The Cost of the Game
The gates at Kauffman Stadium swing open in April. If the Royals’ front office has chosen wisely during the off-season, young power hitters will have ample support to hoist the team into the upper echelon of the American League Central Division. Meanwhile, winning team or no, with Jumbotron replays and “take me out to the ball game” sing-alongs, “The K” is a good place to kick back in the summer sun and forget about cares and troubles.
But taxpayers who help pay for the fresh-cut grass, immaculately groomed infield dirt, sparkling-white bases, and the fountains just beyond the outfield wall may have to make a $150 million choice when it comes to the Harry S. Truman Sports Complex, where Kauffman Stadium stands. Such a hefty investment will increase taxpayers’ yearly $14 million stake in the complex — not to mention Jackson County residents’ initial $56 million investment when the stadiums were built in the 1970s. If the governors of Kansas and Missouri sign legislation introduced by Kansas state Sen. Dick Bond of Overland Park and Missouri state Sen. Harry Wiggins of Kansas City, metropolitan area residents will debate, and then vote, on whether it’s worth paying millions of dollars in sales tax money — the argument will likely be — to keep the majors here by funding stadium improvements and, with a nod to Kansas taxpayers, possibly funnel bistate revenues into the construction of sports facilities in Johnson and Wyandotte counties.
Stadium improvements, Chiefs and Royals officials say, will help the teams generate more money. Feeding the bottom line will entice the teams to stay in Kansas City. Neither Chiefs Chairman Jack Steadman nor Royals Senior Vice President of Business Operations and Administration Art Chaudry says his team will leave Kansas City for a bigger, better home in the near future. But both team officials talk about either getting the public to build new stadiums or having to consider moving after their leases expire in 2015.
Most civic and elected leaders in the metro believe the major league sports teams are gargantuan economic engines. Many sports fans and residents also recognize that the presence of major league sports teams helps determine a city’s identity. Business leaders and team officials are steering the focus there. But Andy Zimbalist, a Smith College economics professor and sports journalist believes funding sports teams through publicly funded stadiums is a break-even proposition at best but more often is an economic drain for an area.
From a hotel room in California, where he is on a break from speaking to a civic group, Zimbalist says that little comes from public investment in sports stadiums and sports teams. Money that goes into a sports team, he says, leaves the community in the form of players’ salaries — because most do not live in the cities in which they play. The money also leaves in the form of profits paid to owners, who have significant investments outside their teams’ communities. Better, Zimbalist says, “not to have major league sports teams and have entertainment dollars go to more homegrown entertainment, retail, and restaurant business.
“The fact is that there is no economic return on that investment (in major league sports). With the Truman Sports Complex location, you don’t get spin-off business in the downtown area that could be argued to be a benefit. This is primarily an investment that will make (Royals prospective owner) David Glass’ deep pockets deeper and (Chiefs owner) Lamar Hunt’s deep pockets deeper.”
Glass has an estimated net worth of $323 million, according to a Nov. 28, 1999, Kansas City Star article. Sports Illustrated reported Sept. 13, 1993, that Hunt’s net worth was more than $150 million. According to a Jan. 27, 1999, article in The Washington Post, NFL owners like to keep team ownership with people worth in excess of $300 million (excluding the assets of the team they own).
The numbers
John Bondon sits in a small, oddly shaped office off the bar at the Italian Gardens restaurant downtown, his family’s business for the past 75 years. Bondon is a long-standing member of the Jackson County, Mo., Sports Authority (JCSA) and an avid sports fan. His desk is an organized riot of paper and receipts. Open before him is a financial report for the restaurant. He fishes a cigar from a box in a file cabinet next to him and lights it, looking satisfied. He turns introspective and places his fingertips gently on the desk. He is considering the importance of major league sports in Kansas City.
“There are so many benefits,” he says finally, his eyes brightening beneath his leonine mane. “Not merely the economic benefit the teams bring to Kansas City, but the tourism and the sense of pride. I can’t imagine the city without the Chiefs or the Royals.
“The nature of major league sports today is that cities build facilities that the teams use. What they do for the town should interest even those who never see a major league game at the stadiums, people who aren’t sports fans, because they bring so much pride to our town.
Bondon says that a bistate sales tax is a good mechanism for funding the kinds of improvements that the teams say they need to stay in Kansas City. “We were lucky to build the kinds of facilities we did in the early 1970s,” he says. “They are stadiums that can be kept up and updated without having to lay out the $500 million to $800 million to re-create them. Many cities have built or are building those new stadiums, creating competition for Kansas City. Fortunately, we have teams here who are committed to the community.”
The JCSA, as the official landlord, helps maintain the sports environment at the Truman Complex. The agency was created in 1966 to plan, construct, and operate sports facilities in Jackson County. It negotiates and fulfills lease obligations, including maintenance and capital improvements on the stadiums, with the teams who use them. The JCSA receives tax dollars to operate the stadiums for its owner, Jackson County. At present, all tax dollars the city, county, and state pay for the stadiums flow through the authority.
