USFL Effect: Did $3 million city, county, CVB pay off? Will league return to Birmingham?

USFL Effect: Did $3 million city, county, CVB pay off? Will league return to Birmingham?

This is an opinion column.

Remember the USFL? The dizzying drone-guided camera angles? The champion Birmingham Stallions? In the wake of the financial calamity that was The World Games 2022, it’s easy to forget the city also hosted the inaugural season of the new incarnation of the spring United States Football League just before the all-consuming 10-day event.

The World Games, as has been well chronicled, cost $65 million to produce and left us with a $14.1 million deficit—$10 million of which is being covered by additional funds from the city ($5 million), Jefferson County ($4 million), and Greater Birmingham Convention & Visitors Bureau ($1 million). Our corporate leaders are passing the hat to help cover most of the rest.

Remember the months of angst, hang-wringing, and cajoling those same entities went through before collectively committing a relatively paltry $3 million to cover the projected cost of hosting the USFL? If so, it’s probably a fading recollection.

Here’s a memory jogger, and at least a rudimentary assessment of whether it was money well spent.

Fox Sports, the league’s primary owners and a behemoth among television sports networks, proposed to Birmingham a unique “hub” format to mitigate costs: It would plant all eight of its teams—400 or so players, 160 coaches, and staffers—in the city for three weeks of training camp and a 10-week regular season and play all 40 regular-season games at still-spit-shine new Protective Stadium or, at the urging/demand of city leaders, the Old Gray Lady, Legion Field.

The caveat—the network play in the stadiums rent-free. Any cost would have to be covered by Birmingham, Jefferson County, and the CVB. Fox would retain any revenue from ticket sales and merchandise (the latter being tricky because the owners were entangled in a lawsuit brought by owners of the original USFL, which died in 1985 after three seasons. The lawsuit was settled in August). The league also committed to utilizing an estimated 40,000 room nights (and the rate of $150 per night) at the Sheraton and Westin, conveniently across the street from the Birmingham Jefferson County Complex (BJCC), owner/operators of Protective Stadium, Legacy Arena, the convention center, and other entertainment venues.

The BJCC would keep revenue generated from concessions, parking, and other areas, such as the USFL’s rental of other areas of the complex, catering, etc.

Put a pin right there. Let’s not forget that after years of political and personal distrust and arm-distance no-dealings, Birmingham, Jefferson County, CVB and BJCC officials were just starting to play nice—after a historic détente allowed them to collaborate in completing the $175 million, 47,100-seat stadium. It was all sips and smiles as the ribbon was snipped just about a year ago (has it only been that long?) and when the USFL came calling with an unexpected, and all-but-unprecedented opportunity.

Let’s be real: Despite its impressive new downtown toy, the city was then still in the adolescent phase as a premier sports and entertainment destination. Better yet, Birmingham was a teen with a learning permit and a Tesla in the garage.

There was a blueprint to follow for building a stadium, but no such viable model existed for hosting an entire league in one city. Not to mention at a new facility under neophyte management at a time of year when little was supposed to be happening at the stadium (the Legion FC was coy about its intentions of leaving UAB for Protective but pretty much everyone knew the soccer team would play its 2022 season there.) At a time when BJCC management was still cleaning up its punch-list kinks, like ramping up wi-fi accessibility and trimming the gargantuan lines at concession stands.

Related: How the USFL came to Birmingham, and almost didn’t

So, for almost anguishing four months, the tenuous alliance of regional officials wrestled with BJCC executive director/CEO Tad Snider over his projected costs of hosting the USFL at Protective (where the vast majority of games would be played). The entity originally set the cost at $3,666.960, but late-game additions to project revenue brought the number closer to the $3 million commitment from the city (up to $500,000), county ($500,000), and CVB ($2 million).

In January, it was finally: Game on.

It was sips and smiles again throughout the season, especially when the perennially “home” Stallions drew an average of just over 10,000 raucous fans to the stadium, according to Fox, en route to a 9-1 record and a nail-gnawing 33-30 victory over the Philadelphia Stars in the championship. (Playoff games were moved to the Pro Football Hall of Fame in Canton, Ohio due to a conflict with World Games prep.)

