Name: SeaWorld seeks federal loan while paying little in U.S. income taxes | Exclusive
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SeaWorld seeks federal loan while paying little in U.S. income taxes | Exclusive

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AdvertisementBy Orlando SentinelApr 29, 2020 at 9:01 amLosing $25 million a month while its amusement parks sit closed and empty, SeaWorld Entertainment Inc. hopes a loan from the federal government could help the company get through the coronavirus crisis.SeaWorld wants help from federal taxpayers though it pays little federal income taxes itself.AdvertisementOver the past 10 years, records show the company has earned nearly $193 million in pretax profits. But it has paid less than $8 million in total income taxes, according to an Orlando Sentinel review of SeaWorld’s financial statements.That works out to a tax rate of 4 percent. Most of the company’s tax payments appear to have been to state governments rather than the federal government.AdvertisementSeaWorld’s tiny tax bill is a result, in large part, of a multibillion-dollar private-equity buyout of the company orchestrated just over 10 years ago. When SeaWorld went public a few years later, company executives boasted to Wall Street that they weren’t paying income taxes. “That’s a great advantage for us,” SeaWorld’s then-CEO told investors at the time.But that tax advantage threatens to become a liability now that SeaWorld is turning to taxpayers for help. The company is targeting a loan program for midsized businesses that is being created as part of the nearly $3 trillion in economic rescue plans that Congress and the Trump administration have enacted as COVID-19 burns through the country.“I think it’s pretty disgusting that a company would pay virtually nothing in income tax, make millions of dollars in profit, and then ask for money back,” said Jeremy Haicken, the president of Unite Here! Local 737, which represents roughly 19,000 food-and-beverage workers and housekeepers in Orlando, mostly at Walt Disney World.The union is lobbying the Federal Reserve and U.S. Treasury Department to reject any loan application submitted by SeaWorld, which has furloughed 95 percent of its largely part-time workforce.“It’s not the way the system should work,” Haicken said. “If you want help from the government, you should be paying in all along, just like the rest of us.”Executives at SeaWorld declined to answer specific questions — including whether the company has paid any federal income tax at all over the past decade. But in a written statement, SeaWorld said it has paid hundreds of millions of dollars in taxes overall — including other forms of taxes, such as payroll, property and sales taxes — and has supported thousands of jobs at its 12 parks around the country and throughout its supply chain.The company defended its pursuit of a government loan.“This is an entirely unprecedented crisis that is profoundly impacting hospitality, leisure and travel businesses. Substantially all of our revenue is generated from our theme parks. All of our operations, like some others, are completely shut down and we are generating zero revenue from our parks. Unlike some others in the industry, we have no other parts or divisions of our business that are still open and generating revenue," SeaWorld said.AdvertisementThe company added, “As an organization that employs thousands of people, cares for thousands of animals, welcomes millions of guests and contributes in meaningful ways to the communities where we operate, it would be irresponsible for us not to explore programs that are specifically designed to support companies like ours.”Once part of the Anheuser-Busch beer empire, SeaWorld became a standalone company in December 2009 when private-equity giant Blackstone bought it for roughly $2.5 billion.Using a common tactic in the private-equity industry, Blackstone arranged the deal so that it was essentially buying SeaWorld’s physical assets rather than the company itself. That allowed SeaWorld to immediately claim big tax deductions by writing down the value of those assets, a process known as depreciation. While physical assets such as buildings, aquariums and roller coasters can become less valuable over time, special tax breaks allow companies to write them down much more rapidly for tax purposes, which can create only-on-paper losses.Thanks to those depreciation deductions — plus deductions for interest payments on debt SeaWorld took on to help finance the Blackstone purchase — SeaWorld was able to claim a large loss for tax purposes at the end of 2009.Corporate tax returns are confidential by law, so it’s impossible to say exactly how big of a loss SeaWorld reported on its tax return that year. But SeaWorld’s public filings since then suggest the company claimed a loss of several