On the Trail: Breaking down the costs, benefits and gaps of St. Louis' riverfront stadium
From the moment a proposal for a riverfront stadium was unveiled nearly a year ago, the roughly $1 billion facility provoked probing questions about the future of professional football in St. Louis. Some of the queries revolved around the intangible benefits of remaining a NFL city. Others asked whether voters or legislative bodies should approve public commitments to the facility.
As those debates continue to play out, the St. Louis Board of Aldermen is wrestling with something more tangible: How much is it going to cost the city to build the facility and how much will a stadium bring into city coffers?
City officials who have crunched the numbers see the stadium's impact on St. Louis’ bottom line differently. For instance: St. Louis Comptroller Darlene Green says she's not going to support a stadium financing package in its current form, primarily because it would result in a gap between what the stadium ultimately costs and the direct revenues the facility produces. Green’s opposition is significant, especially because her vote and her official duties could be required to execute the complicated financial deal.
“This is not a fiscally responsible plan as it has been presented to the board at this time,” said Green, who sits on the Board of Estimate and Apportionment with St. Louis Mayor Francis Slay and St. Louis Board of Aldermen President Lewis Reed. “It does not have enough revenues. As a matter of fact, the revenues are very short. And there’s a material gap that’s created between revenue and expenditures that go out each and every year.”
Yet while acknowledging that the stadium won’t come without costs, both staffers and allies of Slay point to potentially enticing indirect benefits — including bolstered sales taxes for schools, public transportation and parkland. And they see potential windfalls for businesses around the stadium — and to the city’s psyche.
“If the project breaks even, I think that’s a win for us,” said Alderman Jack Coatar, a 7th Ward Democrat who is sponsoring the stadium financing legislation. “What all the numbers that you’ll see … and that the statisticians have crunched, what they don’t factor in is that sense of pride. That’s a legitimate argument. We want to keep a football team.”
Where the billion comes from
To understand the total cost of the stadium for the city, first look at the sources of the money for the facility.
The vast majority of the funding comes from either the private sector (such as a team contribution, a NFL loan program and personal seat licenses) or the state (through bonds and tax credits). Here’s a breakdown of how the stadium would be paid for:
Under the terms of the legislation and a financing plan, the city would issue about $70 million in bonds that would be paid off over a roughly 35-year period. The city would pay between $4.5 million and $8.99 million a year in debt service through 2051, which amounts to a little more than $233 million over a 35-year period. (Though that shakes out to about $103 million in "net present value," which accounts for risk, inflation and interest rates, according to the comptroller’s office. That grand total also takes into account paying off the Edward Jones Dome.)
The St. Louis Regional Convention and Sports Complex Authority would then use a recently signed naming rights deal as collateral of sorts to issue $75 million in bonds. Since naming rights money is typically seen as team revenue, the city would rebate about 64 percent of “game day” taxes to the NFL squad that plays in the stadium. (That means the city would keep about 36 percent of sales and earnings taxes emanating from the facility.)
It is basically impossible to predict how much money the stadium would produce, since that would require knowing how many tickets, parking spaces, hot dogs and vintage Az-Zahir Hakim jerseys are sold out of the facility. But the city's financial experts have made estimations to see if that aforementioned 64-36 split makes sense for the city.
Green's office calculated that there will be anywhere from a $3 million to a nearly $4 million gap between stadium-generated revenue and the debt the city's annual debt payment. (For fiscal year 2015, the city's general fund equals $484.4 million.) She said city residents should understand that “real dollars that would have been there to deliver city services will be reduced by the amount that goes into building the stadium.”
“Because it’s an appropriation bill, it will have to come before [the Board of Estimate and Apportionment]. And I can tell you categorically, I will not vote for the bill in its present state,” Green said. “In committee, they can change it. Maybe they’ll change it to become more fiscally responsible. Maybe they’ll reduce the amount of obligation the city would have — the annual obligation that they would have every year. Then I could see it would be more palatable for the city to consider. But in its present form, my vote would be no.”
Alderman Chris Carter, D-27th Ward, said Green’s opposition to the stadium plan is significant. He noted that the Rams don’t generate enough direct revenue to cover a $6 million-a-year bond payment for the Edward Jones Dome — which means the city has to use general revenue to make up the difference. (Though it should be noted that the Dome is also used for conventions, which bring in a lot of tax revenue.)
