Sonics owners push tax rebates

[metro]

Sonics owners push tax incentives
Journal Record
April 17, 2008

OKLAHOMA CITY – The owners of the Seattle SuperSonics mounted a full-court press on Oklahoma lawmakers Wednesday to convince them to pass a tax incentive package that supporters say will help lure the NBA team to Oklahoma City.

Lobbyists schmoozed lawmakers at the state Capitol and some received telephone calls and e-mails from Sonics owner Clay Bennett and other representatives of the ownership team a day before the state House is scheduled to consider final passage of legislation that will give the team a rebate on a portion of payroll taxes it will pay if it relocates.

“I know what they’re wanting,” said state Rep. Paul Wesselhoft, R-Moore, who said he planned to return phone calls from Bennett and Tom Price Jr., senior vice president of corporate development for Oklahoma City-based Chesapeake Energy, owned by Sonics ownership partner Aubrey McClendon. “I want the Sonics here. I’m just not favorable to this sweetheart deal,” Wesselhoft said. “We’ve been blackmailed from the beginning on this.”

Wesselhoft voted against the measure when the House voted 66-32 on Monday to send the bill to the Senate. The Senate passed the bill 27-21 on Tuesday after stripping it of House amendments and sent it back to the House. State Rep. Charlie Joyner, R-Midwest City, who also voted against the bill, said he received an e-mail from Bennett that said the team might not come to Oklahoma City unless the House passes the tax incentive.“I just don’t think this thing has been handled right. That’s kind of holding legislators hostage,” Joyner said. “I’m not anti-NBA, but this is not right.”

A spokesman for the Sonics, Dan Mahoney, declined comment on the lobbying effort.

Bennett has filed a relocation request with the NBA and a subcommittee of three NBA owners plans to recommend approval when all 30 owners vote on the SuperSonics’ request on Friday.

State lawmakers are considering the tax package six weeks after Oklahoma City voters approved a sales tax extension to fund $121.6 million in improvements to a downtown arena and build a practice facility in hopes of luring the Sonics. The state legislation expands Oklahoma’s Quality Jobs Program to include the NBA. It would permit the Sonics to receive a rebate of some of the payroll taxes paid by the team and places a reimbursement cap on the incentives not to exceed the top income tax rate in Oklahoma, currently 5.5 percent. The measure would also permit the company to receive rebates on the taxable payroll paid by players from opposing teams when they play in the city.

If the team relocates, it will bring 170 jobs with a $74 million payroll to the state, officials have said. The rebate will be about $4 million a year and $60 million over its 15-year life.

Opponents of the plan have said it is unnecessary because the team has already announced its intention to relocate and the team’s millionaire owners do not need a tax break. “This is not what the quality Jobs Act was meant to be. I look at it as corporate welfare,” Joyner said. David Glover, a citizen who has spoken out against the plan, urged lawmakers to oppose the Sonics deal. Glover carried a sign in the Capitol rotunda that resembled a check and was made out for more than $3.3 million. He said that is what Oklahoma taxpayers will rebate to the team each year for the salaries of 16 Sonics basketball players. “It will be by far the most money back for the least people ever,” Glover said.

State Rep. Al Lindley, D-Oklahoma City, who voted against the plan on Monday, said Price urged him to vote yes in a telephone conversation.“He just wanted me to support the Sonics deal,” Lindley said. But Lindley said Price did not indicate the team would not relocate if the tax incentive did not pass. “He just said it would help if it would be passed,” Lindley said. “They’re hitting the Democrats pretty hard because they probably need some.”

Lindley said he does not plan to change his vote. State Rep. Jeff Hickman, R-Dacoma, voted for the Sonics tax package after the House approved an amendment creating economic development incentives for rural areas like his northwestern Oklahoma district. But Hickman said he now plans to vote against it unless he receives a commitment from House leaders that rural economic development will become a priority.“We have some very serious issues involving rural areas that we need to talk about. I think the rural members are tired of being run over,” Hickman said.

