Tennessee taxes visiting players, gives money to Grizzlies, Predators

Grantland’s Zach Lowe explores the strange case of Tennessee’s jock tax, which unlike most such taxes — which are meant to grab a share of salaries earned by visiting athletes playing in your state — is a flat $2,500 per game, up to a maximum of three games a year. And it only applies to NBA and NHL players. And, in a case of Grantland burying the lede a bit, the tax doesn’t actually go to Tennessee at all:

Except the money doesn’t go to the state — another of Tennessee’s jock tax quirks. It goes to the operators of the [Memphis] Grizzlies‘ arena, who happen to also own the franchise, Klempner says. The state doesn’t see a dime, at least not directly. The theory is that arena operators will use the extra cash to spruce things up, draw more celebrated acts, and spend in other ways that will ultimately bring more visitors and money to the Memphis area.

“The state is collecting this money on behalf of a private entity,” [interim head of the NBA players’ union Ron] Klempner says.

The Tennessee jock tax, which also benefits the operators of the Nashville Predators arena (who are, surprise, surprise, the owners of the Predators), was first created in 2009 under somewhat mysterious circumstances: contemporary reports don’t mention that the money would go to the arena operators rather than the state. NBA and NHL players have been griping about the tax ever since, though, and it’s no doubt more of those complaints, from Klempner among others, that prompted this latest Grantland story.

It probably shouldn’t be surprising, in any case, given that Tennessee elected officials already gave the Grizzlies owners a non-compete clause that let them drive a neighboring city-owned arena out of business, plus accidentally gave them a parking garage, and gave the Predators owners $2 million a year in sales tax subsidies without telling their city landlords. Maybe Tennessee newspapers might want to start reading the fine print before these deals are actually signed into law, you think?


15 comments on “Tennessee taxes visiting players, gives money to Grizzlies, Predators

  1. There was a time in the mid-to-late 90’s that Alberta did the very same: they taxed NHL players that came in to play the Flames and Oilers, with the money funneled back to said Flames/Oilers. Heck, Alberta even set up a lottery to benefit the two teams (all of these were phased out in the early 00’s).

    Mind you the Canadian dollar was hovering around $0.65 US back then. The NHL helped match the difference in currency, but it was still touch and go for Canada’s small market teams. Edmonton was very close to moving to Houston at one point.

  2. How is a state collecting “taxes” for a private interest, constitutional?
    Seems more like extortion…”You come and play your sport in our state, you pay ‘tribute’ to our people!”

  3. Isn’t Tennessee the same state that holds some sort of healthcare lottery every few months?

    May the odds ever be in your favor, indeed.

  4. Interesting that this jock tax does not appear to apply to the Titans…

    Should we be calling taxes that are, in their entirety and sole purpose, directed to specific private businesses taxes at all?

    Maybe vig or grease would be more suitable terms.

  5. The over-paid athletes are paying this tax, so why are we wasting bandwidth on this site to talk about this? No tax-payer money is involved here.

    There are 122 major league franchises that comprise MLB, NFL, NBA, and NHL (113 in US and 9 in Canada). Let’s get focused. You can’t take down every one of these, or even most of these, assuming, there are a few worthy of not being taken down.

    So let’s identify the most evil, egregious, and of course non-raping, of the lot, and focus are efforts on that franchise every second, minute, hour, day, and month of the year and cause their non-evil owners extreme pain, just from the attention that we can muster on this website!

    We cannot take down 122 franchises at once (and that’s not counting MLS, collegiate entities, etc.).

    I nominate the Tampa Bay Bucs for the 1st franchise where we apply enough heat to make their billionaire owners (the lovely and talented Glazer family) at least to appear that they have the first appearance of sweat on their brow.

  6. If I had a tail, it would be twitching in full Dogbert mode at the idea of having a special tax not on the athletes but on the team owners and their earnings…. and a multiplier for when they have a transaction of greater than some % of the total ownership.

    Think of it like a Sin Tax. There’s an extremely high correlation between pro sports teams (and especially pro sports teams under new ownership) requiring taxpayer money/shuffling funds away from traditional tax revenues into special pro-sports building projects. Of course, you’d have to do this at the federal level to prevent localities from simply doing an exemption…. and it would probably just result in absurdly higher costs to the public.

  7. Neil: Let’s hope so. But wouldn’t hiring the Dolans or Isaiah Thomas to manage/run it into oblivion be cheaper?

  8. “The over-paid athletes are paying this tax, so why are we wasting bandwidth on this site to talk about this?”

    If somebody willingly pays you whatever you’re being paid, you’re not “over-paid”. Calling athletes “over-paid” implies that somehow owners are getting screwed, a laughable concept. And the owners are the real targets of this site – along with the government officials who go along with the “incredibly profitable businesses need/deserve subsidies” game.

  9. … or that the fans and taxpayers are getting screwed, which is certainly something I’d agree with (though at least the fans do have a say in whether they allow themselves to be fleeced).

    The longer one looks at the stadium extortion game, the more you blame governments and not sports team owners. What they demand is scandalous, but they only do it because they know elected officials are too weak willed and afraid to resist. It might be the only time I’ve ever agreed with Nancy Reagan… but just say no.

  10. Keith,

    I’m calling the athletes over-paid because they are. The reason they are over-paid is because the owners under-pay for their stadiums via huge subsidies from us taxpayers, and thus can afford to be frivolous, gutless, and stupid when negotiating player contracts – e.g. – Alex Rodriguez ($353 million career earnings to date, with another $86 million yet to come in.) If taxpayers had not subsidized the new Yankee Stadium with over $1 billion, Hank Steinbrenner would not have been so stupid when dealing with A-Rod.

  11. Sure, subsidies give owners some extra money to throw at players, but I don’t know that I’d call spending what ya got “frivolous, gutless, and stupid”. Yankees/ARod aren’t the best example – they make so much from TV that they could’ve paid him twice as much and still made bazillions in profit.

  12. They also paid him a staggering amount before the “new” Yankee stadium was even a gleam in George’s eye… in fact, they did it twice as I recall.

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