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Rays owners probably demanding another $1b stadium subsidy in Tampa, counting free land and tax breaks

access_time personNeil deMause

The Tampa Bay Rays‘ proposed memorandum of understanding with Hillsborough College on a site for a new stadium is out, and the initial news coverage of same tells us next to nothing we want to know about who’ll actually pay for what. So let’s go to the actual document and see what’s what, then reconvene at the bottom to try to estimate a total subsidy cost:

The Property is an approximately 113 acre-site located in Tampa, Florida, bounded by W. Dr. Martin Luther King Jr. Boulevard, N. Lois Avenue, W. Tampa Bay Boulevard., and N. Dale Mabry Highway

This is Hillsborough College’s Dale Mabry Campus, which would largely be turned over to the Rays, with the college building new facilities on one corner of the property. How much room the campus will get to retain “shall be agreed to in the Definitive Agreements,” which are TBD.

HC and the Rays will negotiate in good faith to agree on an ownership and financing structure and the conditions precedent for the contribution of the Property by HC.

I.e,, final lease terms, including things like whether the Rays will pay any rent for the state-owned site, are also TBD.

The Rays will construct a mixed-use development that may consist of, but is not limited to, hotels, retail space, multifamily buildings, sports and health related buildings, commercial buildings, parking structures, restaurants and other related buildings (“Mixed-Use Development”). The Parties acknowledge that the Rays will have sole and exclusive control over the Mixed-Use Development, during and after construction. The scope of the Mixed-Use Development will be determined as part of the Definitive Agreements

In addition to a stadium, Rays owner Patrick Zalupski will get to build a whole new neighborhood, as former team owner Stuart Sternberg planned to do at St. Petersburg’s Gas Plant District before backing out of that deal early last year. All revenues from that project will go to Zalupski, nothing to the land’s state taxpayer owners.

HC will ground lease the entire Property, except for the College District, to the Rays or a Rays’ affiliate by long-term lease of not less than 99 years.

Since Hillsborough College is a state facility, the property will be exempt from property taxes, including the parcel the team plans to build its mixed-use district on. Also, hey, it’s another 90-plus-year lease, just like the Washington Commanders deal! Lease terms TBD, of course, but it means that any discounted rent could add up to one hell of a lot, as it did for the $6.6 billion Commanders subsidy.

(Economist Geoff Propheter, who crunched the numbers for the Commanders deal, delivers the mic drop on this via email: “If there’s an upside to all of these stupidly long land leases that are so common in sports, I won’t be alive to remind people that I told them so.”)

The Parties anticipate the prominence and activity generated by the Project that will significantly enhance HC’s visibility, strengthen its community presence, and create valuable opportunities for outreach, partnerships, and student engagement.

LOL.

The Rays will pursue various economic incentive programs at the local and state levels in connection with the Project

You didn’t think Zalupski would be content with getting to build his stadium on state-provided tax-free land, did you? Florida already has a sports slush fund that draws on state sales tax dollars, and Hillsborough County and the city of Tampa could always offer tax breaks as well.

The MOU has already been unanimously approved by Hillsborough College’s board of trustees and has the backing of Gov. Ron DeSantis, who has a long history with Zalupski, appointing him to the University of Florida’s board of trustees after Zalupski gave $250,000 to his Super PAC. DeSantis said yesterday that while he wouldn’t help fund the stadium itself, he would consider spending to move a juvenile jail currently on the site and, in the words of the Tampa Bay Times, “help pay for roads and sewers to prevent traffic jams,” which suggests some innovative mass transit solutions.

So, what are we talking about in terms of public cost? It’s hard to say until we see the final lease agreement, but Propheter does provide a figure for the value of the land itself: $250 million if the college were to sell it, between $582 million and $1.7 billion (in present value) if they leased it. Add in whatever Zalupski would get in tax breaks (Propheter can’t estimate those yet because he doesn’t know how much the stadium and development would be appraised at), state road and sewer spending, and any “economic incentives,” and it all seems very likely to exceed the $1 billion that Sternberg rejected one year ago. All this has to get approved by the state and likely Hillsborough County and the city of Tampa as well, of course, but never bet against team owners finding a greater fool.

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The two very different ways the Chiefs stadium public funding plan can fail

access_time personNeil deMause

The Kansas City Star ran an informative article on Sunday on questions still outstanding about the plan to give Kansas City Chiefs owner Clark Hunt $2.8 billion in Kansas state tax money to build a new stadium, (With other tax breaks and financing charges, the total cost to the state would end up more like $4 billion.) “How exactly — or easily — will Kansas generate enough sales tax revenue to pay for the bonds?” ask sports reporter Sam McDowell and government reporter Matthew Kelly. “Will potential investors see them as too risky?”

