The governor of Tennessee recently signed into law a repeal of the so-called jock tax that taxed NHL and NBA players as much as $7,500 a year when they played games in Nashville and Memphis.
The NHL Players’ Association and the National Basketball Players Association both lobbied to repeal the Professional Privilege Tax for Professional Athletes, which taxed NBA and NHL players who played games in the state $2,500 a game with an annual cap of $7,500. The Tennessee Legislature approved the bill to repeal the tax in April, and Gov. Bill Haslam signed the bill into law last month.
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The Nashville Predators, along with the NHL and the NHLPA, fought the $2,500-a-game tax on visiting players.
Photo by: GETTY IMAGES
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The tax, which went into effect in 2009, was unusual in that the money from NBA and NHL players playing the Tennessee clubs, the Grizzlies and Predators, went to the owners of those clubs, with the idea that they could use it to bring events to their arenas. NFL players who played the Tennessee Titans were not subject to the tax.
For NHL players, the repeal of the tax is effective immediately, but for NBA players, the tax will remain in effect until June 1, 2016. The reason NHL players are getting immediate relief and NBA players are not is that the Grizzlies opposed the bill while the Predators did not.
“The Nashville Predators and the NHL joined the NHLPA in supporting immediate repeal of the bill,” said Ron Klempner, NBPA acting executive director. “The Memphis Grizzlies, on the other hand, aggressively fought and lobbied against repeal. The two-year phase-out is the Legislature’s compromise. It was the only way the Legislature would support repeal.”
The 2013 NHL collective-bargaining agreement contained in it a provision in which the NHL agreed to work to repeal such taxes on NHL players.
Jason Wexler, chief operating officer of the Grizzlies and FedEx Forum, has said the tax served as an economic development incentive that benefited the residents of Tennessee because it was used to help attract high-profile music acts such as Elton John, Paul McCartney and the Eagles to the Memphis arena.
Last week, Wexler wrote in an email: “On behalf of FedExForum, the Grizzlies worked closely with state legislators in crafting the two-year sunset provision on the Athlete’s Privilege Tax as it relates to FedExForum. The Privilege Tax remains an important economic development incentive that helps FedExForum create jobs and revenue for Memphis and Shelby County. The sunset provision provides a window to transition on that front.”
NHL and NBA players union officials, however, said the tax was discriminatory. “We are obviously pleased that the correct decision was made by the state of Tennessee to repeal a tax that unfairly targeted NHL and NBA players,” NHLPA Executive Director Don Fehr said.
Taxes targeting professional athletes have been around since at least the early 1990s, said Robert Raiola, who advises more than 100 athletes in the four major North American team sports as senior manager of the sports and entertainment group of O’Connor Davies. Raiola said he is aware of such taxes in 22 states and 10 cities in the United States.
“What made this tax different is every player paid a flat rate whether they were making the league minimum or $10 million year,” he said. “The other thing that was different is the money went to the owners who owned the teams.”
The repeal bill was sponsored by Tennessee state Sen. Jack Johnson, a Republican.
“Sen. Johnson decided to repeal the law because he felt it was an inappropriate use of the state tax authority, because the state would not get the benefit of the tax money; it was going back directly to the teams,” said Luke Gustafson, spokesman for Johnson.
