Quebec premier says he might spend public money on nouveaux-Expos stadium to “generate revenue”

Would-be Tampontreal Ex-Rays co-owner Stephen Bronfman hired lobbyists this week to ask the province of Quebec for public cash toward a new Montreal stadium, and it sounds like Quebec premier François Legault is willing to listen, on one condition:

“We have an open mind towards the project,” Legault told reporters Tuesday in Quebec City. “There are several business people who are behind this project, and not just Mr. Bronfman. If we are able to bring a baseball club and it can generate more in revenue than the aid we give the company, everybody wins — including Quebecers.”…

“The principles that we will use to help or not this baseball team is to see how much additional revenue do we expect to get from this activity. For example, the baseball players will pay tax in Quebec, so the idea is to give back less than the additional money that we would get.”

The idea here would be to issue “forgivable loans,” which the team owners wouldn’t have to repay if they met certain goals. In the past, these have been used as a way to threaten to claw back subsidies if certain minimal job goals aren’t met — train manufacturer Alstom, for example, is getting $56 million if it promises to maintain at least 350 employees for ten years. But in this case, Legault is talking about ensuring that the province is made whole via new spending.

At first glance, that could be tricky. The average MLB payroll is $120 million, and Quebec taxes local income for high earners like baseball players at about 25%. That would be enough to justify $30 million a year in spending, or maybe $400 million in total outlay — if players paid taxes on that full amount. However, most nouveaux-Expos players almost certainly wouldn’t live in Montreal full-time — aside from those tax rates, it’s damn cold there in the winter — even before you get to the part where they would play half their home games in Tampa Bay. Anyone resident in a Canadian province for less than 183 days in a year isn’t considered a resident, but still has to pay income taxes on money they’ve earned there.

That would get into some weird epistemological calculations: Is a player paid for time they’re living elsewhere during the offseason? What about road games? And, of course, if half the season’s home games are in Florida, how does one assign which salary was earned there and which was earned in Canada?

The nice part about a forgivable loan is that it’s based on actual tax payments: If players end up paying, say, $10 million a year in taxes, then team owners would have to repay everything above that amount. The devil, though, will be in the loan details, which is why it’s especially worrisome that Legault said “for example” about player income taxes: If you start counting additional things like “economic activity” that can be hand-waved into existence whether they’re real or not, then suddenly a lot more in loans would become a lot more forgivable.

Clearly, way more details are needed on what Legault is considering and how any loan agreement would be phrased. Still, this is potentially a large barn door that he’s considering opening, and something that makes the possibility of a new Montreal baseball stadium significantly more likely. If, you know, the developer of the proposed site can be made happy, too. Hey, I bet residents of their buildings would pay taxes, too! This could work out great — everyone gets their income taxes rebated to pay for their new homes, and Quebec still has enough money to pay for all its services because if it were just a vast, empty plain it wouldn’t get any tax revenue at all, and, hmm, there must be a logical flaw in this, but I have too many visions of baseball stadiums dancing in my eyes to be able to see it.

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7 comments on “Quebec premier says he might spend public money on nouveaux-Expos stadium to “generate revenue”

  1. If I remember correctly, NFL players pay income tax in “all” the states in which they earn game checks… to make the math simple, a player earning $1.6m pays state tax on income of $800k in their home state and on $100k income in each of the “road” game states (this assumes that none of the road games are in the same state in which their home city is located, and that none of the road games are in states with no state income tax).

    Federally, what state (or province) you earn income in makes only a relatively small difference. And there are of course tax treaties between the US and Canada that prevents the IRS/CRA from double dipping on basic income taxes if you work in both countries during one tax year (IE: you don’t pay the basic income tax in both countries if you only work part of the year in each).

    It is complicated. And it would not be difficult to imagine all players able to do so declaring themselves residents of Vermont or Florida and just travelling in to home games in Montreal. If the avg Expo player was making $4m annually, I would be very surprised if more than $1m was ultimately taxable in Quebec/Canada. At the present exchange rate, that would work out to about C$1.3m. At a 25% federal/15% provincial tax split, that means around $200k per player (on average) to Quebec’s coffers.

    It’s hard to see the total provincial tax “take” being more than $10m annually for all club employees isn’t it?

    This is why a $100m sports team payroll isn’t the tax bonanza the leagues make it out to be. Sure, there’s some spin off revenue from sales taxes earned at the local Bentley dealership, and the players that are making the host city their home will certainly shop at the high end of the housing and retail market.

    But 30 rich guys who play baseball or hockey do not an economy support.

    1. There’s also going to be some substitution effect, to the degree that those players are being paid in part with ticket sales revenue that would otherwise go to the Canadiens or movie theaters or economists’ beloved bowling alleys. (They’d also be getting paid in part with international TV revenue, of course, which would genuinely be new to Quebec.) We went through some of this with the Milwaukee Bucks arena deal that was supposed to bring a windfall of player taxes to Wisconsin; wonder how that’s working out.

      1. Absolutely. Expos II would/will cannibalize all sorts of revenue from racinos. Assuming Quebec has racinos and if it doesn’t it should get on them right now.

        The problem with the pooled TV money and other distributed MLB revenue is that I don’t see it being enough to cover player salaries… so it effectively becomes a pass through. Yes, it is new revenue, but all of it (and then some) will go straight back out to the players – nearly all of whom will not become residents of Montreal.

        Many posters have said in the past that it will be “different” this time in Montreal because of the MLB distributed revenue. That is certainly something that wasn’t as big a factor in the 80s/90s. However, since all teams get it it doesn’t really change the relative financial dynamics. You definitely don’t want to pass it up, but at the same time your $60-70m or so doesn’t improve your club’s standing or spending ability relative to the other small and mid market teams.

