Quebec preparing to kick back $300m in taxes for Montreal Ex-Rays stadium

It’s been a while since there’s been much talk about specifics of a new baseball stadium in Montreal as a part- or full-time home of the Tampa Bay Rays, and even then it was mostly vague haggling over would-be owner Stephen Bronfman’s preferred Peel Basin site, plus vague talk of the province of Quebec offering loans that the team could count player income taxes as repaying. Yesterday, however, the French-language La Presse newspaper ran a long article saying Quebec premier François Legault is considering vastly expanding the amount of public loans and grants it will offer, to as much as $300 million (all translation via Google):

According to our information, Quebec considers four factors in particular to assess the impact of the project:

  1. taxes paid in Quebec by Expos-Rays players;
  2. the tax revenues, for Quebec, generated by the construction of the stadium (a study by the Chamber of Commerce of Metropolitan Montreal estimated this amount at 55.6 million in 2013; this gives 65 million in 2021 dollars with inflation);
  3. Quebec tax revenues (for example, the QST) generated by tourists from outside Quebec who come to Montreal to watch the Expos-Rays games;
  4. a percentage of the project’s economic spinoffs, in particular those coming from foreign tourists who come to Montreal to watch baseball games.

That’s a dog’s breakfast of tax kickbacks, and the Gazette isn’t entirely clear how it came up with a value of $300 million. (The paper gives a figure of $155 million over 25 years for a half-season of player income taxes, assuming 3% a year salary inflation, but no details on how it calculated the value of the last two elements, tourist tax revenues and “economic spinoffs.”) And if Quebec is actually thinking of carving out those revenue streams and crediting them to the Ex-Rays owners, it would be a logistical nightmare: There’s no way to set aside only sales taxes paid by people who came to Montreal solely for baseball games (unless every store had to ask customers to fill out a survey, which would be hilarious), let alone to sell stadium bonds based on a revenue stream that comes down to ¯\_(ツ)_/¯.

But then, this sort of thing is likely meant less as an enforceable economic formula than as a political argument: If you can come up with enough tax revenue that you can claim is “generated” by a sports team, then you can argue that handing over several hundred million dollars in tax money is really no cost to taxpayers — which is exactly what the Gazette says. (Okay, it actually says, “ce sera à coût nul pour les contribuables,” but both Google Translate and my remaining high-school French tell me that’s what it means.) That’s what we saw with Wisconsin Gov. Scott Walker’s defense of his Milwaukee Bucks subsidy package, not to mention in the Odd Couple “casino night” episode.

There are two main problems with the “it’s okay, it’s taxes they’re creating to begin with” argument: New tax money isn’t always new, and even giving up new tax money comes with a public cost.

On the first part, sure, Quebec wouldn’t get any MLB player income taxes without an MLB team, nor would it get taxes from tourists who wouldn’t come to Montreal without a baseball team. Except: If part of player salaries are paid for by tickets bought by Montreal residents, and those people then reduce their spending elsewhere (on hockey tickets, movies, whatever), then you’re in part shifting that income tax revenue from one place to another, not getting it all as a windfall. And as for tourists who go to Montreal to see ballgames, at least some of them might have gone to Montreal anyway — as we have seen in Florida, where in years without spring training just as many tourists arrive regardless.

As for the second part, even if 100% of the tax money were new, that still doesn’t mean it’s money that Quebec wouldn’t have other uses for. Baseball players and the tourists who arrive to watch them play come with costs as well — athletes need schools for their kids and government health insurance, fans need to ride trains and drive on roads, just for starters — and that’s what tax money is collected to pay for. And even if the costs don’t eat up all of the new tax revenues being brought in, there’s still an equity issue, in that normal Canadian millionaires have to pay their fair share toward government services, whereas MLB players would have their taxes diverted to build their place of employment. (There’s an equity issue with taxing workers to pay owners, too, but that’s a separate issue.)

Anyway, all this is very hazy at the moment — the La Presse article refers to a deal that would be part grants and part forgivable loans, with no details on how that would break down — but Quebec does seem to be heading in the direction of “pile up everything we can designate as team-related taxes, and hand that back to the team,” which is not a great starting point for negotiations. Quebec opposition parties quickly slammed the plan — “We take people for idiots when we say that,” said Quebec Liberal Party leader Dominique Anglade about claiming that a $300 million tax kickback would cost taxpayers nothing — and there’s still that guy with a billboard, but it appears that Bronfman and Rays owner Stuart Sternberg have at least found a willing ear in Legault, giving Sternberg either a shot at a Montreal stadium or leverage to demand public money in Tampa Bay, which is all he really ever wanted from this whole Tampontreal gambit.

