This article originally appeared in Forbes
As anticipation for Super Bowl 50 builds, one winner has already been decided. When it comes to what team treats its local taxpayers better, the Carolina Panthers blew out the Denver Broncos.
To determine the winner, we can compare the burdens of direct taxpayer subsidies for the teams’ stadiums. The Broncos received $400 million (adjusted to 2016 dollars) for Sports Authority Field, or 75 percent of the total cost. Taxpayers gifted the Panthers $165 million, or 30 percent of Bank of America Stadium’s total bill.
The Denver Broncos play at Sports Authority Field at Mile High Stadium. Taxpayers took on a $300 million share of the $400 million cost of the stadium when construction began in 2002. One of the ways this public financing was paid for was through a 0.1 percent sales tax that was applied to taxpayers in six Colorado counties until 2012.
Even though taxpayers funded the majority of the stadium, they are forced to split the $6 million annual profits from naming rights 50-50 with the Broncos. Instead of the operating revenues going back to the taxpayers, Sports Authority Field’s proceeds go to the Broncos’ billionaire owners, the Bowlen family.
The Panthers' home field since 1996, Bank of America Stadium in Charlotte, North Carolina, was billed as "privately financed," even though the city provided $40 million for land, and the county provided $10 million for building relocation.
In April 2013 the Charlotte City Council voted unanimously to give the Panthers $87.5 million to upgrade their stadium and renovate luxury suites. In exchange for this handout, the Panthers promised to stay in Charlotte for six more years. One of the reasons for the package's unanimous approval was a fear that the team would pack up and move to the Los Angeles area.
Maybe now that the St. Louis Rams and the San Diego Chargers are moving to Los Angeles, the commonly-used bargaining chip of threatening to move a NFL team there will finally be off the table. However, NFL owners are professionals at extracting public funds. Rumor has it that the Oakland Raiders are considering a move to Las Vegas, so it is likely that taxpayer extortion will continue.
Publicly-funded stadiums are not unique to the Broncos and Panthers. All but two NFL stadiums received direct subsidies for their stadiums (the Jets’ and Giants’ Meadowlands and Patriots’ Gillette Stadium are the exceptions).
The NFL is by far the most valuable sports team in the world. Team owners do not need taxpayer aid to turn a profit, yet this problem is only growing. Public funding for stadiums completed in the 2000s was 70 percent higher than for those completed in the 1990s. League-wide, about 70 percent of the capital cost of NFL stadiums has been provided by taxpayers, not NFL owners. To see one other example, let’s also take a look at the stadium that will host Super Bowl 50, Levi’s Stadium.
San Francisco 49ers
Two seasons ago, the San Francisco 49ers left their long-time home field, Candlestick Park, and moved into the new $1.3 billion Levi’s Stadium in neighboring Santa Clara. San Francisco residents should be glad that their representatives lost the bidding war over the team, as Santa Clara taxpayers ended up directly footing $114 million of the bill through increased taxes and diverted city funds. In comparison, the city’s general fund budget is only $145 million.
Additionally, much of the “private” portion of the funding for Levi’s Stadium is not private. Over $900 million of the stadium’s financing was arranged by the Santa Clara Stadium Authority, a tax-exempt public organization that is comprised of Santa Clara City Council members. It was given the power to issue tax-exempt municipal bonds, which are given preferential treatment by the federal government so that they can fund schools and roads—not lavish sports stadiums. The Stadium Authority is responsible for all interest and fees on its municipal bonds, while the 49ers and the NFL only put up around $260 million.
Nearly 60 percent of Santa Clara voters approved these public expenses by voting “yes” on Measure J. The ballot question included the language, “no use of City General or Enterprise funds for construction; no new taxes for residents for stadium… no City/Agency obligation for stadium operating/maintenance.” Clearly, this part of the deal was quickly broken and yet construction continued. But no matter, some proponents of generous stadium argue—these subsidies pay for themselves with increased tourism, economic activity, and development.
Herein lies the problem with stadium subsidies. It seems that no matter the costs, state and local elected officials continue to promise endless public benefits. But the Cleveland Browns and Tampa Bay Buccaneers playing each other in next year’s Super Bowl is more realistic than the imaginary economic benefits of stadium subsidies.
It is not just direct subsidies that cost taxpayers—cities are also losing out on property taxes from stadiums, revenue that has to be made up for with higher taxes. Generally, professional sports teams are not liable for property taxes since, due to complex layers of ownership and leases, the stadiums are publicly owned (even though team owners get to keep the profits). Many stadiums are also exempt from sales taxes, including Levi’s Stadium.
There are other taxpayer costs that fans of stadium subsidies never mention. A recent report from San Francisco’s city budget analyst shows that hosting the required NFL events in the lead-up to the Super Bowl will cost San Francisco $4.9 million—even though the game will be played 40 miles away in Santa Clara.
Even if the Broncos are able to pull out an upset against the Panthers on Sunday, at least Carolina residents can still celebrate. When it comes to the Super Bowl of tax subsidies, Denver taxpayers have already lost. Unfortunately, most other taxpayers also lose to the NFL.
Jared Meyer is a fellow at the Manhattan Institute for Policy Research. Follow him on Twitter here.