Daily Tax Report: State

Cleveland’s NFL Draft Bid May Be Bolstered by Expanded Tax Perks

Dec. 6, 2018, 4:55 PM

The Ohio Legislature is willing to throw Hail Mary grants to event organizers in hopes that Cleveland can land a future National Football League Draft.

The Ohio Senate passed a bill (H.B. 531) Dec. 5 that would create a “Sports Event Grant Fund” fueled with state sales tax revenue from events. The money would be divvied up in grants to organizations pitching leagues on bringing big events to the Buckeye State.

The bill has the backing of the Cleveland Browns, which said grants could help win the city’s 2020 or 2021 bid for the NFL Draft. The measure is supported by a who’s who of Ohio sports: the NHL’s Columbus Blue Jackets, the NBA’s Cleveland Cavaliers, The Ohio State University, and MLB’s Cleveland Indians and Cincinnati Reds all back the measure they say could bring huge events, and huge tax revenue, to the state.

“In its selection process, the NFL explicitly considers the availability of incentives,” David Jenkins, executive vice president and chief operating officer of the Cleveland Browns testified in a November hearing on the bill. “Passage of H.B. 531 this year would greatly strengthen our bid and increase the likelihood that the NFL draft, one of the largest sporting events in the country, will be held in Northeast Ohio within the next two years.”

Ohio already has had some success in drawing large sporting events: Columbus hosted the 2015 NHL All-Star Game and Cleveland is set to host both the 2019 MLB All-Star Game and the 2022 NBA All-Star Game.

Sales Tax Capture

The bill expands the Ohio Development Services Agency’s authority by eliminating the $1 million annual cap on state grants for event organizers and the $500,000 cap on grants per event. The proposal also expands the grants to include baseball events and drafts.

The process works by allowing an organizer to receive up to 50 percent of the projected increase in state sales tax from an event.

Ohio Municipal League executive director Kent Scarrett testified in November that in addition to sports teams, local governments benefit because “millions of dollars in economic activity are created by these kinds of events.”

The bill now heads to Gov. John Kasich (R). His office declined to comment on whether he’d sign the bill.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Megan Pannone at mpannone@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.