Annually, the JCSA receives $2.75 million from the State of Missouri, $3.5 million from Jackson County, and $2 million from the City of Kansas City, Mo. In addition to these commitments, in October 1998, Jackson County issued $40,170,000 of Leasehold Revenue Bonds in part to fund the sports complex. From this additional source, the JCSA received more than $10 million in 1998, bringing taxpayer investment to $18.25 million.
According to JCSA figures, the Royals, the Chiefs, and the Wizards, Kansas City’s major league franchises, bring in little more than $11 million in direct taxes each year. The state receives $7.9 million; the county $716,696; and the city $2.43 million. While the state receives a healthy return on its investment, the county loses several million every year. Each team pays $450,000 per year in rent plus a percentage rental based on the team’s revenues. Together the teams paid just over $2.2 million to use the complex in 1998.
Kauffman and Arrowhead demand upkeep. In 1998 the JCSA spent $851,989 on repairs and maintenance and $15,824,968 on capital improvements, which were detailed in a master plan in the lease the JCSA and the teams agreed to in 1997. From 1993 to the end of the lease in 2015, the JCSA officials estimate the authority will spend more than $56 million on capital improvements to the stadiums.
But the commitment is worth the money, Bondon says. He ticks off economic benefits, such as the restaurant and hotel business the teams generate, as well as the livelihoods the teams provide vendors and employees of the sports organizations. “If those teams get the improvements they need, they will get more revenue,” he says. “This will keep the stadiums compatible with other sports facilities in the United States. If the teams have good facilities to play in and can make the money they need to in order to field the players they need for winning teams, the community benefits.”
The Chiefs, the Royals, and the Wizards are vital parts of this community’s economic and entertainment health, Bondon says. “The sports complex is a significant draw to those players and those teams. And it’s not a big investment when compared to what other cities are doing. That is something we have to keep in mind. If the sports teams do well overall, then the tax revenues, other economic benefits, and the sense of community that comes from them are good for everyone.
“Plus, it’s part of the game. Kansas City does have a community players want to live in. Many have their second homes here, and many will stay after their retirement.”
“We would hope that the community would want to keep the Chiefs in good facilities and have good value for community,” says Steadman. “If the community tells us no, then we do not have as much value to them as we thought. There will be a point in time when civic leaders must keep Kansas City up to date and compete with other cities.”
Chaudry says the voters must decide whether to make renovations. “It raises a serious issue,” he says. “The Royals are a community asset; we belong to the community. They must find ways to support us. Regardless of the sources of new revenues for capital improvements to a sports complex now 28 years old, Kansas Citians must come together and find ways to support us. We could not do this on our own. In order to put a product on the field that will be attractive, we must have other revenues to help shore up what is needed here.”
Zimbalist says not one independent study has indicated that stadiums are sound economic investments. “But team owners, architectural firms, investment bankers, and all their lawyers lean on politicians,” he says. “The idea that stadiums are a benefit is a fabrication out of thin air. It began in the 1950s and took off in the 1970s and 1980s, when the cost of stadiums became $80 million to $100 million.”
What they say they need
“The (stadiums at the sports) complex would cost an estimated $600 million if you were to build them today,” says John Friedman, JCSA executive director and chief economist. “That’s what it’s costing cities to build stadiums now.” When asked whether the taxpayers benefit over and above the cost of operating the stadiums, Friedman says, “Ah … it all depends on who you ask.”
“As time advances, there are fan amenities we do not have at Arrowhead that new stadiums do,” says Steadman, who is in Scottsdale, Ariz., for meetings with National Football League team owners and on the phone before a golf game. “Sooner or later, that is something we have to deal with as teams or as a community. We have to bring the stadiums up to the state of the art. Many of the communities with multipurpose stadiums have razed and rebuilt their facilities — Cincinnati, Pittsburgh, Cleveland. We must have a stadium that is a revenue producer.”
Steadman believes now is an opportune time to build amenities, which will cost between $70 million and $75 million. The Chiefs, Steadman says, have identified significant changes team officials believe will help them make money and increase the popularity of an already popular game. Steadman did not indicate the percentage increase the team expects to enjoy after renovations. The team wants to open concourses on every level of the stadium to be able to build more concession stands. Steadman says it’s important to be able to serve a wider variety of food and to service people faster. Improvements to restrooms, particularly women’s restrooms, he says, are essential. The team wants to move press boxes to the top of the stadium, overhanging the seats, and build 55 luxury suites into the press boxes’ current location. The Chiefs will build the new press boxes, but taxpayer money will pay for elevators and other infrastructure to get people there.
Arrowhead has four sizes of suites, and all but two suites sold for the season at rates from $34,000 to $104,000 per year. Field boxes sell for $14,000 to $61,000 per season. The suites that do not sell are available on a single-game basis that varies with the size of the party and with food and beverage options.
