August 30, 2010

Add Florida taxpayers to the list of those subsidizing profitable major league baseball franchises in Miami and St. Petersburg, even if most Floridians don’t realize it.

Financial documents leaked this week show that both the Florida Marlins and the Tampa Bay Rays turned profits in recent years even as they insisted that local taxpayers finance new stadiums.  (Read news stories about their profitability here and here.)

In the Marlins’ case, the cost to local taxpayers for “a sweetheart stadium deal” will be $2 billion or more to repay bonds over 40 years.  The Rays also say they need a new stadium financed in part by local taxpayer subsidies.  Both teams let it be known that they might move to another city if new stadium arrangements weren’t satisfactory.

Meanwhile, thanks to a Florida law enacted in 1991 to subsidize a "new or retained professional sports franchise," the Marlins, Rays, and six other professional sports franchises each receive a check from the state every month for $166,667.  That’s $2 million a year for each team, for 30 years.

Together with $5 million in subsidies for major league teams based in Florida for spring training, these subsidies from state money cost $21 million each year, straight from collections from the sales tax.  In addition, Florida provides a $2 million annual subsidy to the Professional Golf Hall of Fame and $1 million annually to the International Game Fish Association World Center. 

The Marlins, Rays, and other baseball, football, basketball and hockey teams subsidized by Florida taxpayers are each worth hundreds of millions of dollars, according to annual sports franchise valuations by forbes.com: 

Florida Marlins                                  $317 million

Tampa Bay Rays                              $316 million

Jacksonville Jaguars                         $725 million

Tampa Bay Lightning                        $191 million

Florida Panthers                               $159 million

Tampa Bay Buccaneers                    $1 billion

Miami Heat                                       $364 million

Orlando Magic                                  $361 million

In just the last five tough budget years, Florida’s taxpayers will have subsidized these profitable pro sports teams with more than $100 million.  This money leaves the state treasury month by month and is not available to fund priorities like education, health care and health insurance, and other services needed by those caught in the economic downturn.

Subsidies for professional sports teams fall under the guise of “economic development,” where tax revenues are handed out with the rationale that they will create jobs and other positive economic outcomes.  The $21 million annual subsidy to sports teams is one of hundreds of tax breaks in Florida law, costing billions each year, which are seldom if ever reviewed.

Supporters maintain that the state can’t change the 1991 law to eliminate the subsidies because the money supports bonds sold to finance pro sports stadiums.  Other money could be substituted, however, if legislators decided that the Florida had more important priorities.

Many tax breaks merely provide government subsidies to profitable businesses or provide money to employers who would have hired new workers anyway.  (See “Tax Breaks Shift Money to a Few Winners and Compete for Limited State Revenue.”) 

Sport subsidies are opposed by most economists.  “There appears to be little or no evidence for any net beneficial economic impact of public stadium financing,” concluded an economist’s study for the James Madison Institute in Tallahassee.

An examination of a multitude of national studies on tax breaks for sports teams reached the same conclusion.  “Sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation.”

“The fact that sports subsidies continue to be granted, despite the overwhelming preponderance of evidence that no tangible economic benefits are generated by these heavily subsidized professional sports facilities, remains a puzzle,” said the authors of the study for the International Association of Sports Economists.

Part of the explanation may be “simple collective foolishness when it comes to matters of the heart like sports,” the economists said.

One former owner of the NFL’s Philadelphia Eagles, Norman Braman of Miami, drew his own conclusion when talking to the Miami Herald about the Marlins’ profitability while the team sought taxpayer subsidies.

“The taxpayers are stuck with paying [the money for the stadium] back.  It shows [the Marlins] should have built the thing themselves.  It shows the taxpayers are a bunch of suckers.”

 

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