Daily Tax Report: State

Ohio Tax Lawsuit Keeps Major League Soccer Team in Columbus

Oct. 12, 2018, 10:17 PM

Heavy pressure from the Ohio Attorney General enforcing a unique state tax law kept a Major League Soccer team from moving to Austin, Texas, despite the owner’s wishes.

For the first time in the U.S., a state law based on public tax assistance stopped a major pro sports team from leaving. On Oct. 12, the Cleveland Browns’ owners announced they were part of a group negotiating the sale of the Columbus Crew, which Attorney General Mike DeWine (R) sued this year to force into negotiations.

Up until now, sports teams have used the U.S. Constitution to batter down all attempts to keep squads from leaving. Ohio’s stadium-tax law (R.C. 9.67), which requires a team to offer local buyers a chance to purchase a team that receives public support, survived motions from league attorneys arguing that forced negotiations would violate the team’s rights. The Crew received at least $6.6 million from Columbus and Ohio for stadium infrastructure improvements.

That tune changed Oct. 12.

“MLS, the Columbus Partnership and the investor group all agree that for the club to be successful in Columbus, it requires strong local partners, long-term corporate support, a strong season ticket base and long-term plans for a stadium, practice facilities and associated sites,” the league said in a statement. “MLS is committed to keeping Crew SC in Columbus should we continue to make progress on these critical components and agree to key terms with the investor group.”

DeWine also crowed about the announcement.

“I am proud of the work our legal team has done in ensuring Ohio’s laws are followed and the door has been kept open to productive negotiations,” he said in an Oct. 12 statement. “Our community has invested in this team and deserves the opportunity to keep the black and gold right here, where they belong.”

The MLS said it is still committed to placing a team in Austin.

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

To contact the editor responsible for this story: Cheryl Saenz at csaenz@bloombergtax.com

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