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On June 5, Patrick Tuohey, senior fellow at the Show-Me Institute, guest-hosted Mundo in the Morning on KCMO Talk Radio, where Terrence Wise of the Missouri Workers Center announced the organization had collected over 4,500 signatures, more than double the roughly 2,000 required, to force a public vote on any taxpayer subsidy of the proposed downtown Royals ballpark. The city clerk has 10 days to validate the signatures, after which the city council has 60 days to act, with a public vote expected in November.

Listen to the full show here. 

The post Kansas City Voters May Get a Say on the Royals Downtown Stadium appeared first on Show-Me Institute.

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The post Is the Chiefs Move to Kansas Really a Done Deal? appeared first on Show-Me Institute.

In Kansas, Sales Tax and Revenue (STAR) bonds are a state-level form of tax-increment financing, similar to taxing districts created by municipalities in Missouri. The state issues bonds to pay for development costs and then repays that debt using only the additional state sales taxes generated inside the project district. The claim is that the project’s shoppers—not general taxpayers—will cover the cost.

The sheer size of the STAR bond being considered for the Chiefs is staggering, and Kansas leaders will likely need to be creative to satisfy the risk being taken by potential bond buyers. I don’t envy them in that task.

The tax question is another issue. The STAR bond will determine the base year of sales tax revenue. You might assume that the base year would be 2025 or 2026, but it could conceivably be 2020 or 2015. But whatever the year, once that dollar figure is determined, everything collected anywhere in the approximately 300-mile district in excess of that dollar figure will be dedicated to pay for the Chiefs’ projects for 30 years. Mind you, the cost of delivering public services will continue to rise due to inflation or, say, due to huge infrastructure projects developed to support the stadium. But the sales tax revenue to pay for those needs is frozen at the base year level.

What then happens?

In Missouri we got the answer in 2016. Due to Kansas City’s profligate subsidy culture, property tax revenue, which libraries depend on, was flat. And so the Mid-Continent Library system sought an increase in property taxes. In doing so, the library observed:

[T]ax incentives and abatements by local government have impacted the revenue that would generally result from the growth of the Library’s tax base. The Library’s budget has been essentially flat for the past 8 years.

Advocates of subsidies often argue that they are free, because they are paid for with funds that wouldn’t exist anyway. This is exactly the argument Kansas Governor Laura Kelly makes ad nauseam. But as we learned in Missouri, that just isn’t true.

Kansans might not see tax increases going to the Chiefs’ project, but they are very likely to see tax increases because of the Chiefs’ project.

The post Kansas’s Coming STAR Bond Tax appeared first on Show-Me Institute.

Startling to me, anyway. None of the legislators on the committee seemed bothered.

Is there any public benefit to this secrecy?

There can be when vendors are bidding competitively for a state contract—say, road construction. Protecting proprietary financial or technical details in that context may encourage better bids and serve the public interest.

But stadium subsidies are different—there’s no obvious reason why secrecy is necessary or helpful. When public officials negotiate deals to hand out taxpayer money, the public deserves transparency. Teams may want discretion. State representatives may want to negotiate without tipping off competing states. But neither, in my opinion, is a good enough reason to give it to them.

Yet secrecy has become the norm. Kansas City Mayor Quinton Lucas won’t release the city’s proposal for a downtown stadium to the Royals—even though Clay County released its proposal. The city also kept its 2017 Amazon HQ2 bid under wraps, while many other cities disclosed theirs.

Judging by the lawmakers’ lack of reaction, non-disclosure agreements are now standard operating procedure. They shouldn’t be. Even if elected officials are fine being left in the dark, the public shouldn’t be.

The post Why Is the Department of Economic Development Keeping Secrets? appeared first on Show-Me Institute.

Click here to read testimony on the Show-Me Sports Investment Act.

Click here to read testimony on Senate Bill 3 and property tax adjustments.

