Exclusive: NFL stadium deals often have large 'hidden costs'

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(The Center Square) – The Chicago Bears and Denver Broncos used the opening of a new National Football League season as a platform to announce each intended to build a new stadium for which the teams would pay.

But the reality for taxpayers in each state and NFL city is that the “hidden costs” as described by journalist and author Neil DeMause, are the numbers taxpayers should be following.

Those include tax captures, new taxes, property tax and rent deals, land purchase cost breaks, tax-increment financing, site infrastructure costs and stadium naming rights.

“Every team owner knows that you have to find a rock to hide the subsidies under,” DeMause told The Center Square.

DeMause cowrote the book “Field of Schemes” and operates a stadium funding blog with the same name where he regularly covers the topic.

He compared the earlier stages of the Bears’ proposal to move to Arlington Park and the Broncos’ proposal to move to Burnham Yard to the Washington Commanders’ proposal to move to federal land at the site of the former RFK Stadium. The Commanders' leadership and D.C. Mayor Muriel Bowser said the team would pay for the stadium but the fine print showed something different.

DeMause said the team’s claim “was true as far as it went but left out $7 billion or so in other tax breaks and free land and other goodies that the team was getting.”

Teams often announce deals with limited details to begin to establish a narrative and goodwill, University of Colorado Denver Associate Professor Geoffrey Propheter told The Center Square.

In the case of the Broncos’ announcement, Propheter’s takeaway is that it simply was a note that the Broncos prefer to move to Burnham Yard over Douglas County or Aurora, comparing the announcement to Michael Scott in “The Office” shouting “I declare bankruptcy” and thinking that will somehow impact reality.

“It is very lean on details, which makes it really hard to offer much in the way of policy wonky analysis,” Propheter said, adding that there is speculation about a TIF district but no confirmation that funding mechanism will be used.

Propheter is an expert in public finance and stadium finances who has studied stadiums, property tax, housing and more.

He said that teams start with narrower announcements to lead the narrative on a stadium development, create a scope for discussion of the public policy and determine what will and won’t be discussed in each time frame.

“It anchors all future expectations and frames all future policy debates,” Propheter said. “That is control you want to have. You don’t want to lose the narrative before you ever had a chance to have it.

The Bears have already gone through a cycle of new stadium announcements, purchasing the former race course at Arlington Park, announcing plans there, andn telling the public that Chicago was then the preferred new stadium location. Now it's a circle back to state that Arlington Park is the preferred location if state lawmakers create a property tax exception at the property, calling it “property tax certainty and a fair contribution toward essential infrastructure.”

In response, Illinois Gov. J.B. Pritzker said that he had not spoken to the Bears in weeks but that he would ask the team to pay off what is reported to be $534 million in debt for the city of Chicago related to Soldier Field renovations in 2003.

“We need the Bears to pay off what’s owed on the existing stadium,” Pritzker said. “So that’s going to be a really important feature of whatever happens going forward.

“If they want a PILOT bill or some other help, we’re gonna make that a prerequisite for something like that happening.”

PILOT is an acronym for payment in lieu of taxes.

Propheter said that a promise from Broncos’ ownership of no new taxes would be created to pay for a new stadium and development doesn’t mean team ownership will be paying for the project or that taxpayer funds won’t be used.

“Go to the extreme just to illustrate the silliness of this reasoning and, if Denver had a $1 billion budget, they could turn around and give that entire billion dollars to the Broncos or, pick any corporation or business that you want … you take the entire revenue stream that is used for public services and you give it to someone, then you’re like, ‘At least we didn’t raise your taxes,’” Propheter said.

Propheter said that stadiums like SoFi Stadium in Inglewood, Calif., that are privately financed without TIF are “super rare” even with the development having a 50% sales tax capture in the surrounding development along with ticket and hotel/motel tax collections.

Early indications from local politicians in Denver are that more taxpayer money could be involved in the Broncos’ project, including for infrastructure and TIF. But details on how or where a TIF would be drawn at Burnham Yard and if the actual stadium would be included in the TIF has not been publicly released.

Propheter called TIF districts "a way for teams to basically keep their own property taxes." In Denver, it will be important to find out who will own the land and stadium, how long those rights are for and which side will pay for future renovations.

“We already know there’s taxpayer money involved and this idea that TIF money is not tax money or new tax money … now I have to spend the next couple years trying to convince people that it is tax money because it is money you could have used for other purposes and now you have to find other money for those purposes, or you could cut them I suppose,” Propheter said.