The New Soccer Stadium Deal: Closer to the Goal But Still Wide of the Net

May 30th, 2014 | by Ed Lazere and Wes Rivers

Mayor Gray’s updated deal for a DC United soccer stadium makes progress toward ensuring that the city and team share the costs fairly, but it still could leave the District paying half or more of the total. The deal creates risks for the city while enabling the team owners to benefit financially from both the new stadium and development around the stadium that they would control. 

A new stadium for DC United would add to the quality of life in our region, and some level of support from the District is likely to be needed, as is the case with most professional sports stadiums. But the District should approach the deal in a responsible way. 

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DCFPI’s review of the finances of the deal reveals positive developments but also important lingering concerns. Many details are included in legislation submitted to the Council, but other details are part of documents the mayor has not shared, such as a ground lease. 

  • Some city costs would be capped, but not all:  The deal sets caps the city’s cost to acquire stadium land at $90 million, but DC would pay all the costs – with no cap – to get the land ready: demolition, environmental cleanup, and new infrastructure. The Gray administration has not shared estimates, but the costs could be $30 million to $50 million or more.
  • New revenues to help offset costs, but not for 10 years:  DC United would pay the District $2 per ticket, starting in year 11 of the stadium’s operation. This could bring in $1 million per year, which would offset a small share of the city’s costs. (This fee is mentioned in a press release from Mayor Gray, but is not included in legislation submitted to the Council.)
  • Substantial tax breaks: The team’s owners would pay no property taxes for five years, and partial taxes for the next 15 years. The team also would not have to collect sales taxes for five years on tickets, food or drink, or merchandise within the stadium or on the adjacent land. Full sales taxes would not have to be collected until the 11th year. According to the Washington Post, this could cost the District about $40 million.

This means that the costs to the District could easily exceed more than half of the estimated $300 million total stadium costs, and the District would face all of the risk if the costs of preparing the land rise. That doesn’t seem like a fair deal, given the team owners’ strong financial interest in a new stadium. A better approach would cap the District’s costs and ask the team to pay a majority of the stadium costs.

Over the next weeks, the District’s Dime will look at other aspects of the updated deal, including plans for a land swap involving the Reeves Center, local hiring requirements, and the need for a community benefits agreement with stadium neighbors. 

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2 Responses to “The New Soccer Stadium Deal: Closer to the Goal But Still Wide of the Net”

  1. PowerBoater69 says:

    The District paying for the environmental clean-up and infrastructure doesn’t bother me, but the United should pay for the land and property/sales taxes just like any other business. Then there is no need for the special $2 tax that seems highly unlikely to net $1 million per year anyway.

  2. Riky says:

    We know that DCFPI is against the current deal, but could you please include a table breakdown of your estimated costs and gains instead of a opinionated summary at the end.

    According to your numbers that could “easily exceed more than half of the estimated $300 million total stadium costs” the highest amount that the District would incur is about $180 million, and the low end of the assumptions is $160 million. It is no baseball stadium deal. This includes the tax breaks the above article states are indirectly costing the District.

    While the above is correct, in 5 years, property tax will be received on behalf of various other sources including the Reeves Center land trade and construction/employment taxes. This would offset the $40 million included in this value. So if you take the assumed potential costs into account, it would be prudent to note the assumed potential gains. Otherwise, think-tanks such as DCFPI cannot be taken seriously.

    Also of note, DC United would pay “up to” 2.5 million to help offset the costs of infrastructure. It is not much, but it does help.