Chairman Smith Opening Statement at Hearing on the Growing Business of Sports: Tax Incentives Push Pro Sports Teams to Prioritize Profits At Expense of Communities, Fans

WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08) delivered the following opening statement at a hearing on the Growing Business of Sports: Reviewing Federal Tax Policy in the Multibillion-Dollar Industry.

As prepared for delivery. 

“Today’s hearing continues a long-running effort by the Ways and Means Committee of aggressive oversight over our nation’s tax code, and an area that demands our attention is the $2.5 trillion global sports industry.

“From college athletics to professional leagues, sports organizations benefit from a range of favorable tax treatments – including tax exemptions and taxpayer-funded subsidies – that warrant congressional oversight to ensure tax dollars are being used as intended.

“Today, tax incentives push professional sports teams to prioritize corporate profits at the expense of their local communities and the fans who live there. At the same time, college athletes are facing a confusing maze of potential tax liabilities brought on by the explosion in the use of name, image, and likeness rights, more commonly known as NIL. The coaches, athletic directors, and college administrators to whom these student-athletes might turn for advice are no doubt equally unprepared for the unique tax implications of the NIL system – a system worth an estimated $2.3 billion today.

“A particularly disturbing piece of this puzzle is how professional sports teams are using tax-exempt municipal bonds to finance stadium construction, renovation, and in some cases relocation – all to benefit their bottom line at the expense of the taxpayer without necessarily helping the communities where they reside. 43 of 57 new stadiums over the past 20 years have been built using tax-exempt municipal bonds – at a cost of $4.3 billion to the American taxpayer. In 7 of these instances, the team actually moved out of their original locality, in some cases leaving taxpayers on the hook for the cost of the original stadium.

“The purpose of tax-exempt bonds is to generate local investment and job creation in the communities where new construction occurs. But the evidence shows that communities are not seeing meaningful return on their investment from the team and stadium relocations that have occurred.

“Sadly, I must look no further than my home state of Missouri to find an example of corporate greed triumphing over community benefit. The Kansas City Chiefs – who called Missouri home for over six decades – have announced their decision to leave the state and move to the Kansas side of the city. This decision being made based on where the team can extract the most taxpayer dollars reflects the reality that ultimately these teams – or at the very least their C-suite leadership – are more loyal to their bottom line than their fans.

“But it’s not just the Chiefs. Tax incentives are being used by teams around the country to leverage the communities they’re in for the most favorable deals possible – often without any public benefit.

“The Oakland Athletics walked away from the city that supported them for nearly six decades, bound for the Las Vegas Strip and up to $380 million in Nevada taxpayer money.

“The Arizona Coyotes asked Tempe voters to help finance their new arena. When those voters said no, the franchise was shipped to Salt Lake City inside of a year.

“Oklahoma City voters were told to remember what happened when their team used to be the Seattle Supersonics – and maybe because of the concern about losing a team, approved a sales tax to cover roughly 95 percent of a $900 million arena, while the team’s billionaire ownership put in just $50 million. All to keep a franchise that was itself poached from Seattle in 2008 when that city declined to pay up.

“The Chicago Bears are threatening to abandon Soldier Field, and have floated crossing state lines into Indiana, to pressure Illinois into a richer package.

“The Philadelphia 76ers spent two years playing Pennsylvania against a New Jersey offer to lure them to Camden, only to reverse course at the last minute.

“And the numbers only climb:

• $850 million in public money for the Buffalo Bills.
• $1.26 billion for the Tennessee Titans.
• $1.15 billion land-and-tax giveaway for the Washington Commanders.

“Different cities, different leagues, but the same unfortunate playbook: leverage, threaten, relocate, repeat. And send the bill to the taxpayer.

“From jobs to other investments, these actions by sports franchises can cost the local communities they leave behind. Meanwhile, the communities where they relocate end up subsidizing these corporations that are already worth billions of dollars.

“This committee has also given heavy scrutiny to the benefits that teams are currently able to take advantage of. In the House version of the One, Big, Beautiful Bill, we included a provision to restrict the amortization deductions of sports-related intangibles.

“When you factor in all the various pieces that make up today’s college sports experience – from ticket sales to broadcasting rights, sponsorships and merchandising, the modernization and construction of sports facilities on campuses, not to mention the global reach of this whole enterprise – it is a $23 billion annual business. It is projected to double in less than a decade to $47 billion. All the while, these teams benefit from their classifications as tax-exempt under the U.S. tax code because of their affiliation to institutions of higher education.

“It is this Committee’s responsibility to ensure the integrity of our tax code – including the rules and regulations governing the nonprofit sector. At the same time, for Americans – like today’s college athletes – who face an uncertain tax policy landscape, we need clear rules of the road they can navigate with greater certainty.

“I look forward to hearing from today’s witnesses about what more can be done to improve the administration of and adherence to our tax laws.”