Lee Signs Pair Of Memphis FedExForum Tax Capture Extensions
Photo Credit: David Marion / CC
The Center Square [By Jon Styf] –
Tennessee Gov. Bill Lee signed a pair of bills to continue tax captures in order to fund renovations at Memphis’ FedExForum and future marketing for Nashville’s Bridgestone Arena.
The bills come after the state Legislature approve $350 million from Lee’s budget proposal to send directly to Memphis to fund part of $684 million in sports facility improvements planned for the city that include renovations to the FedExForum, home of the Memphis Grizzlies, along with renovations to Liberty Stadium, AutoZone Park and a new soccer stadium.
A 2% Shelby County car rental tax that will go toward bonds for the FedExForum work, extended to 2059 in Senate Bill 935, sends an estimated $3.4 million annually to the Shelby County Sports Authority to help pay off the bonds. Lee signed that bill on April 28.
This week, Lee signed the sales tax capture bill, House Bill 1085.
The fiscal note on the bill states it allows Memphis to keep an estimated $5 million in state sales tax each year through 2059 and, by also extending the deal for Nashville’s Bridgestone Arena, will allow Nashville to keep $7 million in estimated sales tax annually for expenses associated with securing current, expanded, or new events at Bridgestone Arena.
Economists have shown that tax captures at sports arenas are similar to giving taxpayer funding directly to sports teams because the money spent at those arenas are generally diverted local spending that would have been spent elsewhere if the team was not there.
That means the municipality and state are conceding funding that would have otherwise gone to them.
“The opportunity cost of most sports consumption – particularly regular season team games hosted by sports venues – is other local spending, which results from the diversion of consumption from other local entertainment options,” a recent academic paper on the topic stated. “It is well understood by economists that spending on tickets, concessions, merchandise, and other items directly at a stadium largely ‘crowd out’ spending that would otherwise go to other local businesses, and there is no theoretical expectation that expanding business activity to include the district outside the stadium would change this accounting.”
About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.
