MLB Spring Training Helps Players Pay Less Taxes

Major-League

While baseball purist fans rejoice in spring training opening up, so do the players not just for the game but also their paychecks. Spring training camps are located in Arizona and Florida which helps players pay less since they are legally working in those states. This helps cushion the tax blow they receive from the states they play in during the regular season.

Sean Packard, CPA, who is Director of Tax at OFS. He specializes in tax planning and the preparation of tax returns for pro athletes shared this tax benefit with Forbes.com:

Spring training is an opportunity for players to escape state income taxes on roughly 20% of their income. Professional athletes pay taxes in all states in which they play. This is known as the “jock tax.” Most states calculate a player’s jock tax based on the number of duty days spent inside the state divided by the total days a player works.

Unlike most sports, where preseason training occurs near the team’s home, spring training takes place in one of two states, Florida or Arizona. Florida does not have an income tax and while Arizona does, it does not begin taxing professional athletes until the beginning of their teams’ regular season. This means that duty days spent in the state prior to the season do not count as taxable days. Holding spring training in these two tax havens can save elite players hundreds of thousands of dollars in state income taxes.

Packard provides an example of how money a player can save just at spring training.

The portion of Santana’s salary allocable to spring training under the duty day calculation is $5.355 million. If the Mets held spring training in New York instead of Florida, this income would be allocated to New York and subject to their 8.82% income tax. But because the Florida (and Arizona) climate is more conducive to baseball in February, Santana will save $472,000 in state income taxes.

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Indiana Pacers Worth Hundreds of Millions

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Forbes magazine is stating that the Indiana Pacers has spiked in value over the last year and is now edging up to the “Billion Dollar” mark. Here is more in their report:

The value of the Indiana Pacers franchise skyrocketed by $355 million just since last year to $830 million, according to Forbes magazine. The Pacers rank 21st among the NBA’s 30 teams. The Los Angeles Lakers were first at $2.6 billion. In the magazine’s annual report on franchise values, posted Wednesday, reporter Kurt Badenhausen attributed the huge growth of the NBA to “a massive new $24 billion television contract, a nearly six-year bull market in equities creating tremendous wealth, and cheap credit.”

The Pacers new financial numbers are perplexing considering the deal they struck last year with the city of Indianapolis using taxpayer money to subsidize their operations.

The Pacers’ value also increased 74 percent and could renew questions about the Capital Improvement Board’s decision, less than a year ago, to use $160 million in tax money to cover operating costs and upgrades at Bankers Life Fieldhouse. The Pacers keep revenue from all fieldhouse events — basketball and non-basketball alike.

The CIB who negogiated the deal gets money from taxpayers:

The CIB gets its revenue primarily from hotel, food and beverage, and admissions taxes. The agency also collects money from rental fees, parking garage income, car rental taxes, cigarette taxes and Downtown income and sales taxes.

While most of the CIB’s revenue comes from Marion County, six neighboring counties — Boone, Hamilton, Hancock, Hendricks, Johnson and Shelby — also pitch in through a 1 percent food and beverage tax.

H/T Indianapolis Star