Either St. Louis MLS stadium funding is in trouble, or democracy is

That proposed MLS stadium for St. Louis that may be about to lose its $40 million state tax kickback could be facing trouble for its planned city subsidies as well, as apparently nobody gave the board of aldermen time to actually discuss funding bills before putting them up for an April vote:

One measure would raise the city’s sales tax by a half percent, with the revenue going to mass transit, public safety and economic development. A second measure would direct the corresponding increase in the use tax to the new stadium…

If [St. Louis Board of Aldermen President Lewis] Reed waits until next year to make those [committee] assignments — something that he’s well within his rights to do — aldermen would have just two weeks to pass the bills if they want the measures on the April ballot.

“I received the bills an hour before they wanted me to assign them,” Reed said. “We should have gotten that information a little bit earlier to really have an opportunity to take a look at the bills, understand what they are, their total impact, and the best assignment for them.”

This could easily be a screwup by the stadium’s sponsors, or it could be intentional: Corporate subsidy advocates haven’t been above throwing bills at legislators at the last minute to avoid scrutiny (or even leaving time for legislators to read the damn things), after all. Reed steered carefully down the middle on the proposed St. Louis Rams stadium subsidy, so it’s probably unlikely he’ll use this as an excuse to throw roadblocks in the way of the MLS deal; whether he’ll use this as an excuse to ram it through with little debate, we’ll see — though the fact that he’s griping publicly about not having enough time doesn’t seem promising for stadium subsidy backers.

Gov. Nixon gets more wrong on St. Louis MLS deal in three sentences than most can in lifetime

Lame duck Missouri Gov. Jay Nixon opened his mouth about the proposed St. Louis MLS stadium on Friday at a meeting with reporters, and this poured out:

“Folks may want to anguish a little bit over all this sort of stuff, but it’s the price of doing business,” Nixon said in a meeting with Post-Dispatch reporters downtown. “And quite frankly, we’re getting in, relative to what other areas of have done, so much more cost-effectively here.”…

“If we’re going to sit around the table and complain about this little part of the deal or that little part of the deal, then the $250 million to $300 million in private money that’s going to be invested will go somewhere else,” Nixon said, “and that site will sit there looking the way it is.”

Nixon has never been known for being the most savvy sports subsidy negotiator, but that’s a whole lot of stupid packed into just three sentences. Let’s break it down:

  • “It’s the price of doing business.” This is mostly meaningless rhetoric, but to the extent it has any meaning, it’s “this is the best deal we’re going to get.” Except the $129 million in state and city spending being proposed is literally the team owners’ first ask, so there’s no way to know whether this is the price of doing business or just what a couple of wannabe MLS owners decided they can sucker the public into giving them.
  • “We’re getting in, relative to what other areas of have done, so much more cost-effectively here.” There could be a word missing here in the transcript (“of have”?), but regardless, Nixon is off his rocker here, since this would be the second-largest MLS-only stadium subsidy ever, meaning that by definition more than 20 other areas have gotten off most cost-effectively. Unless he just means “ha ha ha ha, we’re making the city foot most of the bill instead of the state,” which is true, but not exactly what most people mean by “cost-effective.”
  • “The $250 million to $300 million in private money that’s going to be invested will go somewhere else.” Of that private money, $150 million will go into the pockets of the other MLS owners as an expansion fee — and that will happen regardless of whether a team goes to St. Louis or some other city. (In fact, you could even argue that it would be better for the Missouri economy if the St. Louis-based prospective owners didn’t waste their money on an MLS team, and instead spent it on something else local.) The team would be putting about $71 million into actual construction, but since it would also be taking up a piece of land that then couldn’t be used for anything else ever, not to mention $129 million in public money that couldn’t be used for anything else, that’s not necessarily a plus even if you think the land would likely remain undeveloped for a while otherwise.

Nixon was, by all accounts, a successful litigator and popular state attorney general before becoming governor, so you’d think he might know a little bit more about haggling than he’s shown with his sports dealings. Guess there’s really no accounting for the effect of the toy department.

Missouri delays $40m soccer subsidy ruling, St. Louis team owners may grub for money elsewhere

Okay, didn’t see that coming: One day after Missouri governor-elect Eric Greitens called the local soccer team’s $129 million stadium subsidy request “nothing more than welfare for millionaires,” the team’s owners asked a state board to delay a meeting on $40 million in state tax credits for the project, saying they may look for another source of funding:

[SC STL vice chairman] Kavanaugh said the ownership group is working on contingencies in the event it can’t secure the $40 million in tax credits, but those ideas are in the early stages. He said losing out on the state contribution wouldn’t necessarily derail the group’s efforts at an MLS team.

