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Government subsidies to corporate fat cats raise your ticket prices

Apr 6, 2010, 10:15 AM EST

Plutocrat.jpgYeah, the headline was a bit much, but I like saying “fat cats” whenever I can. This is a story about why tickets to ballgames cost so much:

There are many reasons for the price explosion, but a critical factor
has been the ability of businesses to write off tickets as
entertainment expenses — essentially a huge, and wholly unnecessary,
government subsidy.

These deductions have led to higher ticket
prices in two ways. On the demand side, they have fueled competition for
scarce seats, with business taxpayers bidding in part with dollars they
save through the deductions. On the supply side, the large
number of businesses bidding for expensive seats has driven the
expansion of luxury skyboxes and a reduction in overall seats in new
ballparks.

Of course any politician who tried to repeal tax breaks for luxury boxes would be attacked for trying to “raise” taxes on business. Meanwhile, anyone who wants to use tax dollars to provide basic medical care to poor people is a godless socialist who hates America and everything for which it stands.

I sat in a luxury box for a baseball game once. It was interesting in both good and bad ways. I don’t begrudge their existence. But I never once felt like it was something the government should be subsidizing.

  1. tadthebad - Apr 6, 2010 at 10:24 AM

    “Meanwhile, anyone who wants to use tax dollars to provide basic medical care to poor people is a godless socialist who hates America and everything for which it stands.”
    Ridiculous statement.

  2. Trevor B - Apr 6, 2010 at 10:28 AM

    “Of course any politician who tried to repeal tax breaks for luxury boxes would be attacked for trying to “raise” taxes on business. Meanwhile, anyone who wants to use tax dollars to provide basic medical care to poor people is a godless socialist who hates America and everything for which it stands.”
    Craig, I love you. (Mainly this comment, actually. If I were a 22 year old attractive female with a less monotone voice you’d like this even more.)

  3. Head Bee Guy - Apr 6, 2010 at 10:35 AM

    “Of course any politician who tried to repeal tax breaks for luxury boxes would be attacked for trying to “raise” taxes on business. Meanwhile, anyone who wants to use tax dollars to provide basic medical care to poor people is a godless socialist who hates America and everything for which it stands.”
    CC, I haven’t had my first cup of coffee. Way too early for a flame war.

  4. JCD - Apr 6, 2010 at 10:57 AM

    Spot on. Perfect. How more americans don’t get more pissed off about this is beyond me.

  5. thepelosi - Apr 6, 2010 at 11:07 AM

    A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.
    Thomas Jefferson

  6. David - Apr 6, 2010 at 11:13 AM

    I like banging my slaves.
    Also Thomas Jefferson

  7. GimmeSomeSteel - Apr 6, 2010 at 11:15 AM

    In what way are we subsidizing this? Business A shows it as income (higher profits, more taxes), business B shows it as an entertainment expense (50% writeoff, lower profits, more taxes). IF Business B is showing it properly on their tax return (50% instead of 100% deduction), it’s a net GAIN for the taxman and the government can then spend 300% more of the difference!
    Personally, I’ve been in luxury boxes and don’t really like them when it comes to watching the game, but even more than that I don’t like the kind of people who get their kicks gloating over how they’re in the luxury boxes while the peasants pay for mere seats.

  8. BC - Apr 6, 2010 at 11:15 AM

    So how does this explain all of the unsold boxes all over the place? Companies aren’t spending 1/3 as much on these things as they used to. Remember all the unsold boxes in Yankee Stadium last year?
    My brother and I got tickets late in the season to Citi Field for $60 (face value). So the tickets were $120. Food, beer and parking cost as much as the tickets (and no we did not drink a case of beer each). That’s as big or a bigger problem. You can get into the park for as cheap as $25, but you’ll pay double that in parking and refreshments.

  9. KR - Apr 6, 2010 at 11:21 AM

    You don’t really think opposition to the health care bill comes from wanting to deny medical care to poor people, do you? Just because people disagree with you doesn’t mean they don’t have actual motives beyond “I hate poor people” or “I want to use old people’s medicine for robot fuel”.
    And I know that you know that, and that you’re just exaggerating because it makes for entertaining writing, but I felt compelled to respond anyway. :P
    But anyway. I enjoyed reading about your luxury box experience. Missed out on that during my time as a +1 to someone being recruited at a law firm. (They did take us to Jacobs Field for lunch or something, but there was no game at the time.) Sadly, no one recruits software engineers that way. (Well, maybe Google does, but no luck there despite my cake shaped like the Internet.)