Watch Patrick Tuohey’s Testimony

Watch David Stokes’ Testimony

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In this episode, Susan Pendergrass speaks with Patrick Tuohey, senior fellow at the Show-Me Institute, about Missouri’s upcoming special legislative session, slated to begin on June 2, and the debate over taxpayer subsidies for stadiums. They discuss why stadium subsidies often fail to deliver promised economic benefits, how billionaire sports team owners leverage public funds for private gain, and the potential impact of a $50 million annual giveaway to the Kansas City Chiefs and Royals. Tuohey explains the flawed logic behind the argument that Missouri must compete with Kansas in a “race to the bottom” and argues that the state should instead focus on core services like public safety, education, and infrastructure. They also cover the broader implications of using taxpayer dollars to benefit wealthy team owners, the political dynamics driving these proposals, and what citizens and lawmakers should consider as the special session begins.

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Timestamps: 

00:00 Introduction to the Special Session
01:59 Stadium Subsidies: The Chiefs and Royals
05:35 Economic Impact of Stadium Subsidies
09:43 Political Dynamics of the Special Session
12:34 Public Sentiment and Legislative Challenges
16:29 Conclusion and Future Implications

Produced by Show-Me Opportunity

The post Missouri’s Special Session and Giveaways to Billionaires with Patrick Tuohey appeared first on Show-Me Institute.

On August 7, Patrick Tuohey joined Mundo in the Morning on KCMO to discuss the recent Missouri elections and whether they have any impact on the Kansas-Missouri border war over stadium subsidies for the Chiefs and Royals.

The post Do the Election Results Change the Border War? appeared first on Show-Me Institute.

What I found gratifying is that a great deal of voters, regardless of their own political views, seemed to understand that the economic impact claims made by the proponents of stadium subsidies were simply not true. Show-Me Institute analysts have been making this point since our founding.

Read Timothy Lee’s post from 18 years ago, Stadium Proposal Unfair to Taxpayers, and you will see the exact same arguments I made in 2024. The basics of good public policy do not change, they may just take a while to catch on.

The post Sometimes, Sanity Wins appeared first on Show-Me Institute.

Royals-loving Jackson County voters might think this is about baseball; it is not. It’s about Sherman enriching himself and his investors, leveraging our love of the Royals so he can drive up the value of the team. A recent CNN report pointed out:

Teams are now real estate plays for billionaire owners, stadiums increasingly serve as anchors for mixed-use shopping and entertainment districts, and development rights around stadiums for owners have become a key component of public financing for these projects.

Sound familiar? That same CNN story points out that the trend of moving stadiums downtown is relatively new. Prior to that, in the 1960s and ‘70s, new stadium construction moved to the suburbs—just as the Chiefs moved from Municipal Stadium to Arrowhead in 1972 at public expense. (Kansas City leaders are nothing if not suckers for developers’ slick sales pitches.)

The trend to move stadiums back downtown started in 1992, when the Baltimore Orioles opened Camden Yards. The deal struck by the Orioles owner, Peter Angelos, is a cautionary tale for Kansas City.

Neil deMause, freelance journalist and editor of the website Field of Schemes, has covered the Orioles for years. In 2019, he noted rumors of a possible Orioles move to Nashville. Orioles CEO John Angelos, son of the elderly owner, then inked a lease keeping the Orioles in place for 30 years.

Well, not exactly. According to deMause:

. . . the new lease gives Orioles owner John Angelos, or whoever buys the team from him, an out clause where he can leave early if he can’t come to an agreement with the state on a development deal for the area around Camden Yards by the end of 2027.

Maryland Governor Wes Moore extolled the agreement as protecting taxpayers, but it didn’t. In fact, the governor weakened his negotiating position because of that 2027 deadline—he either caves to Angelos on area development or risks triggering that out clause. Or, as Sherman has done in Kansas City, the owners could seek to renegotiate a subsidy package years before the lease expires.

The Angelos family recently announced they are selling the Orioles to billionaire David Rubenstein for over $1.72 billion.