Steadman says the Chiefs have a total payroll of some $80 million. Last year, the team drew 629,545 fans to games and led the NFL in paid attendance from 1994 to 1999. Forty percent of the game revenues at the box office are earmarked for the opposing team. The Chiefs also receive NFL revenue-sharing funds.
Similarly, the Royals want to transform Kauffman Stadium from a place to see a ball game into a family entertainment, retail, and dining experience. Chaudry says his organization believes Kauffman’s infrastructure is sound and the facility is attractive. “But it is lacking in amenities and features. The stadium has not kept pace with other stadiums. We need to bring a unique identity to Kauffman that will attract a broader demographic to the stadium and transform the stadium into a new point of destination. We must create additional reasons for people to come to Kauffman and spend their entertainment dollars — besides just watching a baseball game. We have to increase the revenue generating opportunities and reduce dependence on the team’s on-field performance.”
Improvements, Chaudry says, are critical to the stability of a team hobbled by a small market. “At one point, the Truman Sports Complex was the icon for the nation and for cities building stadiums,” he says. “We were ahead of our time. Now we are playing in some of the oldest facilities in all of major league baseball.
“The stadium will be enhanced with architectural features designed to link the stadium with the community and be targeted across a wide cross-section of fans. We are not just catering to high rollers. Our plans are to attract a broad fan mix and maximize revenues from each group of fans.”
Such plans, Chaudry says, include linking the right and left fields behind the fountains so fans can wander the general admission sections to view a game. Plans include retail, coffee bar, and refreshment concessions in the corkscrew ramps leading to the upper decks. The team wants to increase its number of luxury suites — 19 — to the nationwide stadium average of more than 50. Restaurants, picnic facilities, and even a building for a Royals Hall of Fame are included in the Royals’ plans. “We can do what we need to do for between $75 million and $90 million,” he says. “We will give Kansas Citians more opportunities to socialize. A family could come here and spend an afternoon for an outing. It won’t be just baseball. We want to move from just baseball to all of entertainment.”
Currently, when a Royals fan buys a ticket for a game, all of the money from the ticket goes to the team. The Royals pay taxes, revenue sharing, lease, payroll, and other overhead costs from their general fund. The team drew 1,506,068 people to Kauffman in 78 home games last year. In 2000, the Royals will pay about $25 million in players’ salaries. The team would not release team revenues. Besides the box office take, he says, the team receives some revenue from a general fund from All-Star, playoff, and World Series games. The team also receives some revenue sharing from the league to offset the difference in revenue-generating power between large- and small-market teams.
Chaudry says that teams now playing in renovated or new stadiums have increased their revenues by between $20 million and $40 million with additional activity at concession stands, retail outlets, club seats, luxury suites, restaurants, and picnic areas. The Royals would expect the same, with a cut of the take going to the JCSA in percentage rent. Already, he says, the public is responding positively to last year’s stadium renovations; the luxury suites on the club level and behind the dugout sold out last year and for the coming season. Dugout suites rent for $1,000 a game, not including a $35 per person ticket and food and beverage packages.
Steadman says Kansas City’s two stadiums can be improved for a relatively small amount, about $150 million. “New stadiums for both teams would run somewhere between $700 million and $800 million,” he says. “We are not running around with our hands out. If we can get the support from the community, we would be interested in extending our lease and would make part of the renovations ourselves. If we don’t retrofit, we would not do anything with leases. At 2015, we would be looking to replace the facility. We can get what we need done now at a bargain cost or hold off and deal with it at a later date.”
One of the possible advantages of putting more money into Kauffman Stadium, says Zimbalist, “is that it will help the Royals in the player market. They will be more competitive on a sustaining basis. The team is in a small market, and more money means bigger salaries and, possibly, better players. In the case of the Chiefs, more public investment does not have that effect. They have the NFL salary cap and revenue sharing across the league. More public investment goes to the owner and to the NFL in general.”For what it’s worth
Sports teams are not a reason people move to or stay in a particular city. Quality-of-life issues, such as schools, city services, social climate, and the amount of money or type of job, have much more to do with those decisions. Businesses look at the labor market and at school districts. Then there’s wage trends, access to infrastructure, tax incentives, and transportation costs. Businesses shop these factors around when looking to relocate; stadiums don’t.
Supporters of the amended bistate proposal would like the public to believe sports teams are valuable economic development engines worthy of public financial support. But they’re private businesses, and profits often flow out of the local economy and into the pockets of very wealthy players and team owners. Most local politicians don’t like to dwell on such points.
“The Chiefs and Royals are extraordinarily important to this community,” Mayor Kay Barnes writes in response to questions from PitchWeekly. “These major league teams generate excitement, goodwill, and economic vitality not only for Kansas City but for the entire region.”
