NJ gives NFL super tax break for Super Bowl, and pays for security

NJ agreed to give the NFL an $8 million tax break on Super Bowl tickets and parking at MetLife Stadium, along with a pass on all security costs, to bring the big game to the state. (John O'Boyle/The Star-Ledger)

By Ted Sherman/The Star-Ledger
http://www.nj.com/super-bowl/index.ssf/2014/02/nj_gave_nfl_8_million_tax_break_and_pass_on_security_costs_to_land_the_2014_super_bowl.html
on February 02, 2014 at 7:30 AM, updated February 02, 2014

Call it an $8 million gift.
When New Jersey landed this year’s Super Bowl, it gave the National Football League a major tax break. The state agreed to suspend the sales tax on all tickets and parking for today’s big game — a gift that will cost the state $8 million in lost revenues, officials said.
And that’s not the only cost the state is picking up.
All the security and police presence needed for the game — including the estimated 700 New Jersey state troopers who will be patrolling in and around MetLife Stadium today — will also not cost the NFL a dime. The state said it is covering all of its public safety expenses for the game, which is expected to include hundreds of hours in overtime.
Officials say the cost of the game is worth it, pointing to the additional business and economic activity that will be generated by the game, including sales at local restaurants and bars, as well as increased hotel taxes. However, with an event straddling two states, and many fans staying across the river in New York, no one can yet calculate the economic impact on New Jersey of staging the Super Bowl in the Garden State.
But with the millions already being shelled out by the state in lost tax revenue, overtime costs, traffic, transportation and personnel costs — as well as the bitter disappointment by many New Jersey towns that canceled Super Bowl events because of a lack of support from organizers and the NFL — some might wonder whether the first cold weather Super Bowl should be the last for New Jersey.

A ticket for the 2014 Super Bowl, which will not include a sales tax surcharge.Spencer Platt/Getty Images 

The league, which pays no federal taxes because of its tax-exempt status, receives 100 percent of the revenues from the sale of all Super Bowl tickets and parking, and has long gotten a pass on state and city sales taxes when it comes to the championship game.
"One of the standard conditions that the NFL asks of all host communities for Super Bowls is to provide sales tax relief on the sale of tickets to the game and certain associated events as well as parking at those events," said Christopher Santarelli, a spokesman for the state Treasury Department. "New Jersey agreed to provide this tax relief to the NFL."
Brian McCarthy, an NFL spokesman, said there was nothing new about the request for sales tax relief.
"This has been part of a Super Bowl host committee bid package since the 1990s," he said.
Indeed, the bid specifications for the host committees that had been vying for the 2014 Super Bowl — Tampa, Miami and New York/New Jersey — made it clear that the NFL would not award the game to any site that did not give the league a pass on sales taxes. According to the bidding requirements, a 127-page document obtained by The Star-Ledger, the NFL spells out the requirement that all revenue on Super Bowl and Super Bowl-related event tickets "be exempt from sales, amusement, or entertainment taxes, and other surcharge obligations."

Other tax breaks

The tickets sold for tonight’s game carried a face value ranging from $500 all the way up to $2,500 for the club seats, according to a league spokesman. In addition, the NFL’s allotment of MetLife Stadium’s 218 luxury boxes (the league gets at least half of them, according to the bidding specs) sold for $400,000 each. Game-day parking, which was also exempted from the state sales tax, went for $150.
In addition, the league also required it not be subject to any state, county, city or other local taxes in connection with the game.
Taxes, meanwhile, are not the only expenses the NFL won’t get saddled with during the Super Bowl. According to the bid specifications, the league also insists there will be no charge for any public security or safety services. The host committee must also guarantee that police escorts for the teams and news media to and from all events leading up the game will be provided at no cost to the league.
"The league is not responsible and we’re not charging them for the costs associated with public safety and security services around the stadium," confirmed Paul Loriquet, a spokesman for the New Jersey Attorney General’s Office.
He said about 700 state troopers will be working the stadium today, but said it was premature to discuss total security costs.
"There are too many variables," said Loriquet, while acknowledging "there will be overtime." He said local and federal police agencies, including the FBI and Department of Homeland Security, will be manning the game as well, incurring their own costs without any reimbursement from the NFL, under the agreement that brought the game to New Jersey.
Loriquet said the Attorney General’s Office was working to lessen the burden on taxpayers and will be receiving some federal assistance to offset costs, including equipment and technology that the state will be allowed to keep after the game.
Mitchell Fillet, a professor of finance and business economics at the Fordham Schools of Business, said from the state’s perspective, the sales tax relief is actually not a bad bargain.
"You give up $8 million, but look what you’re getting," he said. "You’re getting taxes on hot dogs, on sports jerseys, on bar tabs and restaurant bills. You’re getting more income tax from those hired to serve all the people coming to the game."
While the tax relief ultimately ends up in the pocket of the NFL, he said the additional business generated more than offsets the cost given up by the state.
"Will New York get more? Yeah, probably. But Jersey will make out really well," he said. "At $8 million, it’s a slam dunk."
Some, though, are questioning why the NFL and other sports organizations enjoy any sort of tax exemption.
Sen. Tom Coburn (R-Okla.) has legislation pending that would revoke the tax-exempt status of sports leagues such as the NFL. His bill would strip tax-exempt status from any league making more than $10 million a year.
The NFL, registered with the IRS as a 501(c)(6) nonprofit organization, generates billions in broadcast and licensing deals for its member teams and brings in about $255 million in revenues annually. It paid its commissioner, Roger Goodell, $29.4 million in 2011, the most recent figures available.

Little support

A recent national survey from Fairleigh Dickinson University’s PublicMind found few support the use of public funds and tax breaks for the NFL. In fact, most were unaware the NFL is a not-for-profit entity, said Krista Jenkins, director of PublicMind and a professor of political science at FDU.
"When you think of the NFL, you think of a lot of revenues being generated," she said. "With billions likely to flow from the Super Bowl, it would seem a contradiction that the organization behind it all would be technically a not-for-profit, but that is indeed true about the NFL."