Utah preparing to offer $600m+ toward stadium project for MLB team that doesn’t actually exist

Not one but two different overview articles today on how lots of sports owners sure are demanding lots of money for lots of stadiums and arenas, neither of which will contain any surprises for regular readers of this site. To really get a rise out of sports subsidy followers these days, you need some real novelty — say, legislators proposing a massive stadium subsidy for a team that doesn’t even exist yet. Which brings us to Friday’s news out of Utah:

Legislative leaders are still working behind closed doors on a proposal that could throw more than $1 billion in public financing toward not just the baseball stadium, but the sprawling entertainment district stretching from the northwest corner of downtown Salt Lake west along North Temple toward the State Fairpark…

Under the framework, the state would issue hundreds of millions of dollars worth of bonds, essentially borrowing the money, then repay the debt with revenue generated by an increase to the transient room tax, or hotel tax.

Technically this would be public money toward a $3.5 billion development that included a stadium, but the clear goal is to bring an MLB expansion team to Salt Lake City — something that isn’t likely before 2030 at the earliest if it happens at all, though USA Today’s Bob Nightengale calls Nashville and Salt Lake City the frontrunners, citing no sources at all.

Calling this a $1 billion stadium subsidy may be overstating it just slightly. While there was an initial plan to hike hotel taxes by enough to generate $70 million a year, the current bill percolating in the Utah state legislature would generate between $42 million and $50 million a year over 20 years, which isn’t enough to pay off $1 billion in stadium costs unless the state could borrow money at zero interest. (If we use Tennessee’s 5% rate for its Titans stadium bonds, it would cover at most $623 million.) But there would likely be additional money provided to the rest of the project: The Salt Lake Tribune, citing “sources,” said one proposal would be to kick back “a portion” of sales and property taxes from the stadium district to pay for its construction costs, aka a mega-TIF.

The hotel tax hike, which could come either in the form of a 2.5% hotel tax surcharge across seven counties or a statewide tax hike of 1% to 1.5%, has the backing of both Utah house speaker Mike Schultz and Gov. Spencer Cox, who declared on Thursday that giving money from a hotel tax isn’t like giving money from other taxes:

“We have some of the lowest taxes in the United States on hotels … so the argument is there’s a little bit of room. Most of those taxes are paid by people outside of the state of Utah, so that’s one area where we’re having discussions and negotiations where I’m open to it.”

“I’m not open to using General Fund money and writing a check to subsidize these at all,” he said.

It’s the Casino Night Fallacy! Everybody drink!

The Tribune’s sources added that there would have to be “a deal signed with MLB committing to an expansion team” before the tax money was actually provided, so at least this wouldn’t be building a stadium on spec like some cities have done in the past. It’s absolutely upping the ante for what MLB can demand from prospective expansion cities, though — Oakland officials might want to be careful what exactly it asks for as part of lease extension talks with the A’s, if they don’t want to end up winning a replacement team that comes with a billion-dollar public stadium price tag.