Here’s the point: In 2019, when the rumors started that the team may relocate, the Orioles were valued at $1.3 billion. After renegotiating leases, additional subsidies, and an area development agreement, the team sold for over $1.72 billion. That’s a 33% increase in value driven not by playing baseball, but by negotiating deals—deals taxpayers paid for with subsidies.

Beyond the cost, deals like this allow developers to influence who sits on the other side of the negotiating table by backing sympathetic (or simply malleable) politicians. Here in Kansas City, Burns & McDonnell was one of the largest contributors to local political candidates, including Mayor Sly James, the year it applied for and received millions of dollars in taxpayer-funded subsidies. Incidentally, Sly James is now on Sherman’s stadium tax campaign payroll.

Whether you’re on the diamond or in city hall, it pays to play ball.

But nothing about this is about baseball. It’s about money and contracts.

If voters agree to the new stadium tax, elected leaders will have less leverage to strike a good deal on community benefits agreements, leases, and more. If the measure is defeated, Sherman and the county, in a stronger position, will go back to the negotiating table—hopefully cutting a better deal for taxpayers.

Sherman and his partners want to make as much money as they can, and that is fine. Voters need to be just as clear eyed about the costs and benefits of this proposal.

The post Royals Move Downtown Is Not About Baseball appeared first on Show-Me Institute.

The Kansas City Royals and Kansas City Chiefs released a joint statement Friday to stay in Jackson County, pending voters’ approval of a sales tax extension.

The statement comes amid the Royals’ plans to build a new $2 billion ballpark district as they look at locations in both Jackson County and Clay County.

The teams said Friday they are committed to staying in Jackson County — and provid[ing] over $200 million in economic benefits — if voters approve a 40-year extension of the 3/8th-cent sales tax in April.

The sales tax extension will help the Chiefs renovate Arrowhead Stadium at the Truman Sports Complex and assist with the Royals’ new stadium in downtown Kansas City.

It wasn’t news that the Chiefs planned to stay put. Driven in part by the Royals’ public relations disaster, the Chiefs had confirmed months ago they indeed intend to remain at Arrowhead (despite flirting with Kansas two years ago), and it was clear the football team was only waiting on the baseball team to make its decision. The Chiefs’ involvement at this juncture also puts a more popular brand in front. Frankly, the baseball team is probably better off with Chiefs superstar and Royals co-owner Patrick Mahomes leading the final charge to the ballot box rather than majority owner John Sherman, who’s helmed the Royals’ push to this point. I’m sure Sherman would agree.

Will taxpayers accept this rose? It won’t come for free. Now that the Royals have decided on Jackson County as their first choice, it will now (likely) be up to voters to decide in April whether to continue subsidizing not one, but two sports teams into 2071—that is, nearly to the 22nd century. Where will that baseball stadium be? Unlikely at its current site, where the taxpayer-financed and recently upgraded Kauffman Stadium seems destined for the wrecking ball. At least two new Jackson County sites are in contention, and a final site announcement may be weeks or months away, if it comes before the vote at all. In the meantime, we wait.

In the interest of balance, I will say that the Royals’ behavior—though misguided and wrongheaded—is consistent with the behavior of countless other private businesses, in and outside the professional sports industry, when it comes to tax incentives and public financial support. The Royals want something for free, regardless of whether they’re owed it. That’s their prerogative, and it’s up to taxpayers to finally say, “No, our tax dollars should go to legitimate public services and not to a private entertainment operation.”

But odds are that Jackson County taxpayers won’t say no—they’ll likely approve the tax extension for the Royals’ (and Chiefs’) benefit, even as other notable local challenges, like murder, remain unaddressed. Taxpayers can do better. I hope they do.

The post Royals Officially Probably Staying in Jackson County appeared first on Show-Me Institute.

That said, I should make and reiterate a few points about the Royals’ stadium issue, now that it’s back in the news.

