Moynihan takes aim at tax breaks for sports owners

July 15, 1996|By Neal R. Peirce

WASHINGTON -- Sen. Daniel Patrick Moynihan, D-N.Y., stirred up a virtual hornet's nest last month with a bill to forbid use of federally tax-exempt bonds to finance sports stadiums for private teams.

From Nashville to Cleveland, Seattle to Denver, New Orleans to New York and multiple points in between, mayors and councils are readying bond issues to finance close to $7 billion worth of football, basketball, baseball, hockey facilities.

The first deal imperiled was a $60 million bond sale by the city of Nashville as part of the tax-free bonding package it is assembling to pay for a $292 million state-of-the-art stadium to lure the Oilers football team from Houston. When Senator Moynihan suggested barring tax-free financing for such deals, angry protest erupted.

The proposal was ''abrupt,'' it ''jeopardized'' local planning, said city leaders. It was a ''dangerous precedent,'' asserted the Public Securities Association.

Mr. Moynihan beat a tactical retreat, saying he'd consider ''the need for equitable relief for stadiums already in the planning stages.'' But he is not backing away from his bill. He should be hailed as a hero of the times -- an invaluable whistle-blower and friend of all U.S. taxpayers.

Unless current federal law is changed, interest payments from the billions of dollars of upcoming stadium bonds will be totally tax-free to the affluent investors who buy them. These are general-purpose bonds that Congress intended to finance such public purposes as schools, libraries, roads, sewers and public buildings.

And who will be the beneficiary? Joe Six Pack, who often can't afford the seats in these opulent new stadiums and who'll surely never darken the door of one of their ritzy sky boxes? Of course not.

The real winners are professional-sports team owners utterly proficient in blackmailing local officials: ''Buy me my stadium, rent it to me for a pittance or nothing, channel the ticket and concession revenue to me, and if you don't like my deal, I'll skip town and leave you, Mr. Mayor, with egg all over your face for having lost a team.''

Senator Moynihan has been at this struggle for years. In the mid-'80s, many stadiums were being financed by low-interest, tax-exempt private revenue bonds. Owners paid off the cost over 30 or 40 years. But the federal taxpayer got clipped, because no taxes were collected. Mr. Moynihan's answer was to write conditions into the 1986 tax-reform law that virtually choked off such revenue bonds.

The owners were checked, but not for long. They soon thought of asking mayors to finance their stadiums with general-purpose bonds.

What a deal!

What a deal! At concessionary prices, they rent (but aren't ultimately responsible for) their stadiums. And they're relieved of repaying the bonds: the local taxpayers take care of that for them.

As for the tax-free interest payments -- well, Uncle Sam can take it on the chin as lost revenue. One result, Senator Moynihan notes: ''forcing the taxpayers in the team's current hometown to pay for the team's new stadium in a new city.''

But mayors found it tough to say no. Federal and state aid was shrinking. If not another city, a rapacious close-by suburb would bid for their sports teams. So many said ''yes.'' They'd keep (or sometimes gain) a team, but at the price of added municipal indebtedness, leading sometimes to a shakier credit standing and thus higher borrowing costs for schools, colleges and other public investments.

As the federal budget vise tightens -- forcing program after FTC program to constrict -- justifying megasubsidies to fat-cat sports owners will become even more reprehensible. The sooner Congress acts, the better for us all. And the quicker cities get wiser and resist the owners' threats and demands, the better.

A hero on this score, maybe a pioneer, is Houston's Mayor Bob Lanier. He has focused city funds on bolstering police, neighborhood rebuilding, cleaning out sewers, sprucing up parks.

When Oilers owner Bud Adams put on pressure for incentives, Mr. Lanier just said ''no.'' All Nashville will get for a total incentive pool of $650 million, the mayor noted, is 10 home games a year. The same cash, he said, would almost finish the job of cleaning up Houston's depressed neighborhoods.

If a few more mayors got their priorities as straight as Mayor Lanier's, the team owners would have fewer cities to prey on.

Neal R. Peirce writes a column on state and urban affairs.

Pub Date: 7/15/96

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