‘Tax’ing times for Chiefs-Royals

Image: KC Royals and Populous

The Major League Baseball (MLB) team Kansas City Royals Owner John Sherman and the National Football League (NFL) team Kansas City Chiefs President Mark Donovan stood on a small stage in the second-floor lounge of the historic J. Rieger & Company distillery in Kansas City, Missouri (US) on April 2^nd, acknowledging the will of the voters who had rejected a sales tax initiative that would have helped pay for a new downtown ballpark and renovations to the GEHA Field at Arrowhead Stadium.

The 2024 Coliseum Summit US will be held at the GEHA Field at Arrowhead Stadium, Kansas City, from June 5^th-6^th. An ice-breaker event including stadium tour will be held at the CPKC Stadium in Kansas City (June 4^th).

‘AP’ quoted Sherman as stating, “Won a baseball game tonight (April 2^nd),” who’s Royals had beaten their peer team Baltimore Orioles, “but we didn’t win this.”

The ballot measure didn’t just lose, though. It lost decisively.

The Kansas City Royals are an American professional baseball team based in Kansas City, Missouri (US). The Royals compete in Major League Baseball (MLB) as a member club of the American League Central Division.

The 37,903-capacity Kauffman Stadium, often called ‘The K’, is a baseball stadium located in Kansas City, Missouri. It is the ballpark to the Kansas City Royals of Major League Baseball (MLB). It is part of the Truman Sports Complex together with the adjacent Arrowhead Stadium, home of the Kansas City Chiefs of the National Football League (NFL).

The 79,451-capacity Truman Sports Complex is a sports and entertainment facility in Kansas City, Missouri (US). It hosts two major league sports venues: The Arrowhead Stadium, hosting the National Football League’s (NFL’s) Kansas City Chiefs, and the Kauffman Stadium, hosting Major League Baseball’s (MLB’s) Kansas City Royals.

The Kansas City Chiefs are a professional American football team based in Kansas City, Missouri (US). The Chiefs compete in the National Football League (NFL) as a member club of the league’s American Football Conference West division.

The 76,416-capacity GEHA Field at Arrowhead Stadium is an American football stadium in Kansas City, Missouri. It primarily serves as the home venue of the Kansas City Chiefs of the National Football League (NFL).

‘AP’ further stated that more than 58 percent of voters in Jackson County, Missouri, rejected the three-eighths of a cent sales tax. The Royals, who had promised $1 billion in private funding, wanted to use their share of the tax revenue to build a new ballpark as the centerpiece of a $2 billion-plus downtown district in a thriving arts neighborhood known as the Crossroads. The Chiefs, who had committed $300 million from their ownership, wanted to use their share for an $800 million renovation of the Arrowhead Stadium.

Added Donovan, “We will look to do what is in the best interest of our fans and the organization as we move forward.”

Sherman and Donovan then walked off the stage and out of the back door, leaving what had been an upbeat and festive watch party without taking questions, yet leaving many questions to be answered in the days and months ahead.
 

Why did the Tax Fail?

There was no single reason the tax failed, rather an accumulation of factors soured the voters. Among them were the location of the downtown ballpark, the messaging from the franchises and the very nature of their construction plans.

Last Fall, the Royals floated the ballpark concepts East of downtown and in neighboring Clay County, Missouri, and said they would decide by September on one of the sites. But that self-imposed deadline passed, and it wasn’t until February that the club said it would move instead to the Crossroads, leaving less than two months to sway voters on the location. Yet, the Royals experienced serious pushback from the business owners in the area, some of whom would have had to sell their property and relocate. Compounding the problem was the lack of concrete plans – the Royals could not even produce a current ballpark rendering by April 2^nd after agreeing recently to keep open a street in the stadium footprint.

That was just the start of messaging problems that plagued the campaign.

Along with lacking transparency, the Royals and the Chiefs shifted their approach at the insistence of the political strategists running a committee to keep the teams in Jackson County. Their once-positive and collaborative messages were replaced by veiled threats that they would leave if the tax failed, and the “vote yes-or-else” message turned many voters away.

Then there was the plans themselves. In the case of the Chiefs, the renovation would have had upgraded concourses, videoboards and the parking at the Arrowhead Stadium. But the everyday fan, which in many cases already has been priced out of the games, balked at the idea of helping to pay for the exclusive end zone clubs, the renovated suites, the sideline clubs, and the VIP entry points.
 

