Baseball, Sports, Tax Law

It's Opening Day: Why Can't I Afford to Go to the Ballpark?

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The Major League Baseball Season started last night and gets underway in earnest today. Football might be the biggest sport on the American landscape, but baseball is still America’s pastime. It’s a favorite of lawyers and judges — and according to a recent poll, baseball is the sport that draws a nearly equal percentage of liberal and conservative fans.

If you’ve actually been to a baseball game in the past decade, you know that the experience is ridiculously expensive. My first baseball game cost my dad $55 all-in (Mets/Padres, 1987, Straw hit one out). My last game cost my wife and I upwards of $200 — and we saw the pitiful Nationals in bad seats.

Duke law professor Richard Schmalbeck and Rutgers business professor Jay Soled think they know why the price of attending a baseball game has skyrocketed. They blame the tax code and the money generated from corporate ticket buyers. Have you ever gone to a game on your firm’s dime? If so, you are part of the problem …

The two professors tell the New York Times that tax write-offs are responsible for high ticket prices. The ABA Journal summarizes their findings:

On the demand side, businesses that write off tickets are using the money they have saved to bid up the prices. On the supply side, ballparks have responded to businesses’ demand for expensive seats by building more skyboxes, reducing the space available for cheaper seats. The new Yankee Stadium, for example, has 3,000 fewer seats that the old ballpark, but almost three times as many skyboxes, the professors say.

Baseball is perfect for schmoozing potential clients or new recruits. It’s warm, it’s fun, and the oft-maligned pace of the game allows for interesting conversations while the action unfolds on the field. But should companies really get a tax break for this expense? The professors don’t think so:

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Ideally, Congress would get rid of business-entertainment deductions altogether — after all, they are little more than an excuse for corporate executives to consume luxury items at a discount, distorting markets and cheating the public out of substantial tax revenue.

Given corporate America’s passionate attachment to sports-related perks, a blanket elimination may be unrealistic, though. A more feasible but still effective approach would be to limit deductions for luxury skybox tickets to a low, fixed amount — say, $50 per seat, per game.

Setting a hard dollar figure is a little bit unfair to corporations operating in big markets. I’m sure $50 buys a pretty nice seat in Pittsburgh. In New York, not so much. So if the tax code really is a contributing factor to the high price of sports tickets, just eliminate the break entirely. Baseball owners are capable of running successful, money-making businesses without government welfare.

Throw Out Skybox Tax Subsidies [New York Times]
Paying Too Much to See a Baseball Game? Blame the Tax Code, Law Prof Says [ABA Journal]

Earlier: Quote of the Day: The Umpire Strikes Back

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