• The stadium renderings are cool. It’s easy to poo-poo big-dollar construction proposals as being sales jobs of dubious eventual reality, but that doesn’t make the prospect of something new any less interesting. The eventual financing plan for the stadium will likely be bad policy, but it’s understandable why people might get excited at what a future ballpark might look like. That’s obviously why they had the press conference this week: to stoke support and excitement.
• But cool renderings don’t change the fact that taxpayers shouldn’t pay for professional sports stadia. The renderings for these stadia could have put a helicopter port on the roof, a rocket ship in the parking lot, and a theme park in center field, but a cool drawing doesn’t make giving tax dollars to rich baseball tycoons an appropriate “investment” by the public. Developments like this generally do not expand the pie of disposable income in a region; instead, they tend to redirect spending that was previously being spent by consumers at other restaurants and entertainment options in the region. Ask bar owners in Westport what they think the immediate impact of the Power & Light District was on their traffic and you’ll get a sense of the potential risks of subsidizing new competition to existing businesses this time around.
• The “$2.8 billion” construction impact figure presented by the Royals is not a game changer. As I told KMBC 9, I believe that the Royals believe their numbers and that stadium construction would create “$2.8 billion” in economic activity in and around the ballpark. But what’s that really mean, other than to repeat the obvious? When the team is promising $1 billion in private financing to go along with $1 billion in public support, yeah, those are two giant wheelbarrows of cash being dumped into one spot that get you pretty close to the headline number. But that doesn’t change the fact that half of the spending would be coming from the public to create a district that would compete with other entertainment districts, including Westport and the Power & Light District.
• And speaking of the taxpayer-subsidized Power & Light District, it hasn’t and won’t ever pay for itself. One of the biggest public spending projects in the last couple of decades was the Power & Light District in Kansas City’s downtown. From the beginning, the city was on the hook to pay off the bonds for the property if tax revenue from the district wasn’t high enough. The result? Over the last 16 years, Kansas City taxpayers paid the nearly $170 million gap between what the district costs and what the district generates in tax revenue to pay the bonds. It’s easy to make promises of success when the cost of failure is borne by someone else, and there’s no guarantee taxpayers—whether in Jackson County or Clay County—won’t get soaked this go-around, too.

There is a bit of deja vu here, of course; about this time in 2022, I was talking about a potential move for the Chiefs, whose lease at the Truman Sports Complex ends when the Royals does. But the takeaway now with the Royals is the same as it was with the Chiefs—sports teams should pay for their playthings themselves. The Royals may be the kings of Kauffman, but when it comes to sovereign action in the real world, public officials should reject spending tax dollars on anything but legitimate responsibilities of government. Subsidizing sports teams isn’t one of those responsibilities.

The post Hey! Hey! Hey! Hey! Pay for Your Own Stadium appeared first on Show-Me Institute.

Kansas City Mayor Quentin Lucas declared that “Kansas City will not now engage in an intrastate regional race to the bottom that ultimately does little more than fleecing our taxpayers”—which is the right policy position to take! Meanwhile, Jackson County executive and former Royal Frank White echoed similar sentiments, suggesting county taxpayers deserved “loyalty” from the Royals.

In relationship terms, the snap response by Kansas City civic leaders had the tone of a bad breakup and a badly spurned partner. But that tone shifted in recent weeks, after the Royals’ management team confirmed that a second site was also under consideration just east of Kansas City’s downtown, within KC’s city limits.

For a moment, it seemed like a longshot attempt at making up was afoot. Yet, the Royals haven’t said much more to the public about the potential Kansas City plan . . . and apparently they haven’t said much to city leadership about it, either:

Kansas City Mayor Quinton Lucas said Friday the Kansas City Royals need to flesh out details for a downtown ballpark.

Lucas said to KMBC’s Micheal Mahoney on Friday that no one is hearing enough details about the Royals’ downtown plans.

“Here are the things that need to be shared with the citizens of Kansas City — and in my view — today,” Lucas said. “Why the need for a move? What’s the plan for, perhaps, wherever they’re going? And what’s the funding idea?”

