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Friday, June 01, 2007
Arizona to Waive Sales Tax to Attract 2009 NBA All-Star Game?

2007 NBA All Star Game Las Vegas 2Later this summer, NBA Commissioner David Stern will announce which city will succeed in its bid to land the 2009 NBA All-Star Game. The game has come under controversy of late, with this year's game in Las Vegas drawing rebuke for attracting, in Bill Simmons' words, "so many gangbangers and troublemakers" (an observation vehemently challenged by Jason Whitlock when he spoke at Harvard Law School in April). Next year's game will be played in New Orleans, a city still recovering from Hurricane Katrina and one that some commentators and players are said to be uncomfortable with the All-Star festivities being held.

But the All-Star game is still a major attraction, particularly because it is a weekend long affair that generates significant revenue and attention for the host city and its businesses. Just consider that for all of the problems in Las Vegas, All-Star weekend attracted over 85,000 visitors and created nearly $91 million in local economic impact. That impact in part derives from the type of person who is able to attend the game: someone who can afford to pay between $1,000 and $6,000 for a game ticket.

And the city of Phoenix wants its turn at those benefits in 2009--so much so that some state lawmakers are seeking to pass a waiver of the state sales tax charged on tickets for the game and its associated attractions (Arizona has a 5.6% sales tax, with no exception for food or prescription drugs). Matthew Benson writes about this in today's Arizona Republic. The waiver, which is supported by Phoenix Mayor Phil Gordon, is said to be worth between $300,000 to $400,000 to the NBA and its sponsors who buy the tickets. Some believe that the NBA won't select Phoenix without the waiver, particularly because the city just held the game in 1995 and the NBA likes to "spread the wealth" when it comes to All-Star city selections.

There are at least two core arguments against the proposal, however.

1) A State Sales Taxes is Not a Comparative Disadvantage: 45 out of the 50 states have a sales tax of some sort, and the only states without one are Alaska, Delaware, Montana, New Hampshire, and Oregon. Although I grew up a mere 15 minutes from the New Hampshire border, I just don't see Manchester or Salem or Nashua landing the game, nor do I see the NBA turning to Anchorage, Wilmington, Billings, or Helena. Sure, Portland Oregon would be viable, but wasn't landing the first overall pick good enough news for them? (in fairness, Paul Gerald of the Willamette Week Online wrote a good piece today entitled "Ill-Starred: Why Portland Never Gets an All-Star Game"--Portland has never hosted the game. But they will be hosting Greg Oden for the next 15 years, so I can't feel too sorry for them).

2) Waiving the Sales Tax for an NBA All-Star game Benefits the Rich: Ken Cheuvront, an Arizona state senator, draws parallels between a All-Star Game sales-tax waiver and the big-dollar incentives offered by municipalities hoping to lure retail developers: "It seems absolutely ridiculous. I don't support it. I don't think it's good public policy. The tickets sell out anyway." And as Benson writes in his article, the NBA controls most of the tickets, and they tend to go those with a lot of money--those who presumably least need the sales tax break.

What are your views? Would waiving the sales tax for the NBA All-Star game--but not for groceries or prescription drugs--be a sell-out to the rich and privileged or would it be good business policy to attract an event that will generate revenue and attention and that might not otherwise occur?


It's difficult to imagine that the sales tax charged on a game ticket will be a make-or-break issue for anyone who's planning to attend the game. And what other "associated attractions" would come under the tax waiver?

I also believe that the economic impact claims for All-Star weekend are grossly exaggerated.

Anonymous Peter -- 6/01/2007 3:22 PM  

Living in Phoenix, I don't see how this would only benefit the rich. No sales tax? A middle class guy like me sure could take advantage of that.

Anonymous Anonymous -- 6/02/2007 10:46 AM  

It's not so much that the tax break wouldn't only help the rich (although if you are coming from far outside Arizona to attend the game, you probably are rich) -- it's just that it will tend to. Probably the greater thing requiring attention is anecdotal mention that groceries and medicine are not exempt. That essential life-sustaining goods are taxed leaves a bad taste in one's mouth.

Anonymous Anonymous -- 6/02/2007 11:53 AM  

Thanks for these comments.


Great point about the ambiguity of "associated attractions." I'm not sure how proponents of the sales tax waiver measured economic impact, but I agree, on the surface their figures seem rather high.

Anonymous 1,

Would waiving the tax for the NBA All Star game really benefit middle class guys? Do they get to the NBA All Star game? Can they afford to go? I haven't seen demographic data on those who attend that game, but it is very expensive to attend. Just check out the following link for ticket prices to attend the 2008 NBA All Star game:

Prices for the game range from $1,090 to $5,905 (if purchased from that dealer). It doesn't appear that the NBA All Star game is a middle class affair by any means.

Anonymous 2,

I agree, there is something irksome about directing a tax break toward a luxury item, but not toward the purchase of life's necessities.

Blogger Michael McCann -- 6/02/2007 12:39 PM  

They "share the wealth" among the top markets, but don't expect to see the All-Star Game in Portland, Salt Lake City, Memphis or Milwaukee anytime soon.

Anonymous Anonymous -- 6/02/2007 7:43 PM  

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