by Jon Styf
Memphis accepted $350 million in state taxpayer funds for upgrades at its sports facilities and plans to ask Tennessee taxpayers for more.
The set of Memphis sports facility asks previously included funding for $684 million in renovations to the FedexForum, home of the Memphis Grizzlies, along with renovations to Liberty Stadium, AutoZone Park and a new soccer stadium for new soccer club 901 FC.
The Tennessee Legislature approved a $350 million lump sum in this year’s budget that Memphis’ city council voted to accept and put in an interest-bearing account Tuesday.
The state contribution also includes a hotel/motel tax, a county car rental tax and a deal where all sales taxes collected at FedExForum are kept by city for arena upgrades.
Outgoing Memphis Mayor Jim Strickland said those taxes will go toward the $334 million city and team portion of the projects.
The proposal that Strickland put forward when asking the state for the funding, however, could have changed or increased in cost as the city and incoming Mayor Paul Young told ABC 24 in Memphis that the city would now be asking for more state taxpayer funds for the projects.
The station reported the tax captures are expected to equal $250 million additional in taxpayer funding for the projects but that combined $600 million will still not be enough for Memphis to complete the work.
The Tennessee Legislature approved extending through 2059 a 2% Shelby car rental tax that brings in an estimated $3.4 million annually to pay off bonds for the FedExForum work and a bill extending a sales tax capture at the arena through 2059 that brings in an estimated $5 million in state sales tax each year.
The state recently agreed to a $500 million lump sum contribution plus significant state taxpayer contributions to a $3.1 billion expected tax capture at and around a new $2.1 billion Tennessee Titans stadium in Nashville.
“We want to make sure the Grizzlies stay in Memphis, and we want to make sure that the University of Memphis is able to move to a bigger conference,” Young told the station. “And you know we have a limited amount of funds to achieve those goals. I want to work with them to figure out how can we get the capital stack such that both projects can be executed.”
Tennessee Gov. Bill Lee was in Memphis on Tuesday and told reporters the state would continue to look into further spending on Memphis sports facilities.
“Sports venues around the state are really economic development opportunities,” Lee said. It’s what they are. They are investments in jobs and economic development for a community.”
Economists who have studies sports arenas and developments across the country, however, have shown that those facilities don’t spur other economic development and don’t make up for the taxpayer funds used on the projects.
“The opportunity cost of most sports consumption – particularly regular season team games hosted by sports venues – is other local spending, which results from the diversion of consumption from other local entertainment options,” an academic paper on the topic stated. “It is well understood by economists that spending on tickets, concessions, merchandise, and other items directly at a stadium largely ‘crowd out’ spending that would otherwise go to other local businesses, and there is no theoretical expectation that expanding business activity to include the district outside the stadium would change this accounting.”
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Jon Styf is an award-winning editor and reporter of The Center Square who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies.
Photo “Fedex Forum” by Ron Cogswell. CC BY 2.0.
Memphis has just as much right to playhouses as Nashville does. Shoot, let’s build lavish stadiums in Knoxville and Chattanooga too!
Picking winners and losers again? What a dam shame, what the world’s …..
Teams owned by billionaires which employ multi millionaire athletes and they want the average joe to pay for their toys? Wow, the hubris.
Let Memphis pay for its own assets. Memphis is already the cesspool of Tennessee.
I think that there needs to be an amendment to the Constitution of Tennessee to FORBID the direct (i.e., apart from ordinary public spending for roads, police protection, public utilities, etc. which I will call indirect) spending (i.e., however clever may be the financial artifice for doing it, such as the dedication of sales tax revenue generated in particular areas near the stadium/facility; such as payment of interest by the State on locally issued bonds; etc. ad infinitum) by the State of Tennessee for professional sports stadiums and other similar professional sports facilities.
In an economic downturn, or, God forbid, an economic depression, I fear that the taxpayers of the entire State of Tennessee, at the worst possible economic and financial time imaginable, will be forced to pay for these boondoggles.
Local leaders will ALWAYS want sports teams to come to, and settle in, their city/county; and local leaders will always prevail upon their State legislators to help them succeed in accomplishing this; and State legislators will always prevail upon their fellow State legislators to help them win/keep these sports franchises.
But someone, somewhere must have ‘clear-eyed’ and ‘tough’ love and act in the best interest of ALL of the people of our State and say NO when necessary, and it is now clear as crystal that our Governor will NOT do that.
I myself like college and professional sports teams. I like to go to professional sports games (particularly baseball). Many people do. Sure, I would like to have professional sports teams in our State. But the way that I look at it, IF IT CANNOT BE DONE WITH PRIVATE MONEY, IT CANNOT BE DONE!
And furthermore, it is not ‘right’ for ‘well-connected’ individuals and/or their families, who are rich as Croesus themselves, to personally benefit from the tax revenues paid to our State by the hard-working taxpayers of our State.
Something like this has happened in our State before. In the early and mid-years of the 1800s, the technological ‘craze’ was railroads. Building and maintaining railroads, then as now, is an expensive proposition. Railroads, and the communities whom they enticed with the potential for quick riches if a railroad line traversed their community, were constantly lobbying the Tennessee General Assembly for financial assistance for railroads. Eventually, the State Constitution had to be amended to put a stop to this very risky expenditure of public funds by the State. Yes, times have changed, but the issue then is the same as the issue that is now presented by the demands for public funds by professional sports teams.
When is the legislature/state going to stop this craziness? The average taxpayer is getting taken to the cleaners by special interest freebies.