Chiefs Stadium Deal is Insane

TexMustang said:

The Hunts have more money for NIL

stl.pony said:

Feel like it's largely being paid for by sales tax the new stadium development will generate.

abezotnar said:

Not in finance, so someone should absolutely check my math/analysis on this. State of Kansas has an 8.25% sales tax. For the sales tax to generate 3 billion, the total sales would need to be about 36 billion. According to this article the Royals stadium and Arrowhead stadium collectively generate 55 million a year in tax revenue. (Don't know what the analysis is to produce that; admit it could be wrong.) If you round it up to 60 million a year, the break even point is 600+ years. If you take the numbers the Chiefs put out, 1 billion in economic impact for the region and 29 million in tax revenue per year. The break even point from tax revenue would be 1800 years? I don't know what is considered the region for the economic impact evaluation and how that changes based on if the stadium is on the Missouri side or the Kansas side of Kansas City. I also remember reading a report about the state fair of Texas that claimed that events like the state fair and sporting events don't necessarily generate additional economic activity in a region, it just concentrates it into the event rather the wider community. (Admittedly, that could mean more tax revenue for one city in the region over another.) In my layperson's opinion, a sports stadium deal like this doesn't seem to be as smart of a decision as offering economic incentives to a Toyota or other non-entertainment business to move to your city.

ChallengeMet said:

Just like the stupidity of Dallas not allowing Jerry to build there, folks do not understand the development a stadium it tax breaks bring to an area (see Frisco and the est $10 bill under construction around Jerry World in Arlington). Chicago probably following the same track with the Bears. Extremely short sided.

abezotnar said:

This isn't my area of expertise. Connect the dots for me. How do you go about evaluating the economic impact of a deal like this?

ChallengeMet said:

Take a look at what Jerry did for Frisco, and what’s going on around the stadium in Arlington. Bars, restaurants, apartments, then business centers. The economic impact is est at $25 billion in a decade from the star alone. Freaking PGA headquarters is moving to Frisco now.

abezotnar said:

How are you determining that the economic impact of the Star is 25 billion? Again, I'm not a developer.

• Massive Development Catalyst: The 91-acre complex, a $1.5B initial project, sparked surrounding development (like the "$5 Billion Mile"), adding hotels, retail, office space, and luxury housing.
• Tourism & Hospitality Boom: Attracts millions of visitors for events, training, and games, directly benefiting local restaurants, hotels, and shops, with tourism growth linked to sports.
• Business Attraction: Its presence draws inquiries from other businesses looking to relocate, leveraging the "halo effect" of the Cowboys brand.
• Job Creation: Supports numerous jobs in the service, retail, and corporate sectors.
• Public-Private Partnership Model: A successful collaboration between the Cowboys, City of Frisco, and Frisco ISD, serving as a blueprint for other large-scale projects.

johngray0 said:

The "economic impact" is simply a reshuffing of a fixed amount of disposable entertainment income between locales. A sports team is not like a factory where you are creating wealth. Or more cynically an interstate toll road or international casion where you are capturing outside wealth. Yeah a college team like SMU doesn't create wealth by investing in football, either; but does attract resources by increasing admissions that'd would've gone elsewhere or rekindling alumni interest. So there is a different argument for college sports spending in providing a multiplier effect. Almost all of pro sports money generated by a stadium is bleed from other local entertainment options. It's not clear how Kansas City as an economic entity comes out as a net positive, as each dollar is bled from something/someone nearby. Never been a big fan of these government subsidies for pro sports.

abezotnar said:

Not in finance, so someone should absolutely check my math/analysis on this. State of Kansas has an 8.25% sales tax. For the sales tax to generate 3 billion, the total sales would need to be about 36 billion. According to this article the Royals stadium and Arrowhead stadium collectively generate 55 million a year in tax revenue. (Don't know what the analysis is to produce that; admit it could be wrong.) If you round it up to 60 million a year, the break even point is 600+ years. If you take the numbers the Chiefs put out, 1 billion in economic impact for the region and 29 million in tax revenue per year. The break even point from tax revenue would be 1800 years? I don't know what is considered the region for the economic impact evaluation and how that changes based on if the stadium is on the Missouri side or the Kansas side of Kansas City. I also remember reading a report about the state fair of Texas that claimed that events like the state fair and sporting events don't necessarily generate additional economic activity in a region, it just concentrates it into the event rather the wider community. (Admittedly, that could mean more tax revenue for one city in the region over another.) In my layperson's opinion, a sports stadium deal like this doesn't seem to be as smart of a decision as offering economic incentives to a Toyota or other non-entertainment business to move to your city.

abezotnar said:

Not in finance, so someone should absolutely check my math/analysis on this. State of Kansas has an 8.25% sales tax. For the sales tax to generate 3 billion, the total sales would need to be about 36 billion. According to this article the Royals stadium and Arrowhead stadium collectively generate 55 million a year in tax revenue. (Don't know what the analysis is to produce that; admit it could be wrong.) If you round it up to 60 million a year, the break even point is 600+ years. If you take the numbers the Chiefs put out, 1 billion in economic impact for the region and 29 million in tax revenue per year. The break even point from tax revenue would be 1800 years? I don't know what is considered the region for the economic impact evaluation and how that changes based on if the stadium is on the Missouri side or the Kansas side of Kansas City. I also remember reading a report about the state fair of Texas that claimed that events like the state fair and sporting events don't necessarily generate additional economic activity in a region, it just concentrates it into the event rather the wider community. (Admittedly, that could mean more tax revenue for one city in the region over another.) In my layperson's opinion, a sports stadium deal like this doesn't seem to be as smart of a decision as offering economic incentives to a Toyota or other non-entertainment business to move to your city.

stl.pony said:

Feel like it's largely being paid for by sales tax the new stadium development will generate.