Opinions, as they will, differ. University of Chicago finance professor Justin Marlowe tells the Star, “I think it’s fair to say that they won’t have any trouble selling these bonds,” but the article also notes that “vocal detractors [are] questioning whether the math will add up to bring the project to fruition.”

To understand the dispute here, let’s take a step back and talk about how bonds work. A government entity — in this case, the state of Kansas — sells bonds to private investors, effectively borrowing the money from these investors and repaying them with interest. One kind of bonds is general revenue bonds, which are repaid with cash from the state treasury, a source that is essentially bottomless unless Kansas declares bankruptcy. The STAR bonds, however, are dedicated tax bonds, meaning the only pool of money they can use to repay bondholders comes from specific tax revenue streams — in this case, increased sales and liquor taxes from within a designated stadium district.

If you’re drawing up a dedicated tax bond, the first trick is to make sure that that pool of tax revenue you’re setting aside to pay bondholders with is actually enough to cover your principal and interest payments. One way to do that is to make the stadium district really, really big: The preliminary sketch covers 293 square miles, including all of Wyandotte County (where Kansas City, Kansas is and where the Chiefs stadium would go) and a large chunk of Johnson County to the south (where the Chiefs practice facility would be built, in the city of Olathe). And the state could still make the district even bigger, which would increase the tax pool that could be used to pay off the bonds.

Another option for bringing in more money is to redefine what “increased” means in “increased sales and liquor taxes.” STAR bonds utilize incremental tax revenues, meaning the state locks in the current amount of taxes being collected in the stadium district, sets that aside to keep going to  the general fund, then allocates any money above that level to be siphoned off for the development project. (The idea behind this is that all the new tax revenues wouldn’t have happened without the development, so it’s free money; we’ll get back to that in a minute.) “Current,” though, could mean 2026, or 2025, or 2015 for all you want — Kansas officials haven’t yet set a baseline for what year they’ll be calculating the increment relative to, and the earlier they go, the more money will be siphoned off.

And there’s yet a third option, which is to throw additional taxes into the pot. STAR bonds are by law only allowed to use sales and liquor taxes, but so far it’s only the state that’s approved kicking in its share of taxes. State officials are also asking Wyandotte County and the cities of Kansas City and Olathe to kick in county and city sales taxes — something that local officials would be crazy to go along with, given that it would just shift costs from the state to the county and cities, but the state is leaning hard on them to do so.

If the amount of revenue collected by an expanded stadium district, a flexible tax baseline, and grabbing local tax revenues isn’t enough, what happens? The bondholders would have no recourse to make the state pay them out of the general fund, so they would end up taking a loss on their investment. That’s a risk, and the way that bond buyers deal with risk is to demand a higher interest rate, something that Marlowe says could end up being a part of the Chiefs deal:

Kansas officials have emphatically said taxpayers won’t be left on the hook if the project fails to live up to expectations. Having no security pledge on the bonds would very likely ratchet up the cost of debt service payments, Marlowe said.

“Investors are going to see the bonds as more risky, and they’re going to price that into the yields that they demand to buy the bonds,” he said.

A higher interest rate means the state would need more money to pay off the bonds — Patrick Tuohey of the Better Cities Project has speculated the rate could be as high as 6% — which means that the state would have to expand the stadium district, reset the baseline, or include more local taxes to pay them off. With that in mind, it’s more likely that the state would just make those adjustments up front, creating a bigger tax revenue pool and calming bondholders’ fears enough that interest rates can be kept to a dull roar.

And if the revenue collected is indeed enough to pay off the bonds, everything is cool, right? If you’re a nervous bondholder-to-be worried about your investment, sure. If you’re a Kansas resident, though, not so much: Siphoning off taxes from a bigger area, from more of the existing tax base, and from more jurisdictions makes it way more likely that you’re eating into tax revenue that has nothing to do with the Chiefs, and which in the absence of a stadium deal would be collected by the state and used to pay for public services. To take this to the most absurd extreme: Kansas could legally expand the stadium district to be the size of the entire state, and set the baseline back to 1861 when Kansas was first admitted to the union — that would thrill bond buyers, but would also effectively mean that the state’s entire budget could be used to pay off Hunt’s stadium bills, despite the fact that Kansas had a functioning economy before the Chiefs arrived.

