TradeEdge-What's next for Chiefs in stadium funding push? Pivot needed after fans reject tax measure

What next?TradeEdge

In suffering something of a home loss at the ballot box on Tuesday – Jackson County, Missouri, voters overwhelmingly rejected a proposal to extend a 3/8-cent stadium sales tax – the Kansas City Chiefs spoke it into existence.

Now they can sincerely explore “all options,” as Chiefs CEO Clark Hunt recently put it.

No, the Chiefs won’t be headed back to Dallas when their Arrowhead Stadium lease expires in 2031.

Did you hear the one from Dallas Mayor Eric Johnson? He’s invited the Chiefs to return to the city where they were established as an AFL franchise by the late Lamar Hunt. Johnson declared the market as big enough to support a second NFL team alongside the Dallas Cowboys. Yes, he’s got jokes.

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“The politicians have learned that the cheapest-cost headlines that they’ll ever get are related to sports,” sports consultant Marc Ganis told USA TODAY Sports.

Scratch that option. And St. Louis, San Diego, San Antonio and Oakland, too.

Ganis and other experts agree that leaving the market is hardly a choice for the signature NFL franchise with the serious Super Bowl swag.

The possibility of leaving the state, however, is another matter. The Chiefs hoped taxpayers would have foot the bill for more than half of an $800 million makeover of their iconic home. Now it’s hardly a stretch to think they could wind up with a taxpayer-supported deal in, say, Kansas City, Kansas, which is merely minutes away from Arrowhead.

“Crossing state lines creates an entirely different tax structure,” Ganis said. “Kansas might be very interested and justified in a big investment in a new stadium because of all of the tax revenues that would be created for Kansas.”

Then again, while the measure listed as Question 1 failed tremendously with 58% of voters rejecting the prospect of supporting the Arrowhead renovations and a new downtown baseball stadium for the Kansas City Royals, there’s no law preventing another run at the ballot box in the future in Jackson County. Yet here’s what likely needs to happen for the Chiefs to succeed in that scenario: separation.

“From now on, I don’t think it will be possible for the Chiefs and Royals to jointly gang up on Kansas City,” Rodney Fort, professor emeritus of sport management at the University of Michigan, told USA TODAY Sports. “Taking it to the public is one thing. But try to argue jointly, ‘Give us both something or we’re both going to take drastic action,’ that’s not going to fly. They’re going to have to separate now.”

Fort has tracked referenda for sports stadiums and arenas for decades. The measures are much more likely to fail now than in the past, with the principle of taxpayers supporting venues where billionaire owners rake in profits seemingly one of the damning blows.

“It’s kind of a coin toss,” Fort said.

Yet it also seems the Chiefs would have succeeded on Tuesday had it been a stand-alone ballot measure. The ask for renovations to the third-oldest NFL stadium, which opened in 1972, wasn’t such a huge one when compared to the desires of their Major League Baseball counterparts. The Royals sought a new downtown stadium against the backdrop of intense controversy linked to the site. Months before the election, the team identified two other locations as the two “finalists,” yet weeks later switched to a site that left locals wondering about the upheaval of the current urban footprint.

David Carter, a sports consultant and business professor at the University of Southern California, maintains that such measures need at least three essentials to succeed.

“It has to be clear, it has to be cohesive, and it has to be compelling,” Carter told USA TODAY Sports.

The Royals’ plan, he added, “continued to morph, without great clarity. That kind of confusion, that kind of work-in-progress feel has to alienate voters.”

Said Ganis: “There were a host of issues that were Royals-related that were controversial, that likely cost this election.”

Perhaps that’s the big takeaway lesson for the Chiefs: Don’t mix with baseball. Especially now.

Consider the timing. The Chiefs are riding a wave with back-to-back Super Bowl triumphs, with three in the past five years.

“The Chiefs are a national brand,” Carter said. “They’re a very important part of the fabric of the NFL and certainly the region, whereas the Royals continue to hope to turn things around and really be competitive.”

Is it possible that the Chiefs, who have already committed $300 million to Arrowhead Stadium renovations, would privately finance the entire project? Highly doubtful.

“If you’re going to start putting big, private dollars in, why wouldn’t you look at a new stadium versus an existing one?” Ganis said.

One of the NFL’s newest venues, SoFi Stadium in Inglewood, California, was privately financed by Los Angeles Rams owner Stan Kroenke. Don’t expect SoFi, which opened in 2020 (as was the case with taxpayer-supported Allegiant Stadium in Las Vegas) to become the NFL model, regardless of principles linked to subsidies for rich owners.

“When you look at what Kroenke is doing at SoFi, he has a real plan in place to capture the global sports entertainment events that help him justify why he wants to do this privately,” said Carter, pointing to revenues generated from adjacent real estate. “He has to pay for it privately, but he basically reaps all of the revenue and all of the upside that comes with having a state-of-the-art facility in Los Angeles. It’s different from market to market.”

For the Chiefs, Carter sees the equation working the other way. In a letter intended to sway potential voters, Hunt cited nearly $1 billion in annual economic impact on the region, including $572.3 million in Jackson County, and that Arrowhead will host FIFA World Cup matches in 2026.

“Why not go after public subsidies?” Carter suggested. “Teams in (smaller markets) like the Chiefs, they’re delivering huge value for the residents in the community at large…You can argue that the taxpayers should pay for the benefit in their own backyard. That brand is so big and so important that there is some public value. And the owners try to gain that value through tax measures.”

As the Chiefs explore options, years before crunch time, the negotiations seemingly have just begun.