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A Primer on St. Louis NFL Stadium Financing

Cutting through the confusion of a very expensive deal to the city

St. Louis Magazine co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m. He is also the author of the monthly column Think Again.

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VIA NATIONALCARRENTALFIELD.COM

If there were an honest debate about whether the city of St. Louis should provide public funding for a new football stadium, it would center around one simple question:

“Is keeping the NFL in St. Louis worth $6 million per year in general city revenue over the next 35 years?"

That’s a simple enough proposition and one upon which reasonable people can disagree. But rather than have the debate—and rather than consider the numbers honestly—the backers of a new stadium are ferociously committed to avoiding transparency and to obfuscating the issue with phony math.

This is not complicated. Presently, the city contributes $6 million per year toward retiring the bonds used to build the Edward Jones Dome in 1991. Those bonds mature in the year 2021, meaning that from 2022 forward, that $6 million would expire.

It is worth noting that the rationale for making these $6 million in payments over 30 years was also straightforward: The tax revenues generated to the city from the dome would more than cover the debt service cost. I know this, because I was one of the people in the media (as publisher of The Riverfront Times) to whom this proposition was sold in the early '90s. I supported it.

Now the city is being asked by the “task force” headed by Dave Peacock and Bob Blitz to “extend” those $6 million payments—the ones that would otherwise turn to zero in 2022—through the year 2051 to finance about $70 million in bonds. And, just as important, the city is being asked to “rebate” what they now call “event-day” revenues (meaning taxes generated at or around the venue during an event) to whatever NFL team plays in the new stadium to offset the fact that stadium naming rights from National Car Rental would be used to finance another $80 million in bonds.

This is newsworthy, seeing as how stadium backers, led by Blitz, had testified in open court as recently as June that the city would only be asked for “around $6 million.” That was during the legendary case before Judge Thomas Frawley when they basically sued themselves (the city being pro-stadium) to invalidate a city ordinance requiring a public vote. More recently, after trying without success to slide city funding of the second $80 million in bonds quietly through the Board of Aldermen, they apparently landed on the creative strategy to camouflage the increased hit on the city with the “rebate” angle.

Conveniently ignored is this small detail: The same “event-day” revenues were the ones used to justify the first $6 million in debt-service payments. Not only are the stadium backers ignoring that fact, and not only are they ignoring the fact that the dome bonds are maturing in 2021, but then they also have the audacity to proclaim that none of this involves any “new taxes or spending.”

Amazingly, the mainstream media will buy this nonsense and report that the city is only being asked to continue its current bonding level and to commit new revenues from the new stadium. So what’s the fuss?

Well, here’s the fuss. Memo to mainstream media: You're forgetting that the original bonds are maturing in six years, and you're letting them count 'event-day revenues' twice.

What the stadium backers are doing with financing is a lot like the shuffle-the-helmet game put on the scoreboard to amuse fans. They show a football under a helmet and start spinning and rotating the helmets while fans try to keep their eyes on the one covering the football.

Now that game is common to most sports teams around the nation. What’s not common is to play it in real life with taxpayers’ money.

The hope is that no one will notice that “event-day revenues" are the football under the helmet of the original $6 million in yearly debt service payments on the dome. And while the helmets are whirring, they want you to confuse payment from 2022 to 2051 with the ones used to retire the debt on an unrelated project.

One more memo to mainstream media: The $6 million in payments from 2022 to 2051 are not an extension of anything. They would be used for an entirely different project.

They can slice it and dice it all they want, but what the stadium backers want from the city is at least $6 million per year more than “event day revenues” could produce in their wildest dreams. In fact, it’s worth noting that “event-day revenues” don’t actually cover the original $6 million in debt service. One set of documents sent to the city claims only $4.1 million is presently generated on Rams’ game day. It’s a generous assumption that the revenues of a new stadium would even justify the initial $6 million figure.

But that’s arguably worth debating. And here are some of the arguments I think might be used if an actual honest debate took place:

ARGUMENTS FOR CITY FUNDING OF A NEW STADIUM

Backers of funding can make the case that losing an NFL team would be a blow to both the image and the pride of St. Louis. They can argue that it’s important to the region’s quality of life. They can observe that NFL games are among the most broadly watched events on U.S. TV and that the images and mentions of St. Louis that come with game telecasts are priceless. They can point out that the new stadium represents needed renovation of the neglected North Riverfront, and that there’s no good alternative on the horizon. They can say that whatever one thinks about spending public money on sports venues, there’s no reason these projects should get any less consideration than any other Tax Increment Financing (TIF) project. They can argue that the $988 million construction project would provide a sorely needed boost in jobs and revenue—like a WPA project might—to a city desperate for activity. They could argue that almost all of the monies would be coming from the private sector and state government. And they could point out that it’s not a choice between two $988 million projects. Rather, it’s this one or none at all.