  10. Craig Calcaterra - Apr 6, 2010 at 11:28 AM

    I don’t believe that that was health care reform opponents’ motive any more than the opponents believed that supporters’ motive was to affect a government takeover of medicine as part of a socialist plot, but I heard that too.
    My comments along these lines are reflective of my dissatisfaction with the political process and discourse as opposed to support or opposition to any given policy (though I think my positions on these things are pretty obvious). The point is that there are legitimate and intellectually-honest pro and con arguments regarding tax writeoffs for tickets just as there are legitimate and intellectually-honest pro and con arguments regarding health care reform. Unfortunately, our political actors and media are either afraid or disdainful of them so those arguments are rarely aired.

  11. Will - Apr 6, 2010 at 11:36 AM

    Oh, goody. A lameass political thread to start the morning, with strawmen a plenty. Thanks heaps, Craig. Why don’t we bring in the DH and Chief Wahoo and really get a good fight going?

  12. Joey B - Apr 6, 2010 at 12:46 PM

    I love it when LW lawyers use BB to talk political, business and tax matters.
    The idea of deductions for entertainment has been around forever. You can do away with it, but half the bars and restaurants in NY will disappear, and with that, a lot of jobs. If the idea of a lot of waiters, busboys, etc., losing their jobs doesn’t bother you, go right ahead. I just don’t know why you hate waiters so much.
    And as Gimmiesomesteel pointed out, the gov’t nets more taxes from the arrangement since it gets credit for 100% of the revenue and only 50% of the cost. If the idea of the gov’t getting less tax revenue and having less money for healthcare for the poor doesn’t bother you, then go right ahead. I just don’t know why you hate the poor so much.
    And at the end of the day, the middle class people upstairs with $20 tickets are being supplemented by the guys worth $10M buying $250 tickets. Do you rich people, that go to games for free, hate the middle class?

  13. Joey B - Apr 6, 2010 at 12:57 PM

    Craig, here’s your economic lesson for the day. The best possible result for the economy is to get rich people to spend their money. Every dollar that they spend provides jobs. Every dollar that they spend is reported as taxable revenue by someone else.
    It’s like everytime you read an article about some actress spending $10,000 on a bassinet. The question you have to ask is, is that money better off being spent, or sitting in her bank account?
    If you believe in the socialist idal of everyone having identical wealth, so be it. But the rich are the ones that pay all the taxes, and their spending is what supports all the businesses that we take for granted. As a wise man once said, money is like manure. Keep it one place, then it’s of no benefit and stinks. Spread around, and helps make things grow, and doesn’t stink. Allow the motivations of the tax system to re-distribute the wealth.

  14. Craig Calcaterra - Apr 6, 2010 at 1:13 PM

    “The best possible result for the economy is to get rich people to spend their money.”
    I’m not interested in solely benefiting the economy. At least not at any cost. I want there to be less suffering, less want and greater equality both in terms of social equality and economics. All of your assumptions are based on a post-1980s conservative value judgment. Which is totally acceptable. I don’t mean to denigrate it because there are many arguments in its favor. It’s just not the only option out there and it’s not the particular set of values to which I subscribe.
    This does not make me a communist or a class warrior. I don’t wish to end free enterprise and radically redistribute wealth and I fully understand incentives. I just think we’ve swung very, very far in one particular direction when it comes to these issues — many on the mainstream left now are to the right of pre-1980s Republicans — and I have no problem with wanting to decrease some of the vast differences between the haves and have-nots in society.
    And with all due respect to the tax system in this country, I don’t it to do it by itself. Indeed, most people who subscribe to your economic views tend to be downright hostile to our tax system as currently constructed. They only laud it when they point to it as the be-all, end-all in resource distribution.

  15. bafinaire - Apr 6, 2010 at 1:15 PM

    “Of course any politician who tried to repeal tax breaks for luxury boxes would be attacked for trying to “raise” taxes on business. Meanwhile, anyone who wants to use tax dollars to provide basic medical care to poor people is a godless socialist who hates America and everything for which it stands.”
    Great statement, couldn’t agree with you more. Unfortunately it seems all too often a lot of what America seems to stand for is everyone worrying about what is best for themselves and not our country as a whole.

  16. TucsonTumbleweed - Apr 6, 2010 at 2:43 PM

    Ridiculous that his statement is true!

  17. Joey B - Apr 6, 2010 at 2:52 PM

    “All of your assumptions are based on a post-1980s conservative value judgment.”
    The post-1980s conservatives, to a fair degree, have no value judgment. It displeases me to say that, but I find way too many people associating themselves with Reagan or Goldwater, though either of those guys probably wouldn’t recognize our current lip-service consrvatives.
    “Indeed, most people who subscribe to your economic views tend to be downright hostile to our tax system as currently constructed.”
    There is much to be hostile about. You have AMT creep, which sucks in a few more middle class people every year. That’s not what it is created for. You have the higher cost of living areas which get penalized. $100k in NY money is probably $70k in MN money, but we pay tazes on the extra $30k. Non-funded mandates. Industries like tobacco still exist because the gov’t can’t afford to lose the tax revenue it provides. Why isn’t SS bnefits taxed as regular pension income?
    But none of that matters. I’m not sure why BB needs to singled out when the concept of entertainment expenses being deducted has been around for a long, long time.
    I’m curious. How many people have ever turned down corporate tickets when they were offered to you, because you disagreed with the tax treatment?

