Now in Legal Rebels:
Posted Apr 05, 2010 12:07 pm CDT
A law professor says there is a critical factor that helps explain why the average price of a Chicago Cubs ticket has increased 265 percent in the last two decades—the tax code.
Business write-offs are spurring skyrocketing ticket prices to sporting events in two ways, according to a New York Times op-ed by Duke University law professor Richard Schmalbeck and Rutgers business professor Jay Soled.
On the demand side, businesses that write off tickets are using the money they have saved to bid up the prices. On the supply side, ballparks have responded to businesses’ demand for expensive seats by building more skyboxes, reducing the space available for cheaper seats. The new Yankee Stadium, for example, has 3,000 fewer seats that the old ballpark, but almost three times as many skyboxes, the professors say.
The article notes that Congress acted in 1986 to restrict the deductibility of luxury skybox tickets to the face value of nonluxury premium tickets. But the authors conclude the restriction doesn’t go far enough, considering the increasing prices of premium tickets.
“Ideally, Congress would get rid of business-entertainment deductions altogether,” the article says. “After all, they are little more than an excuse for corporate executives to consume luxury items at a discount, distorting markets and cheating the public out of substantial tax revenue.”
Another, more feasible approach is to cap the deduction—perhaps to $50 a seat, per game, the professors say.