Search Results for: Magic seeking to double their subsidies

Rays don’t have to threaten Orlando move to get billions from Tampa, because county official is doing it for them

access_time personNeil deMause

If there’s one basic principle in negotiations of any kind, it’s to hold your cards tight and not give your opponent any unnecessary leverage. Even if you want to ultimately agree to a deal, to get the best one possible for your side you want to keep your focus on your own advantages, and don’t let — oh just never mind:

“I believe that it’s either going to be located at (Hillsborough College) or the team’s going to be in Orlando,” [Hillsborough County Commissioner Ken] Hagan said on a sports radio show Wednesday. “The reality is the they have significantly more bed tax revenue than we do, and they’ve been pushing for a team.”

Let’s say that it’s true that Orlando officials are likely to jump to throw money at the Tampa Bay Rays if Tampa does not. (They haven’t before now, but also former Rays owner Stuart Sternberg was mostly focused on playing off cities in Tampa Bay against each other, plus Montreal for some reason.) Or even let’s just say that Hagan believes that Orlando will jump to lure the Rays, and that new Rays owner Patrick Zalupski would be willing to move there. You still don’t say that out loud! Not when your city and county are about to have to negotiate unspecified “incentives” to help Zalupski build a new stadium on the campus of Hillsborough College, on top of $1 billion or more in land and tax breaks.

Hagan said something similar back in September when Zalupski first bought the Rays, declaring, “If for any reason we’re unable to get over the finish line, then the team may ultimately be in Orlando. It’s Tampa’s to lose.” But this week’s statement was phrased as even more of a threat on Zalupski’s behalf.

There’s been a lot of speculation over the years about why local elected officials do the bidding of sports team owners when they don’t have to, most of which come down to the ideas that they’re 1) stupid or 2) on the take. (My leading theory remains that they’re just doing what all the lobbyists and other people at the right parties are telling them to do.) But statements like Hagan’s betray a deeper problem: Many elected officials just want to make team owners happy, regardless of the cost to taxpayers. Announcing that the Rays will move to Orlando without subsidies in Tampa is horrible tactics — it will almost certainly raise the eventual public cost — but it does increase the chances that Tampa will win the right to shower Zalupski with money, and if that’s the only goal, then Hagan has done his job perfectly.

This has been Hagan’s M.O. for a long while now, back to when he declared the “sense of urgency” around building a Rays stadium to be “borderline dire” way back in 2013. Normally I would warn that being the commissioner who cried wolf will stop you from being taken seriously, but here Hagan is still getting headlines in the Tampa Bay Times with his dire warnings, so I guess it works different when you’re a county commissioner-for-life.

Share this post:

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.

 

Share this post:

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.

Share this post:

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.

Share this post:

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.

Share this post:

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.

Share this post:

NJ bill would give Devils $300m for arena renovations, amid $1.5B state budget shortfall

access_time personNeil deMause

Over the last couple of years, billionaire private equity goon Josh Harris has been among the most active sports owners at winning public approval for new venue projects, first getting Philadelphia’s okay for a downtown arena for the 76ers and leveraging that into a new joint arena plan with the Flyers owners, then landing the most lucrative sports subsidy of all time, worth at least $6.6 billion in cash, land, and tax breaks for a new Washington Commanders stadium. But what of Harris’s third team, the New Jersey Devils? Turns out it’s time for the third shoe to drop:

A bill that would expand the state’s corporate tax incentive programs by billions and extend new tax subsidies to Newark’s Prudential Center was advanced by Assembly lawmakers Monday over the objections of critics.

The measure, which won 10-2 approval from the Assembly’s economic development committee, would pour an additional $2.5 billion into the state’s marquee tax incentive programs and extend up to $300 million in state subsidies for renovations at the Newark arena.

