Sun, Nov. 13, 2005
The murmurs — and snickers — resonated throughout the Truman Sports Complex during back-to-back fall weekends.
As the Royals and Cleveland Indians played on a Friday night at Kauffman Stadium, a bank of lights blacked out behind third base, causing a 15- to 20-minute delay.
The next weekend, during the Chiefs-Philadelphia Eagles game, the scoreboard and game clock were inoperable during the second quarter.
Spectators couldn’t help but notice the coincidence and wondered whether this was more evidence that these two once-wondrous stadiums were indeed falling apart — and if proposed renovations, if not replacements, for the facilities are as imperative as the clubs insist.
Less than a year after a Bistate measure to refurbish the stadiums failed, the Chiefs and Royals, as well as the Jackson County Sports Authority, are back at the negotiating table with the owner of the facility, Jackson County, trying to craft a new referendum to put on the ballot next April.
The clock is ticking. The clubs are seeking about $465 million in public money for renovations and expansion of the two stadiums, and a referendum, probably for a three-eighths-of-a-cent sales-tax increase for at least 25 years to finance most of the work, must be submitted to the Jackson County and Kansas City election boards by Jan. 24 to make it onto the April 4 ballot.
Without new leases, Kansas City could lose both franchises. The county will default on the current leases as soon as 2007 because it lacks the funds to meet the terms of the master plan project agreement stipulated in leases signed in 1990.
The Chiefs are proposing a $312 million refurbishment for Arrowhead Stadium and would contribute a minimum of $50 million, or at least 16 percent, toward the project, and cover any cost overruns. The Royals are proposing a $225 million refurbishment for Kauffman Stadium and would contribute $20 million, or about 8.8 percent. In turn, both teams would agree to new 25-year leases though 2031.
But is that a fair private-public partnership? What are the ground rules when wealthy owners ask cash-strapped communities to help underwrite their football or baseball playpens?
“The rules of the game are established by the fact the NFL and Major League Baseball are both monopolies, so the rules of the game are unfair,” said Andrew Zimbalist, a professor of economics at Smith College in Massachusetts and an author of several books on the subject.
“It gives the teams more bargaining leverage than they ought to have. Also, given the fact they are monopolies, you look at what the deals that have been struck in the recent past are, and you try to fit into the parameters of those deals.”
The industry average for 20 new or refurbished NFL stadiums built since 1992 — and including soon-to-be-built stadiums in Indianapolis and the Dallas area — has been 62.8 percent public financing, 37.2 percent private. That does not include the just-announced new $800 million stadium the New York Giants and Jets plan to build on land adjacent to Giants Stadium and share as partners without taxpayer assistance in New Jersey, because most experts will say different rules apply to the enormous New York marketplace.
The industry average for new major-league baseball stadiums built since 1991, including the new facility in St. Louis that will open in 2006, is 67.7 percent public and 32.3 percent private.
“The first rule of thumb is the smaller the market, the larger (public) contribution,” said Marc Ganis, president of the Chicago-based sports consulting firm Sportscorp Ltd. “A city like New York can have a lower percentage of public contribution than a city like Cincinnati. Smaller markets don’t have the population to support local broadcasting (rights fees), they don’t have the size and scope of the business community to support suites and sponsorships, and they don’t have the depth of a demographic market to support increasingly higher ticket prices with increasing attendance.
“The second rule of thumb is, when you’re looking at a market the size of Kansas City, you’d be looking at no less of a public contribution than two-thirds … and could conceivably go to more than 80 percent. But at a minimum, it would be a two-thirds, one-third arrangement.”
A look at comparable markets to Kansas City bears that out.
Recently opened NFL stadiums heavily funded with public money include Tampa (100 percent), St. Louis (96 percent) Cincinnati (94 percent), Baltimore (90 percent), Jacksonville (86 percent), Nashville (71 percent) and Seattle (65 percent), as will the stadium that will be built in Indianapolis (80 percent).
The same holds true in baseball at the stadiums in Cincinnati (90 percent), Baltimore (90 percent), Milwaukee (84 percent), Pittsburgh (83 percent), Denver (82 percent), Cleveland (70 percent) and San Diego (68 percent).
An exception to the small-market rule was in Charlotte, where $242.9 million Bank of America Stadium was funded 77 percent privately, mostly through $100 million in personal seat licenses.