“They (the Chiefs and Royals) are definitely economic engines,” says Missouri state Rep. Henry Rizzo. “We have had marketing surveys done, and there’s no doubt that they bring in millions of dollars’ worth of income. It’s not a ‘maybe’ type deal; they do.”
Wiggins, who’s helping engineer the bistate legislation in Jefferson City, was named Mr. Baseball 2000 by the Royals at their annual awards banquet last year. The state senator did not return calls for this story but sent his acceptance speech for the Mr. Baseball award instead. In the speech, he vowed to “show my gratitude and prove it to the Royals organization by my undying loyalty, friendship and devotion, support and belief in what you stand for as long as I live.” Some may ask, “What do the Royals — or major league sports in general — stand for?”
Jackson County legislator Victor Callahan says the stadiums deserve attention because of their audience’s regional nature and that a bistate tax is the best way to ease the costs of keeping the teams across the metro. “I think you have to look at the stadiums not just as the City of Kansas City or Jackson County. When we first built stadiums, it was the county that paid for and benefited from them. Now the Chiefs and Royals are regional sports teams. The present leases will not allow us to charge a nonresidents’ fee at the gate. Half the cars at any of the games are from Johnson County. The stadiums are every bit as regional as Union Station, and more so because the teams have a substantial impact on the local economy.”
Steadman is not sure whether a bistate tax is the best way to fund stadium improvements, but it’s the only funding mechanism anyone is talking about seriously. “It makes sense,” he says. “About 60 percent of metro area season ticket purchasers are from Johnson County. Johnson Countians certainly would be the people who would be enjoying the added amenities.”
Bistate supporters also point to the regional nature of the Kansas City economy when citing the benefits of the stadiums. In 1993, the Mid-America Regional Council (MARC) released a report that stated that the impact of major league sports on the Kansas City economy was $256 million and 4,489 jobs annually. The teams directly contribute 2,922 jobs to the community with an annual payroll of $54.5 million, 64 percent of which was paid to employees living in Johnson County. Proponents of a new bistate sales tax rely on the report to justify their support.
But other economists question those types of calculations. In the book Sports, Jobs, and Taxes, editors Roger G. Noll and Andy Zimbalist write, “Typically, economic impact studies of stadiums are susceptible to two errors related to net exports that cause the benefits of the facility to be overestimated: The first is to overstate the extent to which a stadium attracts tourists; the second is to overstate the extent to which the income generated by the team is retained in the local community.”
The MARC study says, “For every dollar’s worth of sales directly produced by the Chiefs and the Royals, another $1.10 of sales is generated throughout the economy. Every employee of the two organizations generates another 1.87 employees elsewhere in the economy. And for every dollar’s worth of income paid in the form of wages and salaries by the Chiefs and Royals, another $1.88 of income is generated for other workers in the economy.”
Such multipliers are wrong, Noll and Zimbalist opine, because, “Obviously if tourists who attend sporting events visited the city for another purpose or have their visits paid by local residents, these calculations are in error.”
Frank Lenk, director of research and services at MARC and the principal researcher on the project, stands behind the MARC figures. “It’s not that they come here just for the sports teams, but they spend money that they otherwise wouldn’t have spent,” he says. “A lot of the visitors are from Des Moines, Omaha, and so on from smaller cities in the Midwest, and this is the place to go if you want to see professional sports. We’re not saying that they’re coming in just for the game, but we’re saying that they are spending money that they otherwise wouldn’t have spent.”
No ‘net’ benefit
Zimbalist says no evidence shows that communities overall enjoy marked economic benefits from sports teams or funding multipurpose stadiums. Even for media events, such as concerts and other stadium shows, he says, 85 percent to 90 percent of people in attendance come from the metropolitan area. “Many visitors are not in the area because of the teams, but they are visiting people or doing business,” he says. “If they are doing business, many of them are paid by some local corporation. There is only a very small number of people the teams actually bring in.”
The downside of major league sports, Zimbalist says, is that they leak a lot of money. “Much of the money spent at a baseball or football game goes to players’ salaries. Many don’t live in town. Frequently, in major league sports, the owner does not live in town or spends a lot of time outside of town. It is better to have local people spend their money in a local bowling alley or restaurant.”
Zimbalist points out that a $150 million investment will demand an annual debt service of $10 million to $15 million. Then there will be maintenance, upgrades, and sanitation. The hole created in the community budget, whether from Kansas City, Mo.; Jackson County; or the region as a whole “will be filled with higher taxes or lower services. There is not an economic return here.” The teams, the county, or the regional advocates of funding sports teams “can hire as many consulting firms as they want and get the foretold result. The studies are all bogus. They are based on faulty methods with unreal assumptions. The consultants produce what their employers want them to produce.
“Every independent study says it’s wrong to continue funding sports teams through facilities. If you perform an objective, proper study, you find there is no net tax benefit. It might generate taxes they can show, but if the initial tax investment were spent other places, it would generate that much more tax. If there are additional taxes coming in after the investment, without sacrificing services or other obligations, then you can show additional economic benefit.”
