Kansas legislators introduced a bill yesterday to provide public funding for new stadiums to lure the Kansas City Chiefs and Royals across state lines, and while we knew this was coming, we didn’t know how much taxpayer money would be at stake. That’s now coming into focus, and it looks like the public price tag is going to be a whole lot more than was previously revealed:
- While Kansas is already permitted to sell so-called STAR (Sales Tax And Revenue) bonds to fund up to 50% of private development projects, the new legislation would raise that limit to 75% for projects costing over $1 billion.
- As was the plan when Kansas stadium funding was first discussed back in April, the state would kick back all new sales tax receipts from in and around the stadiums to pay for construction — which, assuming that the stadiums were built on currently unused land, would mean all sales taxes from the stadium districts, with no apparent limit on how wide a circle could be drawn to siphon off taxes from.
- The bill would kick back 100% of taxes on alcohol sales in the district, even if the current site already generates some of these.
- The proposal would make permanent additional payments from state lottery proceeds into a fund the state is considering tapping for stadium costs, which could provide an additional $10-25 million a year, or around $150-400 million in total present value. As the Kansas City Star notes, “If a project encountered difficulty making bond payments on time, lawmakers would likely face pressure to increase the amount of Lottery revenue sent into the fund, which would reduce the amount of Lottery revenue available to fund the state government.”
How much all this would add up to is unknowable, but if you’re talking two $1-billion-plus stadiums, 75% of that would be anywhere from $1.5 billion to who knows, leading economist Geoffrey Propheter to call the bill “a blank check for billionaires.” In layman’s terms, it would be a buttload of money to shell out in exchange for having two pro teams play on your side of the state line — something Kansas would never recoup through new state tax revenues, and which would just contribute to the ever-worsening war between the states to see who’ll exempt corporate titans from the most taxes, leaving the tax burden on other residents and business owners.
The Kansas legislature is set to start a special session today that will likely largely focus on stadium funding, but state legislators kicked things off last night by meeting at a local steakhouse with what the Kansas Reflector summed up as “lobbyists, a Royals executive and representatives of organized labor,” all of whom were seeking to convince them to rubber-stamp the plan. If that happens, Gov. Laura Kelly has already indicated she’s likely to go along with whatever the legislature votes for, so this could get approved fairly quickly.
With so much still in flux, including how much the stadiums would cost and where they would go, we’re looking at a two-stage process: first the passage of the bill authorizing stadium bonds, then actually figuring out what number to fill in on that blank check. Twitter is already calling out Missouri for getting pwned, and economist Twitter is clapping back that getting to watch Chiefs games while the state next door pays for the stadium seems like a pretty good deal for Missourians. To see which carries more weight with legislators, head to your local steakhouse and ask to be seated in the smoke-filled room.
The more I think about it, the more I start to believe that one of the fundamental disconnects in policy discussions is that a lot of people aren’t familiar with doing a net present value calculation. Not to say that should factor into absolutely everything, you only have to go looking at the LessWrong rationalists/AI doomer subculture to see how that approach can go pretty wildly sideways. But including such an estimate in public finance discussions automatically puts this coverage a cut above the rest.
Unfortunately, this will just lead to an arms race to see which of the two states is willing to blow the most money on sports franchises. The local coverage hasn’t been great. The narrative appears to be “Kansas is stealing our teams!” I live in St. Louis and don’t care whether Kansas gets the Chiefs or Royals. But I do care about the Missouri legislature panicking and handing out blank checks to the Hunts and John Sherman.
This is the ultimate place to create leverage with the Kansas City Metro area in two neighboring states and so many municipal and county governments too. One won’t give you what you want? Just put them against each other with arguments over job creation, tax revenue, etc. until you get a sweetheart deal. The Hunts have learned a lot from other owners demands, but they at least had to travel several hundred or thousand of miles away, not a 15 minute drive.
Any smart Missouri Pol would say “you win, take ’em.”
Kind of like the hockey fans in Scottsdale who were rooting for the Tempe subsidy for the Doggies.
What difference does it make which side of the Missouri River the stadiums are on? This is like the “competition” the Vikings set up between Hennepin, Anoka and Ramsey Counties. Ramsey County went nuts with a huge sales tax increase for a stadium-retail-entertainment complex in the middle of an abandoned munitions plant in Arden Hills. The politicians fell for it hook, line and sinker and gave the Vikings what they wanted all along, a billion dollar stadium in Downtown Minneapolis. Missouri should know, despite attempting to give the Rams a new stadium, Kroenke and NFL Commissioner Jerry Jones had already decided the Rams were moving to Los Angeles. Wake up Kansas politicians, how many Chiefs fans will vote for you because the Chiefs Stadium is 15 minutes closer and in Kansas, versus how many will vote against you because taxes and class sizes went up.
To paraphrase Peter Clemenza, “Leave the Royals, take the Chiefs.”
The royals getting a blank check to move out to the racetrack would be complete fool’s gold. Attendance at the least populated edge of an already very small metro area would be a disaster. Coyotes in Glendale but 2x more games and 1/3 of the population.
Although a racetrack site is far away from most Chiefs and Royals fans, it’s closer to Topeka! And really far from Jefferson City, priceless! Will they be serving steak or lobster in the legislator’s skybox? Both, and don’t forget the champagne!
It would be funny if the only way they could juice attendance after May would be never ending special sessions
The Chiefs and Royals have different issues with location. It’s no problem if the Chiefs are at Kansas Speedway, which is 12 miles west of the state line between KCK and KCMO. The Royals ought to be closer to the core business district in KCMO.
The Patriots are fine in Foxborough, but the Red Sox are in Boston. The 49ers are ok being down in Santa Clara, but the Giants are on the bayfront in SF.
That’s right. Football stadiums don’t have to be all that accessible to fill up. People will drive for hours and make a day or a weekend of it. That’s why tailgating is a thing.
Baseball, hockey and basketball need to be accessible to people on weeknights. That usually means being in the center of a city where parking is impractical, although in sprawling metro areas that have “no there there,” it’s very hard to get that many people to any one location all at once on a weeknight.
But where are you putting this in kansas that’s close to the stateline and will positively spur development? Everything along the river is heavy to light industrial and seems to be doing fine.
The whole point of these decades of subsidies at I-435&I-70 is to spur development. Why would the state of Kansas want to do that do another competing site 15 miles away? A “ballpark village” in Kansas City, KS is direct competition to all that development you’ve spent billions on out by the race track.
Let the Royals find a way to get a ballpark in KCMO. If Kansas funds anything, it should be only a stadium for the Chiefs(plus ancillary development).
As a Kansan it disgusts me. The general vibe is, “STAR bonds will cover it all!”
One wonders if people understand how bonds work.
When news outlets routinely report projects as being “paid for by bonds,” it’s no surprise that people are confused. Though one would kind of hope that legislators would understand, since it’s their job and all.