Congress spent four hours Tuesday doing something it almost never does. Agreeing. Republicans and Democrats on the House Ways and Means Committee took turns dragging tax-exempt stadium bonds. Jason Smith called it corporate greed. Don Beyer called it indefensible. Even the committee's most reliable municipal bond defenders didn't say a word in favor of the practice.
That is notable. Ways and Means does not agree on much. Here's this week's edition of The Dime๐ฐ, the stadium bond reckoning.
Quick intro if you're new here๓ ๓ ๓ ก๓ ข๓ ๓ ง๓ ๓ ก๓ ฉ๓ ๓ ๓ ต๓ ฌ๓ ๓ ผ๓ ๓ ๓ บ๓ ฟ๓ ป๓ ๓ ๓ ฅ๓ ๓ ๓ ช๓ ฒ๓ ๓ ด๓ ๓ ฅ๓ ๓ ๏ธ๓ ต๓ ง๓ ฌ๓ ๓ ๓ ท๓ จ๓ ๏ธ๓ ข. I'm Carl, by day I run Joseph Black Law PLLC, a New York Law practice where I work on startup and venture capital transactions, entertainment and music deals, and investment fund structures๓ ๓ ๓ ก๓ ข๓ ซ๓ ฑ๓ ๓ ๓ ฅ๓ ๓ ๓ ๓ ฉ๓ ๓ จ๓ ก๏ธ๓ ๓ ๓ ๏ธ๓ ๓ ฌ๓ ๓ ๓ ๓ ๓ ๓ ๓ ฎ๓ ๓ ๓ ๓ ค๏ธ๓ ซ๓ ๓ ช๓ ฑ๓ ๓ ผ๓ ๓ ๓ บ. By night, and honestly during a lot of stolen lunch hours, I write The Dime๐ฐ.
๓ ๓ ๓ ก๓ ข๓ ๓ ฆ๓ ๓ ๓ ๓ ฉ๏ธ๓ ๏ธ๓ ๓ ๓ ธ๓ ฑ๓ ถ๓ ต๓ ท๏ธ๓ ๓ ฌ๓ ๓ ญ๓ ๓ ก๓ ๓ ฅ๓ ๏ธ๓ ๓ ธ๓ ด๓ ๓ ๓ ฆ๓ ๓ ๓ ๓ ณ๓ ญ๓ ๓ กThe Dime๐ฐ exists for one reason: the most interesting financial stories in America run through culture, and almost nobody covers them with both the spreadsheet and the source material open at the same time๓ ๓ ๓ ก๓ ข๓ ๓ ๓ ป๓ จ๓ ถ๓ ฑ๓ ต๓ ๓ ฌ๓ ฏ๓ ๓ ๓ ข๓ ๓ ๏ธ๓ ค๓ ฆ๓ ณ๓ ๓ ฉ๓ ๓ ฐ๓ ๓ ๓ ๓ ฟ๓ ๓ ๓ จ๓ ๓ ด๓ ๓ ๓ ๓ ฐ๓ ฝ๓ ๓ ๓ ฉ. Music press covers artists. Sports press covers athletes. The Dime๐ฐ covers deal๓ ๓ ๓ ก๓ ข๓ ผ๓ ๓ ฌ๓ ๓ ๓ ๓ ๓ ๏ธ๓ ๓ ญ๓ ๓ ๓ ๓ ๓ ๓ ๓ ญ๓ ๓ ๓ ๓ ฏ๓ ฝ๓ ๓ ๓ ๏ธ๓ ๓ ๓ ฒ๓ ฒ๓ ต๓ ๓ ญ๓ ฅ๓ ๓ ฝ๏ธ๓ ฌ๓ s.
WHAT'S ACTUALLY BROKEN
When a city needs money for a school or a bridge, it issues a municipal bond. Investors lend the money. The interest they earn back is exempt from federal tax. That exemption is the entire appeal. It is why high earners load up on munis.
The tax code draws a hard line here. If more than 10% of a bond's proceeds benefit a private business, the bond is supposed to lose its exemption. A stadium built for a franchise worth billions is about as private as it gets.
