BOB's a Bust

Bank One Ballpark was touted as a powerful economic engine for downtown. Data show, however, that BOB has fueled sales mostly for BOB. The meager spillover doesn't bode well for the Arizona Cardinals' stadium aspirations.

"I really don't want to be defending BOB," Ferris says. "I would rather draw a distinction here. The governor said very early on to the task force that we are not going to do anything close to BOB."

Where BOB collected $238 million from taxpayers, Ferris says, Arizona taxpayers would contribute only about $22 million (in today's inflation-adjusted dollars) to a new Cardinals facility.

Because local residents will be chipping in a much smaller share for the Cardinals stadium, the question of whether there is significant economic impact to the community doesn't loom as large, he says.

Downtown Phoenix Partnership executive director 
Brian Kearney says BOB is fueling a downtown 
resurgence.
Paolo Vescia
Downtown Phoenix Partnership executive director Brian Kearney says BOB is fueling a downtown resurgence.

"With Bank One Ballpark, you're questioning whether or not kicking $238 million over a three-year-plus period has generated a stream of revenue that is a good return on that investment. That's a legitimate question.

"I would rather not compare the two," he says. "Ours was specifically designed not to be that model, to be a more creative model that leverages dollars for the benefit of Arizona. We think we have done that."

The gubernatorial task force not only has distanced itself from BOB, but from the Cardinals, who have become a mere footnote in the overall tax plan. During a January 31 press conference at the Governor's Office, task force members rarely mentioned the Cardinals. The team's vice president, Michael Bidwill, attended the 90-minute presentation, but declined to comment on the proposal.

The briefing focused on other reasons for tapping public funds, including boosting the state's tourism-promotion budget, upgrading spring training facilities for the Cactus League, keeping the Fiesta Bowl as a major college football game and landing a Super Bowl every five years.

And the only way to achieve these goals, reporters were told, is to build the Cardinals a new football stadium.

Why is the task force suddenly concerned about Arizona tourism and the Cactus League? Politics. The only tax stream palatable to voters must come from out-of-state tourists.

But taxing visitors would hurt Arizona's moribund tourism industry. The only way stadium supporters could get the tourism industry to agree to the taxes was to promise that most of the tax revenue would be spent to promote tourism.

"It's basically compensation, if you will, the quid pro quo to the tourism industry, to the hotel industry in particular," says Mark McDermott, director of the Arizona Office of Tourism. "They are going to be asked to incur an additional tax. So what's in it for them? This is the answer."

The hotel and car rental taxes were identified as funding sources during discussions between Ferris, Phoenix development attorney Steve Betts, Cardinals political consultant Jay Smith, and Bank One chairman Michael Welborn, state records show.

Initially, the plan was to impose a 1 percent sales tax hike on hotel rooms in Maricopa County and a 0.5 percent hike on hotel rooms outside the county. The hotel tax was estimated to raise $1.1 billion over 30 years.

However, resistance from legislators in outlying counties and the difficulty in waging a statewide election campaign forced stadium promoters to seek a hotel sales tax increase in Maricopa County alone. The Maricopa County hotel tax is expected to raise about $900 million over 30 years, Ferris says.

The car rental surcharge would also raise significant revenue: $417 million over 30 years.

Lumped with the Cardinals' $75 million investment, the car rental fee would provide a revenue stream nearly sufficient to pay for the stadium without a hotel tax.

Combined, the hotel and car rental tax streams -- totaling $1.3 billion -- would more than cover construction of the $342 million stadium, $130 million in financing charges plus $40 million to subsidize operation of the stadium during the first 10 years.

In addition to the tourism taxes, the stadium plan would tap other tax streams that already exist -- at the expense of the state's general fund.

The plan calls for $36 million in NFL players' state income taxes to be earmarked for the stadium. State sales taxes generated during construction of the stadium and from the sale of merchandise and concessions once the stadium opens would be used to help pay for the stadium -- a total of $29 million. These three tax streams would not exist, and could not be diverted if no NFL team were playing here.

Last year, Forbesmagazine estimated the Cardinals are worth about $301 million, based on $100 million in revenue and net operating income of $10.6 million. The Cardinals were ranked the 28th most valuable team in the 30-team league. The Dallas Cowboys were the most valuable team at $663 million based on $161 million in revenue and $56.7 million in net operating income.

The tax plan also calls for the Fiesta Bowl to contribute $20 million to the construction of the stadium. However, Fiesta Bowl executive director John Junker says the bowl has not yet determined how much money it will contribute, although he guarantees the Fiesta Bowl would make a significant contribution.

"It would be much too soon to commit to a number until I know all the details of a stadium-use agreement," Junker says.

Whatever plan emerges from the Legislature, Senate President Brenda Burns says it will be up to Maricopa County voters to decide whether to impose a tax to help finance the stadium.

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