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KC council set to vote on city giving Royals owner $600m plus a crapton of tax breaks, getting almost nothing in return

access_time personNeil deMause

A Kansas City council committee is set to vote today on approving city money toward a new Royals stadium, so naturally the actual legislation didn’t get released until yesterday, providing everyone involved approximately no time to read and understand it. While everyone scrambles to play catchup, here’s an attempt to at least figure out the main gist of the city’s proposal, after looking at the most important bits and emailing with a bunch of economists who did the same (particularly University of Colorado Denver’s Geoffrey Propheter, who should be a finalist for the Nobel Prize for Speed Reading).

At stake is one bill, plus three accompanying agreements:

  • The bill, ordinance 260704, would allocate $20 million from food and beverage taxes to be placed in a Special Obligation Downtown Stadium Bond Fund, which would be used to pay for [scene missing].
  • An accompanying funding agreement, the Baseball Stadium Funding Agreement, would devote $600 million in city money toward a $1.9 billion stadium, with the state and county providing another $540 million. This would include $90 million for “infrastructure” from “funding not otherwise committed to the Project,” plus $510 million in “legally available sources,” which are both fancy ways of saying ¯\_(ツ)_/¯.
  • The Baseball Stadium Lease Agreement spells out how much rent the team would pay ($1 a year, plus 5% of net non-baseball profits, which as Propheter notes will likely be 0% if the team as operator is smart enough to ensure that non-baseball events run at a loss) and who would get all other revenues, including naming rights and advertising (Royals owner John Sherman, without exception).
  • A Baseball Stadium Development Agreement that probably lays out a bunch of other stuff, I haven’t finished reading it all yet.

The ordinance is super-short, but it contains one slightly worrisome clause: It would authorize “the City Manager to execute a lease, non-relocation agreement, development agreement, community impact partnership agreement, and funding agreement with the Kansas City Royals or an affiliated entity for design, construction, and operations of a new stadium, team offices, and supporting infrastructure.” Previous legislation authorized the city manager to negotiate terms with Sherman; it’s unclear how much additional leeway he would have in “executing” an agreement, though the lease does at least say it’s contingent on a council vote to approve it being held no later than the end of September.

The associated agreements, meanwhile, are very long, and include enough worrisome clauses to keep a council hearing very busy indeed, if anyone chooses to ask about them. In addition to the items laid out above:

  • Sherman would pay no property taxes on the stadium, since it would be city-owned, and would also receive a full sales tax exemption from all spending on construction, as well as on future maintenance and upgrade costs. Total cost: undetermined as of yet, but on a $1.9 billion stadium, likely to be half a billion dollars or more.
  • The city can’t levy any ticket or parking taxes to recoup its $600 million share, which would instead be paid off by an assortment of “economic activity taxes” (not strictly defined, though expected to include a STIF district to kick back city sales taxes) both within the stadium district and outside it.
  • All funds from actual stadium revenue, meanwhile, with the exception of that 5% cut of non-baseball profits if any exist, would go toward paying off Sherman’s costs: $760 million toward construction, plus $55 million in “community benefits” (paid out over 30 years, so actually significantly less than $55 million in present value).
  • Any future state or county taxes that impact the team are required to be siphoned off to fund the Royals’ stadium maintenance, notwithstanding that the state and county aren’t even parties to this lease.
  • The Royals can stop spending anything more than $1 million a year on stadium repair in the final five years of its lease, which would almost certainly be used by whoever owns the Royals in 2051 to extract a new or renovated stadium.

This is a world-historically terrible agreement for taxpayers, with a near-record $1.9 billion stadium being covered 60% by the public while they receive virtually 0% of the proceeds — and, in fact, would lose far more money from all those tax breaks than any meager non-baseball revenue the city might receive. The total public cost would almost certainly be in excess of $1.5 billion, and could reach $2 billion, either of which would be a new record for the largest MLB stadium subsidy ever.

