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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.
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How Kansas governor claims $4B Chiefs stadium subsidy will cost “no new taxes,” and whether this makes any damn sense

access_time personNeil deMause

Judging from my email, the proposed Kansas City Chiefs stadium deal with the state of Kansas has set off a wave of cognitive dissonance among sports fans and taxpayers: Gov. Laura Kelly says that the state will spend $1.8 billion on a new stadium — really more like $4 billion, counting tax breaks and subsidies for additional development around the stadium — but also claims that the deal “requires no new funds from the current state budget and no new taxes on Kansans.” How can a stadium both cost taxpayers billions of dollars and also be free?

This is a topic that deserves a full analysis with lots of numbers and math, but those are still being compiled. In the meantime, let’s examine more closely that “no new taxes” claim, what kind of logic it relies on, and whether it holds water.

About $3 billion of the Chiefs subsidy will come from STAR (Sales Tax and Revenue) bonds, which are a kind of tax increment financing, or TIF: A governmental body, in this case the state of Kansas, calculates the current total amount of taxes being paid in a designated district and guarantees that this amount will continue to be collected. (For STAR bonds this is only for sales taxes, making it technically a STIF.) Any additional revenue that comes in — the “increment” — gets diverted to pay off the bonds, which in this case would pay off the stadium.

The idea here is to only spend what new value you get from a project: If moving the Chiefs across state lines increases sales tax receipts by X dollars, then only X dollars will go toward paying off the bonds. State taxpayers, the theory goes, are held harmless: The state is collecting the same amount of taxes as it would without the Chiefs, so the stadium pays for itself. Here’s Gov. Kelly, telling the New York Times how she plans to spend $3 billion paying off STAR bonds without costing anyone anything:

Kelly said Kansas will take tax dollars only above and beyond what was previously generated in the area — thanks to the Chiefs’ arrival — to fund the new initiative.

“So the shopper, the diner, they will not be paying any new tax,” Kelly said.

The problems start to arise when it comes to calculating what “thanks to the Chiefs’ arrival” means. TIFs don’t actually try to calculate how much in tax revenue is actually created by the new development — they just assume that any new spending was caused by the project, and kick that amount back to developers as a presumed windfall. This leaves lots of room for subsidizing projects that would happen with or without the subsidy: Chicago famously created so many TIF districts under Mayor Richard Daley two decades ago that it had to raise taxes on the remaining parts of the city to cover for all the holes it was blowing it its tax base.

It also leaves open the possibility that a lot of the “new” taxes being siphoned off would have been collected regardless, thanks to natural economic growth, inflation, etc. University of Colorado Denver economist Geoffrey Propheter, who has clearly spent a lot of his Christmas week explaining tax increments to reporters, describes it this way:

“I will bet my life on it that somewhere within 300 square miles, in that 300 square mile district, someone’s going to buy a Chipotle burrito, someone’s going to buy a lawnmower, someone’s going to buy a T-shirt, all these taxable goods,” Propheter said. “It’s going to happen whether the Chiefs are there or not. The difference is now; those dollars are going to the Chiefs, even though it has nothing to do with the Chiefs.”

This seems obvious if you think about how spending works: There’s almost zero chance that sales taxes in a district covering most of Wyandotte and Johnson counties would stay flat for 30 years if the Chiefs didn’t move in. But we can also perform a simple thought experiment here: How much Chiefs-related spending would there have to be to pay off the STAR bonds by itself? A $3 billion bond at 4.25% interest over 30 years will cost about $175 million a year in tax receipts. Kansas’s state sales tax is 6.5%. (Liquor taxes also go into paying off STAR bonds, but they’re a tiny fraction of the sales tax total.) That means Chiefs-related new spending would need to be $2.7 billion a year — this for a team whose total annual revenue, including TV money that isn’t subject to sales taxes, is currently less than a quarter of that total.

Looked at another way, if you assume that a new 65,000-seat stadium would sell out ten games a year, that means each and every Chiefs fan would need to spend an additional $4,000 per game in Kansas, over and above what they would spend in the state regardless, for the state to break even. Anything less than that, and Kansas taxpayers will have to make up the difference, just as was the case with Chicago’s TIFs.