The bill in question was introduced on Friday by state assemblymember Eliana Pintor Marin, whose district includes most of Newark, including the Prudential Center. Pintor Marin said that the Devils’ arena, which is owned by the Newark Housing Authority and operated by the team, “needs to have major renovations” so that the Devils “can continue to play” and also “compete and bring in different spectators and bring in different shows.” Pintor Marin did not explain why these were New Jersey taxpayers’ problems to solve, or why the Devils can’t continue to play in a 19-year-old arena.

Notably, the Devils just extended their lease in 2013 — in exchange for, among other things, revenue from city-built parking garages — until 2038, which you might think would have forestalled any renovation subsidy demands for at least the next few years. But nope, the subsidies are moving forward now, for unexplained reasons. To get around state laws prohibiting special giveaways to particular companies, Pintor Marin even wrote language saying “Prudential Center” without saying “Prudential Center,” limiting the bill’s recipients to building with capacities of “at least 15,000 [that] have operated for at least 15 years in a city with an international airport in a non-coastal county with at least 550,000 residents and a density of not less than 3,000 people per square mile.” (If this wasn’t sufficient, the next item on the list was presumably going to be “and ending in X.”)

The bill also includes one of the more hilarious provisions ever for a sports subsidy, requiring that “the gross economic benefit of the sports and entertainment facility to the State over the duration of the commitment period is at least 150 percent of the overall public assistance provided to the sports and entertainment project”— an effectively meaningless provision, given that “gross economic benefit” just means money changing hands in your locality, not any actual tax receipts that can be used to refill the state budget. Dena Mottola Jaborska, executive director of New Jersey Citizen Action, warned that New Jersey is already facing a “very brutal budget” with a $1.5 billion projected deficit in the current fiscal year, and “you are talking about taxpayer dollars going towards these wealthy corporations, 3 billion dollars’ worth, at a time when we’re going to have a hard time balancing our budget heading into next year.”

Though the Devils subsidy bill was put forward outside of the state budget process, it still needs to go through the Assembly Appropriations Committee before going to a floor vote, as well as passing through the state senate. The 2026 legislative session begins January 13; I’ll report back here if New Jersey residents will have any opportunities for public comment.

Share this post:

Kansas council rep sets up website to calculate how many billions Chiefs stadium would cost taxpayers

access_time personNeil deMause

The Kansas Reflector has done a deeper dive into how the STAR bonds for a new Kansas City Chiefs stadium in Kansas would work, and while it doesn’t change the likely total subsidies much — we’re still talking a couple billion here, a couple billion there — there are some worthwhile takeaways.

First off, this is the most coherent concise summary I’ve seen yet of the problems with Gov. Laura Kelly’s “no new taxes” argument:

It is accurate when state leaders say no new taxes will be implemented to move the Chiefs across the border, said Ian Graves, a Prairie Village City Council member and self-described public finance policy wonk who has been studying the details.

However, the project may require new taxes down the road to cover the loss of revenue growth that would normally flow into the state’s coffers, he said.

That’s exactly right: The issue isn’t that Kansas will lose money it’s getting now, but rather that it will lose money it would otherwise get in the future — which, since money is money, still has the potential to blow a huge hole in the state budget. And in fact Kansas could even lose some money it’s receiving now: The state secretary of commerce would have the power to set the base value (taxes that won’t be handed over to the Chiefs) at below what the state is receiving now in the stadium district, cutting into public funds currently available. “They could just make everything zero,” notes Washburn University economist Paul Byrne. “If they choose a base value that’s below what would typically be a base value, well then you’re even more clearly capturing sales tax revenue or property tax revenue, or whatever would have gone to the state and to the local government.”

There’s also that issue of local governments: Kansas Commerce Department chief counsel Bob North said he “anticipates” both Olathe County and Kansas City, Kansas, to kick in their share of increased sales taxes to help pay off the STAR bonds, calling it “really important, and something that we’re monitoring very closely.” Local governments would seem to have zero motivation to kick in out of their own future tax revenues — it would just shift costs from the state budget to city and county budgets — but maybe if state officials argue that it would otherwise blow up the Chiefs moving in, they can be arm-twisted to contribute.

