Monday, February 17, 2014

"Field of Schemes" Author Says Publicly-Funded Indianapolis Soccer Stadium Would Generate Little Tax Revenue, Leave Taxpayers Holding the Bag

Neil deMause, the author of the excellent book, Field of Schemes, and blog of the same name takes a look at Indy Eleven's owner Ersal Ozdemir's presentation to the House Ways and Means Committee and finds it contained outrageous demands and phony numbers:
Speaking of outrageous demands, expansion minor-league soccer team owner Ersal Ozdemir went before an Indiana state house committee on Thursday to ask for $87 million to build a major-league-ready stadium for his Indy Eleven, and this happened:
Several members of the House Ways and Means Committee thanked Ozdemir for investing in the North American Soccer League franchise Indy Eleven, which begins its inaugural season in April. While members had questions about the proposed financing of the 18,500-seat venue, they did not question its impact on other taxpayer-supported venues downtown.
... 
(That reference to “impact on other taxpayer-supported venues” is a reference to the fact that the stadium is proposed to be a concert venue, which could end up drawing acts away from the Pacers‘ Bankers Life Fieldhouse.) 
The funding plan for the proposed stadium would require the state to provide $5 million a year to pay off the stadium bonds, drawn from ticket taxes (estimated at $5.1 million a year) plus sales and income taxes paid by the team (estimated at $4.1 million a year). The latter would largely be a taxpayer subsidy, thanks to the substitution effect, but if the entire nut can really be provided by ticket tax money, that wouldn’t be so bad, since ticket taxes largely come from team owners’ pockets (by lowering the face value that teams can get away with charging).
That’s assuming that the $5.1 million a year projection for ticket taxes is legit, of course. If Indy Eleven tickets are taxed at the current 10% rate that other teams are charged, that would require $51 million a year in ticket sales. The average MLS team sells about 300,000 tickets a year, at an average of $26 a ticket, which comes to … just shy of $8 million. That would generate just $800,000 in ticket taxes, leaving $4.2 million a year to be paid off by sales- and income-tax kickbacks.
The members of the House Ways and Means Committee deserve criticism for not spending the "two minutes" that deMause said spent (according to his Twitter comment) to figure out that Ozdemir's numbers don't add up.

1 comment:

Flogger said...

Our elected officials have some "dim bulbs" but they are also a servile lot when the moneyed aristocracy pays a visit.