“We are thinking of other options to fill in the potential hole,” Kavanaugh said.

(If you’re confused about the team name, by the way, that’s because it’s confusing: Kavanaugh currently owns the minor-league St. Louis F.C., but the larger group seeking an MLS team is called SC STL, which may or may not be the name that the MLS team goes by, if it ever comes into being.)

With the board meeting now delayed in 2017, it looks like Greitens will be overseeing any state share of the stadium deal after all, which explains why Kavanaugh is looking for a Plan B. If you’re hoping that it will be “ask the private investors who’d get the benefits of a stadium to cough up some more money, especially what with MLS reducing its expansion fee for its next two franchises from $200 million to $150 million,” Kavanaugh is already crying poor:

“Personally, growing up from a father who was a brick layer, I don’t come from money and any money I’ve made I’d say it has been earned,” Kavanaugh said by phone. “There’s a lot that personally speaking for myself and my partners we have given back in a number of ways and still plan on doing that in the community here.”

Kavanaugh had a brief career as a pro soccer player before co-founding a tech company with his friend David Steward, who likewise was born into wealth, so it’s true they’re not old-money millionaires. Still, he co-owns a company with $7.4 billion a year in annual revenues, so if he really needs $40 million, he has other places he can go other than the state of Missouri. Here’s guessing that he’ll end up asking the city of St. Louis instead, but there’s always hope that by “giving back to the community” Kavanaugh actually means “paying for my own stuff already.”

Missouri governor-elect calls St. Louis soccer stadium plan “welfare for millionaires”

I admittedly hadn’t noticed that Missouri elected Eric Greitens as governor until yesterday, but he’s sure on my radar now:

Missouri Gov.-elect Eric Greitens said he opposes public funding for a Major League Soccer stadium in downtown St. Louis, according to a statement released by his transition team Monday.

“This project is nothing more than welfare for millionaires,” Greitens said. “Right now, because of reckless spending by career politicians, we can’t even afford the core functions of government, let alone spend millions on soccer stadiums.

“This back-room wheeling and dealing is exactly what frustrates Missourians.”

The St. Louis MLS stadium project certainly qualifies as welfare for millionaires, involving $129 million in public cash, land, and tax credits to build a $200 million stadium. That’s not the sort of thing that governors usually say aloud, but Greitens has an unusual resumé, mixing altruism with serving in the Navy SEALs with hating on unions (he’s also the first-ever Jewish governor of Missouri), so maybe it’s not entirely unexpected.

Also, probably not entirely likely to do much, since the state Development Finance Board is set to vote on the city’s request for tax credits today, before Greitens takes office, and the rest of the stadium decision will be up to St. Louis city officials and voters. Still and all, it’s not going to help the soccer team’s ballot campaign to have the governor-elect publicly call them a bunch of rich guys with their hands out.

St. Louis mayor wants sales-tax hike to pay for MLS stadium so owner can drop $200m on expansion fee

Whole lotta news swirling around the proposed St. Louis MLS stadium (and team), as Mayor Francis Slay prepares for an April public vote on the team’s proposed $129 million subsidy:

  • While $40 million for the deal would come from state tax credits, and another $9 million from state land preparation funds, the source of the city’s $80 million in cash was unknown until now. Slay’s idea: Hike city sales taxes by half a percentage point (from 8.67% to 9.17%) and use the proceeds for a whole bunch of stuff, including light rail, job training, surveillance cameras to reduce crime — and an MLS stadium. (Technically the stadium money would come from a “use tax” on purchases of out-of-state products, but it’s essentially the same mechanism.) This is, needless to say, money that if raised could be spent on anything else — and the raising of which doesn’t come without a cost to the local economy, as the city across the state was warned a decade ago.
  • MLS commissioner Don Garber called the vote on stadium subsidies a “referendum” on whether they want an MLS stadium at all, which isn’t a take-it-or-leave-it blackmail threat at all, gosh no.
  • Prospective team owner (and former Bain Capital exec and Boston Celtics /AS Roma minority owner) Paul Edgerley continues to tout his “$400 million of private money” in the deal, which pointedly ignores that 1) half of that is for the expansion fee MLS is charging him for the team itself and 2) most of the rest would be covered by the public subsidy.
  • If Edgerley also wants to get property taxes from the blocks around the stadium kicked back to help pay his costs via a TIF — he’s not answering questions on the topic — then a previous city deal means even more tax money could be diverted to an unrelated private developer in the area.

