Perspectives

The home field advantage

Credits and Incentives talk with Deloitte

"Credits & Incentives talk with Deloitte,” is a monthly column by Kevin Potter of Deloitte Tax LLP, featured in the Journal of Multistate Taxation and Incentives, a Thomson Reuters publication. This issue's column discusses state and local credits and incentives for major league sports franchises, with examples of how states have used tax credits and incentives to attract or retain sport franchises.

The home field advantage of Credits and Incentives

In the world of North American major league1 sports franchises, every team seeks to maximize home field advantage to give it the best chance to win. Similarly, when competing to attract major league sports franchises, states and cities utilize their own home field advantage, in the form of state and local credits and incentives to develop and maintain long-term relationships with these franchises.

In 2014, there were 113 major league sports teams located within the United States. However, these 113 teams are only located in 26 states, leaving 24 states without a sports team to call their own. This has created a very competitive market for the relocation of a team from one state or city to another due to the limited supply of teams for which there is great demand.

Professional sports has grown into a multi-billion dollar industry, with revenue from ticket sales, media rights, sponsorships and merchandising all reaching record levels. Additionally, local sports teams are often credited with helping to provide an economic boom to local communities on game days.

Given the tax revenue and the general economic benefit provided by professional sports franchises and their athletes, there is strong competition for where these teams both play their games and hold their practices. States that host a franchise have been trying to maintain a competitive edge by using credits and incentives to encourage existing sports franchises to maintain their current location, while knowing that other states are aggressively pursuing the same franchises by offering similar incentives.

March/April’s issue of “Credits & Incentives talk with Deloitte,” discusses state and local credits and incentives for major league sports franchises, with examples of how states have used tax credits and incentives to attract or retain sport franchises.

1 Major league sports are defined as Major League Baseball (MLB), the National Basketball Association (NBA), the National Football League (NFL), and the National Hockey League (NHL).

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