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SFIA Addresses Impact of the Election on Sports/Fitness Industry

Date: 11/15/12

SILVER SPRING, MD – November 15, 2012 – Now that Americans have cast their ballots for control of the White House and the U.S. Congress, how will the results of this year’s national election affect the sports and fitness industry?  That ‘big picture’ question was answered yesterday (November 14) during a webinar hosted by the Sports & Fitness Industry Association.

During the hour-long presentation, SFIA President/CEO Tom Cove, SFIA Vice President of Government Relations Bill Sells, and St. Maxens & Company President Tom St. Maxens provided their thoughts on five major issues – Regulation, Trade, Budget & Tax Policy, Intellectual Property, and Health Care. 

Some of the questions which they answered included:  Will the next four years bring more regulations?  Will health care be revisited?  What changes in tax policy can we expect?  How will the U.S. deal with the issue of online sales of counterfeit merchandise?  What can be done to better protect intellectual property rights?  

The President and Congress will determine how the U.S. moves on all these issues.  During the webinar, Cove, Sells and St. Maxens gave specific thoughts on how the White House and Congress will approach the challenges now affecting the country.

“While the Electoral College victory for President Obama was significant, the close popular vote delivered a clear message that the President’s victory was not a ‘voter mandate’ for his policies,” said Cove.  “Not surprisingly, Congress remains divided.  There were small Democratic gains in both chambers of Congress.  The Democrats expanded their control of Senate 55 to 45, while the GOP’s control of the House of Representatives has been reduced to 236 to 199.”

Cove indicated that one of the big takeaways from the election is the emergence of the non-white/non-male voting block.  And, that the traditional lobby presence of big business did not prevail, as it has in the past.

In the area of Regulation, Cove said the integrity of sports product advertising will be analyzed by Congress and the Federal Trade Commission (FTC).  Specifically, he said that protective claims made by makers of football equipment are under close scrutiny.  The issue of sports injuries is also high on the agenda for the Consumer Product Safety Commission (CPSC).  The environmental agenda, as it applies to outdoor activities, is not a ‘front burner’ issue for the EPA.

St. Maxens’ topic was Trade.  He does expect the Miscellaneous Tariff Bill (MTB) to be passed, but it may not happen until the final days of the current Congress.  He noted that Russia joined the World Trade Organization (WTO) in August, but American companies cannot enjoy the WTO trade benefits with Russia until the U.S. normalizes trade relations with them.  A vote to normalize trade relations is expected before the end of the year and indications are it will pass.  St. Maxens also predicted that the Generalized System of Preferences Program (GSP) will be renewed.  The current one is set to expire on July 31, 2013. 

Sells tackled the issue of what it will take to lower the national debt – Budget and Tax Policy.  Sells noted that compromises must be made by the Democrats and Republicans in order to decrease the federal deficit. 

“Frankly, everything is on the table when it comes to dealing with the federal deficit,” said Sells.  “Will both parties be able to reach across the aisle for the best interests of the people they represent?  For the benefit of the country, they must.”
Sells said that tax reform will entail eliminating tax deductions, allow the Bush-era tax breaks to expire, raising the top rates on upper income taxpayers (i.e. those making at least $250,000/year), and lowering the corporate tax rates in order to encourage investment.  Sells mentioned that passing the PHIT Act, an SFIA legislative priority, could ultimately reduce the strain on the health care system which is one of the biggest drains on our national economy.  

Sells made a reference to the much talked about Fiscal Cliff.  In layman’s terms, the Fiscal Cliff means there will be steep budget cuts and additional tax revenues.  The budget cuts will impact both defense and domestic programs. Sells said that the goal of the Republicans is to raise revenue without raising taxes.  One such measure is to bring back U.S. company funds currently in offshore accounts. A ‘tax holiday’ (i.e. a tax break) has been proposed to allow companies that have kept money overseas, to avoid U.S. taxes, to bring that money back into the U.S. without a penalty.

As for the issue of Intellectual Property, Sells said the best thing that Congress can do is to increase enforcement at the borders to stop large shipments of counterfeit items from entering this country from China.  If that happens, consumers will not have the chance to buy inferior items which would deprive U.S. firms of that sale.  He acknowledged that the on-line sale of fake products via foreign-based “Rogue Websites” remains a problem and that Congress has not found a solution that satisfies both the on-line community and manufacturers.

With regard to Health Care, Sells said that the Affordable Health Care Act (Obamacare) will go into effect on January 1, 2013, which directly affects companies with 50 or more employees, requiring companies to provide health care for their employees or pay a $2,000 per employee penalty.  Sells also said if Congress does not find a way to avoid the pending 27.5 percent cut in Medicare payments, some doctors will opt out of treating Medicare patients.  One option that has been floated is raising the Medicare eligibility age from 65 to 67.

The Sports & Fitness Industry Association, the #1 source for sport and fitness research, is the leading global trade association of manufacturers, retailers, and marketers in the sports products industry. SFIA seeks to promote sports and fitness participation as well as industry vitality through research, thought leadership, public affairs, public policy, and member services. More information can be found at www.sfia.org.

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