With the Tampa Bay Rays‘ new stadium plans dead or mostly dead or pining for the fjords or whatever pop culture reference you prefer, it’s time to speculate wildly on other cities that might want to take St. Petersburg’s place to offer up a steaming pile of money for a new stadium. Up first: Portland, Oregon, where would-be team owners the Portland Diamond Project (led by retired not-even-close-to-billionaire Nike executive Craig Cheek) want to revisit the $150 million in player-income-tax kickbacks that were approved two decades ago to try to lure the Montreal Expos, and invited over a ton of city and state elected officials, as one does, to discuss upping that dollar amount for bring an expansion or existing team to town. How’d that go over?
- State Sen. Lew Frederick: “How would people respond? The present state treasurer and the incoming treasurer were there—she [Elizabeth Steiner] will have a lot of say. If there’s a bill, the argument will be the same as it was in the past. Could we be leveraging the tax money for something else other than baseball?”
- Incoming state treasurer Elizabeth Steiner: “Selling bonds backed by the new salaries—that’s revenue we wouldn’t get if we didn’t get the team. In principle, I’m supportive but I’m not willing to commit until I see all the details.”
- State Sen. Mark Meek “I can’t wait.”
Feel the excitement! The initial $150 million cap on stadium bonds was in 2003 dollars, to be fair, so expanding it would make a kind of sense in that player salaries have gone up since then; on the other hand, state budget analysts at the time said player income taxes would only be enough to pay off about half of a $150 million bond, so maybe it wouldn’t actually make sense at all. A lot of the “revenue we wouldn’t get if we didn’t get the team” calculation would depend on whether the entire roster could be encouraged to live in Oregon and pay its 9.9% state income tax rate or if the state would only be able to charge income tax for days when the team was playing at home.
Plus, as always, there’s the substitution effect problem: How much of that income would be earned, and have taxes paid on it, somewhere else in the state if MLB never arrived? Part of players’ salaries are paid from out-of-state sources like national TV contracts, obviously, but part comes from local fan spending. If even some Oregonians fund their baseball ticket purchases by cutting back on other sporting events, or going out to eat as much, or some other local entertainment option, then the state loses income tax proceeds from Trailblazers players or sous chefs or pumpkin boat mechanics, which has to be factored in.
All this math will need to be hashed out in the state legislature, and even then it needs to be seen how much money a stadium would cost and how much of the tab Cheek and company would pick up themselves. The proposed site, the Zidell Yards south of downtown, is in a tax increment financing district, so it could get potentially get property tax kickbacks as well. (Here are some images of what the stadium could look like, or at least could have looked like when it was slated for an entirely different site in 2018.)
Portland mayor-elect Keith Wilson, at least, is apparently unworried about where to find a billion dollars or so, and already thinks his city is neck-and-neck at the finish line:
“I’d say this is as close as we’ve come. We feel confident it’s down to us and one other city. And we’re making a solid play.”
One other city? Give us a hint — does it rhyme with Schmeensboro?
As I sit here in my office equidistant from Nashville and Charlotte…I feel a disturbance, the wheels grinding. Surely by the end of the day we’ll hear rumors coming out of both.
And Salt Lake City! (Kidding! It would make a certain someone’s head explode.)
Tokyo Bay Rays. Osaka Athletics. MLB might as well throw those possibilities out there just to see how everyone reacts.
Agreed. Let’s get more worldy for World Series.
Mexico City Rayos?, Monterrey Atletismo?
Keith,
Are you close to Knoxville? I have been waiting for those rumors too. I am between Knoxville and Nashville. I can’t see Nashville coughing up the free money.
Yes, in Knoxville. I didn’t mean to imply that either city is a likely or good choice, just that it seems inevitable that Portland won’t be the only city to be part of the discussions. It would be surprising if we didn’t also hear from Montreal, Mexico City, and the rest of the usual suspects.
I agree, I expect it too. I would love to have a team in Middle Tennessee, but I don’t see it happening. I think a setup similar to The Battery would work in the Mt Juliet or Franklin/Brentwood area. As much as I would like to see a team, I don’t think it is a good use of public money.
-The tax hits players salaries regardless of where they live (home and away players).
-My understanding of the original SB5 legislation is that the owner has to guarantee the bonds.
-Most of the public infrastructure at Zidell was already built out prior to the pandemic and it was on its way to becoming a mid to high rise neighborhood when Covid hit.
