I am not saying it is going to happen (or not happen), but the understanding of how the bond works is key to understanding how this can be potentially good.
Maybe I misunderstood, but you wrote, "Oregon would theoretically tax the salaries of baseball players, coaches, and staff who work at the new stadium." Who is "staff"? Is that just the GM and front office individuals? Or does that include the beer vendors, ushers, groundskeepers, and others who would pay their regular income taxes + whatever the "jock tax" is?
Excellent report John. Lot's of people only read headlines and fail to understand how this tax works. My nephew, who played pro football clued me in on the intricate details of how much he was taxed state by state whenever and wherever his team played. Professional (and college) sports add revenue to states if yuou consider hotels, restaurants, travel, etc. I hope this comes to fruition for Portland. The city can certainly benefit at this juncture.
At this point, I think that is unlikely. The reason it works so well for pro-athletes is that they are paid on a game by game basis. Most NIL contracts are not written that way. It is more like how you or I might get paid if we worked for ACME company and traveled to different sites around the country. You still only pay taxes where you live. This is even true if you live in one state and work in another (which can be really good for people living in Washington and working on Oregon).
Was going to reply pretty much the same. Going back to Steph Curry as an example, while OR taxes him for each game he comes here to play the Trail Blazers, the state doesn't tax him on any of the money he makes from Under Armour for wearing their sneakers, or payment for any other product he hawks....NIL is pretty much the same thing as endorsement deals that pro athletes do.
I just don't understand how anyone can't see the economic benefit of an MLB franchise in the city. When I Lived in PDX I shared Ms tickets for close to 20 years. Hotels, meals and more from THOUSANDS of visitors every year. Not to mention the jobs from construction ...all of that a HUGE economic benefit for years to come. And cleaning up and beautifying an up ugly part of the waterfront...HUGE> I think in 1964 voters in PDX turned down the Delta Dome by a small % of voters. If built the Raiders from the AFL were moving here. What would an NFL franchise done for the city at that point? Don't be shortsighted. The tax money is not going to magically be here without it...so let's get er done.
No surprise that the Yankees, Dodgers--and the handful of other wealthy baseball franchises--would want to add Portland. It would be another nifty farm team, like Seattle, Oakland, K.C., Minnesota, Milwaukie, Pittsburgh and so on....small to medium market teams with no chance of building a sustainable winner. Every now and then one catches lightning in a bottle for a season, then the rich teams lure away the stars with ungodly salaries. As a fan of one of those teams, I'd say be cleared eyed about what you'll be getting, Portland. Maybe if you're lucky get to the World Series every 25 to 50 years. Why? Because baseball refuses salary caps--you know, those things that make the NFL, NHL and NBA perpetually competitive. As a result, MLB championships are for the richest teams only. The Dodgers are paying Ohtani almost as much per year as the Pittsburgh Pirates can afford for their entire roster. Could the Pirates pay a little more? Sure. But match the Dodgers, whose roster earns more than three times as much? No way.
Plus MLB owners refuse to equaly share revenue, which ensures only the rich big city teams stay rich. There's a reason the NFL is so consistently competitive. MLB? Never!!!
Glad you shared the Info: I saw a social media claim, of asking $800M from Taxpayers. Must admit, all of us taxpayers are sick of new $ sucking out of our bank accounts every year...I see fees added to: my cable bill, my cell phone bill, my gas bill, yadda yadda.
Here is what not being said: who pays for maintenance on the stadium? Upgrades? Will the owners go to voters to pass a levy? Who will control the parking dollars? What is the level of commitment from the owners to give back to the community? Bonds are not free. Someone pays to float the bond. I’ve not seen the answers to these questions.
Perhaps one of the questions from the Legislature could be, "what would be your proposal on ticket surcharges/fee that would be handed over to offset increased costs to local government, with the actual users (baseball fans) being a primary contributor?"
I understand the concept: this is a source of tax revenues that we won't have unless the stadium is built. It is not a new tax. It's just a new way of allocating the incremental tax revenue from MLB.
However, if the median payroll of an MLB team is $160,000,000 and Oregon get's 10% of that, that is only $16,000,000. That doesn't seem to be enough to pay the interest on $800,000,000 in bonds, let alone provide funds to retire the bond. Is there some math that's not apparent?
