The approval of $65 million in public bonds for a Tennessee Smokies Double-A baseball stadium continues to steam ahead, with last week’s approval by the local stadium authority followed up by yesterday’s unanimous vote by the Knox County Commission to approve the bonds after nine whole minutes of discussion. Labor groups had been pushing for a delay in the vote to allow for a community benefits agreement to ensure at least local hiring and a living wage for jobs related to the project — Smokies owner Randy Boyd has refused to sign anything, but says not to worry, you can trust him to do right because he’s a local guy — but county commissioner Dasha Lundy explained her vote this way:
“I choose right now to be optimistic. I think it’s a great opportunity for our city and county to do something right. … With that being said, let’s play ball,” she said.
Well, okay, perhaps that’s not so much “explained” as “explained away.” The Knoxville News Sentinel also paraphrases her as expressing that “the project can build wealth, particularly Black wealth,” but doesn’t say if she explained why she believes that, either. Maybe she just trusts Boyd because he’s a local guy?
The News Sentinel also includes this explanation (sorry, I think this word has been totally devalued now) of how the stadium funding will work, which is worth following along with because it’s an excellent example of how team owners can handwave away public costs through the power of advanced mumbling:
The expected debt payment every year is roughly $3.2 million in tax money combined for the city and county.
That is offset by the team’s $1 million rent payment and a payment in lieu of taxes estimated to be roughly $750,000. That brings down the total debt payment to roughly $1.5 million. The sales tax revenues from the ballpark and surrounding retail complex are expected to bring the total to $480,000, which split between the city and the county at $240,000 each a year.
If things go as planned, the $240,000 a year that both Knoxville and Knox County would pay should decrease and the complex would, by year 10, pay for itself.
Things start off well enough: The combined city/county debt payments are indeed expected to be $3.2 million a year, though this is discounting the $13.5 million in state funds that would also go toward the $74.5 million stadium. And Boyd would pay $1 million a year in rent, leaving the city and county on the hook for $2.2 million a year.
All the rest of the money, though — the payments in lieu of taxes (which would normally be regular property tax payments, only Boyd is giving the land to the city so he won’t owe property taxes on it) and the sales tax revenues from the ballpark district — is tax money that would be kicked back to Boyd. “A new minor-league stadium for the local rich guy would cost taxpayers $2.2 million a year, but if we hand over enough tax money it would eventually pay for itself” doesn’t make a whole lot of sense, but if you keep saying it loud enough, apparently it’s good enough for 21st-century journalism work.
Boyd’s argument is that since this tax money would only be collected at the stadium if the stadium exists, it’s really not tax money at all — which will likely be familiar to longtime FoS readers (or Odd Couple fans) as the Casino Night Principle. And it ignores the fact that any taxpayer could make the same argument for why they should get to pay their taxes and keep them too, and that the whole point of taxes on development is to pay for the added costs of supporting new development with roads and schools and police and fire protection and whatnot — but you know, I already went over this with Amazon, just go read that for a full explanation. Or you can always just “choose to be optimistic,” that usually works out well.
(The Knoxville city council meets tonight at 6 pm to cast its vote on the bonds; you should be able to watch here to see the proceedings. Just be sure to get there before 6:09 pm, or you might miss it.)
Agree with your analysis. I have not been able to find any publicly-funded stadiums that proved a worthwhile investment for a city/municipality. Maybe some have seen financial success and have been a blessing to the tax-payers but I have not found them.
For leaders in Knox County and the City of Knoxville to think they can reverse a proven trend is a bit arrogant.
I wish that Mr. Randy Boyd (who can afford the venue himself) would show us his “generosity” by letting his investors pay for the stadium blessing alone – w/o government assistance. Then after it is built if he wants to donate stadium proceeds to the city and county because he believes so strongly that it will be a boon to the locale that would relieve my apprehension.
It is unfair to taxpayers to place them at risk w/o a least an opportunity to vote on the issue. If the leaders were not afraid of a “public NO” I expect they would be willing to place it up for a vote.
Not holding my breath.
Every other team in that league seems to be doing it. Birmingham built Regions field in a similar manner, and Mobile’s team moved to Huntsville for a brand new stadium.
I guess monkey see, monkey do?
This is not the worst MiLB stadium deal I have come across. Arguably, it’s better than I thought Knoxville would do.
Are they suggesting that the stadium will ‘eventually pay for itself’ because they expect revenues (and thus taxes collected) at the stadium to rise significantly by year 10? Or are they just assuming that they will eventually have paid off the bonds (or whatever) and will keep collecting tax revenue after that?
It seems like their tax collection projections might be a little optimistic, no?
There are some circumstances where I can understand why a community might accept PILOTs instead of actual property taxes. For example, an auto dealership or big box store is open for business 10-16 hours a day 300+ days a year. A sports stadium, while it might house the tenant team’s offices year round, is actually only open for business with customers part of the year (depending on the league and sport, 3 hours x 10-90 days a year). So PILOTs do have their place… but they should be set high enough to at least cover municipal debt obligations.
It seems Mr. Boyd’s proposal does not do that.
If I am a minor league sports team owner (I am not) and want a new $75m stadium, I don’t think $1.5m in annual rent and $1.5m in PILOT payments is too much to pay.
And if you can’t generate $3.5m in additional revenue from a $75m stadium, why on earth do you want one?
“Are they suggesting that the stadium will ‘eventually pay for itself’ because they expect revenues (and thus taxes collected) at the stadium to rise significantly by year 10?”
That one. Presumably because there’s supposed to be more stuff built around the stadium by then, and sales tax receipts will rise. (There’s been no analysis, to my knowledge, or whether increased sales in and around the stadium will reduce sales in other parts of the city, if people start going to bars there instead of elsewhere, say.)