D.C. United deal would cost taxpayers $200m, give all revenues to team

The D.C. United stadium term sheet is now online for public perusal, and a quick scan provides a few glimpses into how the deal would play out:

  • D.C. estimates that the “total value” of securing land for the project, doing any environmental remediation, etc., would be $140 million. Given the complicated land swap that would be required, it’s not entirely clear whether this would actually mean D.C. spending $140 million in cash, but it’s a reasonable starting point as guesstimates go.
  • D.C. United would pay $1 to rent the site, then would “develop, construct, manage and operate” the stadium. In other words, would pay neither rent nor property taxes. D.C. United would make payments in lieu of property taxes, but those would then be funneled back to the team to pay off its stadium construction costs — presumably in order to take advantage of the tax dodge first employed by the New York Yankees.
  • D.C. United would get all revenues from the stadium, including, presumably, non-soccer uses like concerts.
  • If D.C. United turns more than a “reasonable profit,” as yet to be defined, then the District will receive a “portion” of the excess profits, also as yet to be defined. The Washington City Paper calls this an “interesting wrinkle,” but without details it’s tough to know whether this would amount to real money or is just a windfall profits clause that sounds nice but would never come into play in reality, because you know how sports teams are about keeping their books.
  • I can’t find anything about the sales and use tax kickback that the Washington Post reported yesterday, but that may be a separate negotiation.

In short, then, we’re still looking at D.C. paying around $200 million, give or take an unknown amount, in exchange for the team promising to play in a stadium for which it keeps all the revenues, unlike the lease the team has currently at RFK Stadium. It doesn’t sound that great when you put it that way, which is no doubt one reasons why the apparent cost has been somewhat obscured by using this complicated land swap deal, where the District can claim that it’s just taking the opportunity to redevelop a bunch of plots of land at once. But as Matt Yglesias points out at Slate:

Note that while we superficially have a story about sports subsidies here, the real devil’s work is being done by accounting. Imagine we had already sold the Reeves Center to a private developer and moved the government offices across the river and had $100 million sitting around in a room somewhere. Now we’re debating what to do with the $100 million. The option “use it to buy land and then give it for free to a soccer team” would probably not seem very appealing to people. But since selling the Reeves Center and moving the offices is a very good idea, including that swap as part of the bundle rather than considering it separately makes the plan look pretty good.

It’d be nice if, say, the Washington Post would analyze the deal on that basis, and see if it then makes sense. But I’m thinking naaaaaah.

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2 comments on “D.C. United deal would cost taxpayers $200m, give all revenues to team

  1. DC, be very careful around profit sharing provisions. Seattle thought they had one, until the Mariners claimed they had a $200 M hole from “before SafeCo” that they had to fill up before the profit sharing kicks in. Now, they’re near the end of the lease and still haven’t thrown any profit sharing Seattle/King County’s way.

  2. Seems like a pretty straightforward stadium deal.
    $150 Million is actually a small expense for the economic benefits of basically two new stadiums. Moving DCU out of RFK is the first step to bulldozing RFK stadium and opening the door for the Skins back at the RFK site which they have been trying to do since the moment they opened FedEx.

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