[MikeLucky]

Opponents of the plan have said it is unnecessary because the team has already announced its intention to relocate and the team’s millionaire owners do not need a tax break. “This is not what the quality Jobs Act was meant to be. I look at it as corporate welfare,” Joyner said. David Glover, a citizen who has spoken out against the plan, urged lawmakers to oppose the Sonics deal. Glover carried a sign in the Capitol rotunda that resembled a check and was made out for more than $3.3 million. He said that is what Oklahoma taxpayers will rebate to the team each year for the salaries of 16 Sonics basketball players. “It will be by far the most money back for the least people ever,” Glover said.

What these people don't understand is this isn't about just luring a team here and then ignoring it.....

It's like buying a new car but then NEVER changing the oil or doing any maintenance because you already paid for the car.....

This is an issue about doing what we can as a community to keep our market viable and thriving.... it's not like there won't still be growth that the city and the citizens will reap because of the NBA even after the rebates......

And I get the feeling that David Glover will pretty much find something about this team to complain about.... first it was the arena, now the rebates..... what's next? Carrying a sign in front of the Ford Center to protest the prices of hot dogs and beer at the games......

[Kerry]

Glover would be more persusive if he would just stick to the truth and make his point using facts. It is 75 position not 16. When you have to lie, oops I mean mis-represent the truth, to help prove your point it really detracts from your point. DG can still oppose the plan using the 75 number but he knows he won't get as many supporters. That means he is try to take advantage of the uninformed to push his personal agenda. Nice legacy DG.

P.S. Yes Glover will be protesting hotdog prices at the Ford Center. Is there any doubt that he won't? He is a man possesed. Thanks for hanging with him kooks.

[andy157]

Glover would be more persusive if he would just stick to the truth and make his point using facts. It is 75 position not 16. When you have to lie, oops I mean mis-represent the truth, to help prove your point it really detracts from your point. DG can still oppose the plan using the 75 number but he knows he won't get as many supporters. That means he is try to take advantage of the uninformed to push his personal agenda. Nice legacy DG.

P.S. Yes Glover will be protesting hotdog prices at the Ford Center. Is there any doubt that he won't? He is a man possesed. Thanks for hanging with him kooks.

Kerry, I guess you could classify me as one of Glovers "Kooks". That is until now.

In the past I opposed the Practice Facility, yet they got it. Most recently I've opposed the the Payroll Tax Rebate. Nevertheless, that is going to happen as well.

Therefore, I've succumb to the realization that the time has come for me to follow that age old adage, which is,"if you can't beat um, join um". From this day forward I will strive to become a more positive and progressive citizen, and not an obsructionist.

No doubt, your right, Glover is going to protest hot dog prices. Which brings me to my point. We can stop his hot dog tirade dead in its tracks, I have solution, a plan if you will, to do this.

We give the Sonics in the form of a rebate the City's $400,000 (give or take) portion of the naming rights for the Ford Center. The Sonics will then reduce the price of a hot dog by 25%. Poof, Glovers high hot dog argument will have no merit.

Reduced hot dog prices will mean more people will be able to come and enjoy the NBA. This means more ticket sales, more team revenue, which will greatly enhance the teams bottom line. This in turn will insure that OKC remains a "BIG LEAGUE CITY" for many, many years to come.

The $400,000 loss in availible revenue to the Citys 800 million dollar budget is nothing. A drop in the bucket. I can live with an extra pot hole or two.

[srkboy23]

Looks like the Sonics are already asking you more from you than you want to give them. If you do somehow manage to get the Sonics, you'll realize just how hard it is to keep a pro team.

[metro]

I think Glover just likes to be anti-popular opinion!

[kevinpate]

> He is a man possesed. Thanks for hanging with him kooks.

way, way funnier than the slew of Gundy tirade spinoffs

[HOT ROD]

i think the idea of extending the rebate to the NBA only makes sense. During lean times (which COULD happen. ...), the rebate will only ensure the team's success in Oklahoma City.