The Minnesota Vikings did this with their stadium. The bond was set to be paid back in 2043. They paid it back in 2023 -- 20 years ahead of schedule. The tax revenue soared above what they expected.
This bill in Oregon would require the bond to be paid back in 30 years... after which the tax revenue from the salaries would be paid into the state’s general fund.
Ok so let's say the coupon rate is 5% and you said the tax rate was 10% so that is 8 million a year in interest for 30 years this 24 million but also get 8 million to pay back bond.
A)that is invested to be able to grow and
B) that is expected to grow as salaries grow without the interest growing. With inflation rate of 2.5% in 30 years that would have grown to 350milluon in salary so 27 million that last year so that is averaged to about 18 million a year in excess beyond the interst which just in those payments gets you to 550 million of the 800 million and the other probably made up in the growth of the bond repayment fund.
Right now Portland needs SOMETHING POSITIVE in the eyes of the rest of the country. The most common thing I hear is, "Portland USED to be a nice city to visit". I'm not saying a MLB franchise is the answer to all our problems, just as an open use drug park isn't the answer to drug abuse, but......a MLB park is one-time capital investment and the "jock tax" is an everyday revenue. Let's pencil it out and see if it makes economic sense. As a bonus, it might also be FUN.
Portland has had a history of professional hockey from the days of the Portland Rosebuds up to the Portland Eagles, and subsequently the Buckaroos. The Winterhawks junior hockey team has been a mainstay for over 50 years and has produced a stream of NHL talent. The “Glass Palace” was home to the Lester Patrick Cup champions in the mid 60’s, and they owned the town along with the Portland Beavers baseball team. I long for those simpler times when those sports were played by men who were your neighbors, not multi million dollar prima donnas. Players who often had off season jobs to make ends meet.
Jim - I wholeheartedly agree. We have the Corvallis Knights and even though a step-down from the level of those you mention, they are still fun to watch.
Unfortunately, another open drug use area might be adjacent to the stadium unless PDX is willing to put a surcharge on tickets to pay for police presence?
Well played, ES, I would like for someone to convince me that an MLB team could exist, let along thrive, around here for an extended number of years. Charlie
It would be nice to see a "total cost" estimate, and what percentage of projected taxes from players would contribute to that total cost. Not the cost to build a structure, the total cost. Changes in roads, mass transit, police presence required, subsidies, effect both negative and positive on nearby businesses, etc. Stadiums have a useful life - who pays for the dismantling, etc. when it has to be replaced, if it is replaced. What guarantee is MLB providing there will be a Portland franchise during the entirety of that projected life, and not an abandoned stadium?
There have been several studies done on projected projects like this - many without Rose City colored glasses, such as:
A Google search leads you to many more. The Legislature needs staff to peruse those studies to develop the appropriate list of questions.
Even more subjective questions such as "if you are touting economic benefits, what are your assumptions on attendance and how might those assumptions be affected by seasons with a large number of losses that lead to dwindling attendance?"
This reads like I'm casting stones, but my point is there really needs to be objective analysis, and what were the factors in successful new stadiums, and the factors that led to problems, particularly as the stadium/franchise aged.
Not only the factors you mention, but what kind of ownership group will they be? Mariners (we want to be competitive not championship quality), the A's (disaster), or the SF Giants (their CEO said the recent 10% equity sale is NOT going towards impact players. All 3 teams are showing by actions & words that winning championships are not the priority.
Hey John, I’m really torn on this “jock tax” thing. On one hand, I don’t like the idea of public tax money funding stadiums, so something that can prevent or minimize that is definitely worth considering. On the other hand, I don’t like the idea of taxing those who are not residents of Oregon for a day’s “work” in Oregon. Athletes playing in away games are essentially on a business trip. I can’t see any other type of business trip being taxed this way. Are you taxed by state and local governments on your biz trips? I don’t think you or anyone else would stand for that. So, why should pro athletes?
Its not up for debate, it's already a federal law. When JC goes on a business trip he certainly does pay taxes. He pays hotel taxes, tourist taxes, any sales tax, etc. Again, the jock tax isn't anything Portland or the state of Oregon is implementing, it already exists in every single state and the District of Columbia.