“Any team-community relationship is a public-private partnership,” said Dean Bonham of The Bonham Group, a Denver-based sports marketing/consulting firm. “By definition, both parties benefit by that partnership.
“The city and its citizens benefit dramatically on both sides of the ledger, so there ought to be a recognition of benefits on both sides, and there ought to be a contribution from both sides.”
One notable exception is in St. Louis, where the Cardinals are funding 89 percent of the $380 million Busch Stadium that will open in 2006. The Cardinals were unable to persuade voters to finance another facility after spending $288 million on the Edward Jones Dome to entice the Rams from Los Angeles seven years after the football Cardinals moved to Arizona.
“Clearly, our timing was not the greatest as far as the public was concerned,” said Bill DeWitt III, a Cardinals vice president. “People were leery of the Rams situation and what happened there … not that they were disappointed with the final result. The state budgets were really in tough shape when we were after this money.
“Frankly, we’re the Cardinals, and to some extent they called our bluff a little. We’re here, and we’re not going anywhere. We did threaten to move to Illinois a little bit, and we could have moved across the river and financed it publicly. But we didn’t feel it was in the best interest of our fans and the city and we tried to make it work (privately). … We felt good about taking that gamble.”
Chiefs chairman Clark Hunt suggested last summer that his franchise could look elsewhere in the Kansas City metropolitan area, presumably Wyandotte County, if Jackson County defaults on its lease. But both the Hunt family and Royals owner David Glass have reiterated their desire to remain in a renovated Truman Sports Complex.
“The Kansas City Chiefs, as well as the Kansas City Royals, have determined they want to stay at that complex, (but) it’s old,” said Michael Smith, chairman of the Jackson County Sports Authority. “They’re telling the public: ‘We love Kansas City, we like where we’re at. Just fix up our old stadium.’
“This is very common practice throughout the United States, that we publicly fund stadiums.”
During the Bistate campaign, the Chiefs pledged at least $50 million toward the $230 million plan for Arrowhead Stadium, or about 22 percent; while the Royals offered $15 million, or 7.6 percent, toward the $195 million for Kauffman Stadium. Both teams were going to cover any cost overruns, and they agreed to put a cap on future maintenance obligations on the part of the county, something that was not done in the 1990 lease and has created the specter of default.
But after Bistate was defeated, the clubs are going for more extensive renovations and amenities to make the facilities year-round destinations. Renovations would add as much as a third more space in square footage to the stadiums while maintaining the integrity of the bowl and seating areas. That is requiring a larger percentage of funding by Jackson County, which approved Bistate but saw it fail because Johnson and Clay counties rejected it.
The clubs are also still hopeful the Missouri state legislature will take some of the burden off Jackson County taxpayers by redirecting the proceeds from the existing Athletes and Entertainers Tax toward the upkeep of stadiums.
Had a proposal not died in a House committee last summer, taxes paid by those who perform in the stadiums would have raised about $8.5 million in 2005 for facilities and kept the leases from the danger of default. In return, the clubs were willing to extend their leases by 15 years to 2030.
Now, the clubs and county are trying to find a formula that works for everyone.
“Every city is different,” said Chiefs vice chairman of the board Jack Steadman, who was a central figure in creating the Truman Sports Complex 35 years ago and is the club’s point man in the current negotiations.
“The big-market teams where they have the opportunity to sell personal-seat licenses and lease suites for $250,000 and $100,000 have been able to do a lot more of the financing than the smaller communities like ourselves, Cincinnati, Indianapolis.
“The problem we’re facing here in bringing our stadium to state-of-the-art is we do not have the potential of selling PSLs, because the people on the club deck have been there for years, so it’s a matter of trying to generate revenue out of additional suites, and hopefully improve concessions and things of that nature to pay off our $50 million commitment.”
Royals owner David Glass said the more money his club has to put into the stadium, the less it will have to invest in talent.
“In a market our size, there’s a tradeoff,” Glass said. “You either put your money in the team to be competitive, or you put it in brick and mortar. My approach is whatever revenue we have to spend, we ought to spend it on the team to field as competitive a team as possible. All we’re looking to do is try to break even. If you put a lot of money in the facility, you have to amortize that some way.
“It’s one or the other, and I’m not sure what is the proper mix.”
