Editorial: Pro soccer stadium would benefit Des Moines, but city should limit public aid

It’s been a halting path to get Iowa’s first professional soccer stadium to the finish line.

The biggest missing piece in publicly announced financing for the Krause Group’s plans for a 6,300-seat south-of-downtown home for a new USL Championship team is assistance from the city of Des Moines. Private donors, including Krause Group CEO Kyle Krause, and the state of Iowa and Polk County have committed to helping reach a goal of about $95 million. Little information has been released in recent months about negotiations between developers and the city about tax incentives and other assistance to advance the deal.

We think the city holds the cards here and should hold the line against sweetening the pot for Krause.

It’s difficult to explicitly say how much would be too much without being privy to the parameters of the talks, especially with tools such as tax increment financing that let governments argue, semantically, that they aren’t actually giving up any money. But it will be disappointing if Des Moines goes beyond the millions in infrastructure assistance and TIF relief that are standard for development projects in the city. Similarly, other public entities should honor their existing commitments but should not give more to the project.

A few principles guide the thinking here:

The benefits of the project are almost wholly intangible

Much commends the ideas for the stadium and a surrounding commercial district. They would benefit greater Des Moines.

The Capital City Reinvestment District including and surrounding the stadium site could transform one of the most embarrassing eyesores in the city into one of its most attractive. Unused for decades after heavy pollution from manufacturer Dico, the area easily visible to drivers coming to downtown from the airport would become a center for shopping, living and working. Judging by the markets the league has and is adding, Des Moines would fit well in USL Championship, the largest second-tier soccer league in the nation (below Major League Soccer). Des Moines has a popular fan club for the men’s and women’s national soccer teams and capably supports minor league baseball, basketball and hockey. Iowa has strong high school soccer programs.

But where community after community across the country has gotten into trouble is in accepting predictions of economic value attached to improvements such as these. That, and the supposed threat of losing a proposed or existing team to another market, leads to misguided handouts that starve better investments of capital.

The Brookings Institute concluded in 2016 that “any economic activity generated while attending a game will largely if not entirely be offset by reduced spending on other local leisure activities.” A new commercial district will create new tax revenue, but that hardly makes the amount of up-front public investment inconsequential. Further, setting a pattern for heavy public involvement now risks being on the hook perpetually for renovations.

A Citizens Against Government Waste report that cites the Brookings study closes by calling Iowa the home of the project that “shows just how out of control the taxpayer funded stadium scam has become”: The permanent “Field of Dreams” stadium outside Dyersville, for which Gov. Kim Reynolds allocated $12.5 million of the state’s COVID-19 relief money. Indeed, Iowa gained a national spotlight in a pair of major-league games at the site, but there is no indication of when — or if — Major League Baseball might ever return to the state.

Another view: Local soccer projects will build more than stadiums

If the goal is growth, there are better options for investment

The role of elected officials is not to maximally grease the path for private enterprise on every cool-looking project. They should closely guard finite resources for vital work that won’t be done without the government. Could they really say with certainty that no part of the subsidies for the Pro Iowa project might have instead been directed toward subsidizing, say, investments in affordable housing, which remains a desperate need in this area? If you’re going to spend millions, which investment would actually attract and keep more workers in Des Moines?

Krause, for his part, has presented a reasonable outlook on all this, telling the Business Record last month, “Right or wrong, when you look across North America, the funding model of these types of projects include government support of these types of projects because they see it’s for the greater good.” That is correct, and Krause did not achieve his financial success by reflexively turning away people who want to give him money.

He also cited the government’s involvement in downtown’s Principal Park and Wells Fargo Arena. Neither is a perfect comparison. Polk County owns Wells Fargo Arena, which represents a wholly different set of questions about prudence in government. And the Iowa Cubs minor-league baseball club is home for 75 dates every year — more than 20% of the year. The Iowa professional soccer team could have as few as 34 home dates in a season.

More: After 110 million euro loss, Kum & Go owners continue investing in Italian soccer team

What the pro soccer project needs is more private investment

Krause is an Iowa lifer, having earned bachelor’s and master’s degrees here and building Kum & Go and Solar Transport as locally owned and operated businesses until their sale last month. He wants to bring professional soccer to Iowa, not to own a franchise just anywhere. That is commendable — but Krause’s personal incentive to make this work in this location also gives the city of Des Moines an opening to hold firm.

Private fundraising should cover the bulk of this project. Everyone would welcome additional private businesses deciding to get on board. But any new package of taxpayer support must be carefully measured. Although professional soccer would be good for Des Moines, it can’t justify a blank check.

— Lucas Grundmeier, on behalf of the Register’s editorial board

FURTHER READING: Cities should not pay for new stadiums

FURTHER READING: Should taxpayers pay to build a new soccer stadium in Pawtucket, Rhode Island?

This editorial is the opinion of the Des Moines Register's editorial board: Carol Hunter, executive editor; Lucas Grundmeier, opinion editor; and Richard Doak and Rox Laird, editorial board members.

Want more opinions? Read other perspectives with our free newsletter, follow us on Facebook or visit us at DesMoinesRegister.com/opinion. Respond to any opinion by submitting a Letter to the Editor at DesMoinesRegister.com/letters.

This article originally appeared on Des Moines Register: Opinion: City of Des Moines should limit aid to pro soccer stadium