Tag Archives: Dallas Cowboys

How the profitable sports league in the world fleeces taxpayers

Here is how the NFL takes advantages of taxpayers across the United States and doesn’t pay any taxes.

Last year was a busy one for public giveaways to the National Football League. In Virginia, Republican Governor Bob McDonnell, who styles himself as a budget-slashing conservative crusader, took $4 million from taxpayers’ pockets and handed the money to the Washington Redskins, for the team to upgrade a workout facility. Hoping to avoid scrutiny, McDonnell approved the gift while the state legislature was out of session. The Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at $1 billion. But even billionaires like to receive expensive gifts.

Taxpayers in Hamilton County, Ohio, which includes Cincinnati, were hit with a bill for $26 million in debt service for the stadiums where the NFL’s Bengals and Major League Baseball’s Reds play, plus another $7 million to cover the direct operating costs for the Bengals’ field. Pro-sports subsidies exceeded the $23.6 million that the county cut from health-and-human-services spending in the current two-year budget (and represent a sizable chunk of the $119 million cut from Hamilton County schools). Press materials distributed by the Bengals declare that the team gives back about $1 million annually to Ohio community groups. Sound generous? That’s about 4 percent of the public subsidy the Bengals receive annually from Ohio taxpayers.

In Minnesota, the Vikings wanted a new stadium, and were vaguely threatening to decamp to another state if they didn’t get it. The Minnesota legislature, facing a $1.1 billion budget deficit, extracted $506 million from taxpayers as a gift to the team, covering roughly half the cost of the new facility. Some legislators argued that the Vikings should reveal their finances: privately held, the team is not required to disclose operating data, despite the public subsidies it receives. In the end, the Minnesota legislature folded, giving away public money without the Vikings’ disclosing information in return. The team’s principal owner, Zygmunt Wilf, had a 2011 net worth estimated at $322 million; with the new stadium deal, the Vikings’ value rose about $200 million, by Forbes’s estimate, further enriching Wilf and his family. They will make a token annual payment of $13 million to use the stadium, keeping the lion’s share of all NFL ticket, concession, parking, and, most important, television revenues.

After approving the $506 million handout, Minnesota Governor Mark Dayton said, “I’m not one to defend the economics of professional sports … Any deal you make in that world doesn’t make sense from the way the rest of us look at it.” Even by the standards of political pandering, Dayton’s irresponsibility was breathtaking.

In California, the City of Santa Clara broke ground on a $1.3 billion stadium for the 49ers. Officially, the deal includes $116 million in public funding, with private capital making up the rest. At least, that’s the way the deal was announced. A new government entity, the Santa Clara Stadium Authority, is borrowing $950 million, largely from a consortium led by Goldman Sachs, to provide the majority of the “private” financing. Who are the board members of the Santa Clara Stadium Authority? The members of the Santa Clara City Council. In effect, the city of Santa Clara is providing most of the “private” funding. Should something go wrong, taxpayers will likely take the hit.

The 49ers will pay Santa Clara $24.5 million annually in rent for four decades, which makes the deal, from the team’s standpoint, a 40-year loan amortized at less than 1 percent interest. At the time of the agreement, 30-year Treasury bonds were selling for 3 percent, meaning the Santa Clara contract values the NFL as a better risk than the United States government.

Although most of the capital for the new stadium is being underwritten by the public, most football revenue generated within the facility will be pocketed by Denise DeBartolo York, whose net worth is estimated at $1.1 billion, and members of her family. York took control of the team in 2000 from her brother, Edward DeBartolo Jr., after he pleaded guilty to concealing an extortion plot by a former governor of Louisiana. Brother and sister inherited their money from their father, Edward DeBartolo Sr., a shopping-mall developer who became one of the nation’s richest men before his death in 1994. A generation ago, the DeBartolos made their money the old-fashioned way, by hard work in the free market. Today, the family’s wealth rests on political influence and California tax subsidies. Nearly all NFL franchises are family-owned, converting public subsidies and tax favors into high living for a modern-day feudal elite.

