Friday, February 27, 2009

Sports Porkulus 

There has been some speculation around here lately about how much of the stimulus money will go to professional sports. Interestingly, there was an attempt to explicitly prohibit the use of stimulus money for professional sports in the early going. Senator Tom Coburn (R-Okla) introduced an amendment to the stimulus bill
None of the amounts appropriated or otherwise made available by this Act may be used for any casino or other gambling establishment, aquarium, zoo, golf course, swimming pool, stadium, community park, museum, theater, art center, and highway beautification project.
that passed the senate on February 6th. However, this section got changed in the conference committee. The final wording in the stimulus bill is
None of the funds appropriated or otherwise made available in this Act may be used by any State or local government, or any private entity, for any casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool.
The full text of the final stimulus bill can be found here. What remains of Senator Coburn's amendment, Section 1604, (the text above) can be found on page 189.

So the congress has spoken. No stimulus money for zoos, gambling, or golf courses, but feel free to shower stimulus money on stadiums. My hat is off to Senator Coburn, and shame on whoever eliminated the prohibition against stimulus money for stadiums in the conference committee.

Hat tip to Emily Sparvero.

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Monday, September 22, 2008

New York PILOT Decision, Part II 

I was in Washington DC last Thursday testifying in a hearing that is part of the ongoing investigation by the House Committee on Government Reform, Subcommittee on Domestic Policy into the financing of the New Yankee Stadium in the Bronx. For those who have not been following this controversy, here's a brief summary:
  • 1986: Congress passes a law (the Tax Reform Act) that says sports facility construction projects can only be financed with tax exempt bonds if the principal and interest are paid using tax revenues.
  • 2006: The IRS issues Private Letter Rulings that allow New York City and the Yankees (and later the Mets) to finance the construction of two new baseball stadiums using tax exempt bonds and pay off the principal and interest on these bonds using payment in lieu of taxes (PILOTs), and not tax revenues collected by New York City or the State of New York. This ruling effectively guts the 1986 Tax Reform Act. The rationale for this decision was that these stadiums would generate significant positive economic impact in the community, and thus serve the public interest.
The Subcommittee web page has a lot of information on this issue, including video of the hearing and the written statements of all the witnesses. A lot of interesting information came to light in this hearing, including the fact that the justification given by the City of New York for pursuing this course of action was that both teams threatened to leave the city if they didn't get what they wanted, and that the City fudged the assessed value of the New Yankee Stadium significantly in order to make the project qualify for PILOTs.

The PILOT issue is interesting for several reasons: it's a clear example of the tensions that arise between the people who make the laws (Congress) and the people who implement the policies that are dictated by those laws (the IRS in this case); it makes for great political theatre, as the parties involved are high profile organizations; and as Dennis Zimmerman pointed out in his testimony at the March 29th 2007 hearing, the PILOT decision has a desirable, although probably unintended consequence of forcing the one group of taxpayes who benefit most from the new stadium (sports fans) to pay for the majority of the financing.

Somewhat predictably, the Yankees and NYC have stuck to their orginal claim that the tangible economic benefits justify the ruling, rather than the more creative position that, despite the bad intentions surrounding the PILOT decision, it actually results in almost good economic policy. I say almost good because the lower interest rates on those tax exempt bonds represent an implicit subsidy from every taxpayer in the United States to baseball fans in New York City.

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Thursday, May 01, 2008

Emerging scandals? 

If the favorite, Big Brown, wins the Kentucky Derby, expect the tone of the news coverage to change. His trainer has a history of doping that the mainstream press is putting aside in the usual rose-colored pre-race stories. Journalist Paul Moran has the story though, at his blog. Oddly, the story comes via the New York Times top horse racing writer Joe Drape, whose blog "The Rail" gives outstanding coverage of the Triple Crown. This is my first stop for horseracing news these days.

As an aside, I think that doping and horses provides a good example of the social costs of doping in general. The Nash equilibrium is to dope, and it has been going on for decades. But doped, muscle-bound thoroughbreds are more likely to suffer a catastrophic injury than horses that run clean. (Granted, I think the links here are much stronger than with humans.) Drape has a good post on this issue as well, "The Last Winstrol Derby?", which discusses the possibility that American racing will ban & test for steroids in the near future. Winstrol has been used on horses long before it was injected - allegedly - into Roger Clemens' butt.

And now to the land of scandals, European soccer. This time we go off the beaten path, to Romania, and the run-in for the league championship. The story has everything: ethnic tension between the two protagonists, allegations of payments to referees, payments to opposing teams, and mafia-like sniping between the clubs.

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