K.C. Business Journal parrots debunked NFL economic impact numbers

It’s sports playoff season, which means it’s time for another round of stories claiming huge economic windfalls from postseason games. Today’s contestant is the Kansas City Business Journal’s Krista Klaus:

The Kansas City area is poised to reap a significant economic benefit from the coming Chiefs playoff game in January, the first hosted at Arrowhead in six years.

Estimates of how much money might be poured into the local economy range from $6 million to $20 million.

A study commissioned by the NFL and conducted by Washington-based Edgeworth Economics placed the average economic effect of NFL teams on local communities at $160 million, or $20 million a game for an eight home-game season.

Another study conducted by the University of Minnesota put the economic effect of a single NFL game at closer to $6 million.

A summary of the U of M study is here, and makes clear that the authors merely took the total number of people who came from out of town for a Vikings game (in this case, a playoff game against Dallas last January), multiplied it by the average spending, and came up with a figure of $9 million. There’s no adjustment for the substitution effect, however: How many of those people would have gone into Minneapolis to spend their money some other way if they hadn’t been blowing it on the Vikings? And did any of those Vikings fans displace other spending — say, people who chose to stay home that day because they didn’t want to fight the football crowds on the highways and in the downtown restaurants?

As for the Edgeworth study (which was actually done for the NFL players union, not the NFL), I haven’t been able to find the complete study, but the talking points make it clear that the numbers aren’t to be taken seriously:

The studies used in this assessment were commissioned to justify a start, increase, or continuation of public funding for NFL stadiums and/or to retain or draw a team to a city. As such, the numbers are based on the League’s and facilities’ own projections of the economic activity associated with NFL games.

But don’t just take my word for it: Read what sports economists told the Atlanta Journal-Constitution about the study last month. Which Krista Klaus could have found out about as easily as me, if she’d bothered to type “Edgeworth” and “NFL” into Google. Guess she was too busy feeding the hamster wheel.

K.C. squabble continues over stadium reno subsidies

Kansas City Mayor Mark Funkhouser is back again with his proposal to stop paying the city’s $2 million a year subsidy towards renovations of the Royals and Chiefs stadiums. Funkhouser proposed the same thing last year, you may recall, but the city council ultimately ended up not going along with it.

This is really a squabble between the city and the county, thanks to a terribly written stadium funding contract that guarantees the teams public money, but doesn’t specify which public body will pay it (and which the city isn’t actually a signatory to). The only thing for certain: Kansas City residents will end up paying the cost somehow, whether via city taxes or county taxes. If not, the teams could break their leases and move to … well, I’m sure there’s someplace out there with newly renovated stadiums that would love to host some sports teams. Hey, there’s an idea…

K.C. risked defaulting on Royals lease in 2009

Hey, remember how Kansas City agreed to spend $425 million on stadium renovations a few years back in exchange for the Royals and Chiefs agreeing to stay in town for another 25 years? Looks like somebody should have read the fine print: Thanks to a tussle between the city and state over who’ll pay $4 million a year in ongoing upkeep and improvement costs to Kauffman Stadium and Arrowhead Stadium, the city nearly defaulted on its lease last year, to the point where Royals management had drafted a letter declaring the city in default. If that happened, the teams could leave before the 25 years were up, effectively making the entire $425 million expense worthless — except inasmuch as having nicer digs would give them less reason to want to leave. Still, it’s a worthwhile reminder that leases are only as good as their fine print — something K.C. could have learned just by looking across the state.

K.C. and Jackson County tussle over who’ll pay stadium subsidies

If nothing else, the economic meltdown and attendant budget woes seem to be making local governments bolder about trying to reign in subsidies for sports facilities. On Thursday, Kansas City Mayor Mark Funkhouser proposed a city budget that would eliminate the city’s $2 million a year subsidy of the Chiefs and Royals stadiums, which was extended as part of the teams’ $425 million stadium renovation deal approved three years ago by Funkhouser’s predecessor, Kay Barnes.

Jackson County Executive Mike Sanders immediately flipped out, saying it would allow the teams to break their leases and leave town if they wanted to. “The fact that we would have violated a substantive provision would mean those leases are now gone,” Sanders told KMBZ radio. “We would be on a tightrope or a high wire with no safety net.”

Sanders’ confusion about funambulist nomenclature aside, the teams’ leases themselves (Royals here, Chiefs here) don’t seem to support his contention: They only say that the teams will get money from the existing “local/state sports tax revenues,” defined as “currently, Missouri State of $3 million, County Property Tax of approximately $3.5 Million, and City of $2 Million, with a minimum annual amount of these three combined sources not to be less than $8.5 Million per year.” In other words, the state, county, and city are responsible for coming up with $8.5 million a year, but how they get there is between the three of them, meaning if the city stops kicking in, the county and state would have to make up the shortfall — which helps explain why Sanders is flipping out, but also why Funkhouser felt free to say, “I don’t think it would jeopardize leases. We’re trying to focus on … basic services like police. That is a core function. Operating a sports venue is not.”

Chiefs unveil extra stadium doohickeys

If you were wondering what the Kansas City Chiefs are doing with the extra $25 million in state tax credits they got last month, wonder no more:

The improvements to be completed by August 2010 include:

-$15.5 million to expand the scope of Arrowhead’s upper deck, widening it far beyond originally planned with additional concession stands and more public gathering places.

-$4.77 million to increase from eight to 18 the number of elevators for people with disabilities.

-$4.19 million to expand the Hall of Honor.

The other common-area improvements presented Tuesday included $6.2 million for parking lot and road repairs; $7.3 million in concrete coatings; and nearly $400,000 to improve drainage on ramps.

Spain described the expenses as unanticipated ones discovered after the original scope of the project had been set.

Not sure how you “discover” the need for more concession stands, but there you go. The Chiefs will be kicking in $50 million of their own money toward the new expenses, so when Missouri taxpayers admire the new concrete coatings at Arrowhead Stadium, they can rest easy that only one-third of it is made up of their money.