Do you ever wonder why your favorite pro sports team never gets over the hump? While you might be quick to blame the coach or the players, perhaps there’s something more at play. Taxes.
And that could be good news for the success of Southern Nevada’s two new professional sports teams, the NHL’s Golden Knights and the NFL’s Raiders.
According to new research by a professor at the University of Illinois at Chicago, high state income taxes translate into more losses for pro sports teams. The study found that tax rates could affect win totals by as many as four games during an 82-game season. Why? Because as professor Erik Hembre points out, free agents are more likely to sign contracts with teams in states where they can keep more of what they earn.
As CaliforniaWatchdog.org reports, Mr. Hembre found that “since the mid-1990s, a 10 percentage point increase in income taxes means anywhere from a 1.9 to 3.0 percent decrease in a team’s winning percentage.” (Mr. Hembre’s formula also accounts for other factors such as weather.)
Mr. Hembre said the disparity is more pronounced in basketball, football and hockey because those sports have salary caps that limit the contract flexibility of teams. All other factors aside, says Mr. Hembree, contract offers from teams in states with no income tax are often more attractive.
The site also cites 2016 data from the Bureau of Labor Statistics showing that hundreds more pro athletes live in Florida than any other state because it doesn’t impose an income tax. Like Florida, Nevada is one of six states with no state income tax, a factor that could be of benefit for both the on-field success of both the Raiders and Golden Knights.
Mr. Hembre’s study should offer another incentive for state and local officials to maintain a low-tax climate. Not only do such policies promote job growth and prosperity, they may also boost the fortunes of our two new professional franchises.