Super Bowl Math: The Cost of Winning

2/11/2013

Last week's Super Bowl in New Orleans was a week-long "fais do do" featuring world-class food, drinks, and music. Advertisers rolled out their newest, shiniest campaigns to display their newest, shiniest products (apparently, Anheuser-Busch thinks they need to remind viewers to drink something called "beer"), and entertainers like Alicia Keys and Beyonce dazzled. Sharp-eyed fans even saw a football game between the Baltimore Ravens and San Francisco 49ers.  

The NFL estimated that the game would bring $434 million to the city. While some economists scoff that actual revenue is just a fraction of the official estimate, there's no doubt that the Big Easy was thrilled to host their tenth "Big Game." Most of that revenue goes to the hotels, restaurants, and souvenir vendors who open their cash registers to affluent visitors (while face value for game tickets was "just" $1,015, the average fan paid $3,000 for their seat). Millions more goes to the bartenders, waiters, cabbies, and hotel staff that take care of those fans. But some of that money actually goes to the players, too. The NFL gave each of the winning Ravens a ring worth $20,000 plus another $88,000 in cash. The losing 49ers didn't get a ring, but still walked away with $44,000 for their valiant effort.  

So . . . with numbers like those on the field, do you think the tax man can resist throwing a penalty flag or two? Of course not! And, as a result of the fiscal cliff bill, Super Bowl LXVII was pricier than usual to win. Last month's bill raised the top tax rate from 35% to 39.6% on ordinary income topping $400,000 ($450,000 for joint filers). It also phases out personal exemptions and itemized deductions for taxpayers earning over $250,000 ($300,000 for joint filers). Considering the 2012 league minimum ranged from $390,000 for rookies to $925,000 for 10+ year veterans, those new taxes will hit every player on the field. And the 2010 Affordable Care Act adds a new 0.9% Medicare surtax on earned income topping $200,000 ($250,000 for joint filers). The result: each winning Raven is facing a $45860 tax bill (up almost $5000 from 2012 levels).  

If that’s not enough, don’t forget Uncle Sam isn't the only one paying attention. Can’t leave out the Bayou State and the Crescent City! On January 30, the Louisiana Department of Revenue issued a helpful two-page bulletin alerting visitors that "according to Louisiana Revised Statute 47:290, a tax is levied on all nonresident individuals who have income earned within or derived from sources in Louisiana." That "jock tax" reaches 6% on income over $50,000 ($100,000 for joint filers). Louisiana's tax compares with zero in Florida, which has also hosted the Super Bowl 15 times, and a whopping 12.3% in California, which has hosted it 11 times.  

Of course, none of the players actually care how much tax they'll pay on their bonuses. They just want that ring!