This is, on some level, a variation on the Casino Night Fallacy, where any tax money touched by a team is designated as “team-related” and therefore fair game for the team owner to demand to keep. Only in this case, it’s money that the team may never have touched in the first place: All those new lawnmower purchases get credited to the Chiefs’ account regardless of whether they have anything to do with a football stadium being built elsewhere in the county. The net fiscal benefit of luring a pro football team across state lines isn’t zero, but after subtracting out spending that would have taken place regardless, spending that is cannibalized from elsewhere in the state, and tax money that will be needed to pay for new costs like police and fire services to a new stadium development (and schools if it includes residences), the amount of actual new money is certain to be way, way less than the state’s $4 billion expense. We can debate how much red ink Kansas taxpayers will end up swimming in if this stadium comes to pass — and I do hope to have more specific numbers soon — but it’s likely to be somewhere between a lot and a whole hell of a lot.

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Friday roundup: Chiefs stadium to cost all Kansans tax money, Royals up next

access_time personNeil deMause

I have to figure hardly anyone is reading this here on Christmas weekend, but for those of you who are, here’s an abbreviated news roundup, much of it about the proposed Kansas City Chiefs stadium deal, because almost everything is this week:

  • The STAR bonds that Kansas plans to use to finance $1.8 billion worth of a Chiefs stadium (and close to $1 billion in other development by the team) confuse a lot of people, and headlines like the Kansas City Star’s “Much of Wyandotte, Johnson counties will pay for Chiefs stadium with sales tax” aren’t helping. No, people inside the “stadium district,” which could end up covering much of those two counties, won’t be paying extra taxes for the stadium; rather, an amount equal to all future sales and liquor tax receipts above what the district is getting now will be removed from the state’s general fund and used to pay Clark Hunt’s stadium bills. (State officials seem to believe that all this will be free money because the only reason tax revenues will rise in the area will be the eight home games a year the Chiefs will play, which is insane on several levels — more on that after the holiday.) That means the cost will fall just as much on Kansans in Topeka and Wichita and points west as it will on those in and around Kansas City, since the state will have to find a way to pay its future bills without a couple hundred million dollars a year in tax revenues it would have otherwise gotten. So really it’s “Everyone anywhere in Kansas will pay for Chiefs stadium,” hth.
  • Elected officials in Missouri, meanwhile, have learned their lesson from the huge giveaway across the border: Time to try to throw billions of dollars at the Royals owners or risk being left without any billionaires to give tax money to. KC, MO Mayor Quinton Lucas noted on Tuesday that voters look to be opposed to this sort of thing, so “we’ve talked about a pathway that allows us to do it through public body approval rather than perhaps having to go to the ballot box,” take that, voters who insist on having opinions the mayor doesn’t like!
  • Construction of the Athletics‘ planned Las Vegas stadium is ongoing — for now, at least — but the casino complex that’s supposed to surround it may not happen for a while if ever: Leaseholder Bally’s has yet to announce a financing plan for its part of the project, and may yet seek another investor to take over the development. That could be a problem for A’s owner John Fisher, who was counting on Bally’s building a parking lot and other infrastructure that the ballpark would use, meaning he’d need to find a way to pay for it on his own, even while figuring out how to pay for the bulk of his $2 billion stadium on his own.
  • Greater Greater Washington has a good long rundown on how this year’s Commanders stadium deal became so bad that it still outpaces even the extremely bad Chiefs stadium deal, dipping briefly into a discussion of Swiss semioticians before returning to its main point: “The moderate flank of our government behaved as recklessly and irresponsibly with the District’s finances as their progressive colleagues are so often accused of, but, because it’s sports, masquerading as economic development, they won’t be attacked by business advocates, the press, or public opinion for putting their pet causes first.” Well, possibly by public opinion, but mayors know how to get around that.
  • Finally, I did a bunch of interviews this week about the Chiefs stadium deal, and you can find one of them here — another from December 24 should be showing up here, but it looks like it’s been delayed by the Christmas rush, check back later.
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Chiefs stadium subsidy hits $4.1B, could siphon off taxes from 293-square-mile swath of Kansas

access_time personNeil deMause

It’s been a whirlwind couple of days since Monday’s announcement that the state of Kansas was offering Kansas City Chiefs owner Clark Hunt billions of dollars in cash and tax breaks to move across the border from Missouri, and more details are still only now becoming clear. Catching up on the latest:

  • After I guesstimated that the total public cost of the deal for Kansas taxpayers would be $3 billion or so — up to $2.775 billion in state-backed STAR bonds to build an up-to-$4.4 billion stadium-and-other-development complex, plus an unknown amount of property tax breaks — sports economist Geoffrey Propheter jumped in with some more fine-grained math:
    The number we want to focus on is the “PV” (for present value) column; the “nominal” column is for payments added up over years, which would be like figuring out the cost of your house by adding up all your mortgage payments over time. Still, Propheter has the total cost to state taxpayers at more than $4.1 billion, including:

    • More than $3.1 billion in payments on the STAR bonds. As Propheter notes above, “cap is not what is owed to bondholders but what the state commits to project”; in other words, while the amount of money going to the Chiefs is capped at $2.775 billion, the state still needs to provide for bondholder profits, bank fees, and the like, so Kansas ends up spending more than Hunt gets.
    • $497 million in property tax breaks thanks to the state taking possession of the land, a number that I’m willing to take as gospel given that Propheter literally wrote the book on this stuff.
    • $444 million in future maintenance on the stadium. In my calculations yesterday, I dismissed this as being covered by the Chiefs’ $7 million a year rent payments, but those won’t come close to paying off $444 million in present value. Plus, as Propheter noted to me in an email, rent payments could legitimately be seen as, you know, rent payments — if the state of Kansas is choosing to spend those on stadium upkeep, that’s its choice, but it doesn’t make it less of a subsidy.
  • Also yesterday, I noted that paying off almost $3 billion in bonds solely with state sales and liquor taxes from in and around a Chiefs stadium could be a tough lift, and quipped that “if all else fails, they could just expand the stadium tax district until it stretches all the way to Topeka.” I should really learn not to make jokes, because it turns out there’s a draft stadium district in the stadium agreement, and it looks like this:
    That’s a bit bigger than just the stadium and its immediate surroundings — it would cover 293 square miles, cannibalizing sales and liquor taxes from an enormous chunk of the northeast corner of the state. This handily puts the lie to Gov. Laura Kelly’s claim that the stadium “requires no new funds from the current state budget,” since sales and liquor taxes from those 293 square miles currently go to the state budget, and replacing them is 100% going to require new funds. And that mammoth stadium district is still just a preliminary estimate: Because STAR bonds can only by law be paid off with taxes from within the district, Kansas will eventually have to draw a big enough district to make bond buyers confident that the proceeds can pay off the state’s stadium debt — meaning Topekans might still wait to hold on to their wallets, just in case.
  • I also noted yesterday that the current public price tag estimate was made “without even knowing if Hunt plans on seeking any city or county money,” and indeed, the Chiefs owner appears to have designs on that as well: The Kansas Commerce Department website declares that county and city officials “will now have the opportunity to approve an ordinance to pledge local incremental general sales tax within the STAR bond project area to the project.” Lucky them! It at least looks like any city and county sales taxes would just go to help pay off the $3.1 billion in STAR bond costs already planned, in which case it wouldn’t raise the total public cost any, just shift it between the state and local governmental bodies, but I’m kind of afraid to assume anything now, for fear of conjuring my worst fears into reality.

All this has led one sports business writer to call the proposed Chiefs agreement “the most lopsided stadium deal in NFL history,” thanks to the public taking on the vast majority of the costs while team owners keep 100% of the revenues. That may be pushing it — the $6.6 billion Washington Commanders deal is still the benchmark for governmental malpractice here — but however you slice it, the Chiefs deal is real lopsided. Given all the glee from Kansas state officials at having pulled this off, it’s probably too much to hope that cooler heads will prevail, but after seeing Tampa Bay Rays and Anaheim Angels and Philadelphia 76ers deals collapse after they were seemingly set in stone, anything can still happen.