Zimbalist is not alone. Grant Gulibon, senior policy analyst at the Allegheny Institute for Public Policy, also believes that stadiums as economic engines are a fallacy. In an April 1, 1999, Government Finance Review article, “The Four Popular Myths of Taxpayer-Funded Stadiums,” Gulibon writes, “It seems like every campaign for public stadium financing is accompanied by an economic impact study, usually prepared by a local university or accounting firm, that ‘proves’ that stadium development creates jobs and attracts surrounding development. The authors of such studies arrive at that conclusion by assuming that every dollar spent at the stadium and ancillary development represents new money in a city’s economy and that each of those dollars is recirculated in that economy … producing a ‘multiplier effect’ that leads to additional development.”
The argument suffers, Gulibon writes, because most stadium jobs are low-wage and seasonal — vendors, ticket takers, restaurant and bar servers, and hotel workers. Gulibon cites a Cleveland State University study that found that Cleveland’s Gateway Complex, which houses the Indians baseball and the Cavaliers basketball teams, “created only 1,900 jobs — mostly low-wage, seasonal ones — at an estimated cost to taxpayers of more than $320 million. It has been pointed out that Baltimore’s Oriole Park at Camden Yards generates about $3 million per year for the Maryland economy at an annual cost of $14 million to Maryland taxpayers.”
Gulibon maintains the reason for such poor returns is that sports-related development “does not create new entertainment spending by bringing in large numbers of tourists or inducing local residents to increase such outlays accordingly. Instead, it merely shifts current recreational spending from one activity to another — from movie theaters and amusement parks to stadium ticket windows, from grocery stores and neighborhood restaurants to stadium concessionaires and surrounding bars and restaurants. Stadium development does not create wealth — it just moves it around from a city’s surrounding region to the neighborhood in which the stadium is located. This is not economic development strategy; it is the most unconscionable kind of corporate welfare.”
Robert Baade, an economics professor of Chicago’s Lake Forest College, has done extensive study on professional sports teams’ impact on local economies. He also says professional sports are merely a substitute for other entertainment options in the local economy. If the teams didn’t exist, he says, consumers would spend their entertainment dollars on restaurants, bowling alleys, movies, and amateur sports. Groups that perform economic studies of sports teams’ impact on local economies ignore such things as “the substitution effect,” often arriving at overblown conclusions. “I’m not going to accuse anybody of advocacy research,” Baade says. “But clearly some of these studies are commissioned by teams, and some of these studies have a political stake or economic stake in the outcome. So I think you could make the argument that this stuff is more a political statement and involves more posturing than providing a precise rendering of what these teams do.
“Do people intentionally ignore these things like the substitution effect?” Baade asks. “I can’t say. It certainly has that appearance sometimes. I don’t want to be in the business of saying, ‘Yes, somebody is intentionally offering numbers that are deceptive.’ While I don’t know the motivation for that or why that occurs, I do know that they are making some pretty fundamental errors that any scholar of note would not make in trying to come up with some rendering of what it is that teams do for a community.”
“I am not an economist,” says Peter Levi, president of the Greater Kansas City Chamber of Commerce. “I have read studies that say it both ways. What I know is that teams are approaching values of a billion dollars, and so are stadiums. Nobody is suggesting that Kansas City must make that kind of investment. We have stable football ownership and are on the way to having stable baseball ownership (with prospective owner David Glass, who faces major league baseball owners in April on his $96 million bid to buy the Royals). The improvement we are talking about is not an issue of today or tomorrow. Both teams have leases to 2015. Hopefully, any improvements are tied to extending the teams’ leases. The ownership will keep those teams here as long as we can meet their needs.”
So how far should a community be willing to go to keep a professional sports team?
It’s a question that deserves more research, says Lenk. “It depends on the level of tax incentives,” he says. “It also depends on what you would assume if you did nothing. It depends on (other) assumptions we make. At the time we did our study it was, ‘What if the teams were to leave; what is the impact?’ So the $256 million in the last study is our estimate. What is $256 million out of a $55 billion economy? It’s big, but it’s still a small percentage. In pure economic terms, the impact would be felt, but it wouldn’t be a disaster. On the other hand, teams provide much more than their economic impact.”
Baade believes the economic impact may be even less and that contributing millions of dollars to sports teams and stadiums is a poor investment in economic terms. Baade also contributed to Sports, Jobs, and Taxes and stands firmly behind the conclusions the authors drew. “I think that the people who contributed to that volume are the people who are best known throughout the country for that work,” he says. “So I think that they make the case for the fact that, economically, (contributing millions to support sports franchises) doesn’t mean a whole lot. If it doesn’t, then why should you invest? You’ve got to really examine the cultural dimension and try to get a feel for how important this is psychologically to a community.”
