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Editorial: Rams pay their way, but voters must have a say

Rams Stadium rendering

An aerial view of the proposed Rams NFL stadium, looking toward downtown St. Louis. Image courtesy HOK

On July 14, 1989, Missouri Gov. John D. Ashcroft, a famously conservative Republican, surprised a lot of people by signing a bill authorizing the state to spend $12 million a year to help fund a new domed stadium and convention center annex in downtown St. Louis.

Earlier, Mr. Ashcroft had expressed skepticism about the key claim made by backers of the stadium bill: that it would pay for itself with “net new fiscal benefit.” That is, it would return more money to the state in the form of taxes than the state was spending to help retire its construction bonds.

Much has transpired since Mr. Ashcroft’s leap of faith. The stadium got built. Stadium proponents were snookered into signing a terrible lease that rendered a 20-year-old stadium prematurely obsolete. Another team is threatening to leave, and a replacement stadium has been proposed.

But one question has never been answered: Does the stadium pay for itself? Does it repay the $12 million a year the state continues to pay for it? Does it repay the $6 million each that St. Louis city and county pay for it?

There’s never been an official economic study to prove it, but the back-of-the-envelope answer is: Probably. At least as far as the state and city’s combined $18 million is concerned. As to the county’s $6 million, raised by a 3.5 percent sales tax on hotel bills, that’s harder to determine. It depends on how many hotel room stays can be attributed to events at the dome.

The pay-for-itself question has become urgent now that Gov. Jay Nixon is arguing that the state can simply roll over its $12 million dome payments to help pay for a billion-dollar stadium on the north riverfront for the St. Louis Rams.

The Missouri Legislature may take issue with that claim. Senate Bill 330 would make it clear that the governor cannot extend existing bonds, nor issue new ones.

On Friday, the Regional Convention and Sports Complex Authority, the state board that owns the dome and would own the new stadium, filed a lawsuit to keep the city from holding a public vote on whether to roll over its $6 million-a-year obligation for a new stadium. In 2002, as the city was considering helping the Cardinals build a new baseball stadium, city voters passed a referendum saying that future “financial assistance” to a new stadium would require voter approval.

The CSCA lawsuit says the ordinance created by the law is “overly broad, vague and ambiguous.” County voters passed a similar measure two years later, but Mr. Nixon already has taken the county out of the riverfront stadium financing plans.

The problem is twofold: One, a referendum on public financing for a new stadium would take time to put together, and two (the big one) it might not pass. The NFL, knowing that Rams’ owner Stan Kroenke is well along on a new stadium project in Los Angeles, and that the San Diego Chargers and Oakland Raiders are talking about a joint-use stadium elsewhere in the LA region, would like the issue clarified by this fall.

Pulling off an election before then would be difficult, but not impossible. Welcome to the NFL.

This editorial page opposed the city and county ask-the-voters referendums in 2002 and 2004, believing that these are business decisions that shouldn’t be subject to emotion. They passed anyway. They must be honored.

All things considered, it’s better to have an NFL team than not. It’s good for the town’s image. Sports create valuable common ground. But there’s no evidence that sports stadiums create major economic benefits to anyone but the teams’ owners. An NFL team has a high profile, but in terms of direct economic impact, the Rams are a bit player.

However, they have almost certainly repaid the public’s investment. The team is organized as a limited liability corporation, meaning whatever profits they generate ($16.2 million according to Forbes in 2014) are treated for tax purposes as Mr. Kroenke’s personal income. There’s a lot of other income on his tax form, but for the sake of argument, assume the state’s 6 percent income tax is levied on that $16.2 million. That’s almost a million bucks right there.

Then there’s the player payroll of $151 million. Six percent of that is $9 million. Throw in the coaches and the support staff, and the tax on visiting players’ and coaches’ income, and the state’s probably got its money back on income taxes alone.

All of this is subject to the wiles of tax lawyers, of course, but sales taxes on game tickets are 13.5 percent. There have been years when the Rams have demanded six-figure refunds. With sales taxes on tickets, food and merchandise, plus the 1 percent earnings tax, some hotel rooms, restaurants and bars, the city probably comfortably covers its nut.

In all, the back of our envelope suggests the Rams generate $20 million to $30 million a year in taxes for the city and the state, plus whatever is generated by convention events in the Edward Jones Dome.

So the Rams probably cover the $24 million a year that the state, city and county invest in the dome. There’s not much beyond that but civic pride and memories of Kurt Warner, but it’s not nothing.

It’s not a great argument, but you might be able to win an election with it, particularly if you add in the benefit of rebuilding the blighted north riverfront. If you don’t win the election, you might lose the NFL. Again.

But you need to hold the election.

It simply insults the intelligence of taxpayers to claim, as Mr. Nixon did last week, that money rolled over from the dome to the riverfront stadium would not be new money. Do nothing and $24 million a year in tax payments goes away in 2021. Roll it over and the $18 million state-city contribution continues for 25 more years.

“Because this plan would impose no new taxes and instead use funding that has already been approved by the voters, another public vote is not required,” Mr. Nixon said in a Friday press release.

The “already been approved” funding was a reference to a vote in April 1993, when city voters approved Proposition L. It restructured the city’s hotel-motel tax by eliminating a $2-a-night surcharge and raising the hotel tax to 7.2 percent from 3.75 percent. At the time, proponents said it would raise an additional $500,000 a year that might be used to pay for part of the city’s $6 million-a-year share of the domed stadium deal. The county also passed a hotel-motel tax for the dome project, but the county’s now out of this deal.

State voters never approved a stadium proposition; the 1989 Legislature and Gov. Ashcroft did. City voters never had a clear shot at it. This time around, if there must be a new stadium, the public must have a turn.

Kevin Horrigan • 314-340-8135

@oldsport on Twitter

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In the Post-Dispatch editorial "No vote, no stadium" (April 14), the editorial board determined that the Rams stadium probably pays for itself…

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