It’s been a whirlwind couple of days since Monday’s announcement that the state of Kansas was offering Kansas City Chiefs owner Clark Hunt billions of dollars in cash and tax breaks to move across the border from Missouri, and more details are still only now becoming clear. Catching up on the latest:
- After I guesstimated that the total public cost of the deal for Kansas taxpayers would be $3 billion or so — up to $2.775 billion in state-backed STAR bonds to build an up-to-$4.4 billion stadium-and-other-development complex, plus an unknown amount of property tax breaks — sports economist Geoffrey Propheter jumped in with some more fine-grained math:
The number we want to focus on is the “PV” (for present value) column; the “nominal” column is for payments added up over years, which would be like figuring out the cost of your house by adding up all your mortgage payments over time. Still, Propheter has the total cost to state taxpayers at more than $4.1 billion, including:- More than $3.1 billion in payments on the STAR bonds. As Propheter notes above, “cap is not what is owed to bondholders but what the state commits to project”; in other words, while the amount of money going to the Chiefs is capped at $2.775 billion, the state still needs to provide for bondholder profits, bank fees, and the like, so Kansas ends up spending more than Hunt gets.
- $497 million in property tax breaks thanks to the state taking possession of the land, a number that I’m willing to take as gospel given that Propheter literally wrote the book on this stuff.
- $444 million in future maintenance on the stadium. In my calculations yesterday, I dismissed this as being covered by the Chiefs’ $7 million a year rent payments, but those won’t come close to paying off $444 million in present value. Plus, as Propheter noted to me in an email, rent payments could legitimately be seen as, you know, rent payments — if the state of Kansas is choosing to spend those on stadium upkeep, that’s its choice, but it doesn’t make it less of a subsidy.
- Also yesterday, I noted that paying off almost $3 billion in bonds solely with state sales and liquor taxes from in and around a Chiefs stadium could be a tough lift, and quipped that “if all else fails, they could just expand the stadium tax district until it stretches all the way to Topeka.” I should really learn not to make jokes, because it turns out there’s a draft stadium district in the stadium agreement, and it looks like this:
That’s a bit bigger than just the stadium and its immediate surroundings — it would cover 293 square miles, cannibalizing sales and liquor taxes from an enormous chunk of the northeast corner of the state. This handily puts the lie to Gov. Laura Kelly’s claim that the stadium “requires no new funds from the current state budget,” since sales and liquor taxes from those 293 square miles currently go to the state budget, and replacing them is 100% going to require new funds. And that mammoth stadium district is still just a preliminary estimate: Because STAR bonds can only by law be paid off with taxes from within the district, Kansas will eventually have to draw a big enough district to make bond buyers confident that the proceeds can pay off the state’s stadium debt — meaning Topekans might still wait to hold on to their wallets, just in case. - I also noted yesterday that the current public price tag estimate was made “without even knowing if Hunt plans on seeking any city or county money,” and indeed, the Chiefs owner appears to have designs on that as well: The Kansas Commerce Department website declares that county and city officials “will now have the opportunity to approve an ordinance to pledge local incremental general sales tax within the STAR bond project area to the project.” Lucky them! It at least looks like any city and county sales taxes would just go to help pay off the $3.1 billion in STAR bond costs already planned, in which case it wouldn’t raise the total public cost any, just shift it between the state and local governmental bodies, but I’m kind of afraid to assume anything now, for fear of conjuring my worst fears into reality.
All this has led one sports business writer to call the proposed Chiefs agreement “the most lopsided stadium deal in NFL history,” thanks to the public taking on the vast majority of the costs while team owners keep 100% of the revenues. That may be pushing it — the $6.6 billion Washington Commanders deal is still the benchmark for governmental malpractice here — but however you slice it, the Chiefs deal is real lopsided. Given all the glee from Kansas state officials at having pulled this off, it’s probably too much to hope that cooler heads will prevail, but after seeing Tampa Bay Rays and Anaheim Angels and Philadelphia 76ers deals collapse after they were seemingly set in stone, anything can still happen.