When people ask “Will the Chiefs stadium pay for itself?” then, it’s really conflating two different questions: Will the amount of tax money Kansas is setting aside be enough to pay off its bonds? and Can the state pay for this without costing Kansas taxpayers money they otherwise could use for schools and roads and whatever? At this point, the answers to those two questions appear to be “sure, maybe, depending” and “hahahahaha LOL no.” They’re both going to be important as the Chiefs stadium deal continues to be negotiated — and make no mistake, there’s still lots of negotiating to go — but it’s important to keep in mind that there are two different ways for a stadium deal to fail, and it can be a success on the bond market and still be disastrous for state residents.

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Friday roundup: Rays target stadium site, Bears seek Indiana stadium authority, Chiefs pursue local tax money

access_time personNeil deMause

Sorry for the late post today — I think all the images of people getting shot in the face and pulled screaming from their cars are starting to interfere with my sleep schedule. No matter what else is going on, though, the stadium and arena shakedowns continue, so let’s get to the news that we didn’t already cover this week:

  • Tampa Bay Rays owner and Gov. Ron DeSantis pal Patrick Zalupski is reportedly in advanced talks to buy the state-owned Hillsborough College’s Dale Mabry Campus in Tampa for the site of a new stadium and surrounding development. (The college’s 20,000 students would possibly get a new campus elsewhere as part of a “land swap” for something or other.) How the money for any of this would work is as yet a mystery — the Hillsborough board of trustees will meet on Tuesday to discuss the plan, at which point we’ll learn a bit more, maybe.
  • The Indiana state senate is considering a bill to create a stadium authority in Northwest Indiana to lure the Chicago Bears, which would have precisely the same effect as me opening a bank account to use to buy a yacht: nothing at all, until somebody puts some money in it. (The bill language would give the authority bonding capacity, but no set revenue streams to pay off any bonds.) Bears officials nonetheless called it a “significant milestone” in their talks of getting a stadium in Indiana, guess you gotta celebrate your achievements where you can find them, especially if you want to maintain your leverage.
  • There’s been talk before that Kansas’s $4 billion subsidy offer to the Kansas City Chiefs for a new stadium in Kansas City, Kansas (their current stadium is in Kansas City, Missouri) could involve kicking in future city and county sales tax revenues as well as state sales taxes, and now it’s an official ask: Both Wyandotte County, where Kansas City, Kansas is located, and the city of Olathe, where the Chiefs’ new training facility would be built, are being asked to chip in their share of any rise in sales tax receipts to help pay the Chiefs’ construction bill. (I don’t think this changes the overall public price tag, just displaces some of the money the state might otherwise struggle to come up with.) Why the local governments would want to commit their own tax revenue to pay for something the state otherwise plans to build with its own funds, who knows, but Olathe councilmembers did call the training camp a “wonderful transformational project for us” and “a very exciting announcement,” so maybe the hope is local lawmakers will be so excited they’ll contribute to the project’s GoFundMe.
  • Unite Here Local 49 has estimated that those billboards the city of Sacramento is erecting and giving the revenue from to the Sacramento Republic F.C. owners could end up costing the city $115 million over 34 years — which would be worth less in present value, but also it looks like the union didn’t account for future inflation in billboard rates, so maybe not less in present value? Maybe we’ll find out in the year 2060, if man is still alive.
  • There are new renderings of the planned Washington Commanders stadium on the old RFK Stadium site, and they look kind of like a plus-sized version of the Saddledome, surrounded by a whole lot of garages and buildings strategically shown so all you can see are their green roofs. (No fireworks or entourage at all, Josh Harris isn’t blowing any of that $6.6 billion on the clip art budget.) One thing they don’t show: Any of the homes in the nearby neighborhood, or the grocery stores and other small businesses that residents say they would like to see built there, but aren’t hopeful anyone will be able to afford to once the stadium opens.
  • The Houston Texans just hired a chief revenue officer who last worked on the Buffalo Bills stadium project, guess we’re going to start hearing again about Texans owner Cal McNair’s desires for a new or upgraded stadium.
  • $50 million in public bonds for a cricket stadium? In Oswego? It’s all supposed to be covered by stadium revenue, but I can’t find confirmation in the (checks notes) Fox River Valley press. Anyway, I’m done, have a good holiday weekend, see you back here on Tuesday, if woman can survive.
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New Jersey legislature okays $300m Devils tax break just one week after it was introduced

access_time personNeil deMause

Well, that didn’t take long: Just one week after it was first revealed that the state of New Jersey was considering giving Devils owner Josh Harris $300 million in new tax breaks to pay for arena upgrades, both houses of the state legislature signed off on the money this week (49-22 in the Assembly and 33-4 in the Senate) because re-vi-tal-i-za-tion!

