Chiefs Touchdown for Kansas?

On Monday, December 22, shockwaves were sent through the City of Kansas City, Missouri, as the City’s beloved Chiefs announced that they were headed to Kansas beginning with the 2031 NFL season. The reaction around the news was split on social media, and for good reason. The Chiefs have been located in Kansas City – and the iconic Arrowhead Stadium – since 1963, when the legendary Lamar Hunt moved the Dallas Texans to Kansas City. Since that time, the Chiefs have been a staple in Kansas City. As someone who grew up in the area (and as a humongous Chiefs fan), I know how much of a stronghold the team has in the area.

The move from Missouri to Kansas is not unprecedented. As the Kansas City Metro is located between both Missouri and Kansas, it has long been a practice for companies to move across state lines to the state which gives them the best incentives. This was so much of a problem that the legislature in each state – until now – were parties to a “border war” truce, which prohibited either state from luring companies across state line with massive incentives. While the Kansas Governor thinks that the Chiefs move will not end in a truce, Missouri has already made moves to forgo extending the truce. In my opinion, this will have far reaching and negative impacts on the region, as companies play off the other jurisdictions to obtain heavier and deeper incentives while, in some cases, creating no new jobs or economic impact for the region.  As a lawyer who works with companies and entrepreneurs in the Kansas and Missouri area, I guess I could put a positive spin on it and say that it could be good for some of my clients!

While many in Kansas City, Missouri were upset by the Chiefs move, it is hard to blame the Chiefs for accepting such a massive incentive deal. The stadium in Kansas City, Kansas is likely to have a price tag of approximately $3 billion, and approximately 60% of that price tag will be paid by public funding. In addition, the State will provide public funding for a $975 million training facility in Olathe, and up to $1 billion in ancillary development. The public funding will come from a mix of STAR Bonds (sales tax and revenue bonds) and funds from the State of Kansas’ Attracting Professional Sports to Kansas Fund, which was generated through the State’s legalization of sports betting a few years ago. Indeed, this public incentive is the largest ever given by a state or local government for the construction of a stadium. According to one commentator, “[a]dding in debt service costs, expected property tax exemptions and the state’s annual commitment to maintenance and repairs, Propheter estimated the nominal public price tag for the stadium project is roughly $6.3 billion.”

To justify this massive public investment, Kansas relies on the estimates that the Stadium will create nearly $4.4 billion in economic activity during construction (including 20,000 jobs) and an estimated $1 billion in annual economic impact, once operational. If those numbers come to fruition, it would be hard to argue that Kansas didn’t score a massive touchdown with its relocation of the Chiefs. But, only time will tell…