Meanwhile, let’s give the closing words to Propheter, who from the looks of my RSS feed has spent the last 24 hours doing nothing but talking to reporters:

“I just can’t believe, in my lifetime, we went from a couple $100 million stadiums to billions and no one caring,” he said. “When I say ‘no one caring,’ that’s hyperbole — lots of people care — but lawmakers in no way, shape or form pausing to think: ‘We can’t find something else to do with billions of dollars? It has to be for this?'”
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Judge puts 14-day hold on Ohio gifting Browns owner $600m from unclaimed private funds

access_time personNeil deMause

As we near the end of a year that seems to have been nonstop sports team owners getting everything they wanted and then some, an Ohio judge has dropped some coal in Cleveland Browns owner Jimmy Haslam’s stocking: Franklin County Commons Plea Judge Bill Sperlazza issued a 14-day temporary restraining order against the state of Ohio using $600 million in unclaimed private funds toward a Browns stadium, calling it “robbing Peter to pay Paul.” Sperlazza ruled that there was a likelihood that the plaintiff in the case — a client named John Reid who says the commonness of the name would make it hard for him to claim an old paycheck before the money was transferred to the Browns on January 1 — could suffer “irreparable harm” if the state was allowed to raid the fund.

The state’s response was, in essence, that it’s all cool, because it has plenty of money to cover kiting checks: Its lawyers said that because there’s $4.8 billion in the unclaimed funds account, and people owed money have until 2036 to file claims, raiding it for the Browns is fine because it’s unlikely to run dry. And if it does, said attorney Aneca Lasley, “If we need to make changes, we’ll make changes” — presumably meaning the state legislature would have to allocate more money to fill in the hole created by the Browns spending, which is honestly stretching the meaning of “we” when you’re an unelected state lawyer.

Ultimately, the unclaimed-funds gambit is mostly a bookkeeping trick: Ohio lawmakers are choosing this particular pocket to take the $600 million from, but they’re still on the hook for paying private creditors back if they file claims. It’s possible it’s an illegal bookkeeping trick, though, in which case the state would have to find another pile of money to throw at Haslam to let him move his team from one part of Ohio to another. (There’s also the issue of whether helping billionaires buy new stadiums is the best use of a suddenly discovered $4.8 billion slush fund, but that’s more an ethical question than a legal one.) We’ll find out more in another 14 days, when there will be another hearing in the case, likely before a different judge, as Sperlazza was just filling in for another judge who was on holiday break. Having to wait an extra week for your $600 million check may not seem like the greatest hardship for a sports team owner, but the way 2025 is going, it qualifies as an unprecedented setback.

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Chiefs sign nonbinding deal to move to Kansas that could cost taxpayers $3B+

access_time personNeil deMause

The Kansas City Chiefs are moving to Kansas! The Kansas City Chiefs are … maybe moving to Kansas? The Kansas City Chiefs have said they’re moving to Kansas, somewhere, definitely, once they work out the details of how to cash an enormous check from state taxpayers.

Here’s what we know so far:

  • The Kansas state legislature’s Legislative Coordinating Council met yesterday and unanimously approved using state sales and liquor taxes in and around a stadium district to pay off bonds covering 60% of the cost of a Chiefs stadium, pretty much just like they said they would a year and a half ago. (The original authorizing legislation would have covered up to 70% of the stadium cost.)
  • Kansas Gov. Laura Kelly announced: “This agreement to bring the Chiefs to Kansas takes our state to the next level. With this new stadium, we’re creating thousands of jobs, bringing in tourists from around the world, attracting young people, and most importantly, we’re continuing to make Kansas the best place in America to raise a family.” The stadium, she said, “requires no new funds from the current state budget and no new taxes on Kansans.”
  • Chiefs owner Clark Hunt put up a statement on the team website saying “we have entered into an agreement with the State of Kansas to host Chiefs football beginning with the 2031 NFL season” and “we look forward to designing and building a state-of-the-art domed stadium and mixed-use district in Wyandotte County,” though “we have a lot more work to do to make this vision a reality.”

