Pro sports interests don't merit state funding

This bill would earmark nearly two-thirds of the estimated $25 million the state collects from its nonresident athletes and entertainers tax to subsidize professional sports interests. The remaining third would go to arts and humanities. Currently, these taxes go to the state general fund.

Missouri already spends about $18 million each year on sports-related subsidies. This includes $12 million for the Edward Jones Dome, $3 million for upkeep on Arrowhead and Kauffman stadiums, and $3 million for the Mizzou Arena.

Should this legislation pass, it would become fully operational in 2008 (FY 2009), and the tax would generate about $30 million. Instead of these funds going to the general fund for badly needed services such as education and health care, the likely allocations are St. Louis pro sports interests, including Ballpark Village and Edward Jones Dome debt service – $10 million; Kauffman/Arrowhead stadiums – $8 million; smaller city sports commissions – $1 million; and arts, humanities and library funding – $11 million.

While a case can be made for state support for arts and humanities, there is no reason for the state to provide more money to pro sports interests.

The K.C. Chiefs are probably among the most profitable businesses in the state. According to Forbes magazine, the Chiefs enjoyed pre-tax profits of $153 million from 1998–2003, an average of about $25 million per year. All Chiefs home games are sold out with about 78,000 fans in the stands.

The Kansas City Royals play at Kauffman Stadium. Despite being 32 years old, it remains a first-rate facility. Providing the Royals with more state money to improve an already great stadium would be an unwise use of taxpayer dollars.

The Royals’ problem is that Major League Baseball does an inadequate job of sharing league revenues, making it very difficult for small market teams such as the Royals to be competitive.

For the 2005 season, the Royals team payroll is about $37 million. This is $92 million below the average of the top four American League teams. The Royals would greatly benefit from a revenue-sharing plan comparable to that used by the NFL.

It is reasonable to assume the lion’s share of the estimated St. Louis allocation would go toward the Ballpark Village development.

The St. Louis Cardinals are among Major League Baseball’s most successful franchises. There is no need to subsidize private development adjacent to the new stadium. It will occur naturally.

Due to Missouri’s current budget crunch, SB 269 phases in over three years beginning in fiscal year 2007; by fiscal year 2009, the tax would generate approximately $30 million. These are funds Missouri cannot afford to lose, especially because general revenue will be down $189 million in fiscal year 2009 due to passage of Amendment 3 in November.

Growth in Missouri’s revenue is not likely to improve in the near future, leaving the state with an ongoing shortfall. It is unconscionable to increase pro sports subsidies while enacting enormous budget cuts that hurt the poor.

Senate Bill 269 should be defeated posthaste.

Tom Kruckemeyer is director of fiscal policy and chief economist of the Missouri Budget Project.