Kansas City Wizards get a Tax Break to Build Soccer-Specific Stadium Complex

The obligatory post regarding government and the sports business today concerns the Kansas City Wizards of Major League soccer getting $30 million in tax breaks to construct a complex including a soccer-specific stadium.

The Missouri Development Finance Board approved $30 million in tax credits toward The Trails development in southeast Kansas City. That clears the way for the LANE4 Property Group and the Wizards’ ownership group, OnGoal LLC, to begin demolition of the old Bannister Mall site and start construction of a $1 billion mixed-use project.

The centerpiece of the project will be the $100 million soccer stadium, seating 18,500, scheduled to open late in the 2010 Major League Soccer season or for the start of the 2011 season.

“It’s a really big day for us,” said Robb Heineman, chief executive officer of OnGoal and president of the Wizards. “It’s huge for us to have this out of the way to make sure the project comes together.

“We’re appreciative of the action the board took, and we think it’s a positive thing for the state of Missouri and for Kansas City, and we’re ready to move forward.”

OnGoal is investing about 71 percent of the capital required for the project, which will include the stadium, 12 tournament-quality soccer fields, 590 hotel rooms, 1.13 million square feet of mixed-use retail, 1.7 million square feet of office space and 18,249 parking spaces. Public taxing districts will provide the additional 29 percent, mostly through TIFs.

OnGoal is spending $60 million on what Heineman called “eligible costs” such as demolition, site preparation, land acquisition, roads and parking lots in return for the $30 million in tax credits that provide cash value to be reinvested in the project.

“We would like to move ahead with demolition as soon as possible,” Heineman said. “Obviously our economic situation is improved in a new stadium, so we have every incentive in the world to get into that new stadium as fast as we can.”

There are still some details remaining before the wrecking ball hits Bannister Mall, including the purchase of the Sears building, Heineman said.

He also conceded the current economic climate “may impact us a little bit … if you look at the broad credit markets right now, they’re not great.

“So far for our group, that hasn’t been an issue. We hope it continues to not be an issue. We’ve spent a whole bunch of money at the site already and we continue to spend money out there every day.

“The retail piece may lag behind just based on everything that is going on, but hopefully the stars align … ”

The the tax-increment financing (TIF) vehicle mentioned above is a $21 million TIF from the state of Missouri, or 70% of the tax credit.  With a TIF, taxes generated by a site go to paying some of the costs associated with development.  Because of this, some of the riskiness of the project is being spread about the taxpayers of Missouri and Kansas City. 

An additional problem, as with any tax-favored development, is that the tax breaks direct resources to this development, even if it is not in the best interest of the state of Missouri.  But the politicians who voted for it think that it is (or, more cynically, think it is in their best interest).

Comments

[Ironman]

Of course they do! With 1,403 people employed in spectator sports, they have just a slim lead over St. Louis' 1,397. They have to do SOMETHING to make sure they don't lose their lead in Missouri! (Ref BLS: http://www.bls.gov/spotlight/2008/thanksgiving/data.htm#5.employmentinspectatorsports )

Cool chart here: http://www.bls.gov/spotlight/2008/thanksgiving/images/figure05-map.gif

Original source here: http://www.bls.gov/spotlight/2008/thanksgiving/