WASHINGTON, D.C. – Today, U.S. Senators Cory Booker (D-NJ) and James Lankford (R-OK) introduced legislation to end generous federal subsidies for professional sports stadiums.
The bill would close a loophole in the tax code that allows professional sports teams to finance new stadiums with municipal bonds that are exempt from federal taxes.
Municipal bonds are intended to give communities a way to finance projects, such as hospitals, schools, and roads, without needing to pay federal taxes on the debt’s interest. Using municipal bonds to finance sports stadiums diverts money away from these critical local infrastructure projects.
“Professional sports teams generate billions of dollars in revenue. There’s no reason why we should give these multi-million-dollar businesses a federal tax break to build new stadiums,” Senator Booker said. “It’s not fair to finance these expensive projects on the backs of taxpayers, especially when wealthy teams end up reaping most of the benefits.”
“The federal government is responsible for a lot of important functions, but financing sports stadiums for multi-million – sometimes billion – dollar franchises is definitely not one of them,” Senator Lankford said. “Using billions of federal taxpayer dollars for the subsidization of private stadiums when we have real infrastructure needs in our country is not a good way to prioritize a limited amount of funds. I’m pleased to work with Senator Cory Booker to introduce this bill to eliminate the use of federal tax-exempt bonds for sports stadiums. Everyone likes free federal money to build their expensive stadiums, but with $20 trillion in federal debt, this is waste that needs to be eliminated.”
The bill would end federal subsidies for stadium financing, but would not prevent localities and states from bidding and offering economic incentives to teams. In eliminating this wasteful expenditure, the bill also unties the hands of local governments to finance their stadium subsidies with taxes on tickets and in-stadium purchases—in other words, allowing states to target taxes on the people who actually use and benefit from the subsidy. Current tax law does not allow local governments to finance federal stadium subsidies by levying taxes on stadium purchases.
Since 2000, 36 professional sports stadiums have been constructed or revamped under financing provided by federal tax-exempt municipal bonds, costing taxpayers over $3.2 billion dollars. Despite billions of dollars of federal funding flowing toward these projects, stadiums have proven to have limited to no impact on local economic development. In fact, twenty years of research finds that “there is no statistically significant positive correlation between sports facility construction and economic development,” particularly across income growth or job creation.
A companion measure to this bill was introduced in the House in March by Rep. Steve Russell (R-OK).