Stadium Naming Rights Rebate Tax Bill
(Stadium Rebate Bill)
What is it?
Baseball stadiums are often paid for by federal, state and municipal taxpayers and the stadiums are then named after corporations.
In short, the Stadium Naming Rights Rebate Tax Bill taxes Major League Baseball clubs that sell or rent naming rights1 and then returns the tax revenue to municipal and state governments that subsidize stadiums.2
A full copy of the bill is shown at the bottom of this web page below
Baseball stadium names being used for advertising is nothing new.
“…in 1912, the Boston Red Sox were still partly owned by the same man who owned the Fenway Realty Company: John Irving Taylor. “There was no official “naming rights” deal drawn up. Still, Taylor managed a clever solution.. (that) .. gave his Fenway Realty Company free name recognition. “3
Fenway Park – Massachusetts Historical Society4
In 1953, Gussie Busch wanted to enter into a naming rights deal by naming the stadium in St.Louis “Budweiser Stadium.” The Major League Baseball Commissioner said “No” and Gussie Busch settled for “Busch Stadium.”
Taxpayers in Milwaukee County built a stadium to attract Major League Baseball. The Boston Braves moved to Milwaukee in 1953.
The Milwaukee County taxpayers named their stadium “Milwaukee County Stadium.” The naming rights were never sold.
A new subsidized Stadium was built in 2000. The first naming rights partner was “Miller Park” and the current naming rights partner is American Family Insurance. Both naming rights partners were and are subsidized by the federal government through the sale of tax-exempt municipal bonds.
Aerial view of Milwaukee County Stadium in 2000 with Miller Park under construction in the lower right.5
Over two-thirds of MLB parks have official naming-rights deals.6
In Tampa Bay, the current subsidized stadium name is Tropicana Field. Tropicana is not locally owned.
Tropicana is owned by PAI Partners, a French private equity firm based in Paris. It is possible for PAI to change the stadium name, for example, to PAI Field.7
The type of corporate switching and non-democratic changing of the stadium names has occured in other markets with other stadium names.
“Kauffman Stadium” is currently the only stadium in the American League to be named after a person and is also one of nine stadiums in Major League Baseball that does not have a corporate-sponsored name.8
But the current ownership of the Royals wants a new stadium with perhaps, a new name. The overall cost to taxpayers would be between $4.4 billion to $6.4 billion, according to a local newpaper.9 On April 2, 2024, Jackson County, Missouri, voted “No” to a sales tax to pay for the new stadium.
Both the Kansas City Royals and the Superbowl winning Kansas City Chiefs gave indications that they might move, effectively holding Jackson County as a hostage of professional sports.10
Kauffman Stadium – Aerial view in August 201311
By Ichabod – Own work, CC BY-SA 3.0
“I’m Jane Hague,
Chairperson of the Metropolitan King County Council
and a hostage of professional sports.”
was the County Chairperson’s testimony before the Congress of the United States of America in 1996.12
A new stadium was built. In 2020, the Seattle Mariners rented the naming rights to T-Mobile. T-Mobile US is not a locally owned company. T-Mobile US is a subsidiary of Deutsche Telekom.
In 2024, seventeen teams would be required to pay the Stadium Naming Rights Rebate Tax.
The Stadium Naming Rights Rebate Tax would not hurt the quality of players on Major League Baseball teams.
In the tax year 2022 calculation, the lowest naming rights tax would have been paid by the Miami Marlins, $839 thousand.
That’s about the annual salary of some of the lowest paid players in Major League Baseball.
The highest naming rights tax would have been paid by the Atlanta Braves, $2.7 million.
This is a little more than half the average salary for players in Major League Baseball.
The Stadium Naming Rights Rebate Tax amounts to less than half of one percent of the average Major League Baseball Club’s total revenue.
The Stadium Naming Rights Rebate Tax would not have a significant impact on the amount of money available to pay baseball players or the overall quality of players on an MLB team.
Who Pays?
The Stadium Naming Rights Rebate Tax is a tax paid by Major League Baseball clubs.
Major League Baseball club owners are made up of business people, business groups, and financial investors, including numerous billionaires.
