The Chiefs: No New Taxes—But Not No Public Cost

Sep 8

Kansas officials describe the agreement bringing the Kansas City Chiefs to Kansas as a historic economic-development victory accomplished without raising taxes. That claim is technically defensible—but it can also leave taxpayers with the wrong impression.

Kansas is not creating a special stadium tax. It is committing billions of dollars in future tax revenue to help finance the project. Those are not the same thing, but neither is the second one free.

Key Takeaways

Kansas plans to provide approximately $1.8 billion toward the proposed $3 billion stadium, with additional public financing associated with the team headquarters, training facility, and related development.
The financing relies primarily on Sales Tax and Revenue—or STAR—bonds.
STAR bonds do not ordinarily require an increase in the sales-tax rate. Instead, they redirect future sales-tax revenue generated within designated districts toward repayment of the bonds.
Bondholders generally bear the direct risk if project revenue proves insufficient. Taxpayers still bear an opportunity cost because pledged tax revenue cannot be used for other public purposes.
The project’s value ultimately depends on how much genuinely new economic activity it creates—not simply how much money is spent within the STAR-bond districts.

What Are STAR Bonds?

STAR bonds allow a government entity to borrow money for a development project and repay that debt using future sales-tax revenue generated within a designated area.

Imagine that a development district currently produces $10 million annually in sales taxes. After a new attraction is built, collections rise to $16 million. Under a conventional STAR-bond arrangement, the original tax base continues flowing to government, while some or all of the additional $6 million is directed toward bond repayment.

Once the bonds are retired, the government begins receiving the full amount.

Kansas created the program to support major commercial, tourism, and entertainment developments expected to attract visitors from outside the area. STAR bonds can finance such costs as land acquisition, site preparation, infrastructure, and certain construction expenses. Kansas Department of Commerce⁠

The Chiefs agreement uses an expanded version of the program authorized by the Legislature specifically for major professional sports complexes. The project can capture portions of state and local sales-tax revenue, with the sports-related bonds permitted a longer repayment period than ordinary STAR bonds. Kansas Legislature’s HB 2001 summary⁠

How the Chiefs Agreement Works

The central project is a planned 65,000-seat domed stadium in Wyandotte County, accompanied by mixed-use development. A separate headquarters and training complex is planned for Olathe.

For the stadium itself, STAR bonds are expected to finance approximately 60% of the estimated $3 billion construction cost—about $1.8 billion. The Chiefs and related private entities would provide the remainder. Additional public participation is contemplated for the headquarters, training facility, and supporting development.

The bonds would be repaid from designated streams of sales-tax revenue associated with the project. These include portions of new state revenue generated within the project area and participating local revenue from Wyandotte County and Olathe. Kansas Department of Commerce⁠

That is the basis for the state’s “no new taxes” claim. The project does not depend upon increasing the tax rate paid by Kansas families.

But it does depend upon dedicating future taxes to the project.

Why “No New Taxes” Is Incomplete

Suppose a visitor spends $100 at a restaurant inside the stadium district. The customer pays the ordinary sales tax regardless of whether STAR bonds exist.

The relevant question is where that tax revenue goes.

Without the STAR-bond pledge, the revenue would ordinarily flow to state and local government. With the pledge, part of it is reserved for paying project debt. It may therefore be accurate to say that taxpayers are not being charged a higher rate. It is inaccurate to suggest that no public resources are involved.

The distinction is straightforward:

Claim Assessment

Kansas is imposing a new stadium tax: NO

The project uses tax revenue: YES

Bondholders generally bear the direct default risk: YES

The financing has no cost to government: NO

The project could eventually expand the tax base: YES, if the projections prove correct

STAR bonds shift the debate away from whether taxes are being raised and toward whether the public receives sufficient value for the revenue it relinquishes.

The Central Question: Is the Revenue Truly New?

A development can produce substantial sales-tax collections without producing an equal amount of new economic activity.

If a Kansas family spends $200 at the stadium instead of spending that same $200 at another Kansas restaurant, theater, or retailer, the stadium district records additional activity. Kansas as a whole may have gained little. The spending was relocated rather than created.

The strongest argument for the Chiefs project is that it could attract:

Missouri residents whose spending currently remains on the Missouri side of the border;
visitors attending concerts, conventions, championship games, and other major events;
national tourism that would not otherwise occur in Kansas;
hotels, restaurants, offices, and businesses that would not have developed without the stadium.