What’s the more work to do? KMBC spells out that yesterday’s agreement (full text here) is a “nonbinding term sheet” — a draft proposal, basically — that would tremendously up the ante for Kansas taxpayers:

  • With a Chiefs stadium now coming it at a staggering $3 billion, state taxpayers’ 60% share could be as much as $1.8 billion. (It’s unclear if there would be enough sales and liquor taxes in the stadium district to cover that much state spending, but once the bonds are sold, it would be the state’s problem to figure out how to cover the bills — if all else fails, they could just expand the stadium tax district until it stretches all the way to Topeka.) Then a second phase of development around the stadium could cost between $1 billion and $1.4 billion, with the public on the hook for as much as another $975 million — bringing the potential total taxpayer cost to $2.775 billion.
  • Good news: The Chiefs would pay rent! Bad news: It would only be $7 million a year, which even if it scaled up for inflation would only come to about $200 million in value over a 30-year lease, which is a whole lot less than $2.775 billion. Worse news: Much of the rent money would be set aside to help pay for stadium maintenance and upgrades, so that wouldn’t be revenue that could be used to offset the state’s stadium costs regardless.
  • The state or a quasi-governmental authority would own the stadium, so presumably the Chiefs would get out of paying property taxes.
  • The Chiefs would have to repay the public’s costs if they tried to leave in the next 15 years, but after that the penalties would gradually decline until they were at zero in year 30.
  • According to the draft agreement, the Chiefs would retain all naming rights revenue from the building, even though it would be owned by the state and public money would pay for 60% of the construction cost.
  • The agreement is only an exclusive negotiating term that lasts until next October 31, after which Hunt can resume negotiating with Missouri if he wants. The Chiefs can also back out of the deal early if they don’t have a site acquired by next May 15.

I’m still trying to finalize the numbers for the value of that tax break [UPDATE: early estimates by Geoff Propheter are that it would be worth about $500 million in present value], but clearly we’re looking at a deal that would cost Kansas more than $3 billion, which would be the second most costly stadium project for taxpayers in history, behind only the off-the-charts insane Washington Commanders deal. And that’s without even knowing if Hunt plans on seeking any city or county money, or if the eventual lease would include a state-of-the-art clause that could allow the team owners to demand future upgrades. (One thing we do know: State lawmakers will get one luxury suite, but will have to pay for their own food.)

Even as a deal written so far in pencil, this is a ginormous win for Hunt, and for his strategy of playing off Kansas and Missouri against each other to shake loose the best deal. (That sound you just heard is of Royals owner John Sherman drooling audibly.) It’s also a bullet dodged by Missouri, whose residents will lose out on at most $29 million a year in Chiefs-related taxes (if you believe the Chiefs’ own consulting reports) while Kansas has to pay around seven times that in tax subsidies, and will only have to drive a bit farther to go to Chiefs games. In fact, Missouri officials should be issuing triumphant “better them than us” statements right about—

[Missouri State Sen. Nick] Schroer said he will be filing legislation this week “to get rid of the asinine classification of the Chiefs as Missouri’s official NFL team as it was passed just a few sessions ago. Similarly I will be getting rid of the asinine ‘handshake’ border-war resolution which says we will play nice with our neighbors next door.”

Not that the Kansas-Missouri truce on poaching each other’s businesses was ever really respected, but getting back at your neighboring state by threatening to bribe its companies to move to your state is exactly why border war compacts are needed. As State Sen. Patty Lewis remarked yesterday, “There are no winners in a border war, just losses on both sides. Companies moving back and forth across the state line to reap massive tax breaks while creating no real net job growth is bad for families, bad for the region and bad for both states.” It’s very, very good for company owners, though — $3 billion good, in this case — so expect billionaires to keep on trying to play states and cities off against each other so long as it keeps on working.

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Friday roundup: Chiefs to ramp up Kansas saber-rattling, Bears’ Indiana move threat gets cool reception in Illinois

access_time personNeil deMause

Are people still flipping out about Chicago Bears management acknowledging that Indiana is next door to Illinois and they could try to build a stadium there if they wanted? Yep. Does that mostly come down to “fans in Indiana would be happy with a shorter drive and those in Chicago would be unhappy with a longer one”? Yep.