Probably one difference is many tourist taxes are discretionary. I don't necessarily have to pay taxes on a rental car if I don't rent. I don't have to eat at an expensive menu restaurant. I don't have to pay sales tax on a t-shirt I don't buy. A tax on income "earned" while in state is not discretionary. I wonder how those taxing authorities handle player income that comes from annual bonuses paid where the actually live or deferred and paid out later? How do player's agents consider that in negotiations for potential tax consequences?
Anybody can pose questions. A question is a useful tool to evaluate a proposition, but don't laud the person posing the questions as if they've provided the answers to those questions.
It is not a biz trip. They are doing the main work of the job in that state the travel too. That is different than a business trip. Like if you own a construction biz and you build in different states be sure that you will pay taxes in those states you build in.
I confess I haven’t followed this closely, but I do have a question:
Does the bond have to be “floated“ and the stadium built in order to attract an MLB team? If so, if PDX does not get an MLB team to play in their new stadium does it get stuck with the $800 million bond and no jocks to pay the jock tax?
Ignore the nay sayers John. Excellent explanation of how taxes work! Go MLB!!
I am not saying it is going to happen (or not happen), but the understanding of how the bond works is key to understanding how this can be potentially good.
Maybe I misunderstood, but you wrote, "Oregon would theoretically tax the salaries of baseball players, coaches, and staff who work at the new stadium." Who is "staff"? Is that just the GM and front office individuals? Or does that include the beer vendors, ushers, groundskeepers, and others who would pay their regular income taxes + whatever the "jock tax" is?
Excellent report John. Lot's of people only read headlines and fail to understand how this tax works. My nephew, who played pro football clued me in on the intricate details of how much he was taxed state by state whenever and wherever his team played. Professional (and college) sports add revenue to states if yuou consider hotels, restaurants, travel, etc. I hope this comes to fruition for Portland. The city can certainly benefit at this juncture.
Leads to the question, "will Oregon tax NIL income of players visiting to compete at college contests within Oregon?"
I asked the tax man about this... NIL dollars are taxed in a player's state of residency.
At this point, I think that is unlikely. The reason it works so well for pro-athletes is that they are paid on a game by game basis. Most NIL contracts are not written that way. It is more like how you or I might get paid if we worked for ACME company and traveled to different sites around the country. You still only pay taxes where you live. This is even true if you live in one state and work in another (which can be really good for people living in Washington and working on Oregon).
Was going to reply pretty much the same. Going back to Steph Curry as an example, while OR taxes him for each game he comes here to play the Trail Blazers, the state doesn't tax him on any of the money he makes from Under Armour for wearing their sneakers, or payment for any other product he hawks....NIL is pretty much the same thing as endorsement deals that pro athletes do.
Correct... endorsement contracts are taxed at the rate of your state of residency.
I just don't understand how anyone can't see the economic benefit of an MLB franchise in the city. When I Lived in PDX I shared Ms tickets for close to 20 years. Hotels, meals and more from THOUSANDS of visitors every year. Not to mention the jobs from construction ...all of that a HUGE economic benefit for years to come. And cleaning up and beautifying an up ugly part of the waterfront...HUGE> I think in 1964 voters in PDX turned down the Delta Dome by a small % of voters. If built the Raiders from the AFL were moving here. What would an NFL franchise done for the city at that point? Don't be shortsighted. The tax money is not going to magically be here without it...so let's get er done.
Steph Curry plays a game in PDX... it's worth about $70k in state income tax.
Too bad some of those potholes on 99 in Oregon City can’t be filled.
No surprise that the Yankees, Dodgers--and the handful of other wealthy baseball franchises--would want to add Portland. It would be another nifty farm team, like Seattle, Oakland, K.C., Minnesota, Milwaukie, Pittsburgh and so on....small to medium market teams with no chance of building a sustainable winner. Every now and then one catches lightning in a bottle for a season, then the rich teams lure away the stars with ungodly salaries. As a fan of one of those teams, I'd say be cleared eyed about what you'll be getting, Portland. Maybe if you're lucky get to the World Series every 25 to 50 years. Why? Because baseball refuses salary caps--you know, those things that make the NFL, NHL and NBA perpetually competitive. As a result, MLB championships are for the richest teams only. The Dodgers are paying Ohtani almost as much per year as the Pittsburgh Pirates can afford for their entire roster. Could the Pirates pay a little more? Sure. But match the Dodgers, whose roster earns more than three times as much? No way.