A vote of the city Finance, Governance and Public Safety Committee is expected today, with a full council vote by the end of the week. If that seems like a crazy rush when the full deal has only been available to read for less than 24 hours, the goal is to pass legislation by the end of the month in order to avoid any possibility of holding a public vote in November, as a local labor group is trying force the city to do with a petition campaign. So the council is willing to cut some corners on democracy in order to … well, cut more corners on democracy, it’s just cutting democracy all the way down, really. Tune in today at 9:30 am Central (Zoom link here) to see if any democracy sneaks in during today’s committee hearing.

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San Antonio council votes not to let city residents vote on $489m in Spurs arena funding

access_time personNeil deMause

The San Antonio city council has completed its hearing on Mayor Gina Ortiz Jones’ proposal to put a measure on the November ballot on whether to devote $489 million in city money to a new Spurs arena, and their verdict is nope:

The San Antonio City Council batted down Mayor Gina Ortiz Jones’ attempt to get the city’s funding for a downtown Spurs arena onto the November ballot in a 5-6 vote Monday morning….

Opponents of another vote argued that the money is either restricted in how it can be used or relies on the project moving ahead in the first place.

The vote’s outcome was not a surprise; a majority of council members publicly voiced their opposition shortly after Jones floated her idea in a July 31 memo. Still, Jones held a series of public “listening sessions,” and pushed ahead with bringing the issue up in Monday’s special council meeting.

KSAT describes the $489 million as coming from “the Spurs’ lease of the publicly owned arena, private developers’ lease of nearby city-owned land, property tax from that development within a specific area known as the Hemisfair Tax Increment Reinvestment Zone (TIRZ), and hotel-related state taxes from a ‘Project Finance Zone’ (PFZ)”; the city’s term sheet helpfully doesn’t break down how much would come from each source. It’s the sort of thing that might have to be included in a ballot measure, but we’ll never know now.

As for why the six deciding councilmembers said they voted no, councilmember Misty Spears said it would be bad for business to establish a precedent that voters should have a say on major spending decisions, while councilmember Marc Whyte said prior to today’s meeting that holding a vote on whether to spend $489 million on a Spurs arena would cost too much at a time when the city is trying to reduce spending. The other four no votes can try to top that, but it’s going to be tough.

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Friday roundup: Plano residents to vote on $700m Stars arena subsidy, Bears still playing hard to get with IL and IN

access_time personNeil deMause

In case you missed it, sports economist/meme master J.C. Bradbury has a new book on sports subsidy deals due out soon: This One Will Be Different details the latest in stadium and arena deals and why they never pay off for the public, with a particular focus on the Atlanta Braves‘ extraction of money from Cobb County for a new stadium just 17 years after getting their last one, which he had a front row seat for. And for the run up to the publication date, Bradbury has been building out his sports economics website with all sorts of fresh goodies: FAQs on stadium economics and how stadiums are funded, links to academic studies and presentations, and even a series of YouTube shorts on the lessons of past deals and the prospects for future ones. Check it out, it’s entertaining and eye-opening rabbit holes all the way down!

But don’t go just yet, because first we have another week of stadium and arena news to get through:

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Portland okays spending $120m on Blazers arena renovation if Dundon agrees to pay rent and PILOTs

access_time personNeil deMause

After months of public debate, the Portland city council voted 8-4 yesterday to approve spending $120 million toward renovations to the Trail Blazers arena, plus $275 million for upgrades over the next 20 years. But the term sheet it approved included several major new conditions — most prominently, that the team start paying rent, starting at $3.1 million a year and rising by up to 3% a year, as well as payments in lieu of property taxes on the tax-exempt land around the arena, starting at $3 million a year and rising by 5% a year. The team must also agree to cover any cost overruns.

None of those provisions in the final term sheet were in the original one, and they could end up being pretty significant. With the rent and PILOT payments set to increase over time, they should be worth about $110 million in present value to the city, roughly $50 million from the rent and $60 million from the PILOTs because of the different escalation percentages. And while it’s hard to exactly credit these as a windfall for city taxpayers — paying rent on the building you’re a tenant in and property taxes on the land you’re using are usually just what’s expected of everybody — they are additions to the term sheet that would mostly cover the city’s debt payments on its $120 million in arena construction costs. And as for the $275 million in upgrades, that would mostly be covered by ticket taxes, which as we’ve explained here previously largely end up coming out of team owners’ pockets because microeconomics.

