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Stadiums as infrastructure investments

As I looked over a number of construction projects in the works throughout the region for a Prairie Business article, I found myself wishing another one — a new Minnesota Vikings stadium — was also in the pipeline.

A mammoth building project of this scale would be a well-timed shot in the arm for the state and region’s building industry, effectively serving as a state stimulus project to help jump start the economy.

Given Minnesota’s budget deficit and the economy, some have questioned the wisdom of committing public financing toward the construction of a sports stadium. But I believe it’s time to lock up a key state asset and make an infrastructure investment that will continue to pay dividends for years to come.

An economic impact report commissioned by the Metropolitan Sports Facilities Commission, which operates the Metrodome, found that the construction of an estimated $954 million stadium on the current Metrodome site in downtown Minneapolis would lead to $734 million in direct construction spending in the state and the creation of 13,400 jobs during construction. The report indicated that the project would have a total output of $1.35 billion during the construction period.

Impact beyond the Twin Cities
The economic impact of the construction of a new Vikings stadium would surely extend beyond the Minneapolis-St. Paul metro area. Grand Forks, ND-based JLG Architects, which also has a Minneapolis office, has had preliminary discussions about potentially providing some design services for a new Vikings stadium in collaboration with other firms. It also wouldn’t be surprising to see other companies in the region benefit, such as Brookings, SD-based Daktronics, which provided scoreboards and signage for the University of Minnesota’s TCF Bank Stadium and the Minnesota Twins’ Target Field.

Ryan Schuster
Ryan Schuster

It’s difficult to fault state legislators for focusing on more pressing matters during the recently completed legislative session that required the balancing of a $3 billion budget deficit and the cutting of funding for many worthy programs as well as aid to local communities. The task won’t get any easier during the upcoming 2011 session when Minnesota will face a projected deficit of more than $5 billion. Convincing state legislators to use public financing to help fund a stadium for a private enterprise in the current economic climate may be a tough sell.

The right decision isn’t always the easiest one, though. Financing a new Vikings stadium in a way that doesn’t take away funding from other worthy recipients (such as a new state lottery scratch off game) presents a number of challenges, but the long-term benefits of retaining the Vikings outweigh the costs.

The Vikings, which rank near the bottom of the league in revenue generation, have a Metrodome lease that will expire after the 2011 season. Without a long-term stadium solution, the state risks losing the team to Los Angeles or another municipality willing to build a new stadium. Losing the Vikings would result in a big long-term financial hit for the state of Minnesota.

$145 million in annual direct spending in Minnesota
A recent report indicated that a new stadium would lead to more than $145 million in annual direct spending in the state. A joint economic impact analysis performed by the University of Minnesota and the Meet Minneapolis organization found that the Vikings home playoff game against the Dallas Cowboys in January alone led to the generation of $9.1 million in sales, 113 jobs and $3.6 million in labor income.

Without the Vikings, the team’s payroll, out-of-state visitor spending from home games, team merchandise sales profits for local merchants and taxes generated by the team would all be lost.

If the new facility has a roof, it may also be able to host major events such as a Super Bowl and Final Four as well as the high school sporting events, concerts and other events hosted each year by the Metrodome.

Ryan Schuster is the editor of Prairie Business magazine. He grew up in Minnesota and Wisconsin, and previously worked as a business reporter at the Grand Forks Herald and Bakersfield Californian newspapers.

Comments (6)

  1. Submitted by James Hamilton on 07/19/2010 - 08:27 am.

    Once again, we’re asked to fund the construction of a public facility for the private, for-profit use of a privately held business. Once again, legislators and whomever sits in the governor’s office next session should say ‘no’.

    How recent are these analyses? Do they pre-date the recession which has only recently ended and which left behind it staggering unemployment levels, a very shaky economy and consumers highly inclined to hang onto every dime they can?

    Even if accurate, Mr. schuster doesn’t really give us a complete picture of the economics. What are the costs, up front, annually and over time? What is the expected life span of any proposed facility?

