Lawmakers floated a variety of legislative proposals to increase taxes on sports teams at a July 1 Ways and Means Committee hearing, discussing provisions that would block teams from using tax-exempt bonds to finance sports arenas and stadiums, bar teams from amortizing intangibles under Section 197, and cap deductions for player compensation. The Joint Committee on Taxation released a detailed summary (JCX-19-26) of sports-related tax issues ahead of the hearing.
Legislation does not appear imminent but could gain traction in the future, particularly if lawmakers seek revenue raisers to pay for other priorities.
Tax-Exempt Bonds
House Ways and Means Chair Jason Smith, R-Mo., was deeply critical of the use of tax-exempt bond to finance sports arenas and stadiums, partially blaming their use for causing teams to relocate. He described it as “particularly disturbing” how teams use tax-exempt bonds to finance stadiums “at the expense of the taxpayer, without necessarily helping the communities where they reside.”
Republicans have long been critical of tax-exempt bonds, and they discussed repealing them as a revenue raiser in the lead up to the One Big Beautiful Bill Act (OBBBA). Republican lawmakers ultimately abandoned the idea early in the legislative process.
Democrats are traditionally more sympathetic to tax-exempt financing, but several Democratic committee members, including ranking minority member Richard Neal, D-Mass., echoed Republican concerns about the use of tax-exempt bonds for sports.
“While I support public-private partnerships that genuinely strengthen our communities, we cannot enter an endless cycle of bending the knee to the whims of the billionaire class,” Neal said.
Rep. Brendan Boyle, D-Pa., said he is considering proposing an excise tax that would discourage the “race to the bottom” in which states and cities offer “billions in taxpayer subsidies” to lure teams away from other locations. Rep. Don Beyer, D-Va., plugged his bill, the No Tax Subsidies for Stadiums Act of 2025 (H.R. 2434), which would bar the use of tax-exempt bonds to finance any facility used as a stadium or arena for professional sports exhibitions, games, or training. Sen. Cory Booker, D-N.J., has cosponsored a companion bill (S. 1192).
BDO Takeaway
Republicans failed to advance a broader repeal of tax-exempt bonds as part of the OBBBA, but a narrower provision aimed at sports facilities could gain traction in future legislative efforts with enough Democratic support. If a bill eventually advances, lawmakers appear likely to target bonds issued after the date of enactment.
Amortization of Intangibles
Smith also focused on the ability of purchasers of sports teams to amortize intangibles such as goodwill, player contracts, broadcast rights, and trademarks under Section 197.
The original House draft of the OBBBA would have allowed sports franchises to amortize and deduct only 50% of the basis of Section 197 intangible assets. The provision was dropped when the bill moved to the Senate.
BDO Takeaway
Intangible assets under Section 197 can represent a major proportion of the value of a sports franchise. Removing or limiting the ability of taxpayers to amortize and deduct those assets over 15 years would remove a valuable tax benefit for potential buyers of sports teams. The version of the provision included in the House OBBBA bill would have been effective for intangibles acquired after the date of enactment. Under the proposed framework, only future owners of a franchise would be directly affected. But the loss of a significant tax benefit for potential buyers could affect franchise valuations and sale prices for current owners.
Player Salary Deductions
Smith said at the hearing that he is working on legislation to provide parity between publicly and privately owned teams’ abilities to deduct player salaries. Section 162(m) generally limits the ability of public companies to deduct compensation exceeding $1 million for covered employees, and the number of covered employees is set to increase by five for tax years beginning after 2026.
Smith said he is interested in expanding the limit under Section 162(m) to apply to all sports teams, instead of only those organized or owned by publicly traded entities. Several other lawmakers also expressed interest in providing parity between public and private teams.
BDO Takeaway
Some Republicans appear more inclined to provide an exception to Section 162(m) for publicly traded sports teams rather than expand the limit to privately owned teams. Rep. Nicole Malliotakis, R-N.Y., said she is working with Rep. Brian Jack, R-Ga., on legislation to address the “unintended consequences” of Section 162(m) on teams owned by publicly traded entities, such as the Atlanta Braves and New York Knicks.
Other Provisions
Lawmakers discussed several other tax issues related to the sports industry, including:
- The tax obligations of college athletes receiving name, image, and likeness income;
- The tax-exempt status of college sports; and
- The use of tax-exempt entities by professional sports leagues.
There was little discussion of the “jock taxes” that some states and localities impose on a prorated percentage of the annual salaries of athletes and entertainers that play or perform in their locations. Republicans have been critical of those taxes, but a provision on the matter seems unlikely to progress without broader reform of the rules for taxing remote work.
Next Steps
Lawmakers largely appear to be in the deliberation phase, but they could start the formal legislative process on some of the proposals in the coming months. Many of the provisions would have a large impact on teams and owners, potentially making it more costly and difficult to finance team facilities, depressing the value of teams by removing significant deductions for buyers, and increasing taxes on teams by removing millions in deductions for player salaries. Teams, leagues, and related organizations should assess the potential effect of the proposals and consider lobbying lawmakers on the issues.
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