MLS4CLT rally at First Ward Park

On Tuesday evening Charlotteans came together at First Ward Park to rally for Major League Soccer. Marcus Smith spoke to the enthusiastic crowd.
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On Tuesday evening Charlotteans came together at First Ward Park to rally for Major League Soccer. Marcus Smith spoke to the enthusiastic crowd.
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Business

What you need to know about the proposal to bring Major League Soccer to Charlotte

By Katherine Peralta and Steve Harrison

kperalta@charlotteobserver.com

sharrison@charlotteobserver.com

July 19, 2017 03:02 PM

Earlier this year, Marcus Smith, CEO of Speedway Motorsports, submitted a bid to bring a Major League Soccer team to Charlotte. Under Smith’s proposal, the county-owned Memorial Stadium and Grady Cole Center would be razed to make way for a new 20,000-seat facility, with up to half paid for with taxpayer dollars.

Smith, son of recent inductee to the NASCAR Hall of Fame Bruton Smith, sent in his bid even though the city of Charlotte was not ready to commit millions of dollars to the project. More than half a year after the submission, the public funding part of the deal remains the most contentious, despite Charlotte’s long history of using taxpayer dollars to fund pro sports facilities

The city’s economic development committee discussed a proposal last month to help pay up to $30 million for the proposed stadium, but didn’t take any action.

County commissioners will consider the county’s capital improvement plan, which includes money for the soccer stadium, at a meeting Wednesday.

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Here is some background on the proposal:

Q: How much public money is involved?

A: Mecklenburg County Manager Dena Diorio’s proposed capital budget included $71.25 million for the stadium next year, and then another $43.5 million for fiscal year 2020. In an email July 31, Diorio reduced the 2020 payment to $30 million.

After that, the county would begin collecting lease payments of $4.25 million a year from the potential MLS team. The total cost of the stadium has been estimated to be $175 million.

The original framework for the deal called for the city to also contribute $43.5 million. But the city has recently said it can only contribute up to $30 million.

The ownership group, called MLS4CLT and headed by Smith, would pay $87.5 million for the stadium under the proposal. Smith would also pay the $150 million MLS expansion fee.

Q: What else is in the agreement?

A: The county would own the new stadium, though the soccer team’s ownership group would manage it. The team would be able to rent the stadium for other uses – and keep profits from those events. According to the MLS4CLT site, the stadium would host women’s and men’s college soccer, U.S. National team games, a variety of music and entertainment events.

The team and the county would each contribute $150,000 a year to a capital reserve fund.

The lease between the team and the county would be for 25 years, though the team could end the agreement after 15 years if the stadium is “no longer economically viable.”

The soccer team would have full operating control of the facility, but allow the city and county 20 days’ free use a year and charge “reasonable” rental fees for nonprofit groups.

Q: What else could the money be used for?

A: The county’s contribution comes from its general fund. That means the soccer money could be used for almost anything, including schools, parks and greenways.

The county has said the money for the stadium wouldn’t require a tax increase. But the money could be used to finish capital projects that are waiting for funding.

The city’s $30 million or $43.5 million would come from hospitality taxes on hotel and motel room occupancy. By state law, that money can only be used for tourism-related projects. That means the city couldn’t spend that money on police officers or affordable housing.

The city said it still has enough money to pay for other tourism projects such as a renovation of the Charlotte Convention Center and a second phase of improvements to the Spectrum Center uptown.

The biggest wild card for the city is whether it would have to put more tax dollars into Bank of America Stadium in three our four years. The city’s current six-year “hard tether” to keep the Panthers in Charlotte expires in two seasons.

Some officials also believe they could be asked to help pay for a new stadium if the team is sold.

Though the city can’t use the hotel/motel tax money for non-tourism related projects, City Council member Ed Driggs recently asked why Charlotte couldn’t transfer money between different accounts to give the city more flexibility.

He was referring to planned renovations to Ovens Auditorium and Bojangles’ Coliseum that are being funded from general property tax revenue. Driggs suggested the city pay for those renovations from the hotel/motel tax money slated for the stadium, and then use the other dollars for projects like affordable housing.

Q: Is this deal similar to other stadiums?

A: Bank of America Stadium was built more than 20 years ago and paid for almost entirely by the Carolina Panthers. The city, however, did agree to spend $87.5 million on renovations in 2013.

To build BB&T Ballpark for the Charlotte Knights, the city and county each spent $8 million toward the cost of the $55 million stadium. Since the team started playing at the new uptown facility, attendance has been close to the highest in the league.

The $190 million Spectrum Center was built entirely by the city. Self-described as “stewards of the arena” responsible for filling seats for non-basketball events, the Charlotte Hornets manage the arena and are allowed to keep all profits from the building.

The Hornets and the city both pay $600,000 a year for a maintenance fund for the arena.

Q: What about other locations?

A: Some City Council members have said they would be more interested in the deal if the ownership group wanted to build the stadium at the Eastland Mall site or north of uptown – two areas that are economically distressed.

But Marcus Smith has said the Memorial Stadium site is best. One reason is that MLS prefers stadiums in or near downtown areas.

Q: What are Charlotte’s chances of landing a team?

A: Charlotte is one of 12 cities vying for four MLS expansion franchises. Other cities include: Nashville, Tenn.; Indianapolis; Detroit; Phoenix; St. Louis; Raleigh, San Antonio; Cincinnati; Tampa Bay, Fla.; San Diego and Sacramento, Calif.

Some of those markets (Nashville and Sacramento, for instance) have stadium plans that are more locked up than Charlotte’s. Experts say, in fact, that a lack of support from the city could weigh on Charlotte’s chances of landing a team.

During a visit to Charlotte Tuesday, MLS President Mark Abbott said the league has a set of four criteria for considering potential expansion cities: A committed ownership group, a firm stadium plan, support from the community and a demonstrated ability for the new market to drive profit for MLS.

Critics of the MLS proposal question whether Charlotte has a strong enough appetite for MLS to justify millions in taxpayer dollars for a new stadium.

Other bidding markets have partnered with the local professional team to generate fan interest in MLS – Cary did that with North Carolina FC, for instance. The Charlotte Independence, the city’s minor league team that had worked on its own plan to renovate Memorial Stadium, have not been involved with the MLS4CLT bid.

MLS4CLT points to events like the well-attended friendly matches at Bank of America Stadium as evidence of demand for the sport here, as well as the popularity of youth soccer leagues (Spanish team F.C. Barcelona opened an official soccer school in Charlotte last fall), and Charlotte’s quickly growing Latino and millennial populations.

Katherine Peralta: 704-358-5079, @katieperalta