Supporters argued that the tax break will nourish Newark’s renaissance.

“This is not a cash check,” said bill sponsor Sen. Teresa Ruiz (D-Essex). “This is ensuring that Newark stays revitalized and becomes the cornerstone or an economic engine and development, and a source of pride.”

It is undeniably a cash check — the only question is what, if anything, New Jersey residents will get out of the deal. Assembly sponsor Eliana Pintor Marin, who represents the district with the Devils arena in it, said that if the Devils “were to pack up and leave, the economic detriment it’d cause the City of Newark — my home base in the Ironbound — would be substantial.” That’s very debatable, but more to the point, Harris hadn’t threatened to move the Devils anywhere, and has a lease in Newark through 2038, and would be hard-pressed to find another metro area the size of New York City’s if he did want to move. But, you know, details!

Moreover, from the looks of the bill language, Harris isn’t required to sign a lease extension or do anything else in exchange for the tax subsidy, so it’s not only a cash check, it’s one with no strings attached. Even if unbeloved lame-duck governor Phil Murphy signs the bill before leaving office on Tuesday, state senate appropriations committee chair Paul Sarlo said Harris will still have to negotiate final details with incoming governor Mikie Sherrill, the state Economic Development Authority, and the city of Newark, so it’s still possible that the state could put some conditions on its $300 million, but probably best not to hold your breath.

 

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Illinois speaker who called $1B+ Bears subsidies “insensitive” now says they’d be okay, maybe

access_time personNeil deMause

Illinois state officials are continuing to walk back their rhetoric against state funding for a Chicago Bears stadium, at least when it comes to infrastructure. Following Gov. JB Pritzker’s statement earlier this week that “we help private businesses all the time in the state, and I want to help” and that there’s “absolutely a way” Illinois could help with infrastructure, House Speaker Emanuel “Chris” Welch — who just last week said it was “insensitive” to talk about giving the Bears ownership money when people have real needs like rent and health care costs — said yesterday that he’d consider both infrastructure spending and tax breaks for a Bears stadium in Arlington Heights:

“I’m very happy to hear the Bears emphasizing that they’re going to pay for their own stadium. Infrastructure? We’ve always said that’s a conversation we’d love to have. That area needs infrastructure anyway. If it’s because the Bears are there, that’s a plus,” Welch said.

Calculating what’s actually infrastructure and what’s just a slush fund for stadium spending by another name is always a dodgy business. Local governments often (though not always) cover the costs of things like roads and sewer hookups for new developments, but past stadium deals have often taken an expansive view of what “infrastructure” means, including such things as new highways and new train stations and new bridges and new parking garages and even stadium foundations and stairs. (One memorable example from my neck of the woods: The $55 million minor-league baseball stadium that New York City built for the Brooklyn Cyclones in 2001 got the benefit of a new $282 million subway terminal that was approved at the same time; while the old station was certainly in need of repairs, it was also undeniably skipped to the head of the line because of the baseball team’s demands.) Bears execs have floated a staggering $855 million price tag for Arlington Heights infrastructure, including new highway ramps and relocating a Metra train station, something the Chicago Tribune editorial board summed up as beginning to “morph into subsidy.”

And, of course, the Bears owners aren’t just looking for state infrastructure (or “infrastructure”) spending, but also for “tax certainty,” by which they mean paying only what property taxes would be for an unimproved Arlington Heights property, not for one with a stadium and other development and giant bear statues on it. And Welch now says he’d be fine with that too, maybe probably:

“There’s a bill out there called PILOT, payment in lieu of taxes. That is a bill that has been percolating the General Assembly for about a year now and we’re having conversation around that. Certainly, if we can get something going on that, that would be helpful in the Bears staying here and staying in Arlington Heights,” Welch said.

That’s not really what PILOTs are — the term is just a catch-all for any agreement to exempt a property from taxes and accept side payments instead. But in this case, the bill under consideration would allow the Bears to pay less in PILOTs than they would normally pay in property taxes, which combined with the infrastructure demands would bring the public cost to well over $1 billion. That’s some serious morphing!

The context of all this, of course, is that Bears officials announced that they’d think about moving to Indiana if they could get stadium subsidies there, and even sent NFL commissioner Roger Goodell to go wander around there, as his job description entails. As for what actual Illinoisans think of all this stadium-costs-but-not-really spending, that’s not entirely clear, because nobody’s asking them in quite that detail. A new poll found that 58% of state voters think it’s important for the Bears to stay in Illinois, but also that 58% opposed using public funding to get them to stay. Would they count $1 billion in tax breaks and infrastructure spending as “public funding”? Crap, forgot to put that question in the poll, better try again. Or not — if state officials do decide they’re okay covering off-the-books stadium costs, it might be convenient not to know whether their constituents were opposed to it or not.

