Susan Pendergrass (00:01.346)
Great. Well, we're joined in the Show Me Institute podcast once again by Senior Fellow, Show Me Institute Senior Fellow, Patrick Tuohey. Thanks for joining us. We're going to talk today a little bit about the fact that the legislative session just ended, but the governor is calling the legislators back just as summer, their summers are getting cranked up. They have to come back next week, June 2nd for a special session. And these are typically very narrow things that I guess they couldn't

Patrick Tuohey (00:21.975)
Yeah.

Susan Pendergrass (00:31.138)
figure out during the legislative session. But what is the special session that's gonna start happening next week and what are they there to talk about?

Patrick Tuohey (00:37.4)
Well, they're there to talk about a number of things. But what we're here to talk about today is the aspect of the special session that will cover subsidies for stadiums for the chiefs and royals here in Kansas City. And part of the reason why we have a special session is because nothing was agreed to in the regular session that just ended, as you said. governor introduced, of course, governors don't introduce legislation, but the governor introduced legislation that was passed in the House.

with three days left before the end of the session, there were no hearings in the House. It passed. The Senate balked and nothing was agreed to. And I am told that one of the reasons why supporters of these subsidies didn't want to introduce it earlier in the regular session is because they didn't want legislative hearings. They didn't want members to have the time to talk to stakeholders, to talk to policy experts, to talk to economists about

exactly what they were doing. And of course, now that they've started a special session on this, they will go ahead and do exactly that. expect whatever committees are assigned the stadium subsidies legislation will have hearings. They will hear from supporters and opponents and try to grapple with why is this a good use of taxpayer funds?

Susan Pendergrass (01:59.374)
So how do the subsidies work? We're talking about the Kansas City Royals and the Kansas City Chiefs, for where they play.

Patrick Tuohey (02:02.54)
Yeah, yeah, that's right. So, so what the what the bill right now suggests or seem to suggest for waiting to see it introduced is that Missouri will take the $50 million that it gets every year as a result of the teams playing in Missouri and give that back to the teams to offset the costs of either renovating the stadium in the chief's case or building a new ballpark in the Royals case. So

Proponents are saying this is really a zero sum because either we vote to give that revenue back to the teams and are left at zero or the teams lose and or forgive me or the teams leave and that revenue is lost to us. I think that's a false choice but that's the argument that supporters are making that really this is just letting them keep the tax revenue that they generate.

Susan Pendergrass (02:59.598)
So if I hear you, we need to pay them $50 million or they will for sure leave. Do you think they're gonna leave?

Patrick Tuohey (03:06.936)
Well, that's that's kind of the argument that's being made by proponents. No, they they kind of have threatened to leave. They talk about maybe going to other markets or maybe just moving across state line into Kansas, which would be in the same market. But that's really tricky because the teams don't want to be accused of saying, you know, give us this money or we're going to leave because that was the charge. Yeah, that was the charge that was leveled against them.

Susan Pendergrass (03:32.142)
blackmail.

Patrick Tuohey (03:35.767)
last year when they lost a vote in Jackson County. But that is kind of a lot of the motivation of supporters. They are nervous that the teams are going to leave. I don't think that's credible. I don't think that's likely at all. I think what's happening is that Missouri is really negotiating against itself in a race to the bottom to compete with the bad idea subsidies that Kansas offered next door.

Susan Pendergrass (04:04.248)
So the Chiefs and the Royals, don't make any money? they have enough money to build themselves stadiums or are they really on the dole at this point?

Patrick Tuohey (04:09.443)
Yes.

Patrick Tuohey (04:14.278)
Well, both. The Chiefs are valued at about four and a half billion dollars. The Royals at about one point three billion dollars. They are in a fantastically wealthy industry. Both owners are billionaires. The Hunt family, which owns the Chiefs, forgive me, is I think maybe the 12th or 13th wealthiest family in the United States. But

For years, cities and states have demonstrated that despite the wealth of their owners, that taxpayers are willing to subsidize such developments. I mean, they can't really be blamed for asking. I would ask if I owned these teams because you're pushing on an open door. The answer always seems to be yes. But if you look at it from a taxpayer point of view, no, these

These teams are more than capable of, of, building their own stadium, probably building better stadiums for themselves than if the public were investing in it. You know, you look at staying cranky in Los Angeles building so fly stadium as an example. So, no, they don't need it, but yes, this is what team owners do. They beg and they threaten.

Susan Pendergrass (05:35.086)
So it sounds like the governor is behind it. He wants this to happen?

Patrick Tuohey (05:39.579)
Yeah, the governor has said that he has met with both team owners, that he is afraid that they might leave. And so he wants the state to offer something that is similar to what the state of Kansas offered next door. What's important to understand is that I don't believe Missouri state subsidies, if these pass, or Kansas state subsidies are sufficient enough for what the teams want to do.

Susan Pendergrass (06:09.578)
Alright, $15 million? Yeah.

Patrick Tuohey (06:09.73)
I think these deals will ultimately fall on what Jackson County, Missouri, and maybe what Kansas City can offer. But again, this is just one more package of subsidies for the teams.

