By Brian Tinsman

WASHINGTON — Thanks to a gross receipts tax on some of Washington D.C.’s bigger businesses, the district is paying down the debt on Nationals Park faster than projected.

In fact, the Washington Business Journal reports that the tax could help the city finish payments in 2026, a full decade ahead of schedule.

At $31.1 million, per the [Office of the Chief Financial Officer], the fiscal year 2017 ballpark fee haul is more than double the minimum $14 million required under the stadium financing law to cover the bond debt service. In fiscal 2018, the CFO estimates, D.C. will collect even more — $33.9 million. The fee revenue fluctuates year to year, from a low of $23.6 million in 2007 to a high of $34.9 million in 2016.

The ballpark fee is a tax on the gross receipts of businesses earning at least $5 million. The tax ranges from $5,500 to $16,500 per year, depending on the volume of gross receipts.

When all is said and done, the stadium will cost the city approximately $1.1 billion in both principal and interest. The $693 million in principal costs is the second-most expensive in MLB, behind only the newer home of the New York Yankees.

While fans will almost always side with the team, the question for taxpayers and politicians will always be: was it worth it? That’s a very complex question to answer, but here are three important factors to consider:

  1. This was part of the deal. MLB wanted baseball back in D.C. and D.C. wanted a team. Part of the deal in moving the then league-owned Montreal Expos to Washington was to provide them with a state-of-the-art stadium, which Montreal balked at. The team temporarily moved into RFK Stadium while work on Nats Park began. At the time of its completion, it was the first LEED-certified green professional sports stadium in the U.S., fitting that cutting-edge build. Cutting-edge is great, but it costs money.
  2. The carrot on a stick has worked. The goal in putting it near Navy Yard was to revitalize the area, which it has unmistakably done. New businesses, housing and restaurants flocked to the area, making it one of Metro’s most-used stops and a destination spot even when the boys of summer are gone.
  3. All-Star exposure awaits. Unlike some major sporting spectacles that fill and then empty a stadium around a single event, the MLB All-Star Week, which will be hosted in D.C. in 2018, has a lingering economic impact. Fans and players come from all over the country and stay through the Home Run Derby, All-Star Futures Game, and the All-Star Game itself. That won’t pay down the price of the stadium much faster, but it is great for D.C. overall.

For some cities, financing professional sports stadium is a necessary evil to building the type of community that politicians envision. For others, it’s an example of corporate greed run amok. Regardless of where you stand on the issue, it’s objectively positive to see it paid off faster.

 

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