That being said, I do NOT like/agree with how the bill is written. I do NOT think the rebate should be awarded to visiting players's payroll taxes since they DO NOT RESIDE IN OKLAHOMA and THEIR JOBS ARE NOT IN OKLAHOMA and THEY DO NOT ADD TO OKLAHOMA CITY'S JOB MARKET - all of which are conditions/intentions of the Quality Jobs program.

Since the program is not met in this case, the visiting-player/coach/trainer clause should be removed from the bill.

[solitude]

Tax breaks for companies that bring real jobs for real people to Oklahoma is what Quality Jobs was all about. Not in my wildest dreams did I think that would one day include, in a twisted and perverse manner, celebrity millionaire salaries. Spin it any way you want, this is a travesty and an embarrassment. Corporate welfare at one of its most extreme examples. Start the spin - deep down, I think even the biggest homers for this whole basketball thing knows it's not what Quality Jobs was/is all about.

[bornhere]

What these people don't understand is this isn't about just luring a team here and then ignoring it.....

No, we understand exactly. This is about long-term socializing of cost and privatizing of profit. This will go on for decades to come.

Since the program is not met in this case, the visiting-player/coach/trainer clause should be removed from the bill.

This boosts Bennett's image with the other owners, since every one of them will benefit. And they can go to their own state legislatures and demand parity.

I guess when two MLB teams play an exhibition at the ballpark, we'll send their owners money, too.

Tax breaks for companies that bring real jobs for real people to Oklahoma is what Quality Jobs was all about.

Quality Jobs was all about tax breaks for people with money and political influence – nothing more. Again, look at the historical record of 'job creation' in this state.

[solitude]

Quality Jobs was all about tax breaks for people with money and political influence – nothing more. Again, look at the historical record of 'job creation' in this state.

While I agree that has certainly been the result - it wasn't the "spirit" of the bill as presented to Oklahomans.
I opposed it then - and I oppose it now.

[Blazerfan11]

This is an AP article btw....

[edcrunk]

i don't think glover understands the concept of running a successful business. just because bennett has a substantial amount of cash, doesn't exempt him from some type of incentive/reward in doing business here. one of the arguments being put forth in the sonics' case vs seattle is the fact that they can't make money with the type of lease they have with key arena. i would think that owning an nba franchise is a risky venture. there are so many factors at play that can determine whether it is successful or not.
anyway... there is an argument out there that nba can't thrive here. a whole lot of people are gonna be expecting us to fail. this a chance for oklahoma of late to be re-introduced to the world, there is quite a lot riding on the sucess of this venture / nba experiment.

btw, does it apper to anyone else that dg just has a problem with rich folks?

[betts]

Although I have some issues with using the Quality Jobs program to support the team, what it may have been designed to do is remove the concern that will exist about the amount Bennett will be able to receive for a television contract in OKC.

To move from the 12th to the 45th largest television market, to the owners, indicates a drop in revenues, which is one of Mark Cuban's points. It may end up being a misconception, if the Sonics' owners can craft an television deal that shows games throughout the state, and perhaps in some neighboring cities such as Wichita, Joplin, Springfield. Interestingly, the Sonics' television contract in Seattle was only $10 million a year, whereas the contract in Salt Lake City is $12 million a year. So, some of the objection may be due to perception and uncertainty, but I suspect it was an attempt to negate the drop in revenue due to market size that was behind this move. There is a big concern regarding smaller markets within the ownership group, as some of the smaller markets have been asking for revenue sharing, which is, of course, of concern to some of the bigger markets.

[andy157]

Although I have some issues with using the Quality Jobs program to support the team, what it may have been designed to do is remove the concern that will exist about the amount Bennett will be able to receive for a television contract in OKC.

