Seattle arena builders ask for a tax break, nothing is pure and innocent in this world

You know, it never fails: No sooner do I praise a sports venue deal for being the rare case that doesn’t screw over taxpayers than it turns out the team owner actually plans to screw over taxpayers at least a little. So I should have known that my Deadspin article a year and change ago about how the Seattle arena deal is an exceptionally good deal would beget this:

With costs climbing on the KeyArena renovation, members of the Los Angeles-based Oak View Group were in Olympia on Wednesday seeking to defer at least $80 million in sales tax payments related to that project and an NHL training facility

“We want everybody at the legislature to hear from us that we are not asking for any special consideration,’’ Leiweke said of the Olympia visit. “We’re not asking for a tax break. We’re not asking for a waiver. We’re not asking for a rebate. We’re simply working through the payment structure and we’re going to pay 100 percent of our taxes.’’

Well, no: If you require legislation to be passed just for you, then by definition you’re asking for special consideration. Even if the Mariners and the Seahawks owners got similar special consideration before you did.

The gain from the tax deferral is likely to be small: As the Seattle Times’ Geoff Baker explains it, OVG will even pay interest to the state on about $90 million in deferred construction sales tax payments. The main benefit would be shifting the cost from its capital books to its operating expense books, which would allow the arena builders to save money on its federal taxes by deducting them all at once rather than depreciating them over time:

“In effect, it’s a tax scheme that is designed to make sure you get your money back quicker,’’ [College of the Holy Cross sports economist Victor] Matheson said. “That all being said, it’s a small subsidy and it is not a subsidy from the taxpayers of Seattle and Washington, but a subsidy from federal taxpayers. And it isn’t a huge one. Even a stadium critic like me would have a hard time getting too worked up over it.’’

Me too! But it’s still a subsidy, even if a small one, and also one that as a U.S. federal taxpayer I’m going to help kick in for. So even if it’s not as bad as the Kansas City Chiefs owners trying to demand a full sales-tax break on the purchase of a bronze sculpture of late Chiefs founder Lamar Hunt Sr., it still makes me a little sad that we can never have nice things.

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11 comments on “Seattle arena builders ask for a tax break, nothing is pure and innocent in this world

  1. the $80 million will be deferred until 2022 and they would pay that back with interest. You’re so damn negative! Seattle got a great deal for the renovations at the Seattle Center Arena

    1. I wrote above: “The gain from the tax deferral is likely to be small: As the Seattle Times’ Geoff Baker explains it, OVG will even pay interest to the state on about $90 million in deferred construction sales tax payments.”

      I’m more and more convinced that people don’t actually read posts anymore, just look at the headline and skip straight to the comments.

      1. If there is vaportecture, then we will stop look at that and maybe forget for a second to write a knee jerk comment. So be sure to ALWAYS include vaportecture. :-)

    2. May I ask, as a resident of Florida who pays Federal Income Taxes, just what is the benefit for me to be screwed over by having to contribute a single penny to a subsidy, however small for an arena 4000 miles away?

      I fail to see how this is a good deal from me Even if they repay 100% of the subsidy.

      1. Pretty sure tax payers all over the country wonder why they should have to pay for FEMA and Flood Insurance because a bunch of people decided that building sub-divisions on former swamp land was a good idea

  2. I’d say a federal subsidy is quite a bit worse than a local one. It might be a drop in the bucket but it’s one that sets a dangerous precedent. It’s bad enough to throw federal dollars meant for revitalization and redevelopment of blighted or contaminated areas at some of these stadiums. At least those are already earmarked for a specific purpose. If the owners in various sports leagues see that federal tax breaks or subsidies are available to them, they’ll try to milk that for all it’s worth and make a point to tell local and state leaders that it’s not a local or state subsidy.

  3. Maybe I’m being dense, but I didn’t see any mention of what these “repayments” are for. Are they not paying sales taxes on all the stuff they’re purchasing in the process of (re)building the arena? If that’s the case, “repayment” is a bizarre choice of words – it’s been a deferral all along.

    And I really don’t see how paying sales taxes, deferred or otherwise, could ever be considered a capital expense as far as your federal taxes are concerned.

  4. The curious thing about this – at least on the surface – is that the net benefit is so small, yet OVG asked for it anyway.

    Even if we assume that all the points they made are accurate (and as Keith says, there are some legitimate reasons to doubt some of them), they have applied to modify a term/principle of the agreement for what seems like a very small benefit.

    It’s the equivalent of going back to the car dealer a few weeks after your purchase and saying you’ve had a think about it and you want them to reduce the ‘application fee’ from $495 to $475 retroactively.

    I’m not sure I understand why they would make such a request, unless there is something else to come that we don’t see/just haven’t noticed yet.

  5. Seems to me that the Oak View Group has no leverage now that the NHL has approved putting a franchise in Seattle. The legislature should just say no, go away. This would send a message that drinking from the public trough days are over, a least in Seattle for an NHL team.

    If Oak View Group is so destitute, it can go ask Microsoft, Amazon, and Starbucks for a few dollars.

    1. OVG could also take the money from the windfall it expects on naming rights for the rebuilt arena since they supposedly have many suitors lined up to pay the maximum.

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