Royals’ planned stadium move all about money: Here’s how it breaks down

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Posted at 3:53 PM, Aug 24, 2023
and last updated 2023-08-24 16:53:20-04

KANSAS CITY, Mo. — One of the deciding factors, perhaps the biggest deciding factor, in where the Kansas City Royals ultimately move will be the package of incentives offered and the details of the lease agreement the team hammers out with local political officials.

The Royals announced in July that the search for a new home had been narrowed to two sites — a 27-acre tract in the East Village of downtown Kansas City, Missouri, and a 90-acre site in North Kansas City.

The former would keep the Royals in Jackson County, where the club has been since its founding in 1969, and the latter would move the team north of the Missouri River into Clay County.

“We’ve spoken with both (counties),” Royals President of Business Operations Brooks Sherman said Tuesday. “That’s part of the process of going through this.”

It’s unclear how much progress has been made with Jackson and Clay counties toward a memorandum of understanding about the public financing and lease details, including the length of any agreement.

The Royals presented renderings and more details about the proposed sites Tuesday at a press conference, which included the ball district’s lead designer and an economic consultant retained by the club.

HR&A Advisors Principal Imran Aukil presented the economic-impact research commissioned by the team, suggesting that either site would drive $320 million or more in annual regional economic activity once completed.

According to HR&A’s analysis, building the new stadium and surrounding ballpark district will create an estimated 20,000 construction job-years with an estimated $1.4 billion in labor income and $2.8 billion total economic output.

But that’s a short-term economic bump.

Long-term, Aukil said the new ballpark district and stadium, which the Royals hope to move into for the 2028 season, would be expected to drive new spending within the ballpark, increased tourism and a bump in accompanying retail spending and hotel stays.

Once completed, a process that could take several years beyond stadium construction given the scale of surrounding projects, HR&A estimated that a new ballpark district would generate $185 million in “net new regional economic output,” including $117 million in new revenue from game-day experience and an additional $68 million from visitor spending.

The increased visitor spending would create 600 new full-, part-time and temporary jobs across the region, according to Aukil.

“The numbers we presented are estimated to be at full buildout,” Aukil said. “Of course, we assume there will be opportunities above and beyond the district to continue to drive benefit in this region.”

HR&A said it expects a new ballpark district to produce $150 million in annual retail and hotel revenue when fully operational with another $170 million in estimated retail and hotel revenue “beyond the ballpark” for a total annual economic impact of $320 million.

The Royals are asking for $1 billion in public funding for the project and said at least another $1 billion in private financing will be spent on the stadium and accompanying ballpark district.

“We’re going to do everything we can to produce the right revenue, as much revenue, pour that back into the team, invest in the team, have the team get better as a benefit from that,” Sherman, who is not related to the Royals’ Chairman and CEO John Sherman said. “I believe their numbers are conservative. We’re going to push there.”

Brooks Sherman said most, if not all, of the proposed $1 billion in private investment will come from the team’s current ownership group.

“You can bet every day we’ll be working to boost that (economic return),” Sherman said.

How realistic are the projections?

As part of the lease agreements with the Chiefs and Royals at the current Truman Sports Complex, the Jackson County Sports Complex Authority commissioned an economic-impact study in 1989.

At that time, the Royals and Chiefs combined produced a $238 million economic impact for the Kansas City region, according to the February 1989 study prepared by the Mayer Hoffman McCann accounting firm and the Mid-America Regional Council.

MARC updated its study in 2001, estimating that the total economic impact of the Chiefs and Royals being in Kansas City had climbed to $328 million.

“It would be about double that (the 1989 estimate) now, so closer to a half billion dollars today,” MARC Director of Research Services Frank Lenk, who participated in the original economic-impact study and authored the 2001 update.

MARC has not been approached to provide its own independent analysis of the economic impact the region could expect from a new stadium, but he said baseball’s trend toward downtown ballparks has benefited several other cities.

“They do seem to have some additional impact when they are, in particular, this one is also targeted to benefit those who are just to the east of downtown, just east of Troost (Avenue),” Lenk said of the proposed East Village site. “That would be a huge benefit for the region. If those benefits were to spill over to the people that need it most. It’s an area weakness for us, so it would be great to use this (a new stadium) as a catalyst.”

Sherman said the Royals and their ownership group already are considering ways to invest there.

“We do think that the East Village location and the highway improvements that would go along with that over there would certainly open up what we refer to as Paseo West for development,” Sherman said.

The Populous design calls for a pedestrian bridge over the interstates that would connect the neighborhood to the ballpark district.

Lenk said a downtown stadium also could help draw more convention business, a benefit that might not travel as well across the river, but he said there’s more chance for economic activity at the considerably larger NKC site.

“At the current site, there’s really nothing to do once you leave the game,” Lenk said. “Either of these two sites could be built in a way with more to see and do before and after the game.”

Aukil said the Royals’ vision for a ballpark district that would attract visitors year-round and not just for the 81 scheduled home games “is a foundational concept in creating a vibrant, successful, exciting place.”

HR&A also touted the new stadium as a draw for new businesses and residents to the region.

Some have argued that a new ballpark district near a downtown stadium might damage the Power & Light District, which has historically struggled to pay for itself anyway.

But Earl Santee — the Global Chair and Founder of Populous, the design firm guiding the Royals — said that was a consideration when creating the East Village concept.

“The style of development is different,” Santee said. “It’s lower scale. I think right now we’re pushing for local companies to be involved in it versus having national franchises being involved at Power & Light District.”