This doesn’t make the Blazers plan a good deal for Portland, but it would make it a far better deal. Councilor Angelita Morillo, one of the four no votes, called the revised plan “still the worst deal in the country,” which is almost certainly wrong given some other recent examples, and added “the public is getting fleeced,” which is absolutely correct, especially given that state and county taxpayers would still be on the hook for another $480 million. And it could still get worse in upcoming talks with the team: Yes vote Steve Novick said yesterday, “I’ve already signaled that I’d be willing to accept something that’s arguably less,” which is really not the way you want to start off negotiations.

Still, the Portland council did something all too rare: Presented with a plan that would have poured tax money into the local sports billionaire’s pockets under threat of the team leaving town, they decided to use their leverage as the team’s best option to play in to demand that the billionaire cough up at least some money toward the project, no matter how much he said he wasn’t gonna. And Blazers execs didn’t immediately shoot it down, with team president of business operations Dewayne Hankins issuing a fairly conciliatory (for him) statement that said, in part, “We look forward to continuing to work with the City’s negotiating team in good faith, addressing the issues that remain and finding a resolution that allows all of us to move forward together.” That’s not an acceptance of the city’s rent and PILOT demands, but it’s not “Tom Dundon’s way or the highway” either. One thumb up to the council for at least trying to get something significant for taxpayers, rather than just rearranging deck chairs — how much they stick to their guns from here will determine if they can earn the other thumb.

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Councilmember says his Rays stadium tax plan would leave Tampa “not involved in the financing,” except for all the financing

access_time personNeil deMause

Ever since Tampa councilmember Bill Carlson announced a few days ago that he’d be willing to consider casting a swing vote for a Tampa Bay Rays stadium if the city’s share came out of a different pot of property tax money, I’ve been engaged in a weird, slow-motion discussion with Carlson on the former Twitter about what exactly his plan is, and how it could possibly save Tampa any money. It started out like this:

Calling my report “false” while linking to the same WUSF report I had linked to is a choice, certainly. But I tried again, asking, “You propose eliminating $180m in CRA and CIT funding and substituting $180m in TIF funding for ‘publicly owned infrastructure.’ Could that be used toward the (county-owned) stadium? If not, who would cover the resulting $180m stadium funding gap?” To which Carlson’s reply, in its entirety, was: “The city is not involved in the financing.”

This brings us to yesterday, when the Tampa Bay Times reported:

Carlson said the city would provide an $80 million advance payment to the development district, paid in four annual $20 million installments, at the Rays’ request. He did not specify which city funds would be tapped for that money.

Carlson has yet to explain how sending $80 million to be used for a Rays stadium district is not being “involved in the financing,” though it’s possible he’s making a distinction between stadium financing and stadium district financing. (Carlson has insisted that any money under his plan would only go for “public infrastructure,” but didn’t answer me when I asked if that could include infrastructure for what would be a county-owned stadium.) Carlson also confirmed to the Times that, contrary to what he said on X, his plan would indeed kick back property taxes to support the Rays project, justifying it as “with the property taxes being generated, we can put some of that back in for the infrastructure.”

There are several possibilities here:

  1. Carlson doesn’t understand how money works. This seems unlikely, given that Carlson is currently in his eighth year on the city council, and at least understands tax increment financing districts enough to write a proposal about how to use them. Elected officials, though, keep falling for the Casino Night Fallacy that taxes paid by a development project don’t cost anything for a local government to give up, so we can never rule out stupidity. For his part, Carlson tweeted on Monday, “You’re not dealing w an amateur here. I have been against these deals for years and I can see through BS on both sides,” which would leave us with…
  2. Carlson is trying to pull a fast one. Before he was elected to the council, Carlson ran a public relations and marketing firm, and it’s entirely possible this entire tax switcheroo is meant as obfuscation, to convince the public that he’s cutting a better deal when he knows he’s not really. His X debating style certainly seems to follow the classic PR principle of “if you don’t like the question you’ve been asked, answer a different one that you wish you’d been asked,” so it’s very possible he knows what he’s doing. Unless…
  3. There’s something here Carlson isn’t telling us. Maybe he really has come up with a way of spending city property tax money without spending city property tax money, despite that being not how tax money works. Or he’s figured out a way to use the city’s spending on things completely unrelated to the Rays project, without team owner Patrick Zalupski noticing that he’d be out $180 million. And he just hasn’t explained which it is yet, or where he plans on getting the $80 million down payment, because he’s really really busy, and also the dog ate his laptop keyboard.

