As first appearing in the Columbia Daily Tribune:
Talk about pouring taxpayer money down a rat hole. How about having to pay out $120 million in retiring the debt on a domed and doomed stadium – whose principal tenant has flown the coup for a new home in a faraway city?
That will happen if the St. Louis Rams decide to move to new digs in Los Angeles in 2016 – taking full advantage of the escape clause open to the team through the original lease agreement.
By the end of this calendar year, Saint Louis City and County and the state of Missouri will have paid off $360 million out of the $480 million in bonds that financed the construction of the Edward Jones Dome, which opened in 1995.
That still leaves another $120 million in bond payments due between 2016 and 2021 ($60 million from the state and $30 million each from the city and county).
Neil deMause, co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit, has examined dozens of cases in recent decades of cities that have ponied up hundreds of millions of dollars for the construction of new stadiums for professional sports teams. He calls the deal that the city of Saint Louis struck with the Rams “the worst lease ever” – meaning the most one-sided in enriching the team’s owners at the expense of taxpayers . . . and in opting to please deep-pocketed corporate clients (conducting partially tax-deductible “business entertainment” in their luxury suites) more than to control ticket prices or provide better seating for ordinary fans.
The Edward Jones Dome (formerly the TWA Dome) was a 100 percent publicly financed project. The Rams paid no part of the construction costs, and they have paid almost nothing in rent (just $250,000 a year) while receiving all luxury-box and concession revenues, claiming 75 percent of advertising and naming rights, and pocketing a $46 million relocation fee.
Still more, political and civic leaders signed on to a deal that gave the team the right to opt out of the original arrangement 10 years early – in 2015 – if the stadium did not rank in “the top 25 percent of NFL stadiums” – even if that meant having to build a whole new stadium, once again at taxpayer expense.
Jim Nagourney, an ad marketer for Anaheim Stadium who was hired away by the then L.A. Rams as a consultant on their relocation plans, made this comment as quoted in a recent article by San Diego Union-Tribune columnist Tim Sullivan:
I went to a meeting in Los Angeles one morning. We had a whiteboard, and we’re putting stuff down (to demand from cities). I couldn’t believe some of the stuff. I said, “Guys, some of this is crazy.” And John Shaw, who was president of the Rams at the time – brilliant, brilliant guy – said, “They can always say no; let’s ask for it.”
Twenty some years ago, local and state official made a big mistake in not saying no. Are today’s officials about to repeat the same mistake all over again?
Now the call has gone out for building a new open-air stadium in downtown Saint Louis at a cost of almost a billion dollars, with taxpayers bearing about half the cost – through new publicly financed debt, state tax credits, and other means that will deplete local and state treasuries and leave less money for other public needs, such as police, roads, and schools.
Some people say that Saint Louis needs a world-class stadium in order to be a world-class city. But that is an emotional argument, not an economic argument. Despite the rosy claims of local chambers of commerce, there is broad agreement among academic economists that the proliferation of new publicly financed stadiums over the past few decades has done little or nothing to underpin economic growth or employment in their host cities. In some cases, stadium projects may actually undermine growth – by diverting scarce resources to less productive use.
In the Coliseum in ancient Rome, the crowds signaled with a thumbs up for sparing the life of a game’s losing contestant or a thumbs down for showing no mercy.
We have seen that publicly financed stadiums are a misuse of public funds. It is time to turn two thumbs down on a bad idea of no redeeming merit.
Andrew B. Wilson is resident fellow and senior writer at the Show-Me Institute.