To move from the 12th to the 45th largest television market, to the owners, indicates a drop in revenues, which is one of Mark Cuban's points. It may end up being a misconception, if the Sonics' owners can craft an television deal that shows games throughout the state, and perhaps in some neighboring cities such as Wichita, Joplin, Springfield. Interestingly, the Sonics' television contract in Seattle was only $10 million a year, whereas the contract in Salt Lake City is $12 million a year. So, some of the objection may be due to perception and uncertainty, but I suspect it was an attempt to negate the drop in revenue due to market size that was behind this move. There is a big concern regarding smaller markets within the ownership group, as some of the smaller markets have been asking for revenue sharing, which is, of course, of concern to some of the bigger markets.

Betts, if moving to such a small T.V. market causes the owners such grave concern due to the the drop in revenues, there is a solution. Which is.

The City and the State should create, and then impose, a broadcasting fee/tax (user tax) on all clubs, bars, sports bars, and resturants that air Sonics games as a service to their patrons. This user tax/fee could be based upon the establishments gross sales revenues. Then, inturn, be rebated back to the Sonics owners. This tax would not adversly affect business due to the fact they would simply pass the tax onto the patron.

In fact one could say it would enhance their revenues, due to the fact more people will be coming in to have a beer (or 7), eat a burger, and watch the Sonics play on T.V.

As citizens, we must understand. If the Sonics are to survive in this market, which they must, then we as tax payers must be willing to, and become much more creative in our thinking to insure they do.

[donuteyes]

my fear is that IF things don't work out, for whatever reason, bennett will jump ship, and leave us high and dry. if he doesn't want to fight a drawn-out legal battle with schultz AND pay to get out of the key arena lease, he may say, "to heck with this," and sell the team back. if he comes here and doesn't make the money he thinks he might in the long-term, he might sell the team to someone from, i don't know, kansas city, who has a debt-free arena now and wants a team.

and don't say it's a sure thing that an NBA team will thrive in OKC. if it was such a sure thing, we'd have a team. we did well with the hornets, but hosting and having are worlds apart. i'd love a team and will support them, but if you look at this objectively, it's not the way business is normally done with regards to relocation of a team.

and if a judge can be convinced that bennett did not make enough of an effort to keep them in seattle (per the agreement), bennett will lose the team, and we'll never get them.

i'm not saying any of this will happen, but you're lying to yourself if you think it couldn't. don't be blinded by excitement, and stay grounded and look at the overall picture. if this could happen in seattle, it could very well happen here, and that's what worries me.

[Kerry]

Andy157 - I am not saying you can't be an obstructionist. Obstruct all you want you. Just use facts when you do it. DG makes most of his stuff up. If you find that someone you support isn't playing with the facts then don't repeat them and then use the excuse that those are their numbers not mine. Not saying you personally did that but DG did when he came up with his $150 per person tax or whatever the number is.

How hard is it to just be honest?

Here is another example. Was the Ford Center vote a tax increase? No it wasn't. It was a continuation of an existing tax. The anti-Ford Center people lied when they said it was a tax increase. It is just that simple. The tax rate remained the same. There is no "depends on how you look at" excuse unless you want to lie about it. Again, not say you personally did this but others did.

[kevinpate]

I'll disagree with you on that one Kerry. Bottom line to me is a five year 1 cent tax is voted on yes/no with the express inclusion of an ending date. From the moment of the yes vote, the expiration date is known for when the increased penny will cease to be.

The recent vote, to begin upon the already agreed expiration and automatic reduction of the existing tax base, is in fact an increase from the planned drop back to today's level, again for a time certain.

It's a word game used to pass it the first time, and then thereafter, to apply it to other purposes, all the time saying no increase. Yet, it is an increase since you are asking folks to vote away a time stamped reduction of today's tax rate.

To be a true no increase, the original tax vote should be based on yes/no for a penny, the first five years to be devoted to X, and then expires ONLY IF the public does not vote yes to dedicate it to some other purpose. Then of course, you lose the bennie of the temporary increase. How many 5 year periods have the good citizens now agreed to, and how many more will they for the 'temporary' five year tax.

