What's the Matter With Kansas was published in 2004 by an author baffled at how a state he thought he understood as a resident and a state that was arguably doing okay economically began adopting ultra-conservative policies that quickly began producing obvious harm to the state's economic well-being. Even though the book came out in 2004, the phenomena it described continued in Kansas all the way until 2018 after two terms of leadership under Governor Sam Brownback acted as a wakeup call and triggered an about-face in state politics. The title What's the Matter With Kansas? has remained a catch-phrase to describe the puzzlement people sense as they watch others continue to support policies that are NOT in their self-interest.
The original book is now twenty years old but the original author, Thomas Frank, could have an opportunity for a follow-up in the making. It just isn't clear yet if the theme will be one of a hard lesson learned that has "stuck" and is helping to avoid future folly or one of temptation and backsliding into dubious boosterism based on the lure of professional sports. The answer may come down to this... Who's dumber? Kansas or Missouri?
As of Summer 2024, owners of both the Kansas City Chiefs and the Kansas City Royals have begun directly stating that new stadiums are required to replace their fifty-year old facilities, directly stating that public subsidies are absolutely required and directly stating that relocations will be considered if viable local plans cannot be finalized. Missouri-side officials have already put their opening bids on the table which fell far short of the owners' expectations. Sensing an opportunity, politicians in Kansas are now considering the merits of tossing in Kansas State subsidies to keep the Kansas City Chiefs and Kansas City Royals in place but on the Kansas side of the current Kansas City metro area. This latest potential bidding war has unique geographic and economic dynamics worth considering but will still likely boil down to another race to find the stupidest taxpayers in the country.
Here are some factors the citizens of Kansas need to consider before showering two sport franchises owned by billionaires with taxpayer money.
1) The KC metro area is evenly split between the Missouri side (featuring primarily Kansas City, Missouri, Independence, Lee's Summit, Gladstone and Liberty) and the Kansas Side (with cities like Mission, Mission Hills, Leawood, Shawnee, Overland Park, Lenexa, Olathe and Kansas City, Kansas).
2) If I had to guess, I would say the population split is probably about 50/50 between the MO/KS sides but the WEALTH split is probably 70/30 in favor of the Kansas Side.
3) The Missouri and Kansas Rivers do snake through the area but most of the population in the area doesn't need to cross any bridges to move between states. In much of the lower half of the metro area, the state line is just a road incorporated into a typical urban street grid. Fans and revenue both already cross state lines freely.
4) The current venues -- Arrowhead Stadium and Kaufman Stadium -- sit together in a tract of land roughly bounded by Interstate 70 and the area's "ring" interstate I-435. This makes both venues very easy to reach from anywhere in the area BY CAR -- a very dated,1970s approach to urban planning and traffic -- but also means the environment isn't one where existing restaurants, bars and hangouts catering to fans on game day are all tightly clustered around the venues.
5) That supporting bar / restaurant ecosystem is already diffused more widely across the metro area -- INCLUDING the Kansas side -- than might be typical in other stadium extortion scenarios.
6) The State of Kansas is not looking at a scenario where these new stadiums would be economically viable ANYWHERE ELSE in the state except for the KANSAS side of the metro KC area. If the teams move to Wichita, Kansas, the Chiefs could probably sell out their ten games per season but there's no way 16,000 people are going to drive 200 miles from KC to Wichita or even 63 miles from KC to Topeka to see 81 home appearances of the Royals.
7) Because the KANSAS side of the metro area is significantly more affluent than the Missouri side, there is no way the residents of cities like Mission, Leawood, Overland Park, Lenexa, etc. are going to favor locating TWO new stadiums and all of the traffic next to their $700,000 homes. There will be a huge NIMBY force applied to any proposed site decision.
8) The only part of the Kansas half of the metro that ISN'T populated by affluent voters or even moderate densities of lower-income voters who might push back is Kansas City, Kansas itself but that area poses a different problem. It houses a lot of heavy industry, particularly rail yards and stock yards. It might be possible to drop two stadiums in that area but doing so would essentially recreate the current Arrowhead / Kaufman dynamic with giant venues in the middle of a concrete desert with no other attractions nearby -- a vibe completely out of sync with every new modern stadium built in the last twenty years.