The April vote — which, let’s be reminded, is only required because a bunch of community activists passed a law in the wake of the St. Louis Cardinals stadium subsidy 14 years ago — would come in two parts, one to raise the sales tax, and one to devote a portion of it to the stadium. No polling yet to indicate where voters stand, but as I noted to a St. Louis reporter yesterday, this is an awfully big ask for an MLS team, given that in contrast to more established sports, the response of most voters to the threat of “You’ll never get a pro soccer team if you don’t do this” is likely to be “Wait, there’s pro soccer now?”

That’s a big part of the reason why MLS subsidy demands tend to be more modest — I don’t have the full numbers, but I believe this would be the second-biggest subsidy request behind the $183 million D.C. United stadium deal. As such, this is looking more and more like a test case, not just for whether MLS can successfully demand $200 million apiece for one of its increasingly innumerable franchises, but whether the team owners can turn around and shake down a city bereft over the loss of its NFL franchise to cover a large chunk of the nut. This is going to be quite the 2017.

Rich dudes demand $129m in tax money for St. Louis MLS stadium, because teams are expensive, yo

Hey, so it turns out the prospective owners of a prospective St. Louis MLS team don’t really want taxpayers to give them $80 million toward a new stadium! No, they really want $129 million in money toward a new stadium, when you count $40 million in state tax credits, plus $9 million in state money to prepare the land. (Plus $15 million in city money to buy the land, which would “presumably” come out of the city’s $80 million, according to the St. Louis Post-Dispatch, which isn’t really all that reassuring.)

The best part of the Post-Dispatch article, though, is this:

The application, prepared by the city’s Land Clearance for Redevelopment Authority, puts the total estimated cost of the stadium and acquiring a team at $405 million. SC STL, led by former Bain Capital executive and majority investor Paul Edgerley, St. Louis FC founder Jim Kavanaugh, and former Anheuser-Busch president Dave Peacock, would provide $280 million, including the $200 million team expansion fee.

That’s right: The official explanation of why a bunch of rich guys — Bain Capital you may remember as the private equity firm that made Mitt Romney wealthy at the expense of a whole lot of other people — need $129 million in public money to build a $205 million stadium is “Well, we’re already spending $200 million to buy a team! You want us to do that and build a stadium too? What are we, made of mon — er, let me rephrase that…”

St. Louis voters are scheduled to go to the polls in the spring to decide on this deal. One hopes that they’ll be able to cast their votes based on whether this is a sucktastic proposal and not whether they like soccer, but sadly it doesn’t look like “What the hell is this, go back to the drawing board and negotiate a deal where we aren’t giving a bunch of billionaires $129 million for no damn reason other than that they just spent a lot of money on their new toy” will actually be on the ballot.

Owners of proposed St. Louis MLS team to ask taxpayers for $80m+ for new soccer stadium

When a new stadium for a proposed St. Louis MLS team was first proposed last winter, it had no price tag or funding plan. Now it has both, and the total price is $200 million, with taxpayers expected to pony up more than $80 million:

Voters could be asked to put $80 million in public money toward a 20,000-seat stadium, not including a potential land purchase west of Union Station. That amount could be lower depending on financial assistance from the state, Kavanaugh said.

The stadium subsidy would have to go before voters on a ballot in April, thanks to that vote back in 2002 requiring any city stadium subsidies to be approved by a referendum. The St. Louis Post-Dispatch article on this entirely fails to say how the public money would be raised (new taxes? old taxes?) or how much the land purchase would cost, so there are still a lot of unknowns here. But suffice to say that now that St. Louis residents have dodged a $477 million bullet with the Rams moving to L.A. rather than getting a new stadium in their old home, they’re still getting asked to pay for a football tab, just the less-popular version of football. Add in the Blues owners hanging around expectantly, and, well, looks like those voters back in 2002 knew what they were doing, anyway.

MLS to double expansion fee to $200m, hopes world doesn’t run out of rich guys

Major League Soccer is preparing to announce another round of expansion — this time to a whopping 28 teams — and is clearly determined to grab all the money it can in the process, as deputy commissioner Mark Abbott says the league is preparing to double its expansion fee to $200 million.

That’s a whole bunch of money for membership in a league whose own commissioner says it’s losing money, and which Soccernomics author Stefan Szymanski has called a “pyramid scheme” that’s eventually going to collapse. Given that the leading counterargument appears to be that “no, no, even if teams always lose money owners will count on making money when the sale value of the franchise appreciates,” it’s exactly a pyramid scheme — the only question is whether it’s the kind of bubble that eventually collapses, or one that can continue indefinitely.