In 2024, the wealth of individual Major League Baseball owners is estimated at $16 billion Steven A. Cohen (New York Mets), $11.5 billion Edward S. Rogers III (Toronto Blue Jays), $6.6 billion John C. Malone (Atlanta Braves), $6.6 billion Lerner family (Washington Nationals), $5 billion Charles Johnson (San Francisco Giants), $4.6 billion Lawrence and Paul Dolan (Cleveland Guardians), $4 billion William O. DeWitt Jr (St. Lewis Cardinals), $3.8 billion Jim Pohlad (Minnesota Twins), $3.8 billion The Ilitch Family (Detroit Tigers), $3.8 billion Hal Steinbrenner (New York Yankees), and and other weathy individuals such as Mark Attanasio (Milwaukee Brewers), John Henry (Boston Red Sox), and Arte Moreno (Los Angeles Angels).13 The poorest billionaire was $1.1 billion John Stanton (Seattle Mariners).14
Billionaires pay the Stadium Naming Rights Rebate Tax, many of whom are listed above.
Baseball stadium naming rights are subsidizing foreign corporations.
Naming rights for Tropicana Field are now under the control of PAI Partners, a French private equity firm.
T-Mobile US is a subsidiary of Deutsche Telekom, a German telecommunications company headquartered in Bonn, Germany, and the largest telecommunications provider in Europe by revenue.15
Deutsche Telekom’s current sporting venues include T-Mobile Center, a publically funded multi-purpose arena in Kansas City, Missouri, and T-Mobile Park, a publically funded baseball stadium in Seattle, Washington.
Federal and municipal naming rights tax dollars are being used to subsidize corporations headquartered in Bonn, Germany and Paris, France.
Whether you are a non-sports person or an avid baseball fan . .
This is totally unacceptable.
Support the Stadium Naming Rights Rebate Tax Bill.
Contact your Congress person and your Senators today.
https://www.senate.gov/senators/
https://www.house.gov/representatives
Ask your representative to sponsor or co-sponsor this bill.
Estimated Stadium Rebate Tax – Tax Year 2022
In the tax year 2022 calculation:
Rebates to States and Municipalities Totaled $26.7 Million
Rebates to States and Municipalities Averaged $1.5 million
Highest Rebate — Atlanta $2.7 million
Lowest Rebate — Miami $839 thousand
The average Taxable Estimated Naming Rights Exposure tax ($1.5 million)
amounts to less than half of one percent (0.0044) of the average
Major League Baseball Club’s total revenue ($344 million).
The Taxable Estimated Naming Rights Exposure Index for tax year 2022
can be viewed and downloaded below
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The Stadium Naming Rights Rebate Tax Bill — a proposed bill
A). Each Major League Baseball club shall pay a 25% sales tax for naming rights sold or rented. Department of the Treasury Internal Revenue Service shall receive the Stadium Naming Rights Rebate Tax on an annual basis using existing Internal Revenue Service tax collection timelines.
B). The Department of the Treasury Internal Revenue Service shall remit the Stadium Naming Rights tax revenue to the municipal and state governments that issued federally tax-exempt municipal bonds for each stadium.
C). Tax collection: The State where the Major Leage Baseball clubs are located shall be responsible for collecting the Stadium Naming Rights Rebate Tax. The State shall remit the Stadium Naming Rights Rebate Tax to the Department of the Treasury Internal Revenue Service.
D). Valuation of the naming rights shall be determined by whichever is greater:
1). The dollar value stated by the Major League Baseball club or
2). The assessed estimated exposure value based on indexed gross receipts or sales as reported on IRS form 1120, line 1a or on an IRS special return. Re-evaluation of the assessed value shall take place every third year or earlier, as deemed appropriate by the Department of the Treasury Internal Revenue Service.
E). The Penalty for each Major League Baseball club and the Major League Baseball Entity for failure to pay the tax on time:
- Department of the Treasury Internal Revenue Service fines: The Major Leage Baseball club and the Major Leage Baseball Entity shall be fined an amount equal to the failed tax payment plus 100% of that failed payment. After one year, the fine shall increase to 1,000% of that failed payment.
The Major Leage Baseball club and the Major Leage Baseball Entity shall each be responsible for half of the penalty.
