Judging from my email, the proposed Kansas City Chiefs stadium deal with the state of Kansas has set off a wave of cognitive dissonance among sports fans and taxpayers: Gov. Laura Kelly says that the state will spend $1.8 billion on a new stadium — really more like $4 billion, counting tax breaks and subsidies for additional development around the stadium — but also claims that the deal “requires no new funds from the current state budget and no new taxes on Kansans.” How can a stadium both cost taxpayers billions of dollars and also be free?
This is a topic that deserves a full analysis with lots of numbers and math, but those are still being compiled. In the meantime, let’s examine more closely that “no new taxes” claim, what kind of logic it relies on, and whether it holds water.
About $3 billion of the Chiefs subsidy will come from STAR (Sales Tax and Revenue) bonds, which are a kind of tax increment financing, or TIF: A governmental body, in this case the state of Kansas, calculates the current total amount of taxes being paid in a designated district and guarantees that this amount will continue to be collected. (For STAR bonds this is only for sales taxes, making it technically a STIF.) Any additional revenue that comes in — the “increment” — gets diverted to pay off the bonds, which in this case would pay off the stadium.
The idea here is to only spend what new value you get from a project: If moving the Chiefs across state lines increases sales tax receipts by X dollars, then only X dollars will go toward paying off the bonds. State taxpayers, the theory goes, are held harmless: The state is collecting the same amount of taxes as it would without the Chiefs, so the stadium pays for itself. Here’s Gov. Kelly, telling the New York Times how she plans to spend $3 billion paying off STAR bonds without costing anyone anything:
Kelly said Kansas will take tax dollars only above and beyond what was previously generated in the area — thanks to the Chiefs’ arrival — to fund the new initiative.
“So the shopper, the diner, they will not be paying any new tax,” Kelly said.
The problems start to arise when it comes to calculating what “thanks to the Chiefs’ arrival” means. TIFs don’t actually try to calculate how much in tax revenue is actually created by the new development — they just assume that any new spending was caused by the project, and kick that amount back to developers as a presumed windfall. This leaves lots of room for subsidizing projects that would happen with or without the subsidy: Chicago famously created so many TIF districts under Mayor Richard Daley two decades ago that it had to raise taxes on the remaining parts of the city to cover for all the holes it was blowing it its tax base.
It also leaves open the possibility that a lot of the “new” taxes being siphoned off would have been collected regardless, thanks to natural economic growth, inflation, etc. University of Colorado Denver economist Geoffrey Propheter, who has clearly spent a lot of his Christmas week explaining tax increments to reporters, describes it this way:
“I will bet my life on it that somewhere within 300 square miles, in that 300 square mile district, someone’s going to buy a Chipotle burrito, someone’s going to buy a lawnmower, someone’s going to buy a T-shirt, all these taxable goods,” Propheter said. “It’s going to happen whether the Chiefs are there or not. The difference is now; those dollars are going to the Chiefs, even though it has nothing to do with the Chiefs.”
This seems obvious if you think about how spending works: There’s almost zero chance that sales taxes in a district covering most of Wyandotte and Johnson counties would stay flat for 30 years if the Chiefs didn’t move in. But we can also perform a simple thought experiment here: How much Chiefs-related spending would there have to be to pay off the STAR bonds by itself? A $3 billion bond at 4.25% interest over 30 years will cost about $175 million a year in tax receipts. Kansas’s state sales tax is 6.5%. (Liquor taxes also go into paying off STAR bonds, but they’re a tiny fraction of the sales tax total.) That means Chiefs-related new spending would need to be $2.7 billion a year — this for a team whose total annual revenue, including TV money that isn’t subject to sales taxes, is currently less than a quarter of that total.
Looked at another way, if you assume that a new 65,000-seat stadium would sell out ten games a year, that means each and every Chiefs fan would need to spend an additional $4,000 per game in Kansas, over and above what they would spend in the state regardless, for the state to break even. Anything less than that, and Kansas taxpayers will have to make up the difference, just as was the case with Chicago’s TIFs.