Meanwhile, let’s give the closing words to Propheter, who from the looks of my RSS feed has spent the last 24 hours doing nothing but talking to reporters:
“I just can’t believe, in my lifetime, we went from a couple $100 million stadiums to billions and no one caring,” he said. “When I say ‘no one caring,’ that’s hyperbole — lots of people care — but lawmakers in no way, shape or form pausing to think: ‘We can’t find something else to do with billions of dollars? It has to be for this?'”
Is there any assumptions about receiving more income taxes that would offset some of the total public cost?
Probably, but that’s going to generate less than $20m a year from the Chiefs at best. Maybe it gets you down from “just over $4B” to “just under $4B,” if that floats your boat.
Thank you for the reply. I live in Kansas City, MO and it’s been a wild process to follow. Reading your site over the last year has been very helpful to understand the context of what’s happening here and around the country.
The Chiefs deal is pretty bonkers, and I’m still trying to figure out how all the money works. (The STAR bonds, in particular, seem like they would require sales tax receipts in all of Johnson and Wyandotte counties to leap to impossible levels.) Geoff Propheter is on the case, but it may take until after the holidays to get a full analysis.
As a native Missourian I hate seeing my former state get screwed. In this case, you may get the best deal- a new stadium that you aren’t paying for!
Using the practice facility as a separate anchor for the STAR bond districts is just such a gobsmackingly corrupt overreach. So much so that I can scarcely believe this is the first time it’s happened, surely they copped the idea from somebody else!
The Chiefs should change their name to The Grifters.
This is by far the worst public subsidy grift I’ve ever seen. I thought the OKC subsidy was bad. This is multiples worse. There is no way this stadium and the supposed development will come close to generate enough revenue to pay for these bonds and other taxes. When it doesn’t, taxes will have to be raised elsewhere, more than likely in the form of property taxes.
This Kansas City, KS situation reminds me of what the Arizona Cardinals did to Glendale, AZ when building State Farm Stadium. That development, Westgate, hasn’t come close to delivering on the value it was portrayed.
Has any suburban NFL stadium, the Meadowlands, Gillette Stadium, Landover MD, etc., except perhaps Jerry World, had significant economic development around it?
Just look at all that development, or lack thereof, around the Harry S Truman Sports Complex after over 50 years. Although Glendale has mortgaged it’s future, and the Coyotes/Mammoth are now grifting off Salt Lake city, there has been a tremendous amount of development around the arena and State Farm Stadium. 3 Superbowls also helped. Will the NFL really want to hold even a single Superbowl in Kansas when Vegas, Arizona, Florida, LA, and the Big Easy are all available?
As Aaron asked, there’s been actual economic development for some of the suburban NFL sites. MetLife Stadium is adjacent to American Dream, billed as “North America’s largest indoor water park”. Gillette Stadium is the anchor for Patriot Place, another mall with shopping, dining, and movies. AT&T Stadium is in a typical Texas neighborhood with Globe Life Field (Rangers baseball) to the east, a Walmart Supercenter to the north, and a senior community to the south.
I’ve been to American Dream – it was initially planned as Xanadu, before Met Life was ever conceived, then went through various bankruptcies before finally emerging as a middling mall with a giant indoor ski slope. I was there for the U.S. curling championships, which took place before a crowd of confused passersby munching on giant pretzels.
Merry Christmas to the Hunt family, I guess.
And really, who could possibly need $4-6Bn in welfare more than the Hunt family?
Just for the record: This is the second consecutive NFL stadium subsidy that figures to cost more than the team is worth.
Just roll that around in your mind a little. Taxpayers are paying more than the total market value of a business to have it relocate from one place to another.
Adam Smith is rolling in his grave. Again.
* Merry Christmas Everyone * (actually for real)
Note, eastern Johnson County, where the Royals want to build a stadium, is not included in this district.
Fortunately I don’t live in Kansas. Fortunately, extremely Fortunately I haven’t driven across Kansas in 20 years, and never plan to again. I fly over Kansas up to 10 times year, so unless Kansas figures a way to tax overflight rights to pay for this stupid stadium, I’m in great shape.