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9 comments on “Quebec preparing to kick back $300m in taxes for Montreal Ex-Rays stadium

  1. Way to go Stu! Your hairbrained and totally unworkable scheme just chalked up it’s first partial victory!!!

    Based on my economic study (which was at least as rigorous and detailed as Quebec gov’ts was), the economic value of a new MLB team to Montreal is less than $100m.

    Would it be great to have the Expos back in MLB? Sure.

    Is it worth several hundred million tax dollars? No it is not.

    The Rogers tall foreheads were asked years ago what they “pay” for the Jays TV rights. The answer, of course, is that they don’t actually pay anything as they own the team. However, the Sports channels they broadcast end up notionally paying somewhere between $38-45m annually for the annual rights to show Jays games and related content.

    Outside of five or six major baseball loving cities, the value of the MLB product is not nearly what the teams would like us to believe.

  2. Fascinating that Quebec would humor this situation when they built an NHL caliber arena in Quebec City when the NHL hinted maybe they’d give them a team only to turn around an award Seattle the last franchise they’re going to add until team owners want more expansion fee money.

      1. Until/unless the NHL goes to 40 teams, Quebec won’t get an NHL team unless another owner gives up and somehow can’t find another option except to sell to an owner in Quebec, who’d probably have to come up with close to a $1bn. That’s all a lot of ifs.

        The Coyotes are a long shot. The owners would like to keep them in the west or central for scheduling and travel

        The outcomes that the rest of the owners appear to favor is for them to stay in Arizona and move to a new place in Tempe or move to Houston.

        A lot of other things need to happen for any of those things to happen.

        The other possible candidates to move to Quebec would be Florida or Ottawa, but in both cases, it’s more likely that their owners will be able to work something out for a better arena in their current market.

        Even if the Coyotes run out of options – and that could happen before Christmas this year, as it turns out – I think the other owners might still want to hold out hope something can eventually be worked out in Arizona or Houston and might just mothball that franchise for a few years, rather than facilitate a deal for Quebec.

        Insofar as teams are civic institutions that help build communities and all of that, Quebec City should absolutely have an NHL team. There should probably be about 10 NHL teams in Canada.

        Unfortunately, sports are not run as a civic institution for the greater good. They’re run as a business -sort of – and as a tool for billionaires to attain status and power over something they mostly don’t understand.

        So they will continue to put NHL teams in cities where they might make money, but will never truly *matter.*

    1. IIRC, the total price for Videotron arena was less than $400m and the city and private money paid for a lot so the total cost to the Province was like $100m.

      Somebody was going to build a new arena there anyway, probably, for junior hockey, concerts, etc. So by chipping in a bit more, the governments of the city and province allowed that arena, which was going to probably be built eventually anyway, to also be NHL-caliber – just in case. But if no NHL team comes, it’s not a total waste.

      A baseball stadium in Montreal is a totally different proposition. A lot more money for a facility that cannot be used for much more than baseball. They can’t just build it on spec.

      And it’s in Montreal, which already has an NHL team, an MLS team and a CFL team. I suspect that those taxpayers and politicians may not care as much about getting the Expos back as QC cares about the Nordiques. But i’m not at all sure.

      1. The city and province of Quebec chipped in about $300m for the arena, though I don’t know what the final tally ended up being:

        https://www.fieldofschemes.com/2012/03/26/3363/quebecs-new-arena-to-leave-taxpayers-at-least-250m-in-hole-with-no-guarantee-of-nhl-team/

        1. I thought their part was a bit less, but I was right that the city was part of it, not just the province.

          But that’s still probably less than what the province would be asked to pay for a baseball stadium.

          And they aren’t entirely out of luck without an NHL team. They at least got a really nice junior arena out of it and a place for, um, motocross or Metallica or whatever.

          So not all of that $250m is a total waste.

          An MLB baseball stadium isn’t useful at all with no MLB team.

  3. In order for LV and Tampa/Mon to be credible there needs to some progress in terms of how much money, when is on the legislative agenda. What I’ve been seeing from both proposal is run out the clock time fillers for an ending that won’t come

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