MLB Feeling Effects of Corporate Compliance Departments and IRS Focusing on Entertainment Costs
From a recent New York Times article regarding some companies’ reticence to enjoy lavish accommodations at sporting events:
Corporate compliance departments and the Internal Revenue Service are also doing more to ensure that the business entertainment taking place at games is tangible, not tangential.
The belt-tightening on Wall Street could have severe consequences for the Mets and the Yankees, which opened their stadiums this season and, more than most teams, expected free-spending bankers, brokers and fund managers to fill top seats. The teams initially priced some tickets so high — as much as $2,500 each — that the sight of empty box seats became a symbol of excess and hubris. The teams have since discounted some of their seats by as much as 50 percent
“The seats behind home plate, no one wants to be seen there,” said John Lieberman, the former chairman of the entertainment and sports committee of the New York State Society of Certified Public Accountants. “There’s a perception that you’re throwing your money away. Politically, it’s like car company executives taking private jets from Michigan to Washington.”
Attending a sporting event eats into a family’s income as much as any other form of entertainment. But for businesses, leasing luxury suites is often a worthwhile endeavor, as they serve as an ideal environment to impress potential clients.Though baseball broke attendance records the past few seasons and other sports like football figure to draw well even in the priciest markets, this past Sunday Ken Belson of the NY Times explained that for businesses, “accepting an invitation to a game has fast become taboo.”
This is mostly due to scrutiny from outside sources during such arduous economic times. To many, at least visually, it’s comparable to CEOs on private jets staying in luxurious resorts, and other over-the-top spending sprees the media and politicians have exposed in large companies the past few years.
New York City Mayor Mike Bloomberg apparently agreed. He beat the preponderance of public criticism by relinquishing his prime seats at New York’s two new ballparks to instead aid the local treasury.
And as this May article in the Wall Street Journal noted, the new Yankee Stadium, as a whole, has suffered from fans leery of indulgence.
Maybe “teamwork” is the answer, like in Cleveland? There, the local football and baseball teams, seeking to entice big business, have offered combined packages for the most lucrative seats
Two upcoming tests as to how many firms will be renewers or takers of corporate suites and box seats begin quite soon:
The NFL season gets underway in mid-September. In a sport dominated by luxury suites, it should be interesting if the trends, policies and scrutiny continue.
Returning to New York City, a huge cash cow for high level seats will be the US Tennis Open in Queens the first fortnight of September. Many are for sale in the five figure per session range, but will buyers/businesses beware of the public’s (and compliance departments’) skeptical eyes toward such extravagant expenditures?
The overarching point is, for better or worse, most new stadia are in fact built due to a franchise’s desire for luxury suites, even if said facility was only three decades old. Current economic uncertainty is no doubt putting those plans into peril.
Tags: corporate compliance departments, entertainment, irs, MLB
