It was inevitable. Sooner or later some consultant was going to come up with an estimate on what a great economic driver the new riverfront football stadium was going to be.
This time it turns out to be the Missouri Department of Economic Development. The department estimates a new stadium for the St. Louis Rams will produce a cumulative net return to the state of $295 million over 30 years.
Sorry. Been there. Done that.
Let’s go back to 1989, when the drive was on to build what is now called the Edward Jones Dome. John Ashcroft was the governor and the battleground was the Missouri Legislature, just as it is now.
The deal called for selling bonds to borrow $258 million to raise the money needed to build the stadium. The state pitches in $12 million a year for 30 years. The city of St. Louis gives $6 million a year for 30 years and St. Louis County also gives $6 million a year for 30 years. The total cost to retire the bonds will be $720 million when the last payment is made in 2021.
The St. Louis NFL Partnership was the organization running the lobbying campaign to get the money. It hired the consultants who produced the numbers showing how big a money maker the stadium would be for taxpayers.
Their charts showed that in the very first year of debt payments, the state, St. Louis and St. Louis County would realize $13,794,000 more in revenue than they paid in debt retirement.
By this year, 2015, according to their estimates, the state, St. Louis and St. Louis County are collecting $89,337,000 more than they are paying to retire the bonds. A 5 percent annual inflation rate was assumed in the calculations. Has anyone seen all this revenue?
There were many assumptions in the calculations. A key one is “the multiplier effect.” It goes like this: a beer vendor at the ballpark gets paid, and spends part of his money on rent. The landlord spends part of that money on a car. The car dealer spends part of that money to pay his salesmen. Each step generates tax revenue.
The multiplier used by the Edward Jones Dome consultants projected impressive results. But as one consultant said in his report: “These are forecasts that like all forecasts are well-informed guesses about what the future will bring. No analyst can guarantee that his or her forecast will prove out.”
When Ashcroft signed the subsidy bill on July 14, 1989, he said, “I have in the past expressed significant reservations about this bill, and some of those reservations remain.” But he signed anyway. An aide said “some very important people (read campaign contributors) wanted this, no matter what.”
There has never been a postmortem on the Edward Jones Dome guesswork to see how it checks out. But there is a record of what happened in the dome’s neighborhood in terms of economic development.
The Edward Jones Dome opened in 1995. The St. Louis Centre shopping mall was across the street from the America’s Center convention complex, which includes the dome. The mall closed in 2006 and was rebuilt with more taxpayer money as the Mercantile Exchange. Most of it is a parking garage.
Also across Washington Avenue from America’s Center is the Renaissance Grand Hotel, St. Louis’ premier convention hotel. It opened in 2002 with tens of million of dollars of taxpayer subsidies, but was sold at auction in 2009 to the people who bought the bonds to build it. It couldn’t generate enough income to pay the bond debt.
The only economic development in the Edward Jones Dome neighborhood is the Lumiere Place casino. But the Edward Jones Dome had nothing to do with that. The slots and poker tables were the economic drivers.
Now the promoters of the new stadium want a $350 million bond issue and think they can pay it off with the same $24 million a year. And the taxpayers will have to double up on payments for the Edward Jones Dome and the new stadium until the dome debt ends in 2021.
Sorry. Been there. Done that. Don’t want to get taken again.
Fred Lindecke is the spokesman for the Coalition Against Public Funding for Stadiums. He is a retired Post-Dispatch reporter and lives in west St. Louis County.