The error of overstating a team’s importance is common to nearly all economic impact studies, but it is not unavoidable, says Baade. “Sometimes people will say things like, ‘I can’t do anything about quantifying the substitution effect because it’s too hard to get at,'” he says. “Well, I think there are ways of getting at it.
“The devil’s in the details on this stuff. I don’t think, given the way a lot of these economic impact numbers are assembled — by people who have some sort of political stake in the outcome — it’s just not complete enough, it’s just not detailed enough, it’s just not precise enough.”
The money local residents spend should be included in the studies, Baade says. To a large extent, the money generated by the local economy once spent on a professional sporting event is siphoned out of that community. “So often these linkages exist because the owners and players are so mobile,” says Baade. “If they don’t live in the community that they play, for example, then they are repatriating earnings to their primary residences, and that could be very substantial. By contrast, if you’ve got locally owned and operated entertainment activities, that money that is repatriated to players’ primary residences would stay in the community if in fact people were spending the money on locally owned and operated entertainment.”
People will spend money on other entertainment activities, says Baade. To make the statement that sports teams are an invaluable resource to a community, “you’d have to make the argument that people are going to stop spending money on entertainment. To the extent that we’re diverting spending from locally owned and operated entertainment activities to entertainment activities that are national in scope — and professional sports teams are that — that’s not a plus, that’s a negative. When you lose a team then it may well be that you are better off economically because the money is going to locally owned and operated entertainment activities.”
All in the mind
If teams do leave a community for greener fiscal pastures, a loss will undoubtedly be felt, though it may not be primarily economic in nature. “I know that there are zealots in any community and strong supporters of having a professional sports presence, and they really do get a lot psychologically from having a team,” admits Baade. “There won’t be the discussions around the water cooler anymore talking about team fortunes, and maybe that’s something some people are willing to pay for. I’m sure there are some people who are willing to pay for that.”
Lenk echoes Baade’s sentiments. “Sports are one of the few activities that lots of people participate in even if it’s just by reading the sports page. But we’re all on the same team. And we root for the home team. And those are part of the things that connect us. And we have too few of those things left. Sports are one of the things that we share as a region. I’d hate to lose a team without a reasonable alternative.”
The problem is, it is impossible to put a number on the true value of sports teams, because the psychological benefits can’t be measured in dollars. “There’s really no way to put a number on that,” says Lenk. “There might be a way to make assumptions that say, ‘Without a sports team, we have less net migration to the region.’ It might be harder to attract folks to work here. There might be a way to quantify an economic impact to that, but I think that still misses the point. The point is, what does it take to build a good community? In general, community is all about sharing something in common. And so we will lose this thing to share in common. There are other things, but it seems the more we have, the better off we are.”
In the end, admits Lenk, the pure economic impact of sports teams does not really figure all that heavily into the equation. “I would say that the economic impact, while important, doesn’t matter as much to people as the quality-of-life impact that they perceive. But it is an important generator of dollars, and I think it may be more important as a generator in the fact that Kansas City continues to exist and thrive in the rest of the country. If you travel to the coast they barely know about the Midwest. So it’s one of the ways to keep our name out there.”
Not only do proponents of a new bistate sales tax have the success of the Union Station project to use as a rallying cry, but also last winter Kansas City sports fans were nearly dealt another blow when the Kansas City Blades entered negotiations with Oklahoma City to move the franchise. To sports fans in a city that over the years has lost an NHL franchise, a major league baseball franchise, an NBA franchise — and more recently lost the headquarters of the NCAA and saw the Big 12 decrease its yearly commitment to hold the conference tournament here to every other year — losing yet another outlet for team sports fanaticism would be crushing.
The effect of professional sports on a community reaches beyond sports fans, says Levi. The chamber’s major legislative priority this year is passage of new bistate legislation. “Public financing of sports teams is a tough question that relates to the nature of major league sports,” he says. “There is significant competition from community to community to keep a sports franchise.
“I think we would be psychologically devastated if one or both the teams were to leave Kansas City. Charlie Finley threatened to move the A’s for years before he did. When he did, we believed we were inferior because of that. The Chiefs and Royals reversed all that. The teams brand us as a major league city. It gets us on the news and sports page and puts us in the small list of major league cities in the country.”
“Our strong feeling is that the sports complex is one of Kansas City’s greatest assets,” says Steadman. “It brings pride to the community, national recognition through TV and radio and newspapers and through promotional efforts.
“Whether the economic benefits are there or not, people around us know and have a better feeling about Kansas City than Omaha with no sports teams. Folks don’t know where Omaha is and don’t care. Sure, money needs to go to schools, arts, and every other cause in the world. But nothing in any city brings as much pride and joy, or does more to bring community together, as successful pro sports teams.”
The teams bring together significant groups of the community without regard to race or economic standing. Even critics say this psychological benefit may be the most important aspect of a sports team.