ARGUMENTS AGAINST CITY FUNDING OF A NEW STADIUM

Opponents of funding can make the case that the city faces a financial crisis that is likely to deepen over the next decades and that it cannot begin to afford spending scare general revenues for another football stadium. They can point out that the city claims not to have $1.5 million to equip police with body cameras. They can point to underfunding and cuts in the full breadth of essential city services, from police and fire services to the health department and the streets and the parks and on and on. They can cite the essential injustice and immorality of transferring hundreds of millions in public assets to the pocketbooks of billionaire sports-franchise owners. They can point out that virtually every economic study—from Brookings on the left to Cato on the right—emphatically shows that sports franchises provide no net economic benefit to a community. They can note that all the economic analyses presented by stadium backers falsely presume that if the Rams leave, the $36 million presently generated at the stadium simply disappears, whereas in reality, almost all of it would be spent for other discretionary purposes in sports and entertainment, the arts, nightlife, etc. They can point to the growth of non-NFL cities like Orlando, San Antonio, and Portland, Oregon, all of which were half St. Louis’ size when we got a team in 1995, yet are on pace to blow by St. Louis in metropolitan-wide population in the next decade or two.

There’s a lot to debate here. Just like there might have been plenty to debate at the Missouri General Assembly, had Gov. Jay Nixon and stadium backers not chosen to use an end-around to commit state taxpayers to hundreds of millions of future debt service through an absolute abuse of executive power. (That would be the “extension” of bonds on the first dome by the St. Louis Regional Sports Authority, whose authority clearly should have expired with the dome project, but which was able to perpetuate on legal technicalities.)

There would have been a lot to debate had county and city voters been allowed to vote on new stadium expenditures, as they clearly had demanded in the wake of the Cardinals’ mostly failed attempt a decade ago to receive corporate welfare (which they clearly didn’t need) for their new stadium.

It is a measure of the arrogance of Nixon and the stadium backers that they simply pulled St. Louis County out of the mix rather than subject themselves to a public stadium vote—which would have meant a robust public debate—even though County Executive Steve Stenger was himself a stadium backer. But Stenger’s simple willingness to follow the law and do his job properly by insisting on a public vote was a deal-breaker. What does that tell you?

And what do stadium backers have to show for not subjecting their project to a vote in the county? They really had nothing to lose, except for having to make public arguments, rather than backroom political deals. There was plenty of time for voter referenda in the city and county, especially if the stadium backers had put them in motion last January, when the initial plans were unveiled.

Instead, they figured they could scratch and claw to get all of the public and private funding sources they could cobble together, safe in the knowledge that Mayor Francis Slay—a key stadium backer—could use his considerable clout to deliver 15 aldermanic votes for whatever funding number would be needed at the end. Call it balancing the books, if you will.

If I’m wrong about that—if as Peacock, Slay, and others now argue, the city was “always” going to be needed for about $150 million in financing—why wasn’t that all clearly laid out, with plenty of time for a vote, and certainly for a debate? It most certainly wasn’t.

And I'm not wrong. Now that we're conveniently out of time, aldermen will be asked on an emergency basis to commit city voters to tens of millions in general revenues over the next 35 years for a new football stadium. And true to the shuffle-the-helmets game, they’ll be asked to do so with little discourse and operating on the very false assumption that it won’t really cost the city anything “new.”

I don't vote in the city, but if I did, I could see supporting the notion of "rebating" tax revenues generated to the team. That's consistent with what other projects get through TIF deals. They're not my favorite thing—and taxpayers are abused by TIF deals throughout the region—but just about every deal seems to get some sort of TIF treatment in the city, so why not this one?

But then I'd say, "Fine to that. Let's just eliminate Schedule C from the year 2022 on." Schedule C is where you'll find the city's unbreakable commitment to service $6 million in debt annually through 2051. If you credit event-day revenues to soften the blow of an NFL team losing some of its precious naming-rights revenues, you can't turn around and claim Schedule C is covered by those same revenues.

That $6 million annual debt-service commitment would be completely unfunded here. It would come from general revenues. It could not be cut if times got bad. It could not be cut if the NFL or its St. Louis team went out of business. And the city would be paying it until I'm 99 years old.

That's nuts. And it most definitely doesn't fall under the category of "no new costs."

The notion that this deal won't cost the city dearly is a very large lie. If stadium backers want their public money, they should debate the proposition honestly. But don’t hold your breath waiting for that.

I believe they are guided by the words attributed to the football icon Vince Lombardi, who said, “Winning isn’t everything. It’s the only thing.”

That’s not a bad way to run a football team. But it’s not such a good way to run a city.

[bubbaramfan]

Try getting that poste at ROD. (good luck)