Florida Lawmakers Try To Stop Subsidizing Videogames; Send That Money To Hollywood Instead

from the we-NEED-to-throw-this-money-down-a-hole,-but-WHICH-ONE? dept

Florida legislators are looking to dial back the tax credits they’ve been handing out to Electronic Arts over the past couple of years, citing concerns that “people sitting at computer terminals” just aren’t bringing in enough taxable revenue.

“Can you tell me why video games need a tax incentive?” Sen. Eleanor Sobel, D-Hollywood, asked Department of Economic Opportunity Executive Director Jesse Panuccio at one point.

“I just don’t see video games as an issue that’s going to bring a lot of people to Florida and [bring] big expenditures,” added state Sen. Gwen Margolis, D-Coconut Grove.

They may be right — these tax incentives aren’t paying off. After all, EA received $9.1 million during the 2011-12 fiscal year and is looking to score another $14.5 million to underwrite (full retail price!) roster updates for Madden NFL, NCAA Football and the latest iteration of Tiger Woods PGA Tour. EA, which has been in Central Florida since long before the subsidy train started rolling, defended its grab of state incentives by saying the money has “motivated the company to expand its Central Florida workforce during the last three years.” That may be true about the last three years, but as is pointed out elsewhere in the article, EA employs fewer people today than it did in 2007.

Don’t get me wrong. I don’t think EA should be given tax breaks and other incentives in order to continue operating in Florida. In fact, I’m of the opinion that if a business needs subsidies to get by, it’s probably not much of a business. However, they are a fact of life at this point, and giving businesses a tax break to move to your state is a powerful persuader. Many locales compete for the affections (and taxable revenue) of large companies, throwing larger and larger amounts money at them in hopes of a decent return on their investment.

If these legislators want to drop the subsidies, more power to them. Unfortunately, they don’t want to get rid of subsidies. They just want to throw the money in another direction.

“To have such a concentration of it going to games — I mean, people sitting at computer terminals — I’m not sure most of us really think that’s film,” said state Sen. Jack Latvala, R-Clearwater. “Film is movies. … People have to hire a lot of folks and they have meals and have to stay in a hotel room.”

“I think we ought to be focused on those kinds of things [rather] than games,” he added.

“Do you consider any difference if a company is already situated in Florida and has a stable workforce, compared to a company that comes into the state and hires people that might not be hired otherwise, purchases food for the people they’ve hired, provides lodging for them?” [Sen. Geraldine] Thompson asked.

Oh, I see. You just want to take these extraneous fiscal crutches and offer them to a different member of the entertainment industry. This doesn’t really change anything. Sure, legislators want to believe that a big Hollywood production will boost the local economy for the duration of the shooting, but prior experience shows that Hollywood-aimed subsidies rarely improve the financial situation of anyone other than the studio receiving them.

As was previously covered here, a study showed that nearly every subsidy program developed to attract motion picture studios to various locations has turned out to be a losing proposition. Most of the states studied recovered less than $0.25 on every tax dollar invested. Why? Because when a studio rolls into town to shoot a movie, it brings in a lot of its own talent. Sure, there are some temporary bumps to food and housing income, but when it’s all said and done, the studios roll out of town slightly richer, leaving their hosts stuck with the bill.

Despite these losses, states continue to wave ever-increasing amounts of money in the air while shouting “Pick me!” at every passing entertainment concern, gambling away their constituents’ tax dollars. Florida’s legislators seem to be no different. They’ve mistaken movie studios for good-natured philanthropists and written off “people sitting at computer terminals” as a drain on the economy. It’s a “spend money to make money” plan that has failed to pay off time and time again. All these legislators are arguing over is on which losing horse they should put their money.

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Comments on “Florida Lawmakers Try To Stop Subsidizing Videogames; Send That Money To Hollywood Instead”

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fogbugzd (profile) says:

The movie industry has one thing going for it that no other industry can match. Politicians LOVE to rub elbows with movie stars. It is hard for most politicians to resist invitations to a few star-studded parties and promises of visits to local shots, premiers, and private showings. Toss in some campaign contributions and Hollywood can write any bill they want.

Ninja (profile) says:

To have such a concentration of it going to games ? I mean, people sitting at computer terminals ? I’m not sure most of us really think that’s film

Oh the astonishing prejudice against computer basement dwellers. I do believe most of us geek are smart enough to do it awesomely right without any ‘incentive’ 😉

EA doesn’t fit the category, they were taken over by greed over brilliant minds some time ago.

Anonymous Coward says:

yes, just compare Hollywood and Detroit !!!. you can see the movie / entertainment industry is really failing, and I did not know movie instantly stop making money once they have been produced.

and that studios don’t employ people, and they don’t use the money they made off their last movie to help finance the production of their next movie.

Thanks masnick for clearing that up for us.

Josh in CharlotteNC (profile) says:

Re: Re:

I did not know movie instantly stop making money once they have been produced.

Subsidies are supposed to benefit the state where the movie is produced, in terms of additonal tax revenue, jobs, etc.

So yes, once the company stops the production in Florida and moves back to Hollywood, it stops making money for Florida and disappears into the blackhole of Hollywood accounting.

If the subsidies do not return more to the state in tax revenue than the amount of the subsidy, then the state would be better off spending that money fixing potholes, paying teachers, or something else where the state gets more benefit from it. Heck, if the state is only getting back 25% of the subsidy, it would’ve been better off taking 50% of the proposed subsidy out as cash and just burning it in a big pile.

Jeremy Lyman (profile) says:

What now?

Oh, because a Terminal Sitter (aka an employed resident of your state) won’t need to eat and sleep and interact with the local economy. I’m not arguing that EA should get tax incentives, but you’d think a long-term job creating enterprise would be preferable to a movie company renting out hotel rooms for a couple of months for folks who are going to export their pay back to where they really live.

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