The argument for the latter — and, presumably, the MLS business plan — goes back to the billionaire glut, which posits that there are so many rich people wanting to own a pro sports franchise these days, and such a limited number of opportunities, it’s going to be a seller’s market for the foreseeable future. With that the case, it’s understandable that MLS would want to get everything it can for new franchises while the getting’s good, even if it means becoming by far the largest soccer league in the world. (Most other leagues cap membership at 20 and relegate the teams that do the worst to a second division, something that MLS has resisted because it might limit the number of people lining up to sign expansion checks.) And with a list of prospective expansion cities that includes way more than they can possibly fill in this round — Sacramento, Detroit, Cincinnati, San Diego, St. Louis, San Antonio, Charlotte and Oklahoma City are all reportedly on the list — it makes total sense to weed out the winners from the losers by seeing who’ll balk at a higher price tag.

Clearly this isn’t sustainable in the long run, but MLS isn’t thinking about the long run right now, which is its prerogative. If you’re a city thinking about building a stadium for a new MLS franchise, though, you might want to at least keep in the back of your mind that there’s a decent chance the league could, years down the road, eventually contract again — or at least split into upper and lower divisions — and that your shiny new team could end up without a chair when the music stops.

St. Louis lawmakers prepare for budget showdown over stadium that hasn’t even been proposed yet

Nobody has any idea how much a St. Louis MLS stadium would cost or who would pay for it — let alone who would, you know, pay $100 million to buy an expansion franchise and put it there — but Missouri legislators are already preparing to stop Gov. Jay Nixon from approving one without letting them vote on it:

“It’s important that every year we put language in (the budget) to preclude” Nixon from acting without them, said Sen. Rob Schaaf, R-St. Joseph…

Doug Nelson, Office of Administration commissioner, told a Senate committee Wednesday it was a “possibility” Nixon could use that same law on a soccer stadium plan.

“It’s also a possibility the stadium could be paid 100 percent by private dollars,” Nelson said, noting that soccer stadiums are much cheaper than football stadiums.

Nixon and Schaaf have been through this once before, over whether the governor would need legislative approval before building a new Rams stadium (now moot, obviously), so it’s no surprise this would come up again for soccer. If city funds are needed as well, it’s also likely we’ll see renewed battles over the law that was supposed to require a voter referendum on any stadium spending, though at MLS stadium prices it’d be far easier to avoid using city (or county) funds entirely to duck out on any voter requirement. And … you know what, why am I speculating about this when there’s no actual proposal for a team, let alone a stadium? Is it because it’s a slow news day and I feel obligated to make a headline out of nothing, just like the St. Louis Post-Dispatch did? Have I become that guy? I think I’m gonna go work on my book now.

MLS to St. Louis: Sorry about your football team, you know we play “football” too, right?

It’s official: With the St. Louis Rams gone, every other sport in town (or not in town) is hoping to grab a piece of that $477 million in public stadium money that the NFL team turned down. Just ten days after the Rams announced their move to Los Angeles, MLS commissioner Don Garber sent a letter to Missouri Gov. Jay Nixon expressing his sympathies and offering to provide St. Louis fans with some kind of football, anyway:

Garber in his letter, dated Friday, said he was surprised and disappointed at the Rams’ departure and “in the wake of recent developments” wanted to reaffirm his commitment to considering St. Louis as an expansion city.

“I look forward to working with you, your staff and local leaders to explore ownership candidates and to investigate viable stadium solutions to bring MLS to St. Louis,” Garber said in the letter.

Yeah, like Missourians are going to accept a whole different sport as a substitute for anoth —

A Florissant lawmaker who earlier offered up a sales tax financing plan for a new riverfront football stadium is now saying a similar idea could be used to bankroll a new soccer stadium in St. Louis.

State Rep. Keith English has introduced legislation that would put a tax of not more than one-tenth of one percent on the ballot in St. Louis and St. Louis County. A green light from voters could generate between $10 million and $15 million annually, he said.

Note that this plan would have to go before city and county voters, so would almost certainly fail, especially given that nobody thought a similar Rams vote could pass, and some people actually already liked the Rams. Still, mute those cheers that by losing the Rams St. Louis has at least saved $477 million — there are plenty of other sports leagues lining up for a shot at it. How long before the Cardinals‘ stadium is 20 years old?