Pro Soccer Names Tax-Assisted Cincinnati Next Expansion Team

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By Alex Ebert

Major League Soccer announced FC Cincinnati as the league’s next expansion team after the squad sealed its stadium plans with about $40 million in state and local support.

The team also reached a long-term tax increment financing (TIF) agreement with the local school board.

The May 29 announcement capped Cincinnati’s rapid ascent as a soccer town. The squad already nets crowds far above the 21,000-seat, soccer-specific stadium it is building for the 2021 MLS season. Despite a year of haggling with local officials, the team’s owners committed to paying an estimated $250 million of their own money.

“New cities embrace big things, we embrace new ideas,” Mayor John Cranley (D), a supporter of tax incentives for the team expansion bid said. “Great new cities don’t give in to naysayers.”

From Naysayers to Yes Votes

While the team is paying most of the way, that wasn’t always the plan. Last year, the team sought about $100 million in taxpayer assistance and authored an economic study arguing that the public support would lead to 820 jobs and bring about $71 million in new spending by the team’s fifth year.

But that plan didn’t catch on with the Cincinnati City Council or county, which would have had to increase or implement some new form of taxes. Over time, the team changed its request to commitments from the city and state to provide funding for the public infrastructure around a team-built stadium.

The team won over the Democratic-controlled city council twice. First, it got a vote in November for a $52-million incentive agreement that fell through because it couldn’t secure that location. Then the team landed a final $34 million in city taxpayer support through a mixture of money from local hotel taxes, Cincinnati’s capital improvement fund, and TIF revenue.

The team also won over the state and local school board. The Ohio Legislature provided $4 million in this year’s capital improvement budget. The team also secured the new stadium’s land in a TIF and land-swap deal with the local public school system.

From Large to Little Public Money

FC Cincinnati’s bid falls between two extremes in the public funding debate for pro soccer.

In January, the league announced that a David Beckham-led expansion in Miami is going ahead with private funding, asking nothing from the taxpayers.

In December 2017, the league approved Nashville’s expansion plan, which calls for issuing between $200 million and $225 million in bonds for a 27,500-seat stadium, funded with a ticket tax.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio, at aebert@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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