We’ll get back to the Bears in a sec, but first the latest in a more advanced cross-state NFL team location battle:

  • A Kansas legislator says the state’s Legislative Coordinating Council, a joint committee of leaders of the state house and senate, is set to meet on Monday to discuss a proposed agreement between the state and the Chiefs on a new stadium, though the state commerce department cautions that “no final agreement has been reached.” The Missouri Independent says the committee could start the process of approving state-backed STAR bonds at its Monday meeting, though the state already approved those in concept last year, and it doesn’t seem possible to actually sell specific bonds without a specific agreement in place, so not clear on what could actually get decided on Monday. Mostly, this seems to be a way for the legislature to declare that Chiefs owner Clark Hunt has met the required end-of-2025 deadline to be eligible for the bonds — as has Royals owner John Sherman, apparently, despite no concrete stadium plans at all, given that committee chair Ty Masterson’s office said he believes the Royals have met the deadline by being “fully committed” to Kansas. Some sort of announcement of a Chiefs deal on Monday seems likely, but it’s also likely that a lot of details will still need to be worked out, so let’s hold off on the “Chiefs are moving to Kansas” headlines for the — never mind, too late.
  • Back in Illinois, state officials are taking talk of a Bears stadium in Indiana in stride, with State Rep. Kam Buckner (district includes Soldier Field, is opposed to stadium subsidies) calling the team’s move threat “very predictable” and saying “in negotiations, what you do is you create leverage by saying you have more options,” while State Rep. Mary Beth Canty (has sponsored a bill to allow for stadium subsidies in Arlington Heights) asked that the Bears “engage with the General Assembly in good faith, without threats.” State Sen. Bill Cunningham, meanwhile, called giving the Bears a property tax break (but not necessarily all the infrastructure money team execs are asking for) “a good starting point” because it would only be local, not state, tax money, but said “we have more important things to tackle first.” It certainly sounds like the Bears owners can get something out of Illinois, even it not everything they’re demanding; dropping an Indiana move threat may help them get on the legislative agenda, which may be all they want, but there’s still a whole lot of haggling to go.
  • Cleveland’s Gateway sports authority is facing an estimated $150 million in imminent repair costs for the Guardians stadium and Cavaliers arena, plus another $261 million over the next decade, and has no money on hand to pay for these costs and no plans for how to raise it. Not great! The city and county cover capital repairs while the teams cover maintenance, so there’s still the possibility of haggling over which is which. The government taking on all capital repairs during the teams’ 2004 lease renegotiations still seems like a terrible idea, and Gateway just defaulting on this and daring the teams to break their leases (which expire in 2034 and 2036 anyway) early seems like a reasonable consideration compared to throwing $400 million in good money after bad, but nobody’s talking about that just yet.
  • The Dodger Stadium gondola project refuses to die, year after year after year. “NBC Los Angeles reports that during the meeting, project supporters waved signs reading ‘Build the gondola’ while opponents held signs saying ‘Stop the gondola’,” can’t we come to some sort of compromise?
  • Inter Miami‘s new stadium is finally set to open next spring, but the promised accompanying public park space won’t be ready yet, seen that one before.
  • And then there’s Germany, where when a pro women’s soccer team needs a bigger stadium, the team owners buy the one that a recently relegated men’s team is no longer using plays in. It was built way back in 1992, can you imagine how outdated the Getränkehalters must be?
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Stadium questions the media shouldn’t even bother asking

access_time personNeil deMause

If you’ve been reading this site for any length of time, you’ll know that I’m a big fan of Betteridge’s Law of Headlines, which states, to save you from having to click through, that “Any headline that ends in a question mark can be answered by the word no.” It’s not 100% accurate — sometimes the answer is yes, and sometimes even definitely maybe. But most of the time it’s a sign that a reporter spent a bunch of time on investigating a question, realized the answer was boringly obvious, and their editors decided to post the query as the headline instead, hoping to at least get clickthrus from readers curious to find out the details. (Which is pretty much how most headlines are designed to work these days anyway.)

Which brings us to these two recent, I’m going to call them “news stories,” though one is an item accompanying an All Things Considered radio item and the other is a repost of a Substack post:

Downtown Minneapolis is struggling. Would a new Wolves and Lynx arena help?

