Sports welfare: Florida Edition

This is a guest post from economist and frequent LGM commenter Victor Matheson.

This weekend marks the 65th running of the Daytona 500, NASCAR’s marquee racing event. Unlike the other major American sports leagues, which have extracted nearly $35 billion in taxpayer subsidies for stadium construction alone since 1990, NASCAR has actually received a relatively limited amount of corporate welfare over the past several decades.

So, obviously NASCAR couldn’t let that stand, successfully lobbying the Florida legislature to insert a provision into the Florida state budget that eliminated the 6% sales tax on tickets at the Daytona track. The state estimated that this tax break would cost the state $6 million in foregone revenues. This means that a Florida resident paying $8 to see “Ant-Man and the Wasp: Quantumania” this weekend will be contributing more to the state’s coffers than a race fan paying $1,000 to watch 40 superfast cars make a bunch of left turns for 200 laps at Daytona on Sunday. 

Governor Ron DeSantis, who had to power to eliminate NASCAR’s special tax-break through the state’s line-item veto, justified the tax cuts by claiming it was to fight “against inflationary policies imposed on us by the Biden administration” and that the state was “going to support our residents and help them afford the goods we need.”

Let’s just go through all of the ways this is terrible public policy. First of all, the Daytona 500 attracts a large national audience to the race, so DeSantis isn’t just saving Florida residents money. He is sacrificing Florida’s public revenues to potentially save NASCAR fans traveling down from Georgia and North Carolina a few bucks. And even though NASCAR fans overall may skew poorer than fans of other major sports, those spectators attending the race in person, where the cheapest tickets this morning were selling for over $200 a pop, are not the typical blue collar racing fans.

But this isn’t the biggest problem here. Whenever a company like NASCAR gets the taxes on their product cut, they can do one of two things. If they want increase their sales or improve their market share, they can pass the tax savings on their customers. Alternatively, NASCAR can take advantage of the government reducing the tax rate by 6% by increasing their own prices. Economists label this phenomenon “tax incidence,” and we generally expect it to be split between consumers and producers. In this case, however, since the race is a sell out every year, economic theory predicts that none of the tax savings will passed on to consumers to help in the “fight against Biden’s inflationary policies.” This is just a flat out $6 million gift (grift?) to NASCAR. Of course, can you really expect NASCAR’s owners, the France family, to get by on their mere $1 billion plus net worth?

Epilogue: Just in case you think this giveaway to the reddest of the professional sports is just another way for DeSantis stick it to the libs, the same tax bill also eliminated the sales tax on tickets to World Cup games in Miami in 2026, and soccer is the bluest of the major sports. It’s nice to see DeSantis finally showing some bipartisanship by letting our friends at FIFA get the same corporate subsidies as those at NASCAR.