News Story

Michigan Taxpayers Fork Over $912K for Video Game

Fiscal expert: "[S]ubsidies to game makers doesn’t create new wealth, it just shifts it around. From whom was this money taken?"

Michigan taxpayers will give one company about $912,000 for it to make two video games under the state’s 42 percent film tax incentive program. The Michigan Film Office has approved tax incentives to BH Golfing Games Productions so it can make the Ben Hogan games, according to the film office’s 2010 annual report.

The money goes to BH Golfing Game Productions LLC, which is one of a series of limited liability companies created for the project. The project has ties to Alliance Acquisitions, a venture capital company in California. There are also Michigan investors involved, according to Marc Seyburn, the attorney who applied for the film tax incentive.

The Royal Oak company PixoFactor Entertainment was awarded the contract to produce the video games.  PixoFactor Entertainment didn’t return an e-mail seeking information. Reportedly, the company has been hiring and currently has 30 employees.

BH Golfing Games Productions will spend just over $1 million for the interactive website game and receive a $427,856 tax incentive. The company will spend $1.2 million for the Nintendo Wii game and receive a $484,333 tax incentive.

Seyburn said it was very hard to get people in the Midwest to invest in a digital entertainment project. He said these projects wouldn’t go forward without the financial help from the state.

“They (private Michigan investors) would not even touch a production,” Seyburn said. “Tell me where the market is. I don’t know anybody would do it. Without the incentive, I don’t know how you would do it.”

Seyburn said with the state incentives, other investors can be attracted.

“There is a big fear of the unknown. The people in Michigan, there mentality is, ‘It is just too foreign,’ ” Seyburn said.

Michael LaFaive, director of the Mackinac Center for Public Policy’s Morey Fiscal Policy Initiative, said the video game incentives were a good example of why the state should not be playing “this corporate welfare game.”

“It is not the state’s job to judge whether or not we have the right mentality to engage in entrepreneurial work,” LaFaive wrote in an e-mail. “Suggesting that is the case is like saying Michigan’s entrepreneurial and capital markets are broken. Investment dollars will go and stay where they are welcome. Redirecting subsidies to game makers doesn’t create new wealth, it just shifts it around. From whom was this money taken? Was it the next Bill Gates? The next Henry Ford? … The evidence is very clear: governments make terrible investors.”

BH Golfing Game Productions is a wholly owned subsidiary of BH Golf, which is a company set up by investors from California and Michigan. BH Golfing Game Productions set up another LLC company called BH Golf of Michigan.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.