Tax discrepancy for mixed martial arts events in NY an ongoing issue

The existing ticket sales tax discrepancy between mixed martial arts and boxing events in New York creates the wrong impression of the sport, UFC chief operating officer Lawrence Epstein told Newsday.

“That somehow we're worse, that for some reason our fans should pay a higher ticket tax to come to our events,” Epstein said. “Just doesn't make any sense. It’s an inequity that doesn't exist anywhere else in the world. And that's why it's so important to us that it be fixed.”

Since MMA first was legalized in New York in 2016, promoters pay 8.5% sales tax on gross ticket sales receipts while boxing promoters pay 3%. Adding to the inequity between combat sports, MMA tax bills are uncapped, where as boxing tax bills are capped at $50,000 per event.

Assembly bill No. A5254, now in the Ways and Means committee, and corresponding Senate bill No. S6620, referred to the Budget and Revenue committee, seek to align the ticket sales tax for all combat sports, which includes MMA, boxing, pro wrestling, kickboxing and individual martial arts. Neither bill calls for MMA tax bills to be capped.

“Post-COVID, I think there are some positives to bringing MMA down to boxing,” Assemblyman Kenneth Zebrowski (D-Clarkstown), the bill’s sponsor, told Newsday. “Try to expand the opportunity for MMA events across the state. Obviously, New York City and the metro market is one that is advantageous to the business, but we'd like to see this in arenas across the state. So perhaps bringing that tax down to 3% will encourage events across the state."

The last major MMA event in New York was UFC 281 in November, and it brought in a live gate of $11,562,807.77, third biggest for a sporting event in the history of Madison Square Garden (behind UFC 205’s $17.7 million and the $13.5 million from Lennox Lewis vs. Evander Holyfield in 1999).

That means the UFC paid $982,838,67 in ticket sales tax to the state. If sales tax for MMA events were the same as boxing, and uncapped, the state would have collected $346,884 in tax revenue.

“Look, $600,000 isn't the biggest budgetary item but the budget is made made up of lots of $100,000 items,” Zebrowski said. “So certainly that's a hurdle I think we need to overcome. But I'd like to say that could be made up with a few additional events in the state.

“It's a balance. If you make New York more competitive hopefully it will bring more business in. And then of course, all the ancillary benefits.”

New York is the only state with such a tax disparity between combat sports events. The 8.5% for MMA is the highest rate in the country, whereas the 3% tax for boxing is among the lowest. New Jersey, which hosts UFC 288 this Saturday at Prudential Center, has a 6% tax rate, a with other neighboring states Connecticut and Massachusetts at 5%. Nevada’s tax rate is 8%, and Pennsylvania’s is 3%.

The UFC has lobbied in the past to end the tax disparity, with a 2020 bill introduced into the Assembly to align all the combat sports at 8.5%. The leading MMA promotion, which is owned by Endeavor who earlier this week announced its acquisition of the WWE, also has proffered a middle ground for all combat sports. That legislation never made it into an approved budget or out of committee.

“First of all, obviously, I'd say this is not the most important issue that the New York State Legislature is going to address this year, and we understand there are much more important issues that deserve much more bandwidth,” Epstein said. “I think there's a very strong argument, too, that if you create a more competitive tax landscape, you’re actually going to attract more events. And more events is an opportunity to create taxes, more economic impact. And so ultimately, if the right balance is found, this should be a win for the state, not a loss."

The UFC has promoted 15 events in the state since September 2016, with a total attendance of 206,001. That’s led to gate records at the three major venues in the NYC area — MSG, Barclays Center and UBS Arena — and generated $5.4 million in state and local taxes paid on ticket sales. Bellator MMA, owned by ViacomCBS, has promoted three shows in New York, and Professional Fighters League has hosted eight events.

“We've always had a long-term mindset," Epstein said. "And I always felt that we're not just building the UFC brand, but we're continuing to do things that build the sport of mixed martial arts. And when you have that sort of viewpoint, I mean, things like this are important.”

By Mark La Monica

mark.lamonica@newsday.comLaMonicaMark

Mark La Monica is a deputy sports editor at Newsday. He also covers mixed martial arts.