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This post is one in a partnership between the Rochester Beacon and veteran reporter Gary Craig, featuring articles published on his Substack site.
Tucked away in New York’s 2021 analysis of costs for a new Buffalo Bills stadium is this tidbit: “Personal income tax, primarily related to Bills team payroll, is the largest single fiscal revenue source, generating approximately $19.5 million per year for the State of New York.”
That number was likely low then, and with the increasing salary cap in the NFL, is certainly low now. Experts with whom I’ve spoken estimate the annual income tax revenue likely will be upwards of $30 million from the Bills and visiting teams.
“The $19.5 million tax number was based on the annual compensation paid by the Bills organization in 2019,” Pamm Lent, the Western New York director of communications for Empire State Development, said in an email. “The number has significantly increased since then and as such, the amount of income tax collected by New York State has increased as well.”
These income taxes are numbers not often talked about in the debate over public financial support for a new stadium, though the studies do, albeit briefly, make the point. There are legitimate debates over whether a stadium generates other revenues—taxes from construction jobs, restaurants, bars, etc.—to justify the public costs, and there has been reliable data that stadiums are not the revenue creators some would have you believe.
But what about the lost state income tax revenue if the team ups and leaves?
Team income taxes
Sports teams pay what has been dubbed the “jock tax.”
When Joe Burrow and the Bengals visited Buffalo over the weekend—thankfully resulting in a thrilling Bills’ win—the Bengals franchise actually paid income taxes to New York. The Bills do the same when they travel, unless they play in a state where there is no income tax.
Even if the Bills players live out of state, they still will pay taxes into New York coffers because of their time training and playing in New York, noted New Jersey-based CPA Robert Raiola, the director of sports and entertainment practice for the PKF O’Connor Davies firm.
“When you have a home game and they’re there the whole week, it’s paid to New York,” he says.
This issue first was brought to my attention by former state senator and retired Court of Claims Judge Richard Dollinger. Dollinger says he’s not a rabid fan looking for justification for the new Bills stadium but became intrigued by the lack of discussion about a possible loss of state income tax revenues with a possible loss of the Bills.
“This derives from my initial Bills involvement when I was in the Senate and we were dealing with the (television) blackout issue,” Dollinger notes. Then, the networks would, for a 75-mile radius, black out a game that was not sold out within 72 hours of its start.
Dollinger says the past blackout rules were especially unfair to smaller markets, like Buffalo, and he was “miffed that that was the NFL rule.” (That rule was lifted in 2014.)
He began looking into stadium-related issues and saw how states benefit from the income taxes.
“As the salary cap goes up, so do the contributions to New York state to pay the bonds (for construction costs),” Dollinger says.
The NFL salary cap, the amount each team can spend for players, is heading toward $300 million. Most players likely pay an income tax in New York of over 10 percent.
The NFL salary cap in 2019, the year used for the state calculation, was $188 million.
The stadium cost debate
Here’s where I have to step back and acknowledge what I don’t know, but hope to find out for a future column: I’m still trying to do a deeper dive on the stadium financing, which also is partly being shouldered by Erie County. The Buffalo News has provided stellar reporting on the stadium costs, which have swelled from $1.4 billion to $2.1 billion. The team is covering the cost overruns.
As the News has reported, the $850 million in public investment for the stadium was, when first proposed, the biggest public contribution to any NFL stadium.
“In the 3½ years since, however, more than half a dozen other NFL communities have reached, or are negotiating, new stadium deals of their own,” the News reported. “Some will require public investments of over $1 billion, while other teams say they’ll fully finance the stadium construction.”
(The full story can be found here: “Three years and $850 million later, did taxpayers get a good deal on the new Bills stadium?”)
“The more these athletes get paid, the more they contribute to covering the cost of the bonds,” Dollinger says. “I just think the public needs to know that.”
With the deal for the new stadium, the Bills committed to keeping the team in Buffalo for at least 30 years. If the annual income tax revenue from players currently is $30 million, that means the state will receive at least $900 million over the term of the lease.
The ‘jock tax’
The “jock tax” is an intriguing financial creature, as well as is the story that has long been said to be its birth.
“The ‘jock tax’ really came into play with the 1991 NBA finals,” says Nathan Goldman, an accounting professor at N.C. State’s Poole College of Management.
The Chicago Bulls beat the Los Angeles Lakers, and California decided that the Bulls should be taxed for their time in the state, explains Goldman, an expert in sports taxes and financing.
Illinois reciprocated, with what was dubbed “Michael Jordan’s revenge.” (The Lakers and rest of the NBA should have known better than to challenge His Airness.)
“It set off this domino effect that ended up with all athletes across all sports” paying the income taxes for salary and bonuses, he says.
