Business of Hockey: Jets Edition
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08-27-2012, 12:01 PM
Join Date: Mar 2011
Originally Posted by
City Entertainment Tax Refund $5,800,000
City Business Tax Refund $250,000
City Tax Assessment Savings $841,000
Prov. VLT Rev. $4,000,000
Originally Posted by
I'm wondering about these. I know TNSE gets VLT revenue, and that should certainly count. But the other 3, are they not just cancelling a tax that would've been in place normally? So essentially it's a wash.
Good question. ps241 actually raised this awhile back and I responded, likely incorrectly.
The City of WPG's charitable tax assessment ($841k in savings) and refund of the business tax ($250k) are defintely revenue neutral and would be netted out by the corresponding taxes that would be paid on the expense side. While these aren't revenues per se, they are reduced expenditures that TNSE would otherwise have to pay if they were operating any other business in WPG. So, they are direct subsidies in comparison to other WPG businesses but I expect given WPG's tax climate that these still don't level the playing field in comparison to operating an NHL team in other cities. In any case, they should be removed from our calculation especially considering that we're really only talking about operating revenues (earnings before interest, taxes and amortization.)
The outstanding question for me is the $5.8M in city entertainment taxes that are paid by TNSE and refunded each year. (Why a city would want to discourage entertainment is beyond me, but I digress). The entertainment tax is 10% of ticket revenues. Here's the City's explanation of the entertainment tax:
Every person attending [the MTS Centre for Jets games], for every attendance at [the MTS Centre], pay a tax in the amount of 10% of the admission price. The
tax amount is added to the cost of the ticket
The question is: does TNSE get to charge an additional 10% entertainment tax, remit it to the City and then get a refund of $5.8M? This is not revenue neutral.
Is the 10% already factored into the ticket prices ($82 avg for seasons, $98 avg for game day)? This would be revenue neutral.
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