Baade has discovered that there is great psychological benefit to hosting a sports team in a city. “Witness what went on in Green Bay,” he says, referring to the selling of Green Bay Packers stock several years ago. “It (the stock) was completely worthless. It was nonvoting shares that could not be transferred at any price to anybody else. It was just a way of raising money for the Green Bay Packers, and you had a lot of people who were buying what amounted to a worthless piece of paper, a stock certificate.
“And so what that indicates is that there are people who are willing to put up some money for the team. That, yes, they do get something from it psychologically — that they value it and they are willing to part with other things in order to have the team there.”
Bondon says that if the major league teams were to leave, the city would hurt, but it wouldn’t be devastated. “I would find other sports,” he says. “Many sports fans are like that, sports fans. But we have to look at what happens to us because we are a major league town.”
Levi says that because of Kansas City’s location in the middle of the country, without an ocean or mountains, “We don’t have something that will attract professional or blue-collar workers to our town. The sports complex is a great cultural facility. Art, science museums, and amusement facilities are part of what people look at in moving or keeping business in Kansas City.”
Zimbalist says the psychological benefit to a community may be the only significant contribution major league sports make to a community. “There is a return in the form of cultural entertainment,” he says. “If the people of Kansas City think that the Chiefs and/or the Royals provide entertainment or cultural value, they may want to fund the teams through the sports stadiums. But if they are looking for economic return, they should not. The issue should never be sold that way, because it’s pure fabrication.”
Son of Bistate
The perceived success of the first bistate sales tax in helping pay for the Union Station renovation has lawmakers in Topeka and Jefferson City jockeying to pass Bistate II, or “The Son of Bistate.” The tax will be a 1/8- to 1/4-cent sales tax levied in the five counties in Kansas and Missouri that compose the Kansas City metropolitan region.
The original idea for the bistate tax came from arts and culture supporters who wanted to fund area nonprofit organizations that they believed contributed to the quality of life. But in the end, arts and culture did not excite the electorate much. Proponents of greater regional cooperation picked up the original bistate proposal and chose renovating Union Station as a way to try the bistate tax and get voters behind it.
The enabling legislation now before Kansas and Missouri legislators differs from the initial bistate compact passed by voters nearly four years ago. This time, rather than funding a specific project, revenues from the sales tax will fund “cultural activities.” According to the proposed legislation, the term refers to, besides traditional arts and cultural groups, “sports or activities which contribute to or enhance the aesthetic, artistic, historical, intellectual, or social development or appreciation of members of the general public.”
Promises from the first bistate campaign said that the tax would target only arts and cultural activities. With the new enabling bistate legislation, those promises seem to have been largely forgotten. Bistate tax money used for sports facilities basically subsidizes private, profit-making ventures. Arts and cultural groups are mostly nonprofit, charitable groups that depend on the goodwill of the community and of donors to carry out their missions.
Public officials don’t make the distinction. The JCSA presents the logic for public funding of sports stadiums in its 1998 annual report. in the section “Competition Among Communities,” the JCSA writes, “Competition among American communities to attract a major league sports franchise intensified in recent years. Recognizing the economic as well as intrinsic benefits that major league sports bring to an area, many communities passed bond issues, raised local taxes, and in some cases, built stadiums in efforts to attract a major league sports team. The need to retain Kansas City’s major league sports franchises is indicated by the difficulty the city would experience in trying to attract a replacement team.”
The report continues with a litany of other cities that have let teams into the public vault: Nashville is building a $250 million stadium; Cleveland, $281 million; Milwaukee, $230 million; Seattle, $250 million.
Bistate funding of sports stadiums may help Kansas City avoid such large outlays and keep two stadiums up to date. The amended legislation prohibits the use of bistate sales tax revenues exclusively for sports but does not include a dollar amount or percentage that must be used on cultural activities other than sports. If the bistate is renewed, the campaign for dollars doesn’t end. Public hearings and discussions will determine what mix of sports, arts, and culture will be put before voters for their approval.
“If sports facilities were to be added to the definition of cultural attractions, the possibilities are endless,” says Kansas state Rep. David Adkins of Leawood. “It could involve community recreation facilities. It could involve the construction of an arena in Olathe — a lot of communities are now building those 6,000-seat arenas for hockey or indoor soccer. As to sports, the possibilities are endless, just as they are to traditional cultural attractions.”
“The legislation gives people the right to dream,” says Adkins, a major proponent of the bistate bill in the Kansas Legislature. “Ultimately it is up to the community leaders to put together any ballot proposal.” He makes it clear that no specific project is in the works. “At this point in time, the legislation would just expand the scope of projects that can be considered. I don’t think anyone is considering what the specific ballot language will be.”
Missouri legislators are focused on major league sports, which may run the bistate aground. On the strength of funding for stadium improvements, Rizzo is optimistic about the bill that coasted through the Missouri Senate and is awaiting committee approval in the House. “I think it will pass,” he says.
