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Slap shot: TN ‘jock tax’ applies to hockey, basketball players, but not NFL

By   /   April 12, 2013  /   Comments Off

By Chris Butler | Tennessee Watchdog

NASHVILLE — Many of the players for the NHL’s Nashville Predators have a bad taste in their reconstructed mouths.

That acrid taste has less to do with leftover blood from places that once held teeth and more to do with anger over Tennessee’s double standards about tax laws and professional athletes.

According to a 2009 state law, anybody who plays one of two professional sports in Tennessee — hockey or basketball, regardless of whether they play for the home team — has to pay a $2,500 tax for each game. These players have to pay this tax for no more than three games per season. Hockey players no longer have to pay the tax thanks to a recent collective bargaining agreement. That agreement specified that hockey league owners would reimburse the players for this tax.

Hockey league owners — not the players — are now the ones losing money because of the tax.

SLAP SHOT: Because of a 2009 state law, anybody who plays one of two professional sports in Tennessee, hockey or basketball — regardless of whether they play for the home team — has to pay a $2,500 tax for each game. These players pay this tax for no more than three games per season

SLAP SHOT: Because of a 2009 state law, anybody who plays one of two professional sports in Tennessee, hockey or basketball — regardless of whether they play for the home team — has to pay a $2,500 tax for each game. These players pay this tax for no more than three games per season

But NFL players, such as the Tennessee Titans, are completely exempt from this law, what many people refer to as a “jock tax.”

Mark Paluczak, the director of the Missouri-based Stone Carlie’s Professional Athlete’s Services Group, said the tax harmed his clients who play for the Predators, many of whom resent the double standard.

“One client of mine, who plays for Nashville, had $7,500 withdrawn from his paycheck after playing three games. He was later sent down to a minor league team, outside Tennessee and didn’t play any other games the rest of the year. He still had to pay that $7,500 fee. This particular client was paid closer to the league minimum. It negatively impacted his take-home pay, and he was not very happy,” Paluczak said.

“There are circumstances where a certain player is paying more with this fee than they are getting paid to play in Nashville.”

A professional hockey player’s salary ranges from $550,000 to about $7 million per season, Paluczak said.

What he makes depends on a number of factors, including his level of  talent and NHL experience, among other factors.

At 82 games during a typical season — this one is shortened because of a player lockout — the least compensated player made about $6,700 per game, meaning Tennessee taxes more than one-third of his salary, up to three games.

State Sen. Jack Johnson has introduced a bill to repeal the tax, the proceeds of which are supposed to go back to the cities where professional games are held.

Johnson was unavailable for comment, but he told a legislative hearing last month that the money generally goes to team owners.

“This money is directed to go to the managers of the facilities which, of course, are the Memphis Grizzlies NBA team and the Predators. This tax is assessed by the state and goes back to the owners of the respective teams,” Johnson said.

The National Hockey League and the NHL Players Association support the bill, but the owners of the Memphis Grizzlies oppose it, Johnson said.

Tennessee Watchdog left numerous messages with Grizzlies representatives as well as with the NBA, but none of those messages were returned.

Billy Trout, spokesman for the Tennessee Department of Revenue, told Tennessee Watchdog that members of the 2009 Tennessee General Assembly purposefully kept out language that would have placed the tax on NFL players.

State Sen. Jack Johnson

State Sen. Jack Johnson

Titans spokesman Robbie Bohren referred Tennessee Watchdog to various news reports from that year that said the NFL made an advance agreement with state officials to exempt the Titans and their home game opponents.

Tennessee receives about $3.5 million a year from the tax.

According to a 2009 article in Tax Career Digest, the concept of a “jock tax” began 22 years ago in California, when state officials wanted to take revenge against Michael Jordan and the Chicago Bulls for beating the L.A. Lakers in the NBA Finals. More than 40 states have since implemented “jock taxes” of their own, according to the article.

Contact Christopher Butler at chris@tennesseewatchdog.org

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After the original publication of this article, Memphis Grizzlies CEO Jason Levien contacted Tennessee Watchdog and said the revenue from this tax pays for events at FedEx Forum, where the Grizzlies play. These events include Elton John and Paul McCartney concerts. That, he said, is why the team’s ownership opposes doing away with the tax.

“The sales tax rate here for promoters is more than double what it is in Mississippi. We’re competing for acts against Mississippi and Arkansas. Tennessee would lose those acts but for the fund.”

“In order to fund the arena, city and county paid for the Fed Ex Forum arena. The rent that we pay them is per ticket that we sell for events, so $1.15 for every ticket we sell goes back to the city and county, and they use that to fund the arena,” Levien said. 

 

 

 

 

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