The 2015 Super Bowl will be played at the University of Phoenix Stadium in sunny Glendale, Arizona. At first glance, it is a nearly perfect location for what is arguably the biggest event in American professional sports (my apologies to the World Series). But in an odd twist, considering the sports world’s current obsession with the Super Bowl-bound New England Patriots and DeflateGate, the financing scheme behind the University of Phoenix Stadium has left the City of Glendale’s finances… deflated.
Financing sports arenas and stadiums through taxes and public debt is never a good idea. But the University of Phoenix Stadium in Glendale really takes the cake. The City of Glendale itself has a bit of a reputation, according to The New York Times, of throwing money at sports facilities in efforts to lure sports team there. The NYT notes: “But the scale of spending in the city of 230,000 residents is unique. According to Moody’s Investors Service, Glendale’s debt is equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona. More than 40 percent of the city’s debt is dedicated to paying off sports complexes.”
In the case of the University of Phoenix Stadium, advocates attempted to fund its construction via rental car taxes—specifically, a 3.25 percent tax on rentals. They claimed that out-of-state tourists would pay the brunt of the tax and thus finance the stadium—though Americans for Tax Reform has detailed how rental car taxes actually disproportionately hit local taxpayers hardest. Instead, an Arizona judge ruled last year that rental-car taxes are vehicle taxes and thus required, by the Arizona constitution, to be spent on projects such as road and highway construction—not sports stadiums. According to The Republic, this ruling could leave Arizona on the hook for roughly $150 million.
Even without the legal ruling against the stadium financing, it is clear that taxes such as rental-car taxes are discriminatory, reduce local accountability as to how revenue is appropriated, and play into the misguided notion that if you tax it, they will still come.
The Associated Press notes that most Super Bowl revelers aren’t even staying in Glendale, instead opting to stay and enjoy the nightlife in nearby Phoenix and Scottsdale. Glendale, and Maricopa County as a whole, relies on a 1 percent tax on hotel occupancy for (you guessed it) repaying $1.2 billion in bonds to finance stadium construction. Glendale’s predicted boost in tax revenue appears to be up in smoke, leaving the city’s taxpayers on the hook with even more debt.