A new tax on tickets sold in Detroit could generate $14 million to $47 million, according to a new report from the Michigan Citizens Research Council.
Researchers with the Michigan Citizens Research Council released a report Wednesday outlining the potential impacts of implementing a tax on local entertainment venues.
Tax revenue from concerts, shows and sporting events may be able to help lower Detroit’s property tax, which city leaders cite as the biggest hurdle preventing business and families from setting up shop in the state’s largest city.
The City of Detroit’s Legislative Policy Division commissioned the Citizens Research Council to explore an admissions tax on sports and entertainment venues and a local-option sales tax.
Detroit stands out in the country as one of the few cities that host all four major sports, along with the pending addition of a WNBA team and the growing Detroit City Football Club, which is building a new stadium in Corktown. Not to mention all of the concert halls, theaters and other venues that attract attendees from across the state.
“In serving this role, it brings added pressure on public infrastructure and services, such as policing, sanitation, and transportation, especially during major events,” authors of the report wrote in the summary. “It also provides an opportunity for the city to benefit from an admissions tax.”
Researchers point out in the report that while large cities stand to benefit from people visiting their cities, they also bear the costs associated with their role as hosts. Depending on the nature of the event, they can impose costs on cities that exceed those incurred in the normal course of serving their local residents.
The biggest events are typically happening during evening and weekends, outside of normal business hours in downtowns, which may require public safety services to be moved from neighborhoods to provide services near sports and entertainment venues.
Detroit City Council president Mary Sheffield has been a longtime supporter of adding a new tax to offset a property tax cut for residents. The mayoral hopeful says it’s imperative to increase city revenue to support neighborhoods, public safety, transit and infrastructure. She’s acknowledged the hesitancy from business groups to support new taxes, saying continuing to grow Detroit’s population is the chief responsibility of the next mayor.
Sheffield says she would consider a “half-penny” or 0.5% city sales tax as a potential revenue source for the city of Detroit.
Sheffield told Michigan Chronicle in July her tax proposal would be similar to a funding model in Columbus, Ohio, where a half-penny sales tax increase voters approved in 2024, will fund transportation improvements, sidewalks, and bike paths.
Implementing such a tax would require a number of steps to make a reality. Detroit lawmakers would need authorization from state lawmakers as Michigan law requires express authorization for any local taxes beyond property taxes. The city council would have to agree on an ordinance outlining the tax structure and then a majority of local voters must approve the tax in a general election.
Modeling based on gate receipts at Detroit’s major sports venues and large theaters suggests that an admissions tax in the city could generate at least the following: At 3% tax rate $14.1 million annually; At 5% $23.4 million; At 7% $32.8 million; At 10% $46.9 million.
The report also outlined the might contribute to the tax based on ticket sales. In the most recent seasons, an admissions tax would have generated: Lions (Ford Field): $0.99M at 3% to $3.3M at 10%; Tigers (Comerica Park): $1.95M at 3% to $6.5M at 10%; Red Wings (Little Caesars Arena): $2.31M at 3% to $7.7M at 10%; Pistons (Little Caesars Arena): $1.29M at 3% to $4.3M at 10%.
Researchers said cities such as Grand Rapids, Lansing, East Lansing, and Ann Arbor also show moderate revenue potential, particularly from university sporting events and regional arenas.
“We’re one of the only major cities that doesn’t have an entertainment tax,” Lupher told the Michigan Chronicle in July. “People are going for the entertainment and root for their teams. And often the amount that the owners of these teams are increasing ticket prices on a year-to-year basis is greater than what we’re talking about and the tax these other cities are doing somewhere between 3% and 10%.”
The exact percentage is up to legislators, Lupher said.
View the full report here.
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