On the Trail: Rams' departure prompts re-evaluation of the Edward Jones Dome
Now that the St. Louis Rams are Los Angeles-bound, fans of the (formerly) Greatest Show on Turf are likely mulling over whether to start rooting for another team – or tune out the NFL entirely.
But policymakers throughout the state have more salient issues to deal with than whether to hop on the Indianapolis Colts' bandwagon -- especially how to pay off the Edward Jones Dome debt. Might the state stop its payments?
The state contributes $12 million each year toward the facility, while the city and county each provide $6 million. (Those payments go toward paying off the debt accrued to build Jones Dome and for the facility's maintenance costs.) Bond payments on the dome are set to continue until 2021.
This quandary has become a topic of discussion for members of the Senate Appropriations Committee, including state Sen. Ryan Silvey, R-Kansas City.
“It’s important to realize that we don’t have pay it if we choose not to,” said Silvey, who could become the chairman of the Senate Appropriations Committee after the 2016 session. “What we have is a lease agreement with the [Regional Convention and Sports Complex Authority]. And all leases are subject to appropriation, including that one. So this is very different, and it got confused in the sound bites over the stadium bond. But this is not a bond. This is not a state bond that the state has to make a debt payment on that goes against its credit rating.”
Silvey said there are a number of reasons that led lawmakers to question continuing the state's Jones Dome payments. For one thing, there may not be a lot of legislative gusto to contribute funds toward a building that's essentially going to become a full time convention center -- especially when similar facilities around Missouri don't receive as much money from the state.
Plus, Silvey says lawmakers are peeved with the conduct of the Regional Convention and Sports Complex Authority. He said that entity hastened the Rams’ departure when it didn’t fulfill a lease that required the team have a “first tier” facility.
“There have been discussions about whether we want to continue paying an entity that couldn’t keep its lease with the team to begin with,” Silvey said. “They negotiated and signed essentially what was a stupid lease. And then when it came time to put money into the Dome to try and maintain that status that they agreed to, they didn’t do it. So it resulted in arbitration. The arbitrators sided with the team that the Sports Authority had broken the lease. And that’s what allowed them to go year-to-year anyway. And that’s what allowed them to go to the league.
“So really what we have now is the state has a lease with an entity that had a lease with a team that broke its lease,” he added. “So there’s some question about whether we’re going to continue paying that lease when the economic benefit is gone because of their own fault.”
Officials with the RSA did not respond to a message about Silvey’s comments. A spokeswoman for Mayor Francis Slay declined to speculate about the impact of the state cutting off Dome payments, but added she “couldn’t imagine” the state would forgo its obligations.
Regardless of what the state does, the city and county will need to figure out how to make up for the Rams’ lost revenue. Alderman Stephen Conway, D-8th Ward, said that, without the Rams, the city would be “$4 million short in the revenue that would have generated.”
“And at this short notice, we’re not going to have a lot of opportunities to rent up the convention center space for new conventions in 2016,” said Conway, chairman of the Board of Aldermen’s Ways and Means Committee. “Because most conventions take a year and a half to two years in advance. So hopefully the [Convention and Visitors Commission] do the best they can so we can generate the revenues.”
Banking on conventions
Many regional political leaders are diving into their silver linings playbook (apologies for using a tortured cliché involving Bradley Cooper): Although Slay acknowledged last week that the Rams’ departure wouldn’t be without cost, he also contended it created an opportunity for St. Louis’ convention center.
“With the Rams moving, the city will lose money in the short run. The city must pay off the rest of the Dome bonds. It’s $5 million a year through 2021 – and without the revenue from the team,” Slay said. “But without the Rams in the Dome, we’ll be able to book more citywide conventions, which will help us offset the revenue loss.”
Slay’s reasoning is relatively straightforward: Many convention-goers are a lot more likely to eat or shop at Downtown retail businesses – especially since a football stadium is essentially a “walled garden” for food, drink and heavily discounted Nick Foles memorabilia.
“Convention business is very good for the city,” Conway said. “Whether it’s the gross receipts tax, sales taxes at the restaurant venues, or the hotel taxes. There are many events we can bring to try and replace that money. Our sales tax is growing. Our earnings tax is growing. Obviously we’ll take a little bit of a hit on some of those things. But I do believe we will be close to making those funds.”
In a statement, CVC President Kitty Ratcliffe said the end of the NFL in St. Louis “provides us with an opportunity to make the entire America’s Center convention complex a better more competitive center that will allow us to attract larger year-round conventions to St. Louis.”
And Alderman Jack Coatar said one of the reasons he got involved in trying to get a riverfront stadium off the ground was to free up space at the convention center, which is within his 7th Ward. (For what it’s worth, most of the applicable fees to rent out the convention center go to back to the CVC to offset operating costs.)
“Getting the Rams out of the convention center was a priority,” Coatar said. “Whether they were leaving town or just moving to a new facility, we need to free up the Edward Jones Dome and the convention center to make the improvements to that facility so we can attract more conventions. Because ultimately, the convention business is huge for downtown and huge for the region. We can generate a lot of economic activity by increasing our convention business.”
Washington University business professor Dan Elfenbein said most academic research “failed to show” that “professional sports teams do significantly add to a local economy.” He said studies tend to” be more consistent with the view that they claim a slice of the pie of people’s entertainment spending, but don’t substantially increase the overall level of economic activity.”
Conventions, however, could be another story.
“The impact of this is really going to depend on how the city and the community responds to it,” said Elfenbein, who has studied economic issues around sports. “If they respond to it in a way that doesn’t leverage the assets that are in place and build upon them, then the impact will be greater in the negative direction. If they are able to respond in a way that repurposes the stadium for other things, then the impact certainly is likely to be mitigated – especially if it’s repurposed in a way that brings folks from other places into St. Louis in order to spend money and engage in the things that we have here in the community.”
The $16 million question
Silvey said lawmakers would also be looking into the $16 million the Regional Sports Commission spent drawing up plans for the riverfront stadium project.
According to documents sent to the Missouri Development Finance Board, the sports commission used money from its expense fund – which is comprised of “investment earnings of the semi-annual … payments after the RSA's bond requirements are paid, as well as from the various bond refinancing transactions throughout the history of the bonds."
“We have been giving them $12 million annually,” Silvey said. “And yet, somehow they had $16 million sitting in an account somewhere that they could spend pushing this idea. With all the lawyers and architects and all the things, they spent about $16 million. And so now the question has also arisen in the Senate: ‘Why are we giving you $10 million a year if you had $16 million in liquid at your disposal at a drop of a hat?’
“I think the sports authority in St. Louis as entity is held in pretty low esteem by the legislature right now, as far as their ability to keep the agreements that they signed and appropriately spend the money that they’re given,” he added.
Rachel Lippmann and Sarah Kellogg contributed information to this story.
On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.