Even though the company just signed a seven-year lease on their new headquarters, social developer Zynga is threatening to leave San Francisco if it does not receive special tax breaks. Zynga is looking for tax exemptions similar to those previously given to Twitter. The microblogging site could benefit from legislation that exempts the company from payroll taxes for new employees.
“We are looking at a variety of options to grow the company in the Bay Area, and as part of that, we are in serious discussions with the city,” a Zynga spokesperson told MarketWatch. “It would be premature to comment on those conversations at this time. We are encouraged that the city is engaging with us on this issue.”
Zynga is currently the leading social game developer, valued at $10 billion. The company has grown to almost 1,200 employees from just under 400 the previous year.
[Via GI.biz]
7 Comments
March 25, 2011
Poor $10 billion company wants to keep some extra cash for itself. I'm sure the savings will be passed on to the consumer. In all seriousness, I know what these tax breaks are for, but can we really consider Zynga a small business trying to expand at this point? Obviously, they have every right to pursue exemptions, makes good business sense, but from a consumer's perspective, I can't help but find a multi-billion dollar looking to save some cash anything but hilarious.
March 25, 2011
Only when Zynga is in as bad shape as California should they be given any tax break. This is pathetic. Cheating simple-minded social gamers out of their hard-earned cash is not enough? They've got to extort it out of the local government as well? Mark Pincus is one greedy dude. And his company has a serious image problem. This does not help.
March 25, 2011
@Chris I agree that it's laughable. They are valued at $10 Billion, but reports show they only bring in between $500 Million to $1 Billion a year in revenue... only. I can't even say that with a straight face. Anyway, I'm sure they siphon plenty of millions out of Midwestern-housewife social gamers, but I am also sure that tripling their workforce is impeding upon the unfathomably huge profits they were previously enjoying.
March 25, 2011
A 10x-20x price to earnings ratio is not that crazy or unprecedented for companies that are growing quickly.
March 25, 2011
San Francisco is probably the worst city for business in California, because of the corporate taxes and payroll taxes. Zynga has a choice of where they will grow and create jobs, which in itself will grow the tax base as they do pay their employees well. You only need to look at Canada's tax incentives for the game industry (EA, Ubisoft, etc.) and you'll see it really does make sense for San Francisco to attract fast growing technology companies (like Twitter and Zynga) and give them a tax break on new jobs "created" in the city. It drives up the price of real estate, increases the per capita income and likely pays for itself over a few years as it has in Canada. @Abraham - when you run a company, your fiduciary duty is to maximize the profitability of the company while growing the business. Zynga has done an amazing job building a culture that makes people want to work there and they obviously make games that people a lot of people want to play. That's not greed, it's a high level of success in the business world and the games industry.
March 28, 2011
Zynga doesn't "need" this - I don't think any argument could be made about that. When arrangements like these are made, I think the concessions need to go both ways - if Zynga gets their wanted tax breaks, they should lay out how they're planning to expand their offices in San Francisco and how many people they plan to hired.
March 29, 2011
Why does a dog lick itself...