Voters could bring the MLS to St. Louis with soccer stadium vote –

ST. LOUIS • Investors asking for $60 million in public money to help build a Major League Soccer stadium say they have broad regional support, but they’re only cautiously optimistic the vote will pass.

That’s because when the money question gets settled at the ballot box April 4, only city voters get to make the decision. That has supporters expecting a close vote in what they call a once-in-a-lifetime opportunity to bring big league soccer to the River City.

“I’m sure it will be close,” said Paul Edgerley, lead investor of the ownership group SC STL. “That’s why we want to get the message out this is about more than just sports.”

They won the support of labor unions with the promise of creating about 500 construction jobs and an additional 450 permanent jobs working for the franchise. SC STL and city aldermen supporting the effort say the $60 million investment will net the city $77 million in general revenue over 30 years.

In addition to the $60 million public funding from Proposition 2, stadium supporters also need Proposition 1 to pass. Proposition 1 is a half-cent sales tax increase to help fund north-south MetroLink expansion. The sales tax increase would trigger a corresponding increase in the city’s business use tax. If Proposition 2 passes, revenue from the use tax increase would go to the soccer project rather than to other city needs.

About $50 million of the public contribution to the stadium would be generated by the use tax increase. The remaining $10 million would come from the city’s share of developer Paul McKee’s taxing district overlapping the stadium site.

Opponents shrug off SC STL’s promises of economic development as the same old promises from a new group of sports investors. They say St. Louis is giving away money to wealthy businessmen on a gamble while city communities are in desperate need of public investment.

The ownership group would pay MLS a franchise fee of $150 million, the most in league history, and cover the rest of the costs of the $155 million to $200 million stadium project. They’re also contributing $5 million to youth soccer programs over 20 years and partnering with workforce development agencies to do job training, among other things in a community benefits agreement with the city.

Investors are confident St. Louis will get an expansion franchise from the league if the vote passes. League Commissioner Don Garber will be in town Monday to meet with fans and drum up support for the vote, though he has never said publicly the city is guaranteed a team.

Pro and con

There is no organized opposition to Proposition 2, but several prominent activists in the community and on the Board of Aldermen have been campaigning against it. SC STL, for its part, has pumped $1 million into a political action committee called AspireSTL to fund the pro campaign.

Andrew Arkills of Team TIF, a group of advocates who want to reform how the city subsidizes private developments, said the stadium proposal should have been drafted in a way that doesn’t take business use tax funds that could be spent on public safety, affordable housing and repairs to city roads and utilities.

“It’s puzzling and kind of infuriating really that all of the possible tax revenues that could go to building a stadium, the city chose to tap into the one that is meant to address the most pressing needs in St. Louis,” Arkills said. “It seems like a disconnect from reality.”

Arkills was talking about the city’s business use tax on out-of-state purchases of $2,000 or more by city businesses. Current revenue funds the Affordable Housing Commission, public safety and building demolitions.

City officials and SC STL representatives say those programs aren’t losing out because Proposition 2 is creating new revenue that otherwise wouldn’t be there. They say it also means businesses and soccer fans who use the stadium will be paying for it, meaning almost no impact on most city residents’ checkbooks.

When the proposal was unveiled late last year, it called for $80 million in city money. The final proposal stood at $60 million and included the team paying the equivalent of a 2.5 percent ticket tax annually back to the city.

Those payments would generate between $7.5 million and $12 million in new general fund revenue.

The plan also sends the city $5 million over 30 years from McKee’s NorthSide development taxing district, which overlaps the stadium site, that will go into general revenue instead of the stadium.

City Comptroller Darlene Green has expressed concern about the proposal’s potential impact on the city’s credit rating, saying St. Louis is not well positioned to take on more debt with a $20 million shortfall expected in the next fiscal year’s 2018 budget.

The site itself is about 24 acres of state-owned land west of Union Station. Owners had hoped for $40 million in tax credits from the state to help with the project, but Gov. Eric Greitens effectively nixed that plan when he called it “welfare for millionaires” and said he had “completely ruled out funding for stadiums.”

But Greitens later signaled he would support state spending on preparing the site for development. It remains unclear if the state would sell or lease the land to the city.

Rams’ legacy

Public financing for sports stadiums has become increasingly common, expensive and controversial in recent decades. St. Louis’ own experiences with it have shaped the rhetoric surrounding the April 4 vote.

In February, the Board of Aldermen quickly approved a $64.5 million funding package for renovations to Scottrade Center, including more than $2 million for improvements to the executive offices in the building.

City and state officials spent most of 2015 trying to put together a public financing plan for a $1.1 billion football stadium for the Rams of the National Football League before they departed for Los Angeles in January 2016. That saga more than any other has loomed over the soccer stadium debate, with residents suspicious of wealthy sports investors’ intentions.

“The only reason I believe things are complicated is because of the Rams,” said Patrick Rishe, director of the sports business program at Washington University and a supporter of the soccer stadium proposal. “They left a bad taste obviously in people’s mouths, and generally speaking, there’s some mistrust.”

The agreement between the city and SC STL includes a 30-year nonrelocation clause, and the city would own the stadium. When asked by the Aldermanic Ways and Means Committee in January whether the soccer team owners would be asking for more subsidies in 30 years, investor Dave Peacock said no.

But Neil DeMause, author of a book decrying public subsidies for stadiums, said sports teams will continue asking for taxpayer money as long as they can get it.

“Team owners have come to see these buildings not as an asset for their own business but as replaceable,” DeMause said. “They see it as something that’s a responsibility of the public to upgrade and replace for them.”

Public vs. private

Whether it’s a worthy investment depends on the specific project and the dollar amount public officials can negotiate, DeMause said. He said St. Louis’ proposed $60 million contribution, while a “significant chunk of change,” is relatively low as a percentage of cost compared to other sports stadium projects nationwide.

New soccer stadiums are in general much less expensive than football stadiums for a variety of reasons.

Depending on the final cost of the $155 million to $200 million project, the city’s contribution would make up between 30 percent and 39 percent of the funding. Information on stadiums built primarily for Major League Soccer teams shows that’s a relatively low percentage compared to other publicly financed soccer stadiums.

There are no current estimates of the public cost of preparing the site for development, which would likely be incurred by the state.

Some other stadiums have been funded entirely by private money. The 22,000-seat, $300 million Banc of California Stadium in Los Angeles opening in 2018 was entirely privately funded, as is the $150 million stadium for Minnesota United located between the Twin Cities opening in 2018 or 2019.

Edgerley, the SC STL lead investor, said the public-private partnership is needed or it doesn’t make financial sense to establish a franchise in a market the size of St. Louis, which ranks 21st in television market size nationally, according to Nielsen. Edgerley said investors don’t expect to turn a profit on the team until perhaps 20 years from now.

“We thought this had to be a public-private partnership,” Edgerley said.

St. Louis is among 12 cities vying for an expansion franchise. The league is expanding from 24 to 28 teams, and two of the expansion franchises will be announced later this year, according to the league.

The other ownership groups are in San Diego; Tampa-St. Petersburg, Fla.; San Antonio; Raleigh-Durham, N.C.; Detroit; Phoenix; Charlotte, N.C.; Cincinnati; Nashville, Tenn.; Indianapolis; and Sacramento, Calif.