The weakest economic activity is spending transferred from other Kansas businesses into the subsidized district.

This is commonly called the “but-for” question: Would the economic activity have occurred in Kansas without the public subsidy?

What Kansas’s Experience Tells Us

Kansas’s own Legislative Division of Post Audit has found mixed results from previous STAR-bond projects.

In its 2021 evaluation, auditors found that only three of the 16 attractions reviewed met both of the Department of Commerce’s tourism goals during at least one of the years examined. Auditors also concluded that some developments likely would have occurred without STAR-bond assistance and that many visitors simply shifted spending from elsewhere in Kansas.

The estimated time for the state to recover its investment varied enormously. Depending on the project and assumptions used, the state’s break-even period could extend for decades after the bonds were retired.

The audit did not conclude that STAR bonds never work. It found that their success depends heavily upon attracting outside visitors and creating development that would not otherwise occur. It also identified incomplete and unreliable visitation data within the Department of Commerce. Kansas Legislative Division of Post Audit⁠

The Chiefs are plainly different from a regional museum or shopping development. An NFL franchise has an established customer base, national visibility, and the ability to host large events. A domed stadium could also attract activities that the existing Arrowhead Stadium cannot accommodate.

That makes the Chiefs project a stronger candidate for STAR bonds than many ordinary retail developments. It does not make the financial projections self-proving.

The Genuine Advantages

The agreement offers Kansas several plausible benefits.

First, it moves an established professional franchise and associated economic activity across the state line. Missouri’s loss could become a real Kansas gain rather than a rearrangement of spending already occurring within Kansas.

Second, the Chiefs are contributing substantial private capital. This is not a wholly government-owned project funded entirely from general taxation.

Third, the bonds are tied primarily to project-related revenue. If collections underperform, bondholders generally bear the direct default risk rather than possessing an ordinary claim against the state treasury.

Finally, the stadium could anchor development and infrastructure that continue producing revenue long after the bonds are retired.

These are meaningful advantages. They explain why elected officials from both parties supported the agreement.

The Genuine Risks

The first risk is that projected “new” activity may include spending displaced from elsewhere in Kansas.

The second is the district’s size. A broadly drawn STAR-bond district can capture revenue from businesses and development only indirectly related to the stadium. The larger the district, the easier it becomes to generate money for bond repayment—but the harder it becomes to claim that all captured growth was created by the project.

Third, construction-job figures should not be confused with permanent employment. Building a stadium creates a large but temporary burst of employment. The more important long-term measures are permanent jobs, wages, outside visitation, and net tax revenue.

Fourth, public financing reduces the private owner’s exposure while reserving a substantial share of the project’s economic benefit for the franchise and its affiliated businesses. Kansas should therefore insist upon enforceable performance standards, transparent reporting, and protections against shifting additional costs to taxpayers.

Finally, opportunity cost remains real even if no bond ever defaults. Tax revenue committed to the project cannot simultaneously support roads, schools, public safety, property-tax relief, or other priorities.

What Kansans Should Demand

The debate should move beyond slogans. Kansas officials should publish understandable annual reports showing:

the exact boundaries of each revenue district;
total state and local taxes captured;
the amount attributable to preexisting businesses;
attendance and visitor origin;
permanent jobs and wages created;
debt outstanding and projected payoff dates;
private investment actually completed;
public infrastructure and maintenance obligations;
economic activity displaced from elsewhere in Kansas, when reasonably measurable.

The public should also be able to compare actual results with the projections used to approve the agreement.

Why It Matters

The Chiefs project may prove to be one of the rare stadium agreements capable of creating substantial new activity for the subsidizing state. Kansas is not merely helping a team build a newer stadium in the same market; it is attempting to move a major institution, its employees, and much of its surrounding commerce across a state line.

That strengthens the economic case.

It does not eliminate the public cost. Kansas is making an enormous investment of future revenue, and the project should be evaluated accordingly.

“No new taxes” answers whether Kansans’ tax rates will rise directly because of the stadium. It does not answer whether the agreement is a good use of public resources.

The more important question is whether the Chiefs project will generate enough genuinely new economic activity to justify what Kansas is giving up.

Further Reading: Kansas Legislative Division of Post Audit — Evaluating the STAR Bonds Financing Program⁠

Paul Wilson