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Thursday, March 1, 2012

St. Louis's Dome Dilemma

Taxpayers Face a Big Bill for Upgrades Needed to Keep NFL's Rams in Town

February 28, 2012 - THE WALL STREET JOURNAL
ST. LOUIS—Nearly 20 years after the Rams arrived here from Los Angeles, this shrinking city wants taxpayers to open their wallets for a stadium overhaul designed to keep the professional football team from fleeing for the glitz of its former home.
Under terms of St. Louis's deal with the Rams, the 17-year-old Edward Jones Dome must be one of the eight best stadiums in the National Football League in 2015, using criteria spelled out in the contract. If not, the team can leave then—around the time two separate groups hope to open stadiums in the Los Angeles area.
The fight to save St. Louis's NFL franchise comes at a tough time. The city of St. Louis, St. Louis County and the state of Missouri together still owe $153 million on the downtown dome and face deep budget cuts in other areas. But they are proposing a $124 million plan to build new club seats and a 50,000-square-foot plaza at the dome—with nearly half the cost funded by taxpayers.
In Los Angeles, taxpayers would pay almost nothing for the proposed stadiums.
Economists say large cities often fare better than smaller markets in stadium deals with professional sports teams because they can offer franchises a bigger base of potential fans, and because the larger cities are less reliant on a team to help shape their area's image.
Despite evidence that these investments rarely pay off in purely economic terms, smaller-market cities continue to offer sports teams millions of dollars in hopes the investments will pay off by improving the quality of life, aiding in the recruitment of new businesses and burnishing their national reputation. Minneapolis and Minnesota are offering more than $600 million for a new Vikings football stadium. And Indiana still owes $649 million on the Colts' four-year-old stadium.
In larger markets, however, cities have managed to keep taxpayers largely off the hook for stadiums, such as the New York Giants' and Jets' $1.6 billion, two-year-old stadium and the San Francisco 49ers' planned $1.02 billion stadium.
Indeed, taxpayers have shouldered about four-fifths of the funding for NFL stadiums in the eight smallest media markets with new facilities since 1995, according to an analysis of data from the consulting firm Convention Sports & Leisure International. During that period, taxpayers have funded less than a fifth of the cost of NFL stadiums in the eight largest media markets where new facilities have been built or are planned, according to the data.
The Rams have until Thursday to decide whether to accept the renovation plan or offer their own. Rams owner Stan Kroenke, a Missouri native who also owns the pro basketball and hockey teams in Denver, has said little to comfort fans. "Anything could happen," said Rams spokesman Artis Twyman. "After 2015, we could stay or we could leave." Mr. Kroenke has also expressed interest in pursuing ownership of baseball's Los Angeles Dodgers, fanning speculation about a departure to Los Angeles.
The two stadium proposals in Southern California both lack a key component: an NFL team. Just outside Los Angeles, a proposal for a privately financed stadium has been seeking NFL approval for two years. In Los Angeles, city officials have tentatively agreed to another plan for a downtown stadium, and Mayor Antonio Villaraigosa recently set up a city task force to oversee the project. The sports-and-entertainment conglomerate Anschutz Entertainment Group Inc., which says it will pay for the $1.2 billion stadium, has discussed relocation with several NFL teams, including the Rams, people familiar with the matter said.
In St. Louis, taxpayers would fund $59.5 million of the proposed renovations. Meanwhile, St. Louis County announced plans last month to lay off 27 workers to help shrink a $26 million budget gap, while Missouri Gov. Jay Nixon recommended shedding 816 jobs to help plug a $468 million hole. St. Louis is eliminating 50 police positions, and recently began charging residents $11 a month for trash pickup.
The plan suggests public funding could come partly from special taxes on fans, such as ticket and parking surcharges. If the Rams and local officials can't agree by June 15, arbiters will decide what improvements are necessary to satisfy the lease, which runs until 2025. The Rams can leave if local officials reject the arbiters' plan.
Rams fan Michael Phillips, a 34-year-old St. Louis native, said the city should let the team go if the cost is too high. "We can barely afford our schools, but we can basically buy [Mr. Kroenke] a new stadium," he said.
Smith College economics professor Andrew Zimbalist, who studies the impact of sports teams on cities, said the renovation cost is "not an economic investment."
David Peacock, head of a board that attracts sporting events to the city, said there is more to the issue than the renovation costs. "It's civic pride and it's economics," he said. "There are benefits beyond just the 10-plus [home] games. It's creates economic opportunities."
Kevin Demoff, the Rams' chief operating officer, said the team's goal isn't to boost city coffers, but to "use football to make St. Louis a better place for its residents and the region."
Since plans for the Rams began here 20 years ago, St. Louis has lost nearly 20% of its population. (The county's population has stayed flat.) And since 2006, attendance has fallen by about 14%; during that period, the team has been one of the NFL's worst.
—Matthew Futterman contributed to this article.

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved

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