Now back to this: Was the $3 million a sound investment?

Read more on USFL, Protective stadium:

USFL, BJCC reach a nonbinding memorandum of understanding

USFL proposes hosting first season in Birmingham

Almost $40 million spent with minority- and women-owned firms to build stadium, renovate arena

Well, Fox says it spent $10 million during its time here—95 percent with Birmingham-based businesses. That amount includes about 39,000 room nights at the Westin/Sheraton, medical and legal services, a plethora of small-business vendors (transportation, catering, and the like), and personal expenses, such as meals at local restaurants.

Spending, of course, translates into various taxes, including sales and lodging. According to the city, sales tax revenue for March, April, May, and June in 2022 saw a net increase of $4,579,807.91 over the same four months in 2021. Of course, overall consumer spending was just beginning to recover last summer from the staggering effects of the COVID-19 pandemic. With so many economic factors at play, it’s impossible to discern to the dime how much of the year-over-year increase to attribute to let’s call it the USFL Effect.

Let’s go conservative: 10%. That would give the league credit for putting approximately $458,000 back in taxpayers’ pockets as sales tax.

Calculating lodging taxes in the city can give you a migraine. Overall hotels (or guests, more correctly) pay 17.5% in lodging taxes. Four percent goes to the state. Birmingham collects 6.5% (1% of which goes to the CVB), plus a $3-per-night fee (former City Council Chair William Parker’s brainchild). The county receives 7% (3% of which is re-directed to the CVB).

Got all that?

Now, over March, April, and May of this year, the city’s lodging tax revenue was up $409,528.71 over the same months in 2021, according to the city. June? It was down $383,997.14 from 2021, which city officials say could be attributed to the timing of when taxes are paid. All in, let’s put the net gain over the four months at $25,531.57.

Similarly, the $3-per-night fee shows a down month—April: $219,220 lower in 2022 than in 2021. March, May, and June, however, collectively showed a $591,263.61 increase over the prior year. Factoring in April, the tax saw a net gain of $372,241.61 over the four months.

Overall, based on this data, the city saw a net increase of $397,773.18 in overall hotel-related taxes during March, April, May, and June of 2022 over 2021. Calculated at the conservative 10%, let’s attribute to the USFL in this category $39,777.32.

Add the league-credited sales and Hotel-related taxes and the USFL Effect upon city coffers was $497,777.32—just about a wash for its up to $500,000 in-kind commitment to cover the costs of the eight games at Legion, most of it Birmingham police, fire and EMT personnel.

Jefferson County coffers swelled, too, this summer. Indeed March, April, May, and June saw year-old year boosts in gross sales and lodging taxes. Again, 2021 was tempered by the pandemic. That said, according to the county, gross sales revenue was $7,738,939 higher for those months in 2022 relative to 2021. Lodging taxes were 2,035,295 higher.

Since most league activity was downtown, let’s go super conservative and attribute just 3 percent of the sales tax increase to the USFL Effect: $229,168.17. For the lodging tax, let’s use the same 10% we did for the city—that would credit $203,529. Total: $432,697.67. Not quite square with the county’s $500,000 commitment, but the difference ($67,302.23) is loose change in the couch relative to the county’s overall financials.

As for the CVB, remember it receives 1% of the city’s lodging tax revenue and 3% of the county’s. For March, April, May, and June of ‘22, the amounts remitted, based on numbers provided by the city and county, would be $190,630.146 and $233,961.03, respectively. In addition, the BJJC, under a formula way too twisted to bore you with here—also collects lodging taxes and sends a portion to the CVB.

For April and May, when the USFL began playing at Protective, the BJCC made monthly payments to the CVB of $128,000 and $147,000, respectively. For the previous 10 months, payments averaged $51,700.

All in, based on financial figures provided and conservative percentages attributed to the league, the USFL Effect on Birmingham and Jefferson County’s tax coffers between March and June was $930,474.99, not quite leveling the $1 million committed made by the two municipalities.

