Chiefs and Royals agree to new leases that leave out key details on funding stadiums
The Royals, Chiefs and the Jackson County Sports Complex Authority have agreed to new stadium leases and development agreements six days before Tuesday’s election that leave many financial questions still unanswered.
How much will the Royals contribute to the construction of a proposed $1 billion-plus ballpark in Kansas City’s East Crossroads district? The documents don’t say – other than that the amount will be left to future negotiations. The lease does not include a total dollar amount for the project, but it does specify that it only covers the stadium itself, not a potential surrounding ballpark district.
As previously announced, the Chiefs have agreed to contribute $300 million toward their proposed $800 million renovation of Arrowhead Stadium.
Neither team specifies in the leases how much they would expect to receive from city, county and state taxpayers for their projects. But they do count on all three of those governments to come up with cash to support the stadium projects, according to a five-page summary prepared by the sports authority, which received the agreements at its board meeting Wednesday afternoon.
Gov. Mike Parson has said he will make an effort to get state support for the projects. City officials say neither team has made a formal request for funding but they are in contact.
And while the document absolves the county and the sports authority from being responsible for the cost of demolishing Kauffman Stadium in the event the Royals move to the Crossroads, it’s not clear who would need to pay. The document says that the money for that may come from “facility bonds” issued as part of a new bond issuance for the stadium project.
Those bonds would be paid off over time with county sales tax revenue, meaning stadium demolition costs could come from taxpayer dollars.
Overall, the proposed leases do not depart from the basic framework of the current ones the teams agreed to in 2006, except for a couple concessions that the teams had previously announced.
In a January terms sheet, they promised to forego the $3.5 million a year that they’ve been receiving from a county parks property tax levy since 1990. And they promised to pay for the casualty insurance on Arrowhead Stadium and a new Royals ballpark, which the county currently pays for.
Combined, that would save county taxpayers more than $200 million over the life of the new leases: $80 to $100 million in insurance costs and $140 million from the tax levy, according to the teams.
The lease documents approved Wednesday said the team would continue to receive the parks money through the end of 2030 and then start passing that money to the county. Their current leases expire on Jan. 31, 2031.
“The exciting prospect of downtown baseball is one step closer to fruition, and we are grateful for the hard work by the Jackson County Sports Complex Authority on this important piece of the overall plan,” Royals CEO John Sherman said in a press release.
If Jackson County voters approve the 40-year, 3/8th-cent sales tax to help pay for a new Royals stadium and Arrowhead renovations, the teams would split the sales tax proceeds equally over the course of their leases. That’s 40 years with two five-year renewal options for the Royals, and 25 years with three five-year renewal options for the Chiefs.
If the Chiefs did not renew, their share of the tax money after debt payments would go to the county parks fund, the team said when a reporter asked that question a couple of weeks ago.
A bumpy road to leases
County legislators and a lawyer for the sports complex authority had promised that the leases would be completed before advance voting started at the end of February.
But when that didn’t happen, team officials and others began to blame it on County Executive Frank White Jr., who was in charge of the negotiating process until late last year, when the teams began negotiating directly with county legislators Manny Abarca and DaRon McGee, who was chairman of the legislature at the time.
Sherman has more than once criticized White for his approach to the negotiations.
On Monday, the teams’ campaign committee, the Committee to Keep the Chiefs and Royals in Jackson County went further in a letter to legislators announcing that the leases were in the final stages of being completed.
The letter began with an attack on White, saying that in their attempts to “engage in conversation” with White about their stadium projects, “for two and a half years, we have been met repeatedly with barriers to progress. Today is no different.”
The teams did not respond to requests for an explanation of the timing of the criticism, as White was shut out of the process by the teams and legislators months ago. But to White’s allies it appeared to be an attempt to put the blame on him for the delay in getting the leases finished less than a week before ballots are counted.
White has countered on numerous occasions that he negotiated in good faith with the teams, but that they were not interested in making the kind of concessions he was proposing, such as greater share of tax revenue going to support county government.
In both the proposed and current leases, rent payments are redirected back to support the stadiums.
Fewer details than previous leases
If Question 1 on Tuesday’s ballot passes, the county would repeal the current stadiums 3/8th-cent sales tax that is set to expire in 2031 with a new 3/8th-cent tax that would begin on Jan. 1 and last 40 years.
Tax collections would help pay for a new Royals ballpark, renovations at Arrowhead Stadium and provide the teams with a stream of revenue for stadium repairs and operations. Ballpark construction would start next March, according to the Royals’ projections and be completed by March 1, 2028. The team’s new lease would commence then.
The Chiefs project that Arrowhead renovations would start in February 2028 be finished in time for the start of the 2031 season.
The teams signed their current 25-year lease agreements on Jan. 24, 2006, the same day that the county legislature voted unanimously to put the current sales tax measure on the April 4 ballot that year.
The agreements spelled out how much the county would pay to renovate the stadium ($425 million), and how much each team agreed to pay. The Royals at $25 million and the Chiefs agreed to put in $75 million, later upping that to $125 million.
At that time, County Executive Kathryn Shields noted that the state of Missouri had also agreed to extend a $50 million tax credit for the project, and the teams agreed to pay for any cost overruns on the projects.
The tax passed with 53% of the vote.
In 2022, the tax generated $48.6 million in revenue, with nearly $26 million of that going to pay debt service on the money borrowed for those earlier renovations at the Truman Sports Complex.
Most of the remainder goes to the teams to help pay for repairs, maintenance, management and operations of the stadiums.
That arrangement would continue under terms of the new leases, which the sports authority has posted on its webpage along with the development agreements.
This story was originally published March 27, 2024 at 2:57 PM.
