Recently, the Ohio Board of Taxation ruled that the Cincinnati Reds owed $88,000 in back sales taxes on promotional items the team purchased to give away to fans. Mostly bobbleheads. The Reds appealed that to the Ohio Supreme Court and, on Wednesday, the court gave the Reds a win in what ended up being a very interesting and entertaining legal opinion, with no shortage of baseball stuff in it. You can read it here.
The law in Ohio, as in all states with a sales tax, is that if you’re buying something, you pay tax on it. The exception, as in most states, is that if you’re buying something in order to resell it (i.e. from a wholesaler, distributor or whatever) you don’t pay taxes. Ohio taxation authorities took the position that, since the Reds gave away the bobbleheads, they are the end purchaser, they don’t fall under the resale exception and they thus had to pay taxes on the bobbleheads they bought from the manufacturer. The Reds took the position that they were, technically, re-selling bobbleheads to fans, so they did not have to pay a tax. The fans do, and since ticket prices include taxes, the taxes have been paid.
Given that no money changes hands when you pick up a bobblehead on your way into the ballpark on giveaway day — heck, given that it’s quite literally a “giveaway” — you may wonder how you, as a fan, are being “re-sold” bobbleheads and how, exactly, the Reds won their argument. I could, if I felt inclined, talk about the pro-business, anti-tax nature of the current Ohio Supreme Court and wave my hand at it all being a giveaway to an Ohio company like the Reds, but you don’t want to hear me rant about that. Instead, I’ll just sum up the court’s reasoning.
The court said, based on the testimony of the Reds’ CFO, that they advertise which games will include promotional items in advance so fans purchase their tickets expecting to receive the bobblehead and that the ticket prices reflect the cost of the bobbleheads, passed on to the customer. Why don’t bobblehead day tickets cost more, then? Because, the Reds said (and the court agreed), they smooth out the costs over the course of all 81 home games. The important thing here, the court said, is that the Reds promise fans a bobblehead, the fans buy a ticket expecting to get one, they buy tickets with the cost of the bobbleheads baked in and, bam, that makes it a sale, not a giveaway.
Which also means that, contrary to what teams tell you and what you have come to expect, it’s not first-come-first-serve, on bobbleheads and you’re not out of luck if you show up late and can’t get one. From the court’s opinion:
The tickets themselves do not state or include any guarantee regarding promotional items. However, [The Reds’ CFO] testified that fans who purchase tickets to games at which promotional items are offered “[a]bsolutely” believe that they are purchasing both the promotional item and the right to view the game at the ballpark. He said that fans expect and feel entitled to receive the promotional items, and he explained that it would be a “public relations nightmare” if the Reds reneged on the commitment to distribute them . . .
. . . In the event that the Reds run out of any given promotional item, Healy testified that the Reds “will remedy it.” He acknowledged that in these instances, the Reds may not be able to provide exactly the same promotional item, but he said that the Reds would “make it right” in ways such as giving another promotional item or complimentary tickets to fans who had failed to receive the designated items.
I have showed up late on bobblehead days in the past and they’ve been out. I never realized that, on such occasions, I could complain to the Reds and get something else, including free tickets. Indeed, neither the Reds nor any other team will tell you that you can do this. I suspect they’ll only do this if you complain and complain and then only if you get to the right people.
Yet, based on this Supreme Court opinion, the Reds are OBLIGATED to do that, or else they have breached their contract to you! That must be the case because the entire ruling is based on the idea — which I still think is baloney, but never mind — that you are purchasing a bobblehead as opposed to the Reds giving it away. There’s an entire section in the opinion talking about the bobblehead being “consideration” for your purchase. Under Ohio law, as of Wednesday anyway, it’s just as much a part of your ticket as the baseball game is.
So, my friends: next time the Reds or Indians hold a bobblehead day, I suggest that you wait until the second or third inning to show up and they have run out of the bobbleheads. Then walk right up to the ticket counter and ask for a free ticket to the next game or, at the very least, some good substitute swag. If they don’t hook you up, sue them for breach of contract. If you do, you’ll have the Ohio Supreme Court on your side.
(h/t to Boteball for the heads up)
