Will ticket sales tax leave Downtown arena at disadvantage competing for events?

The City’s plan to build a new Downtown multipurpose facility will leave it competing against other arenas in the area for events, without the benefit of the tax exempt status UTEP’s Don Haskins Center and New Mexico State’s Pan American Center have as promoters.

ABC-7 looked into the issue that tax exempt status UTEP and NMSU enjoy allows them to book events without charging a promoter 8.25 percent in sales tax on ticket sales. So will the new Downtown arena be at a disadvantage when competing for events?

“In Texas, admissions to entertainment events are taxable, a sales tax, and here in El Paso that’s eight and a quarter,” said Destination El Paso General Manager Bryan Crowe, pointing out a new Downtown multipurpose facility in Duranguito would have to charge that tax to promoters. “So I think the question of, we’ll have a Downtown venue that’s not university owned, will that create a competitive advantage?”

Or disadvantage? Consider this: A half million in ticket sales for an event, at a sales tax rate 8.25 percent means a promoter could be left paying upwards of $40,000 more to hold an event at the new Downtown arena.

“It’s not really just one variable in the equation, sales tax function, it’s a lot of different parts and pieces,” Crowe said. “So the question is look, I’m going to have a $40,000 tax expenditure performing Downtown, there may be other ways and other things a new venue offers that make that negligible.”

Crowe pointed out that having a bigger, brand new state-of-the-art facility is a larger advantage when competing for events.

“I don’t think it would be an issue for the new building to compete against whatever is in the market,” Crowe said. “When you look at the age of those facilities, the seating capacity of those facilities, the technical capacities of those facilities and that they have obligations to university activities, I think there are a lot of things that play in favor of a Downtown venue that in most cases will have it winning out in terms of being able to attract the event activity.”

Crowe also pointed out that promoters are accustomed to working in all types of different venues, many of them not at universities with tax exempt status as promoters. He thinks when given the choice of the new venue, event though ticket sales taxes apply, the new arena will get its share of shows.