You're hitting on a problem for all small market entities. The NFL does this right. Everyone else... wrong.
Plus MLB owners refuse to equaly share revenue, which ensures only the rich big city teams stay rich. There's a reason the NFL is so consistently competitive. MLB? Never!!!
I’m surprised every sports team hadn’t done this already. If it works in Portland then I bet they will.
States that don't have income tax make nothing on those game nights.
Glad you shared the Info: I saw a social media claim, of asking $800M from Taxpayers. Must admit, all of us taxpayers are sick of new $ sucking out of our bank accounts every year...I see fees added to: my cable bill, my cell phone bill, my gas bill, yadda yadda.
Very interesting article. Thanks for expanding the reporting on this very important topic!
With guys like Ohtani deferring so much income won't this become the norm and the revenue generated shrink?
It's a fair point... that deferral is hurting the whole league.
It is a great point.
For salary cap calculation, does his 10 year contract count the current years for cap figuring?
Here is what not being said: who pays for maintenance on the stadium? Upgrades? Will the owners go to voters to pass a levy? Who will control the parking dollars? What is the level of commitment from the owners to give back to the community? Bonds are not free. Someone pays to float the bond. I’ve not seen the answers to these questions.
Perhaps one of the questions from the Legislature could be, "what would be your proposal on ticket surcharges/fee that would be handed over to offset increased costs to local government, with the actual users (baseball fans) being a primary contributor?"
Well played, Back, Charlie
I understand the concept: this is a source of tax revenues that we won't have unless the stadium is built. It is not a new tax. It's just a new way of allocating the incremental tax revenue from MLB.
However, if the median payroll of an MLB team is $160,000,000 and Oregon get's 10% of that, that is only $16,000,000. That doesn't seem to be enough to pay the interest on $800,000,000 in bonds, let alone provide funds to retire the bond. Is there some math that's not apparent?
The Minnesota Vikings did this with their stadium. The bond was set to be paid back in 2043. They paid it back in 2023 -- 20 years ahead of schedule. The tax revenue soared above what they expected.
This bill in Oregon would require the bond to be paid back in 30 years... after which the tax revenue from the salaries would be paid into the state’s general fund.
Ok so let's say the coupon rate is 5% and you said the tax rate was 10% so that is 8 million a year in interest for 30 years this 24 million but also get 8 million to pay back bond.
A)that is invested to be able to grow and
B) that is expected to grow as salaries grow without the interest growing. With inflation rate of 2.5% in 30 years that would have grown to 350milluon in salary so 27 million that last year so that is averaged to about 18 million a year in excess beyond the interst which just in those payments gets you to 550 million of the 800 million and the other probably made up in the growth of the bond repayment fund.
What Joel said.
Well played, Mark. Yeah. Charlie
Portland needs another failed pro sports franchise like it needs another open drug use area.
Right now Portland needs SOMETHING POSITIVE in the eyes of the rest of the country. The most common thing I hear is, "Portland USED to be a nice city to visit". I'm not saying a MLB franchise is the answer to all our problems, just as an open use drug park isn't the answer to drug abuse, but......a MLB park is one-time capital investment and the "jock tax" is an everyday revenue. Let's pencil it out and see if it makes economic sense. As a bonus, it might also be FUN.
Portland is slated to host the 2030 Women's Final Four. Hopefully by then, with or without MLB, the city will have gotten its act together.
An NHL franchise would have been far more attractive. Less expensive, infrastructure exists.
But let's face it. Who really likes hockey? Ha! Ha! And I'm French Canadian so that is a sacrilegious statement in my New England hometown!
Portland has had a history of professional hockey from the days of the Portland Rosebuds up to the Portland Eagles, and subsequently the Buckaroos. The Winterhawks junior hockey team has been a mainstay for over 50 years and has produced a stream of NHL talent. The “Glass Palace” was home to the Lester Patrick Cup champions in the mid 60’s, and they owned the town along with the Portland Beavers baseball team. I long for those simpler times when those sports were played by men who were your neighbors, not multi million dollar prima donnas. Players who often had off season jobs to make ends meet.