- Cancellation of the Federal tax exemption: Section 103(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: The Federal tax-exempt status for the municipal bonds used to finance each specific Major Leage Baseball club professional stadium shall be immediatly cancelled by the Department of the Treasury Internal Revenue Service for failure to pay the Stadium Naming Rights Rebate Tax.
Effective Date.—The amendments made by this section shall apply to bonds issued before and after the date of the enactment of this Act.
F). Funding: The Stadium Naming Rights Rebate Tax Bill shall use existing Department of the Treasury Internal Revenue Service funding to implement the law.
Definitions:
The term ‘professional stadium’ means any facility (or appurtenant real property) which, during at least 5 days during any calendar year, is used as a stadium or arena for professional sports exhibitions, games, or training.
The term Major League Baseball Club or “Major League Club” means any professional baseball club that is entitled to the benefits, and bound by the terms, of the Major League Baseball Constitution (adopted in 2000, replacing and modeled on the Major League Agreement in effect from 1921 to 2000).
The term Major League Baseball Entity means each of, and “Major League Baseball Entities” means more than one of, the Office of the Commissioner, its Bureaus, Committees, Subcommittees, and Councils, The MLB Network, LLC, MLB Advanced Media, L.P., MLAB Acquisition Corp., SportsOnEarth LLC, Major League Baseball Enterprises, Inc., (doing business in its own name and as Major League Baseball Productions), Major League Baseball Properties, Inc., Baseball Television, Inc. (d/b/a Major League Baseball International), Major League Baseball Clubs, and each of their subsidiaries or Affiliated entities, any entity which, now or in the future, controls, is controlled by, or is under common control with the Major League Baseball Clubs or the Office of the Commissioner of Baseball, and the directors, officers and employees of the above entities, and/or any of their respective present or future affiliates, assigns or successors.
End of text – – The Stadium Naming Rights Rebate Tax Bill.
Terms:
Sold or Rented
Naming rights are almost never actually purchased — they are rented.
A naming rights deal is (an) intangible asset with many rights that might include: The right to have the in-game announcer say the stadium name and/or other sponsored messages about the company a certain number of times throughout every home game; The right to have the stadium name used in all official press releases of the stadium’s home team; Discounted options on buying certain TV commercial slots during televised games; The right to exclude competitor companies from advertising in the stadium and/or adjacent buildings; and more.
https://axiomalpha.com/the-economics-of-stadium-names/
Gross receipts or sales as reported on IRS form 1120:
https://www.irs.gov/pub/irs-pdf/f1120.pdf
https://www.irs.gov/pub/irs-pdf/i1120.pdf
Taxable Estimated Naming Rights Exposure Values Index
The index is the statistical measure of change in a representative group of individual data points and administered by the Internal Revenue Service to establish assessed naming rights taxable values.
Individual data points used in the index include:
1) Attendance at the stadium – – the more people go to the stadium, the more people see the naming rights signage.
2) TV and internet revenue — the more people watch teams on TV or the internet, the more people see the naming rights signage.
3) How a team finishes in the standings — the better a team does, the more attention and exposure naming rights signage gets.
4) How far a team goes in the playoffs — If a team goes to and performs well in the playoffs, for example, if a team goes to their respective League Pennant Playoffs or the World Series, it’s naming rights exposure value gets skewed upward.
Using standings and playoff performance data points, the better a team does, the more tax revenue is returned to the respective municipal or state goverments.
The index provides an incentive for local fans to cheer for their local teams.
5) Gross receipts or sales as reported on IRS form 1120.
Tax Exempt Status For Municipal Bonds:
“The value of bonds used to finance stadiums is influenced in part by how the team performs on the field. Better teams attract more fans, whose money is used to service the tax-free bonds.
In 2016, when the Mets were winning, Moody’s Investors Service upgraded the stadium’s bonds from a rating of Ba1, speculative and near “junk” status, to Baa3, a slightly higher rating meaning that the bonds were “investment grade.”