To make sense of all this, or at least show the range of possibilities, Graves, the Prairie Village council member, has created an interactive STAR bond site where anyone can tweak the parameters of the deal to see how it affects two key metrics: 1) whether the bonds are viable (i.e., if the STAR bond fund actually runs dry) and 2) how much tax money will eventually be diverted into the Chiefs stadium project. For example, here’s the default settings, with a 5% bond rate and Olathe and KCK kicking in funds:

The good news: The amount of new tax revenue raised starts being enough to cover bond payments after five years, after which it just siphons off a flat $175 million a year in sales taxes, but anything over that goes back into the general fund. The bad news: That’s still nearly $5 billion in state money over 30 years, which would be around $2.7 billion in present value, still the second-most expensive NFL stadium subsidy in history, by a wide margin.

And if we change the assumptions just a bit, things could be much worse. Let’s say we assume a full $3 billion for STAR bonds for both the stadium and accompanying development (plus financing costs), ratchet the interest rate up to 6% because these are risky bonds (if the economy collapses, any reduction in sales tax growth could quickly put them underwater), and say that Olathe and KCK decline to participate:

Now it’s 12 years before the state of Kansas can start using any new sales taxes from the stadium district on actual state needs, and the total subsidy has swelled to $8 billion over 30 years, which is nearly $4.8 billion in present value. And Chiefs owner Clark Hunt’s share of the costs sinks from 24% to 17% — and that’s before accounting that he can pay off his share out of stadium revenues, while the state would get none of those, not even naming rights on a publicly owned building. (The state would get whatever incremental tax revenues it could steal from across the border in Missouri, but that would require a whole other set of sliders depending on your assumptions about who’d be seeing Chiefs games and where else they’d be spending their money otherwise.)

Sorry for sounding like a broken record, but while there are still lots of unknowns here, it’s still largely a question of whether this Chiefs stadium deal would be real bad for Kansas, or catastrophically bad for Kansas. It’s at least good to see these questions being asked, by both local media and local elected officials, before all the final signoffs are made on the plan. It’s not often that terrible stadium deals are blocked or improved once they’re announced, but it does happen from time to time; the ball is now in the court of city, county, and state officials in Kansas, as well as Kansas residents who need to decide how much lost state revenue is too much to pay not to have to drive a few extra miles to see Chiefs games across the Missouri line.

Share this post:

Friday roundup: The year that stadium subsidies went completely nuts

access_time personNeil deMause

One year ago today, this site ran an item headlined “Was the Carolina Panthers’ $650m renovation deal really the worst of 2024? An investimagation,” in response to the Center for Economic Accountability declaring Charlotte the winner of that dubious distinction. The conclusion: The Panthers deal was bad, but there were plenty of other contenders, like St. Petersburg’s attempt (eventually rejected) to give over $1 billion to the owners of the Tampa Bay Rays, the Washington Capitals and Wizards owner landing $515 million from D.C., plus non-sports megadeals for everything from an Eli Lilly drug plant in Indiana to expansion of film and TV production tax credits.

All that seems like a million years ago. The year 2025 will be remembered for lots of things, but one is that it was the year where stadium subsidies blew way past the billion-dollar mark, with Washington Commanders owner Josh Harris landing a stadium-plus deal worth at least $6.6 billion in cash, land, and tax breaks, then Kansas City Chiefs owner Clark Hunt following that up with a preliminary agreement for around $4 billion in goodies for a stadium development in Kansas. Otherwise notable events of the past year like the state of Ohio gifting Cleveland Browns owner Jimmy Haslam $600 million (or more) to move from one part of the state to another and even San Antonio providing $1.3 billion for a new San Antonio Spurs arena project — easily an NBA record — feel like chump change by comparison.