What is Next?

The Chiefs and the Royals have said they would explore all options if the tax failed. And while they could still agree to a revised deal with the Jackson County, they also could be courted by the locals offering tax breaks and other financial benefits.

The officials in Kansas have not been shy about trying to woo the Chiefs across the State line, possibly to an area that includes the 48,000-capacity Kansas Speedway in Kansas City, Kansas, and the 18,467-capacity Children’s Mercy Park in Kansas City, the home of the Major League Soccer (MLS) club Sporting Kansas City. Meanwhile, Cities such as Nashville, Tennessee, that desire a big league ballclub could promise the Royals the funding they desire.

The two teams are deeply woven into the fabric of Kansas City, though. Sherman said one of the reasons the Late David Glass sold him the Royals in 2019 is that he entrusted the Kansas City businessman with keeping the baseball team in town, where the fans have supported it through far more losing seasons than winning ones.

The most likely scenario is the Chiefs and the Royals try again in Jackson County, though rather than work together, each could seek its own deal. The Jackson County executive Frank White, a member of the Royals’ Hall of Fame, had been a vocal critic of the tax yet said on April 2nd that he was hopeful the teams would “come back to the table”.

Similar sentiments were echoed by the Kansas City Mayor Quinton Lucas, who endorsed the tax initiative only recently – “The people of Kansas City and Jackson County love the Chiefs and the Royals. They rejected plans and processes they found inadequate. I look forward to working with the Chiefs and the Royals to build a stronger, more open and collaborative process that will ensure the teams, their events and investments remain in Kansas City for generations to come.”
 

Chiefs Conundrum

‘USA TODAY’ stated that in suffering something of a home loss at the ballot box on April 2^nd, the Kansas City head honcho Clark Hunt put it, “Now they can sincerely explore all options.”

No, the Chiefs won’t be headed back to Dallas when their Arrowhead Stadium lease expires in 2031.

Did you hear the one from the Dallas Mayor Eric Johnson? He’s invited the Chiefs to return to the City where they were established as an American Football League (AFL) franchise by the Late Lamar Hunt (an American businessman who promoted American football, soccer and tennis in the United States). Johnson declared the market as big enough to support a second NFL team alongside the Dallas Cowboys. Yes, he’s got jokes.

The American Football League (AFL) was a major professional American football league that operated for 10 seasons from 1960 until 1970, when it merged with the older National Football League, and became the American Football Conference.

Maintained Marc Ganis, Sports Consultant, “The politicians have learned that the cheapest-cost headlines that they’ll ever get are related to sports.”

Scratch that option. And St. Louis, San Diego, San Antonio, and Oakland, too.

‘USA TODAY’ further stated that Ganis and other experts agree that leaving the market is hardly a choice for the signature NFL franchise with the serious Super Bowl swag.

New York (US)-based the National Football League (NFL) is a professional American football league that consists of 32 teams, divided equally between the American Football Conference and the National Football Conference.

The Super Bowl is the annual league championship game of the National Football League (NFL) of the United States. It has served as the final game of every NFL season since 1966, replacing the NFL Championship Game. Since 2022, the game has been played on the second Sunday in February. The Kansas City Chiefs are the current Super Bowl champions.

The possibility of leaving the State, however, is another matter. The Chiefs hoped the taxpayers would have foot the bill for more than half of an $800 million makeover of their iconic home. Now it’s hardly a stretch to think they could wind up with a taxpayer-supported deal in, say, Kansas City, Kansas, which is merely minutes away from the Arrowhead Stadium.

Added Ganis, “Crossing the State lines creates an entirely different tax structure. Kansas might be very interested and justified in a big investment in a new stadium because of all of the tax revenues that would be created for Kansas.”

Then again, while the measure listed as Question 1 failed tremendously with 58 percent of the voters rejecting the prospect of supporting the Arrowhead renovations and a new downtown baseball stadium for the Kansas City Royals, there’s no law preventing another run at the ballot box in the future in Jackson County. Yet, here’s what likely need to happen for the Chiefs to succeed in that scenario: Separation.

Remarked Rodney Fort, Professor Emeritus of Sport Management at the University of Michigan, “From now on, I don’t think it will be possible for the Chiefs and the Royals to jointly gang up on Kansas City. Taking it to the public is one thing. But try to argue jointly, ‘Give us both something or we’re both going to take drastic action’, that’s not going to fly. They’re going to have to separate now.”

