Property Tax Post: Some Sports Stadiums Are Sacking Property Tax

Football season is back in full swing, and football loyalists will likely agree that nothing beats the opportunity to experience game day in the flesh. In 2016, the NFL sold over 30 million tickets at an average price at $81.54 apiece, according to Statistic Brain Research Institute. One would think that the athletic stadiums that professional sports teams call home may also have the capacity to generate a tremendous amount of property tax revenue for state and local governments, but this is not always the case. Hundreds of sports stadiums have popped up in the U.S. over the last two decades, and many of them were constructed with public funding, according to Pacific Standard. It is likely that many of them are exempt from property tax, as property owned by states, counties, cities and other political subdivisions is often exempt when held for a public purpose.

Take AT&T stadium in Arlington, Tex., for example. The stadium is owned by the city, making it public property.[1] And, although most sports fans know it as the home of the Dallas Cowboys, it also contains an art museum and offers educational tours for the public. Texas law explicitly provides that property owned by the state or a political subdivision is exempt from property tax if it is used for a public purpose.[2] As such, the stadium fits the bill and qualifies for an exemption from property tax based on its ownership and use.

Despite complaints over the use of public monies to build sporting facilities,[3] there are those that have been constructed using private funds. But that doesn’t mean that cities and counties that are home to these privately-owned stadiums are maxing out on potential property tax revenue. Gillette Stadium, for instance, home to this year’s Super Bowl champs, the New England Patriots, is owned and controlled by The Kraft Group.[4] Massachusetts law generally provides that privately owned for-profit athletic facilities, amusement parks, and water parks are subject to property tax;[5] however, reports indicate that the Foxborough, the town where the stadium is located, accepted a payment in lieu of taxes (PILOT) from a portion of ticket sales made at the stadium. In February 2016, The Kraft Group pointed out that “[t]he stadium’s event season for Fiscal Year 2016 … generated the most … [PILOT] revenue in town history.” Moreover, a June 6, 2017, Standard and Poor’s increased the town’s credit rating, reporting that that town officials anticipated a surplus based primarily on the Gillette Stadium PILOT and building permit revenues.

Met Life Stadium, located in East Rutherford, N.J., and home to both the New York Giants and Jets, was also financed with private revenue. Similarly, rather than paying property taxes, the borough agreed to accept a sizeable payment in lieu of taxes paid through the New Jersey Sports and Exposition Authority, the state agency which owns the land on which the stadium is constructed.

Although stadium owners’ payments can be quite substantial, generally speaking, PILOT contributions generate less revenue than what property taxes would if they were assessed against all or part of the property’s value. But such agreements are often tradeoff for the economic growth and/or increase in tax revenue generated by other tax types, which is anticipated to result from the activities these stadiums have to offer. That being said, this situation is not necessarily the same for all teams. The Miami Dolphins, the Carolina Panthers, and the Washington Redskins reportedly “pay property taxes on their stadiums,” according to the Miami Herald.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Does your favorite sports team pay property taxes on its stadium?

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[1] The facility was reportedly constructed using revenue generated by the city’s sale of more than $200 million dollars’ worth of bonds, which are being paid with from a percentage of sales and excise taxes collected. 

[2] Tex. Tax Code Ann. §11.11(a).

[3] Click here for look at data on both publicly and privately funded sports stadiums.

[4] The land beneath the stadium belongs to the town of Foxborough and is tax-exempt.

[5] Mass. Gen. L. ch. 59, §2.