Jeff Saturday files suit against city of Cleveland over income taxes

The city of Cleveland taxes NFL players who earn paychecks by playing games on the shores of Lake Erie, but now it appears their methods are under fire. The Indiana Business Journal reports that former Colts center Jeff Saturday has filed suit against the city of Cleveland for their taxation procedures.

At issue is exactly when NFL contract dollars are earned. If a player makes $10 million dollars for a year of football, are they paid that money based on the number of workdays in their season or the number of games? The way the city of Cleveland figures it, a player on a $10 million deal is paid $625,000 per game, so when that player plays a game in Cleveland his taxable income is that whole $625,000.

The way Jeff Saturday figures it, he’s working 200 days a year as a part of being a pro NFL player. That means that he’s paid $50,000 per day of the NFL work year. If he gets to Cleveland on a Friday and leaves on a Sunday, his taxable income in the city is drastically lowered to $150,000. For the city, their revenue is drastically lower as well.

In my example, the city would get $3000 instead of $12,500 in tax revenue on a $10 million player.

One much easier issue to settle might be Jeff Saturday’s claim that he shouldn’t owe anything for a particular Colts game from 2008 when he wasn’t even in the city due to injury.

This is an interesting case. It also drastically changes the cost / benefit proposition of the entire relationship that the city has with the Cleveland Browns. If the law calls into question the very baseline methodology that determines city revenue, it fundamentally changes the landscape with which the city entered into many agreements in terms of costs.

[Related: 2013 In-Season Cleveland Browns Fan Survey]

  • Toddyus

    $50,000/day. That’s all I read…

  • Daniel Carroll

    Whoa…so there isn’t a set rule on this across the board? I would have thought this issue was set in stone a long time ago. The fact there is even confusion here is amazing to me. How is this issue JUST coming up now? Wow…

  • Adam

    After watching a 30 for 30 on sports and money, I was shocked to even see that players pay all the taxes associated with working in different cities/states. That seems moronic to me. I live in MN and travel for business from time to time, but i don’t pay the taxes of the city or state I’m doing business in on that trip. Why should it be that way for athletes?? Seemed strange to me.

  • MrCleaveland

    I’ve always thought this kind of tax shake-down was a bunch of b.s. Players should not be forced to pay taxes to other cities and states for playing road games there.

    My business is located in Strongsville. If I happen to be within the Cleveland city limits when I do a job, I shouldn’t have to pay Frank Jackson for the privilege.

  • Bruce Hicks

    I think taxation should be fair. But hell, consider the lack of equity between the subsidies that regular taxpayers have to bear to build, maintain and then enhance the stadiums used by players. Cities get screwed!

  • CBI

    I assume Saturday is doing this because the tax rate in Indiana is lower. I wonder if Browns players are going to file suit in Indiana and argue the opposite.

  • mgbode

    completely agree, but he isn’t even fighting that item.

    as it is, there should be enough precedence to over-rule Saturday’s claims, I think. otherwise, won’t the city just go after players on the Browns for the income “lost”? I mean, if it’s “per day” then those days are made up by players on our team.

  • Lucas Vaas

    Completely agree they should change it! (as the browns roll away at midnight because it becomes UNPROFITABLE to have a team for the city, NOT the owner)

  • Lucas Vaas

    lets tax all the rich people for everything!

  • mgbode

    huh? with the salary cap, it will not cost the city any real money most seasons either way. it’s just a difference between taxing the Browns players more (per-day) or opposing players more (per-game).

    now, the reason the city does it “per-game” is likely that it DOES matter for baseball and basketball where there are higher revenue clubs that come to town (however, they have less “off” days, so even then it shouldn’t be a huge difference).

  • The_Matt_Of_Akron

    Agreed, I thought you had to do business in that location for 30 days (per year) in order to be taxed by that location.

  • BuckeyeDawg

    If a prominent speaker comes to town and speaks at a convention and is paid $50,000 to do so, does he/she pay taxes to Cleveland because the money was earned here? How about a singer who has a concert here? (Genuine question. I don’t know and I’m curious. Seems the same rules could apply.)