Pro-football coaches talk about accountability and self-reliance, yet pro-football owners routinely binge on giveaways and handouts. A year after Hurricane Katrina hit New Orleans, the Saints resumed hosting NFL games: justifiably, a national feel-good story. The finances were another matter. Taxpayers have, in stages, provided about $1 billion to build and later renovate what is now known as the Mercedes-Benz Superdome. (All monetary figures in this article have been converted to 2013 dollars.) The Saints’ owner, Tom Benson, whose net worth Forbes estimates at $1.2 billion, keeps nearly all revenue from ticket sales, concessions, parking, and broadcast rights. Taxpayers even footed the bill for the addition of leather stadium seats with cup holders to cradle the drinks they are charged for at concession stands. And corporate welfare for the Saints doesn’t stop at stadium construction and renovation costs. Though Louisiana Governor Bobby Jindal claims to be an anti-spending conservative, each year the state of Louisiana forcibly extracts up to $6 million from its residents’ pockets and gives the cash to Benson as an “inducement payment”—the actual term used—to keep Benson from developing a wandering eye.

In NFL city after NFL city, this pattern is repeated. CenturyLink Field, where the Seattle Seahawks play, opened in 2002, with Washington State taxpayers providing $390 million of the $560 million construction cost. The Seahawks, owned by Paul Allen, one of the richest people in the world, pay the state about $1 million annually in rent in return for most of the revenue from ticket sales, concessions, parking, and broadcasting (all told, perhaps $200 million a year). Average people are taxed to fund Allen’s private-jet lifestyle.

The Pittsburgh Steelers, winners of six Super Bowls, the most of any franchise, play at Heinz Field, a glorious stadium that opens to a view of the serenely flowing Ohio and Allegheny Rivers. Pennsylvania taxpayers contributed about $260 million to help build Heinz Field—and to retire debt from the Steelers’ previous stadium. Most game-day revenues (including television fees) go to the Rooney family, the majority owner of the team. The team’s owners also kept the $75 million that Heinz paid to name the facility.

Judith Grant Long, a Harvard University professor of urban planning, calculates that league-wide, 70 percent of the capital cost of NFL stadiums has been provided by taxpayers, not NFL owners. Many cities, counties, and states also pay the stadiums’ ongoing costs, by providing power, sewer services, other infrastructure, and stadium improvements. When ongoing costs are added, Long’s research finds, the Buffalo Bills, Cincinnati Bengals, Cleveland Browns, Houston Texans, Indianapolis Colts, Jacksonville Jaguars, Kansas City Chiefs, New Orleans Saints, San Diego Chargers, St. Louis Rams, Tampa Bay Buccaneers, and Tennessee Titans have turned a profit on stadium subsidies alone—receiving more money from the public than they needed to build their facilities. Long’s estimates show that just three NFL franchises—the New England Patriots, New York Giants, and New York Jets—have paid three-quarters or more of their stadium capital costs.

Many NFL teams have also cut sweetheart deals to avoid taxes. The futuristic new field where the Dallas Cowboys play, with its 80,000 seats, go-go dancers on upper decks, and built-in nightclubs, has been appraised at nearly $1 billion. At the basic property-tax rate of Arlington, Texas, where the stadium is located, Cowboys owner Jerry Jones would owe at least $6 million a year in property taxes. Instead he receives no property-tax bill, so Tarrant County taxes the property of average people more than it otherwise would.

In his office at 345 Park Avenue in Manhattan, NFL Commissioner Roger Goodell must smile when Texas exempts the Cowboys’ stadium from taxes, or the governor of Minnesota bows low to kiss the feet of the NFL. The National Football League is about two things: producing high-quality sports entertainment, which it does very well, and exploiting taxpayers, which it also does very well. Goodell should know—his pay, about $30 million in 2011, flows from an organization that does not pay corporate taxes.