States also get taxes from endorsement advertising, though companies can opt to create the ads in low-tax states, Goldman notes.
Some athletes make no secret about their preference to be in a state with low or no income taxes. Tyreek Hill and Jordan Poyer are recent examples of NFL players who chose Miami partly because of the tax structure and lack of state income tax. (Welcome back to New York, Jordan Poyer.)
Governments, for better or worse, have long been in the business of providing incentives or money to privately-owned businesses.
Speaking of stadium assistance, Goldman says, “It’s not unlike these states that give huge property tax abatements to get corporations to come to their state.”
And, as Raiola says, New York is limited when it comes to NFL-generated revenue, since “the Bills are the only NFL football team in New York.”
Gary Craig is a Rochester Beacon contributing writer. A retired Democrat and Chronicle reporter, he now writes on Substack.
The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. See “Leave a Reply” below to discuss on this post. Comments of a general nature may be submitted to the Letters page by emailing [email protected].
The argument for the subsidy was primarily because people were worried that the team would move if the state didn’t help pay for it.
The owner of the Bills is worth $9.3 billion. The fact that “the team” is financing $700 million in cost overruns means that he could have covered the cost of the entire stadium from his personal fortune.
WNY and Governor Hochul were essentially extorted by one of the 500 wealthiest people on the planet (https://www.forbes.com/profile/terrence-pegula/?list=billionaires). I think that is disgusting.
Ginny, because someone is worth a particular amount doesn’t mean they have that amount of money in cash to spend. I have a house, a car, a nice ebike and furniture, that doesn’t mean I can buy an airplane. Yes, Pegula has assets but they are tied up in other assets, like the Buffalo Sabres.
Sell the Sabres to save the Bills? Hold your tongue.
And what if the Bills left? Think of the hole in our hearts, they help hold an entire region together in this dark season. They give us hope, a common goal, a whole fabric of meaning. To see men knock each other around over possession of a pigskin covered ball, risking life and limb only to shake hands afterward is inspiring. Next best thing to baseball which frankly lacks the violence we crave in our entertainment.
Doesn’t matter who you are, Democrat, Republican, White, Bleck, Brown, man or woman, we’re all Bills Blue.
Why take that away from us?
It’s worth paying for.
This reminds me of the debate over building a new stadium for the Redwings: It will pay for itself because the Redwings bring in many fans and it will be used for band competitions and other events that will bring in money. Those other events never materialized until Rochester had a soccer team. The soccer fans filled the stadium to overflowing and the proponents said, “see we told you it make up the cost. Nope! Then the soccer team said the Wings stadium was not big enough and they needed one of their own. It was built and attendance dropped. Eventually the team was gone. “No problem,” proponents said. It can be used for local amateur sports and there will be revenue earning opportunities as well. We know how that turned out.
While I am not a big fan of his, the Reverend Jessie Jackson spoke at a meeting of the American Psychological Association some years ago in which he said that in every city he visits, infrastructure is falling apart. But in nearly every one of those cities there are two new publicly financed facilities: A brand new jail and a brand new stadium. Such are the priorities of our civilization.
Asking whether it makes a monetary profit is the wrong question.
The question is, “Is this something we want to spend money on for our enjoyment or something we find valuable?”
That’s all.
How much do we spend our personal wealth on are things we absolutely need?
The Scrooge’s, naysayers, and doomers miss the point when they only look at a spreadsheet for answers.
Go to a Red Wings game in the summer. See kids with smiles and feel the excitement in the air. See families bond, and the making of memories of Rochester as home.
Oh, these kids could just play in the street with sticks and stones, while their fathers slouch on the couch, idling their lives away.
The parks make no profit, nor do the beaches, the RPO, the arts or public music…would you deny us of these simple pleasures while we live out our nasty, brutish and short lives?
And it’s the season of lights and hope…Nice going Grinch.
Most of the money for the Bills stadium is coming from the state. It is a benefit to Bills fans, most of whom who attend games live in the Northwest portion of New York. (In the past, some also came in from Ontario but Canadian visits tot the US are down sharply right now.) It is not of benefit to those who live in the Adirondacks, Albany, New York City or Long Island, although perhaps they will watch on TV. It does not need to make money, just to break even on construction and operating costs, and we can even count the income from the constructions jobs, stadium staff salaries, and spending by fans at local business as well as expenses and taxes paid by the players, team staff and owners. But taxpayers should not be subsidizing a profit-making enterprise. If it cannot sustain itself, it should shut down. Unfortunately, the US (including its political divisions) has a long history of subsidizing unprofitable enterprises that contribute little to society but have much political power.
