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EDITORIAL
A bad deal
(Published October 4, 2004)

Major League Baseball belongs in the nation's capital.

But D.C. taxpayers - even business taxpayers - should not be asked to shoulder business expenses that rightly belong to the owners of Major League Baseball teams.

After all, as the millionaire team owners remind us every time they relocate a team - like the National League's Montreal Expos, who are bound for Washington next season - professional baseball is a business. If a major league franchise fails to operate profitably, its owners look for greener pastures.

What's become clear during the past week is that Mayor Anthony A. Williams has promised to deliver to Major League Baseball what some have called the most lucrative deal in the history of the sport in exchange for returning a team to Washington next spring.

The deal promises to build a new stadium along the Anacostia River's South Capitol Street corridor at an estimated cost of $440 million to the D.C. government, not including ancillary infrastructure expenses. The team's owners, who will receive all ticket and parking revenue as well as millions of dollars for selling naming rights to the publicly owned stadium, are expected to contribute a paltry $3.5 million to $5.5 million a year in rent over 30 years toward retiring the city's debt.

Meanwhile, to help pay for the stadium, the mayor wants to impose a "gross receipts tax" on all businesses in the District that take in at least $3 million a year. While $3 million might seem like a lot of money, much of the business community is balking at being taxed on gross receipts rather than profits - especially after suffering through 10 years of a similar "arena tax" to help pay for MCI Center, which carried a price tag less than one-quarter the size of the proposed stadium.

What the mayor has proposed would be comparable to taxing all D.C. residents on their annual gross income from all sources, rather than allowing deductions for necessary expenses to reduce the "taxable" bottom line.

Some large businesses, such as the only two of what used to be 70 new car dealerships in the District, object to receiving zero benefit in return for paying a huge tax. "That attitude is why there are only two of us left," Steuart Martens of Martens Volvo Volkswagen told The Common Denominator. Businesses located in the District's growing number of Business Improvement Districts already are tax-surcharged to pay largely for cleaning streets, which should be covered by normal business taxes. Many of the District's largest hotels, now facing a threatened union strike, already are burdened with both a BID tax and a tax to pay for the District's new convention center (the most costly public project in D.C. history).

Councilman Jack Evans says baseball's return is a "done deal" that D.C. City Council must figure out how to pay for. Hardly. Did someone forget to tell Major League Baseball that all city contracts exceeding $1 million require council approval?

Copyright 2004, The Common Denominator