The Kansas City Chiefs plan to move from Missouri to new facilities in Kansas in time for the start of the 2031 NFL season. Embedded in the move’s political and personal story is, of course, a parallel tax narrative spelled out in the project’s newly available bond and financing terms.

For professional sports franchises, there’s no place like home, unless tax incentives are involved. And, for the NFL’s Chiefs, Kansas has the tax incentives. More below the fold.

The Kansas City football franchise’s move occurred after the April 2024 failure of a Missouri ballot measure to extend sales taxes that would fund renovations at the Chiefs’ current stadium. Instead, the Chiefs will move all operations across the state line, with approximately 60% of direct stadium construction costs (capped at $1.8 billion) financed by Kansas-backed Sales Tax and Revenue (or STAR) bonds—and potentially a much greater public commitment to the entire project over time. (The NFL’s Rams also decamped from St. Louis to Los Angeles in 2016 over public funding for a new stadium.)

Under the late December terms sheet between the Chiefs and Kansas, the core of the franchise’s relocation package involves tax-increment financing through anticipated issuances of federally tax-exempt bonds—perhaps private activity bonds—repaid through projected increases in sales and liquor tax revenue, as well as sports betting and lottery revenue. The political message on this project’s funding: “Not with new taxes.” Citizen watchdogs already have produced an interactive model that projects the full public costs of this bond financing.

Additional tax benefits in the relocation package include property tax relief through a public-private joint venture, with ownership of hard assets by a designated government owner and operational control of those assets by the franchise. This government owner also may sell personal seat licenses for the new stadium, which may carry further tax advantages and are an item to watch as the deal develops. Moreover, construction materials for the stadium, practice facility, and ancillary developments are intended to be exempt from sales tax—a hidden but potentially significant source of public support. Finally, the bond term sheet contemplates further (and layered) public funding mechanisms.

Predictably, there’s been harsh critique of the complex and opaque deal that Kansas offered to induce the Chiefs to relocate. According to commentary by economist Michael Austin in the Kansas City Star:

For up to 30 years, sales tax revenue that could have gone to broad tax relief, infrastructure, education or debt reduction is earmarked for one asset, one owner and one location. Supporters argue the bonds aren’t general obligation and rely on incremental revenue. That doesn’t erase the fact that there will be fewer state sales tax revenues from Kansas businesses moving to the STAR bond district, or Kansas consumers shopping in the bond district, to name a few examples. That doesn’t erase the opportunity cost.

For many commentators, the Chiefs’ relocation package underlines a large literature in law and economics that “say[s] stadium subsidy deals are not winners for states.” For this specific deal, however, a lot lies in the still-pending details and final documentation, and any final verdict on the arrangement’s economics will require decades to determine.