 

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Hidden subsidies cost taxpayers billions of dollars a year, yet elected officials keep pretending they’re not real money

access_time personNeil deMause

University of Colorado Denver sports economist Geoffrey Propheter, who readers here should be very familiar with as it seems like I cite him every day or so, has an essay up today at The Conversation on how “privately funded” stadium and arena deals can often cost the public big money through subsidies that aren’t counted on the official cost ledger. Propheter estimates, for example, that property tax breaks — his specialty — “have cost state and local governments US$20 billion cumulatively over the life of teams’ leases, 42% of which would have gone to K-12 education.” Likewise, taxpayer spending on infrastructure and operating costs is often discounted, while counting team rent payments as private money ignores the value of the land or property that is being rented.

Put it all together, and you get all-time hidden-subsidy champions like the Washington Commanders stadium deal:

By way of example, the Council of the District of Columbia approved a subsidy agreement last year with the NFL’s Commanders. The stadium would be financed, constructed and operated by the team owner, who would pay $1 in rent per year and remit no property taxes. In exchange for financing the stadium privately, the owner receives exclusive development rights to 20 acres of land adjacent to the stadium for the next 90 years.

The stadium is expected to cost the owner $2.5 billion, with the city contributing $1.3 billion for infrastructure.

But the city also gives up market rental income between $6 billion and $25 billion,depending on future land appreciation rates, that it could make on the 20 acres.

In other words, the rent discount alone means the city gives up revenue equal to multiple stadiums in exchange for the Commanders providing one. It is as if the council has a Lamborghini, traded it straight up for a Honda Civic, and then praised themselves for their negotiation acumen that resulted in a “free” Civic.

The Lamborghini Effect is a great image, and one that really should be drilled into the heads of all elected officials who are faced with negotiating sports deals — which sooner or later is pretty much all elected officials. Already just this week, we’ve seen a bunch of political leaders who seem to be in need of reading Propheter’s warnings:

  • The Sacramento city council approved new city digital billboards whose revenue will all be siphoned off and given to the Republic FC owners to help pay for a new soccer stadium, even though nobody has any idea how much that will be. “These billboard leases are a giant hidden subsidy for the railyards developers,” UNITE HERE Local 49 Aamir Deen told CBS News. “It’s absurd to vote on this billboard deal without even knowing what you’re giving away.”
  • Illinois Gov. JB Pritzker, who in the ongoing Chicago Bears stadium talks has mostly been holding a hard line against “propping up what now is an $8.5 billion-valued business” with taxpayer dollars, reiterated that he doesn’t count infrastructure spending as a subsidy, because “we help private businesses all the time in the state, and I want to help” and “some of the infrastructure needs that the Bears are identifying” for their proposed Arlington Heights stadium are “projects that we were going to build at one point or another.”
  • Kansas Gov. Laura Kelly, in her final state of the state speech, gushed about her new Chiefs stadium deal that could end up costing state taxpayers a second-only-to-the-Commanders-record $4.1 billion according to Propheter’s projections, on the grounds that it won’t raise taxes or divert money from existing budget priorities — ignoring how it will divert billions of dollars from future budget priorities as tax revenue from a 300-square-mile swath of the state gets directed to Chiefs owner Clark Hunt’s bank account instead of the state treasury.

Some of these actions are more worrying than others: It’s still unclear whether Pritzker, in particular, will really be okay with the $855 million in infrastructure demands the Bears owners have levied, or if he’s just telegraphing that he’s open to the state covering a few minor expenses, so please don’t play footsie with Indiana without continuing to haggle with him. Either way, though, they’re all concerning signs that political leaders are continuing to divide public spending on private sports venues into two buckets, one marked “real tax dollars” and one “not really tax dollars because reasons” — and the latter can include pretty much anything from spending on everything around the stadium to handing over selected public revenue streams to just straight-up checks from the public treasury so long as they can be termed “no new taxes.” With elected antagonists like these, team owners don’t need friends — as we’re seeing when the largest stadium subsidies in history are being justified as not costing taxpayers anything. Not like that’s anything new, but when Propheter and I and a lot of other people have been pointing out the pitfalls of hidden sports subsidies for decades now, it’d be nice a few more people started at least acknowledging that public costs are public costs, now matter how team owners attempt to launder them.

