KC Playlist: Royals Building Real Estate Empire On Taxpayer Dime

Our BEST & BRIGHTEST readers point us toward a quote that is not only thoughtful but also offers an EXCEPTIONAL PERSPECTIVE on how the public understands the effort to build a new baseball stadium near downtown Kansas City. 

Here's the crux of the "Save The K" argument with a link to the post in its entirety . . .

"The overwhelming majority of Royals fans, 82% in one survey sanctioned by the Royals, have similarly declared that they don't want a new ball park. John Sherman ignores this fact at his own peril. As I have noted numerous times, no business has ever prospered by ignoring the wishes of its customers. John Sherman's Kansas City Royals would not become the first business to buck that history.

"Sherman thinks that a revenue bonanza is waiting to be mined in Downtown Kansas City, and that all he needs is for the taxpayers to build him a $2 billion ball park to anchor the "entertainment district" he wants to build Downtown. But he's monumentally mistaken about that. Unlike fans in the cities that have ball parks downtown, Kansas City fans simply don't care about barhopping, dining in restaurants and shopping before and after games. It just isn't part of Kansas City's fan culture."

On the surface, we don't really disagree but we believe that this view only scratches the surface and limits the public in their understanding of stadium financing. 

Our main TKC contention . . . 

SO MUCH CRITICISM OF THE ROYALS DOWNTOWN KC STADIUM CONFUSES COMMERCE FOR CAPITALISM & FAILS TO UNDERSTAND THE REAL ESTATE GAME IN PLAY!!!

Accordingly . . .  

Special thanks to AWESOME INSIDERS for help with this financial breakdown . . . 

Basically . . .

THE DOWNTOWN STADIUM PLAY ISN'T ABOUT DRAWING CROWDS, IT'S ABOUT BORROWING CHEAP MONEY & REFINANCING DEBT BACKED BY TAXPAYERS!!!

Again, this might be a small quibble but we think it's important for voters to understand exactly what they're opposing if only because most council members are easily able to discredit & discount constituents with an arrogance that mistakenly believes the public can't comprehend this scheme. 

So, here's our best effort to try and help explain . . .  

Critics who focus solely on cash registers and storefront rentals are missing the broader strategic playbook of modern sports real estate. When a baseball corporation like the Kansas City Royals builds a mixed-use entertainment district, it is playing a sophisticated corporate finance game.

Owning the surrounding real estate transforms a sports franchise from a seasonal baseball team into a year-round real estate holding company, unlocking massive corporate structuring, tax, and financing advantages.

Debt Leverage and Asset-Backed Borrowing

A sports franchise's value is highly illiquid, tied up in league memberships and TV contracts. By owning an entertainment district, the team creates a tangible, cash-flowing commercial real estate asset.

They can use the physical real estate as collateral to secure large, low-interest commercial loans.

The team can redirect this borrowed capital back into baseball operations (such as funding massive player contracts), financing other projects, or funding distributions to team owners without having to sell equity in the franchise.

Cross-Collateralization and Cheaper Capital

Lenders look favorably on diversified revenue. If a baseball corporation owns both a stadium and a thriving entertainment district, it can cross-collateralize its debt. The reliable, year-round rental streams from restaurants and bars offset the volatile, seasonal nature of baseball revenue. This lower risk profile allows the corporation to negotiate significantly lower interest rates across all of its business debt.

Capital Recapture via Refinancing (Buy, Rehab, Rent, Refinance, and Repeat -- BRRRR Method)

Once the entertainment district is built and stabilized with tenants, its valuation will likely jump. The corporation can execute a cash-out refinancing. They take out a new, larger mortgage based on the updated higher appraisal, pay off the original construction loan, and pocket millions in tax-free cash proceeds to reinvest elsewhere.

Beyond Debt: The "Hidden" Revenue Streams

Aside from financial borrowing engineering, a retail and entertainment district drives massive profitability through secondary economic ecosystems:

B2B Sponsorship and "Distressed Inventory" Packaging

The entertainment center opens up massive corporate sponsorship inventory. The team can sell "Official Partner" statuses that span both the stadium and the district.

For example, a beverage sponsor doesn't just get stadium signs; they get exclusive pouring rights across 15 bars in the plaza.

This allows the team to command premium pricing from corporate partners by offering year-round activation space, rather than just 81 home game days.

Tax Subsidies and Infrastructure Arbitrage

Sports corporations rarely pay for these districts entirely on their own. They frequently utilize public-private financing mechanisms like Tax Increment Financing (TIF) or Community Improvement Districts (CIDs). These structures allow the team to divert new sales and property taxes generated within the district right back into paying off their construction debt. Essentially, they use the public's tax footprint to build a private asset.

And so . . . We believe . . .

KANSAS CITY VOTERS SHOULD UNDERSTAND THE NEW ROYALS STADIUM AS A TAXPAYER SUBSIDIZED CORPORATE DEBT SCHEME, NOT JUST AN ENTERTAINMENT DISTRICT!!!

Granted, this might be a distinction without a difference but the ability to engage with local politicos on this topic is what differentiates informed voters from social media rubes with a gripe and it's our hope that our friends at "Save The K" will realize that our post merely seeks to further the discourse on this topic worth HUNDREDS OF MILLIONS to Kansas City taxpayers.   

And all of this inspires this week's www.TonysKansasCity.com playlist tonight on the topic of borrowing & debt. . .

As always, we steep our playlists in 90s nostlagia. About the first track: Fans used to pelt the Barenaked Ladies with boxes of Kraft Dinner during live performances of "If I Had $1,000,000" because of a line in the song. Due to safety hazards and stage messes, the band eventually asked fans to stop throwing the pasta and instead donate the boxes to local food banks at the venue doors.

Something we just learned tonight . . . Crystal Waters was deeply invested in making sure the message of her 1991 hit didn't get lost on the dance floor. Because the music was so upbeat, she feared clubgoers would dance right through the serious commentary on poverty and desperation. To force people to look at the message, she fought her record label to ensure that "(She's Homeless)" was explicitly added to the official "Gypsy Woman" track title.

Maybe a metaphor for the 90s, GenX, money and our relationship with the boomers: The Verve lost 100% of their royalties and songwriting credits for "Bitter Sweet Symphony" after being sued over a five-note orchestral sample. Mick Jagger and Keith Richards were credited as the authors for over two decades until 2019, when they magnanimously returned the rights to frontman Richard Ashcroft.

For the bridge, we're certain that climate change can somehow take the blame for this musical drama: Fenton Robinson's original release of "Somebody Loan Me a Dime" was completely derailed when a massive 1967 Chicago blizzard halted vinyl shipments to nationwide radio stations. This distribution disaster left the song vulnerable to a major copyright battle after Boz Scaggs accidentally took credit for the track on his hit 1969 cover version.

Finally, an upbeat bit of 80s pop music brilliance . . . Cyndi Lauper completely flipped the narrative of "Money Changes Everything" without altering a single lyric from the original version written by a male artist. While the original song was about a man abandoning his lover for a wealthier life, Lauper's identical delivery portrays the perspective of the victim left behind by economic desperation.

As always, thanks for reading this week and have a safe & fun Saturday night.