Some taxpayers will argue that they shouldn’t subsidize stadiums inhabited by multimillionaire owners. But Jackson County Legislature Chairman Dan Tarwater said if they don’t come to the aid of the clubs, another community will. Just last week, NFL Commissioner Paul Tagliabue was in Los Angeles meeting with LA Coliseum officials and assuring them a team the league will return a team to that market in the near future.
“We could say, ‘No, we aren’t going to do anything for the Royals and Chiefs, they should do it themselves,’ ” Tarwater said. “Most likely someone else will say, ‘We will build you a stadium,’ and then they are gone.”
Steadman understands the feelings of fans who are already paying average ticket prices of more than $50, plus $20 to park and $8 for a beer to a team that receives $80 million as its share from the league’s national television contracts (soon to be about $115 million starting next year).
“The clubs have to generate sufficient amount of additional revenue to retire their debt,” Steadman said. “The fact is Kansas City has to compete with Indianapolis, with Denver and the deals that are made in Cincinnati and Pittsburgh and other small-market areas.
“It’s the same principle when we sign a player; it doesn’t make any difference that we’re in Kansas City vs. New York. Whoever is making the best deal is what we have to compete with, and Kansas City is going to have to compete with what’s happened in other communities.”
Another source of financing is selling naming rights to the stadiums, and 17 of the 31 NFL stadiums and 15 of the 30 major-league baseball stadiums have such deals. But in Kansas City, it would seem inconceivable and an affront to the memory of Ewing M. Kauffman to sell off Kauffman Stadium in favor of some telecom company.
And Clark Hunt said, “It’s tough to ever envision giving up the Arrowhead name.”
Kansas City has a history of publicly funding its stadiums. The original sports complex cost $62 million, and the clubs contributed $19 million, or 30 percent. The two owners, Lamar Hunt and Ewing M. Kauffman, contributed a total of $6 million up front, and Hunt’s share helped pay for about 18,000 chair-back seats, a computerized scoreboard, business suites and office areas. Kauffman’s share also included some amenities, including the spectacular fountains behind the center field wall.
Property taxes paid off $43 million in county general obligation bonds; and the clubs paid off $13 million in revenue bonds in 20 years.
The Truman Sports Complex became a symbol of Kansas City and was years ahead of its time. Cities such as Baltimore, Pittsburgh, Cincinnati and Cleveland have copied the two-stadium model.
The Royals were a smash success, drawing more than 2 million fans 11 times during 1978-91, the largest attendance per capita in the major leagues; and the Chiefs, among the leaders in NFL attendance during the last 15 years, led the league every year during 1994-1999.
But once in each generation, a community has to determine its investment in professional sports, and that time has come in Jackson County.
By the time new stadiums open in Arizona and Dallas, 29 of the NFL’s 32 teams will be playing in stadiums that have been refurbished or are newer than Arrowhead, which opened in 1972. Only San Francisco (1958), Oakland (1966) and San Diego (1967) will be playing in older stadiums.
In baseball, once the Cardinals move into a new stadium in 2006 and the Washington Nationals, New York Yankees and Mets complete new stadiums, 27 of 30 teams will be playing in stadiums that are either refurbished or newer than Kauffman, which opened in 1973.
Only the Boston Red Sox (1912), Chicago Cubs (1914) and Los Angeles Dodgers (1962) will be playing in stadiums older than Kauffman.
“We have to keep our eyes on the prize, and that’s to keep Kansas City major league in sports,” Jackson County Executive Katheryn Shields said. “The whole issue is what the teams mean to the community — not only the tax dollars that pour in, the revenue from people who come and visit us and watch the Royals and the Chiefs, but also the national image it gives us.”
Shields wants both sides to pay their fair shares.
“Because of the nature of our small market, it becomes even more a necessity there be a public contribution,” she said. “I think there needs to be private participation as well as public. Certainly, things like the suites have to be paid for totally by the teams and not with public dollars. In addition to that, a cap on any future liabilities has to be in place and a commitment from the teams to handle the cost overruns.
“We need to present a lease to the voters they understand and comprehend what their responsibilities will be. I believe the majority of voters in Jackson County want to see us keep those two teams.”
What if she’s wrong and the county rejects a referendum?
“All we can do is decide whether sports is an important part of a local community,” Ganis said. “If the decision is retaining sports teams is an important part of the mosaic of being part of a community, then these are the rules of the game.
“A local community doesn’t have a choice to change the rules. What they have a choice of is to participate or not.”
Source:
http://www.kansas.com/