And that’s the bigger concern here: While in a sane world, elected officials would sit down and figure out how much the presence of a sports team is worth compared to having money for public services, or at least how much they need to offer to outbid other prospective host cities, if any, in this timeline it’s more about what the next guy down the road has established as the going rate. It’s impossible to say, for example, how the Chicago Bears owners’ perpetual game of footsie with both Chicago and every suburb within driving distance will turn out, or if Kansas City Royals owner John Sherman will replicate the Chiefs’ tax windfall — but when owners can point to previous deals and argue that giving 99 years of free rent or all future sales tax increases from a 300-square-mile area is just the cost of doing business, it makes it easier for state, county, and city officials to say “sure, I guess, do we at least get a luxury box?”

And on that note, let’s wrap up the final news from 2025, and the early returns from 2026:

  • Kansas state senate president Ty Masterson said the “worst case scenario” for a Chiefs stadium is “nobody buys the bonds, the bonds don’t get sold, the project doesn’t happen,” but it seems far more likely that if nobody is interested in buying the bonds, the state would make its sales tax increment district even bigger than 300 square miles, which seems like it would be considerably worse. Or the state could have to sell bonds at an interest rate of as high as 8.5% to lure bond buyers, which would definitely be worse. Let only your imagination be your limit, Ty!
  • Count newly elected Kansas City, Kansas mayor Christal Watson, who is also CEO of Wyandotte County (counties got CEOs?), among those eager to look the Chiefs stadium deal in the mouth: “If the numbers aren’t there for us to maintain the services that are needed for the community, then we’ve got to reevaluate and renegotiate,” said Watson this week. It ain’t over until it’s over!
  • Meanwhile, Kansas speaker of the house Dan Hawkins says with the clock turning over to 2026, “time’s up” for the Royals to use STAR bonds that were approved last year. Though technically the legislature can still change its mind and approve new bonds until the end of June — if it can find some bits of eastern Kansas that aren’t already part of the Chiefs stadium tax district — this seems like a good opportunity for Missouri officials to recognize that they’re the only bidder for the Royals and drive a hard bargain, though vowing to do an end run around voters doesn’t seem like a great start.
  • The Minnesota Timberwolves owners are still dreaming of a new arena that will feature augmented reality, and Wild owner Craig Leipold wants to make sure he’s in line for arena upgrades too, because “in order to survive in the NHL” you “need to be in a really good building,” and his building is a whole 25 years old and the team is only turning $68 million a year in profits, this is clearly St. Paul’s problem to fix.
  • San Antonio mayor Gina Ortiz Jones says she’s not done trying to renegotiate that Spurs deal, on the grounds that “non-binding means non-binding.” She likely needs a majority of the city council to back her up there — San Antonio has a weak-mayor form of government — but props to her for knowing how to read a dictionary.
  • The New England Revolution owners reached an agreement this week to pay Boston $48 million over 15 years to compensate for traffic and transit problems caused by a planned new stadium in Everett, as well as $90 million over 20 years in parks and transit upgrades in Everett. With team owners the Kraft family covering the $500 million stadium construction cost, I’m tempted to say this is actually a pretty fair deal and a sign that at least some local politicians can still drive a hard bargain, though it’s equally like that this is mostly a sign that nobody in the U.S. cares as much about MLS as about the other football.
  • Wahconah Park in Pittsfield, Massachusetts is set to be torn down and replaced next year, which will come as a sad note to anyone who read Foul Ball, Jim Bouton’s book on how he helped temporarily save the old ballpark 20 years ago.
  • There’s another interview with me up about the Chiefs deal, which you can listen to here — there doesn’t appear to be a way to link to particular timestamps in a YouTube short, but enjoy the whole thing anyway, it may be the last thing on the platform that’s not AI-generated!
Share this post:

Experts debate just how many billions of dollars Kansas will lose on Chiefs stadium deal

access_time personNeil deMause

It’s been a whole 48 hours since the last Kansas City Chiefs stadium update — here’s what’s been happening:

