TAX REVISIONS OF 2004 AND PRO SPORTS TEAM OWNERSHIP |
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| Authors: | N. EDWARD COULSON RODNEY FORT |
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| Affiliation: | 1. Coulson: Department of Economics, 508 Kern Graduate Building, Pennsylvania State University, University Park, PA 16802. Phone 814‐863‐0625, E‐mail fyj@psu.edu;2. Fort: Program in Sport Management, University of Michigan, 1402 Washington Heights, Rm. 3150, Ann Arbor, MI 48109‐2013. Phone 734‐647‐8989, E‐mail rodfort@umich.edu;3. We thank Michael Wark for helpful research assistance, and Michael Coulson, Virginia Bullard, and anonymous referees for helpful comments. |
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| Abstract: | Tax law revisions of 2004 altered the “roster depreciation allowance” enjoyed by pro sports team owners. Supporters claimed this would practically eliminate costly legal oversight by the IRS and, ultimately, increase owner tax bills. Government officials and leagues remained silent on team value impacts but outside analysts argued they would rise by 5%. We model this policy change and investigate it empirically. Supporters in Congress were absolutely correct that owner tax payments should increase but outside analysts underestimated team value increases by half. No wonder Major League Baseball and the National Football League favored the revision. (JEL D21, G38, H25, L83) |
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