  • Rick Manning

    This is the most ridiculous thing Ive ever heard, I actually hope Saturday wins this lawsuit, this kind of thing should be illegal.

  • Steve

    But those players are working in Berea, not Cleveland, for those days they aren’t playing.

  • Steve

    Let’s be careful with Jimmy then, obviously he’s a bit hard up if he has to pull a rebate scam to get by.

  • simond

    i always thought you pay tax to the state when you play a road game, i guess city of cleveland is imposing an additional city-tax

    sucks for them

    when players go to florida or texas or washington (state) where theres no state income tax, i always heard that since half their games are at home – then those are free of state income tax – but the road games arent

    as a side note, once you live in a state like florida, its harder to live in a state with state income tax after that. no state of ohio tax, no city tax, no rita tax.

  • Steve

    But the property taxes! Whew! Through the roof. And hopefully you can afford a higher, more regressive, sales tax.

  • simond

    full time residents can get a homestead exemption on property taxes ($50k)

    i just checked property tax rates, not that different

    broward sales tax is 6%, dade is 7%. whats the sales tax in cuyahoga?

  • The_Matt_Of_Akron

    Cuyahoga is 8% but overall Ohio’s sale’s tax is 5.75% to Florida’s 6.00%

    I always thought Florida made its money on hotel taxes.

  • Steve

    The homestead exemption is only 15k, and Texas has the third highest property tax as a percentage of home value. Florida’s property taxes aren’t cheap either. Texas and Florida’s governments aren’t kindly letting their residents live their on the cheap, they’re collecting plenty from their residents.

  • Warburton MacKinnon

    Well cosidering when a player is suspended,for say substance abuse, they forefit their game check which seems to be their salary divided by 16..if the organisation as a whole calls it a game day check why wouldn’t a municipality tax it as such, assuming they tax it at all? In any event I wonder if this means Saturday is broke,or hasn’t been paying his taxes in these situations in a timely manner,and if so would this be a test case to set a precedent to sue other cities and only started in Cleveland cause it’s mostly broke? If it is,and he wins look for him to sue most citied he’s played in and for other players to do the same, which will mean a payout by cities and it’s residents including the court costs…though I don’t expect that the city should lose I think they will which will mean millions paid out punatively to millionares(or former millionaires) and more cuts nationwide in city services to pay for it,or even worse loans used to pay with ridiculous intrest rates, and larger cuts in services…like snowplows,fire departments,police departments,pothole filling,infrastructure repairs,education,mass transit…the list could go on almost forever.

  • mgbode

    it is my understanding that a suspended player cannot practice that week either. muddies the waters a bit.

  • mgbode

    it is my understanding that a suspended player cannot practice that week either. muddies the waters a bit.

  • mgbode

    good point.

  • Natedawg86

    Isn’t there an entertainment tax. They should probably be paying for that too.

  • bupalos

    You would if you were actually delivering your goods or services to end users there. But it’s a complicated affair to determine if that’s the case. For most people traveling and “doing business” their activity falls under “value added,” which is not taxed in the states.

    It’s not so odd. When you are doing business in FL, it’s the FL courts, police, and infrastructure that support that business.

  • StillInCleveland

    Yes, if you work in the city, you get taxed by the city. Unfortunately, that standard of “taxation with representation” does not apply, because you do not get to vote in the city. That goes for people that pay into RITA or CCA.

  • MallaLubba

    You don’t. Tax laws which govern any intrastate work are completely different than laws which govern interstate work (at least as they relate to Ohio). There are regulations in other states which change the game for intercity work within state borders but Ohio doesn’t have that, yet. [Just ask any company in Cincinnati that is working back and forth across the border: see Kentucky’s screwy county breakdowns and their commonwealth system.]
    These practices have been in place for a long long time and every professional athlete is (or should be if they’ve got competent tax lawyers) fully aware of how it’s done.
    It’s obvious to me that Saturday is just trying to play a game with numbers. What’s more interesting is how this ruling may trickle down to other aspects of professional sports like how contracts and fines are calculated.