in June, an editorial took on the National Football League’s ludicrous legal status as a tax-exempt nonprofit, noting the potential loss of revenue at the federal, state and city levels. And just two weeks ago, ESPN made waves with an in-depth Outside the Lines report on the PGA Tour’s nonprofit business model, which has resulted in nearly $200 million in federal tax exemptions over the last two decades.

The most recent piece acknowledged the group’s charitable contributions but questioned how much of it actually serves needy groups and whether those benefits outweigh the cost to taxpayers. Bristol residents should probably start to question their local politicians the next time they want to further shift the tax burden away from the Worldwide Leader.

Kavitha A. Davidson is a Bloomberg View columnist who writes about sports. Follow her on Twitter at @kavithadavidson

Photo: USAG-Humphreys via Flickr

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Copyright 2013 The National Memo
  • Buford2k11

    Who are the “takers” again?

    • RobertCHastings

      Bruton Smith, owner of the Charlotte Motor Speedway in North Carolina, wanted to build a drag racing facility beside the Speedway. When the City of Concord denied permission, he threatened to move his raceway somewhere else and,Concord caved, giving him a $60M incentive to build the drag strip and to keep the Speedway where it is, essentially paying for the drag strip AND improvements to the Speedway. In the long run, who profited the most from this? Not the taxpayers of North Carolina. Through three separate arenas, the Charlotte Hornets and Bobcats profited hugely off the taxpayers, and the same will occur when the Carolina Panthers eventually want a new stadium. None of these projects will benefits the taxpayers of North Carolina, but they will greatly enhance the value of their respective franchises.

      • Buford2k11

        I remember when that happened…It seems there is an other taxpayer funded stadium in Georgia, I think…no infrastructure, no popular support…It may happen against the voters wishes…when will these folks learn about GOP type of governing???

        • RobertCHastings

          Are the Braves moving into a new stadium?

          • Buford2k11

            I can’t remember which team it was, I was reading fast with limited comprehension…the hook that got me was about how taxpayer money is going to be used to build a stadium in the middle of nowhere…no mass transit…no real crowd infrastructure, just a gob load of free money from the middle class and poor…

          • RobertCHastings

            Once again, some already-wealthy team owner is going to get even wealthier off the backs of those who could really use some help, just as you say.

          • Allan Richardson

            Unless the taxpayers of Cobb County unite to stop it, they plan to build a stadium in the Cumberland Mall area. Unless the right wingers in Marietta FINALLY allow MARTA to expand at least into this area, every game will be as harmful to traffic as a Presidential motorcade (at least there are some valid security reasons for THAT).

            The county budget, just passed, had to cut school funding because there is not enough money. But suddenly there is enough to give away a stadium again? Professional sports teams are like the stereotypical “golddigger” woman who marries a man for money, divorces him to get more money, and finds another man who falls for the same trick. My apologies to the millions of women who are NOT like that, but I had to use an analogy; and women are not often dumb enough to fall for a man who plans to steal their money through marriage.

            If you hadn’t heard about this two week old story, you live nowhere near any part of Georgia, or you have been in the woods for a month.

          • RobertCHastings

            In addition to new arenas for the Hornets AND Bobcats, And the stadium for the Panthers, Charlotte, NC is in the process of using some prime real estate in the downtown area to build a MINOR league baseball stadium. Fortunately for Charlotte, however, in most of these instances there is adequate ability to handle the excess traffic. However, the city runs into problems when the Charlotte Motor Speedway (in Concord, about 30 miles away) has a big event AND one or two of the other venues is being used (ACC tournament AND CIAA tournaments have been held here in the past). Exacerbating the problem is the recent entry of the UNCCharlotte 49ers into the college football ranks, INCLUDING a stadium on campus.
            For a city with a five-county greater metro area and a total population of approx. 1 million, while that sounds like a good tax base to support such teams, this area is NOT considered a big market.

  • Bryan Blake

    Here in Texas Governor Perry has his own tax funded slush fund he can use to attract business to locate and/or expand in Texas. I am against these incentives because profitable business should not be subsidized by any level of government. My only support of business subsides would be for “incubator programs” that provide access to office space at a very low rate and other non monetary aid to help launch small businesses.

    State income taxes in Texas are prohibited by our state constitution. So the rich and ultra-rich escape paying their fair share for operating Texas. We have the regressive tax system of sales and property taxes which falls disproportionately on whats left of the middle class, the working poor and the poor. The working women and men of Texas finance these very questionable gifts to corporate America/Texas. As I said before I was a small business owner. But I am against the subsidizing through any form of businesses or bailing out of any businesses no matter how large or small. Especially through our tax code that grants ubiquitous exemptions to corporate America. Then there the blatant federal subsidies that our 1 1/2 corporate parties generously ladle on top of their tax free deserts. Sprinkle the very reduced rate of taxes on the rich and ultra-rich and they have a four star meal at the public trough.

    I was especially disturbed to learn that I was being charged over $5.00 per month for ESPN which I do not watch nor do I have a desire to. The fact that the rest of us pay a “sports tax” has always been a pet peeve of mine. Broadcast TV survives on sports programming which only a minority of their viewers watch. I gave up watching any network programs on Saturday or Sunday nights because they push broadcast times back. The biggest corporate sports subsidy is through public university sports programs. University football, baseball and basketball programs are nothing more than “farm teams” for big professional sports. The coaches are paid out-sized salaries and bonuses while those who perform the real functions of the university are paid, on average, middle class wages. In the minds of many the purpose of a university is to have and maintain a winning sports team. Education be damned.

    Why hasn’t the Tea Party taken up this cause? This is definitely taxation without representation! Oh, yeah. They do not want to bite the corporate hands that feed them.

  • Sand_Cat

    So long as the idiots in this country are mad for sports, the outrages and stupidity will continue to increase.

  • The Savage Hombre

    Since a free nation cannot eliminate discontent due to envy, if we are to preserve liberty, we must not sanction envy with “social justice”.

  • Wise words …

    Yet another mystical fortune-teller conjuring up chimerical illusions regarding the future of Federal deficits:

  • Plow Comms

    Our resident marxist agitator recently wasted $100 million on a summer vacation to the 3rd world: