Home games at the Chesapeake Energy Arena routinely sell out. Signs of Thunder mania, from car flags to T-shirts, are everywhere. Lengthy, glowing profiles about the team and its relationship to OKC have appeared everywhere from The New York Times to USA Today. The team’s devoted following spans oceans and continents.
Thunder pride hasn’t come without a price tag. Beyond the cost of tickets and souvenirs, city and state taxpayers have helped fund an NBA team that many say has brought Oklahoma not only economic development but worldwide recognition.
Public financing of professional sports franchises has always been a touchy subject. Prior to the Thunder’s arrival, a proposed 15-month, 1-cent sales tax to raise $120 million for improvements to the then-Ford Center was derided by opponents as “MAPS for millionaires.”
It was also the issue of public incentives that sent the team, then the Seattle Supersonics, to OKC after the Washington legislature declined to put up taxpayer money for a new $500 million stadium.
Incentive for improvement
There are three main perks the Thunder receives at the state and local level:
• an exemption from sales tax on ticket sales,
• tax rebates under the Oklahoma Quality Jobs Program, and
• improvements to the Chesapeake Energy Arena and the construction of a practice facility through a voter-approved city sales tax.
The issue of sales tax on tickets benefits not only the Thunder, but all pro-sports franchises in the state. Lawmakers made the change when the New Orleans Hornets were making their temporary home in OKC in the aftermath of Hurricane Katrina.
There are no exact numbers on how much money this costs state and local governments. But using the average ticket price and total attendance records between 2009 and 2012, along with the 8.75 percent sales tax rate in OKC, it is estimated that the exemption has cost about $15.9 million in sales tax revenue.
The Quality Jobs Program figures, however, are public. Shortly before the Thunder’s arrival, the state Legislature amended the law to allow the team to use the economic development initiative, which incentivizes companies to create jobs.
Under the program, a business can only receive up to 5 percent of its new taxable payroll as a reimbursement for up to 10 years. Under the law’s revision, the Thunder’s reimbursement rate is pegged to the top income tax rate, currently sitting at 5.25 percent, for a maximum of 15 years.
Since 2010, the Thunder has received $11.3 million. Under its contract with the state, the team can receive up to $96.7 million over 15 years.
As for the third perk, nearly 62 percent of voters in March 2008 passed the city sales tax to pay for arena renovations and a practice facility.
Most of those improvements are completed, said Tom Anderson, the city’s special projects manager. That totals around $112 million.
All told, the three incentives add up to around $139.2 million in taxpayer money over four years.
Giving to get
In January 2008, former state Rep. Wanda Jo Stapleton addressed the Oklahoma City Council to voice her opposition to the proposed sales tax for arena improvements.
At that time, she called the plan a “scheme which will make a few of the wealthiest people in this city even wealthier at public expense” and said the money would “pad the pockets of the rich.”
But Stapleton has since had a change of heart.
“They have made their mark,” she told Oklahoma Gazette. “They have put us on the international map. They have paid their dues as far as I’m concerned.”
She is hardly the only one impressed. State Sen. David Holt, R-Oklahoma City, author of the book Big League City: Oklahoma City’s Rise to the NBA, said community support for the team has exceeded expectations.
Having the Thunder has not only ushered in economic development benefits that outweigh taxpayer support but intangible ones as well — such as enhancing the city’s image when companies are looking for places to relocate.
“It’s kind of superficial. There’s no arguing about that. It’s just sports,” Holt said. “But it’s a big part of American life, and we were not participating in it.”
Dan Mahoney, Thunder vice president of corporate communications and community relations, said the team is grateful for strong community support and gives back by providing jobs, entertainment and economic development.
“We enjoy and very much appreciate the tremendous support we receive from the state and city,” he said. “Certainly, we wouldn’t be here without them.”
Roy Williams, president of the Greater Oklahoma City Chamber of Commerce, said the incentives were vital to get the Thunder.
“I think the Chesapeake Energy Arena improvements were just critical,” he said. “The Chesapeake Arena, like a number of NBA arenas prior to enhancing it, was built on a sort of old economic model.”
Indeed, a steep price tag was attached to the move. The team paid $30 million to the NBA as a relocation fee and $45 million to Seattle to get out of its arena lease.
The $112 million in improvements went toward a southwest entrance to the arena, street improvements, electronics, a new scoreboard, suites and a host of other items.
Williams said the chamber does not have economic impact numbers for the Thunder. However, he said, when the Hornets were in OKC, home games had an estimated $1.4 million per-game impact, and the Thunder almost certainly surpasses that amount.
‘A big money deal’
Not everyone is on board with the Thunder
receiving taxpayer money. State Rep. Ben Sherrer, D-Chouteau, voted
against the team being able to qualify for the Quality Jobs program.
He said he’s still uncomfortable with the arrangement.
“The
team is a success, and the Quality Jobs Act would not have been
necessary,” Sherrer said. “It’s ultimately going to be a $60 million
padding to the bottom line.”
He said he often tells his constituents that, in a way, they are partial owners of a pro basketball team.
“I
just didn’t have a good feeling about the people in Mayes County
subsiding a big money deal organized by people with lots of money,” he
said. “Folks who would get to sit courtside are organizing this, and the
people at Mayes County would probably never get to sit in those kind of
seats.”
Sherrer said
the Thunder has brought millions of dollars into the economy and that,
since the team is doing so well, he would like to see the it pay back
the Quality Jobs money.
Holt
said no one likes to put tax money toward private enterprises, but that
the Thunder probably wouldn’t be in OKC without it. He said the team
held most of the leverage in negotiations, and some community effort is
generally required in such matters.
“It’s
a question of what are your principles,” Holt said. “You just have to
ask the question of whether you’re willing to set aside the preference
for no incentives and give up the team.”
Sacramento to Seattle
The deal that brought the Supersonics to Oklahoma City from Seattle outraged many basketball fans, a few of whom funneled that anger into a documentary film. Sonics fans made a documentary, Sonicgate: Requiem for a Team, that laid out how the move to OKC transpired through what the filmmakers call “a perfect storm of corporate greed and political impotence.”
Now, five years later, a Seattle group led by hedge fund manager Chris Hansen and Microsoft CEO Steve Ballmer has purchased the Sacramento Kings with evident plans to move the NBA team to Seattle.
So what do the creators of Sonicsgate think about Seattle snagging another city’s team?
Adam Brown, the film’s producer, said while Seattle basketball fans are excited about a possible reincarnation of the Sonics, they understand the emotions of Sacramento residents.
“This is about the owners, and this is about big business and the decisions that happen up top behind closed doors between politicians and businessmen, and the fans are kind of left out in the cold in both these situations,” he said, insisting that Sonics loyalists had ill will toward Oklahoma City fans.
He added that a new Supersonics playing in the same NBA conference as the Thunder will likely give fans in Seattle and Oklahoma City something else to enjoy: what is certain to be a fierce rivalry.
Hey! Read This:
- In an active year for the state’s Quality Jobs Program, 10 companies received more than $38 million in taxpayer funds
- Thunder city: The Thunder didn’t just make it to the NBA Finals this year — it changed the face of Oklahoma City
