Royals’ expiring lease may not be the stadium leverage John Sherman pretends it is

Kansas City Royals owner John Sherman has been publicly demanding a new stadium for two and a half years now, and one argument he has made is that the team’s future needs to be resolved by the time its lease runs out after the 2030 season.

The traditional way for news outlets to address this is with one line somewhere deep in every article warning that the city faces a “deadline” in the form of the expiring lease. The less common one is to actually look into who really holds leverage around the lease expiration and what might happen as it approaches, and the Kansas City Business Journal, to its credit, took that path less traveled and found:

• Sherman can simply extend his lease for two additional five-year terms, something that “some current and former officials” think he may end up doing.
• Cities like Nashville and Salt Lake City are already saddled with big public debts for other sports venues, and so aren’t likely to lavish money on a baseball stadium as well, says Holy Cross economist Victor Matheson: “It’s not like there is city after city after city that’s just clamoring to hand out a billion dollars to a billionaire ownership group and a bunch of millionaire players. The A’s are the best example (of) saying that we will not play here beyond a certain date, and that’s turned out to really backfire on them. … Playing hardball only works if you really do hold the cards.”
• Even without those five-year lease extensions, says University of Colorado-Denver economist Geoffrey Propheter, there would be nothing stopping the Royals from going year-to-year on their lease, making any deadline totally illusory: “It’s a knee-jerk reaction to get fixated on this end point … and all of a sudden, all decisions are revolving around this point, as though something bad happens at this point. Nothing bad happens at this point. This point just means your current agreement ends, and you need to crap or get off the pot.”
• Former K.C. councilmember Becky Nace, who is now an activist against public subsidies for a new Royals stadium, says team execs are “just hoping that the city government leaders will somehow blink and offer them a better deal, but the problem is, we’re beating the best deal on the table if we do that. We’re bidding against ourselves.”

All this is true, and important: Yes, an expiring lease makes it easier for a team to threaten to leave town, but it then has to have somewhere to leave town for; if the only option is “if you don’t build us a new stadium we’ll go play in the street” — or in Sacramento — that’s not much of a threat. Government officials need to learn that they have leverage, too: There may be a limited number of pro sports teams to go around, but there are also a limited number of major metro areas, so team owners need cities as much as or more than cities need teams.

The one catch that the Business Journal did not mention, of course, is that “metro areas” can include a lot of different jurisdictions, which is precisely what Sherman is trying to do with the Kansas City metro area: The neighboring state of Kansas last summer approved a potentially bottomless pool of tax money for stadiums for both the Royals and Chiefs, and if the teams’ owners haven’t leaped to take it yet, they’re certainly going to remind Missouri politicians at every opportunity that it’s an option. Again, it’s questionable how much of a threat that should really be: Royals and Chiefs fans could still go to games if they were just across the state line, and any Missouri tax losses from being cut out of team sales and income taxes would be more than offset by not having to shell out a couple billion dollars for stadium construction —  and that’s if Sherman and Clark Hunt even really want to move their teams to Kansas. Maybe this would be a good topic for a followup article: “Would K.C.’s best option be calling Chiefs’ and Royals’ move threat bluff?” You can have the headline, K.C. Business Journal, that’s a freebie.