Thursday, September 15, 2016

The San Antonio Spurs And Federal Subsidies

See Study: San Antonio Spurs netted $41 million in federal subsidies for AT&T Center construction: Public makes up for taxes not paid on arena bond interest. By Joshua Fechter of The San Antonio Express-News, September 8, 2016. Excerpts:
"The Spurs received $41 million in federal subsidies to build the AT&T Center with little economic gain for the community due to a quirk in federal tax law, a Brookings Institution study released Thursday shows.

U.S. taxpayers have effectively paid about $3.2 billion to finance the construction of 35 major league sports arenas since 2000, the study says. That’s because the interest earned on municipal bonds issued to finance stadium or arena building is exempt from federal taxes, thus generating the subsidy.
That amount rises to $3.7 billion when windfall tax breaks for high-income bondholders are taken into account, the study shows.

About $169 million in tax-exempt municipal bonds were issued to construct the county-owned AT&T Center, which originally opened in 2002 as the SBC Center, essentially giving the Spurs a $41 million federal tax subsidy, the study says. The arena’s total price was $245 million for construction costs as well as parking and infrastructure improvements, it adds.

Bondholders received $3 million in tax breaks on municipal bonds, costing taxpayers $44 million in lost federal tax revenue, the study shows.

“The justifications for public funding for stadiums are weak, and the justifications for federal government subsidies are even weaker because to the extent the projects confer any benefits, those benefits are local, not national,” the study says.

Spurs Sports & Entertainment officials declined to comment for this report.

Local governments often offer incentives to sports franchises to lure or keep them from moving to another city including bonds, cash payments, tax abatements, infrastructure improvements or coverage of operating costs, leaving teams with only a percentage of costs stemming from stadium or arena costs.

The Spurs shelled out $46.5 million to build the AT&T Center — about 24 percent of the $193 million in total construction costs — and $26 million to cover $111 million worth of improvements to the arena in 2014, including a scoreboard, digital screens, Wi-Fi upgrades and seating improvements among other things."

"multiple studies show major private sports stadiums don’t ultimately produce substantial economic growth relative to the government incentives they receive"
Here is a related story about San Antonio sports: Triple-A baseball falling off back burner: Mayor can’t get financial commitments

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