All we do know for sure is that Carlson is proposing to withdraw $180 million in city sales and property tax spending on the Rays stadium project, and substitute $80 million in some money from somewhere plus some amount of other money from future property tax receipts — and we also still don’t know who covers any shortfall if those property tax revenues fall short. As for why Carlson is being so obscure, we’re ultimately left with the epistemological dilemma that prompted Hanlon’s Razor, but I for one don’t have enough evidence to say whether that conclusion applies here. It’s a fine line, indeed.

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Portland may ask Blazers owner to pay rent in exchange for $395m in city arena funding

access_time personNeil deMause

The Portland city council is set to vote on a term sheet today for the proposed $600 million Trail Blazers arena renovations deal, and it may not look like the one that was initially proposed. Late yesterday, four councilmembers issued a proposed amendment with revised terms that include team owner Tom Dundon paying $2 million a year in rent plus $3 million a year in payments in lieu of property taxes.

Dundon’s refusal to pay rent while insisting that state, county, and city governments cover the entire $600 million renovation cost has been a sticking point for many Portland councilors and residents. The city’s share comes to $120 million toward the renovation, plus $275 million in future maintenance spending over the next 20 years; combined that would cost the city about $22 million a year to pay off, meaning even the proposed rent and PILOTs from Dundon would only cover less than a quarter of the city’s arena expenses.

Dundon, who previously said he didn’t see why he should pay anything toward arena renovations when he already pays taxes (though not property taxes), is expected to object to the new terms. “No team would sign a lease that would keep this business in the red,” Blazers president Dewayne Hankins told the city council last month, which calls for a trip to the Forbes NBA team financial figures:

The Forbes numbers are estimates, though they’ve been proven pretty accurate when actual team financial documents have leaked over the years. Regardless, even if Forbes’ estimate that the Blazers turned a $111 million profit in 2025 is off by a bit, it’s hard to see how having to make $5 million a year in rent and tax payments to their public landlords would suddenly send the team into the red.

More to come once the West Coast wakes up and Blazers officials start issuing statements, almost certainly. The council meeting to discuss the term sheet kicks off at 9:30 am Pacific time; you can watch the drama unfold on the council’s YouTube channel.

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KC mayor postpones Royals stadium funding vote after failing to tell council what they’d be voting on

access_time personNeil deMause

A Kansas City council committee was all set yesterday to consider allocating $20 million to a Royals stadium fund for something unspecified, when Mayor Quinton Lucas abruptly pulled it from the meeting agenda because democracy:

“I believe that even in representative democracy, i.e. going through city council meetings, you have a fair opportunity not just for our review, but for the public’s review on that, which we’re working on,” Lucas said about the agreements with the Royals. “I don’t think that was possible today.”

Councilmember Johnathan Duncan shed a little more light on what “a fair opportunity for review” meant, noting that councilmembers only received a summary of the proposed Royals agreement on Monday night, with finalized agreements still not available. Duncan called the process “a sham and a shame,” and decried rushing to “run a billionaire a $600M welfare check on the backs of City taxpayers for his for profit business.” The reason for the accelerated timetable, he told reporters, is that city lawyers told the council that it needed to finalize the stadium this month in order to avoid being subject to a possible November ballot measure where voters could decide whether to kill the deal.

