How Should We Feel About ESPN's Receiving $260 Million in State Tax Subsidies?

In the New York Times, Steve Eder delved quite deep into financial arrangements between ESPN and the state of Connecticut. The entire story is well worth a read, and there were some eye-popping figures:

"ESPN has received about $260 million in state tax breaks and credits over the past 12 years, according to a New York Times analysis of public records. That includes $84.7 million in development tax credits because of a film and digital media program, as well as savings of about $15 million a year since the network successfully lobbied the state for a tax code change in 2000."

For reasons that are abundantly clear to anybody who was inclined to click on this story, those numbers are probably going to provoke a lot of outrage. ESPN has a clear hegemony over all other sports networks, accounts for almost half of Disney’s profits, went through a very public round of layoffs this year, and oftentimes otherwise finds its content as the subject of criticism from the most highly engaged sports fans and media.

I despise corporate welfare as much as the next guy, but as someone who grew up about 30 minutes from Bristol I do think I can provide some context as to why Connecticut’s political leaders would pragmatically want to ensure a smooth relationship with the Worldwide Leader. As the Times story notes, ESPN employs 4,000 people in the state, many of whom are very well-compensated and contribute income tax to the state’s coffers and spending to local businesses. If their organization just packed up and left (which was admittedly highly unlikely to happen on a large scale anytime soon with or without tax help), it would have massive consequences.

Beyond that, there are symbolic implications. Spawned in 1979 in the town of Bristol — part of the oft-ignored portion of the state not inhabited by New York City commuters — ESPN has grown into a preeminent worldwide empire. Its continued presence in the community serves as a testament that the American Dream is possible to accomplish there within a generation.

Furthermore, it’s not difficult for one to understand why ESPN has reportedly spent $1.2 million on lobbying since 2007 — it’s obviously been effective, and they’ve generated a sizable return on investment from it. The network is part of a public corporation and therefore must seek to maximize value for its shareholders. If managers don’t hit their budgets, it has a material effect on Disney’s earnings and (more) people lose their jobs. Sure, ESPN seemingly has a license to print money now, but there could be stiffer competition from Fox, CBS, NBC and various other segmentations in the future. In their leadership’s minds, they always have to be as profitable as possible.

This isn’t to say that one shouldn’t wish for ESPN to be an upstanding corporate citizen, and in an ideal world its leaders would have the perspective to step back and realize that the fungible nature of money means that their tax breaks come at the direct expense of significant civil and social expenditures. It does seem gluttonous to lay off longstanding employees when there’s no imminent threat, and it does seem overly greedy to concurrently pursue handouts from the state.

[New York Times]