This is, on some level, a variation on the Casino Night Fallacy, where any tax money touched by a team is designated as “team-related” and therefore fair game for the team owner to demand to keep. Only in this case, it’s money that the team may never have touched in the first place: All those new lawnmower purchases get credited to the Chiefs’ account regardless of whether they have anything to do with a football stadium being built elsewhere in the county. The net fiscal benefit of luring a pro football team across state lines isn’t zero, but after subtracting out spending that would have taken place regardless, spending that is cannibalized from elsewhere in the state, and tax money that will be needed to pay for new costs like police and fire services to a new stadium development (and schools if it includes residences), the amount of actual new money is certain to be way, way less than the state’s $4 billion expense. We can debate how much red ink Kansas taxpayers will end up swimming in if this stadium comes to pass — and I do hope to have more specific numbers soon — but it’s likely to be somewhere between a lot and a whole hell of a lot.
Missourians should be celebrating, not slagging their governor on social media because he “lost” the Chiefs.
100%. Jackson County did the right thing. There’s a reason why the KS legislators did not put this up for a vote. I wouldn’t be surprised if there’s as many Bronco’s fans in Western Kansas as there are Chiefs’ fans.
CBS and Fox usually (but not always) send Broncos games into western Kansas when the Chiefs aren’t available. Broncos’ radio network extends into Kansas as far east as Salina.
I live in KC, on the Missouri side and I am absolutely thrilled that Kansas has volunteered itself to pay up for this idiocy, and that Jackson County said no.
I really enjoy the one guy in Twitter spending an hour arguing with the confidence of an authority with Neil at how this deal is a win for Kansas because taxes will go up (even though they already have been without a stadium!) and the only number he cites anywhere is an absurd claim every NFL game sells 200K+ hotdogs.
200,000 hot dogs + 200,000 Cokes = $300,000 at Costco. NFL hot dogs would really have to be seriously overpriced.
It was a great response because I think it was entirely based on the fact he eats 3 hots dogs at games and he was the exact kind of blinkered and confident that he would assume literally everyone does that.
The other really funny thing he said was insisting Neil was dead wrong because tax revenues will continue to rise in Kansas not realizing that entirely undercuts his argument because it’s happening right now *without a stadium*.
Also it’s worth checking to see how many of these guys complain about government mismanagement or waste. I know there are a bunch in Illinois bemoaning the fact the Bears may end up in Indiana even though it would save them money.
All true, but still none of this holds a candle to the person who tried to check my facts by asking Grok AI if they were accurate.
When is that interview going to be run
What interview?
The one you mentioned in last paragraph on Friday roundup
The host is sending me a copy today; I’m asking if I can have permission to post it here, or if it’ll have to wait until he gets it on the web.
You failed to calculate the impact of the Stadium vs just the Chiefs. Add to that total a couple of Superbowls a Republican National Convention, Final Fours, Regional Finals, World Cup Events, CONCAFF Events, Concert Tours (Taylor Swift!?!?) I think over 30 years the value of other events would be 4 or 5 times more than 9 or 10 NFL games a year….
Most of those events are going to happen at most once or twice over the next 30 years, so Taylor Swift is going to have to play a helluva lot of shows in Kansas to get a stadium up to 40-50 events a year, which would be more than stadiums in major cities like NY and LA currently host.
2 Superbowls in Kansas over a million years? Nobody in their right mind would ever go to Kansas in February, or ever. If the Superbowl in Jerry’s World was a frozen disaster, Kansas City would be a US Bank stadium next to an empty racetrack.
If this gets built, there will almost certainly be a Super Bowl there, whether it is a good idea or not.
Getting a Super Bowl, and all of the absurd overestimates of its economic impact, is one of the benefits owners tout when trying to get a new stadium.
Even if the Chiefs don’t really need that to convince Kansas to strike this deal or even if they don’t really want to host a Super Bowl, it’s important for the overall grift for fans and taxpayers around the country to believe that new stadium = Super Bowl = profit.
The World Cup comes to the U.S. every 32 years. And how many Super Bowls do you think this will host? Detroit last hosted a Super Bowl in 2006 with no plans to host another.