  18. Craig Calcaterra - Apr 6, 2010 at 3:05 PM

    “I’m not sure why BB needs to singled out when the concept of entertainment expenses being deducted has been around for a long, long time.”
    Oh, I just singled it out (via the link) because I only care about baseball. I think it’s worth examining more broadly in all areas. Meals, entertainment, etc. I did a lot of corporate and public ethics work when I was a lawyer. I don’t think a hell of a lot of what is written off as entertainment expenses actually does things to stimulate business activity in the way intended. Was the deduction designed merely to get an executive to spend $50 on a steak and have fun while paying some service workers, or was it to get him to entertain clients and possibly earn new business for the company thereby helping the economy? I think the former is all too common.
    I also think that access to such subsidized luxury drives a wedge into society and exacerbates social inequality and separation, but that’s a much more esoteric subject that is probably beyond what we’re talking about.
    “I’m curious. How many people have ever turned down corporate tickets when they were offered to you, because you disagreed with the tax treatment?”
    None, but that shouldn’t matter. Individual incentives are what they are. Our tax code and overall policies should be designed to encourage or discourage certain behaviors writ large.
    But for what it’s worth, I have turned down luxury box tickets in the past year or two, mostly because I didn’t much enjoy my one trip to a baseball luxury box.

  19. The Rabbit - Apr 6, 2010 at 3:10 PM

    Thanks, Craig, for eloquently stating my value system and point of view.
    It’s unfortunate that every political difference ends up as a media soundbite with the choice always designed to inflame one side or the other. The lack of civil discourse and educated opinions is appalling.

  20. BCTF - Apr 6, 2010 at 3:54 PM

    Craig Calcaterra = James Taggart

  21. Craig Calcaterra - Apr 6, 2010 at 4:11 PM

    Being the bad guy in an Ayn Rand novel is fine with me given that she was a horrible writer and a philosophical simpleton.

  22. Joey B - Apr 6, 2010 at 5:29 PM

    “But for what it’s worth, I have turned down luxury box tickets in the past year or two, mostly because I didn’t much enjoy my one trip to a baseball luxury box.”
    I average about once a year. It’s my entitlement program. It’s a nice evener. Guys earning huge money at the investment banks, insurance companies, etc., have already bought them. Most of them get sent to clients. Most of the clients filter them down to employees. Guys like me don’t get to sit behind HP on their own dime. Not that I do badly, but it’s a nice little perk for a whole bunch of people that might normally sit upstairs.
    I understand questions about the tax code, but some of these types of entertainment expenses serve a lot of people that are normally nameless, faceless cogs. Having been born relatively impoverished (but with great parents), I can play the class warfare game with the best of them. But it serves no purpose. Except for the efforts of those capable of producing and employing great amounts of wealth, I wouldn’t have the job I have.

  23. The Rabbit - Apr 6, 2010 at 6:45 PM

    “The post-1980s conservatives, to a fair degree, have no value judgment. It displeases me to say that, but I find way too many people associating themselves with Reagan or Goldwater, though either of those guys probably wouldn’t recognize our current lip-service consrvatives.(sic)”
    I completely agree.
    I suspect many of the people who post here are much younger than this grandmother and lack either the personal experience of living through prior decades or the more formal education in poli sci, economics, and/or tax accounting. Sometimes we don’t know what we don’t know.
    I will try not to add any fuel to the debate other than to say that the current version of health care reform, for example, would have been the Republican solution to the problem in the 70’s. Democrats in the 70’s would have held out for the public option to dovetail Medicare..and I say that as a member of a State Delegation to the Republican convention in 1972 and as the former Health Chairman for an insurance trade group who guest lectured in graduate programs and appeared in televised discussions on the subject of health care.
    My motto: Subvert from within. :-)
    @ Craig Re Ayn Rand: LOL Amen!

  24. W - Apr 6, 2010 at 10:32 PM

    There’s a sucker born every minute.

  25. Joey B - Apr 7, 2010 at 8:59 AM

    “I will try not to add any fuel to the debate other than to say that the current version of health care reform, for example, would have been the Republican solution to the problem in the 70’s.”
    That’s actually my main complaint about government. Had Bush suggested maybe 90% of what Obama suggested about healthcare, republicans would’ve supported him 100%. Now that it’s Obama, it’s a problem.
    Had Bush suggested we drill offshore, democrats would’ve excoriated him. But if Obama suggests it, he’s the man.
    There are way too many people that will support any suggestion by their party, oppose any suggestion by the opposition, even if both suggestions are identical.

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