“I’m definitely not an economist, but I know that if you have a team that’s not filling the seats where they are and we are constantly pulling money out of general revenue to basically pay for a stadium, a new stadium will not fix that,” Carter said. “It’s a major concern that I do have. But it’s one that I don’t think that the folks in the mayor’s office are being factual about — or they may just believe in that pie-in-the-sky plan ‘if you build it, they will come.’”
The whole picture?
Nahuel Fefer is an administrative assistant for Slay who has been assigned to examine and explain the finances of the stadium plan. He doesn’t dispute that the stadium financial plan will create a budgetary gap. But he said that gap doesn’t take into account sales taxes that go to Metro, the St. Louis Public Schools or Great Rivers Greenway.
If those sales tax revenues are included in the calculations, Fefer says the deal is basically a wash for the city — and may be a net positive when factoring in things like bolstered property taxes or sales taxes from the area surrounding the stadium.
"The deficit is [roughly $20 million] net present value. And that’s what you could conceivably argue we could spend on something else," Fefer said. "But then if you consider that $20 million as an investment, you get a lot of bang for your buck. Because you get to keep the NFL. You get to build a massive stadium, which gives wages to city residents, creates 3,000 jobs that are a stimulus. On top of all that, you get [about] $20 million into public schools and Metro and parks."
Alderman Stephen Conway, D-8th Ward, said any calculation about the project's impact also doesn’t take into account the bolstered revenues from surrounding hotels, restaurants or offsite parking. The chairman of the Ways and Means Committee added it doesn’t factor in that the north riverfront “is a mess of deteriorating dinosaurs with no redevelopment ever in the last 20 years.”
“What is her solution to redevelop the north riverfront?” said Conway, referring to Green. “We have a lot of naysayers and obstructionists here. We offer a wide array of service to everybody of all ilks, all backgrounds, all desires of what the city should be. ... To have that riverfront and the intangible benefits of cleaning up our front door are priceless.”
For her part, Green put out two alternatives: Either create a statewide stadium authority funded with a rental car surcharge to pay for stadiums around Missouri or make up the gap with more public safety dollars. The first option may be a tough sell – especially since one of the biggest rental car companies in the world is based in Missouri. But the second option may have a way forward, especially since Alderman Donna Baringer, D-16th Ward, filed legislation that could create a depository of sorts for donated public safety funds.
“Maybe some corporate support that would possibly help to either backfill … the gap that we created and say that the purpose there would possibly be to pay for the public safety piece of the service delivery that we need,” Green said. “That would be a satisfactory to the citizens to moving the city forward. Because we are concerned about crime and the other social ills in the city of St. Louis and the entire region. And it’s not just a city focus. That concern about public safety is regionwide.”
All eyes on Reed
Green’s likely opposition to the stadium plan puts even more pressure on Aldermanic President Lewis Reed. Not only could Reed’s vote break a tie in the Ways and Means Committee, but his approval may be required to get the financing plan through the Board of Estimate and Apportionment.
Still Reed — who hasn’t taken a definitive position on the stadium plan — said Green’s opposition places no more pressure “than is already on me.”
“What I’m looking for is to make sure that we protect the taxpayers’ money, make sure that what we do ends up being something that works for the taxpayers of the city of St. Louis. And that it’s a fair deal all the way around,” Reed said. “So I’m feeling confident based on some of the discussions that have been going on already in the committee and amongst some of the committee members about changes they’d like to see in the bill. … I think we’ll end up with a decent bill at the end of the day.”
But even if Reed ends up voting with Slay on the stadium plan, it’s likely that Green’s office will have to execute parts of the financial package. (In fact, her signature is required within a financing plan for the stadium.) When asked if her opposition to the plan could complicate her role in carrying out the stadium proposal, Green replied: “My responsibility is first and foremost for the citizens to protect taxpayers’ dollars, protecting the credit of the city — so that would be the first thing I would have to look at and consider.
“I would have to analyze what is brought before me in terms of any types of signature or anything,” said Green, referring to how her office needs to sign off on the city’s financial obligations. “And if I thought that this would jeopardize credit of the city and if I thought this was not in line with protecting taxpayers’ dollars or protecting the credit, then of course I would have to consider what to do in order to achieve the goal of protecting the city’s credit. That’s first and foremost my responsibility — to be fiscally responsible on behalf of this city.”
On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.