For months leading up to Super Bowl XLVII, city officials touted the vast economic benefit of thousands of fans converging on the city.
One thing they didn’t highlight: Local government bodies promised to refund up to $800,000 in sales and use taxes to the National Football League and its affiliates in exchange for bringing the game here.
Local officials told The Lens the upfront cost was worth it, considering the overall economic impact. According to a study released Thursday, the event spurred $262 million in direct spending and $217 million in indirect spending, resulting in $21 million in state tax revenue and $13.9 million in local tax revenue.
However, that study does not say anything about the $800,000 tax rebate. It’s outlined in a deal dated Feb. 4, the day after the Ravens defeated the 49ers. Mayor Mitch Landrieu signed the agreement in March.
The parties to the agreement are the NFL and four of the taxing entities in Orleans Parish — the city itself, the Orleans Parish School Board, the Regional Transit Authority and the New Orleans Tourism Marketing Corporation.
They promised to refund taxes levied on three types of spending between Oct. 1 and Feb. 10:
Hotel room lodging
“Personal property” such as merchandise and equipment needed for Super Bowl staging
“Super Bowl Event receipts,” including food and beverages, venue rental, catering services and event planning expenses related to staging the game itself, the halftime show and the NFL Experience
Some taxable purchases weren’t covered:
Alcohol purchases for any Super Bowl event or the halftime show
Minibar purchases, pay-per-view movies, and other incidental purchases at hotels
All costs related to individual team events for the Super Bowl
Purchases for certain parties and the AFC and NFC post-game meals
Individual purchases from Super Bowl vendors and retail outlets, and those made outside Orleans Parish
The school board unanimously approved the arrangement on Feb. 19, with officials saying revenue associated with the game would net them up to four times more than they would give up in tax breaks.
The school board receives 1.5 percent of each type of tax covered by the agreement. That means it would lose $240,000 if the NFL receives the full $800,000 rebate.
And it’s quite possible that the NFL will max out on the credit, which would require spending about $16 million on eligible expenses. The study released Thursday shows that the NFL and its affiliates spent an estimated $12.7 million on lodging and $8 million on meals, but those figures are for the metropolitan area.
The economic impact study estimated that local governments took in $10.4 million in taxes due to direct spending associated with the Super Bowl, plus another $3.5 million due to indirect spending. For the state, it was $13.1 million from direct spending and $7.9 million from indirect spending.
However, the study’s author, Marius Mihai, said Friday that researchers didn’t factor in any tax breaks the NFL received. In fact, the researchers didn’t know about them.*
Brian McCarthy, the NFL’s vice president of communications, declined to comment when asked how much NFL employees and affiliates spent during their time here.
Similar tax breaks offered elsewhere
It’s common for NFL executives to strike such deals with Super Bowl host cities.
In advance of the 2012 Super Bowl, the state of Indiana and the city of Indianapolis exempted NFL employees from sales and use tax. Indiana also exempted them from excise taxes, income taxes and withholding tax.
Though the Indianapolis area realized big revenues, the government body that manages Lucas Oil Stadium expected to lose money because it lost some sales tax revenue and had to reimburse the city for staffing.
The NFL also asked for breaks on venue leasing and hotel stays from Santa Clara, Calif., which is bidding to host the Super Bowl in 2016 or 2017. Santa Clara officials said the league made the same request of Santa Clara’s competitor cities, Houston and Miami.
The sales tax rebate wasn’t the only tax break related to this year’s game in New Orleans. CBS applied for a $700,000 tax credit under the state’s Motion Picture Investor Tax Credit for its production of “The Talk” in the city during Super Bowl week.
City says rebate was worth it
New Orleans city spokesman Ryan Berni said that the Super Bowl’s benefit to the city — financially and in national exposure — outweighed the costs, including preparation and the tax break.
The rebate was “a requirement of the base bid,” Berni said, adding that the city negotiated the $800,000 cap.
The tax rebate applied only to purchases in New Orleans, and only for expenses associated with putting on the game.
“It’s not like XYZ owner of an NFL club could buy an expensive thing and use that as a rebate,” he said.
The Lens asked Berni how much the city spent on the Super Bowl, including event costs and infrastructure projects completed in time for the game. He said Thursday that he was still waiting on more information.
But he did say that the improvement projects were already budgeted, and that the city used the game as “a rallying point” to move those projects forward.
In October, the city said its Super Bowl preparations included numerous street repairs undertaken by the $90 million Paths to Progress program and $356 million in renovations to Louis Armstrong International Airport.
The NFL has until June 4 to turn in receipts for qualifying purchases to the city, which will then cut them a check. Berni said that to his knowledge, the city has yet to receive anything from the football league.
*This story was updated after publication with a comment from the author of the economic impact study.