State Legislatures and Taxpayer Funded Stadiums: The Debate Continues in Florida

Should taxpayer dollars go towards paying for renovated or new stadiums, arenas, and other sporting venues? The debate over this question has raged across the nation for decades at the professional and amateur level of sports. It’s also an issue franchise owners, players, fans, lawmakers, and residents take personally.

For those that may not remember, the midnight move of the then-Baltimore Colts to Indianapolis in 1984 was a result of Maryland’s state and local governments’ refusal to spend $25 million in public funds on stadium renovations. Since that time, an increasing amount of sports franchises across all professional leagues have threatened team relocation if they are unable to secure financial assistance from the state in building or renovating their home court or field.

So what can legislators do to ensure their state’s professional teams don’t relocate? Levy new stadium-centric taxes? Increase existing tax rates? Refuse and hope the team stays anyway? The Florida legislature looks to provide the solution for all parties involved in this debate with a recently passed bill, HB 7095.

If signed into law by Governor Rick Scott, HB 7095 would allow professional sports franchises, as well as motorsports complexes and horseracing venues, to compete for an annual sales tax rebate to fund renovations, for up to 30 years.

In order for a venue or franchise to receive these funds, the Florida Department of Economic Opportunity would evaluate and rank the various projects each year based on the amount of capital improvements, expected increase in ticket sales, and their overall impact on economic development. As reported by The Florida Current, “Projects worth more than $300 million are eligible for $3 million in tax incentives per year, and projects must have capital costs of at least $30 million to qualify.” For projects worth less than $300 million, incentives of $1 million and $2 million will be awarded annually based on the project’s worth. The total amount of tax dollars allocated each year would be capped at $13 million beginning in 2015. Conversely, teams would be responsible for paying back the public funds, plus a 5 percent penalty, if they fail to meet their revenue goals.

Considering Florida’s average sales tax revenue from 2008 to 2012 was roughly $19.62 billion and the total dollar amount of public funds given per year is only $13 million (0.07 percent of annual state revenue from the general sales tax), the bill aims to accommodate owners without digging deep into the taxpayers’ pockets. However, the issue is that once a project is approved, the funds are guaranteed up to 30 years. So if two projects are awarded $3 million and $1 million, respectively, for 30 years, that’s $120 million gone to a privately owned sports venue. And if there are four to seven projects under construction at the capped rate of $13 million that’s $390 million in state funds, all in the name of economic development.

That brings us to the other issue of the overall economic impact renovating or building a new stadium will have, specifically on jobs, revenues, and business development. One venue that would receive immediate financial aid is the Daytona Speedway.

With the assistance of public funding, the $400 million redevelopment project known as Daytona Rising  is expected to create 6,300 jobs, $300 million in labor income, over $80 million in tax revenue, and be completed in 2016. But will those numbers hold past the projected end-date?

Major racing events occur at Daytona Speedway only twice a year, meaning the majority of the non-construction jobs created will be seasonal, hourly paying jobs. Additionally, the economic development of the area surrounding the speedway, or the other sporting venues and stadiums in Florida, isn’t always guaranteed success, as we’ve seen with the area around the Atlanta Brave’s Turner Field in Atlanta: few businesses, depressed commerce, and an above-average crime rate.

Even though HB 7095 does not hike or levy a new tax, and curbs calls for public funds to upgrade sporting venues, it guarantees too much money for uncertain returns on the legislature’s investment. Rather than approving up to $390 million over 30 years for projects worth hundreds of millions of dollars, the state legislature should have started with more modest figures of up to $10 million per year for 15 years, retaining $240 million to address more pressing needs such as transportation, public services, and education. If Florida is to commit to providing millions in taxpayer dollars to support these projects, then it should receive more for its investment, such as shares in ticket proceeds, suite sales, food and beverage concessions, or parking revenue — making it more of a loan than a handout.

Taxpayers are responsible for financing their homes through bank loans or direct payments. Why should privately-owned, multi-million dollar professional franchises receive a break when they are capable of doing the same?