Lucas said the longer those questions are unanswered, the more challenging it becomes for the plans to be successful.

The fact that Mayor Lucas suggests that the Royals should stay in Kauffman Stadium is itself somewhat jarring if you know what direction the team was heading in the last few years and what the mayor himself was supporting. From a story in November:

Kansas City, Missouri, Mayor Quinton Lucas predicts a new Royals stadium will be in and near downtown Kansas City. (emphasis mine)

Lucas spoke with reporters minutes after Royals owner John Sherman announced plans to move the team from Kauffman Stadium.

“The Royals will be somewhere, I’m predicting, between the river,” Lucas said. “North of 31st Street, but let’s be even clearer, probably north of the train tracks that are about at 22nd Street. And then probably somewhere between the state line and of course, I would say Woodland (Avenue).”

Take from that what you will. The Royals should pay for their own stadium wherever they go, and if they stay in the Truman Sports Complex, they should pay their way there, too. But for the last year, the Royals staying put has not been what the city has been preparing for. Quite the opposite, in fact.

But while city leaders have every right to ask what a professional sports team is going to want from the public, the public has every right to ask its elected officials what taxpayer resources they’re willing to give away. And that definitely applies here, where city and county representations in private to the team have, to date, not been made public.

Here are some questions Kansas City’s (and Jackson County’s) leaders need to answer about their plans for the stadium:

• How much could subsidizing a new stadium for the Royals cost taxpayers?
• Are the city and county committed to massive new spending on both the Kansas City Royals and the Kansas City Chiefs, or are there fiscal limitations that city and county leaders won’t violate?
• What are those limitations?
• What city services will be affected by these tax expenditure choices?
• And why should Kansas City and Jackson County taxpayers continue to be on the hook for an amenity that the entire region enjoys?

To reiterate, no public money should go to a project like this, but if money is being spent on private sports teams, Kansas City and Jackson County taxpayers deserve respect and transparency. Taxpayer money spent on sports stadiums is a waste, and it also takes away from other vital public services such as policing

Maybe Kansas City and the Royals will kiss and make up, or maybe the team and the city are in an uncanny valley before an inevitable break up. But whether it’s a make up or a break up, billions of taxpayer dollars are at stake.

Update: Royals owner John Sherman told media today: “No one is waiting on us. We are the urging party.”

The post Kansas City’s Courtship of the Royals Is Getting Awkward appeared first on Show-Me Institute.

In this post I’d like to address something besides the economic issues with subsidizing stadiums. And that’s the claim (see page 13 here) that “if you aren’t a business paying the Use Tax or don’t go to the stadium, your money will NOT be used for this project.” This claim is simply incorrect.

To understand why, we need to look at how the stadium proposal is connected with another proposed tax-hike. There is a proposal to increase the city’s sales tax rate by 0.5%, with the new revenue dedicated to MetroLink expansion and other “economic development” projects. If approved, this increase in the sales tax (on goods purchased in the city) will trigger an increase in the use tax (a tax paid by businesses on goods purchased outside of the state but used in the city). The money that would be generated by an increased use tax isn’t dedicated to a specific purpose—at least not yet. Funding for the soccer stadium would tap into this new use-tax revenue. But that new use tax revenue will only exist if the sales tax hike is first approved. So, in short, to dedicate use tax revenue for the stadium, taxpayers would have to approve a sales tax hike. And to increase the city’s sales tax rate is to make city residents pay for the stadium, whether they visit it or not. 

In addition, the use tax increase will ultimately be paid by consumers—again, city residents included—through higher prices. Businesses in the city will initially pay the higher use tax, and while they may try to absorb some of the cost, it is nearly inevitable that they will pass some of it on to consumers. And when city residents buy goods and services from city businesses, they will end up paying the increased use tax (in the form of higher prices). Again, city residents will pay for the stadium, just not directly.  

The claim that city residents will not pay for the stadium unless they visit it is specious. Taxpayers deserve straight-talk where their money is concerned, and in this case, they don’t appear to be getting it.