That deadline looks like it won’t be met, as even the $20 million down payment isn’t scheduled for a hearing until September 1; Lucas said he might call a special session for next week to vote on Royals stadium matters, but also said he doesn’t expect any council action this week or next. The mayor also specifically noted that he “appreciated my chat” with the workers’ group that has submitted petitions to force a vote, which sure sounds like an attempt at an olive branch — one that Missouri Workers Power member Jaeda Roth told KCUR was nice and all, but it wouldn’t dissuade her group from pursuing a public vote:

“Our decision makers can’t keep trying to rush this process without considering what we the people need, and without all of us having the final say when it comes to the question of how our tax dollars are spent,” Roth said. “It’s time for our city to put poor and working people first and address the cost-of-living crisis crushing all of us, not give our money to a billionaire for a ballpark he could pay for himself.”

It’s too early to call Lucas’s proposed Royals deal stalled, but it sure seems like it’s hitting significant headwinds. We’ll know more once the mayor actually submits something for the council to vote on; don’t wait up.

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Multnomah county chair hires Blazers negotiator who heads pro-arena lobbying group, sees no conflict of interest

access_time personNeil deMause

Uproar continues to grow over Multnomah County hiring a negotiator in the Portland Trail Blazers arena renovation fight who has a curious resume:

Chair Jessica Vega Pederson disclosed Thursday that she had tapped former Trail Blazers executive Chris Oxley to represent the county as it worked with Portland officials on a framework aimed at keeping the NBA franchise in town for at least the next 20 years.

Okay, that’s a little weird, hiring an ex-Blazers exec. But maybe it’s not so bad to hire someone who knows the opposition’s side of things; after all, local governments way too seldom have people with actual sports business expertise on their side, and it’s not like this guy is currently working for —

Oxley also happens to be board president of nonprofit Sport Oregon, which has led a coalition that’s lobbied city and county leaders to back the proposed $600 million arena facelift requested by the team, which would be exclusively bankrolled by taxpayers.

Welp.

County commissioners were predictably gobsmacked when they heard about the hiring of Oxley, with commissioner Meghan Moyer interjecting, “I’m sorry, did I mishear? He is on the board of Sports Oregon that is currently lobbying us on how much we should contribute to this deal? We hired a negotiator that’s on the board of an organization that is lobbying us on this issue? How is that not a wild conflict of interest?” Vega Pederson replied that it’s not a conflict of interest because Oxley isn’t paid for his role as board president of the group that is behind the pro-arena-spending We Are Rip City campaign (which has most recently been paying influencers to stump for the public arena funding plan); that didn’t convince Moyer, but apparently placated the other commission members, who approved the hire by a 4-1 vote. Congratulations on your new job, Chris, and I’m sure you will have no trouble balancing the demands of your new paid gig to get the best deal for taxpayers and your unpaid gig getting the best deal for Blazers owner Tom Dundon.

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Tampa swing vote says he’ll okay Rays stadium if city spends from different pot of tax money

access_time personNeil deMause

I’m on the road today, but did want to briefly note that Tampa councilmember Bill Carlson, the likely swing vote on any Tampa Bay Rays stadium deal, has come out with his plan for a new way of funding the team’s $2 billion stadium district subsidy demand:

Tampa City Councilman Bill Carlson has proposed a new financing structure for the city’s investment in a Tampa Bay Rays stadium project that requires only the property taxes generated by the team’s privately funded multiuse development around the ballpark.

The new arrangement would eliminate the city’s nonbinding agreement to use $80 million from the Community Investment Tax. It also takes out the originally proposed $100 million backed by the Drew Park Community Redevelopment Area’s future property tax growth.

In short, instead of using $100 million from property taxes in the Drew Park CRA district and $80 million from the CIT sales tax surcharge, the city would take $180 million out of future property tax payments on the Rays’ development surrounding the stadium. The amount of taxes collected would be the same, and the check from Tampa to Rays owner Patrick Zalupski would be the same, but it would come from a different city pocket.

Unless there’s more to it than WUSF is reporting, that’s pretty underwhelming, but it appears it’s all it will take to flip Carlson’s vote. The councilmember said that the new tax increment structure would have more public transparency and the money could only be spent on “government-owned property” like “stormwater, roads, sidewalks,” but if Zalupski can’t find $180 million worth of infrastructure to spend on out of a multi-billion-dollar project, he’s not really trying, especially given the increasingly flexible definition of “infrastructure.” Mayor Jane Castor has endorsed the tax switcheroo, and Carlson says Zalupski has been receptive as well; if spending from one pot of tax money instead of another is all it takes to buy his support, Carlson sold out cheap compared to some past Florida swing votes.

