What, if anything, will the end of the Trump era mean for sports stadium subsidies?

Now that we’re all finally starting to come to grips with the presidential election ending in a landscaping company parking lot because Rudy Giuliani wanted to be away from jeering crowds and near an on-ramp to the highway back to New York, no doubt many of you are wondering: What, if anything, will the end of the Trump era mean for sports stadium subsidies? Or if you weren’t before, you are now, since literally the last words you read were those exact ones, in the headline that I just typed.

The answer, in all likelihood, is not much. Oh, sure, there may be dramatic changes in some federal policies impacting spending — for starters, a Biden Administration is far more likely to bail out local governments suffering from Covid-spawned deficits than a second Trump Administration would have been, meaning the trains may keep running. But public sports venue spending is mostly a local game, and it’s surprisingly resilient to ups and downs in local government finances: When times are flush, team owners argue that it’s a good time to spend on stadiums because taxpayers can afford it, and when times are tight, they argue that it’s a good time to spend on stadiums because the economy needs a boost.

The main way that the federal government underwrites private stadium costs is with tax-exempt bonds, which save team owners money by allowing them to get low interest rates on construction debt, at the expense of the federal treasury forgoing collecting income taxes on money earned by bondholders. Congress, realizing it was dumb for the IRS to let cities and states stick the feds with part of the bill for their stadium spending, tried to eliminate this loophole way back in 1986; that effort failed, spectacularly. Ever since then, the tax-exempt bond scheme has chipped in federal dollars on top of local dollars for the vast majority of stadium and arena deals — when the Brookings Institution last looked into how much this was costing, it determined that federal taxpayers had lost $3.7 billion just in the years 2000 to 2016 thanks to tax-exempt bond subsidies for sports venues.

There have, over the tax law’s 34-year history, been sporadic attempts to close the loophole; none have made it very far. Back in 2015, Barack Obama proposed prohibiting tax-exempt bonds for any building whose use would be more than 10% private (currently projects can be less than 10% in either private use or in private financing, which leads to tons of shenanigans); the then-Republican Congress wanted nothing to do with his proposal, and it withered and died. Two years later, as part of its 2017 tax bill, the still-then-Republican House of Representatives included a provision for eliminating tax-exempt sports bonds; the Senate version didn’t include it, though, and neither did the final compromise bill that was passed into law. Trump, who had previously criticized “the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country,” reportedly made restoring the tax-exempt bond dodge a priority in the wording of the final bill.

Senators Cory Booker of New Jersey and James Lankford of Oklahoma have been annually introducing a bipartisan bill to ban tax-exempt stadium bonds, but as you can see from the above about the 2017 Senate, they haven’t even gotten many of their colleagues to sign on. And while that 2017 House Republican action may seem promising — that year’s House included somewhat more drown-it-in-the-bathtub types than the more do-whatever-the-lobbyists-want GOP Senate leadership — as I wrote at the time, “A cynical mind would be tempted to speculate that the whole House bill to crack down on stadium tax breaks was just red meat to throw to libertarian types in the GOP and anyone else who’s pissed off about sports subsidies, and House Republicans knew that their Senate counterparts would rescue them by eliminating the bill so they wouldn’t have to answer to an angry Roger Goodell.”

So, while Booker and Lankford will no doubt be looking to Joe Biden to take up Obama’s push to end federal stadium subsidies, don’t expect it to be a priority, especially not while NFL lobbyists are still out there terrorizing the citizens. And, of course, even if one day the federal bond-subsidy tap is finally shut off, that’s a relatively small amount of money compared to the couple billion dollars a year that state and local government continue to throw at sports projects. To end that, we’d need something akin to Rep. David Minge’s bill to tax stadium subsidies to the point where they’re no longer lucrative to team owners. Given that Minge first proposed it way back in 1995 and it never got significant backing from either party, I really wouldn’t hold your breath on that one, but it’s a nice reminder that the feds could put an end to the entire three-decade-long scam that has made this site necessary, if it really wanted to.

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14 comments on “What, if anything, will the end of the Trump era mean for sports stadium subsidies?

  1. The best thing we can do is stay in contact with our federal officials to keep this on their minds. My county has 2 Congressmen, both of whom I believe agree with us on this issue. I check in every so often with my Congressman’s office, and the last time I had a chance to speak to my county’s other Congressman I raised this specific issue. As you noted, this isn’t going to be any Congressman’s or Senator’s #1 issue, so it’s good to periodically raise it with them.

  2. It’s absolutely true that “this” is not a Democrat or Republican issue (well, keeping it in place is both… eliminating it is the position of a tiny minority of elected officials who understand what it costs their communities). And I can’t help but believe that even if this particular (TEB) loophole is closed cities and states/districts will just find another way to stick someone else with the bill.