  • After my back-of-the-envelope estimates on Monday that tax revenue from a Chiefs stadium wouldn’t come close to paying off Kansas’s $1.8 billion in stadium bonds — let alone the $3 billion in total bond costs including for an adjacent entertainment district, or the $4 billion counting tax breaks and future maintenance costs — I checked in with sports economist Geoffrey Propheter to see if he got the same results. His conclusion: Even if he uses the most generous figures for fan spending, assumes that no Kansas-dwelling Chiefs fans would take the place of Missouri residents following the move, and credits a stadium with six major concerts a year, “the average user (including kids) generates $41 in KS state sales tax revenue per game/event whereas the state needs each user to generate $122 per event to hold everyone else harmless.” Put another way, the stadium would see $693 million in annual taxable sales but would need $2 billion in sales for the state to break even. Put a third way: “Chiefs games and concerts, using the stupidest, most unreasonably generous assumptions I can’t justify without laughing, only gets the state to 33% of the way to the annual debt service needed under existing tax policy.” You could make the assumptions even more unreasonably generous — say, by figuring that new advances in cloning technology will allow for 10 Taylor Swift concerts a year — and this is still a question not of whether Kansas will lose tax money on this deal, but how many billions it will lose.
  • Patrick Tuohey of the Better Cities Project did his own math, this time assuming that the bonds will come with a higher interest rate of 6%, since they won’t be backed by the full state treasury. (Propheter, he notes, thinks this interest rate is likely a tad high, and used the 4.2% rate for state-backed bonds in order to make his projections as conservative as possible.) Tuohey’s conclusion: Total sales within the entire 300-square-mile stadium district would have to more than double just for the state to break even. There’s a possible workaround, but it would involve setting the baseline tax year to sometime last decade, allowing the state to use existing tax revenues to pay off the Chiefs stadium — exactly what Kansas leaders have been promising they won’t do, but without it, no one may be willing to buy the stadium bonds.
  • It’s worth noting that although Chiefs owner Clark Hunt will only be putting up 40% of the stadium cost, he’ll be keeping 100% of the stadium revenues without sharing any with taxpayers, so it’s good that people are noting that.
  • Tim Hamilton, a professor of economics at Johnson County Community College, said businesses in the stadium district will have to raise prices to make up for additional tax being charged — which would be true if there were additional sales tax being charged, but the tax rate will remain the same, it’s only increased tax revenue that will be siphoned off for stadium payments, so it seems like something got lost in translation here. What’s more likely to happen is that Kansas will raise taxes elsewhere to pay for all the stuff it won’t be able to count on using rising Wyandotte and Johnson county sales taxes for, and that could raise prices.
  • Is this all the most expensive sports stadium subsidy in human history? I say it’s in second place to the $6.6 billion (at least) Washington Commanders deal approved this summer; economist J.C. Bradbury notes that the Commanders deal includes subsidies for the surrounding development, and the $1.8 billion in state money for the Chiefs stadium itself is a new record. Fair enough, though Commanders owner Josh Harris no doubt isn’t picky about whether his $6.6 billion is coming via checks from the state or free land, it all ends up in the same place.
  • The Washington Post’s editorial board has chimed in for some reason, calling Gov. Laura Kelly’s arguments for the stadium subsidy “nonsense” and saying Kelly and the legislature “could show respect for taxpayers by stopping this deal before its final approval next year.” (The Post editors hated the Commanders deal, too, so props to them for consistency, even if that consistency is limited to “yay free markets” except for the guy who owns the paper.)
  • Chiefs fans are afraid that the team will use the new stadium as an excuse to require personal seat licenses and charge higher ticket prices, which seems likely given that all the other team owners are doing it.
  • Kansas City, Missouri Mayor Quinton Lucas is already out stumping for a new Royals stadium in his city’s downtown — estimated cost: who the hell knows — and said that he knows the public will support this because the nonprofit that owns the city’s train station lit it up blue this weekend, that’s how polling works, right?
  • Tuohey’s KCMO interview with me from a week ago today already feels like ancient history, but if you want to check it out, give a listen here.
Share this post: