Atlantic Cities

An Unexpected Player in the Sports Subsidy Racket: ESPN

An Unexpected Player in the Sports Subsidy Racket: ESPN
Flickr/Rob Poetsch

Stories of professional sports teams extracting subsidies from local government are commonplace. They follow a familiar narrative: Team X threatens to leave town if it doesn't get a new stadium/a better tax break/a bigger pot of public money that it doesn't plausibly need. No bluff – or vague hint of "economic development" – is too outlandish. Invariably, politicians acquiesce because the only thing worse than making a painful public payment to a profitable sports team is having to watch that sports team walk away.

This refrain is so common that the most surprising municipal news on the sports front this year occurred when one mayor – Atlanta's Kasim Reedactually said 'no.'

If you want to get really worked up about the idea of sports subsidies in the era of government cutbacks, read Gregg Easterbrook's takedown in The Atlantic earlier this year of the worst offender of all: the NFL. (The league extracted, among other things, a $4 million payment to return the Pro Bowl to its 30-year home in Honolulu just as Hawaii was whittling its education budget.)

Apparently, though, this practice extends beyond sports franchises to the broadcasting behemoth that helps them make much of their money. A New York Times analysis this week concludes that ESPN plays for tax breaks, too, and that it operates in its home state of Connecticut with tactics striking similar to the ones Easterbook wrote about in the NFL. From the Times' Steve Eder:

ESPN is hardly needy. With nearly 100 million households paying about $5.54 a month for ESPN, regardless of whether they watch it, the network takes in more than $6 billion a year in subscriber fees alone. Still, ESPN has received about $260 million in state tax breaks and credits over the past 12 years, according to a New York Times analysis of public records. That includes $84.7 million in development tax credits because of a film and digital media program, as well as savings of about $15 million a year since the network successfully lobbied the state for a tax code change in 2000.

Much like the NFL, ESPN justifies what it takes in public support with the small-bore contributions it gives back to local communities: a Boys and Girls Club sponsored here, a local baseball diamond built there. Never mind that this kind of support hardly adds up to the $15 million a year that the broadcaster has managed to withhold from the state by encouraging lawmakers to rewrite the tax code. (Meanwhile, if you're a Connecticut taxpayer who has cable but never watches ESPN, you're subsidizing the company's profit on multiple levels.)

This story also feels so similar to the standard sports-extortion narrative for the pretense at its core: that ESPN would leave Connecticut any time soon. The company sits on a 132-acre campus in Bristol, a place that has become synonymous with sports TV. It has invested billions to create state-of-the-art facilities there (now that money is actually valuable to the local community). And it's been based in Connecticut since its founding back in 1980.

No one disputes that ESPN is a successful company, and that Connecticut's economy benefits by having it there. But it's unclear why taxpayers should subsidize such a profitable local business, especially at the expense of smaller businesses or public priorities that would make different use of this money. And it's disingenuous for ESPN's lobbyists to hint that they might abandon everything they've built in Bristol if the state won't give them more.

The Times found a number of politicians who aren't buying this. Unfortunately, the governor isn't one of them. This is Governor Dannel Malloy's circular logic: “We want a larger footprint for ESPN in Connecticut rather than a smaller footprint for ESPN in Connecticut," he told the Times, "because we know that a large footprint is harder to move out."

But, of course, it's not clear when the footprint is ever large enough. And the larger ESPN grows, the more the company knows its threatened absence will be felt the next time it hints at leaving. Put it that way, and this relationship sounds even more perverse than the one local governments already have with their pro sports franchises.

Top image: Flickr user Rob Poetsch

Emily Badger is a former staff writer at The Atlantic Cities based in Washington, D.C. She now writes for The Washington Post. All posts »

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