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Tuesday, June 19, 2018

How Major League Teams Are Using Bobbleheads to Skirt Tax Laws

The Ohio Supreme Court heard arguments last Wednesday in a dispute over taxes on promotional items purchased by the Cincinnati Reds and offered to fans through promotional ticket packages. Ohio state law exempts companies from paying taxes on items they buy and resell, but the issue is whether promotional items like bobbleheads are being sold as part of a ticket package or given away in an effort to increase ticket sales. Simply put, if the team gives away bobbleheads, they pay tax. If they sell them with the ticket, they do not.

Bote Man Posted: June 19, 2018 at 08:05 PM | 16 comment(s) Login to Bookmark
  Tags: bobbleheads, money, screwing taxpayers, taxes

Reader Comments and Retorts

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   1. Pat Rapper's Delight (as quoted on MLB Network) Posted: June 20, 2018 at 12:57 PM (#5696181)
If the teams are found to be in violation, I'm sure it'll take the state about 2 seconds to pass a bill retroactively making them tax-exempt as yet another thing that sports team are exempted from that other businesses would have to pay. Because teh sportz!1!!
   2. Spahn Insane Posted: June 20, 2018 at 02:07 PM (#5696275)
The quote from the Reds spokeswoman to the effect that the different price structures were to "accommodate fans buying tickets with exact change," as if cash were used to buy more than, what, about half a percent of all MLB tickets sold (I'm making that number up, but I can't imagine it's much higher than that), is quite some whopper. "The dog ate my homework" is more convincing.
   3. The Yankee Clapper Posted: June 20, 2018 at 02:40 PM (#5696317)
Regardless of whether the Reds’ techniques are legal or not, the attempt to avoid paying $88,000 in state taxes is pretty insensitive given the Reds’ recent history. . .

Frankly, that's pretty stupid. The whole question is whether the Reds are correct in their interpretation of the sales tax law. If they are, there's no reason they should pay taxes that they don't owe. If they're wrong, they pay the tax. Neither the Reds recent history nor the writer's sensitivities matter.
   4. Bhaakon Posted: June 20, 2018 at 08:53 PM (#5696604)
I'm completely in favor of this if it means an end to the travesty of giving away bobble-heads or whatever to the first X-thousand through the turnstiles instead of providing enough for everyone who bought a ticket. If I'm actually interested in the item in question, I'd much rather pay a couple extra dollars for a guaranteed return than wait in line two hours before the game to make sure I get one.
   5. cardsfanboy Posted: June 20, 2018 at 09:56 PM (#5696645)
Okay, someone will have to help me here, because I must have missed the issue here.

From what I understand, if the Reds would have bought the bobbleheads and gave them away they would have owed roughly $88,000 in taxes... because of sales taxes. But because they claim to be reselling the item, (which means in theory the taxes will be collected later from another buyer---as that is the entire point of a reseller license, and in fact is encouraged because generally if you buy something at $5 dollars and sell it at $8 there will be more taxes collected.)

So if the Reds are buying bobbleheads and then increasing the ticket prices on bobblehead days, wouldn't they be collecting taxes on those ticket sales at a higher amount, meaning higher paid taxes anyway? I mean just spitballing a tax rate of 5% meaning that if they normally sold a ticket for $20 and they increase the price to $30 for bobblehead day, they go from collecting $1 to $1.5 per ticket, and even increasing the amount just means more tax revenue, a $10 bobblehead would rate $.50 tax so I'm not seeing the issue, and them actually having variable pricing means even more tax revenue generated.

Now of course this is based upon the assumption that the tax rate for ticket sales is the same as the tax rate for bobbleheads being sold, which I do not know if that is the case.... but that is mostly about varying degrees, unless ticket sales are exempt from sales tax, then that is an entirely different issue.

Reading the article, it appears that the whiner... I mean writer isn't actually upset about the taxes, but more upset about the increased price for the good seats.... and honestly, there is not one bit of me that feels any compassion for that argument. It's a premium seat, it costs more on regular days, on high demand days, it's obviously going to cost even more relative to the increase of other seats, this is just common sense.
   6. dlf Posted: June 20, 2018 at 10:14 PM (#5696655)
So if the Reds are buying bobbleheads and then increasing the ticket prices on bobblehead days ...


It doesn't appear that the price increases on bobblehead days, but rather the Reds are arguing that because of the added incentive of the trinket, there are more tickets sold than when fans only come for the game.

...

I don't have a problem with the Reds trying to use available loopholes to minimize their tax burdens -- heck, I do the same. What I have a problem with are government officials who go all googly eyed when a professional sports team comes a-calling and creates loopholes just for them. Stadiums are the biggest boondoggle, but by far from the only ones.
   7. TVerik, who wonders what the hell is "Ansky" Posted: June 20, 2018 at 11:26 PM (#5696728)
I'm completely in favor of this if it means an end to the travesty of giving away bobble-heads or whatever to the first X-thousand through the turnstiles instead of providing enough for everyone who bought a ticket. If I'm actually interested in the item in question, I'd much rather pay a couple extra dollars for a guaranteed return than wait in line two hours before the game to make sure I get one.