Investors are more willing to buy highly rated bonds, just as baseball fans are more willing to support teams with better hitters….” and vice versa.
https://stateline.org/2016/07/11/amid-building-boom-debate-over-publicly-funded-stadiums-goes-on/
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Taxable Estimated Naming Rights Exposure Values Index
Click to view the full Stadium Rebate Tax-Tax Year 2022
In the tax year 2022 calculation:
Rebates to States and Municipalities Totaled $26.7 Million
Rebates to States and Municipalities Averaged $1.5 million
Highest Rebate — Atlanta $2.7 million
Lowest Rebate — Miami $839 thousand
The average Taxable Estimated Naming Rights Exposure tax ($1.5 million)
amounts to less than half of one percent (0.0044) of the average
Major League Baseball Club’s total revenue ($344 million).
The National League Divisions had nine instances of
Rebates to States and Municipalities.*
The American League Divisions had eight instances of
Rebates to States and Municipalities.*
National League West (millions of dollars)
$1.6 San Diego Padres
$1.1 Arizona Diamondbacks
National League Central
$1.3 Milwaukee Brewers
$1.0 Pittsburgh Pirates
$0.9 Cincinnati Reds
National League East
$2.7 Atlanta Braves
$2.3 Philadelphia Phillies
$2.1 New York Mets
$0.8 Miami Marlins
American League West
$2.5 Houston Astros
$2.0 Texas Rangers
$2.0 Seattle Mariners
American League Central
$1.1 Chicago White Sox
$1.1 Minnesota Twins
$1.1 Cleveland Guardians
$1.0 Detroit Tigers
American League East
$0.9 Tampa Bay Rays
*Estimates of rebates shown in millions of dollars
Footnotes:
- Axiomalpha The Economics of Stadium Names: Sell your stock in (most) companies that buy them. “… naming rights are almost never actually purchased — they are rented.” A naming rights deal is (an) intangible asset with many rights that might include: The right to have the in-game announcer say the stadium name and/or other sponsored messages about the company a certain number of times throughout every home game; The right to have the stadium name used in all official press releases of the stadium’s home team; Discounted options on buying certain TV commercial slots during televised games; The right to exclude competitor companies from advertising in the stadium and/or adjacent buildings; and more. https://axiomalpha.com/the-economics-of-stadium-names/ ↩︎
- Forbes https://www.forbes.com/sites/kristidosh/2019/05/28/what-are-naming-rights-deals-in-major-league-baseball-really-worth/ ↩︎
- Bleedcubbieblue https://www.bleedcubbieblue.com/2020/6/20/21297343/wrigley-field-named-after-cubs-owner-not-the-gum-company-proof ↩︎
- Massachusetts Historical Society https://www.masshist.org/beehiveblog/2017/07/from-fenways-past/ ↩︎
- Wikipedia https://en.wikipedia.org/wiki/Milwaukee_County_Stadium ↩︎
- Wikipedia https://en.wikipedia.org/wiki/List_of_current_Major_League_Baseball_stadiums ↩︎
- https://en.wikipedia.org/wiki/Tropicana_Products
↩︎ - Wikipedia https://en.wikipedia.org/wiki/Kauffman_Stadium ↩︎
- Kansas City Star “Secret memo reveals ‘staggering’ cost of new Royals stadium for Jackson County taxpayers”. Kansas City Star. 2023. ↩︎
- AP Voters reject stadium tax for Royals and Chiefs, leaving future in KC in question https://apnews.com/article/chiefs-royals-kansas-city-stadiums-e9605296b85e91699441e4ba10e83212 ↩︎
- By Ichabod – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=28127467 ↩︎
- “I’m Jane Hague, Chairperson of the Metropolitan King County Council and a hostage of professional sports.”
was the County Chairperson’s testimony before the Congress of the United States of America in 1996. Fan Freedom and Community Protection Act of 1995: Hearing Before the Subcommittee on Commerce, Trade, and Hazardous Materials of the Committee on Commerce, House of Representatives, One Hundred Fourth Congress, Second Session, on H.R. 2740, May 16, 1996, Volume 4 page 99; prepared statement page 101.
https://books.google.com/books?id=ChcqAAAAYAAJ&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false ↩︎ - Statista https://www.statista.com/statistics/1125149/wealthiest-mlb-teams-owners/ ↩︎
- Yahoo Sports https://sports.yahoo.com/18-richest-mlb-owners-2023-175352774.html?guccounter=1 ↩︎
- Wikipedia https://en.wikipedia.org/wiki/Deutsche_Telekom ↩︎