In jockeying for Major League Soccer retention and inclusion, numerous cities in recent weeks have echoed a similar mantra.
No new taxes levied upon the broad general public.
For decades, sports teams have extracted favorable financial deals with host cities because of the basic supply-demand dynamic which exists for professional sports teams who hold the threat of being mobile if unsatisfied.
Namely, if you don’t build it, we will leave (or never come in the first place).
And while we shouldn’t expect public financing of sports facilities to ever completely dissipate (both for political and legitimate reasons), there is no question it is becoming more difficult for teams to extract the volume of public subsidies they once enjoyed from local, county, and state coffers.
This outcome, unquestionably, is a delight to numerous sports economists across the country who have illustrated through their credible academic research that the tangible financial benefits of hefty public subsidies rarely outweigh the tangible financial costs. Though, to be fair, these prior findings often focused on projects where a disproportionate share of the funding (60-100%) came from public sources (thereby increasing the likelihood of producing an unfavorable cost-benefit result). Additionally, many of those studies did not account for the non-monetary benefits associated with securing an additional local sports teams (e.g. a new team yields an extra entertainment amenity for the community, a common identification symbol for residents to rally behind or take pride in…all of which add intangible benefits to a particular project).
In short, given the growing pervasiveness of the sentiment that public subsidies of sports facilities are not a good deal for the public, it is noteworthy to observe the common strategic public relations theme of “no new taxes” among cities vying to build new soccer-specific stadiums in their respective communities.
Let’s start in Columbus – The Haslams Saved the Crew
Cleveland Browns owners Jimmy and Dee Haslam, along with Dr. Peter H. Edwards Jr. and his family, plan to buy Crew SC from Anthony Precourt (current owner), and the Crew's new $230 million downtown soccer stadium plan is the crown jewel of their broader proposal to buy the Crew and keep the team in Columbus.
Reports are the new Crew owners would invest a total of $645 million, which would go towards (1) buying the team (estimated $150 million), (2) building the new stadium and surrounding commercial and residential mixed use space (estimated $230 million), and (3) remodel the team’s current home at Mapfre Stadium.
While there will be public funding contributed to the project, there are no new general taxes being proposed. The city of Columbus has pledged $50 million, and Franklin County $45 million, each over 30 years, to be managed by a community authority to support site development and infrastructure. There is also an additional $15 million coming from the state of Ohio.
In short, only 17% of the estimated $645 million for the project is coming from the public sector. This is miniscule, when comparatively judged against historical standards where the public sector financed 60-70% of all sports facilities built in North American sports venues between 1990 and 2010.
Next to Austin – Precourt Scores New Stadium in New Market
In Austin, local officials helped ensure that current Crew owner, Anthony Precourt, realized his vision to start a franchise in the state capital of Texas, making it the first professional sports team in the city.
City Manager Spencer Cronk signed a lease/development deal with Precourt Sports Ventures, where PSV will privately finance a $200M stadium at McKalla Place, and the city will own the 20,000-seat facility and lease it back to the team. PSV agrees to pay $8.25M in rent over a 20-year lease term, and the ownership group also will kick in $3.64M to Capital Metro to be used on transit facilities. The Austin FC franchise will likely begin play in '21 at the new venue.
Meet Me in St. Louis – Taylor’s Catapult St. Louis to Leading Contender Status for 28th Franchise
Unlike Columbus (who is a founding charter member of MLS dating back to 1996), and Austin (who is virtually guaranteed inclusion into MLS due to the league already approving Precourt’s desires to run an MLS team in Austin), St. Louis is still on the outside looking in…though their circumstances changed quite radically in recent months.
Though St. Louis’ chances for MLS inclusion took a serious blow in April 2017 upon a failed city vote for public funding towards a new stadium, the Taylor family catapulted St. Louis into the current lead to become the league’s 28th franchise with their October 2018 announcement that they would privately finance a soccer-specific stadium in downtown St. Louis.
While the plan includes a full exemption on sales tax for construction materials, free use of the site, a 50% break on the city’s “ticket taxes” and an additional 3% sales tax just on goods sold at the stadium, there were no new taxes being proposed…a point they have emphasized and re-emphasized during the last several months since they announced their ownership intentions.
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Again, the idea of a sports facility being financed largely with private money is not without historical precedent. Among the more notable examples from the last 20 years include Busch Stadium (MLB’s St. Louis Cardinals), Gillette Stadium (NFL’s New England Patriots), and AT&T Park in San Francisco (MLB’s San Francisco Giants).
More recently and notably:
- The Golden State Warriors future home, The Chase Center, is privately financed;
- Circling back to our soccer theme, Minnesota United FC will move into its new privately-funded stadium in St. Paul next season;
- And the University of Texas just struck an innovative financial agreement in which the Longhorns will get a $300 million basketball arena with zero out-of-pocket cost. True, this is not for a professional sports team, but is consistent with the theme of minimizing public costs for a new stadium.
In short, as we watch Columbus, Austin and St. Louis make stadium proposals in the last several weeks, there is a common theme among all their pitches.
No new taxes.
In the movie 48 hours, Eddie Murphy’s character famously says to a bartender at a cowboy bar “There’s a new sheriff in town…and his name is Reggie Hammond.”
When it comes to financing sports facilities these days, there appears to be a new sheriff in town.
And his name isn’t “new general sales taxes”.