I am sorry to inform you that STAR bonds are federally tax exempt. This means that bondholders won’t pay taxes on their earnings, costing the U.S. government money, which will have to be covered by you, me, and everyone else from sea to shining sea.
And exempt from state taxes. More than likely, Clark Hunt will put together an entity that will purchase the bonds, and depending on the interest rate of the bonds, generate billions of interest earnings over the life of the bonds.
Why on earth would Hunt want to put his money into STAR bonds?
To pay his share of the project costs. Interest earnings will be in excess of the 40% the Chiefs have agreed to pay. At 5% over 30 years, interest earnings would be over $3.0 billion tax free. Covering the Chiefs $1.6 billion share of this deal.
Another way to look at the scale of this boondoggle is to compare it to a facility 10 miles northeast that is open 24/365, and instead of 600,000 fans a year, this other facility handles over 12,000,000 passengers per year. For this other facility, all ticket surcharges, such as PFCs, parking, concessions, landing fees, fuel handling charges etc are kept by Kansas City, Missouri to pay for the facility. Despite complaints that the facility cost escalated from $964 million to $1.5 billion, the new MCI terminal was an absolute bargain when compared to over $4 billion for a football stadium that will sit empty in the middle of fabulous? Kansas over 350 days a year. Missouri is the big winner here.
Neil, I’m a finance MBA but I’d love your help analyzing the Economic Impact report from Canyon Research. I’ve no idea what “economic output” or “total value added” mean.
If Kansas issues $4.1B bonds in PV dollars, at 4.2%, that implies $172M per year in debt costs.
Offsets to that are incremental sales and income taxes. (To be simple let’s use sales tax at 7% and income at 10%). I see 4 buckets on the report:
1) income taxes on construction. $1.585B or $158M income tax one time
2) Income taxes on district. $662M annually or $66.2M income tax
3) income taxes on visitors. $36.4M or $3.64M annually
4) sales taxes on visitors. $77.4M or $7.7M annually
So the $172M hurdle rate to cover the bond payments is offset by $66M + $3.6M + $7.7M. A shortfall of $96M per year, ignoring the one time construction boost
Is that how you see it? Is the value-added / economic output playing into this?
Income taxes can’t actually be used to pay off STAR bonds, but they can be used to offset other state revenue, so sure, let’s count them. Your math looks right, assuming that all those taxes are *incremental* — i.e., money that the state wouldn’t be getting without the Chiefs, which the Canyon report doesn’t specify. (If a Chiefs stadium encourages people to live in one part of Johnson County instead of another, that’s not a net gain.)
Speaking of things not worth anything, “economic output” just means money changing hands, so is meaningless in terms of actual state budget impact. I haven’t the slightest idea what “total value added” means, and the Canyon report doesn’t specify.
If anyone wants to play along at home, the Canyon report is here: https://www.kansascommerce.gov/wp-content/uploads/2025/12/Economic-Impact-Report-of-NFL-STAR-Bond-Project-12.22.2025.pdf
Thank you Neil.
From what I understand from the document, “total value added” means “measures the contribution to Gross Domestic
Product made by an industry. Value Added represents the difference between economic output and the cost of intermediate inputs.” So apparently net GDP after you subtract the costs from the “Economic Impact”. Not sure what that even means.
1) Didn’t you expect a more robust publication? 5 pages is very basic. There’s no charts or graphs listing all the employee and wage assumptions which are crucial;
2) What is their track record re: predictions? Their website lists many Kansas localities as clients, so we can presume the consulted on at least a few prior STAR Bond projects in the state. Were they accurate?
3) I wonder if Kansas looked at “Economic Impact” and saw roughly the $4B in construction costs. Perhaps they said it looked like a wash. Like an appraiser noting a $50K bedroom addition would add $50K to home value.
4)Structured finance looks at taxes in vs taxes out. Or so I thought.
What do you think?