The post Yes, the Soccer Stadium Proposal Will Cost City Residents appeared first on Show-Me Institute.

Last Thursday, city officials advanced two bills full of questionable spending. One bill proposes that the city’s already high sales tax rate (10.054% on average) be increased by 0.5% to help fund a section of a planned North–South MetroLink route. (Read about MetroLink’s poor track record here and here.) The other bill would raise the city’s use tax by 0.5% to help fund the construction of a Major League Soccer stadium downtown. The use tax increase is supposed to raise some $60 million.

The widespread economic consensus is that public spending on stadiums is a terrible use of taxpayer dollars. But even more troubling is the way in which the bill advanced out of an Aldermanic committee in the first place.

When it was first considered, the bill abated an amusement tax that would have been levied on ticket purchases, diverting revenue from the city. It also would have given tens of millions of dollars to developer Paul McKee, no stranger to subsidies. Why? Well, that’s the troubling part: no public officials knew why the bill abated the amusement tax or gave funds to a developer unrelated to the stadium project. As the Post-Dispatch’s Tony Messenger aptly notes, “This is the story of development in St. Louis. Assets are given away and nobody even knows why.”

But even after one alderman proclaimed that he wasn’t elected to “rubber stamp bad proposals for a City that is already on the financial brink,” the board arguably rubber stamped a bad proposal for a city that is on the financial brink. After closed-door discussions between the board and the ownership group behind the stadium proposal (SC STL), the bill emerged with amendments that abated half the amusement tax and still gave Paul McKee several million dollars in tax-increment financing subsidies.

After passing a vote of the committee, the amended bill was heralded as a win for the city and for taxpayers. Compared to the original bill (which abated all of the amusement tax), the amended bill is estimated to bring in $17 million to the city over 30 years. But does this really constitute a win for taxpayers? For one, although it is described as “new revenue,” this $17 million (and more) is what the city should have been slated to collect if not for the abatement in the original bill that no one could explain. Also, the city will contribute $60 million over that same 30-year period. That makes the stadium deal a loss for the city. Some claim (without providing any financial evidence) that the proposal was originally revenue-neutral for the city, and now will turn a $17 million profit for municipal coffers. Assume, for argument’s sake, that these rosy projections are true. That means the city will net $17 million on a $60 million, 30-year investment. Even if those figures are presented in what’s known as net-present value (which takes inflation into account), that hardly makes this a lucrative investment.

After the bill received approval, SC STL executive Dave Peacock said “The city drives a hard bargain, but they should.” It’s difficult to see how agreeing to this deal constitutes “driving a hard bargain.” But, Peacock is correct—that’s what the city should be doing, which is why recent developments with the stadium bill are so troubling.

The post No, the City Does Not “Drive a Hard Bargain” appeared first on Show-Me Institute.

The chart below compares the old and new funding proposals.

Note that the new funding proposal only modestly reduces the level of public funding. While the old proposal was set to be 65% privately-funded, the new proposal is only 73% privately-funded. And when we exclude the MLS expansion fee, the share of private funding has risen to just 49% from a previous 39%.

In short, while the new SC STL proposal has reduced the public cost of their project, it still calls for $90 million in subsidies. Just because spending $125 million in taxpayer money on a stadium was a bad idea, it doesn’t mean spending $90 million is somehow a good idea. Plus, the City’s Budget Director admits the deal as it’s currently crafted could require more money than the new use tax would provide, requiring the city to dip into the general fund.

Unfortunately, that isn’t the end of it. The new 50-page SC STL proposal was announced less than a week before the city’s Board of Aldermen needs to vote on whether or not to put it before voters. The proposal will be heard by an aldermanic committee once more next Monday morning.

Alderwoman Ingrassia, who’s sponsoring the deal, even admitted she isn’t clear on what’s in the new deal, or if it makes sense. But if our policymakers aren’t clear on legislation that would place a $90 million burden on taxpayers, should they be moving that legislation forward as quickly as the SC STL proposal appears to be?

