The commerce committees of the Kansas state house and senate spent an hour yesterday investigating the “real facts” of the Kansas City Chiefs stadium deal, as House commerce chair Sean Tarwater put it, and naturally enough they started by talking to … the Chiefs’ lawyer?
Korb Maxwell, the attorney representing the Chiefs, repeatedly asserted that the team’s move is all upside for Kansas taxpayers — a claim that experts have cast doubt on. “It’s a great day to be a Kansas taxpayer because we pulled . . . all of this off without raising taxes on Kansas taxpayers, without using any base revenues from the State General Fund, and without pleading the full faith and credit of our state to the bonds,” said Maxwell, who called Kansas’ STAR bonds “tried, true and tested.”
Maxwell is correct that the Chiefs stadium would not directly raise taxes — it would only siphon off future taxes as spending rises with inflation, forcing the state to raise other taxes if it wants to backfill to pay for the services that money would otherwise have covered. And he’s likewise correct that it won’t use “base revenues” from the general fund, at least unless the state chooses to backdate the baseline year for the tax increment in order to keep the STAR bonds from being underwater, in which case it absolutely will.
And Maxwell didn’t stop there:
Maxwell said that if the stadium were privately owned, the $1.8 billion in STAR bond funds would be subject to federal income taxes and 45% of the public incentive money would end up in Washington D.C. “That would blow a huge hole in the budget for this project, and frankly would not allow it to move forward,” Maxwell said. “The fix to that is having a public authority.”
What? No, that’s only if they funded the stadium using private bonds, it has nothing to do with who owns the building. Also, there hasn’t been a tax bracket as high as 45% since the Carter administration, are you drunk, sir?
State Rep. Rui Xu then pushed back on the “no new taxes” trope, pointing out that “even if we just have inflation — let’s say 3% over 30 years — that means prices in 30 years will be 150% what they are today, just with compounding. And if we’re not allowed to capture that full growth . . . I don’t see how it’s possible that the priorities can’t shift as a result of just that.” To which Maxwell replied, “This is really about growing the pie for our state, not just arguing over the current pie out there,” which is either missing the point entirely or grasping the point and attempting to redirect people’s attention through images of sweet, beautiful new pie.
These are all good reasons to call people for testimony who are not the mouthpiece for the entity lined up to get a $4 billion check from your state, but commerce committees gonna commerce committee. Fortunately, some other Kansas locals are asking other pointed questions:
- Wyandotte County and the city of Kansas City, Kansas, which share government leadership, are still considering whether to kick in their own shares of sales taxes from the stadium district so the state isn’t on the hook for all of it. (Wyandotte and KCK would benefit by, I dunno, something about pie?) The city and county’s chief financial officer, Shelley Kneuvean, said her staff will be conducting an independent financial analysis to figure out how to devote future city and county tax revenues without adversely affecting public services, good luck with that.
- State senator Kenny Titus expressed concern that the Chiefs could move again once their lease runs out in 30 years, leaving an empty stadium. “We absolutely plan to be there for the very long term,” replied Maxwell, though not in any kind of legally binding way.
- The city and county are already redirecting more than $5 million a year to pay off four other STAR bond projects, including the Kansas Speedway, reports the Kansas City Star.
- Speaking of the Kansas Speedway project, Rep. Lynn Melton has some thoughts on that: “I went to the community meetings, and we were told that once the bonds were paid off, there’s going to be no school bonds being floated, our taxes will go down because there will be all this revenue. And now we’ve seen the STAR bonds paid off early, that’s all fine and dandy, but we’ve not seen any of that.”
These are all issues that could use more attention, if Maxwell weren’t soaking it all up himself. Maybe first do the independent financial analysis, then ask the team spokesperson about the findings, rather than acting like a real estate lawyer understands how the substitution effect works? Just a thought.
It is really hard to read this post without laughing out loud. As a Missouri resident on the STL side I really hope the elected morons of this state do not try to get back into the action.
Good riddance. I will feel the same way when the Royals and Cardinals try to blackmail the state for free money.
And what’s crazy is that the only thing Missouri fans of the Chiefs will be deprived of is the obligation to pay the billions in subsidies to the team owner. The team will remain in KC metro
This is the biggest misunderstanding how “pie” works since Frank (Always Sunny)
The thing about pies is that there is not just one kind. Not only are there many fruit flavours, you can have meat pies or veggie pies or Italian pies (which we generally call another name).
Just to pick a few recent locales, KC, Washington, Buffalo and Chicago either have been or are in the process of being shaken down for several billion dollars.
Let’s generalize a little and say that the average shakedown will come to $3Bn per location over the next 30 years and each is designed to “save” professional football in the host cities/states. Even though I don’t believe the latter for one second, let’s just accept it as fact that this is what it will ‘take’ to keep the city’s NFL teams happy, or at least not unhappy enough to start mumbling about moving somewhere more generous, for the next three decades.
We can even accept ‘some’ of the claims that the team’s generate local tax revenue, public interest and create jobs.
With that said, the question that should be asked is “is this the best use of $3Bn to achieve the stated goals?”
Even if you limit the spending options to entertainment alone, I think it is pretty easy to demonstrate that $3Bn in spending is not best used on a football stadium that gets used 10-20 times a year – particularly one with a roof that doubles or triples the cost of construction and requires significant annual energy consumption to heat and cool year round – regardless whether any of the 15 annual events are taking place or not.
$3bn per location could fund a new 30-40k seat stadium in each host city and pay $100-150m in operating costs for the tenant team for 20 years – with all revenues going to the city (not just a small stream of local tax revenues). Even if the team only generated $10m annually in average revenue (which only requires a $35 ticket price and 32,500 fans for 8 home games, and includes nothing in TV revenue or commercial revenue), each of these cities would be better off to build their own stadia, start their own teams/league and operate them for the next 40 years than they would handing $3Bn to their local NFL owner.
If you are St. Louis, San Diego, Oakland, San Antonio etc, you have existing facilities that these teams could use effectively and economically (less so Oakland, but the site and services are in place).
The real question, of course, is would people watch?
Pretty much all the spring football leagues have failed. The UFL is still limping along, but given it’s most recent ownership changes I have my doubts it will survive too much longer. The original USFL could have survived if it hadn’t moved to a fall schedule purely to trigger an antitrust suit (and you all know who is responsible for that catastrophic decision). They were building a fan base in several markets. Others were not gaining traction and needed to be excised.
I believe it is possible to create an alternate league so long as you have enough capital. And the kind of money cities & states are throwing at NFL teams is more than enough capital to float a league with ‘city owned’ teams. And with a $150m operating budget, they aren’t going to be depending on bargain basement players either (nor would they be able to draw the biggest stars from the NFL).
This is the problem when elected officials confine their thinking to just “should we give this billionaire $3Bn more dollars because we are afraid”. They don’t consider other options.
Now, the absolute best use of $3bn for any of these locations is almost certainly not related in any way to professional sports. The point is that even if you confine the discussion to only sports, there are probably better uses for the money.