Pretty easy to guess no here, given that the Timberwolves and Lynx already play in a downtown Minneapolis arena, even if it’s one where, as one fan told Minnesota Public Radio, has “restrooms [that] look like they’ve been there for 20 years.” (Presumably whenever her own restrooms get too old, she moves to a new house?) And in fact, the author of the piece knows the answer, because there’s Kennesaw State University economist J.C. Bradbury down in the later grafs saying the answer is no, and it “isn’t some rogue opinion I have. It’s something that’s shared by the entire disciplin. If you ask doctors, ‘Is smoking bad?’ They’ll universally say yes. If you ask economists, ‘Are stadiums bad public investments?’ They’ll universally say yes.”

The article then pivots to talking about how much expensive arenas are to build these days (true), and how the “aging Target Center is mostly upper deck seats” which makes tickets more affordable (possibly slightly true, but probably not so much). It’s not clear why any of this story exists, though the accompanying radio piece does feature T-Wolves co-owner Alex Rodriguez (yes, that one) describing a new arena as “an anchor to the community,” so presumably this was pitched as an investigation of that claim — though if so, sticking in one quote from an economist halfway down saying this question has been asked and answered and then running a headline making it seem like an open question … that’s a choice, certainly.

Then there’s whatever you call this, which ran last week in the Rochester Beacon as a reprint of local reporter Gary Craig’s Substack column:

Is the new Bills stadium really such a bad deal for taxpayers?

Going to go with yes here, because (waves hands generally at everything that has been written about it on this website and elsewhere). But sure, let’s hear how spending $750 million in state money and $250 million in county money to move the Buffalo Bills across the street could be a good deal for taxpayers:

Tucked away in New York’s 2021 analysis of costs for a new Buffalo Bills stadium is this tidbit: “Personal income tax, primarily related to Bills team payroll, is the largest single fiscal revenue source, generating approximately $19.5 million per year for the State of New York.”

That number was likely low then, and with the increasing salary cap in the NFL, is certainly low now. Experts with whom I’ve spoken estimate the annual income tax revenue likely will be upwards of $30 million from the Bills and visiting teams…

These income taxes are numbers not often talked about in the debate over public financial support for a new stadium.

Uhhh, is this for Substack’s new posting-while-smoking-crack vertical? The benefit of getting income taxes from player payrolls is talked about all the damn time by team owners and pro-stadium-subsidy politicians — in fact, here’s then-Wisconsin Gov. Scott Walker doing so about a new Milwaukee Bucks arena 10 years ago. The problem is threefold:

  1. Math: Even $30 million a year in new income tax revenue isn’t enough to cover $1 billion in public spending — it’d be worth a little less than half of that in present value. So even by Craig’s own logic, the answer to his question is yes, it’s a bad deal for taxpayers.
  2. New vs. existing revenue: The Bills already play in Buffalo, so this is income tax money that the state and county will be getting regardless of what stadium they play in. It would only become a windfall if you assume the Bills would have moved without a $1 billion stadium subsidy, which LOL.
  3. The but-for: Even if the Bills did move, the money Bills fans currently spend on tickets would likely be spent on something else within Erie County and certainly New York state, and would go to pay other salaries that would generate income taxes. It wouldn’t be a 1:1 replacement, no — a portion of the Bills salaries are paid by TV rights money, and that would indeed depart — but some of the tax revenue would remain, making the $1 billion taxpayer expense look even worse.

“I’m still trying to do a deeper dive on the stadium financing,” concludes Craig, and maybe he should have finished his research before posting this, or at least before letting the Rochester Beacon reprint his off-the-cuff thoughts. Anyway, hope this helps, not sure honestly why I’m still trying to critique a journalism world that is invariably headed slopwards, I’ll have to do a deeper dive on that impulse someday.

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Columbus council approves first $100m in public money for Blue Jackets, $150m still to go

access_time personNeil deMause

The Columbus city council on Monday unanimously approved raising ticket taxes at the Blue Jackets‘ arena from 5% to 7%, while also increasing the share of the city’s casino tax that goes towards arena upgrades from 32% to 50%. As discussed last week, this is the first installment of a proposed $250 million in public subsidies for the once-privately-owned-before-a-govenment-bailout arena, with the rest to come from the state of Ohio’s unclaimed private accounts slush fund plus $50 million in ¯\_(ツ)_/¯.