-the “other city” is Salt Lake City, which is smaller and more saturated with sports teams, but also growing faster and is free of the reputation issues that has dogged Portland recently.
I realize FoS is not the forum to argue in favor of public subsidies for stadiums, and I’m not. That being said I think you will find that this effort is real and serious, and it’s on the low end of the spectrum when it comes to fleecing the public (as it should be since Portland has the lowest amount of public subsidies for any city in North America with multiple major league teams).
One other thing, this has NOTHING to do with Tampa Bay. Portland is going for an expansion team and news stories have been coming out on this topic for several months since Zidell was announced. The Rays are not moving west and Portland (which has it own MLB vetted ownership group) is not getting a relocated franchise unless the owner was selling, which they aren’t (this explains why Portland was never mentioned regarding the A’s to Vegas fiasco).
Sternberg has previously said that he wouldn’t move the Rays, but might sell to someone who would. Not that we should necessarily take him seriously, but if we’re talking about the Rays moving, cities with their own ownership groups aren’t off the table.
As for “the tax hits players no matter where they live,” I don’t believe that’s true during the offseason. At least, Geoffrey Propheter says that’s not the case in his post that I linked to, and he’s the tax expert — go take it up with him on Bluesky.
MLB players do not work from home. It’s no different than people who live across the river in Vancouver, Washington. They pay tax on wages earned in Oregon. Same goes for NBA players when they play in Portland. This is why players file multi state returns for the states they play in. There may some exception being referred to by Propheter that I’m not aware of(?)…
(I’m also a CPA FWIW, although it’s has been many years since I’ve prepped a tax return for a client)
Never mind we are talking past each other I’m referring to their prorated earning as a player and you are referring to their offseason earnings (endorsements etc.) which is more complicated as I’m guessing Propheter is referring to.
Neil, Portland Diamond Project is not paying the lion’s share of stadium costs if they don’t get to own the team, and they have never expressed an interest in a relocated team. Plus the Rays aren’t moving west. So in this case (and the A’s since Fisher is not selling a majority stake), Portland is definitely off the table.
Professional athletes and other high income persons have tax avoidance and reduction options that are either not available or impractical to deploy for ‘the rest of us’.
Professional athletes can and do require that some or even the majority of their salaries be paid as signing bonuses (and become payable at a time when they are not living or working in the state they normally live and work in). Professional athletes can and do require that the majority of their salaries be paid into ‘foundations’ that they control and which reduce their tax burden dramatically. Former NFL lineman Tony Boselli was lionized for ‘donating’ more than 80% of his salary to his own foundation. I’m sure it did great work. I’m also quite sure he is still doing well off the tax savings that shelter provided.
Municipal officials and stadium boosters tend to oversimplify the math on these kinds of calculations to make it look like a $20m player playing half their games in a state with a 10% income tax will pay $1m in state income tax. The reality is that the actual amount realized will be a fraction of that after the player’s agent & accounting firm get through with it.
MLB players might be the ‘best’ return on this front as they play 25 or 26 days a month during the season. In the case of football players, most training, practice and other non-game “work” occurs in their own host city, so it is not a 50-50 split for visiting teams (which it never is, of course… despite how neat it makes the calculation).
The “$150m” number that Portland put out years ago is simply laughable. I would suggest following Mr. Matheson’s (?) suggestion that the decimal be moved one place to the left to get a more accurate estimate. $15-20m in total seems more achievable, even if the avg major league team payroll is $200m or thereabouts.
Regardless of how laughable you think the number is, this is why the legislation was set up so that the owner guaranteed the bonds (this was brought up in part due to concerns that Portland might end up getting a low payroll team like Moneyball A’s back in 2003).
You (and others in here) are raising the right questions and concerns. And even with those concerns being addressed I’m still skeptical that this will come together, but we will see.
Portland reputation issues?
Easily fixed!
The Portland BLM’s…..
that was so funny that i think you got a future career at the babylon bee (deragatory)
Here’s the first PR salvo article in Willamette Week, Portland’s main alternative paper – slim on details, (natch), on the player’s tax and more importantly, who the hell is going to buy a team. Also, the “detailed renderings” mentioned in the article aren’t public yet – I checked the PDP website. I was hoping for fireworks, lens flare, persons hailing taxis, etc.!
https://www.wweek.com/news/2024/11/22/lawmakers-incoming-treasurer-may-help-bring-major-league-baseball-to-portland/?utm_source=Master+Audience&utm_campaign=e28c88c20c-EMAIL_CAMPAIGN_2024_11_21_06_42_COPY_01&utm_medium=email&utm_term=0_-798bba0f84-87992100&mc_cid=e28c88c20c&mc_eid=29bae13785
Yep, that’s the same article linked above in this post.
