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UPDATED: Congress Takes Aim at Tax-Exempt Funding for Professional Sports Facilities

UPDATED 12/27/17: The final version of the tax bill signed into law earlier this month did NOT include the provision which sought to eliminate tax-exempt funding assistance for professional sports facilities.


While President Trump’s very public feud with the NFL grabs the headlines these days, the U.S. House inserted a provision in the tax reform bill introduced last week which would eliminate a State or local government’s ability to issue tax-exempt debt for the development of any professional sports facility.   The House Staff prepared a summary of the bill, which includes an explanation of Section 3604, the provision relating to tax-exempt financing for professional stadiums.

The introduction of this bill has no doubt sent the lobbyists for the major leagues (NFL, NBA, MLB, NHL) scurrying, as construction costs for a single facility in those professional sports leagues can now exceed $1 billion.  The reach of Section 3604 extends to ALL professional sports facilities, however, and would also function to eliminate tax-exempt funding assistance for minor league professional sports arenas and stadiums.  The bill therefore holds the potential to remove a significant tool utilized by State and local governments – including those which are not in the “major league” sports game — to achieve their economic development goals.

This bill will likely be considered by the full House shortly, and the recently-released Senate version of the tax reform bill does not appear to include an analogous provision.  Accordingly, the reconciliation process is worth monitoring.  If you have questions, feel free to contact Jonathan Fine at Smith Moore Leatherwood, LLP.