The ticket tax hike, as we’ve also discussed here before, is arguably the most defensible use of tax money for a private sports venue, because most of it ultimately comes out of the hide of whoever’s selling the tickets, which is largely here the Blue Jackets. (The short explanation: Teams are going to charge whatever the market will bear for tickets, and fans make that decision regardless of how much of the price is for a ticket tax, so team owners end up eating a significant chunk of the tax.) Diverting casino revenues, on the other hand, is just a straight-up handout: This is money that currently goes into the city’s operating fund, to the tune of about $2.34 million a year for the 18% slice that’s being given up. Over the course of a 30-year bond, which is how long the diversion is expected to last, that comes to about $35 million worth of future payments that will be going into the Blue Jackets owners’ pocket instead of used on public services.

Columbus Convention Authority executive director Ken Paul praised the council vote, saying “this doesn’t pit this decision against other funding priorities or other needs in our community” (it absolutely does) and “ultimately, those who benefit the most from Nationwide Arena will be paying for these improvements” (Casino Night Fallacy, everybody drink!). Councilmember Melissa Green was less enthused, noting that homeless services are being cut in a tight budget year and this is maybe not the best time to be instead siphoning off tax money for a hockey arena. (She voted for it anyway, but enthused she was not.)

The bigger subsidy, meanwhile, is still to come from that additional $150 million that the Blue Jackets’ billionaire owner John McConnell is seeking, most of it from the state’s unclaimed private funds pool that the Cleveland Browns owners have already tapped. With Ohioans racing to file claims for their uncashed checks and the like at quadruple the previous rate now that the Browns deal tipped them off that the state was sitting on their money, will there still be enough money to fund all the sports venues that teams want? Will the state of Ohio bother to check before signing the money over? Will the lawsuits against the state using this money prevail, even after a judge declined to issue an initial injunction? Lots to still be determined, but McConnell has his first taxpayer check, anyway, step by step the longest march.

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Denver council puts off soccer stadium vote till next Monday amid public funding questions

access_time personNeil deMause

The Denver city council met last night to cast a vote on moving forward with what could be $175 million in cash and tax breaks for a stadium for the Denver Summit NWSL team … and instead punted:

The council delayed voting on rezoning the Santa Fe Yards property near Interstate 25 and Broadway, but still held a public hearing. Council is now scheduled to vote next Monday on both the rezoning and whether to allocate $50 million in city funds set aside to purchase land for the project.

Councilmembers had previously said they wouldn’t move forward without a community benefits agreement with the local neighborhood, but that was resolved yesterday when the team owners agreed to chip in $300,000 a year toward things like scholarships and equipment donations. Rather, the vote was delayed “at the request of the city’s ‘executive branch’ to allow for the vote on the soccer stadium rezoning to coincide with the remaining pieces of legislation covering public funding and other steps necessary to keep the stadium in Denver,” reports the Denver Gazette — which suggests that the mayor’s office may be trying to get all its ducks in a row before holding a vote of a council that has raised questions about what exactly the city would be spending money on and why.

Stadiums built specifically for women’s pro teams are still rare, which has given rise to proponents saying that using public money on an NWSL stadium would only be fair. Team president Jen Millet insisted: “When you’re a tenant in a stadium, it’s not your true hub. Women deserve that. Just like men.” Meanwhile, the alt-weekly Denver Westword even ran an op-ed last week by a local middle schooler (with “more than ten years” of soccer experience? she must’ve started young) saying, “By debating whether or not to invest city funding to support building infrastructure around the new stadium – a discussion that rarely (if ever) happens with stadiums for men’s sports [ed. note: Ahem] – Denver City Council is sending a message to girls that we don’t matter as much as the boys.”

Public comment at last night’s council hearing was split, as it always is. This is presumably going to come down to haggling with individual councilmembers, which could go any direction — we’ll all regroup next Monday to see how things went, and whether the team owners can rely on appeals to gender equity, or if they’ll need to again threaten to move to the suburbs or somewhere, just see if they won’t.

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