After an early stint in Philadelphia, a few years in Kansas City and, since 1968, a home in Oakland, Calif., the Athletics are once again on the move. The MLB franchise has targeted a plot of land where the Tropicana currently sits for a new stadium in Las Vegas, and is demanding hundreds of millions in taxpayer dollars to move there.
This is a bad tax deal for Las Vegas, a bad deal for Nevada, and sets a bad continuing precedent for using public funds to line the pockets of private sports team owners. Nevada should tell the ownership of the Oakland Athletics—Gap heir John J. Fisher—to pay their own construction costs or stay in Oakland.
Let’s take a look at the good, the bad, and the ugly of the nascent deal’s tax ramifications.
By any metric, the all-in tax burden for Nevada is substantially lower than neighboring California, which consistently ranks among the highest tax states, while Nevada is near the middle of the pack. This is considering not just income tax, but all relevant state and local taxes—from sales to fuel surcharge and property taxes—that have a tax incidence on individuals.
The Oakland A’s payroll is a positively microscopic $59 million for 2023; compare that against the New York Yankees’ $273 million, with Aaron Judge alone making $40 million. That, from a performance on the field to pay ratio perspective, would mean Judge, if he played for the A’s, would have to bat in spots 1 through 6 in the lineup, with 3 other guys rounding out the other times at bat. Defensively, he’d also have to play every position save pitcher, catcher, and maybe first base. That’s a lot of work.
All that to say, the A’s aren’t a team that pays its players particularly well. Baseball players, along with other athletes, pay taxes in every state they pay—at least ostensibly. The reality is a player files a nonresident return in states they don’t reside in, reducing the resident state tax burden.
However, that means where the team is located accounts for which state about half of a player’s games will be played. The structure of an individual player’s deal may alter these general principles, but mainly the move will save players substantially on income tax. Nevada doesn’t have one, and California is the highest top bracket in the nation at 12.3% with an additional 1% on income over $1 million.
That’s about the sum total of the good things to say about this deal.
The A’s ownership were initially hoping to raise $500 million in public funding through a planned special tax district around a new ballpark—they even claimed to have entered in to a “binding agreement” to acquire land for the deal. But things change quickly, and in the latest iteration of the deal, the ownership is looking for $395 million, a comparative bargain. The upshot to the revised deal is the ownership wouldn’t need to purchase the land, as it is already under a 50-year lease agreement between Bally’s and the landowner, Gaming and Leisure Properties.
If history is any guide and the Raiders football team (also formerly of Oakland and now of Las Vegas) is prologue, there will be a non-relocation agreement attached to the funding. The Raiders have to stay Vegas for 30 years to receive $750 million in public funding, generated by an additional hotel tax. The deal was never great for the state or Nevada taxpayers, but it got worse during the Covid-19 pandemic, when hotels were shuttered or operating substantially below capacity.
Studies and surveys of the economic effects of stadium building has shown limited positive—and in some cases even negative—socioeconomic effects. Nevada, with no income tax, won’t even see revenue generated from the salaries of a squad of millionaire baseball players (assuming with the move the ownership starts paying its players).
There’s also a wealth redistribution in the wrong direction. The cost of the bonds or tax credits generally will be borne by taxpayers, and the benefits will flow mostly to ownership—who, by even the conservative numbers being bandied about, will be getting a 25%-off coupon for their new digs. That’s in addition to whatever property tax abatements will almost certainly be included in a final deal.
Money spent courting a team with an ownership that doesn’t care about the fan base would be better spent on projects that would directly improve the quality of life for residents such as, perhaps, funding education.
Bottom line, public funding for sports stadiums is a bad deal for the taxpayer. This is doubly true when it is for a team that doesn’t spend on players and development and has the correspondingly abysmal turnout numbers to match.
Finally, the Oakland Coliseum is, by almost universal acclaim, America’s ugliest ballpark. Visiting teams hate it, the A’s hate it, and seemingly everyone detests the place save for the opossums that live in the walls.
If nothing else, barring the ownership reaching new heights of cheapskatery and putting the ballpark on logs and rolling it to Nevada, the deal will spell the end of the Coliseum—which may be the one other good thing about the deal, after all.
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @firstname.lastname@example.org.