Mayor Slay, Attorneys Discuss Legal Issues, Financing of New Busch Stadium
“If you build it, he will come,” goes the famous line from the 1989 baseball film Field of Dreams. But for St. Louis’ 45th mayor, a better slogan for the $365 million construction of the new Busch Stadium could have been, “If you build it, they will stay.”
In a recent panel discussion at the law school, “Crafting the Deal: Financing Busch Stadium,” Mayor Francis Slay said he knew that the City of St. Louis needed to proactively “work with the Cardinals to keep them in downtown St. Louis.” He noted: “The Cardinals generated a lot of income—about $8 million a year in taxes to the city alone. That’s a lot of money for a city of this size.”
Echoing Slay’s comments on the panel were Michael Whittle, JD ’92, general counsel for the St. Louis Cardinals, and David Richardson, partner at Husch Blackwell LLP. Organized by the law school’s Real Estate and Economic Development Law Society, the lunchtime discussion gave a behind-the-scenes look at the new Busch Stadium project—one of the most ambitious development projects in the City of St. Louis since the Gateway Arch and Jefferson Expansion Memorial.
In establishing the context for the discussion, Mayor Slay quickly pointed out that the Cardinals’ effort to build a new stadium had started before his election in 2001. Resolving the deadlock in downtown’s favor became one of his first priorities as mayor.
For years, jobs and people had been moving out of the city, leaving behind deteriorating infrastructure and significant problems with crime, schools, and revenue. A new ballpark would not only entice the Cardinals to stay in the City of St. Louis, but also boost city morale and encourage people to move, shop, and work downtown.
“It’s a lot about perception,” Slay said. “Everybody in the region felt it was important for the Cardinals to stay downtown.”
At the heart of the city’s deal with the Cardinals was the 5 percent ticket tax. When efforts to secure financing got bogged down in the state legislature, the city agreed to give up the ticket tax and pledged its cooperation on all aspects of the project. The city also worked with the Cardinals to help get one-time tax credits and highway ramp funding from state authorities. Additionally, the city worked out an arrangement with St. Louis County officials for a share of the county’s hotel/motel tax revenue to be used for the new ballpark. The Cardinals financed the rest of the $365 million total cost.
“The state, the county, and the city stood to lose if the Cardinals moved to Illinois,” says law student and event organizer Barbara Geisman, formerly St. Louis City’s executive director of development. “It was critical that everyone worked together to craft a mutually beneficial package.”
Slay listed the deal’s main requirements from city, county, and state perspectives:
- A new downtown ballpark;
- A commitment from the Cardinals to remain downtown;
- A share of the profits if the team was sold;
- More economic development around the ballpark; and
- An allocation of tickets with pricing affordable to long-time Cardinals fans.
Although that may seem like a short list, structuring the deal involved a great deal of negotiation and give-and-take. Whittle, now general counsel for the St. Louis Cardinals and formerly a partner with Armstrong Teasdale LLP, worked with city agencies and others for two and a half years to “paper” the deal with 200 plus documents.
Whittle said the key agreements—the redevelopment agreement, an operations and non-relocation agreement, and a cooperative agreement between the state, the city, and the county—involved the city’s Land Clearance for Redevelopment Authority (LCRA).
When the dust settled, the county agreed to loan $45 million to the LCRA, the Missouri Department of Transportation agreed to pay for a new I-64 on-ramp near the ballpark, and three other state agencies—the Department of Economic Development, Department of Natural Resources, and Development Finance Board—approved tax credits for the new ballpark.
In 2002 the area around the ballpark was “blighted” to allow redevelopment. The LCRA authorized eminent domain, keeping approval rights over the project. Demolition of the old stadium started just hours after the last pitch of the 2005 season, and it was virtually complete for opening day in April 2006.
“It all happened because the key decision-makers decided they wanted the ballpark downtown,” Whittle said. “The goal all along was the long-term viability of the franchise, preferably in downtown St. Louis.”
David Richardson, a partner with Husch Blackwell LLP, which represented the city in the negotiations, discussed the potential “downward spiral” the Cardinals faced with the old stadium and the research among other cities with new ballparks for “best practices” that could be used for the St. Louis project.
“The old stadium needed a lot of reinvestment that would have burdened the team and required it to cut payroll,” Richardson said. “When you cut payroll, you don’t have a good team, which means you don’t have enough revenues. The Cardinals’ owners thought that a new ballpark would mean more revenue to support bigger payrolls and better teams.”
Richardson added that the deal required “progressive-thinking leaders and decision-makers with the courage to take risks and create an environment for a win-win situation.”
And, concluded Slay, it was a “win-win.” When the negotiations started, the Cardinals were paying roughly $8 million in taxes to the city each year, including the ticket tax, and $9 million to the state. Today, the Cardinals average $11.4 million in annual city taxes, even without the ticket tax, and the state receives an average of $18 million each year. And those numbers grow each time the Cardinals reach the playoffs.
“That’s a good return on investment,” Slay said.
What about Ballpark Village?
One continuing question about the new stadium is the status of “Ballpark Village”—the development proposed for the land just north of the stadium.
Mayor Slay said that the city has refused to put any money into it or to back the bonds needed for the project—and he’s glad he stuck to that decision.
He pointed to Kansas City and the development of the KC Power & Light District using city dollars and city-backed bonds. That city recently had to “write a check for $14 million to cover the bonds,” Slay said.
“For that reason, I’m glad it’s not there, because if it was we’d be writing big checks like Kansas City,” he said.
But the city continues to work with the Cardinals on a plan for Ballpark Village. Slay is confident that since the Cardinals own the land, they will put it to good use.
“No one wants to put up a bunch of bars and call it Ballpark Village,” Slay said. The city and Cardinals are currently looking at a mix of residential, office, and retail development, and they are hoping to entice a major company to place their headquarters at the Village.
And even though more than 110 new businesses have opened downtown since the new Busch Stadium was built, securing funding in the current economy is a significant challenge.
For that reason, the mayor is keeping his cards close to his vest. “I won’t announce anything about Ballpark Village until they start breaking ground,” he said.
By Timothy J. Fox