That’s right—extremely profitable and one of the most subsidized organizations in American history, the NFL also enjoys tax-exempt status. On paper, it is the Nonprofit Football League.

This situation came into being in the 1960s, when Congress granted antitrust waivers to what were then the National Football League and the American Football League, allowing them to merge, conduct a common draft, and jointly auction television rights. The merger was good for the sport, stabilizing pro football while ensuring quality of competition. But Congress gave away the store to the NFL while getting almost nothing for the public in return.

The 1961 Sports Broadcasting Act was the first piece of gift-wrapped legislation, granting the leagues legal permission to conduct television-broadcast negotiations in a way that otherwise would have been price collusion. Then, in 1966, Congress enacted Public Law 89‑800, which broadened the limited antitrust exemptions of the 1961 law. Essentially, the 1966 statute said that if the two pro-football leagues of that era merged—they would complete such a merger four years later, forming the current NFL—the new entity could act as a monopoly regarding television rights. Apple or ExxonMobil can only dream of legal permission to function as a monopoly: the 1966 law was effectively a license for NFL owners to print money. Yet this sweetheart deal was offered to the NFL in exchange only for its promise not to schedule games on Friday nights or Saturdays in autumn, when many high schools and colleges play football.

Public Law 89-800 had no name—unlike, say, the catchy USA Patriot Act or the Patient Protection and Affordable Care Act. Congress presumably wanted the bill to be low-profile, given that its effect was to increase NFL owners’ wealth at the expense of average people.

While Public Law 89-800 was being negotiated with congressional leaders, NFL lobbyists tossed in the sort of obscure provision that is the essence of the lobbyist’s art. The phrase or professional football leagues was added to Section 501(c)6 of 26 U.S.C., the Internal Revenue Code. Previously, a sentence in Section 501(c)6 had granted not-for-profit status to “business leagues, chambers of commerce, real-estate boards, or boards of trade.” Since 1966, the code has read: “business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues.”

The insertion of professional football leagues into the definition of not-for-profit organizations was a transparent sellout of public interest. This decision has saved the NFL uncounted millions in tax obligations, which means that ordinary people must pay higher taxes, public spending must decline, or the national debt must increase to make up for the shortfall. Nonprofit status applies to the NFL’s headquarters, which administers the league and its all-important television contracts. Individual teams are for-profit and presumably pay income taxes—though because all except the Green Bay Packers are privately held and do not disclose their finances, it’s impossible to be sure.

Going Nuclear

The next NFL season just got a lot more interesting if the Redskins/Cowboys go nuclear on the league.

The teams will spend the weekend examining every possible option.  ”Who can I sue and how can I sued them?” will be the operative questions.  (It’s unknown whether a “suance” is being considered.)

Adding to the teams’ frustration, we’re told, is that the deal to take away the cap money was brokered between NFLPA executive DeMaurice Smith and the NFL Management Council Executive Committee, without a full vote of NFLPA leadership or NFL ownership.  The chairman of the CEC is Giants owner John Mara, whose team benefits directly from the removal of cap room from two of his chief division rivals.

It’s unknown whether the Redskins and Cowboys are bluffing in order to force a compromise, or whether they indeed truly intend to file suit.  Reducing the allegations to writing necessarily will expose that the league was engaged in collusion in 2010, which could have all sorts of unintended consequences for the entire NFL, including the Redskins and the Cowboys.

What it takes to be an NFL player

Your body has to take a lot of punishment

The players stick to typical fitness rules: get plenty of rest and eat healthy foods. When an NFL player is watching what he eats, staying disciplined can mean the difference between wins and losses.

"Diet is A-No. 1," said James, who makes sure he has a "rainbow" of foods each meal. "A lot of the guys, we make sure we are getting colorful foods on our plates. If you aren’t eating right, your work won’t materialize into much of anything. You also have to work on hydration, especially when it’s as hot as it is this year."

This off-season has been slightly different because of the NFL lockout, which lasted from March 11 to July 25 (including a one-week extension at the beginning).

