Spurs used $41 million in federal subsidies to build AT&T Center, study finds

Tax loophole allows pro teams around nation to use billions in taxpayer dollars

Forty-one million of U.S. taxpayer dollars were used to build the AT&T Center, but the total tax revenue lost to the San Antonio area is $44 million.

While fans love the Spurs, the author of a recent study that found that taxpayer money was used to build stadiums for franchises that make millions said economically, the city and county aren't getting a lot back for the investment.

Municipal bonds used to promote the public good, like roads and bridges, allow state and local governments to borrow money from the federal government.

"The way the tax code works is the federal government effectively subsidizes these bonds. They make them cheaper for the person, company or entity borrowing them," said Brookings Institution Senior Fellow Ted Gayer.

Gayer co-wrote a study that was just released, titled "Why the federal government should stop spending billions on private sports stadiums."

Gayer explained for the past 60 years, cities and counties across the nation have been securing municipal bonds for professional sports teams, and because of a loophole in the tax code, that's legal.

Bexar County did it for the AT&T Center, built for the Spurs in 2002. About $169 million in tax-exempt municipal bonds ended up giving the Spurs $41 million in federal subsidies. Another $3 million went to bond holders who received extra tax breaks on municipal bonds. That raised the total federal tax revenue lost to $44 million.

"Now if you're the Spurs or a sports owner, of course you're going to ask for the subsidy. But as a finance guy, it's not justified to put taxpayer money toward subsidizing individual companies like that," said Michael Taylor, who runs a financial and business blog Bankers Anonymous, and is a syndicated columnist for the San Antonio Express-News and the Houston Chronicle. 

Taylor agrees with the line of thinking that these stadiums don't financially benefit local communities.

"In 2015 the Stanford study comes out and says, do you get general economic benefit jobs, people get wealthier in the community, if it helps neighborhoods develop, and the overwhelming conclusion is no," Taylor said.

District 2 Councilman Alan Warrick said he has seen other cities benefit from deals like this, but not as much in San Antonio, where his district desperately needs that type of growth.

"I've seen economic benefits in Los Angeles, Washington, D.C., even Phoenix, Arizona, but it takes development outside of the stadium. It has to be restaurants and hotels and apartments and condos and all of those things around the stadium, and we have the opportunity for that. We just haven't seized that opportunity yet in San Antonio," he said.

He said the small changes he has seen haven't gone much further than the stadium.

"But I wouldn't say we haven't seen any. There's tons of folks I know that work at these venues and we have small businesses that are growing, especially on the catering and concessions side, for the Alamodome and AT&T Center, so we've seen some, but but definitely not to the magnitude — I'd say 20 to 25 percent of what it could be," Warrick said.

He did say there is a long way to go to fulfill what he calls empty financial promises.

"A lot of promises were made way back when these stadiums were being funded by tax dollars here locally that we would have that economic development, that we would have those new homes, and restaurants, businesses and it just hasn't happened yet. So we have to get over those old promises that were made and see how we can move forward," Warrick said.

Bradley Toland, a huge Spurs fan, said the Spurs identity is just as important to him as economic benefit.

"It's important enough to me that I want to look the other way and just not really see that part even though I think it's probably not a good idea. At the same time, I really like having the Spurs here," Toland said.

What irks Gayer the most is taxpayers across the nation having to pay for each other’s team stadiums.

"Local benefits aside, there is clearly no economic justification for federal subsidies for sports stadiums. Residents of, say, Wyoming, Maine, or Alaska have nothing to gain from the Washington-area football team's decision to locate in Virginia, Maryland, or the District of Columbia," he wrote in the study.

The Brookings study shows this is a nationwide tactic for professional sports teams. The study shows since 2000, 35 other professional sports stadiums have also been financed with tax-exempt bonds.

"All together, the federal government has subsidized newly constructed or majorly renovated professional sports stadiums to the tune of $3.2 billion federal taxpayer dollars since 2000. But because high-income bond holders receive a windfall gain for holding municipal bonds, the resulting loss in total revenue to the federal government is even larger at $3.7 billion," the study said.

KSAT 12 News reached out to the Spurs organization for a comment but has not received a call back yet. This has not happened just with the Spurs organization, and the Spurs were far from receiving the most in subsidies. Focusing just on the NBA, the Brooklyn Nets got $161 million and the Houston Rockets pulled in $112 million.

For a link to the study to compare all the professional sports teams' subsidies, click here: https://www.brookings.edu/research/why-the-federal-government-should-stop-spending-billions-on-private-sports-stadiums/#federal-subsidy

About the Author:

Courtney Friedman anchors KSAT’s weekend evening shows and reports during the week. Her ongoing Loving in Fear series confronts Bexar County’s domestic violence epidemic. She joined KSAT in 2014 and is proud to call the SA and South Texas community home. She came to San Antonio from KYTX CBS 19 in Tyler, where she also anchored & reported.