Many public needs are competing for attention and dollars across the state and in the City of St. Louis especially. Shouldn’t we focus on addressing those needs before spending tens of millions more on corporate welfare?

The post When Bad Policy Won’t Stay Dead appeared first on Show-Me Institute.

Saint Louis appears to have gotten the memo.

Earlier today, Alderman Christine Ingrassia said that a bill that would raise $80 million for a stadium will not be moving forward. City officials have asked the ownership group to lower the amount of money they’re asking for.

And the city’s request is completely reasonable. If stadiums do little to boost local economies, then what is the rationale for using public funds to help build them?  This question took center stage last week when Gov. Eric Greitens completely ruled out state funding for stadiums. As a result, the prospect for public subsidies for SC STL does not appear to be good.

Time and again, stadiums fail to spur the economic growth that developers promise. Subsidies can help bring a beautiful new stadium to a city, and people may well attend the events held at the new venue.  But much (if not most) of the economic activity taking place at the stadium isn’t actually new; instead, it reflects spending reallocation.  In other words, if people purchase game tickets, they won’t eat out as often or spend money on other forms of entertainment.

With two weeks left before the Board of Aldermen’s deadline for approval, public funding for MLS is not completely off the table, but economists everywhere may rejoice to learn that people are acknowledging their research. 

Avoiding wasteful spending is definitely a step in the right direction, but we should keep in mind that Ballpark Village recently received $16 million in public funding, the Blues are asking for assistance with $138 million in renovations, and many, many, many non-sports–related projects are in line for similar subsidies.  The MLS discussion has engaged many citizens, but the issues with tax subsidies run far deeper than one project.  

The post Prospects Bleak for MLS Proposal-and That’s a Good Thing appeared first on Show-Me Institute.

Right now, because of reckless spending by career politicians, we can't even afford the core functions of government, let alone spend millions on soccer stadiums.

The project’s ownership group, SC STL, has taken Greitens’s words seriously and delayed a request for $40 million in tax incentives from the state. In addition to this $40 million are plans for Saint Louis City to pay $80 million, but before any public funds are awarded we should ask what return the city will see on its investment. Are there benefits to owning a stadium? Here are some claims that SC STL made in its written proposal to the state:

Claim 1: Publicly financing an MLS stadium will help make Saint Louis a “first-class city” and will “complete one of the great corridors of sports, culture, and entertainment in the nation.”

What being a “first-class” city means is ambiguous, and Saint Louis taxpayers have heard this song before. The $3 billion spent on MetroLink (thus far) was supposed to make the city first-class. Today, MetroLink trains carry less than 1% of metro-area commuters and have failed to spur significant economic development. In the 1990s, the Edward Jones Dome was pitched as a way to grow the economy and revitalize downtown; it failed on both fronts. Exactly how another professional sports team will help Saint Louis climb the urban ranks, and how that ascension justifies a massive subsidy, is unclear.

Claim 2: SC STL has made “significant effort to minimize the public financing component of the project.”

It is, at best, unclear what efforts SC STL has made to minimize the need for public subsidies. SC STL originally estimated that the expansion fee for joining MLS would be $200 million, but MLS recently announced that the fee would be only $150 million. One might expect that the $50-million cost reduction would be passed along to the city and the state, but SC STL made clear it would still ask for the full $120 million. Can SC STL really claim they have made “significant effort to minimize public financing?”

Claim 3: The recent departure of the NFL Rams reduced tax revenues for the city, and an MLS team would help recover some of those lost revenues.

This is a little like a doctor prescribing more of the same “medicine” that made the patient sick in the first place. Pushing for a stadium deal to help make up for revenue shortfalls caused by a previous stadium deal lies at the border of questionable and crazy. Of course, the proposed MLS stadium deal isn’t 100 percent identical to the deal city officials offered the Rams, but we won’t fix the outcomes of poor policy with more of the same bad policy.

Claim 4: Taxpayer subsidization is justified because a stadium will spur economic growth.