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Rams owner demands $376m in city infrastructure money following ad board kerfuffle

access_time personNeil deMause

Los Angeles Rams owner Stan Kroenke may have bucked modern trends by going and building a $5 billion stadium without asking for major taxpayer subsidies, but if there’s one thing about stadium deals, it’s that it’s never too late to make new demands. And so it is with Kroenke’s lawsuit against the city of Inglewood, where he’s claiming that the city owes him $376 million for roads, sewers, other infrastructure, and police and fire services that he says he fronted the cost of:

Kroenke’s companies argue the city must still reimburse them for $376 million in public improvements — payments the city counters it can’t make because there’s no valid development agreement.

“This isn’t about SoFi and what’s already been built,” said Louis “Skip” Miller, the city’s attorney. “It’s about public funds being paid to a private party going forward — for which the law requires a valid agreement.”

The legal battle actually started last spring, when Inglewood had the temerity to sign a contract to put up ad boards (the city calls them ad kiosks, Kroenke calls them billboards, this is apparently a key legal distinction) on the roads around the Rams stadium — something that Kroenke’s lawyers said would allow for “ambush marketing” by advertising to the same fans who Kroenke is offering in-stadium advertisers exclusive sponsorship rights to. The notion that fan eyeballs belong to the team from the moment their owners get in their cars until they arrive at the game is a novel twist on the Casino Night Fallacy, but as it turned out, it wouldn’t be tested in court: Judge Maurice Leiter ruled last August against granting an injunction to block the billboard contract on the grounds that Kroenke (and Clippers owner Steve Ballmer, who also sued over the ad signage) couldn’t show irreparable harm, then also (per Bloomberg, at least, the chain of rulings is a little confusing) ruled that the whole development agreement barring billboards near the stadium is unenforceable because it was “improperly enacted.”

We are now deep in the legal weeds, but what it looks like happened is this: Back in 2015, when the Rams’ move from St. Louis to Inglewood was first being negotiated, Kroenke chose to get the stadium development agreement adopted via a voter initiative, rather than being negotiated with the city — though the initiative never ended up voted on after the city council preempted it by approving the agreement themselves. Unfortunately for Kroenke, a state appeals court ruled in 2018 that development agreements are the sole purview of local legislative bodies, and can’t be approved by ballot initiative (though they can be modified by ballot referendum, which is a different thing in California). So once Inglewood Mayor James Butts realized that this could apply to the Rams deal, he informed Kroenke that sorry, Inglewood wasn’t bound by the 2015 agreement, the courts say so.

Kroenke then pivoted to suing over the infrastructure and public service costs — originally $100 million, now $376 million, no explanation given — that he said Inglewood had promised to reimburse him for once the stadium generated $25 million a year in tax revenue. Again unfortunately for Kroenke, that reimbursement was also promised in the development agreement, and Butts now says the appeals court ruling means the DA is “void,” so no payments will be forthcoming.

If all this sounds like Butts is trying to take advantage of a legal loophole to get out of paying Kroenke tax money, that seems like a correct interpretation — especially since the city council ended up approving the initiative, not voters. (Disclaimer: I am not a lawyer by any stretch of the imagination.) For his own part, Kroenke also may be trying to get away with something by inflating his costs from $100 million to $376 million. After much searching, I finally found an archived copy of the development agreement, but it doesn’t appear to spell out how “public infrastructure and improvement costs” are to be calculated, nor impose any obvious prohibitions on billboards.

The two lessons here: Even “privately funded” stadium deals can end up costing public money, and you never really know the full public cost until all the court paperwork has settled. No matter how this works out for Inglewood, those are important things for officials in other cities to remember as they negotiate their own deals.

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Do record-breaking Commanders and Chiefs deals mean other cities need to pay more for stadiums? An investimagation

access_time personNeil deMause

Other news outlets are starting to pick up on what a crazy year this was for sports stadium deals: Just in the last couple of days we’ve had headlines reading “Sports stadium deals hand even more taxpayer money to billionaires” and “Public subsidies for stadiums are exploding.” The lessons that writers are taking from the eye-popping subsidy deals for the Washington Commanders and Kansas City Chiefs, though, are, uh, interesting.