That, of course, does not include the portion of USFL spending with area businesses, which paid employees and fed myriad families.

These CVB numbers don’t come close to its $2 million commitment. CVB President/CEO John Oros, though recognizes the incalculable value of the 80 commercial spots (two per game) during broadcasts that were provided to the city, county, and CVB. Fox says the games reached 34 million unique viewers on its network, NBC Sports, USA, FSA, and Peacock. The league reportedly averaged 715,000 viewers throughout the season. The title game averaged 1.52 million viewers, peaking at 1.8 million viewers.

“People saw us do something that had rarely been done,” says Oros. “It opened some eyes to possibilities for future events, which Birmingham may have not otherwise been considered for.”

“Birmingham experienced an uptick in out-of-town guests and gained media exposure on an unprecedented level with the televised games,” says City Councilor Hunter Williams. “Hosting the USFL was a great opportunity for Birmingham to show that we do have the potential, as well as the amenities to host professional sports teams.”

The $3 million spent to support the USFL certainly appears to epitomize the adage: You gotta spend money to make money. And money was indeed made from the league’s presence in Birmingham.

And will be made again. Maybe.

Before the inaugural season, Fox said it had committed $150 million over three years to the league, so it quickly confirmed after the championship game there would be a second season. They’re still mum, however, regarding the next iteration of the hub format. They’re reportedly considering various options, ranging from one to four teams in one or more southern cities, the same in at least one northern city.

Related: USFL won’t play all of its games in Birmingham in season 2

As for whether Birmingham will retain one, two, or four teams and remain the league’s training camp hub and headquarters for season two, it appears. At least right now, despite actual financials, despite a blueprint, the league is right back where it was at this juncture last year—wrestling over cost projections.

According to Snider, the 32 games played at Protective last season incurred direct costs of $2,280,193—labor, utilities, and the like. In addition, he tallies indirect costs of $1,487,576, which include labor and machinery required to transform playing surface markings between sports, sometimes in a relatively short window. “This was necessary to facilitate the sport-to-sport conversion through the USFL season from football to soccer to football in the compressed turn time windows that the schedules for both teams allowed,” he said. “Without both sports occurring over the same time period, and [with] more time to convert the field from one sport to another, the turf replacement to a non-marked surface would not have been necessary.”

The indirect total also contains the cost of replacing the turf (about $395,000, according to Snider). The original just-one-UAB-season in turf was prior to the first Legion and before the USFL’s arrival. It was replaced, he said, from a turf “that had the football lines and yard markers permanently [sewn into] the field to an identical turf that did not have any pre-marked lines.”

Including both figures, Snider calculates the total USFL costs at Protective and the BJCC, where the league had weight, locker, training, meeting rooms, and other operational needs, at $3,741,952.25.

Most of that ($2.5 million) was offset by the CVB and Jefferson County funds.

Revenue ($476,941.06) generated from food and beverage at the stadium ($434,633.06), and parking ($42,278.00) also close Snider’s gap.

The BJCC’s portion of the almost $6 million the USFL paid for hotel rooms (@ $150 per night, some f which was charged back to players) was $928,740, Snider says.

That gives the BJCC a net gain of $163,728.81 from hosting the USFL. Added to my conservative, back-of-envelope calculation of the USFL’s portion of the four-month year-over-year bump to the city and county taxes, the total is $1,094,203.8

Again, that does not include the portion of the overall $10 million in spending Fox claims that stayed in the pockets of business owners in the region.

Now, with a season behind them, Fox officials are no doubt comparison shopping, and it would be naïve to believe other cities aren’t striving to make themselves more attractive than Birmingham. More attractive, with less wrestling.

Call it: Pre-game on.

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Roy S. Johnson is a 2021 Pulitzer Prize finalist for commentary and winner of 2021 Edward R. Murrow prize for podcasts: “Unjustifiable”, co-hosted with John Archibald. His column appears in The Birmingham News and AL.com, as well as the Huntsville Times, the Mobile Press-Register. Reach him at [email protected], follow him at twitter.com/roysj, or on Instagram @roysj.