Ithaca College

Assistant Professor of Accounting Kari A. Smoker and Assistant Professors Alan Pogroszewski (Sports Management, St. John Fisher College) and Keith Donnelly (Accounting, SUNY Brockport) recently published a professional sports tax article titled, “The New Moneyball,” in the New York State Society of CPA’s online publication, “TaxStringer.”

The authors examine how, under the Tax Cut and Jobs Act of 2017, professional sports teams in high-tax states like New York and California need to adjust to a new economic reality when competing for talent in a national labor pool.  High state taxes combined with recent changes in the federal tax laws put large-market teams like the Los Angeles Clippers and the New York Rangers at an increased competitive disadvantage. And while large-market teams may have the financial ability to offer a salary premium to compete with teams in no-tax states, they are thwarted by their league’s salary cap policies. This presents a golden opportunity for small-market teams in low- and no-tax states to compete against traditional large-market teams in high-tax states and may explain how the NHL’s Nashville Predators, Tampa Bay Lightning, and Vegas Knights—all small-market teams—have risen in the ranks in recent years, competing in three of the last five Stanley Cup Finals.