Ways And Means Hearing Shows Continued Bipartisan Interest In Removing Tax Breaks For Sports Teams

On June 30, 2026, the House Ways and Means Committee held a nearly four-hour hearing titled, "The Growing Business of Sports: Reviewing Federal Tax Policy in the Multibillion-Dollar Industry." The hearing featured sharp bipartisan criticism of two key federal tax benefits that flow to the professional sports industry: the use of tax-exempt municipal bonds to finance stadium construction, and the ability of franchise purchasers to amortize the full cost of intangible assets under Section 197 of the Internal Revenue Code. The session underscored that these tax provisions remain in Congress's crosshairs (including those of Ways and Means Chairman Jason Smith) and that many members in both parties are interested in exploring statutory changes. This alert summarizes key takeaways from the hearing, the current legislative landscape, and the practical implications for sports industry stakeholders.

Chairman Smith's opening statement

Committee Chairman Smith (R-MO) delivered pointed opening remarks framing the hearing around what he described as a pattern of professional sports franchises exploiting federal tax incentives at the expense of local communities and taxpayers. Chairman Smith noted that 43 of 57 new stadiums built over the past 20 years have been financed using tax-exempt municipal bonds, at a cost of $4.3 billion to American taxpayers. He characterized the dynamic as follows: "Different cities, different leagues, but the same unfortunate playbook: leverage, threaten, relocate, repeat. And send the bill to the taxpayer."¹

Chairman Smith noted that taxpayers in St. Louis are still paying for an 82,000-seat football stadium that last saw a home game in 2015, while the Kansas City Chiefs (currently playing in MO) are scheduled to move across state lines into Kansas at a cost of $1.8 billion in taxpayer-funded subsidies. He described the Chiefs' relocation decision as "a clear-cut example of a sports franchise putting corporate interest ahead of the interest of a community in which it has thrived for over six decades." Smith also cited the Oakland Athletics' move to Las Vegas backed by up to $380 million in Nevada taxpayer money, as well as the Chicago Bears' reported interest in relocating to Hammond, Indiana, to pressure Illinois into offering a richer incentive package. 

Significantly, Chairman Smith also referenced the committee's prior legislative action on sports franchise intangibles, stating that "this committee has also given heavy scrutiny to the benefits that teams are currently able to take advantage of" and that "in the House version of the One, Big, Beautiful Bill, we included a provision to restrict the amortization deductions of sports-related intangibles."

Expert testimony on stadium bond mechanics

The committee heard from four witnesses, including Dennis Coates, an economics professor at the University of Maryland and editor of the Journal of Sports Economics. Professor Coates explained how professional stadium bonds currently qualify for tax-exempt status under the existing private activity bond framework. Under the private business use and private security or payment tests of Section 141 of the Internal Revenue Code, bonds are treated as taxable private activity bonds if more than 10% of proceeds are used for private business purposes and more than 10% of debt service is secured by or derived from private business payments. Coates noted that most stadium deals funded with municipal bonds are structured to remain below these thresholds: the team retains most stadium revenue but pays only nominal rent, while the issuing government entity repays the bonds through generally applicable taxes—such as general fund revenues, sales taxes, or levies on alcohol—rather than stadium-derived revenue.

Professor Coates claimed that stadium subsidies "rarely produce the promised economic returns," and called on Congress to "remove the ability of state and local governments to use tax exempt bonds to finance stadium subsidies," an idea he acknowledged has been debated for four decades without action.²

Bipartisan support for reform

The hearing was notable for its near-unanimous bipartisan criticism of tax-exempt stadium bonds. Even committee members historically supportive of municipal bond tax benefit, such as representatives David Kustoff (R-TN) and Rudy Yakym (R-IN), did not address the stadium bond issue during their remarks. Representative Richard Neal (D-MA), another longtime public finance advocate, stated that team owners "are even willing to rip the team from its fan base when more favorable subsidies are offered over state lines," adding that "we cannot continue this endless cycle of bending the knee to the whims of the billionaire class." Representative Terri Sewell (D-AL) told Professor Coates that she shared his concern about "how public finance and municipal bonds are being used to finance professional stadiums and their construction."

The sole voice in defense of tax-exempt stadium financing was Representative Mike Carey (R-OH), who pointed to a Columbus, Ohio, project involving a bond-issuing authority for a professional women's soccer team as an example of a productive public-private partnership, noting that "there are creative ways for local governments to work with professional teams in a public-private partnership to create significant new revenue for local and state governments."

