Friday roundup: Leaked analysis says Royals stadium could cost taxpayers $6B wut

Gonna be a bit of a weird roundup today, gang, because the Kansas City Star dropped this bombshell last night:

A new Royals ballpark in downtown Kansas City would cost Jackson County taxpayers far more than its $1 billion sticker price.

It’ll be more like $4.4 billion to $6.4 billion, if the stadium sales tax and other payments required by the current lease agreement extended 40 years beyond its expiration date in 2031, as the Royals have suggested.

6.4 what now? Is this one of those stress dreams where I’m going to laugh about how I could ever have found it believable once I finally wake up?

If you don’t feel like reading the whole Star article, or just can’t see it through all the pop-up ads, here are some of the main points:

  • The 0.375% sales tax surcharge that funded the most recent Royals and Chiefs renovations currently generates about $53.4 million a year. [CORRECTION: The $53.4 million includes the parks tax and other payments listed below. I’ve adjusted the rest of the calculations that follow — the overall math doesn’t change much.] If that is extended by 40 years like Royals owner John Sherman wants, and sales tax receipts rise as expected, that would generate between $1.3 billion and $2 billion for the Royals alone according to a financial analysis that County Administrator Troy Schulte conducted last week and which someone “associated with the Legislature” leaked to the Star.
  • The Royals would get another $170 million, again over 40 years, from its half of a county parks tax and other payments from the city and state.
  • “What shocked Schulte,” writes the Star, was that Jackson County would face a projected $2.9 billion in increased insurance payments over the next 40 years if a new Royals stadium were built. The Royals’ current stadium comes with an annual insurance bill of $800,000; for a new stadium that would start at an estimated $4.5 million, then rise by a staggering 10% a year.

Some immediate caveats: None of the numbers above are in present value, meaning spending in the year 2070 is counted the same as spending now, which is not really kosher at all. And that 10% a year insurance hike sounds crazy on the face of it, plus also wouldn’t that imply that insurance on the Royals’ current stadium would rise as well, making the incremental cost less?

Still, even if it’s not $6.4 billion, we’re talking about a shit-ton of taxpayer money here. Using my best back-of-the-envelope scribbling and this present value calculator, it looks like the future tax surcharge diversion would be worth something in the range of $500-700 million in present value. The insurance bill, depending on your assumptions, could be up to $500 million. So it’s very likely well over $1 billion worth of taxpayer costs here, and that’s without any public infrastructure spending or property tax breaks or anything else that might eventually get rolled in as well.

If nothing else, this certainly explains why County Administrator Frank White sees $300 million paid out over 20 years as a preferable counteroffer: It very much is. It’s still maybe not a great counteroffer, since that’s almost $200 million in present value, but it beats $1-billion-plus all to hell.

So, yeah, that happened. And other things happened this week too, so let’s get to them as well:

  • Tampa Bay Rays execs presented their $600 million-ish stadium subsidy demand to the St. Petersburg city council yesterday, with city consultant David Abrams beaming that “You only have to look to the Battery in Atlanta to see how there was nothing there, the amount of economic impact that has happened in Cobb County for the Atlanta Braves has been nothing short of astounding.” Sorry, that is incorrect, but we have some lovely parting gifts. Rays exec Brian Auld also told the council that it has to approve a stadium deal by next spring in order for the stadium to be open in 2028 because “if we miss that opening date, this entire endeavor becomes impossible,” an assertion he backed up with I’m sorry, my time has expired.
  • Meanwhile, the Tampa Bay Times editorial board wrote an editorial this week that praised the city of St. Petersburg for its “transparency” by getting the Rays to share economic projections for their new stadium project with the city council by promising not to let the public see them, which is a new twist on the meaning of that word. “This marks a good start in what could be a beneficial new era for area residents and the Rays alike,” wrote the board; it will be left as an exercise for readers to determine what innovative definition the Times is using for “beneficial.”
  • The African-American Sports and Entertainment Group, which was announced with great fanfare a couple of years back as the city of Oakland’s choice to redevelop the Oakland Coliseum site, isn’t doing too well, with two of its eight owners suing the others for something about unfairly diluting their shares by creating multiple LLCs in Delaware. The group has already seen its plans for a WNBA team in Oakland get derailed by the league granting an expansion franchise to San Francisco instead, and getting a new NFL team for Oakland has always seemed kind of pipe-dreamy, so yeah, definitely not doing too well.
  • It’s been a couple of years since we’ve heard about the Minnesota Timberwolves owners — yes, A-Rod and that other guy — and their desire for a new arena to replace their renovated-in-2017 old one, but somebody asked Minnesota city council candidates what they think of paying for one, and they’re not crazy about the idea. “Subsidizing billionaires’ hobby investments is not a responsible use of taxpayer dollars — especially when there is no evidence that these tax outlays provide a return on investment,” said councilmember Elliott Payne.
  • Add Country Club Hills to the list of Chicago suburbs interested in being home to a new Bears stadium if the team’s owners want to pay to build one themselves, which they don’t.
  • The Arizona Diamondbacks are in the World Series, which means it’s time for more articles about why their owners think they need a new stadium. Also pitcher Merrill Kelly cast aspersions on Chase Field’s air-conditioning, saying, “I’m definitely sweating more here than I am other places”; there might just be other reasons for that, Merrill.
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Friday roundup: Billionaires all over get cash for their stadiums and arenas and car plants and movie shoots (I got a rock)

Happy Friday! Ready for a heaping helping of news about America’s elected officials and business leaders working together to ensure smart investments of public dollars that will build a better tomorrow? If so, I am sorry to inform you that you have accidentally clicked on the wrong website, but if you stick around you may be rewarded with some grim laughs, or at least some links to old comic strips.

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