Fort has tracked referenda for sports stadiums and arenas for decades. The measures are much more likely to fail now than in the past, with the principle of taxpayers supporting the venues where the billionaire owners rake in profits seemingly one of the damning blows.

Added Fort, “It’s kind of a coin toss.”

Yet, it also seems the Chiefs would have succeeded on April 2nd had it been a standalone ballot measure. The ask for renovations to the third-oldest NFL stadium, which opened in 1972, wasn’t such a huge one when compared to the desires of their Major League Baseball counterparts. The Royals sought a new downtown stadium against the backdrop of intense controversy linked to the site. Months before the election, the team identified two other locations as the two “finalists”, yet weeks later switched to a site that left the locals wondering about the upheaval of the current urban footprint.

New York (US)-based the Major League Baseball (MLB) is a professional baseball league and the highest level of organized baseball in the United States and Canada. One of the big four major leagues, the MLB comprises 30 teams, divided equally between the National League (NL) and the American League (AL), with 29 in the United States and 1 in Canada.

David Carter, a Sports Consultant and Business Professor at the University of Southern California, maintains that such measures need at least three essentials to succeed – “It has to be clear, it has to be cohesive and it has to be compelling.”

The Royals’ plan, he added, “Continued to morph, without great clarity. That kind of confusion, that kind of work-in-progress feel has to alienate the voters.”

Observed Ganis, “There were a host of issues that were Royals-related that were controversial, that likely cost this election.”

Perhaps that’s the big takeaway lesson for the Chiefs: Don’t mix with baseball. Especially now.

Consider the timing. The Chiefs are riding a wave with back-to-back Super Bowl triumphs, with three in the past five years.

Commented Carter, “The Chiefs are a national brand. They’re a very important part of the fabric of the NFL and certainly the region, whereas the Royals continue to hope to turn things around and really be competitive.”

Is it possible that the Chiefs, who have already committed $300 million to the Arrowhead Stadium renovations, would privately finance the entire project? Highly doubtful.

Continued Ganis, “If you’re going to start putting big, private dollars in, why wouldn’t you look at a new stadium versus an existing one?”

One of the NFL’s newest venues, the 70,240-capacity SoFi Stadium in Inglewood, California, was privately-financed by the NFL team Los Angeles Rams Owner Stan Kroenke. Don’t expect SoFi, which opened in 2020 (as was the case with the taxpayer-supported 65,000-capacity Allegiant Stadium in Las Vegas) to become the NFL model, regardless of principles linked to subsidies for the rich owners.

Noted Carter, pointing to revenues generated from the adjacent real estate, “When you look at what Kroenke is doing at SoFi, he has a real plan in place to capture the global sports entertainment events that help him justify why he wants to do this privately. He has to pay for it privately, but he basically reaps all of the revenue and all of the upside that comes with having a state-of-the-art facility in Los Angeles. It’s different from market to market.”

For the Chiefs, Carter sees the equation working the other way. In a letter intended to sway the potential voters, Hunt cited nearly $1 billion in annual economic impact on the region, including $572.3 million in Jackson County, and that the Arrowhead Stadium will host the FIFA World Cup™ matches in 2026.

The 2026 FIFA World Cup™, marketed as the FIFA World Cup 26™, will be the 23^rd FIFA World Cup™, the quadrennial international men’s soccer championship contested by the national teams of the member-associations of FIFA. The tournament will take place from June 11^th-July 19^th, 2026 and will be hosted by the United States, Mexico and Canada.

Concluded Carter, “Why not go after public subsidies? The teams in (smaller markets) like the Chiefs, they’re delivering huge value for the residents in the community at large…You can argue that the taxpayers should pay for the benefit in their own backyard. That brand is so big and so important that there is some public value. And the owners try to gain that value through tax measures.”

As the Chiefs explore options, years before crunch time, the negotiations seemingly have just begun.

Continue to follow Coliseum for latest updates on venues business news. Coliseum is dedicated towards building the best global community of sports and entertainment venue executives and professionals creating better and more profitable venues.

Become a member of the only Global Sports Venue Alliance and connect with stadiums, arenas and experts from around the world. Apply for membership at coliseum-online.com/alliance and make use of the 365Coliseum Business.

• Tags »
• Kansas City

« Previous News: LEED-certified home venue for Wildcats
» Next News: FC Porto stellar sustainability initiatives