    In one celebrated instance years ago, I remember hearing the mayor of the closest mid sized city to me on the radio/tv demanding the feds (and anyone else) give him money for the ‘affordable housing crisis’ and support for ‘the disadvantaged and endangered’.

    When he was awarded some $130m to address these problems (at least partially, I don’t think anyone believed it would completely solve either) he immediately began decrying the strings that came with the money (namely that it had to be used for housing for the disadvantaged in some form, either assisted living, shelters, or sub market rentals) and generally playing the victim.

    Which is an odd thing to do when you’ve just been given an extra $130m just because you asked.

    Oh, eventually (after he complained enough) the governments who provided the money agreed to remove the restrictions with the understanding that there would be no more money for housing the needy if he used it for something else.

    He immediately built a giant series of highway interchanges (which, in fairness, look quite a bit like sculpture/public art) and contributed the rest to sports arenas that were privately controlled and which housed, to the best of my knowledge, no-one.

    And then he started complaining about the lack of affordable housing and the crisis that someone else had to solve. Immediately.

    There is no such thing as shame in this world….

    1. Yeah I don’t think its officials who “who understand what it costs their communities” so much as people trying to grab attention and this is low hanging fruit that will never pass. Cory Booker is one of the people behind it and he is more owned by big corporations than just about anyone. Look at his work on “opportunity zones” which is a straight up giveaway to billionaires and even gives tax breaks for areas around stadiums. This is just grandstanding and lets be real in the context of the Federal Budget this is less than a drop in the bucket.

      1. What are you referring to when you say “this is just grandstanding”?

        Since the TEBs are not the lion’s share of the cost to communities (in fact, they are a cost to the feds not the community) it isn’t a drop in the bucket. These instruments are used to help justify many times more “community” cost than they notionally save.

        1. By “just grandstanding” I mean he is just trying to get attention for something that will never pass. You’ve got over 100 billionaires who own major league sports teams in the US. What do you think the odds are that anything that over 100 billionaires want will pass?

          1. The tax-exempt bond dodge serves absolutely zero purpose for the federal government — even if you accept that new stadiums can be a significant economic benefit to individual cities (they’re not), there’s no way in which moving economic activity around within the U.S. helps the nation as a whole. That’s the reason why Congress first tried to eliminate this loophole way back in 1986.

            If you’re just saying that Congress is in the pocket of billionaires and we shouldn’t even hope that it will ever do anything against them, that’s even more cynicism than I can muster, and I’m pretty cynical.

          2. Yes I am saying that Congress in general and particularly Cory Booker are in the pocket of billionaires. Look at his work on “Opportunity Zones” which is a straight up giveaway to billionaires including those who own sports teams (many of the areas designated as opportunity zones are the areas around stadiums.

          3. I would say that Cory Booker likes to pick and choose which billionaires he’s in the pocket of.

          4. I view it like this. He proposing something that would in theory hurt sports teams owners that he knows won’t pass. At the same time he works on Opportunity Zones which helps sports owners that he knows will pass. I’m a Democrat but Booker was one of 4 presidential candidates I said from Day 1 I wouldn’t vote for had he been the nominee.

  3. I am predicting House Speaker Ocasio-Cortez and sports teams will be treated just like Amazon. They can forget about ANY tax breaks or even infrastructure help.

  4. Is it just me or is $3.7 billion from 2000 to 2016 not a whole lot in the context of annual multi-trillion dollar federal budgets? If you gave me 5 minutes with the Federal budget I could find a lot more than that.

    1. There are a lot of drops in any bucket. Every one of them helps fill that bucket. Years of thinking of every program (even the pentagon’s, when compared to the size of the national economy) is just a drop in the bucket is exactly how we ended up with an economy in the $22Tr range and a national debt headed for $25Tr very soon.

      It’s always easy to identify things that could be cut to offset spending. The trouble is that no-one ever wants to be the one to cut that particular line item.

      So we keep printing money (although mostly now we just created it electronically), as we have done since 1971.

      I think the bigger point the article makes is that this is several hundred million a year that is being lost to the federal treasury for no good reason. And in doing so, it seems to “convince” many municipalities that they can force the Feds to pay for part of their stadium/arena/convention center etc.

      1. Do you have similar complaints about the National Endowment for the Arts? You didn’t get to $25 trillion with small items adding up over time. You got to $25 trillion with bloated defense spending and tax loopholes to the rich (hello carried interest). I saw $3.7 billion over 17 years and my first reaction was “the US government gives Israel more than that every year”

  5. Nothing. Super rich find a way, that is why they really super rich. I bet DC will build a new dome football stadium soon.

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