Corporate Welfare Olympians are relying on performance enhancing corporate welfare to boost profits

August 15, 2016

Source: New Balance artist rendition

The titans of the sports apparel industry are reveling in the success of the Olympic athletes they’ve signed up to wear their products in Rio. At the same time, the companies themselves are competing in their own games: the Corporate Welfare Olympics.

NIKE leads the pack with its $2 billion megadeal paid for by Oregon taxpayers to help finance its new corporate campus.  Under Armour is far behind in the silver medal slot, with $37 million in tax subsidies to support operations in Baltimore and Tennessee. But the Corporate Welfare Olympics standings may soon be getting a lot closer. Under Armour envisions a new corporate campus in Port Covington, just south of downtown Baltimore. Company founder and CEO Kevin Plank is seeking a $660 million tax subsidy from the city.

In 2011, Under Armour won a $35 million Baltimore City subsidy to improve parks around his then-recently completed corporate headquarters. This time around, he is asking the city for an investment nearly 19 times higher.

Unlike the NIKE deal, which went straight to the company, Plank has structured his new request to go through his privately-owned Sagamore Development Corporation. More than 90 percent of the office space at Port Covington is expected to be occupied by Under Armour, and most of the rest by company suppliers.

The city would build road, sewers and water line to a largely infrastructure-free parcel that will eventually comprise 45 city blocks. Plank is asking city taxpayers to build a 40-acre park that will include covered walkways, an in-street trolley system, and kayak slips in a city where per student education funding is $2,000 less than the state deems necessary to provide an adequate education.

As NIKE and Under Armour duke it out for the gold medal in the Corporate Welfare Olympics, New Balance and Adidas appear to be sitting on the sidelines.

When New Balance built a new Boston-area headquarters campus to house its 700 employees, it did so with private money, not public handouts. In addition to the headquarters building completed last year, and a new $16 million commuter rail station and a Boston Bruins training facility expected to open this fall, the project will also include, a hotel, an apartment complex, and a multipurpose sports facility, all built with private dollars.

New Balance also differs from NIKE and Under Armour in its commitment to domestic production. About 25 percent of New Balance shoes are made by workers in five New England factories. In contrast, 98 percent of shoes sold in America are manufactured overseas.

The Olympics didn’t used to be glitzy affairs fueled by billions of dollars of corporate sponsorships and racked with cheating allegations.

And corporations didn’t used to be entities that demanded a public handout to build and maintain their offices.

Maybe it’s time we end Corporate Welfare Olympics that enhance already buff corporate profits and create an un-level playing field with firms that want to compete the old-fashioned way.