Susan Pendergrass (06:25.818)
But Jackson County voted down a sales tax increase for the Chiefs, is that right?

Patrick Tuohey (06:30.054)
That's right. They voted down giving a three eighths cent sales tax to the chiefs and the Royals to either renovate Arrowhead or to build a new ballpark. Part of that, I think, was because the teams, especially the Royals, really didn't make a compelling argument for themselves. And they certainly didn't want to get bogged down in details. know, they hadn't talked about how much a new project was going to cost.

They hadn't talked about how much money they were willing to chip in. They hadn't reached a community benefits agreement with folks in the area. They hadn't really agreed to a lease agreement at what that might look like. And part of the important thing that I think the legislature has to suss out is when we talk about what the Royals are willing to spend for a ballpark, we need them to be clear how much they're willing to spend on the ballpark and how much they are willing to spend on the entertainment district.

that they want to build around the ballpark. You know, the, bars, the hotels, the restaurants, a year ago in Jackson County, when the Royals said that they were going to invest a billion dollars of their own money. What they were really talking about is the hotels, the restaurants and the bars. They weren't as clear about how much they were willing to spend on the ballpark itself. And, that's really what we're here talking about.

Susan Pendergrass (07:52.034)
And we've talked about this before, but the economic impact of these sports stadiums is not what people think it's going to be. Is that right?

Patrick Tuohey (07:55.938)
Yeah.

No, it's, the argument that people make is like, look, if we lose these teams, then all the economic activity, the taxes, the knock on businesses, the secondary jobs, all that goes away as well. It's a compelling argument, but it's absolutely false. It's akin to arguing that if a restaurant in your neighborhood closes, then everybody starves. Of course they don't starve. They just go to other restaurants.

or they stay at home and make dinner. And that's exactly true with these stadiums. If the entire National Football League and if the entire Baseball League were to just mysteriously vanish tomorrow, the economic impact would be zero because people take the money they would spend at games and instead spend it bowling alleys, taking their families out to dinner, going to water parks, all sorts of stuff. So all too often,

when economic impact studies are presented, what they say is, well, here's the economic impact of this particular location, but they don't count the substitution effect. And that's what responsible economists have to do is say, well, just because one of your entertainment options goes away doesn't mean your entertainment spending has changed at all.

Susan Pendergrass (09:18.456)
So politically, it seems to me that it might've been the safer road to go ahead and run it through the legislature earlier in the session and have the hearings there and let it get put on there because in a special session, it's gonna be much more under a microscope, wouldn't you say? Like now we're gonna have to really talk about it. And if they were trying to avoid economists coming in and saying what you just said, that's gonna be harder to do in a special session. What do you think?

Patrick Tuohey (09:43.939)
Well, I don't know. So part of the benefit of a special session from the governor's point of view is that legislators are in a hurry. They want to have their summers to themselves. They've made plans for months on what they would be doing and they're eager to pass something and get out. The other benefit is the governor can keep them there as long as he or she wants. There is no end of the session as there is with the regular session. So, you know, pressuring legislators just to say, yes, perhaps is easier in a special session.

But to your point, it is one of only three things they'll be discussing. So there is a chance that people will be scrutinizing these deals. Certainly the ShowMe Institute hopes that people will be scrutinizing these deals much more than they would otherwise.

Susan Pendergrass (10:29.654)
The other two things are tornado relief. Is that right?

Patrick Tuohey (10:32.776)
There's tornado relief certainly because of what people suffered in in St. Louis.

Susan Pendergrass (10:38.262)
And also a show barn for cattle at the Missouri State Fair. I think that's over.

Patrick Tuohey (10:43.25)
Yeah, there are lots of, you know, one state senator told me that this was clearly just about stadium subsidies and that the suggestion that this was about helping people in St. Louis or things like that was just cover.

Susan Pendergrass (10:58.786)
Really? Did you think that's right?

Patrick Tuohey (11:01.506)
Well, I mean, that's one person's opinion, but obviously this was about the stadium. We knew this was a possibility. Maybe the other things were thrown in just to make it look like a more legitimate legislative activity rather than just subsidies for two men.

Susan Pendergrass (11:17.102)
So where do see this going? What's your read on it? Do you think it's going to pass this $50 million in subsidies?

Patrick Tuohey (11:23.16)
You know, that's tough to know. The Missouri legislature has been breaking my heart for 20 years, so I don't want to predict the outcome. But despite the fact that it passed overwhelmingly in just a few hours without legislative hearings in the House, there are a number of senators who are skeptical of this, partially because

you know, Missouri desperately needs every dollar it raises and just waving away $50 million a year is not insignificant. And part of the argument is whether you're left, right or center, the optics of giving away taxpayer money to billionaires is really tough to defend. And again, part of it too is that we've been through this in the backyard of these two teams and the people who

benefit the most from whatever economic impact there is voted overwhelmingly by a 16 point margin to say no. So legislators have to not only be able to say that this is a good idea and the state has the money to do it, but they've got to kind of swim upstream against a public that has already said no.