What do all of these factors mean economically?
First, changing the ZIP code of two stadiums will not likely materially change the destination of all SECONDARY cash flows stemming from having two professional sports teams playing in the area. Those dollars are already likely diffused across bars and restaurants across the same community that will still follow the team regardless of whether the ZIP code is 64129 (Missouri) or 66106 (Kansas). That means any Kansas politicians promising a boost in "economic impact" beyond actual ticket revenue for the state of Kansas are deluding themselves and taxpayers. And remember, most ticket revenue goes into the pockets of the owners and their revenue sharing league partners, not the local community. The community or state is primarily netting sales tax revenue on the tickets, maybe 8% of the face value.
Second, the voters of Kansas need to carefully ponder both the COST of any "modern" stadium built in the last twenty years AND the "lifetime" of that venue. The most recent NFL or MLB stadiums have wound up costing a minimum of $1.3 billion dollars in 2024 dollars. But even cities with stadiums built less than twenty years ago are being approached by team owners to cough up money for "upgrades" whose costs approach original construction costs. In St. Louis, owners of the Cardinals are already pressing city and state officials for $500 million in upgrades to the current Busch Stadium which cost $365 million to build in 2004 (about $598 million in 2024 dollars) and opened in 2006. In St. Louis, it is worth noting that the original plan for the rebuilt Busch Stadium included "Ballpark Village", a cluster of condos, restaurants and bars filling the hole left by the old stadium that would contribute to a hipper "night life" vibe around the stadium for game days and beyond. The first phase cost $100 million, didn't open until 2014 and used $49 million in public funding. Work is still in flight for "phase II" and planning still in progress on "phase III". Cardinals owners have not paid a dime in financial penalties for the project remaining incomplete as called for in the original contracts between the team and the city.
The skyrocketing costs and ever-shortening lifespans of these venues before requiring new outlays make them less of an "infrastructure project" where a capital project pays off over 40-60 years and more like a square wave jump in ongoing expenses for city, county and state governments. These same entities often toss in tax abatements as deal sweetening "stay bonuses" that further cripple investments in supporting infrastructure, both physical and social. Perhaps a more effective way for politicians and the public to grasp the stakes involved with new stadiums is to perform a few crude algebraic calculations to put the costs into a per-seat, per-game basis then compare those costs to current "willingness to pay" as reflected in ticket prices. Only then do the tremendous disparities become obvious.
In the case of Arrowhead stadium, surely the Chiefs would not build a SMALLER stadium, right? The current Arrowhead seats 76,416. Similar sized stadiums have cost a minimum of $1.6 billion. If $1.6 billion is spent and twenty years later, ANOTHER $1.6 billion is required to "rehab" the original stadium or replace it, then essentially the asset has a twenty-year life whose cost is being amortized over the guaranteed events being hosted. For an NFL stadium, the only "guarantee" per team is ten games per season (2 home pre-season games, 8 home regular season games). Sure, over that twenty year period, there MIGHT be a combined Mick Jagger / Taylor Swift Goodbye farewell tour in 2038 to sell another $76,416 seats at $500 per pop but that's not enough to change the result much and those types of acts are better at pocketing most of that ticket revenue.
So a "New Arrowhead" seating 76,416 and costing $1.6 billion to construct and lasting twenty years would amortize over 200 games in its lifetime, equating to $1,600,000,000 / 20 / 10 / 76,416 or $104.69 per seat per game. In the case of the Chiefs, their payroll is about $193 million per season equating to about $252 per ticket per home game. Thus the cost of fielding the team (stadium + payroll) is about $356 and the demonstrated willingness to pay for the product based on average ticket price is $132. (NOTE individual ticket prices are much higher -- around $300 -- but the average reflects a high number of season tickets being sold for MUCH less.) Presumably the difference between the $356 ($104.69 + $252) for the raw "product" and the average willingness to pay of $132 is covered by shared NFL ad revenue, parking and concessions.
