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Ohio Supreme Court Hears Arguments in Reds’ Bobblehead Tax Case
The Ohio Supreme Court heard arguments Wednesday morning in a dispute over taxes on promotional items purchased by the Cincinnati Reds and offered to fans through promotional ticket packages. Ohio state law exempts companies from paying taxes on items they buy and resell, but the issue is whether promotional items like bobbleheads are being sold as part of a ticket package or given away in an effort to increase ticket sales, which would require the Reds to pay taxes on the items.

Attorneys for the Reds argue they don't have to pay tax because they resell the promotional items as part of the ticket package, but the state tax commissioner says the promotional items should be taxed because the Reds bought the items as giveaways and aren't selling them with the tickets.

Regardless of whether the Reds’ techniques are legal or not, the attempt to avoid paying $88,000 in state taxes is pretty insensitive given the Reds’ recent history. The construction of Great American Ball Park cost Hamilton County taxpayers $349 million and deprived federal taxpayers of $142 million in revenue – third-most costly of any Major League Baseball stadium according to a Brookings Institute study. The Reds share responsibility with the Cincinnati Bengals for burying Ohio’s Hamilton County in debt, resulting in cuts to social services, including the sale of a hospital, and forcing Hamilton County Commissioners to refinance $376 million of stadium bond debt in 2016. Property owners in Hamilton County were promised 30 percent of the revenue raised by the half-cent increase to the sales tax in the form of reduced tax bills, but the county has rarely had the money to pay the stadium debt and offer the full tax rollback.

Meanwhile, the Reds could go from increasing attendance by giving away items plus tax to making money on tax-free items while also increasing attendance. And they’re not the only ones.

The Minnesota Twins are also offering more of these promotional ticket packages and fewer giveaways after winning a similar case back in 1998. Like Ohio, “goods and services purchased solely to resell, lease or rent in the regular course of business” are tax exempt in Minnesota. In fact, most states allow businesses to purchase items tax-free as long as those items are to be resold. So this is only the beginning, and already, great American ballparks are turning giveaways into takeaways, likely turning a profit on what was a cheap means of advertising and now is a cheape...