While they ostensibly are privately owned, sports arenas for football, baseball, basketball and hockey have been showered with billions of dollars of tax subsidies to defray their construction costs according to a new Brookings Institution study called “Tax-exempt municipal bonds and the financing of professional sports stadiums.”
More than three dozen luxurious major league baseball, football, hockey and basketball stadiums and arenas across the country were financed with tax-exempt municipal revenue bonds that have substantially lowered the teams’ cost of borrowing for construction while creating a drain on the federal Treasury.
Since 2000, the federal government has subsidized newly constructed or renovated professional sports stadiums to the tune of $3.2 billion while providing more than $400 million in federal tax write offs for wealthy investors – resulting in a direct revenue loss of $3.7 billion.
The researchers were ambitious in attempting to estimate every dollar of savings on interest costs and taxes that stadium owners were able to achieve by going the route of tax-exempt municipal bonds instead of other taxable bonds or borrowing. To some degree, they engaged in supposition in reaching the total of the subsidy to the owners. They more precisely calculated how much the bond holders avoided in federal taxes, which constituted a more direct drain on the Treasury.