Tag Archives: Texas

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.

High paid Democrat lobbyist convinces EPA to pollute pristine Texas aquafer

Oh yeah, it was also in an area parched by drought

When Uranium Energy Corp. sought permission to launch a large-scale mining project in Goliad County, Texas, it seemed as if the Environmental Protection Agency would stand in its way.

To get the ore out of the ground, the company needed a permit to pollute a pristine supply of underground drinking water in an area already parched by drought.

Further, EPA scientists feared that radioactive contaminants would flow from the mining site into water wells used by nearby homes. Uranium Energy said the pollution would remain contained, but resisted doing the advanced scientific testing and modeling the government asked for to prove it.

The plan appeared to be dead on arrival until late 2011, when Uranium Energy hired Heather Podesta, a lobbyist and prolific Democratic fundraiser whose pull with the Obama administration prompted The Washington Post to name her the Capitol’s latest “It girl.”

Podesta — the sister-in-law of John Podesta, who co-chaired President Obama’s transition team — appealed directly to the EPA’s second in command, Bob Perciasepe, pressing the agency’s highest-level administrators to get directly involved and bring the agency’s local staff in Texas back to the table to reconsider their position, according to emails obtained by ProPublica through the Freedom of Information Act.

By the end of 2012, the EPA reversed its position in Goliad, approving an exemption allowing Uranium Energy to pollute the aquifer, though in a somewhat smaller area than was originally proposed.

An EPA spokesperson said companies routinely lobby the agency on regulatory issues and that Podesta’s entreaties to Perciasepe, now the agency’s acting administrator while Obama’s nominee to head the EPA, Gina McCarthy, awaits confirmation, played no part in the agency’s final decision.

“Bob’s involvement was literally a part of what he does on a weekly or daily basis,” the spokesperson said. “Lobbyists, etcetera, get in touch, he meets with them, he points them in the right direction.”

Factors other than Podesta’s efforts clearly weighed on the EPA as the Goliad case played out, including the agency’s fraught relationship with Texas officials and the Obama administration’s desire to demonstrate support for energy development.

Still, documents leave little doubt that Podesta, described by Corporate Board Member magazine as the number one person “you need to know in Obama’s Washington,” kept the Goliad County issue alive when the EPA’s scientific analysis seemed to doom it to failure.

Two thoughts.  

  1. Remember when you all foolishly thought Obama was a liberal?
  2. Why do governments even hire scientists when lobbyists can have then overruled?

Texas honor student jailed for truancy

Diane Tran, an honor student in Texas, was thrown in jail by a Judge Moriarty after she missed too many classes at her high school.

Tran said she works both full-time and part-time jobs, in addition to taking advanced and college level courses. But the judge said Tran’s case was bigger than the individual situation of one student. "If you let one run loose, what are you gonna’ do with the rest of ’em?,"said Judge Lanny Moriarty. "Let them go too? A little stay in the jail for one night is not a death sentence."

But Tran’s classmates said she had a lot more to juggle than the average teen. "She goes from job to job from school. She stays up until 7 a.m. in the morning doing her homework," said Devin Hill, a classmate and co-worker.

On top of that, Tran said her parents spilt up and moved away, leaving her to support her younger sister. The judge admitted that he wanted to make an example of the teen. Tran had to spend 24 hours in jail and had to pay a $100 fine.

Nice to see that there is no more common sense in Texas.

Looking for Rivals

So what do you do when you are a major college football program and you leave behind traditional sports rivalries?  I guess you go and find new ones.

Earlier this month, Texas A & M decided to follow Nebraska out the door of the Big 12. Its conference of choice was the S.E.C., its spurned rival the University of Texas. The move was so contentious that Texas Governor Rick Perry, who is an Aggie, was asked to intervene. (T. Boone Pickens, an Oklahoma State booster, told Perry to show America that “you fix problems, don’t contribute to ’em.”) Perry has declined to get involved, perhaps in part because Texas A & M’s rationale for the move was simple: if you can’t beat ’em, leave ’em. Dating back to 1894, the teams have played more games than all but three other rivalries, but Texas has dominated, winning two-thirds of the games played, and eight of the past eleven. The S.E.C. offered more money and, the Aggies thought, a better chance to compete for recruits with Texas. But perhaps rivalries simply mean less than they once did. Teams and fans are able to fly around the country with ease, and fans often get a bigger kick of visiting, say, U.S.C. for the first time, than they do watch another game against the enemy next door. Conference realignment seems like a new phenomenon, but it has been the game’s permanent state. We’ll adapt to this new state of affairs soon enough.

Conference realignment has shown college football for what it is; a professional football league that doesn’t pay it’s players and is run by owners (university regents) that are just as greedy and money focused as their NFL brethren.  No actually NFL owners do a better job of looking out for the game.  NCAA owners are in a league of their own.

Contextless Links

Brad Wall on ProFootballTalk

The Republic of Texas

Texas Governor Rick Perry, who doesn’t like Barack Obama’s tax and spend policies is threatening to have Texas succeed from the union.  I have to admit that as a Canadian who has grown up with Quebec trying to leave Canada, this struck me as both stupid and funny.  Of course over at the Foreign Policy blog, they decided to see what would happen to Texas and the United States if this happened.

So what would Texas look like as a foreign country?

Republic of Texas It would be the world’s thirteenth largest economy — bigger than South Korea, Sweden, and Saudi Arabia. But its worth would crater precipitously, after NAFTA rejected it and the United States slapped it with an embargo that would make Cuba look like a free-trade zone. Indeed, Texas would quick become the next North Korea, relying on foreign aid due to its insistence on relying on itself.

On the foreign policy front, a seceded Texas would suffer for deserting the world superpower. Obama wouldn’t look kindly on secessionists, and would send in the military to tamp down rebellion. If Texas miraculously managed to hold its borders, Obama would not establish relations with the country — though he might send a special rapporteur. (We nominate Kinky Friedman.)

So, Texas would need to court Mexico and Central American nations as a trading partners and protectors. Those very nations would also pose a host of problems for Texas. President Perry might find friends in anti-U.S. nations like Venezuela and Cuba, but their socialist politics would rankle the libertarian nation. 

And Texas would become a conduit for drugs moving north to the United States from Mexico, maybe even becoming a narco-state. It would need to invest heavily in its own military and policing force to stop drug violence within its borders — taking away valuable resources from, oh, feeding its people, fending off U.S. border incursions, and improving its standing in the world. 

In short: the state of Texas would rapidly become direly impoverished, would need to be heavily armed, and would be wracked with existential domestic and foreign policy threats. It would probably make our failed states list in short order. Probably better to pay the damn taxes.

The only way this story could get any stupider is if Chuck Norris said he would be the Republic of Texas’ new President.