Issuers found the crack anyway. Structure the deal so no more than 10% of debt service is secured by stadium revenue, and the bond can stay technically governmental. Back it instead with hotel taxes, rental car fees, tourist surcharges. None of it touches the team directly. The exemption survives. This workaround has a name in policy circles: the 10% loophole. It has been running since the Tax Reform Act of 1986.
Smith's number from the hearing: 43 of the last 57 stadiums built in this country used it. $4.3 billion in tax revenue the federal government never collected.
WHY THIS ISN'T NEW
Congress has tried to kill this before. Cory Booker and James Lankford ran a version of this bill in the Senate in 2017. Beyer, Blumenauer, and Speier ran one in the House in 2022, explicitly aimed at Dan Snyder and the Commanders. A version of the ban nearly made it into the final Tax Cuts and Jobs Act that same year, before it got stripped out in conference.
Every attempt has died. This is at least the fourth Congress in a row where someone has introduced it.
What's different this time is the room. Rep. Terri Sewell, a former bond counsel and one of the House's most reliable public finance advocates, told a witness directly that she shares the concern. Rep. Mike Carey of Ohio was the only voice in four hours who defended the practice at all, and even he was talking about a niche women's soccer financing structure in Columbus, not the NFL stadium arms race.
HOW YOU'D ACTUALLY BUY ONE
If you're wondering how a regular investor gets exposure to this corner of the market, there are three lanes.
New issue, through a broker's (Fidelity, Schwab, etc.) municipal desk at the time of underwriting. Minimums usually run $5,000.
Secondary market, where a broker pulls a live quote off EMMA, the MSRB's public disclosure system. Think of it as the place to check the official statement and recent trade history before you buy.
Or the lane almost everyone is actually in without knowing it. A muni bond fund or ETF holding a slice of stadium paper as part of a much larger portfolio. Nobody is individually shopping the Buffalo Bills' $850 million issue. You own a sliver of it because it's 0.3% of some fund sitting in your brokerage account.
WHAT CHANGES IF THE EXEMPTION GOES AWAY
New deals get more expensive to build. Strip the exemption prospectively, and any new stadium bond has to price like a taxable instrument, competing directly with corporate debt instead of drawing a built-in audience of tax-averse buyers. The closest precedent is Build America Bonds in 2009, taxable munis where the federal government subsidized the issuer directly instead of exempting the investor. Those deals had to offer meaningfully higher yields to clear.
Existing holdings likely don't change. None of the bills on the table strip the exemption retroactively. That would be a legal and political mess nobody wants. If you're holding stadium paper through a fund today, the working assumption is your tax treatment stays as is. The grandfathering language isn't identical across every version of this bill that's been introduced, so that's worth confirming if something actually moves.
The buyer pool shrinks. Tax-exempt munis draw a specific crowd: high-bracket individuals and muni-dedicated funds chasing the shield. Remove the exemption and that exact crowd doesn't automatically show up for the taxable version. Less demand depth means wider spreads relative to comparable taxable paper.
It falls out of the muni ecosystem entirely. Muni funds are often mandated to hold only tax-exempt paper. A taxable stadium bond gets kicked out of that index and has to compete on pure credit merit in a much larger, much less forgiving market.
THE PART NOBODY'S SAYING LOUD ENOUGH
Emily Brock of the Government Finance Officers Association said the quiet part out loud at her own organization's conference, days before the hearing. This bill does not touch the team. It does not touch the owner. It raises the municipality's cost of borrowing, full stop.
The stadium still gets built. The owner still gets his building. The city just pays more to finance it, and that cost lands right back on the same taxpayers this hearing claims to be protecting.
Whether this actually becomes law is a separate question. This fight has died every session since 2017. But when Sewell won't defend the practice to a witness's face, that tells you which way the room is leaning.
That's it for this week's edition of The Dime๐ฐ.
Don't be stingy with the ๐. Pass this to a friend.
See y'all next week.
CJB