A taxing situation
Asking visitors to foot the bill for sports facilities just isn't right
Posted: Tuesday January 27, 2004 6:35PM; Updated: Tuesday January 27, 2004 6:35PM
Is there anything more galling than checking out at the hotel front desk or car-rental counter and getting hammered with hidden fees? Hey, I'm as big a sports fan as the next guy -- but don't ask me to help foot the bill for Comerica Park, American Airlines Arena or any of the other new sporting digs in somebody else's town.
Not even Reliant Stadium, the fancy host to Super Bowl XXXVIII.
Actually, nobody bothers to ask -- and that's the problem. States and local municipalities know better than to put stadium or arena funding referendums before the local voters, so it's become increasingly popular to levy a tourism tax on hotels and car rentals. In other words, hit up the clueless out-of-towner to build facilities aimed at keeping the local sports franchise owner fat and happy.
This pass-the-bill epidemic is sadly sweeping the country. At last check, 35 percent of the professional sporting venues built since 1990 have been funded in part by tourism taxes, with an average $28 million contribution per facility. That's the word from Judith Grant Long, whose Harvard doctoral thesis, "Full Count: The Real Cost of Public Subsidies for Major League Sports Facilities," is widely considered the most comprehensive research on the subject.
"A big part of the appeal here is tourism taxes are perceived generally as being paid by non-residents," said Long, professor of Urban Planning and Development at Rutgers University. "So politically, in terms of local support for any changes to tax regiment, that makes it very popular. And because tourism expenses tend to be business-related and tax-deductible, that means that tourists are relatively price insensitive.
"If you are traveling for business, you may be mad because you're paying that 10 bucks [in taxes], but it's not coming out of your pocket. So taxes don't have a huge impact on the local demand for tourism. And so the general idea is whenever you increase the tourism tax that is great because somebody else paying for it."
Yeah, right. It's just hitting up the wrong folks.
Check out the Super Bowl scene in Houston, where civic leaders are rightly proud to talk up a $1 billion building spree that in the last three-plus years opened venues for the Astros (Minute Maid Park), Texans (Reliant Stadium) and Rockets (Toyota Center). We're told close to $700 million of that is public money. Left unsaid is that a fair chunk of that is coming from the pockets of tourists and business types paying an additional 2 percent tax on hotels and a 5 percent tax on car rentals.
We're talking about a city that loves sticking it to its guests. The hotel tax in Houston is up to 17 percent, highest in the nation. And the car rental tax at Hobby International tops 27 percent.
If you could get a room this week at the Marriott -- and you can't because they're booked solid with a three-night minimum for the Super Bowl -- it'd run you about $2,100 for seven nights. That's not including almost $370 in taxes, including a $43 contribution for the Houston sports facilities.
"I know some people see the bill and it is 17 percent [in taxes], and some do require an explanation," says Ovidio Vela, who works in sales and catering for the Houston Marriott. "But it is throughout Houston. We're not the only hotel that does it."
It's the law, and it isn't a single-city phenomenon. Across the state in Big D, Jerry Jones is pushing for $450 million in hotel and car-rental taxes to construct a new stadium for his Dallas Cowboys. The new digs for Mark Cuban's NBA Mavericks are financed in part by a 2 percent hotel and 5 percent car-rental tax.
When Atlanta officials signed off on a 3 percent rental-surcharge to help finance Phillips Arena, they estimated 80 percent of the tax would be collected in the vicinity of Hartsfield International Airport. Get it? Not the locals, but out-of-towners would bear the cost.
Another beauty is the so-called sin tax. Remember the pitch that state lotteries were created to generate dollars for education? A noble cause, we agree. Except in Baltimore and Seattle, scratch tickets and the "Big Game" also help fund the baseball and football stadiums.
In Cuyahoga County, Ohio, if you light up (4.5 cents a pack of cigarettes) or drink ($3 a gallon on liquor and 16 cents per gallon on beer), you're also paying to service $117 million in bonds for Cleveland's Jacobs Field and Gund Arena complex.
The locals usually go with the flow if it isn't costing them, but not always. A noteworthy exception is the effort of former Florida Marlins owner John Henry (now of the Boston Red Sox) to impose a 4 percent ticket tax on the cruise ship industry in Miami to pay for a new ballpark -- a proposal that was soundly rejected. No word on whether Mr. Henry is angling to tax fishing licenses throughout New England in a bid to further spruce up Fenway Park.
What we do know is there is something ethically distasteful in all the myriad of hidden taxes. Heck, in most cases, there's nothing even close to a nexus between the tax and the sporting facility itself. So what gives?
"It is the old element of self interest," Long said. "Humans will always ultimately do whatever is in their own self interest. Why would anybody want to increase their own tax load when they can off load it to somebody else?"
How about because it's not right? Because that clueless somebody else shouldn't be left to pick up the tab.
Mike Fish is a senior writer for SI.com.