hundred million dollars.And when a company reports a loss on its tax return, it can carry those losses forward and use them to wipe out income — and income tax payments — in future years.AdvertisementBlackstone sold off the last of its stake in SeaWorld in 2017. But records show SeaWorld is still carrying more than $600 million in accumulated tax losses — some of them stemming from that first tax return after the 2009 buyout.The company has had business struggles since then. SeaWorld lost money in 2016 and 2017, after its brand was badly damaged by the anti-captivity documentary Blackfish. But it has generally been profitable: SeaWorld turned pretax profits in seven of the 10 years between 2010 and 2019.Last year was its best yet. SeaWorld earned a pretax profit of $129 million. It paid $1.4 million in total income taxes that year — an effective tax rate of 1.1 percent.Altogether, SeaWorld paid $7.7 million in income taxes over the decade. Records show that little — if any — of that was paid into the U.S. Treasury. Instead, most of SeaWorld’s income tax payments appear to have been for state income taxes. The company has amusement parks in California, Florida, Pennsylvania, Texas and Virginia.The coronavirus pandemic, which has essentially shut down the U.S. tourism industry, is the biggest threat SeaWorld has faced yet.That’s why the company is in discussions to borrow money from the Federal Reserve, through a program for midsized businesses known as the “Main Street Lending Program.” Though the program hasn’t started yet, the Fed will allow companies to take out four-year loans with loan sizes starting at $500,000. Borrowers wouldn’t have to make any payments for the first year.AdvertisementSome analysts say SeaWorld may not need taxpayer help."My view is any efforts to get this federal loan are much more about optimizing their pluses during this time period," said Bob Boyd, an analyst at Pacific Asset Management. "It's also a matter of 'Can I get funding that's cheaper?' SeaWorld has a decent amount of debt to repay. If the government is willing to give them cheaper financing, they’re going to look at it as well."WeeklyA weekly update on health news in Florida. &gt; Last week, SeaWorld raised $227.5 million through a private offering, which the company said would give it enough cash to survive through the end of 2021 even if its parks didn’t reopen this year.“They bought themselves a little bit of extra time,” said Tuna Amobi, an analyst at CFRA.SeaWorld isn’t likely to be the only company that has avoided income taxes over the years that is likely to turn now to taxpayers for help amid the historic economic collapse. A study late last year by the Institute on Taxation and Economic Policy, a Washington think tank that advocates for higher corporate taxes, found that roughly one-quarter of profitable companies in the Fortune 500 did not pay any U.S. income taxes in 2018, according to their disclosures to investors.Advocates say companies like SeaWorld reflect a corporate income tax structure that has been twisted by business and shareholder lobbying. And they say any economic rescue efforts during the coronavirus crisis should be paired with changes that ultimately force companies and their biggest shareholders to pay taxes on a larger share of their own income in order to support a social safety net that they, too, are using.Advertisement“I think we’re going to learn a lot of lessons from the COVID crisis,” said Frank Clemente, the executive director of the lobbying group Americans for Tax Fairness. “And one of them, I hope, that people are going to take home is that there are a lot of people who do a lot of condemning of the government and they’re not willing to pay their fair share of taxes to make the government work — and then they come hat in hand when they hit a rough patch and they want the taxpayers to bail them out.”jgarcia@orlandosentinel.com; grusson@orlandosentinel.comEDITOR’S NOTE: This story has been updated to reflect new loan terms for the Main Street Lending Program that the Federal Reserve announced April 30. 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AdvertisementBy Orlando SentinelApr 29, 2020 at 9:01 amLosing $25 million a month while its amusement parks sit closed and empty, SeaWorld Entertainment Inc. hopes a loan from the federal government could help the company get through the coronavirus crisis.SeaWorld wants help from federal taxpayers though it pays little federal income taxes itself.AdvertisementOver the past 10 years, records show the company has earned nearly $193 million in pretax profits. But it has paid less than $8 million in total income taxes, according to an Orlando Sentinel review of SeaWorld’s financial...

SeaWorld seeks federal loan while paying little in U.S. income taxes | Exclusive

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