Longform

BOB's a Bust

Page 5 of 8

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, Forbes magazine 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.

Insiders tell New Times that the hotel tax may disappear from the equation altogether, leaving the car rental tax and the supplemental revenue streams to finance the stadium.


With the Cardinals keeping a low profile, football stadium supporters say $1.3 billion in new taxes must be raised to save Arizona's tourism industry, protect the Cactus League, keep the Fiesta Bowl a top-tier bowl game and bring the Super Bowl back.

While the arguments have merits, the impacts are years down the road, and of questionable economic magnitude. Of the four, the impact on tourism appears to be the most immediate.

Arizona's tourism industry is growing, but at a slow, choppy rate. Tourism spending, including business travel, hit $10.9 billion in Arizona in 1998, up 6 percent over 1997.

However, there are indications that business travel, the most lucrative segment of tourism, is slowing. Business travelers spent $3.3 billion in Arizona in 1998, up only 10 percent from $3 billion spent in 1994.

Arizona's tourism promotion budget is relatively small compared to other states, ranking 26th in the nation at $8.8 million. Hawaii leads all states with a $60 million budget.

Arizona's biggest tourism rival has become Las Vegas, which spends $100 million a year on promotion. This is in addition to the $12 million spent by the state of Nevada.

"I think we have really raised the level of awareness of the fact that we are challenged to protect our tourism market share by all this increased spending not just in other states but by major communities in the country," says Arizona Office of Tourism director Mark McDermott.

The stadium tax proposal would add $5 million to the state tourism budget the first year, with steady increases thereafter. The tourism promotion budget would get $19.6 million from the tax plan in year 30.

ASU economist Tom Rex says that spending tax money to promote tourism would be more beneficial to the state than putting the money into a new football stadium.

"I would be willing to bet the net benefit to the area would be far greater if you spent the money in ways to support tourism, and not just in advertising but providing support for that industry, than building a football stadium that gets used 10 times a year," he says.

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John Dougherty
Contact: John Dougherty
Amanda Scioscia
Contact: Amanda Scioscia