The key here is that in this NFL example, the stadium cost is very near the average fan's current demonstrated willingness to pay for the product.
In the case of Kaufman Stadium, it currently seats 37,903 but the relatively small KC market means filling a larger stadium over 81 games per year would be very difficult. Assuming a replacement of similar size would cost about $500 million and again last twenty years before requiring "upgrades" amounting to a complete rebuild, the per-seat per-game cost would come out to $500,000,000 / 20 / 81 / 37,903 or $8.14 per seat per game. Seems much more realistic, except that the Royals don't sell out every seat for 81 games per year. The Royals are currently averaging 18,407 in the 2024 season but more typical averages for attendance per game are between 14,000 and 16,000. That amounts to $19.29 per occupied seat per game. Royals payroll for the 2024 season is estimated at $122 million or about $94.14 per occupied seat per game. The average cost of a ticket for a Royals game is around $72 dollars so the delta betweeen the fielding cost (stadium + payroll) and average willingness to pay is $114 - $72 or $42 dollars, presumably being made up by ad revenue sharing within MLB and local parking and concessions.
The key here again in this MLB example is that the likely stadium cost being considered of roughly $19.29 per seat per event is MUCH LESS than the currently demonstrated willingness to pay of $72 dollars, providing a larger margin of error in the decision for the public to chip in or not.
The only downside to this analysis is that ALL of these numbers are subject to change. That's why this "margin of error" is so crucial.
The league (NFL or MLB) could change revenue sharing terms that currently subsidize small market teams at the expense of big media market teams, suddenly starving small teams for revenue.
A change in revenue sharing could trigger small market team owners to cut payroll, making the team less competitive on the field.
A less competitive team on the field can cause attendance to plummet, reducing ticket revenue, parking and concessions in the venue and equally hurting secondary revenue for hotels and local bars and restaurants.
The owner could be the type that doesn't care about fielding a competitive team, they only want to milk their monopoly, enjoy the revenue sharing subsidy generated by interest in more successful teams and sit back and lose, tanking fan interest, tanking attendance and tanking all of those secondary economic benefits originally promised when locking in public subsidies.
The owner could decide to move the team when lease contracts between the team and venue reach their endpoint. The stadium may last twenty years but if the team's contract to play there ends after just five years, the community is taking a huge financial risk.
In fact, the only economic figure here that is guaranteed to be UNCHANGED over time is the debt owed on the stadium. It is no coincidence that construction costs are the component team owners are most interested in transferring to the public.
Of course, there is one other intangible to consider. Will either pro football or pro baseball still have the same draw that they do now, across the "stadium lifetime" of the venue being constructed? NFL football is certainly more popular than MLB baseball but the NFL has a growing raw materials problem... Chronic traumatic encephalopathy, or CTE. Could litigation stemming from lawsuits from retired players eventually alter the nature of the game to materially change the product on the field and shrink demand? That seems not only possible but likely. Even without litigation changing the rules on the field in an attempt to reduce injuries, could the supply of talent dwindle on its own as parents and kids more accurately balance the allure of football with its life-altering after-effects and avoid the sport? If a significant portion of the violence is filtered out of the product, will the product still sell at current rates and prices?
Baseball has a fundamentally different problem -- a mismatch between the dynamics of the sport and any audience that essentially results in a surplus of the product. The sport itself has a season that lasts 162 games and each game lasts often three hours yet only offers possibly fifteen minutes of actual action split up by interminable, often boring waits. At the same time, the potential audience is increasingly ADHD driven, distracted every second by smartphones and has other forms of entertainment explicitly designed for delivery and distraction on a smartphone to choose as alternatives.
So is there anyone in the state of Kansas paying attention to these dynamics? Will Kansas be the next city/state consortium to get screwed with its proverbial pants on by corrupt monopolistic sports leagues and their billionaire owners, all in the vain pursuit of being able to say they have a "major league city" in their midst? Or will they wake up in time and instead allow politicians in Missouri to do the same? Or will both states read the tea leaves, hold the the line on these public subsidies for private billionaires and win a more reasonable deal or let the teams flee to other communities waiting to be the next greater fool?
Stay tuned.
WTH
