NBA team gets $60 million tax break
Reynolds tries to close loophole in corporate welfare arrangement
State lawmakers voted to give a privately owned professional basketball team $60 million in tax credits as an incentive to move from Seattle to Oklahoma City.
Passage of the legislation to bring the Seattle Supersonics, now owned by a group of millionaires in Oklahoma City, did not give tax relief to any other private companies or individuals.
On Friday, NBA owners voted 28-2 to let the group move the team to Oklahoma City over the protests of Seattle fans and a lawsuits from the City of Seattle and the previous owner of the team.
“Oklahomans already knew we were ready to become the permanent home for a big league sports franchise, and today’s decision by NBA owners shows that they agree,” said Glenn Coffee, a Republican and State Senate Co-President Pro Tempore. “ This is a proud and exciting day for the entire State of Oklahoma, and is evidence that when Oklahomans work together we can make great things happen.”
The deal has parallels to a move by the Legislature several years ago to subsidize Great Plains Airlines with around $30 million in tax credits. That airline was owned by powerful and wealthy Tulsa families and financed almost entirely by government money. The airline went bankrupt. No one was ever indicted in that scheme.
The tax credit subsidy for the Supersonics was endorsed by Tulsa Mayor Kathy Taylor, even though there is no guarantee the NBA will ever play in Tulsa’s new downtown arena.
The Oklahoma House passed modifications to the Quality Jobs Act to encourage the National Basketball Association to move a professional basketball team to Oklahoma. The State Senate passed the bill last Tuesday and it was quickly signed by Gov. Brad Henry.
Oklahoma City voters approved a special tax for improvements to the Ford Center to accommodate the new NBA team.
Coffee claimed that the state budget won’t be impacted because the rebates provided for in this bill would come from funds that the state wouldn’t receive at all if the NBA doesn’t locate a team here.
The bill expands the program to include the NBA and the 170 jobs with a $74 million payroll it is estimated to bring to the state.
Senate Bill 1819 also extends the act to cover a 15-year period and puts a reimbursement cap on the incentives from the state to not exceed the top tax rate in Oklahoma. Currently the tax rate is 5.5 percent. The change is part of a requested financial package the team owners said they needed to make the move to Oklahoma.
Legislation providing tax incentives to NBA basketball teams may contain major flaws that could ultimately drain hundreds of millions of taxpayer dollars that would otherwise go to schools, roads, and health care programs, state Rep. Mike Reynolds warned.
“We’ve already eliminated one major loophole that would have given millions of taxpayer dollars to out-of-state teams that simply visit Oklahoma, but this bill is still fatally flawed,” said Reynolds, R-Oklahoma City.
He noted that each NBA plays 82 games in the regular season, 41 at home and 41 away. Each team faces opponents in its own division four times a year.
The Dallas Mavericks, which have a payroll of more than $105.2 million, would spend more than $2.5 million on player salaries in just two away games at Oklahoma City and would have qualified for state tax incentives under the bill’s original language, Reynolds noted.
More teams should reach that threshold in the future due to the escalation of player salaries. Reynolds authored an amendment to close that loophole that was originally rejected in the House, but later adopted in the Senate.
“This bill is so poorly designed that it would have funneled millions of dollars to other states every time Shaquille O’Neal or Kobe Bryant set foot in Oklahoma,” Reynolds said. “Oklahomans would have been sending their taxes to support nearly 30 teams all across the country and receiving no benefit at home.”
Oklahoma is one of only 22 states and 28 cities with a team.
House Speaker Chris Benge, House author of the legislation, said bringing a major league team to Oklahoma City financially benefits the entire state.