Real Salt Lake are $5 million richer thanks to a tax loophole
With city and county officials complicit by virtue of their approval, Real Salt Lake have successfully manipulated circumstances to their enormous benefit and detriment of the taxpayers whose money supports the franchise.
The taxpayers of Salt Lake County, Utah, financed part of the construction of Rio Tinto Stadium, the home of MLS franchise Real Salt Lake, in 2011 with $11 million in public bonds. It was that very facility which has been used to skim millions from those same public coffers.
According to Lee Davidson of The Salt Lake Tribune, Real front office personnel worked out a deal with the former mayor of Sandy, Utah, to cut the property tax on Rio Tinto Stadium in half back in 2012. Real Salt Lake pay those taxes annually, and as a result have saved $5 million thus far.
What could be a simple adjustment of real estate value is complicated by the fact that those property taxes are the funds counted on by the city to repay the bonds used to finance the stadium’s construction. With less money coming from Real Salt Lake, the difference has had to be made up by other taxpayer funds.
The complicity and/or failures of government officials in this go beyond former Sandy mayor Tom Dolan, however. With Dolan, that was a classic quid-pro-quo. Dolan supported the devaluation in exchange for over $10,000 in reelection campaign donations. For the city council members and county officials who approved the devaluation, and conveniently can’t remember voting on or even discussing the matter, the motivation isn’t as clear.
This story gives more background to how MLS has built its business on taxpayer dollars, a strategy that MLS is looking to expand upon in 2017 and beyond. Charlotte, once considered a frontrunner for MLS expansion, is now a non-starter for the league because a deal to use public funds to finance a new arena is dead. Other possible expansion sites like Cincinnati, Nashville, San Antonio and San Diego are all augmenting their bids with taxpayer dollars. Even in Miami, where funding for the new MLS arena is privately-sourced, the endeavor takes advantage of several tax breaks.
Perhaps the most curious aspect of this deal is that Real applied for a reduction in the property taxes because they argued that they were losing money. State law in Utah requires properties to be assessed based on their construction cost, but has a loophole that allows county assessors to devalue properties if the businesses operated on the premises can show significant financial losses.
Apparently the reduction had the intended effect, as the franchise recently committed the dollars necessary to begin an NWSL franchise. It is fair to ask, if Real can afford to fund another football franchise and make donations to political campaigns, why can’t they pay enough property taxes to actually give a return to the taxpayers on their investment?
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As other cities consider partnering with MLS franchises and investing in new facilities for the teams, this can act as a cautionary tale. Committing to those relationships can end up costing far more than originally projected.