It'll never happen. It's about the manufacture and distribution of the one-time use item. How many do they make?
   8. You Know Nothing JT Snow (YR) Posted: June 21, 2018 at 06:23 AM (#5696775)
Miami Marlins leverage bobbleheads to boost sagging attendance.

I’m astounded faux-Miami native Vanilla Ice didn’t get one.
   9. Zonk qualifies as an invasive species Posted: June 21, 2018 at 09:01 AM (#5696806)
I'm completely in favor of this if it means an end to the travesty of giving away bobble-heads or whatever to the first X-thousand through the turnstiles instead of providing enough for everyone who bought a ticket. If I'm actually interested in the item in question, I'd much rather pay a couple extra dollars for a guaranteed return than wait in line two hours before the game to make sure I get one.


I am firmly for this idea.

Been a while, but on a couple of occasions - granted, we're talking day of sales - but I've NEVER managed to be one of the "first X" fans when I've actually based on my ticket buying on a promotion. I do get in line early - always just not early enough, apparently.

Annoys - or annoyed, at this point, I just use ebay to pay somebody 20 bucks for standing in line for two hours - me immensely.

So... put me down as being in favor of whatever decision leads to me not be disappointed in missing out on the giveaways.
   10. Rennie's Tenet Posted: June 21, 2018 at 09:05 AM (#5696807)
Sean Rodriguez is hitting .159 and has a bobble head night on Saturday. Speculation is that his roster spot is safe only until the bobbles have been distributed.
   11. Bhaakon Posted: June 21, 2018 at 11:15 AM (#5696899)
It'll never happen. It's about the manufacture and distribution of the one-time use item. How many do they make?


I've seen it happen. The Giants have several special events a year in which only a few thousand items are given away to people who bought special tickets for the giveaway. Though, IIRC, they usually limited it to one (rather mediocre) section. I'd rather it just be an additional fee that can be tacked on to any ticket. If they want to do the first 10,000 thing, that's fine. Make it the first 10K to buy the special ticket. I just don't want to be forced to show up an hour before batting practice (and I can't imagine how hellish that would be for people bringing kids).
   12. David Nieporent (now, with children) Posted: June 21, 2018 at 11:58 AM (#5696940)

1) I have no idea why bobbleheads have been singled out for news coverage of this topic. It applies to all giveaways by teams -- magnets, t-shirts, floppy hats, bats, stuffed animals, whatever.

2) TFA is completely confused. The issue is that the teams don't charge extra for the giveaways. The teams claim that the cost of the giveaways is nevertheless built into the ticket prices and therefore the giveaway items are being (re)sold, while the state claims that the giveaways are being, well, given away, rather than (re)sold.

3) In response to cfb above -- TFA is confused as I mention above, but note that in Ohio they don't tax ticket sales.
   13. Bhaakon Posted: June 21, 2018 at 04:21 PM (#5697195)
2) TFA is completely confused. The issue is that the teams don't charge extra for the giveaways


That's what I got from the article. If the team charge for the items, then they're middlemen and don't pay sales tax. If they're given away as a promotion, then the teams are the final customer and have to pay.

Though why they wouldn't have to collect sales tax from ticket buyers if the give-away is technically a sale rolled into the ticket price is beyond me.
   14. Random Transaction Generator Posted: June 21, 2018 at 05:13 PM (#5697247)
Sean Rodriguez is hitting .159 and has a bobble head night on Saturday. Speculation is that his roster spot is safe only until the bobbles have been distributed.


Something similar happened to the Jays last year.

There was a "Fire up the Grilli" apron for Jason Grilli on the Jays last year. It was given out on Father's Day, and he was DFA by the team about a week later.
Everyone knew he was going to get DFA (as he was TERRIBLE to start 2017), but everyone also knew they weren't going to drop him before the giveaway.

This season, the Jays had to make an emergency switch-out for a t-shirt giveaway on a Thursday game as the subject of the shirt (Roberto Osuna) was arrested for domestic violence earlier in the week.
Thankfully, they had another shirt ready (Yangervis Solarte) to drop into place after quickly updating the marketing.

Basically, giveaways that involve player likenesses/representation are a gamble that teams should be thinking carefully about going forward.
   15. Bhaakon Posted: June 21, 2018 at 05:18 PM (#5697252)
Basically, giveaways that involve player likenesses/representation are a gamble that teams should be thinking carefully about going forward.


That brings something else up. Pretty much all of the giveaway items I've collected over the years are sponsored items. I'd always just assumed that the sponsor footed most or all of the bill for that, not the team.
   16. cardsfanboy Posted: June 21, 2018 at 10:54 PM (#5697585)
Basically, giveaways that involve player likenesses/representation are a gamble that teams should be thinking carefully about going forward.


Cardinals had a Kolten Wong, Hawaiian shirt day, and sent him to the minors 11 days before that day, and then recalled him for the shirt day.

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