Let’s start out with that first article, which ran on the nonprofit-owned Stateline news service. It noted the record-breaking numbers for the Commanders and Chiefs stadiums, then quoted sports economist Geoffrey Propheter as saying that these deals will end up doing a favor to other team owners seeking their own stadium deals, because “now teams can look at the Kansas deal and say, ‘Hey, what we’re asking for is not nearly as bad or as crazy or stupid as what Kansas is offering.’” It also quotes another stadium expert (that’d be me) as noting that in both cases, the elected officials who landed the stadium deals had been “negotiating against themselves,” since nobody else was offering the many billions of dollars that Kansas and D.C. ultimately came up with — and “the more they get away with that, the more their fellow owners are going to be emboldened to ask for the same thing.”

So far, so good: Because sports team owners often successfully employ the “all the other kids are doing it” argument, the Chiefs and Commanders deals are likely to lead to more multibillion-dollar stadium subsidy demands. But this brings us to article #2, by Tampa Bay Times columnist John Romano, which takes that conclusion to some unlikely places.

Romano is a weird one in the stadium coverage landscape: He’s been critical of Tampa Bay Rays ownership for demanding too much in stadium talks, but has also been an advocate for Rays stadium subsidies so long as they’re kept to a half billion dollars or so. Here, he takes the record-breaking stadium subsidies and runs with them, predicting that it could lead to a higher public price tag for a new Rays deal:

For the typical taxpayer on Main Street USA, the real culprit is your crazy neighbor in Kansas. Or Washington D.C. Or any number of other desperate municipalities.

We’re not talking about the actual cost of construction — which is significant and rising daily by itself — but the public funds/enticements that are being tossed around so towns can either lure or retain baseball, football, hockey and basketball teams.

The Chiefs and Commanders deals — and, for some reason, the Atlanta Braves deal with Cobb County, which Romano also throws into the mix — raise the prospect that “municipalities could recoup their initial investment with funds from property taxes on new construction, liquor taxes in new bars and restaurants, and a variety of other fees and taxes that would not otherwise exist without the project,” something Romano terms an “intriguing idea” before immediately noting that economists consider it “a load of hooey.” Still, there are “intangible” benefits from hosting a sports team, says Romano! Though “critics suggest that concept is also vastly overrated”! The answer must lie somewhere in the middle, or at least in just dumping the two arguments into a Word document and letting readers figure it out for themselves!

If Romano column is disappointingly bothsidesy when it comes to evaluating the alleged benefits of stadium deals, the headline it ran under put its finger definitively on the scale: The full hed is “Public subsidies for stadiums are exploding. Can Tampa Bay keep up?” That’s a very different question than whether “keeping up” is even worth it, and it makes it sound like the challenge here for elected officials is to find a way to meet the new stadium subsidy thresholds, regardless of whether they make any economic sense. After all, as Romano argues in his conclusion, it’s really all about what the guy next door is offering:

As history has shown, it only takes one desperate community armed with municipal bonds to completely change the landscape — and the zip code — of a baseball or football team.

Yeah, if Tampa Bay doesn’t come up with three or four or six billion dollars, the Chiefs and Commanders deals show that the Rays might … move to the next city over? Which would also be in Tampa Bay? “Cities are bidding more and more billions of dollars to secure stadium deals” is pretty obvious; “cities need to bid more and more billions of dollars to secure stadium deals” is a very different thing, especially when they’re bidding against themselves.

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Friday roundup: Trail Blazers, Lightning owners join Devils in asking states to fund their arena upgrades because reasons

access_time personNeil deMause

The way this week has gone, you can be forgiven if you just want to avoid the news entirely. If you’ve come here to be cheered up by some less depressing news … that’s never a good idea, but there are maybe some amusing bits, and nobody has gotten killed (so far), so I guess those are pluses!

Feel free to try to find the glass half full in these items:

  • The Portland Trail Blazers owners are about to ask that Oregon hand over all state income taxes paid by home and road players and staff to help fund a $600 million renovation of their 30-year-old arena. (The cost is estimated at $20 million a year, which if salaries rise enough could easily end up amounting to $600 million worth of future taxes.) The Oregonian notes: “Team employees, notably players who earn millions, have been paying into the state’s general fund for decades, dating back to the franchise’s founding in 1970. Will lawmakers have the stomach to divert those funds from essential services to rebuild an arena that is home to a team that will soon be owned by a Texas billionaire?” Then it says that “the income tax dollars the general fund would lose in this proposal will vanish anyway if the Blazers relocate,” which, no they wouldn’t, not if Portlanders spent their basketball ticket dollars elsewhere locally, which the numbers show is what would mostly happen. Securing approval of the tax money before Tom Dundon (the aforementioned billionaire) officially steps in as owner, one source told the Oregonian, “guarantees the Blazers’ future,” though they didn’t say what kind of lease extension Dundon would agree to in exchange, so it’s always possible it would only guarantee the Blazers’ future until it’s time to ask for more tax money again.
  • Hillsborough County is discussing paying for $250 million in renovations to the Tampa Bay Lightning‘s arena in exchange for a six-year lease extension until 2043, which has some Tampa Sports Authority officials worried the Buccaneers and Rays owners may make similar demands if the arena project is approved. Also that would be $41.7 million per year of lease extension, which would be close to the record for most expensive ever.
  • New Jersey’s proposed $300 million Devils arena subsidy only has a few days left of the legislative session for approval, and “some lawmakers,” per New Jersey Digest, have “raised concerns” that rushing a major tax break through in a lame-deck session with a lame-duck governor might not be the best of ideas. Not that state legislatures don’t do it all the time, but not the best of ideas does check out if you’re a fan of transparency and due diligence and all the other democracy things that are out of fashion right now.
  • Kansas officials want to make clear that the state could still build a Kansas City Royals stadium, just not with STAR bonds since the deadline for those expired at the end of 2025, so they’re just for the Chiefs and for Barbie/Hot Wheels theme parks. And the state doesn’t really have many other good revenue sources, says house speaker Dan Hawkins: “It would be tough to use those and develop enough money to really support a stadium, and so, I just can’t see that happening.”
  • The Ohio judge who issued a 14-day temporary restraining order against the use of unclaimed private funds to pay $600 million toward a new Cleveland Browns stadium has extended it indefinitely while he hears arguments on whether to issue a permanent injunction.
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Royals suitors dropping like flies, Kansas Chiefs stadium still faces bond questions

access_time personNeil deMause

If Kansas City Royals owner John Sherman was hoping that the Chiefs announcing a move across the border to the state of Kansas in exchange for around $4 billion in subsidies would spark a bidding war for his own team, well, not so much, it appears. Kansas house speaker Dan Hawkins declared this week that the December 31 deadline for the Royals to pursue state-backed STAR bonds was set in stone, and the offer is now off the table. (Though with the legislature set to consider expanded STAR bonds beyond 2026, it’s always possible to put it back on the table.) On the Missouri side of the border, meanwhile, potential Royals suitors are getting cold feet as well:

On Wednesday, Clay County Commissioner Jason Withington said that he was done negotiating with the team.

“Like Kansas, I’m done negotiating with the Kansas City Royals,” he wrote on Facebook….

“As the August deadline approached, we were then told they wanted to move to the April 2026 ballot at the earliest. Tomorrow was the deadline we gave the team to meet that timeline. They’ve now told us they aren’t ready for that either. At some point, you stop negotiating–and start being honest about what’s actually happening.”

One would think that this leaves Sherman with only the option of Jackson County and downtown Kansas City, Missouri, which should put local officials there in the driver’s seat to limit taxpayer subsidies, especially after Jackson County voters made their feelings clear in April 2024. Or one would hope, anyway — after all, Chiefs owner Clark Hunt didn’t have anyone else offering him $4 billion before Kansas put its deal on the table, but that didn’t stop that state from seizing the winner’s curse with both hands.

Yet Hunt may still have a chance to seize defeat from the jaws of victory. The city of Kansas City, Kansas and Wyandotte County still must sign off on the deal, and Mayor Christal Watson and other local officials are concerned that kicking in city and county sales taxes — as the state wants them to do to keep its costs to a dull roar — could force local governments to raise property taxes to compensate. And there are still questions about whether even the proposed giant 330-square-mile stadium sales tax increment district can generate enough funds to pay off the STAR bonds, or at least to convince bondholders that the bonds are safe. And that, University of Chicago bond expert Justin Marlowe tells the Kansas City Star, could lead the state to go back on its “no new taxes” pledge:

“Do we default on the bonds and hope that the bondholders are willing to take a haircut, which they won’t be. Which they never are,” Marlowe said. “If it goes to court and there needs to be some sort of negotiated settlement, it’s fair to say that at some point, everyone will look to the state to provide some kind of relief to prevent the Chiefs from leaving, to prevent this otherwise potentially successful development from failing before it has a chance to succeed.”

The discussions over how to draw the STAR bond district should be interesting indeed … or would be, if Kansas didn’t have a special state law allowing talks to be conducted in secret, only making a plan public once it’s been finalized. State officials won’t even reveal what non-disclosure agreements they’ve signed regarding the Chiefs deal, citing that same confidentiality clause that was approved as part of the expanded sports STAR bonds package in 2024 — refusing to disclose what you can’t disclose is some next-level stonewalling, excellent work, Kansas state obfuscatorians.

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