Missouri legislators are also more willing than their Kansas counterparts to let professional sports teams have what they’d like. But they are also reaching the limit, considering the state’s tight budget. “Then there are term limits, which could get rid of traditional supporters,” Rizzo says. “There are a lot of different things entering the equation that have never been there before. Stadiums are important, but as a priority as with all other things that need money in the state, their importance is sliding. We are closely reaching the level of funding in Missouri where rural legislators and those from Springfield have trouble taking the vote home. Kansas City and St. Louis are given money for sports when the rural districts need funding for fundamental services. There is an increased call for more private funding. The teams will have to bring something to the table. We might match that.”
Although Levi says the chamber has yet to gear up for a campaign to have voters pass the tax, such a push will certainly be a multimillion-dollar effort. Currently, Levi says, the chamber lobbyist, Vice President of Government Relations Christy Wyatt, is spending a good deal of time with lawmakers in Topeka and Jefferson City.
The Missouri General Assembly seems to be behind new bistate legislation. Kansas legislators are less enthused. When Son of Bistate was proposed, legislators in both state capitals pushed the legislation that would clear the way for funding of the sports complex and possibly the construction of one or several sports facilities in Kansas. In the works are a sports arena in Olathe and the proposed $150 million Maurice Greene Sports Complex at the Kansas City, Kan., Community College. While these proposals will be discussed and will certainly gain support in their communities, once word about the major league focus of bistate discussions filtered out to Kansas voters, lawmakers began to hear from constituents objecting to the use of tax dollars flowing out of their community to fund professional sports in Missouri.
The bill in the Kansas House has yet to move from the commerce committee. “Bistate stands a good chance of failure,” says state Rep. Phill Kline of Shawnee, who is a member of the commerce committee. “The delegation from Johnson County is split. I oppose it, and a good number of us do. I doubt it could get a majority when the rest of the House looks at it. They may vote against it if delegation is not unified.”
Critics say sales taxes are regressive, falling most heavily on those with the least means to pay them and funding those with money — who make even more money with the public investment. “There is something fundamental here,” Kline says. “We have to decide to increase sales tax on food so that luxury suites can be built? I don’t believe, and I am not alone, that that is a wise approach to tax policy, especially in the current budget climate with things getting tight.” Kline says the commerce committee is trying to decide whether to even bring the bill out of committee this year. Moreover, he says, it faces some principled resistance whenever it comes out. “For instance, my opposition would still be there if it would benefit Johnson County with a sports facility,” he says.
The new bistate proposal is “taking on water,” according to Adkins. “Conventional wisdom at this point would be that Johnson Countians do not want their sales tax dollars to pay for stadiums in the Harry S. Truman Sports Complex. As a result of that, Johnson County legislators are not going to be supportive of these revisions to the compact even though these revisions do not impose any tax for that purpose. And oftentimes when a local delegation is split on an issue, other legislators tend to take their cue from that. I would guess that if Johnson County and Wyandotte County legislators can’t be overwhelmingly supportive of the changes in the bistate compact, they (the changes) will have some difficulty being enacted.”
But, Adkins says, the lack of support is primarily due to a misunderstanding of the bill before the legislature in Kansas. “I don’t think a lot of legislators are yet cognizant of what the bill actually does,” he says. “I think that many of them believe that the compact is going to sunset and has to be renewed or that this somehow creates a new tax, and it doesn’t do any of that. In light of the fact that no new tax would be imposed until voters approved it, I would think that in the end it has a chance of being enacted.”
In any event, the Son of Bistate will have a much harder road to travel than its predecessor, which was tightly wrapped around Union Station. “When you get into sports, I know down here (in Jefferson City), arenas and stadiums are very, very controversial. It would not surprise me at all if it did get a little off-kilter,” Rizzo says.
Likewise, Adkins sees a fight on the horizon. “There are very real political difficulties when you start talking about the stadiums,” he says. “Kansas would want to make sure that Jackson County has honored its commitment to those stadiums first. We would want to make certain the State of Missouri has done for Kansas City what it has done for St. Louis. We want to make sure that the State of Missouri has essentially done what is commensurate with what other states similarly situated are doing. I think Kansas should rightfully say, if in fact additional funds are needed after Jackson County has met its obligations and after the State of Missouri has met its obligations, that a bistate tax should only be used for capital improvements and could only be used when necessary to fill any gap that would exist. That, quite candidly, would be a quite small investment, if any.”
While optimistic about getting the bistate proposal amended to include sports facilities, Adkins believes the battle over the use of the money will be long. “There are a whole lot of hurdles that we would have to overcome before Kansans, Kansas politicians, and civic leaders would feel comfortable participating in any way in financing professional sports stadiums,” he says. “And under no circumstances do I think we envision any scenario where a blank check is offered to the owner of the Royals or the owner of the Chiefs to do whatever they want and that we’re willing to pay for whatever we need to.”
Former staff writer Jeffrey Ramsey contributed to this story. Contact Patrick Dobson at 816-218-6777 or patrick.dobson@pitch.com.
