[Business Exchange Column]
The tax-free municipal market faces a rough road under President Donald Trump. President Trump’s threat to “end use of municipal bonds” for building or renovating National Football League (NFL) stadiums escalates the battle with protesting pro football players.
Trump’s theme is that “billions of taxpayer dollars” subsidized construction of professional sports stadiums. Trump’s move also exposes the gullibility of urban governments over three-decades of financing and underwriting rich stadium owners.
Private, professional sports stadiums are increasingly built with taxpayer dollars. It’s estimated that the total bill for stadiums is $10 – to $12 billion. There are many forms of such deals; they include a mix of state, local, and federal subsidies in the form of land, infrastructure improvements, cash payments, tax-free municipal bonds, and more. Since 2000, federal taxpayers have footed $3.2 billion toward private sports stadiums through subsidies in the form of tax-exempt municipal bonds.
The issue shows how deferential urban governments were to sports team owners. The practice of building stadiums for rich owners was accelerated during the 1970s, 1980s and 1990s. Governmental entities have long used tax-free municipal bonds to finance infrastructure projects, including sports stadiums. Investors buy the bonds as a relatively risk-free vehicle to earn interest.
The irony is that the NFL is a $14 billion-a-year business. After Trump’s threat affecting their money, NFL Commissioner Roger Goodell released a letter saying the league’s position is that “everyone should stand” for the anthem. Cowboys’ owner Jerry Jones stood foursquare behind Goodell against the players.
Why? Perhaps it’s because Jones and the Dallas Cowboys ushered in the era of the billion-dollar stadium with “Jerry’s World” in 2009. Taxpayers assumed the cost for over a quarter –$325 million– of its $1.2 billion price tag. Around the league, rich owners are feasting at “the public trough.” At the U.S. Bank Stadium, where the Minnesota Vikings play, public dollars account for half the $1.06 billion bill. The Atlanta Falcons’ new Mercedes-Benz Stadium opened at a cost of $1.5 billion, with the public picking up an estimated $600 million of its tab.
Twenty other NFL stadiums have opened since 1997, at a cost of nearly $5 billion in taxpayer funds. In Virginia, Republican Governor Bob McDonnell used $4 million in taxpayers money to build the Washington Redskins a training center in Richmond. The Redskins’ owner, Dan Snyder, has a net worth estimated by Forbes at 3.2 billion
The furor and protests had escalated after President Donald Trump labeled protesting NFL players “sons of bitches.” The next week, more than 150 NFL players, alongside coaches and owners, protested the comment. Now, Jerry Jones is doing Trump’s bidding.
Jerral Wayne Jones Sr. has moved to the fore probably because of his interest in the Cowboys and AT&T Stadium, a retractable roof stadium in Arlington, Texas. AT&T stadium is also home of the Cotton Bowl Classic and is owned by the city of Arlington. The stadium can be used for activities such as concerts, basketball games, college and high school football contests, soccer matches, and motor races.
Forbes reports Jones’ net worth as $5 billion, the majority of which can be accounted for from his ownership stake in the Cowboys, currently valued as the world’s most valuable sports team at $4 billion.
Many municipal governments have been “taken” by rich sports team owners. In his 2016 budget, President Barack Obama proposed getting rid of tax-free bonds that help finance stadiums. Since 2000, more than 45 sports stadiums were either built or renovated. The average cost to build or renovate a stadium was $412 million. Since the early 1960s, 91 sports stadiums have been built with public funding, and 22 were paid for with public funds.
The NFL was a tax-exempt nonprofit operation until 2015. It was considered a nonprofit because it distributed profits evenly to all 32 teams. Each team is required to pay taxes on their distribution.
Protesting NFL players want people to understand that Trump is spinning things; and that their dissent isn’t about the flag or “an anthem cause.”
They say their goal is to highlight egregious cases of police brutality against African Americans.
William Reed is publisher of “Who’s Who in Black Corporate Americ” and available for projects via [email protected]
