Washington stadium update, part 6,459
February 17, 2025
by Steve Thomas
My last column about the ongoing, seemingly neverending search by the Washington Redskins Washington Football Team Washington Commanders Washington team for someone to gift them a new stadium was at the very end of 2024. The news at that time was of a bill passed by Congress that essentially ground leased the RFK Stadium site to the District of Columbia for 99 years. I’m not going to repeat information that in this column, but you can read it by clicking here.
The latest update on the stadium issue comes from DC Mayor Muriel Bowser. According to NBC4 Washington (click here), Bowser was in attendance at a town hall meeting where she was asked whether she would be willing to state that public funds would not be used to construct a new stadium on the RFK site, which she refused to say. Specifically, according to the NBC4 column, civic activist Adam Eidinger asked, “[i]t’s typically a billion dollars of public money to build a modern stadium in this country, and will you commit to not offering a subsidy?” Bowser’s response was simply, “no”.
That response should have surprised no one, as Bowser has made it abundantly clear over a number of years that she was in favor of a new stadium in the District, and she’s never denied that public funds could be used.
In today’s world, the total cost of an NFL stadium project is going to start at a billion dollars, and could very easily be significantly more. The bulk of that cost will likely need to be funded by the government in which the winning site is located.
The truth is that Washington owner Josh Harris has very little motivation to put a significant amount of money into a new stadium, simply because there is competition between three separate jurisdictions, i.e., Maryland, Virginia, and the District. However, this is more difficult for the District to accomplish than either of the two states. Because the federal law last year granted a ground lease, the District is unable to provide Harris with a true piece of marketable title – in legalease, fee simple title. About the best Harris could do in this situation in regards to the RFK site is to negotiate a deal with the District government in which he is entitled to a certain amount of the profits of from the stadium, but he can never own it. Certainly possible, but both Maryland and Virginia can do better.
The other problem for the District is that Maryland and Virginia simply have more access to capital than does the District, particularly given that federal funds cannot be used on the RFK site. As a result, I still believe that – fan wishes aside – it’s more likely that one of the states, particularly Maryland, ultimately comes through.
The District will no doubt make an effort to get a deal done, though, as they should. What are the options to raise money? First and most importantly are the issuance of public bonds. A bond is a security instrument issued either directly by the government or a quasi-governmental entity formed and controlled by the government. Investors can buy into these bonds in exchange for a certain, guaranteed future payout. Typically, for major projects, one or more specific large financiers, such as major banks, get involved instead of thousands of individual investors. For all intents and purposes, the net effect is that this operates essentially as a typical commercial construction loan, complete with liens on the property, albeit with a couple of extra steps involved.
For a stadium project in 2025, the District will most likely need at least a billion dollars in bond funds, and even that probably won’t be enough. These bonds will have to be repaid, of course, which is the major problem. Annual debt service for a billion dollars in 30 years bonds at 5% interest is more than $65M. Can the District afford that? Many cities much larger than the District would not be able to do so without serious budgetary problems. States have larger budgets than a city and therefore many more options to be able to afford annual debt service. This is where both Maryland and Virginia will have an advantage over the District.
Also, it’s not totally beyond the realm of reasonable to think that a state could also come up with some additional state funds to throw into a construction project. The District could do the same thing, but at a much lower level.
The way cities typically raise capital, mostly to be able to afford the debt service on the public financing bonds they’ve issued is a tool called “excise taxes”, which are taxes on goods, services, and activities. Many cities and states that are financing stadiums like to impose taxes on hotels and car rentals because that is a way to tax travelers instead of local residents. For the most part, it illegal to openly and directly discriminate against visitors, but since hotels and car rentals are available to everyone but mostly utilized by visitors, this is a good option to achieve the same goal. Once again, Maryland and Virginia have more of an opportunity to impose these kinds of taxes than does the District. Advantage, Maryland and Virginia.
The point to all of this is that it’s going to be much easier for either Maryland or Virginia to be able to afford a construction project this large. Also, this doesn’t even take into account that the residents in the area surrounding the RFK stadium site don’t want, and have never wanted, a stadium on that site. A larger number of available and appropriate are available sites outside of the District, which is yet another advantage to Maryland and Virginia.
The other typical fundraising opportunity is a tax on tickets at the venue, including both football games and all other events. Exactly how much is an open question, but that sort of tax plus the inevitable future of “personal seat licenses” means that the cost of season tickets will go up dramatically at a new stadium. This is going to be true regardless of where the stadium is ultimately located, so it won’t be much of a factor in determining which of Maryland, Viriginia, and the District will win the battle.
I don’t know what’s going to happen here, and it’s tough to even predict. The District could still pull it off. At this point, the only thing I’m willing to guess is that at least one of these three jurisdictions is going to be willing to raise sufficient funds to build the stadium without a significant contribution from Harris, and that’s who he’ll go with. As I’ve said, it appears most likely that the District will come in third in that race.
Let me know your thoughts in the comment section below.