Tax Subsidies

From Fair Pay, Fair Play pages 36-44.

Indianapolis has two pro-sports teams—the Indianapolis Colts and the Indiana Pacers. The city (and other taxing authorities) put up $590 million to fund a new football stadium in the early 2000s. When Indianapolis resident Fredrick McCarthy heard the initial announcement, he said the city couldn’t afford it and the Colts shouldn’t be singled out for government help: “I don’t see why it should be subsidized any more than a bowling alley or theater.”

In January 2005, team president Bill Polian spoke to the Indianapolis legislature. Like the Detroit Lions, he defended the team’s demand for the huge subsidy by crying poor (versus other teams). He also reminded them what was at stake “It doesn’t just say Colts on the jerseys,” he told lawmakers, “It says Indianapolis Colts.”

When Indiana Governor Mitch Daniels went to the counties around Indianapolis to sell his tax plan for the new stadium he heard from Frank Stockton “I’m all for spending money, but let’s spend it right. Let’s take care of the children before we take care of professional football players.” And he heard from retiree John Lewis: “All my coffee buddies got up in arms when it came out that you were going to tax doughnuts.”

In 2014, Indianapolis owner Herb Simon made a similar argument to defend is call for public funding:

“We are doing much better than we did the last couple of years, but we still only average $700,000-and-change [a] game in ticket revenue. Other cities get $2- to $3-million a game, and the interesting thing is, we all have the same salary cap. So for Indianapolis to be competitive, we have to pay up to the [threshold where the luxury tax kicks in] and that rises every year, because new arenas are coming online and guys are getting $2- or $3-million gates. Indianapolis is still a small-tier market, and we are struggling to get $700,000 or $800,000.”

That rationale helped the Pacers sign a deal that year which gave them $160 million over 10 years to support their operations. And like the Colt’s deal, people like local councilman, Zach Adamson were left wondering about the continuing prioritization of sports subsidies: “I love having professional sports in town, but there comes a point in time when you have to ask yourself what you can afford. Is it something we can obligate the taxpayers to fund when we don’t have enough to fund the things we are obligated to pay for, like road repair and police officers?”

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