I'm not opposed to the FC vote, and if I were in the area as a voter, I would have voted for it. Hang the NBA, it's good for the arena and thus OKC as a whole.

But the whole let's make our temp tax extend out for a new purpose and do away from the planned reduction and claim wiping out a planned for, voted in reduction in the tax base is the same as having no increase, that's the word game if ever there was one, at least from where I sit. To hold otherwise is to say the tax was never meant to be temporary, only its purpose was.

[donuteyes]

wow, we don't even have the team, and bennett is already making demands. what's crazy is that most of our legislators are bending over backwards to give him whatever he wants. clay bennett will screw us to make (or keep from losing) money, just like he's doing to seattle. business is business, he doesn't care what state he's in.

[SouthsideSooner]

wow, we don't even have the team, and bennett is already making demands. what's crazy is that most of our legislators are bending over backwards to give him whatever he wants. clay bennett will screw us to make (or keep from losing) money, just like he's doing to seattle. business is business, he doesn't care what state he's in.

Donuteyes, would you mind telling me just exactly how Clay Bennett is going to screw you and how he's screwing Seattle?

[edcrunk]

Donuteyes, would you mind telling me just exactly how Clay Bennett is going to screw you and how he's screwing Seattle?

yeah, that's what i'm wondering. he's not assured of making money in the long run... okc is a largely unproven market.

can you believe this guy... bringing the NBA to town... why is he screwing us over like that!!
hah!

[andy157]

I'll disagree with you on that one Kerry. Bottom line to me is a five year 1 cent tax is voted on yes/no with the express inclusion of an ending date. From the moment of the yes vote, the expiration date is known for when the increased penny will cease to be.

The recent vote, to begin upon the already agreed expiration and automatic reduction of the existing tax base, is in fact an increase from the planned drop back to today's level, again for a time certain.

It's a word game used to pass it the first time, and then thereafter, to apply it to other purposes, all the time saying no increase. Yet, it is an increase since you are asking folks to vote away a time stamped reduction of today's tax rate.

To be a true no increase, the original tax vote should be based on yes/no for a penny, the first five years to be devoted to X, and then expires ONLY IF the public does not vote yes to dedicate it to some other purpose. Then of course, you lose the bennie of the temporary increase. How many 5 year periods have the good citizens now agreed to, and how many more will they for the 'temporary' five year tax.

I'm not opposed to the FC vote, and if I were in the area as a voter, I would have voted for it. Hang the NBA, it's good for the arena and thus OKC as a whole.

But the whole let's make our temp tax extend out for a new purpose and do away from the planned reduction and claim wiping out a planned for, voted in reduction in the tax base is the same as having no increase, that's the word game if ever there was one, at least from where I sit. To hold otherwise is to say the tax was never meant to be temporary, only its purpose was.

True. And very well said. Semantics in its truest definition.

[Kerry]

Kevin - you are correct that it was an extension of a temporary tax but it was not a tax increase. The tax rate stayed the same. Let's say you work for employer XYZ and on January 1 you are supposed to get a pay increase of $1 per hour. However, on Dec 31 you get a letter that says sorry, You are only going to get a $0.50 increase. On January 1 do you get a 50 cent incease or 50 cent decrease? Of course everyone know you got a 50 cent increase.

What you are doing is falling into the trap of base-line budgeting and that is a slippery slope. For example, I could say that per capita income in Oklahoma has gone up over the past 10 years in Oklahoma so they original 1 cent tax is actually now a tax cut because it wasn't indexed to infaltion or growth in income. 1 cent is now a smaller percentage of the average income so the effective tax rate went down. Is anyone going to buy that arguement? Why not? It is true. Don't fall into the base-line budgeting trick.

[Blazerfan11]

Great info on the tv contract stuff Betts! very interesting!!!!

[Kerry]

Blazerfan11 - It kind of takes some wind out of the Seattle sails doesn't it. They actually make $2 million less in Seattle than the Jazz make in Utah. I guess there is something to be said for being the only pro team in town.