Typically, NFL players will work on their own at their team’s facility and possibly visit professionals at a center such as the Michael Johnson Performance Center for periods of around six to 12 weeks for skill-specific training.

This year more than 50 players, including several Cowboys, worked out with Walker this summer, some for up to 22 weeks.

"To really get ready, you have to actually hit people. That only starts in training camp," said Walker, who was a Cowboys strength and conditioning assistant coach for three seasons.

The week in bad ownership

In a week where the Washington Football Club/Racist Nickname asked the Washington Post to rename a sports news blog that covers the team and you also have Jerry Jones trying to intimidate the union in negotiations which lead them to decertify and sue the league, you would think the NFL would be a lock for bad owner of the week award.  Not even close as the NBA trumps them all with not only a worse owner but a commissioner that allows it.

Dan Snyder (while amassing billions) just comes across as incompetent.  Donald Sterling and his chief enabler, David Stern come across as worse. Here is how Yahoo! Sports Adrian Wojnarowski sees it.

Stern has long preached that coaches are too expensive, scouts too plentiful and perhaps no one has heeded the commissioner’s words like the Los Angeles Clippers’ owner. He has a history of hiring them cheap, and refusing to honor contracts. The NBA has a history of letting it go without protests.

Yes, Stern’s silence and inaction on Sterling’s despicable behavior has to be considered as some level of approval. Now, Kim Hughes tells the story to the Racine (Wis.) Journal-Times about how Sterling didn’t pay for his prostate cancer surgery as a Clippers assistant coach several years ago. Clippers players contributed much of the $70,000 needed to take care of the costs that weren’t covered by Hughes’ medical insurance.

And once Sterling fires those coaches and scouts, he often stops paying the balance of their contracts. He dares them to sue. Some can, and do. Some can’t afford the legal fight and end up settling for pennies on the dollar.

This happened with scouts Scott Wissel and Jerry Holloway a year ago. They made less than six figures a year, and the Clippers simply stopped paying them. Essentially, Sterling was telling them, “The season’s over, and so what if your deal runs October to October. It’s April, get lost and we aren’t paying you.”

Eventually, Holloway won a settlement, and Wissel had to fight more than a year to get part of his money. Where was the league office? Where was Stern’s indignity?

Then Stern goes off on Stan Van Gundy who is trying to figure out why his star player gets fowled 593 times this year.  Stern uses this as an excuse to chastise Van Gundy and publically humiliate him

Off to Stern’s Siberia. Stern wouldn’t stop there, because he gets such a charge out of humiliating those under him. Taunted Stern, “I see somebody whose team isn’t performing, whose star player was suspended, who seems to be fraying.”

No commissioner has ever been so emboldened to speak this way. Yet now, so much of Stern’s staying power is built on a far more flimsy baseline. Respect has eroded for him, replaced with fear and loathing.

“It’s a divisionary tactic to take away from the 593 fouls without a flagrant,” one long-time league executive said of Stern’s rant on Van Gundy. “The question is: Do you have to be mean and a bully to be a commissioner? As he’s gotten older, he has become more mean-spirited, and it shows in how he deals with his own staff, coaches and with the new-age owners.”

When Stern goes to Orlando’s ownership group, he knows it’ll soon be wondering how much of an impact Van Gundy’s mouth will have on Howard and the Magic in the playoffs. Teams tremble over retribution from Stern and fear it in the form of officiating.

Big and small markets. Winning and losing franchises. Great and lousy general managers and coaches. Old and new owners. They all agree: Don’t push Stern too hard because there will be a price to pay. Better off bowing, kissing the ring and shuffling past him.

In case you haven’t heard of Donald Sterling before, here are just some of the recent stories.  The recent stories about him grow more horrifying with each new revelation but don’t worry, there are a variety of stories from the past that seem to confirm an ongoing pattern and yet this man is allowed to own a NBA team when no other league on the continent would find his actions permissible. Well done NBA, well done.