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Zynga seeking tax break to keep San Francisco base

Fri 25 Mar 2011 11:21am GMT / 7:21am EDT / 4:21am PDT

"Serious discussions with the city" ongoing as future of headquarters becomes uncertain

Social game developer Zynga is said to be 'encouraged' by ongoing discussions with local government over the future of its San Francisco headquarters.

The Farmville creator has threatened to leave the city unless it receives tax exemptions similar to those recently given to networking site Twitter, according to Market Watch.

A spokesperson for the company admitted it is engaged in "serious discussions" with officials, though they declined to comment further at this time.

Zynga, which could be worth as much as $10 billion, only moved into its current premises in September of last year and has space for around 2000 employees at the site.

17 Comments

Nicholas Lovell
Founder

187 175 0.9
This is exactly why we should oppose tax breaks. Highly profitable companies that benefit from the infrastructure of a major city (great universities, a desirable place to live, educated work force, critical mass of potential employees, etc) then seek to blackmail governments into giving them tax breaks.

Wrong, wrong, wrong.

Posted:3 years ago

#1

Lance Winter
Game Designer

26 12 0.5
They could always just invite a friend to fill a vacancy in City Hall!

Posted:3 years ago

#2
Having tax breaks is a bit like being on benefit. There's a time and a place for both of course, but isn't it a shame that apparently our industry isn't strong and viable enough by now that we need to be "on benefit", and fighting so hard for increased hand outs.

Posted:3 years ago

#3

Nicholas Lovell
Founder

187 175 0.9
@charles Indeed. But Zynga isn't exactly in need of benefits. It's growing fast, highly profitable and has raised $500 million in private equity. Really, I think this is just blackmail, and the city should call their bluff.

Posted:3 years ago

#4
Yes of course, but it's an option open to them because of so many other tax friendly locations.
Likely or not, it's a realisitc threat to say they'll move to Canada. It's just a shame that the blackmail option is open to them. The city should ignore them - ultimately Zynga probably needs San Francisco more than SF needs Zynga.

Posted:3 years ago

#5
It sounds like Bullying to me. SF should stand firm.

Posted:3 years ago

#6

Kingman Cheng
Illustrator and Animator

951 180 0.2
Why in Gods name would Zynga need a tax break? I'm not opposed to tax breaks but as noted it can potentially be abused by the bigger companies. Bit of a cocky move.

Posted:3 years ago

#7

Andrew Clayton
QA Weapons Tester

150 7 0.0
I'm guessing most of you don't live in or around San Francisco or California and therefore don't understand the current level of taxes its population (both citizens and businesses) is forced to deal with. Personal income tax is the highest in the nation, as is the sales tax and the gas tax. Even big corporations like Zynga are hurting and could easily increase their bottom line by moving to a different state / country. Having a business in San Francisco is corporate suicide for any business except the ones that see Zynga-like profit margins.

I don't blame them for wanting tax breaks, everyone else in the state wants/needs them too.

Posted:3 years ago

#8

Soeren Lund
Producer

42 1 0.0
I think the key issue here is that Twitter got tax breaks and now Zynga wants them as well. Seems fair enough to me. The question is if the first tax-break was even called for but that is another discussion I think.

Posted:3 years ago

#9

Lenny Raymond
Vice President, Strategy & Development

11 0 0.0
Commenters in this thread should actually take the time to understand what they are talking about before posting. The tax issue Zynga is trying to resolve is that San Francisco has a 10% (sometimes more) city tax on capital gains arising from stock options exercise. Other cities do not have this tax. With Zynga looking at an IPO, and stock options being the major financial incentive to work there, this is a very material issue for Zynga. They are being perfectly reasonable in just wanting tax parity for their employees vs. any municipality in a hundred miles in any direction.

Posted:3 years ago

#10
Wanting different tax conditions to your fellow businessmen in the city is hardly "reasonable", no matter which way you spin it. They have given literally no reason as to why they should receive special treatment - "do it or we'll move somewhere else" is a threat, not a reason.

The SF local government should stick it out, but of course they won't. Local governments only crack down on small businesses, not on the big boys, because the big boys have PR departments.

Posted:3 years ago

#11
Zynga ...could move if its hurting. SF cost of living is totally insane.

Posted:3 years ago

#12

Private
Industry

1,176 182 0.2
What happened to Zynga making oh so much money? Reminds my a lot of Ryanair besides that both offer very cheap and questionable services. Threatening the small airports and wanting money or otherwise they are not flying anymore there. The small airports need Ryanair, but does SF really need Zynga? If they don`t like it there I know a good place, Siberia or the Antarctic :)

Edited 1 times. Last edit by Private on 25th March 2011 10:56pm

Posted:3 years ago

#13

jim ellis
2D/3D artist, design, illustration, concept artist, video editor

27 1 0.0
There's an old saying "Much wants More..."... god this industry has changed so much in 15 years... :-(

Posted:3 years ago

#14

Michael Bennett
Senior Designer

39 12 0.3
The San Francisco government is the shopkeeper, Zynga the customer. Zynga will go to another store (Canada) if San Fransisco doesn't lower its prices enough that it's not really worth the trouble of Zynga moving. It's nothing to do with benefits being a remedy to an ailment.

Posted:3 years ago

#15
"It's nothing to do with benefits being a remedy to an ailment."

You're right, it's not. It's greed, pure and simple.

Posted:3 years ago

#16
That's a deeply misleading analogy. The cost to a shop customer of leaving is minimal, and their benefice from the shop's services to the point-of-sale is virtually nil. Zynga have already enjoyed the services provided by the city of San Francisco and will incur notable costs in moving.

Posted:3 years ago

#17

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