Susan Pendergrass (12:34.53)
And those are the people who are most affected and people on the other side of state or in the boot heel or up in Kirkland, you know, who are not at all impacted will be sharing part of the cost.

Patrick Tuohey (12:45.178)
Yeah, that's one of the frustrations of this particular deal is by, you know, again, giving $50 million in state revenue to these teams, you ineffectively push the cost onto people who would never buy a ticket to see the chiefs or the royals. And like you said, Cape Girardeau, St. Joe, Hannibal, all these places in Missouri will either have to have important government services cut to make up for the loss or

or have taxes raised to make up for the loss. So, you know, as we do so many times in politics, we are just spreading around the cost to focus benefit on, in this case, two people.

Susan Pendergrass (13:26.892)
I imagine the governor doesn't want to be the governor who lost the royals and the chiefs. Right?

Patrick Tuohey (13:31.193)
Well, again, that is exactly right. It's true of Jackson County legislators out here. It's true of the mayor of Kansas City. And so I think they all know that the threat that the teams are going to leave Missouri is BS. It's not credible. You know, the president of the Kansas Senate was on the radio the other day, pretty much admitting that Kansas's offer is not competitive with what Missouri can offer. But

You know, perhaps even if it's a one percent chance that the teams to leave, no politician wants to be the one to take that risk. And so unfortunately, they are willing to spend hundreds of millions, billions of dollars in taxpayer money to give these guys what they demand.

Susan Pendergrass (14:19.95)
Well, I know quite a few people, including some in my immediate family, who still have very hurt feelings about Stan Cronkey and what he did. And I think whether he was planning on doing it before any other, there's, you know, there's those theories, but he, you can always point to that example and say, well, it happened to the Rams. So you can't say it's never gonna happen.

Patrick Tuohey (14:27.886)
Well that's... Yeah.

Patrick Tuohey (14:40.718)
No, it never, you can never say never about teams leaving. But if you look at the economics of the cities that have lost teams right after, know, they don't see a drop in their GDP. They don't see a drop in unemployment. They don't see a drop in economic because, you know, especially here in Jackson County, but it's true everywhere. The chiefs and the Royals are a fraction of 1 % of the workforce. They are a fraction of 1 % of the

Susan Pendergrass (14:56.002)
Not from that.

Patrick Tuohey (15:10.422)
regional GDP, they just don't count that much. They make us feel good about ourselves. And, and, you know, there is some team pride, but, economically they just don't have that big a footprint. So if they leave, despite all the gnashing of teeth, the impact isn't that great. And, and one other thing I want to point out about Stan Kroenke is Stan Kroenke for a long time, I think, wanted to move the team back to Los Angeles and Los Angeles offered him

zero dollars in subsidies. Yet he and private investors built a five billion dollar SoFi stadium. And it's because they wanted to be in Los Angeles. And it's because they wanted to be in Los Angeles because Los Angeles is a great market for football. If Missouri and specifically Kansas City and St. Louis want to be a great market for football, we need to focus on the basics. Public safety, infrastructure, low taxes and efficient government.

And if cities do that, then the good things will come. But you don't make a good economy by subsidizing all those amenities. Subsidizing the Royals and the Chiefs doesn't make Kansas City safer, doesn't fix our roads, doesn't provide a better education for our children. In fact, because of the subsidies, it often gets in the way of delivering those things.

Susan Pendergrass (16:29.048)
Yeah, so it starts Monday, the special session.

Patrick Tuohey (16:32.632)
Special session starts Monday. We don't know what committee these bills will go through. So maybe we'll find out Tuesday and Wednesday if there are opportunities to testify. So again, the pressure will be on legislators to just get something done and get out of there. But I hope that they take the time to do something serious and substantive rather than just stamp. What I think everyone knows is a bad deal.

Susan Pendergrass (17:02.178)
Well, based on what happened in the Jackson County sales tax situation, I suspect you also will be applying some pressure or you'll at least be writing, writing, talking.

Patrick Tuohey (17:10.338)
Well, would love to go to Jeff. Yeah, certainly writing, running my mouth whenever I can. I would love to get to Jefferson city to speak to legislators themselves and testify on this and try to answer their questions. Because again, a lot of the arguments they are hearing are doom and gloom or overstate the economic impact of these teams. And legislators desperately want to do the right thing. And sometimes it's easier to.

give into a scare tactic than it is to try to understand the reality of subsidies and act accordingly. So, you know, it's incumbent upon the ShowMe Institute and good researchers everywhere to speak up and make sure that the people making the decisions, whether they're legislators or the voting public, you know, have all the facts.

Susan Pendergrass (17:57.262)
Well, that's great. Thank you so much for coming and explaining it to me and to our listeners. And we'll be tracking it. And maybe you can come back and tell us what happened.

Patrick Tuohey (18:05.138)
Yeah, it's my pleasure. Thank you so much.

Susan Pendergrass (18:06.6)
Great, thanks.