ST. LOUIS • An application for $40 million in state tax credits for building a Major League Soccer stadium downtown also reveals more details about an ownership group’s plan to bring a team to St. Louis.
The city’s application is in addition to the $80 million for stadium construction that city voters may be asked to decide in April. The tax credit request will be presented to the state Development Finance Board at a special meeting in Jefferson City Thursday morning.
A vote by the board is expected Dec. 20.
“We remain committed to working with (team ownership group) SC STL to develop a sound financial proposal to put before the voters,” Mayor Francis Slay’s Chief of Staff Mary Ellen Ponder said in an emailed statement. “This is a piece of that proposal.”
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The application, prepared by the city’s Land Clearance for Redevelopment Authority, puts the total estimated cost of the stadium and acquiring a team at $405 million. SC STL, led by former Bain Capital executive and majority investor Paul Edgerley, St. Louis FC founder Jim Kavanaugh, and former Anheuser-Busch president Dave Peacock, would provide $280 million, including the $200 million team expansion fee.
The rest includes an estimated $9 million to be spent by the Missouri Department of Transportation, which owns most of the 24-acre site west of Union Station, to prepare the land for development before selling it to the city. The city would buy the land for an estimated $15 million.
That expense would presumably come out of the city’s $80 million contribution if voters approve it. Crane said that ballot proposal could be made public next week.
The city-owned stadium would seat 22,000 and could be expanded to 28,000 in the future.
In an interview this week, Edgerley said the stadium needs public investment for the deal to be a good private investment. He said private investors don’t expect to see much direct profit for a decade or more, while a stadium would more immediately net jobs, business and other revenue in the city.
“We believe economically the city will do much better than break even from the economic development that’s created,” said Edgerley, who is also a minority investor in the Boston Celtics professional basketball team and AS Roma Italian soccer team. “I don’t think other people are going to come up with $400 million of private money and believe that’s a reasonable investment.”
He said the size of the St. Louis area’s media market, which ranks about 21st in size nationally, would result in less investor revenue than in other major cities. But Edgerley said league popularity and exposure will only grow in the next two decades.
“I think soccer will be the second- or third-most popular sport in the United States in 20 years,” he said.
The application states the ownership group expects a negative net income off the team for the first decade. But it also estimates the state would generate $44.8 million in tax revenue over the next 33 years from the stadium, and foresees hundreds of millions added to the local and state economy through new jobs and business.
Included in the application is an analysis by St. Louis-based analytics consultant Missouri Wonk, which says the stadium could generate 538 permanent jobs and 1,345 temporary jobs during construction.
Edgerley said estimated stadium costs will fall in the range of $180 million to $210 million. The $200 million put forth is only a current estimate, he said.
State and city money combined would fund about 64 percent of the stadium, but SC STL representatives say the $200 million cost of securing a team for the stadium is inextricably linked to the cost.
SC STL’s investment in the stadium would be the third-largest percentage-wise in the Midwest among MLS teams, according to an analysis by California-based Barrett Sports Group. Dallas FC’s stadium in Frisco, Texas, opened in 2005 and was half publicly funded, and the Chicago Fire’s stadium that opened in 2006 in Bridgeview, Ill., was 44 percent privately funded.
While other relatively new MLS stadiums have cost less, such as the Earthquakes’ 18,000-seat, $100 million Avaya Stadium built in 2015 about three miles from downtown San Jose, Calif., Edgerley said the sport is continuing to grow in popularity and so the price tag is investing “in front of the curve.”
“We looked at stadiums that have been built recently and we talked to MLS about how to make sure the fans have a good experience,” Edgerley said. “They want it to have the right level of amenities to make it a good experience, and also structured in a way that can be used for a broad set of purposes, not just soccer.”
Edgerley said the downtown site here is more expensive to develop than perhaps other parts of the city, but that location would form a “corridor” of sports and entertainment venues that would ultimately provide a better game-day experience.
“We don’t want to build something half-way and not have the fan experience be right and have to redo it at twice the price later,” Edgerley said.
In a letter sent Monday to the state Development Finance Board, the board’s executive director Robert Miserez said he asked the city to provide more information to the state Economic Research and Information Center to prepare its own analysis for the state.
“There are many questions regarding the application which will not be answered by Thursday,” Miserez wrote.
Those details include the payment structure for spending eligible for tax credits, the complete composition of the ownership group and “how to quantify or assess the actual need for and sizing of the credit request, and impact to the state,” Miserez wrote.
The city and ownership group are hoping to secure $20 million in tax credits this year and again in 2017, although they likely would be used in 2017 and 2018. The tax credits would only be used if St. Louis voters approve city money for the project.
The request is for half of the Development Finance Board’s annual $10 million in capped tax credit allocation and all of its $15 million in annual discretionary tax credit allocations, each year. The board has $5.7 million remaining in its 2016 capped tax credit allocations.
The city would provide the tax credits to the ownership group following the first $80 million in expenses on the project. The credits could be used by businesses in two ways, by either going toward a tax write-off or being sold to other investors such as banking institutions.