This does not even touch on the argument of whether or not it is worth paying ten times or more the salary of a doctor who saves lives year-round to someone who trains and plays less than half a year to entertain a small portion of the state population. Yes, we can live it up and enjoy life, but spending this money on other things might enable more people to enjoy more activities than a relatively few games per year. Perhaps spending the same amount of money on other public facilities would even encourage people to go out and do things themselves and with others rather than sit passively and watch highly paid professionals do them.
J Baker, I see your point…yet; governments subsidize many profit making industries to attract, keep, and promote them in state and federally. I may have no interest in the Olympic Training site in the Adirondacks, yet I have no qualms with the state funds that keep it going and the profits it generates for the area. One may not fly much, but I have no qualms with the subsidizes that keep airports operating to the profit of the airlines, vendors, and employees. Or the subsidizes that government pays out to farmers.
I agree the salaries paid to some professional athletes is outrageous, and there is an argument what we pay doctors in the US is out of line with what they are paid in other First World countries, but so it goes with capitalism and competition.
Finally, I like the part in the Constitution that says one of the purposes of our government is to promote the general welfare.
The community building, employment opportunities, the joy the Bills bring to Western NY fulfills that ideal.
Ecclesiastes, “Consider the work of God; for who can make that straight, which He hath made crooked?” Only heretics think they know better than god…or gods as the case may be.
Len, do you have kids in public schools? Is your house on fire? Do you get EBT cards?
No?
So, let those who use these things pay for them! Who says such things aside from Trump and Musk?…and Scrooge?
Are there no workhouses? Are there no prisons?
Listen Grumpy, it’s Christmas don’t be such a Debbie Downer, culture matters, even if it is about grown men from poor backgrounds slamming into each other on a contested field over a pigskin covered oblong “ball”, in front of drunken and inane fanatics who spent hundreds on tickets as their grocery bills pile up.
Better to let the unwashed masses have their fun, else they should spend Sundays reflecting on their nasty, brutish, short lives of no account and demand something from the haves.
Don’t take their dreams away, it’s both mean and dangerous.
I really don’t care that much whether we ‘lose’ money or not on the Bills.
We lose money on other things that entertain us, such as parks, orchestras, and politicians.
Sure, we could always spend more on the poor, wretched, and needy; but the connection the Bills bring to the community, the relief from the daily tediousness of our nasty, brutish and short lives, the three hours of escape every Sunday in this dreariest time of year, celebrating men crashing into each other in a contest of violence over a pigskin covered oblong ball is priceless. /s
Priceless. No, we know the exact price, $880,000,000. That being said, I assume you’re being sarcastic. No rational person could claim that “entertainment” (for 17 or so games a year) is worth 880,000,000 taxpayer dollars.
Sarcastic? Yes.
Is it worth it, I think so.
I refer you to Ecclesiastes, live life to its fullest while we’re here ’cause it ain’t gonna last.
And I refer you to the road construction and repair reference in Luke 3:5, “the crooked shall be made straight and the rough ways shall be made smooth”. And also Isiah 58:12, “you will be called Repairer of Broken Walls, Restorer of Streets with Dwellings”. Roads and streets are vital. Football is nothing but a form of entertainment, a business which should be supported by it’s customers, not subsidized by the taxpayers. So live life to the fullest….on your own dime.
I believe that the oft-quoted figure of $850,000,00 in public funding for the new Bills jock palace is incorrect. According to the Frontier Group, in addition to NYS’s $600,000,000 and Erie County’s $250,000,000, there is the cost of $400,000,000 to be split between the state and county for maintenance and repair of the stadium over the length of the 30 year deal.
That aside, we have the issue of whether the state’s millions could have been better spent here and now on such vital public works as infrastructure repair. With water main breaks becoming an almost weekly event in the Rochester area, with almost all of the bridges in the state needing some form of repair and 10%-12% of them rated as “structurally deficient”, and with 43% of the state’s roads in poor or mediocre condition, it’s difficult to impossible to understand giving priority to keeping a billionaire team owner happy.
But at least we have the satisfaction of knowing how thankful Mr. Pegula is for the state’s efforts to make him ever richer. So thankful that, rather than cutting a deal with New York’s wineries, one of our state’s major industries, to bottle Bills-branded wines, he sold those naming rights to California wineries who now produced a line of cabernet sauvignon, chardonnay, and blanc de blanc, the bottles festooned with Bills chants or logos!
It’s not just jocks who pay the tax. I once went to California for two days of meetings with a client. I then got notification from the state of California demanding that I pay them income tax for my two days of work in state. That was the last time I went to California for work; Zoom worked perfectly well. (California seems to be the most aggressive in enforcing such taxes for ordinary folks, but they all pay close attention to athletes and performers.)