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30 Jan, 2016 16:22

Do billionaire NFL owners deserve subsidies from taxpayers?

Do billionaire NFL owners deserve subsidies from taxpayers?

The recent announcement by the National Football League that the St Louis Rams would be relocating to Los Angeles created much excitement in NFL circles, but the news didn't meet with universal approval.

While revenues in the league continue to rise at a staggering rate - the Forbes 2015 list of the most valuable teams in the NFL showed the average team value is $1.97 billion, up 38 percent from the previous year - the question of taxpayer subsidies continues to cause much debate.

The Rams' valuation of $1.45 billion might suggest they don't need handouts, yet the stadium they leave behind will continue to cost St Louis and Missouri taxpayers $12 million per year until 2022.

Local government officials' attempts to keep the team in St Louis with the offer of $500 million towards a new stadium fell on deaf ears, as billionaire Rams' owner Stan Kroenke pursued the Los Angeles dream. That proposal left taxpayers footing a further $16.2 million expenses bill.

In a recent column for insidesources.com, David Williams, President of the Taxpayers Protection Alliance (TPA), noted that just two stadiums out of the 31 used by NFL teams did not receive taxpayers' money - the MetLife Stadium (home of the New York Giants and Jets) and Sun Life Stadium (home of the Miami Dolphins).

While politicians defended the $7 billion subsidies received by the other 29 stadiums by claiming it helped local economies, the TPA's research published in September 2015 disproved this theory.

As far back as 2012, Bloomberg Business reported that Dallas Cowboys' $1.2 billion, 80,000-seat stadium was subsidized in part by tax-free borrowing by the City of Arlington.

Forbes' report shows the Cowboys are currently the highest valued NFL team at $4 billion - the ninth year in a row they have topped the list - while their owner, Jerry Jones, has a personal value of $5 billion.

Criticism of the system is widespread, with respected Arlington lawyer James Runzheimer claiming taxpayer subsidies are “part of the corruption of the federal tax system” and that it's “the use of government funds to subsidize activity that the private sector can finance on its own.”

Political commentator John Oliver also took aim last July on the “Last Week Tonight” programme in the US, putting forward impassioned arguments as to why taxpayers should challenge the practice.

Favourable tax breaks for the teams and the NFL's not-for-profit status continue to raise questions elsewhere, with Villanova professor Rick Eckstein, co-author of the book “Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums,” a long-standing critic of how the league operates.

"I've been studying this for 15 years, and I still cannot believe cities and states are lined up begging to give money to these very profitable teams," he said.

Eckstein also questioned the Rams' move to Los Angeles, with the NFL failing to supply any details to date about how the new stadium will be funded.

He recently told KCRW radio's “To the Point” show: "With these kinds of deals, the devil's always in the details. At this point, we don't really know what the new stadium is going to look like.

"They've thrown around the number of $3 billion for an overall investment project. But that's pie in the sky right now.

"There are always costs involved that the city may have to bear either on the surface or under cover. Infrastructural costs sometimes can amount to $50 million, $60 million, a $100 million to hook up sewers, to do road repairs, to put in new traffic lights, sometimes subsidizing security on game days.

"There's all kinds of money that hasn't even been talked about, all kinds of specifics that haven't crept up yet, and they're going to have to be dealt with. And somebody's going to have to pay for something. There's going to be some public money involved in this, and it's not clear how much yet."

Los Angeles may have its own NFL team now, but the debate about the potential cost to the taxpayer looks set to run for some time yet.