If I’m not mistaken, the pattern is that any new *domed* stadium will get one Super Bowl, but maybe just one.
The ideal location is SoFi. It’s very corporate-friendly, the weather is fairly predictable and the city is big enough to absorb the influx of visitors.
Having it there every year would make sense logistically, but would offer too much of an advantage to the Rams and, perhaps, the Chargers and would not allow them to get competitive bids from other cities or offer a Super Bowl as a prize to owners who fleece their respective cities for a new stadium.
I hope they fail spectacularly. I love Kansas Speedway but not only am I never attending a game in the new stadium I am never attending another race at Kansas Speedway. I didn’t bitch when Kansas won the Speedway over Missouri because they won it fair and square. This was theft just like the American Royal. Fuck Kansas. I’ll never knowingly spend another god damn dime in Kansas.
Explain again why we’re using taxpayer money to pay for a billionaire’s stadium which he is perfectly capable of paying for with their own cash?
Hunt doesn’t want a new stadium — he would almost certainly turn a loss if he built one himself. He wants the $4B in tax money that comes with one.
Neil ,I always felt if it was privately financed, it would be cost efficient or cheaper because the owners are paying for.
Foxbourgh wasn’t too expensive when it was built.
Sure, I guess Hunt could build a no-frills new stadium. But that’s pretty much what he has now — Arrowhead was just renovated what, a decade ago?
The number of new stadiums being built every year soared around 1990 when cities started kicking in the bulk of the costs and not demanding any rent in return. That’s not a coincidence.
St. Louis and Missouri dodge both bullets with the Rams and Chiefs leaving the state. Hopefully, the Royals will end up in Kansas, too.
The issue with all of this is the bill passed by the state for money for sports venues. A billionaire might see the state as an easy target for threats or moving a team there.
The Rams departure in particular was a great thing… they actually got hundreds of millions in settlement cash from some combination of Kroenke & the other NFL owners…
https://www.nfl.com/news/790m-settlement-reached-in-lawsuit-over-rams-st-louis-departure
https://www.espn.com/espn/story/_/id/35149258/deal-finalized-divide-rams-settlement-money-st-louis
If memory serves, the $500m roughly they got after attorneys fees (because…) is more than the original construction cost and upgrades they had made to the former TWA dome.
Leagues can’t have it both ways… if the economic impact of a publicly funded stadium is going to be ‘so great’, then obviously losing a team through questionable machinations must “cost” a great deal to the host city.
In this one case, St. Louis appears to have gotten a free stadium from the NFL, albeit after years of trouble and legal wrangling. Not Bad!
Now if only they could avoid giving it all to the Cardinals…
Dome stated cost was 300 mill, 600 total with interest, plus coupla rounds renovations with third round pending. Settlement definitely removed sting of the shaft but Dome authority is out of money and specter of demolition still looms.
The Dome can not be demolished. It’s a part of the city’s convention center. They’ll have to renovate.
How badly does St Louis need a massive convention center?
Conventions are not likely to be much of a growth business going forward.
Anecdotally, I’ve been to dozens of big conventions. I’ve never even heard of one going to St Louis.
Well, you’re anecdotally wrong.
VEX Robotics World Championship: An enormous global event for STEM education held annually.
St. Louis Auto Show & RV Travel Show: Large consumer expos drawing huge crowds.
Monster Energy Supercross Championship: A major sporting event filling the Dome.
Still host major concerts. People stood outside in 100 degree heat to see Beyonce.
Also, hosted the Final Four in 2005.
It’s even more important that Kansas will have a new dome for events.
Demolition has been discussed. County and state no longer providing cash unless StL manages to pry some loose during this KC madness. Authority has nada, and is spending last strands to replace escalators and the like. Events that fill upper deck are Metallica (which I enjoyed) and a few very rare others. Final Four was two decades ago and not coming back. Convention center expansion still troubled and the mad race for shrinking convention market not promising.
By logic Done is part of convention center and can’t be demolished, Kiel Auditorium and Opera House were one, so Auditorium couldn’t be demolished.
