NFL, MLB Lobby to Safeguard Billionaire Team Owner Tax Breaks

Professional sports leagues are taking no chances after President Donald Trump threatened to take away lucrative tax breaks for billionaire owners.

Trump questioned what he called the NFL’s “massive tax breaks” in 2017, and the second administration called on Congress to end “special tax breaks for billionaire sports team owners” in their upcoming budget reconciliation bill.

Leagues’ lobbying on tax and other legislative issues that spiked during drafting of the original 2017 tax law hasn’t let up. The National Football League and Major League Baseball have spent $890,000 so far this year on lobbyists on issues that include tax, according to federal disclosures. That outpaces their activity at the start of any of the last 10 years.

Both have retained Trump-connected Ballard Partners and former aides to then-Senate Republican Leader Mitch McConnell of Kentucky. The NFL’s roster includes former chiefs of staff and tax counsel to Senate Majority Leader John Thune (R-S.D.), a member of the tax-writing Finance Committee.

Trump hasn’t given specifics, but the administration’s push might involve rolling back the ability to write off assets unique to professional sports and the interest on bonds that finance their venues.

“These are the two buckets,” said Adam Michel, director of tax policy studies at the Cato Institute. “A lot of these things are still unclear, sort of like, which track are they going to take, or both, or neither.”

The outcome could be especially relevant to the D.C. economy. The Washington Commanders alongside NFL Commissioner Roger Goodell said last month they’d pay billions to move the team’s games to a stadium in the District at a time when the city’s budget and residents face federally mandated cuts.

“I’m focused on building this stadium,” Josh Harris, the billionaire owner of three professional sports teams, including the Commanders, told reporters after the announcement when asked about Trump’s tax pledge. “We’re going to do our best to financially make it work.”

Write-Offs in Play

The most direct provision tax writers could change is the deductibility of intangible assets.

Rules around amortization signed into law by former President George W. Bush, a onetime owner of the Texas Rangers baseball team, allow sports team owners to claim that some of their teams’ most valuable assets—like player contracts and media rights—lose value and are therefore eligible for tax breaks.

Trump’s move marks a continuation of his long-running feud with the NFL. He once owned a defunct football team in New Jersey that unsuccessfully challenged the NFL’s supremacy and attempted to buy a handful of its teams.

Either way, tax professionals said it moves away from the goal of tax simplification.

“Targeting a really specific industry for tax increases is a terrible way to do tax policy,” said Erica York, vice president of federal tax policy at the Tax Foundation. “Putting a provision in like this would work in the opposite direction of tax reform.”

It’s unclear how much money such a move would raise that could help offset parts of the tax bill. LA Clippers owner Steve Ballmer and other billionaires have written off millions of dollars each by claiming the depreciating value of their team, according to a 2021 exposé by ProPublica.

But professional sports can also boost the economy, and taxes on those industries might suck money out of other investments, said Sen. John Cornyn (R-Texas), a senior member of the Finance Committee who represents more than a dozen professional sports franchises that call the Lone Star State home.

“The most important numbers are 218 and 51,” Cornyn said, referring to the number of votes they’ll need in the House and Senate to clear the legislation. “But obviously when the president says he’s concerned about something that we share that concern, and we’ll try to figure out how that works out.”

Trump is considering a range of tax proposals for the reconciliation bill now moving through Congress, but is more focused on tax policy that would benefit the working and middle classes, according to a senior White House official who spoke on the condition of anonymity.

Stadium Financing on Chopping Block

Lawmakers also might target the financing of professional sports stadiums. Interest earned by bondholders funding the construction of those arenas is exempt from taxation, like other municipal bonds. It’s just part of the billions of dollars in subsidies such projects get from the government.

“It’s one item of a long list of considerations we’re giving,” said Sen. Steve Daines (R-Mont.), a Finance Committee member. “The details remain to be completely ironed out, depending on where the deliberation goes right now with sports owners.”

Both parties have tried and failed to roll back those private activity bonds, including a 2017 proposal that lawmakers’ eventually scrapped in final compromise legislation. Republicans once again are targeting municipal bonds as a potential revenue raiser, though defenders have sought their preservation.

A similar move would collect more than $43 billion over the next decade, according to the Joint Committee on Taxation.

Bipartisan legislation pending from Sens. James Lankford (R-Okla.) and Cory Booker (D-N.J.) would explicitly eliminate the exemption for bonds used to finance any stadium used at least five days a year for professional sports games or training.

“We shouldn’t have a protection for something that’s clearly not infrastructure,” said Lankford, who sits on the tax-writing Finance Committee. “Not trying to target anybody, just trying to say that’s not really the intent of what that was for.”