by Julie Tisdale
City & County Policy Analyst
Tomorrow, Thursday, January 26, the Mecklenburg County Board of Commissioners will vote on a plan to build a new soccer stadium on the site of Memorial Stadium as part of a package for an Major League Soccer (MLS) franchise in Charlotte. The city council will hold a similar vote on Friday.
I’ve spent the last few weeks following developments, and I’m concerned. This plan is not a good deal for the taxpayers of Charlotte or Mecklenburg County. It calls for the city and county to each put up $43.75 million towards construction of the stadium. That would constitute half the cost. The other half would be paid by Bruton and Marcus Smith’s corporation, Speedway Motorsports. Eventually.
The Smiths would pay a little less than 15 percent of their half – $12.5 million – up front. The other $75 million would be financed by the county. Essentially, the county would loan them the money, and the team, owned by the Smiths, would agree to pay it back over the next 25 years.
Let me say upfront that this is not about whether a soccer stadium should be built in Charlotte. It’s not about whether MLS would be good for the city. It’s not about whether Memorial Stadium should be demolished. I’m not really concerned about any of those questions. As it happens, I quite like the idea of an MLS franchise in North Carolina, wherever that might be.
But I don’t like the idea of forcing taxpayers to subsidize a really expensive private business venture. And that is exactly what this is. According to an article in Forbes late last year,
…now the average club is valued at $185 million, an 18 percent increase from 2015. When the first valuations were released in 2008, the average club was listed at just $37 million, a 400 percent spike.
That’s a lot of money, and a lot of valuation growth. Potentially, someone could make a fortune off of a successful MLS team in Charlotte. But it won’t be the taxpayers. The team, and their owners the Smiths, will control and operate the stadium. They’ll control concession and ticket revenue, apart from 20 days a year (six for the city and 14 for the county) when local governments will have use of the stadium. The team and county will each pay $150,000 each year into a capital projects fund related to the stadium, so there’s ongoing cost to the taxpayers. And while the team, i.e. the Smiths, will be responsible for day-to-day operating costs, the county will be responsible for major upgrades to the stadium in years 11 and 21.
For all this, the county would retain ownership of the site, which sounds like a good thing. But consider that, because it’s county owned, it would be exempt from property taxes. So, not only will taxpayers have to pay upfront to build the thing and get stuck with ongoing maintenance costs, but their local government will not receive annual property tax revenues. If the county believes that more property tax revenue is needed, they’ll have to raise it by increasing existing property tax rates.
Other cities are building or have proposed to build MLS stadiums without large taxpayer-funded subsides. A competing proposal in Raleigh would be almost entirely privately funded, with the only taxpayer money likely to be associated with parking and road infrastructure. San Jose has a privately funded soccer stadium. Minnesota, which will enter MLS this year, will also play in a stadium built with private funds.
An MLS team for Charlotte might be a great business idea and might make money for its owners, but if that’s the case, then those owners and investors should pay for it. This is a bad deal for taxpayers in Charlotte and Mecklenburg County.