July 05, 2007

Christmas in July: Michigan gives tax breaks to sports teams

Surprise, Michiganders! The new tax code approved by your state legislature includes millions of dollars in tax breaks for the Michigan International Speedway and the Detroit Tigers, Red Wings, and Pistons, as well as non-sports entities like the Detroit Zoo and art and historical museums.

How many millions of dollars I can't say right now - the Detroit Free Press story that reported this didn't actually indicate how much the tax credits would be worth. The Speedway was apparently the first recipient, getting $7 million in tax breaks if it spends $35 million in renovations through 2012; after that, according to the Freep, everyone else bum-rushed the candy jar:

As word leaked out that MIS tax credits were being negotiated, other stadium owners came knocking on legislative doors, seeking their own special deals. So lawmakers gave virtually the same tax credit to Palace Sports and Entertainment and Ilitch Holdings Inc., which own the Palace of Auburn Hills and Comerica Park, respectively.

"If MIS got credit for new construction, to level the playing field it was felt that that credit should be extended to all entertainment venues," said Matt Marsden, spokesman for Sen. Mike Bishop, R-Rochester, whose district includes the Palace.

Elsewhere, the Freep notes that "carving out such narrow breaks for specific businesses illustrates the clout they have and the urgency of state lawmakers to ease taxes for Michigan-based corporations" - the latter, no doubt, having a lot to do with the former.

The only Detroit-area franchise to be left out was the Lions, whose Ford Field was declared ineligible "because it was built with the help of public dollars" - which ignores all the public dollars that went toward the construction of the Tigers' Comerica Park, for one, but maybe the state legislature has a different definition of "public."

As for what this would mean for the Red Wings murmurings about a new arena to replace Joe Louis Arena - which the Freep calls "a dinosaur among NHL arenas" (it's only 28 years old, so presumably they mean it's really popular with kids) - it's hard to say: The article implies that the tax break can be used for either facility renovations or new buildings, which would seem to create an incentive to go for the most costly project if it can generate bigger revenues. Much will depend on the exact language of the new tax code, though - I'll try to do some digging and report back here.

In related news, meanwhile, Tigers and Red Wings owner Mike Ilitch and Pistons owner Bill Davidson are pushing a public campaign to block a proposed ticket tax on sporting events, even setting up an Astroturf group called Fans Against the Ticket Tax to promote their cause. (Economists, for what it's worth, generally say that ticket taxes mostly come out of the pockets of team owners, not fans, since they make it unprofitable for teams to raise prices as high as they would in the absence of a tax.) While acknowledging that the state has a $1.8 billion budget deficit, Pistons lobbyist Roger Martin insisted, "At a time when they're considering higher taxes on our pay, we don't believe they should also tax our play." Just who he meant by "our" is left as an exercise for the reader.