Jim - I wholeheartedly agree. We have the Corvallis Knights and even though a step-down from the level of those you mention, they are still fun to watch.
Unfortunately, another open drug use area might be adjacent to the stadium unless PDX is willing to put a surcharge on tickets to pay for police presence?
Lol
Well played, ES, I would like for someone to convince me that an MLB team could exist, let along thrive, around here for an extended number of years. Charlie
It would be nice to see a "total cost" estimate, and what percentage of projected taxes from players would contribute to that total cost. Not the cost to build a structure, the total cost. Changes in roads, mass transit, police presence required, subsidies, effect both negative and positive on nearby businesses, etc. Stadiums have a useful life - who pays for the dismantling, etc. when it has to be replaced, if it is replaced. What guarantee is MLB providing there will be a Portland franchise during the entirety of that projected life, and not an abandoned stadium?
There have been several studies done on projected projects like this - many without Rose City colored glasses, such as:
https://cbcny.org/research/determining-appropriate-buffalo-stadium-subsidy
A Google search leads you to many more. The Legislature needs staff to peruse those studies to develop the appropriate list of questions.
Even more subjective questions such as "if you are touting economic benefits, what are your assumptions on attendance and how might those assumptions be affected by seasons with a large number of losses that lead to dwindling attendance?"
This reads like I'm casting stones, but my point is there really needs to be objective analysis, and what were the factors in successful new stadiums, and the factors that led to problems, particularly as the stadium/franchise aged.
Not only the factors you mention, but what kind of ownership group will they be? Mariners (we want to be competitive not championship quality), the A's (disaster), or the SF Giants (their CEO said the recent 10% equity sale is NOT going towards impact players. All 3 teams are showing by actions & words that winning championships are not the priority.
Well played, Back, extremely well played. Logical and realistic (not sure I can stand it!)
Certainly more descriptive than "we'll tax somebody else and that'll cover it!"
Hey John, I’m really torn on this “jock tax” thing. On one hand, I don’t like the idea of public tax money funding stadiums, so something that can prevent or minimize that is definitely worth considering. On the other hand, I don’t like the idea of taxing those who are not residents of Oregon for a day’s “work” in Oregon. Athletes playing in away games are essentially on a business trip. I can’t see any other type of business trip being taxed this way. Are you taxed by state and local governments on your biz trips? I don’t think you or anyone else would stand for that. So, why should pro athletes?
Its not up for debate, it's already a federal law. When JC goes on a business trip he certainly does pay taxes. He pays hotel taxes, tourist taxes, any sales tax, etc. Again, the jock tax isn't anything Portland or the state of Oregon is implementing, it already exists in every single state and the District of Columbia.
Probably one difference is many tourist taxes are discretionary. I don't necessarily have to pay taxes on a rental car if I don't rent. I don't have to eat at an expensive menu restaurant. I don't have to pay sales tax on a t-shirt I don't buy. A tax on income "earned" while in state is not discretionary. I wonder how those taxing authorities handle player income that comes from annual bonuses paid where the actually live or deferred and paid out later? How do player's agents consider that in negotiations for potential tax consequences?
Yes. This seems the epitome of "taxation without representation", but I have no doubt there must be some federal loophole that validates the tax.
Well played again! You are on a roll today! I'm in awe, Charlie
Anybody can pose questions. A question is a useful tool to evaluate a proposition, but don't laud the person posing the questions as if they've provided the answers to those questions.
Regrettably true.
It is not a biz trip. They are doing the main work of the job in that state the travel too. That is different than a business trip. Like if you own a construction biz and you build in different states be sure that you will pay taxes in those states you build in.
Yes, I pay state income taxes in states I work in even though I live in Washington where there is no income tax.
Well played, Jaymes; since the tax is on "someone else", it is easy to ignore that it is incredibly discriminatory. Good catch, Charlie
Interesting
I confess I haven’t followed this closely, but I do have a question:
Does the bond have to be “floated“ and the stadium built in order to attract an MLB team? If so, if PDX does not get an MLB team to play in their new stadium does it get stuck with the $800 million bond and no jocks to pay the jock tax?