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Friday roundup: County commission approves $100m in Blazers arena money, doesn’t actually have $100m

access_time personNeil deMause

One of several remaining shoes dropped in the Portland Trail Blazers arena renovation saga yesterday, as Multnomah County commissioners voted 4-1 to approve team owner Tom Dundon’s term sheet for $100 million in county funding for the project. Or maybe just half a shoe, as three of the five commissioners voted not to use $35 million in county taxes from the sale of the Blazers to Dundon to pay for the county’s costs, and the commission doesn’t have a substitute source of those funds. “How real is this commitment for money, if we can’t agree on a way to fund it?” asked commissioner Meghan Moyer, the only no vote. Next up is the Portland city council, which yesterday debated its own term sheet and failed to come to any agreement; several councilors said the term sheet needs more revenue going to the city and more costs being paid by the team, with councilor Angelita Morillo (last seen during Wednesday’s stadium economics webinar, a recording of which is now available online) arguing: “We are not in a negotiation, we are in a hostage situation. How does adding amendments to this term sheet make it worse?”

And in this week’s non-Portland news:

  • San Antonio Mayor Gina Ortiz Jones wants city residents to get to vote this November on whether to spend $489 million in city funds on a new Spurs arena; councilmember Marina Alderete Gavito argues that a majority of city residents already voted in favor of a Spurs arena funding referendum last year; sports economist Geoff Propheter says that’s “silly” reasoning given that that vote was on county spending on the arena, not the city’s larger share. Voters are split on whether to vote, reports KSAT, or at least whichever voters were at yesterday’s public listening session were split. Maybe there should be a city vote on whether to take a city vote? Somebody should vote on that.
  • The Kansas City Planning Commission unanimously approved zoning changes for a new Royals stadium. The plan must next go to the city council, which also has to find $600 million in city funds to help pay for the public’s $1.35 billion share of a $1.9 billion stadium — details!
  • The owners of the Orlando Dreamers (note: not actually owners, because the Dreamers aren’t an actual team yet) are still asking Orange County to approve using $975 million in tourist tax dollars to build their non-team a new stadium. “Investing $975 million and getting $32 million a year, we lose money in that investment as a return,” replied Michael Poole of the county’s Tourist Development Tax Citizen Advisory Task Force. “Where can you help us make up that loss?” An excellent question, but I have another one: Do the Dreamers really plan to build their lineup around a 52-year-old Johnny Damon?
  • The Cleveland Guardians‘ stadium needs repairs to its elevators and hot water tanks, and its public owner doesn’t have the tax money to spend on them. If only there were someone around who’d already received at least $300 million in public money to help build and improve the stadium and could be asked to help chip in, hmm.
  • FIFA management told World Cup 2026 host cities that they’d get $1 million in payments to spend on soccer infrastructure and other “legacy” projects, but has so far stiffed them. Can you really say you’re surprised?
  • The latest Denver Broncos stadium renderings are all of people out and about enjoying new neighborhoods while the stadium itself is just a shapeless egg — seems like somebody’s got the message that people would rather their tax dollars go to things that they don’t have to buy PSLs to access, even if the lesson they’ve learned is “Shhh, ixnay on the uxury-boxes-lay.” Denver Gazette sports columnist Mark Kiszla is eager to lend a hand, with a long column saying it would be a “grave mistake” not to give Broncos owner Greg Penner what he wants, in which Kiszla calls the stadium’s proposed Burnham Yard site “blighted,” “dusty,” “a dump,” and “dilapidated” — everybody drink, several times!
  • Vancouver is “ready to build [a] new ballpark” for an MLB expansion team, according to a talkSport article that is actually about how the city authorized a local real estate developer to try to propose a way to do so, which isn’t the same thing at all.
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Field of Schemes