Demolition has been discussed. County and state no longer providing cash unless StL manages to pry some loose during this KC madness. Authority has nada, and is spending last strands to replace escalators and the like. Events that fill upper deck are Metallica (which I enjoyed) and a few very rare others. Final Four was two decades ago and not coming back. Convention center expansion still troubled and the mad race for shrinking convention market not promising.
The NFL played a shell game with St. Louis to have that dome stadium built in the first place.
The NFL promised STL an expansion team after the football Cardinals relocated to Arizona. The NFL then gave the team to Jacksonville.
The Rams were originally supposed to move to Baltimore, but St. Louis literally had a new stadium nearly finished, and gave the Rams whatever they wanted.
NFL paused expansion process to give StL time to fix morass of the lease, which was a mess. Pretty bad when lease is jacked before a team is involved.
Effin’ Fran Murray
“NFL paused expansion process to give StL time to fix morass of the lease, which was a mess. Pretty bad when lease is jacked before a team is involved.”
It didn’t matter whether St. Louis got a new team. The NFL still strong-armed the city into building a stadium, by taking its original team and dangling a replacement as leverage.
KS statewide sales tax revenue is $2.5 billion with $188 million from Wyandotte County where the stadium will be built. So they’re planning on diverting about 5% of that revenue to the Chiefs. And it’s looking like they’ll give another $1 billion to the Royals.
Everyone seems to be forgetting that there are already numerous unpaid STAR bonds in play in Wyandotte county. Kansas Speedway’s $24.3 million STAR bond is still unpaid after 25 years. Add to that the STAR bonds for U.S. Soccer Training Facility, Homefield, Schlitterbahn Series 2015, American Royal, Mattel & Barbie amusement park & entertainment zone, all of which are within a mile or two of each other — in fact the speedway, American Royal, and proposed Mattel Park are 3 out of 4 corners of a single intersection. How do you carve out a STAR bond district for each one, and allocate which attraction is increasing the revenue above baseline? 100% of local taxes are being absorbed by some of those, too. Where’s the money going to come from for increased street maintenance, police, and fire coverage?
There’s a new Buc-ees being built, on their own dime, across from the speedway. It’s another new tourist destination. Will this stadium deal try to siphon off its increased sales tax revenue?
I just watched an Armageddon It video filmed at Big Mac in 1988. Although McNichols had the reputation of being the worst of the 1970s arenas, and was demolished less than 25 years after it opened, nobody in the video seemed to care. Big Mac was centrally located in Denver, 15 minutes from Stapleton, so it was a convenient location for concerts. Today’s billion dollar arenas are half empty because so many are in the clubs or back of the sky boxes watching the game or concert on TV. And the billionaires expect taxpayers who could never afford a ticket to pay for these gold plated jokes.
The only people profiting from this project are the company selling the bonds and the entity purchasing the bonds (KC Chiefs and Clark Hunt)
This is the Fan Cost Index for 2023: https://www.statista.com/statistics/202584/nfl-fan-cost-index/?srsltid=AfmBOoqrV0xRlOd5jt1D8S4VkkMlz3WsgIMAUavbs3Kgf0V5Ec9eVPVD
Based on trends and history for new stadiums. My guess is it will be $1000 for the Chiefs in the new stadium. Which is $250 per person. That’s $16.25 million per game. $162.5 million for the season. So that’s coming in around $10,2 million in tax revenue. Then you have whatever from suite sales. Then you add approximately $18 million in income taxes based on a $300 million payroll but that will rise. So yeah it doesn’t pencil out for the state.
The part I don’t get is from the Chiefs side. They are still going to be contributing $1.3 billion to the project. Missouri’s last offer was to give them $1.5 billion for Arrowhead. Now Arrowhead is approaching Lambeau Field status as one of the legendary stadiums in the league. With the Royals going either downtown or over the boarder, the Chiefs would have had the whole complex to themselves and they could build whatever surrounding development they wanted. I know there are more uses for a dome. Sure. But I am not sure how the extra investment for the Hunts pencils out.