Taxes knock out Pacquiao-Mayweather bout … from NY, NJ

You don’t have to be a boxing fan to understand the uppercut that high state taxes gave to an opportunity for a big sports event in New York and New Jersey.  Newsday reports on the decision by promoter Bob Arum to pursue a highly-sought bout between Manny Pacquiao and Floyd Mayweather in Jerry Jones’ new football stadium in Texas instead of Yankee Stadium or the Meadowlands.  What KO’d the East Coast?  High state taxes:

It appears the Tax Man is about to do to Manny Pacquiao and Floyd Mayweather Jr. what Oscar de la Hoya, Ricky Hatton and Miguel Cotto could not.

Namely, knock both of them out.

Out of New York, that is. And New Jersey, too. …

But last night, Arum dropped the hammer on the fight taking place anywhere east of the Mississippi River.

“No chance,” Arum said. “Nothing would please me more than to have it at Yankee Stadium, but the way the tax structure in New York is set up, it’s impossible.”

But that’s not the worst news. The front-runner to host the bout, proposed for early May or June 2010, is – gulp! – Cowboys Stadium, Jerry Jones’ $1 billion-plus, retractable-roof football palace that makes Yankee Stadium look like a sandlot.

There’s nothing terribly surprising about this, although tri-state sports fans have already begun to howl over Arum’s courtship with Jerry Jones.  The Cowboys are the hated rivals of the New York Giants, and Jones the embodiment of all their animus.  Losing the biggest fight of the year — and perhaps the decade — to Jones would be akin to having Eli Manning starting for the Cowboys next season.

Put simply, producers in any industry will locate where their costs become lowest while maintaining their ability to produce.  A boxing match can be staged anywhere, as most of the revenue comes from television contracts.  However, big sporting events generate a lot of business for the city in which it is staged, which is why cities try so hard to land them (although, as with the Olympics, there are also cost considerations that might make it advisable for cities to take a pass).  The more portable the activity, the more likely it is for the business to find the best financial setting, and taxes play a big part in that calculation.

Missing one big boxing match won’t break the East Coast, but it should send a lesson to voters in that area.  It will certainly send a lesson to Texans when they benefit from the tax policies of New York and New Jersey.

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