The Tax Dodge - Santa Clara San Francisco 49ers Stadium

Property Taxes

super rich Montgomery Burns

The Billionaire Wins

No one knows more about tax shelters and avoiding taxes than a billionaire. And when it comes to an NFL pro football team, the biggest tax break comes from getting some city to own the stadium. The San Francisco 49ers are constructing a $1,177,000,000 stadium. Annual Santa Clara property tax on that would be 13 million dollars. For 40 to 60 years, that is 520 to 780 million dollars in saved property taxes in todays dollars - and that is if they only own the building and lease the 17 acres of land. Owning the land would create an even greater property tax amount.

The City Loses

The Santa Clara Unified School District gets 38.4 cents of every property tax dollar and the City of Santa Clara General Fund gets 10.2 cents of every property tax dollar. This means that while Denise Debartolo York (and her heirs) save $520 million to $780 million by not owning the stadium, the Santa Clara school system loses $199.68 million to $299.52 million dollars in revenue. In addition, the City of Santa Clara General Fund loses $53.04 million to $79.56 million in property tax revenue due to the San Francisco 49ers not owning the stadium. Other losers include Santa Clara County ($93.6 to $140.4 million), West Valley-Mission College District ($57.72 to $86.58 million), and the Educational Revenue Augmentation Fund ($82.68 million to $124.02 million).

Income Taxes

1040 tax return and w-2 form

The Billionaire Wins

When the Santa Clara Stadium Authority was only supposed to contribute $330 million to the stadium construction (pre-election term sheet), it was said that ALL of that money would be gained from the sale of Stadium Builder Licenses, Naming Rights, charges for rights to host concession stands (Pouring Rights) and other fees. However, the San Jose Business Journal reports that the 49ers have given a presentation showing SBL revenue will be $500 million. If the San Francisco 49ers were the recipient of those charges, they would be added to their income. And since they are profitable every year, that would mean taxes would need to be paid on the $500 million (likely more) received from fees and charges related to the stadium. The current corporate US Income Tax rate for income over $18,333,333 dollars is 35% (for income under $18,333,333 it is essentially the same).

State and Federal Taxpayers Lose

So $500 million dollars in fees taxed at 35% would be $175 million dollars in income taxes, but the San Francisco 49ers are saving all that (and the US Treasury is losing an equivalant amount) by having their stadium charges funneled through the tax free public entity called the Santa Clara Stadium Authority.

California's corporate tax rate is 8.84%. The effective state tax is (lower due to state tax deductibility on federal filing) 5.746%. So the 49ers savings on State of California income taxes are at least 28.7 million dollars. That would make their total income tax savings at least 203.7 million dollars.

In addition to the SBL fees, the San Francisco 49ers will income tax shelter the Naming Rights fees, and fees levied on the vendors who will be selling food at the stadium ("Pouring Rights"), through the Santa Clara Stadium Authority.