Apologies, I’m only on my third cup of coffee!
“I’d say this is as close as we’ve come.”
Funny. I felt the same way about this past week’s lottery…
Never give up!
You can’t win if you don’t play!
Hey let’s approve money now… and figure out how much and how we’ll pay for it at some future date!
LOL. To quote George Carlin:
“This is an emergency. We don’t have time for rational solutions”
Expect Utah to shove their way into this as well. They’re already pushing through the Fairpark redevelopment plan (the State Fairgrounds and power plant site the ballpark will sit on). They’ve also announced that the Gadsby power plant – the smokestacks in the ballpark renderings unveiled by Big League Utah that were the source of much derision – will be decommissioned by 2025 and torn down by 2032. Given the state’s love of fossil fuel energy and efforts elsewhere to keep coal-fired plants running till the 2040s, this isn’t a small matter and almost certainly was done to mollify opposition.
The real key will be the funding source. I’ve heard conflicting reports that either the language of the bill passed last session says the state can borrow $900 million and figure out the money later, and others saying that they can’t till the funding source is passed. As I’ve said before, the issue will be finding a source that won’t affect taxpayers outside of the Wasatch Front and will pass above the 2/3 threshold to subject it to a referendum. That’s what derailed the hotel tax levy last time: allegedly they had the numbers to pass it in the legislature, but the hospitality lobby vowed to fund a referendum and take it down. (Which makes sense: if you own a ski resort in Park City or a dude ranch in Kanab, you sure as hell don’t want to pay for a ballpark in SLC that’ll do bupkus for attracting more visitors). The defeat of Amendment A in court, which if passed by voters would have rewritten the state constitution and allowed the legislature to raid income tax money that’s set aside for education, also cuts off another potential funding source.
I still don’t know how they’ll make the math work, but they’ll try. One idea I’ve heard kicked around is to tap into funds set aside for the Jordan River restoration for the ballpark, since it would be adjacent to it. Whatever passes, it’ll likely be something on that level of stupidity.
I feel like they should just go ahead and build a stadium and then try to lure a team. It worked great for St. Pete and Quebec City!
You really had fun with the tags on this one, didn’t you, Neil?
No way Sugar Land gives up the Skeeters!
Bizarre — I didn’t mean to check all those categories. Fixing now, thanks.
I dunno, I took it as possibly intentional or a really great coincidence, because it seems like a random selection of minor league teams would be the only ones interested in this offer.
Does this mean the woodcutters aren’t in on this deal somehow? I am crushed to hear of this development – errr- non development.
It’s all part of my secret plan to introduce promotion/relegation to baseball. Skeeters/Yankees World Series in 2040!
Neil you sniffed out the other city!
Darn you’re good!
The average MLB team payroll is $166 million. You aren’t going to replace the $166 million in payroll with sous chefs and waiters. Especially when you consider that the dinners out would be spread out over course of a year so that demand would be absorbed by existing capacity. The average MLB team draws 2.4 million people on 81 home games. If they all went out to dinner, movies, etc that would be spread out over 365 days. So that would be absorbed by existing capacity. Restaurants won’t have to add tables because there is no baseball in town. Secondly, we’re only talking about the team payroll. Not including the food service staff, ticket takers, security, etc. So the sous chefs, waiters, etc that you mention would be replacing the stadium staff not the players
Economic data shows that yes, you absolutely are going to replace that team payroll with income from other jobs:
https://link.springer.com/chapter/10.1007/978-3-031-39248-1_5
It starts with “A 1999 study.” So its 25 years old. In the grand scheme of taxes and government spending sports is negligible. $166 million in major league baseball payroll is a drop in the bucket when you consider that total salaries and payroll in the State for the last 4 quarters amounts to just she of $600 billion https://fred.stlouisfed.org/series/ORWTOT
“This paper returns to the questions Coates and Humphreys asked using an additional 17 years of data and a number of new stadiums, arenas, and franchises.”
It does help to read past the first sentence.