  2. If they are going to do this they need to create a AAA stadium with more bells and whistles and luxury suites in both markets. That is the only way I see this flying

  3. It was fun while it lasted. However, it is tIme to let go of the Montreal Expos. And relegate them to dustbin of history.

    Face it. The Montreal Expos were a failed MLB franchise. In 36 seasons in Montreal, the Expositions never won

    * A World Series
    * Were never in a World Series
    * Won no National League title (who knows what would’ve happened in the 1994 season had there been no player strike)
    * Were defeated by the Los Angeles Dodgers for the 1981 National League title (again, another season interrupted by a player strike. Whereby, special circumstances by MLB permitted the Expos to be in the title chase)
    * Had 14 winning seasons out of 36 seasons, 39% …..
    * Never led MLB in attendance, even during their most successful seasons, despite having a metropolitan area of 4.2 million people (currently, the 15th largest on the North American continent that had a MLB franchise)
    * Broke the 2 million total attendance mark in only 4 seasons
    * Averaged 20,000+ fans through the turnstiles in only 11 seasons, the best season being the 1983 season with 30,534 fans per game
    * Played their MLB games in the Olympic Stadium, the “Big O” (Big Owe), from the 1977 season forward (hey Atlanta, how did the Braves playing MLB games in that 1996 Centennial Olympic Stadium work out for you?). A stadium that cost 1.1 billion in Canadian $ when it opened in 1976 (in unfinished form). Total stadium cost amounted to 1.61 billion in Canadian $. For repairs, renovation, additional construction, etc. (a large chunk of the tower fell onto the playing field causing the postponement of the San Diego Padres game on August 29, 1986, the installation of a retractable roof in 1987 that experienced numerous rips and tears allowing rain to constantly leak into the stadium (or huge patches of ice in April or September), 1991 renovations to make the stadium more suitable to baseball, roof tears leaving gaping holes of 98 feet by 49 feet caused by a June 1991 windstorm, the support beam that snapped and allowed a 55-ton concrete slab to fall onto an exterior walkway on September 8, 1991 and finally the removal of the retractable roof in 1998, installation of a non-retractable roof). Just your average, normal stadium repairs and maintenance. Due to the thin padding between the concrete and astroturf, as well as thin outfield fence padding, players were also at a greater risk of injury.

    1969 52-110 .321 1,213,277 (10th) 16,851
    1970 73-89 .451 1,424,449 (8th) 19,249
    1971 71-90 .441 1,293,053 (10th) 17,959
    1972 70-86 .449 1,149,506 (12th) 15,747
    1973 79-83 .488 1,246,863 (14th) 17,080
    1974 79-82 .491 1,019,132 (16th) 14,559
    1975 75-87 .463 908,202 (19th) 12,614
    1976 55-107 .340 646,698 (23rd) 9,652
    1977 75-87 .463 1,437,190 (11th) 18,426
    1978 76-86 .469 1,427,181 (16th) 18,779
    1979 95-65 .594 2,102,153 (8th) 29,197
    1980 90-72 .556 2,185,122 (7th) 29,135
    1981 60-48 .556 1,534,663 (4th) 29,513
    1982 86-76 .531 2,319,792 (4th) 29,741
    1983 82-80 .506 2,320,556 (4th) 30,534
    1984 78-83 .484 1,623,419 (16th) 21,361
    1985 84-77 .522 1,502,494 (17th) 19,263
    1986 78-83 .484 1,125,164 (24th) 14,613
    1987 91-71 .562 1,850,324 (17th) 22,844
    1988 81-81 .500 1,478,659 (22nd) 18,255
    1989 81-81 .500 1,789,073 (20th) 22,087
    1990 85-77 .525 1,421,391 (23rd) 17,548
    1991 71–90 .441 978,045 (26th) 14,598
    1992 87-75 .537 1,731,566 (20th) 21,645
    1993 94-68 .580 1,641,438 (27th) 20,265
    1994 74-40 .649 1,276,250 (21st) 24,543
    1995 66-78 .407 1,308,618 (19th) 18,175
    1996 88-74 .543 1,618,571 (20th) 19,982
    1997 78-84 .481 1,507,166 (23rd) 18,607
    1998 65-97 .401 914,909 (30th) 11,295
    1999 68-94 .420 772,737 (30th) 9,540
    2000 67-95 .414 926,272 (30th) 11,435
    2001 68-94 .420 642,743 (30th) 7,935
    2002 83-79 .512 812,537 (29th) 10,031
    2003 83-79 .512 712,757 12,081 SJ 312,884 14,222 Total 1,025,639 (29th) 12,662
    2004 67-95 .414 531,545 9,009 SJ 217,005 10,334 Total 749,550 (30th) 9,369

    What historical evidence is there, if any, that a franchise that plays its games in two cities (much less two countries) will be successful? I have 6 examples that it won’t be; Cincinnati Royals, Kansas City-Omaha Kings, Carolina Cougars, Virginia Squires, Memphis (Nashville) Oilers and now Los Angeles (San Diego) Chargers.

    This all sounds like a fever dream by two billionaires (oh wait, Stuart your net worth is only $800 million, you don’t qualify as a billionaire) who want local municipalities to build baseball-specific stadiums for them.

    1. it seems like this proposal is primarily a TV revenue focused strategy. I presume the need for a new stadium are for suites? Why not just consider the Trop and O for this if that is what you are going for?

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