LEGISLATIVE FISCAL ESTIMATE TO
ASSEMBLY, No. 2213
STATE OF NEW JERSEY
DATED: OCTOBER 15, 1996
Assembly Bill No. 2213 of 1996 deregulates the professional wrestling industry by removing it from control of the State Athletic Control Board (SACB) and exempts professional wrestling from a tax imposed on television rights.
The Office of Legislative Services (OLS) estimates that implementing the changes in this bill will create a loss of $20,000 in State revenues. These losses will result from the removal of licencing and related fees that the SACB imposes to certify professional wrestling participants, promoters, timekeepers, announcers, box office employees and doorpersons.
It should be noted, however, that the World Wrestling Federation (WWF), the State’s largest professional wrestling promoter, testified before the Assembly Senior Issues, Tourism and Gaming Committee that, after this legislation becomes law, they intend to increase the number of televised, professional wrestling events in the State. If the WWF's plans come to fruition, the State may receive up to an additional $125,000 annually in gross receipts tax revenue from the sale of tickets to these events. The Office of Legislative Services is in no position to evaluate the likelihood of these events occurring, but has calculated the fiscal impact such events could have.
For the last five years, the State has not collected any revenues on the tax imposed on television rights associated with professional wrestling because promoters of professional wrestling events have not sponsored televised, professional events in New Jersey since 1989. Since there have been no televised, professional wrestling events in the State, exempting such events from taxation has no adverse impact on State revenue.
The deregulation of the professional wrestling industry will reduce some regulatory activities of the State Athletic Control Board and reduce their spending demands to support such regulation. However, it is unknown whether the funding required to support SACB regulatory activities over the professional wrestling industry is equal to the $20,000 certification fees that professional wrestling generates. If the revenue loss exceeds savings from the Board's reduced activities, the SACB may be adversely affected by this bill.
The proposed growth in televised professional wrestling in New Jersey is the most uncertain factor in this estimate. It depends upon statements made by World Wrestling Federation (WWF) officials regarding their intended growth in New Jersey after the passage of this bill. It is not possible to know whether this growth will occur, but it appears likely that the WWF will be the only professional wrestling promoter operating in New Jersey that is large enough to sponsor televised events. Therefore, any growth that occurs will probably result from this company's efforts.
Televised professional wrestling events generate substantially higher ticket revenues than do non-televised events. There are two types of televised professional wrestling events, pay-per-view events and non-pay-per-view events. New Jersey's last televised, pay-per-view professional wrestling event in 1989 generated $1.6 million in ticket sales for the WWF who paid roughly $93,000 in gross receipts taxes. Past televised, non-pay-per-view events, have raised roughly $325 million in ticket revenue. These events generate roughly $16,000 in gross receipts.
Under current law, ticket sales to professional wrestling events are taxed on a graduated scale between 3 percent and 6 percent. The first $25,000 in ticket sales is taxed at 3 percent the next $50,000 is taxed at 4 percent; the next $125,000 is taxed at 5 percent; and ticket sales above $200,000 are taxed at 6 percent. The WWF has stated that with the passage of this bill they intend to sponsor up to three televised events in the State annually. Specifically, they propose one pay-per-view event and two non-pay- per-view events. Based on the historical data, if these events occur, New Jersey may receive an additional $125,000 in gross receipts tax revenue from ticket sales.
The legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67.