Current legislative proposals: Tax-exempt stadium bonds

The No Tax Subsidies for Stadiums Act

The most direct legislative vehicle targeting stadium bonds is the No Tax Subsidies for Stadiums Act, which has been introduced in multiple Congresses and currently exists in the 119th Congress as S. 1192, sponsored by Senators James Lankford (R-OK) and Cory Booker (D-NJ), with a companion House bill sponsored by Representatives Glenn Grothman (R-WI) and Don Beyer (D-VA).³ The bill would amend Section 103 of the Internal Revenue Code to remove the exclusion from gross income for interest on any "professional stadium bond." The bill defines a "professional stadium bond" as "any bond issued as part of an issue any proceeds of which are used to finance or refinance capital expenditures allocable to a facility (or appurtenant real property) which, during at least 5 days during any calendar year, is used as a stadium or arena for professional sports exhibitions, games, or training." The effect of this provision would be to convert any bond used for professional stadium purposes into a taxable bond, eliminating the lower borrowing rate that state and local governments are currently able to access for these financings.

Representative Boyle's forthcoming legislation

In addition to the No Tax Subsidies for Stadiums Act, Representative Brendan Boyle (D-PA) disclosed at the hearing that he is "in the beginning stages" of crafting a separate bill that would "disincentivize states and localities from engaging in this sort of practice" of offering competing public subsidy packages to lure professional sports teams across state borders. Rep. Boyle framed the problem as "a race to the bottom, where you have municipalities and states that are falling over themselves to give billions of dollars of taxpayer subsidies in order to lure franchises away." No bill text has been released, but the concept would represent a different statutory mechanism from the No Tax Subsidies for Stadiums Act—potentially imposing federal tax consequences or other disincentives on state and local governments that offer cross-border incentive packages to attract professional sports teams.

Legislative history: The 2017 Tax Cuts and Jobs Act

The closest that a stadium bond prohibition has come to enactment in recent years was in 2017, when the original House-passed version of the Tax Cuts and Jobs Act included a provision that would have eliminated the tax exemption for bonds used to finance professional sports stadiums, including state and private college athletic stadiums. That provision was dropped during the House-Senate conference committee on the final legislation.

Limitation on amortization of sports franchise intangibles

The OBBBA house-passed provision

In addition to stadium bond financing, the Ways and Means Committee has recently targeted a separate tax benefit available to sports franchise owners: the ability to amortize the full cost of intangible assets acquired in connection with a sports franchise purchase under Section 197 of the Internal Revenue Code. Under current law, a purchaser of a professional sports franchise may amortize 100% of the adjusted tax basis of the franchise's intangible assets, including player contracts, broadcasting rights, trademarks, goodwill, and franchise rights, ratably over a 15-year period.⁴

When the Ways and Means Committee released its original draft of the One Big Beautiful Bill Act on May 12, 2025, it included a provision (Section 112017) that would have limited the amortization of professional sports franchise intangible assets to 50% of the adjusted tax basis, down from 100% under current law. The provision would have been effective for assets or interests acquired after the date of enactment. The House-passed version of the OBBBA (May 22, 2025) retained this amortization limitation; however, the provision was ultimately dropped from the final enacted law as enacted July 4, 2025. 

Standalone legislation

No standalone bill has been introduced in the 119th Congress that would independently limit current law amortization of professional sports franchise intangibles. However, Chairman Smith's pointed reference to it in his opening statement at the June 30 hearing—noting that "in the House version of [the OBBBA], we included a provision to restrict the amortization deductions of sports-related intangibles"—signals that the committee has not abandoned the concept.

Outlook

Despite the strong bipartisan rhetoric at the June 30 hearing, the near-term legislative outlook for eliminating or limiting tax benefits for professional sports teams remains uncertain. Representative Mike Thompson (D-CA), the top Democrat on the Tax Subcommittee, acknowledged as much at the hearing, telling Chairman Smith that "this has been an interesting hearing, Mr. Chairman, but what it tells me is we need a lot more." 

Although passage of any tax legislation over the remainder of this Congress is unlikely (and much less a bill with provisions limiting the above mentioned sports-related tax provisions), the hearing demonstrated that interest – of a bipartisan nature – will remain into the next Congress in passing reforms in this area. It should be noted as well that reforms in this area could adversely affect tax treatment of tax exempt bonds for college and university stadiums as well, as such institutions grapple with steadily escalating facilities investment costs.

If Congress moves tax legislation in the next Congress, (regardless of party control of each House) sports-related tax provisions could resurface as pay-fors to offset the cost of other priorities. Sports industry stakeholders, including franchise owners, potential acquirers, municipal bond issuers, state and local governments, and public and private institutions that rely on tax-exempt financing for stadium projects, should monitor these developments closely and consider the potential impact on pending transactions and future financing structures.

We will continue to monitor legislative developments in this area. Please contact us if you have questions about how these potential changes could affect your interests.