Nick Shaxson ■ How Goldman Sachs distorts sports via tax cheating
As if the FIFA scandal weren’t enough to be choking on.
Quoted in the LA Times, an article about Goldman Sachs’ role in financing large sports stadium:
“Goldman Sachs’ job is to use, if not disguise, every public funding tax shelter and loophole.”
Here is the (sour) juice of this particular story, which mostly concerns the San Diego Chargers:
“Goldman’s plan was to create a public authority to build and own the stadium, using the proceeds of a construction loan raised from private investors.
. . .
Using a tax-exempt public authority to sell personal seat licenses and sponsorships allows the teams to avoid many taxes on those sales, saving them tens, perhaps hundreds, of millions of dollars, Vrooman said. The teams would also avoid property taxes on the building, though they would pay rent and other local taxes on the private use of a public facility.
Public agency bonds for the stadium would be tax exempt and sell at lower interest rates.”
There are two pairs of words for this. If you’re more academically inclined, those words are ‘rent seeking;’ you may, alternatively, prefer the more popular term “wealth extraction.”
Build a stadium, fine – but don’t extract wealth from taxpayers in order to do it. Who pays for that?
As our Offshore Game project noted recently, all this stuff is distorting sport:
“How interesting is sport going to be if the competition is between the accountants and tax advisors, rather than between the players?
. . .
how will other clubs perceive this?”
The ultimate result is that this club may be able to afford more expensive and better players as a result of this tax cheating, and other clubs will lose matches to these subsidised clubs.
And which are the clubs that are getting these subsidies? The story also mentions the new Yankee stadium in New York; the Oakland Raiders, the San Francisco 49ers, the St. Louis Rams. Big, wealthy, famous clubs. Enabling them to trample on the smaller clubs even more. Oligopoly, distorted markets and increased inequality – all courtesy of tax cheats (and, in this case,
the vampire squid Goldman Sachs.)
Sport will be the poorer for this. As will a lot of taxpayers.
The good news is that this particular extractive deal doesn’t appear to have been signed and sealed yet. But plenty of others have.
With thanks to Martin Hojsik, for tipping us off.