The Missouri Economic Research and Information Center (MERIC) conducted a study concluding that an MLS stadium would generate $24.5M in net state general revenue over 33 years, but this study deserves some scrutiny. Economists overwhelmingly agree that benefits from stadiums are overstated due to studies failing to take into account that spending is taken away from other businesses. Moreover, these studies rely on a controversial economic concept known as a “multiplier effect,” which is a measure of the overall impact of money in a local economy. In short, studies assume a multiplier effect far higher than most economists believe exists, and so, project rosy but unrealistic, outcomes. This is why, despite studies claiming stadiums will be boons for the economy, history and economics show promised economic benefits don’t pan out as projected.

The current proposal for publicly subsidizing an MLS stadium in Saint Louis is heavy on optimism, but that optimism isn’t justified by research or by past experience. Taxpayers should be wary of doubling down on a bet in hopes of paying off the debt we’re already stuck with.

The post A Critical Review of the SC STL Proposal appeared first on Show-Me Institute.

A new soccer stadium could cost anywhere from $40 million to more than $300 million, depending on the design. One might hope the lower price tag, especially compared with the NFL and other major sports leagues, would prompt MLS owners to pay for these stadiums without public support. Unfortunately, that has not been the case. Only two MLS stadiums, the Stubhub Center in Los Angeles and the Columbus Crew Stadium in Columbus, Ohio, were built without any public support in the last fifteen years. And for anyone who hoped that a new Saint Louis team could play in the now-vacant Edward Jones Dome, no dice. Soccer-only stadiums are in vogue, and an MLS team has not located to a stadium not built specifically for soccer since 2002.

As with other pro sports ventures, many hope that increased tax revenue will justify public subsidies for an MLS team. But there is no good evidence for that. In fact, there is the counter-example of Toyota Park (IL), the home of the Chicago Fire, which is quickly bankrupting the small suburb of Bridgeview.

While professional soccer would be a welcome addition to Saint Louis, there is no reason residents should have to pay for a stadium with tax revenue, especially in light of the big asks the city is already getting for the Scottrade Center and the Convention Center.  Let’s leave the construction of soccer stadiums to league owners and soccer fans. 

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Much like with the NFL, civic daydreamers pine for MLS teams. City officials hope pro soccer can revitalize neighborhoods, bring in tax revenue, and draw hip residents. That’s what Bridgeview hoped when the city covered the entire cost of Toyota Park, at the cost nearly $100 million. Unfortunately, promises went unfulfilled. Bridgeview is now in dire financial straits, $225 million in debt with a population of just over 16,000.

None of this should come as any surprise. While the phenomenon of cities spending money on MLS teams is new, cities have long subsidized stadiums for other professional sports. The evidence is clear that building these stadiums does not increase economic growth, spur urban revitalization, or increase tax revenue sufficiently to cover large subsidies. Unfortunately for taxpayers, the cost of soccer-only stadiums has risen over time, along with the subsidies:

So what of the MLS in Saint Louis? With the Rams leaving for Los Angeles, the push to land an MLS team is on. A bill in the Missouri legislature proposes sales tax increases in Saint Louis City and County for a new stadium, likely near Union Station.

But much like the Rams’ riverfront stadium plan, there is little reason to believe that an MLS stadium will do any more for the city than it has done for Bridgeview. Furthermore, private owners have funded their own MLS stadiums, as was the case with Crew Stadium, in Columbus, Ohio. Saint Louis, if MLS officials are to be believed, is a strong soccer town. If the “beautiful game” is so appreciated here, an entrepreneurial owner should be able build a stadium, bring the city an expansion team, and make money. If Columbus doesn’t need to buy a soccer stadium, Saint Louis shouldn’t need to. And if no such owner is to be found, soccer supporters could use crowdfunding like Kickstarter to fund a stadium, if such a proposition is so popular. Given the city’s issues with its existing stadiums, perhaps we should make sure we can afford what we have before we bring in a new pro team.

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