The Most Important Corporate Subsidy Battle of 2025

Kansas City is at the center of it all.

Photo credit: Jon Dickson

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Many sets of eyeballs will be on Kansas City during next weekend’s Super Bowl, as the Chiefs attempt to become the first team to win the NFL’s big game three years in a row.

But I’ll have my eyes on Kansas City for a very different reason this year: It’s the site of, perhaps, the most important corporate subsidy-related policy debate of 2025 — one that even involves the Chiefs and the stadium in which they play.

Back in 2019, Kansas and Missouri agreed to a legal truce in what was known as the “Border War.” That name referred to the common practice of corporations jumping back and forth across the state line between Missouri and Kansas that lies within the Kansas City metro area in order to qualify for corporate subsidies and tax breaks, but without actually providing anything new in the way of jobs or services. The states were simply handing free money to any CEO willing to move a mile down the road and deal with changing their official address.

Between 2009 and 2018, Kansas and Missouri spent a collective $335 million on border-hopping corporations such as AMC, Applebee’s, and many others. One company, the insurance firm CBIZ, went from Missouri to Kansas and then back to Missouri again, claiming subsidies every time, without leaving the Kansas City metro area. Employees in Kansas City wouldn’t even move or change school districts when these deals occurred, even as their tax dollars flowed to their bosses.

It was a truly absurd situation, even in the context of the general absurdity that is America’s economic development policy.

The 2019 Border War truce was crafted via a law in Missouri that was passed by the legislature and signed by the governor, and in Kansas via an executive order signed by current governor Laura Kelly, making it the first legally binding corporate subsidy ceasefire ever agreed to by two states. But the Missouri law that authorized the truce expires in August. In order for it to stay in force, the current Missouri legislature needs to renew it.

Missouri state Sen. Mike Cierpot introduced a bill to do just that this week. Considering how dumb the Border War was, renewal should be a slam dunk, right?

Alas, not exactly — in part because of the Kansas City Chiefs.

Last year, the Kansas legislature and Gov. Kelly attempted to poach both the Chiefs and Major League Baseball’s Kansas City Royals from Missouri, offering to cover 70 percent of the cost of new stadiums if the two franchises agreed to hop across the metro area into Kansas. Kelly argued, ridiculously, that sports franchises somehow didn’t fall under the purview of the Border War truce.

There were indeed, some exceptions to the truce. For example, it didn’t include local entities, only state-level, and has a vague carveout for the addition of “net new jobs.” But no good faith reading of it excludes professional sports franchises. Give it a read yourself right here if you don’t believe me.

It would certainly be understandable if Missouri legislators were not keen to re-up an agreement that leaves them vulnerable to being responsible for losing their state’s pro sports teams. And it’s unclear that Kansas would agree to a new agreement that explicitly takes its ability to woo the Chiefs and Royals off the table.

There is also, to be clear, zero evidence that moving the Chiefs or the Royals from one side of the Kansas City metro area to the other would provide real benefits to anyone. The massive amount of research that has been done on this topic is abundantly clear.

Sure, maybe some tax revenue that had previously been booked in Missouri would be booked in Kansas, but even that’s likely not as much as you think. Over the course of a year, NFL teams only pull in as many customers as the average grocery store, because they play so few games, leaving their stadiums dark and empty most of the time. In the context of a major metro area, any single sports team constitutes an economic rounding error.

Merits of moving the Chiefs aside, though, the symbolic worth of the Border War truce is incredibly high. There are no easy solutions for the problem and associated harms of states and localities using tax breaks to poach from each other, a problem known historically as “smokestack chasing.” The simple reality is that the politics of appearing to do “something” about job creation works in favor of pols doling out cash to big corporations and claiming credit for anything good that happens next.

Jurisdictions working together to take away the leverage corporate leaders wield over them is one of the few plausible fixes — so having the first legally binding agreement between states, as flawed as it is, fall apart would certainly be a setback.

To be sure, there are other important efforts to rein in corporate subsidies taking root around the country, including a bill in New York that would safeguard schools from losing money due to corporate handouts. But in terms of setting a path forward out of the general problem of American states and cities blowing billions of dollars every year on corporate subsidies, Kansas City is where the proverbial rubber meets the road. Making the Border War truce permanent, and having it become a model for the rest of the country, would be more significant than anything the Chiefs will ever do.

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GUIDE TO TAKING ON MONOPOLY UTILITIES: A bunch of my American Economic Liberties Project colleagues and I published a new guide last week for state lawmakers who want to take on monopoly utilities. It includes 11 policy ideas aimed at making utilities more accountable and less abusive to ratepayers, and to bring fairness back to the rate determination process. Check it out here.

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SIMPLY STATED: Here are links to a few stories that caught my eye this week.

• Legislators in at least 10 states are planning to introduce pro-crypto bills this year. One is already moving through the Arizona legislature.

• The Minnesota utility Xcel sold land to a buyer, who then flipped it to Amazon for nearly 10 times the price.

• “All these governors are just, like, drunk on the data center Kool-Aid.”

• Ohio state legislators introduced a bipartisan bill to ban worker non-compete agreements.

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— Pat Garofalo