Analysis reveals FC Cincinnati stadium has $150m in hidden public costs, or maybe $17m, math is hard

Cincinnati’s WCPO has done a long analysis of the projected public and private costs of F.C. Cincinnati‘s new stadium, and determined that contrary to claims that contrary to claims it will cost taxpayers $63.8 million, the actual public price tag will be $213 million. That’s a lot more money!

Unfortunately, the charts that WCPO has used to accompany its article are not all too clear:

And even more unfortunately, WCPO has included 20-year costs as if they’re all payable now, meaning it’s impossible to figure out the cost in present-value terms. (Paying $10 million over 20 years isn’t really a cost of $10 million any more than paying $1 million in mortgage payments over 20 years means you bought a $1 million house.) So we’re going to have to break these down one by one:

  • It’s projected to cost $34.4 million over 20 years ($1.72 million a year) to pay for the construction of two parking garages, and while garage revenues are projected at $2.6 million a year, some of that needs to go to pay operating expenses. Net cost: unknown.
  • “The city of Milford is borrowing $3.5 million to cover the cost of purchasing land for FC Cincinnati’s training facility.” Net cost: $3.5 million.
  • The city of Cincinnati is “likely to finance up to $25 million in funding commitments for road improvements, a 750-car garage and other stadium infrastructure.” Net cost: $25 million.
  • The stadium and practice facility will be owned by Hamilton and Clermont counties, respectively, and to get around a law that private entities must pay property taxes on any port authority land leased for more than one year, the team will operate under a series of 360-day leases. The team will make a lump sum payment of $9.3 million to the Cincinnati public schools, which is estimated to be 25% of the present-value total of future property taxes, so if we assume the other 75% to be a tax break then we get net cost: $27.9 million.
  • The team will be exempt from sales tax on construction materials. Net cost: $7.7 million.
  • Cincinnati is providing $8.9 million in cash, and the state has committed to $4 million in cash and is expected to approve another $4 million. Net cost: $16.9 million.
  • There’s a bunch of land changing hands in complicated ways, and the WCPO article isn’t clear about what’s a cost and what’s a revenue, so net cost: unknown.

That gets us to a total of upwards of $81 million, which is definitely more than $63.8 million, but not nearly as much as $213 million. This is why it’s important to specify your units: There’s a massive difference between paying $213 million now and paying $213 million over 20 years, and headlines confusing the two are, well, confusing.

That said, there are still hidden costs to this deal, and upwards of $81 million is still a lot to pay for a soccer stadium for a team that was already drawing well in its existing stadium. The F.C. Cincinnati deal was a major taxpayer handout to begin with, and it’s only getting handoutier.

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6 comments on “Analysis reveals FC Cincinnati stadium has $150m in hidden public costs, or maybe $17m, math is hard

  1. You’re tax revenue “cost” calculations are completely incorrect. These are opportunity cost in the senses that revenues are being forgone. However, the team stated that these projects would not be done without these deals.

    Therefore, no tax relief, no stadium, no generates revenues. So the actual opportunity cost of the deal is the current revenues generated by the properties – significantly lower than the $35.6M you’ve listed.

    Also, listing forgone tax revenues as “cost to tax payers” in an article blasting a publication on their obscure math isn’t the best look. Yes opportunity cost exist in an economic sense. But it’s irrelevant in the discussion of tax player expenditures.

    1. Does that mean that I can tell the IRS I’m not paying income taxes next year, then, on the grounds that if I have to pay them, I’m going to refuse to work? Excellent!

      Also, just FYI, you’re using “opportunity cost” incorrectly — it actually refers to the cost of losing the opportunity to do something, such as if you give land over to a soccer stadium, you can’t then use it for something else. The term you’re looking for would be more like “incremental tax revenues” — which are still tax revenues, and so still a cost if you forgo them, but at least then the terminology is correct.

      1. Opportunity cost is defined as: “the value of the most valuable choice out of those that were not taken.”

        The options evaluated are a stadium/training facility vs current use of the land. There aren’t other development options on the land to be valued against. My definition of opportunity cost is correct.

        And if you’re going to list net cost of tax revenues you need to include the new tax revenues generated from income taxes of club employees, ticket taxes, and gameday sales taxes

        1. No, you absolutely do not. Otherwise the IRS would have to be happy to accept $1 in income taxes from me on the grounds that they’re at least getting something.

          I’ve been writing about sports and other economics for 25 years, and I think you’ll have a hard time finding any economists (other than maybe some diehard right-wing libertarian ideologues, and even then) who would say that tax expenditures aren’t a cost if they’re less than 100% of the tax revenues involved. You can argue that the tax breaks are worth it — FC Cincy’s owners absolutely do, though as I’ve written elsewhere, I (and that aforementioned army of economists) think they’re wrong — but they’re still a tax break.

          1. This might be a good time to revisit the Casino Night Fallacy:


  2. You don’t understand. In a politician’s mind, the term “present value” means the taxpayers will gladly pay you Tuesday for the voters’ perceived low cost, Whataburger* stadium value today.


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