    Some, including Mr. Schuster, seem to believe that both gambling revenue and families’ discretionary income is limitless. They are not. Each new gambling facility/device/game siphons off revenue from another. Families’ discretionary income is always a limited portion of their available funds. When those funds shrink, discretionary income is the first to go. What is spent on a Vikings’ game can’t be spent at other venues.

    Show me I’m wrong and I’ll re-think my opposition to publicly funded professional sports arenas. Until then, don’t tell me that you’re going to make money by taking it out of one pocket and putting it in another.

  2. Submitted by myles spicer on 07/19/2010 - 10:03 am.

    As Hamilton points out, the economic benefits to the community have always been in question with subsidized stadiums — because those same taxpayer dollars might have gone into other public projects with more and longer community benefits (would that same money put into education, for example provide a better ROI than a privatley-owned stdium?) History has shown on the economics of such ventures, the team owner is the chief beneficiary of having a magnificent new stadium under lease, if and when he sells the team (and teams do change hands fairly often as shown by the Vikes).

    So, it is important to seperate the economic advantages from the life style ones. Given that fact, and the fact that most cites would like to have local sports teams, the best outdomce for the public would be an OWNER FINANCED PROJECT. that is free enterprise and capitalism at its best. The only caveat might be if the public can also benefit from the increased value of the enterprise, and get some return on its investment, should a sale occur and the increased valuation create a profit.

    I do get a bit out of joint by those Conservatives who rail against welfare, unemployment benefits, health care for the poor (GAMC), and apocraphol stories of the “Welfare Queen” driving up to get her weekly check in a Cadillac — but then vote to give a billionaire owner hundreds of millions of taxpayer dollars to further his fortune. Worse yet, it is being done all too often.

  3. Submitted by Tony Spadafora on 07/19/2010 - 12:46 pm.

    It might help if stadium proponents and stadium opponents would both stop exaggerating.

    During the 49ers campaign to pass Measure J on June 8 for a new $937 million stadium in Santa Clara, CA, the public was told the construction project would create an annual average of 700 construction jobs.

    “An economic impact report commissioned by the Metropolitan Sports Facilities Commission, which operates the Metrodome, found that the construction of an estimated $954 million stadium on the current Metrodome site in downtown Minneapolis would lead to $734 million in direct construction spending in the state and the creation of 13,400 jobs during construction.”

    13,400 jobs?? What is the stadium commission’s definition of “a job?”

    My definition of a full time job involves 2000 hours of work per year.

    Since the Vikings stadium project will involve 4,250,000 work hours during a 3 year period of time…. 4,250,000 divided by 2000 hours = 2125 jobs lasting only one year. Divide that by the 3 years the construction project would last and you come up with about 710 full time construction jobs during the construction project.

    If you divide 4,250,000 by the 13,400 jobs the commission is talking about… each job would only amount to 317 hours or about 105 hours of work per year during the 3 year project.

    The Vikings are proposing to contribute $211 million of funding from private sources to what will be a $1 billion+ project when land and infrastructure costs are included. That would amount to an $800 million public contribution for the project.

    The public cost per 3 year full time construction job would amount to over $1 million per job.

    YOU CANNOT JUSTIFY THE VIKINGS STADIUM PROJECT BASED ON THE NUMBER OF CONSTRUCTION JOBS THAT WOULD BE INVOLVED. PERIOD!!

  4. Submitted by myles spicer on 07/19/2010 - 01:53 pm.

    There is one more “dark side” to new stadiums, and that is once they are built ticket prices climb sharply (as they did with the Twins). Major sports is slowly pricing the “average” person out of attendance anyway — and with Viking prices now approaching $400-500 per game (for a group of 4 with all associated costs) — many of the folks who are paying the taxes to build the stadium will rarely if ever be able to afford the cost to see what their tax dollars have bought.

  5. Submitted by Tony Spadafora on 07/19/2010 - 03:15 pm.

    myles… new stadiums are not built for “average” people.

    Season ticket holders will fill over 90% of the seats in a new Vikings stadium. “Average” people certainly can’t afford season tickets. Avid sports fans find a way to purchase season tickets.

    Plus, keep in mind the 8500 “Club” seats the new stadium will have with ticket prices in the $400-$500 range per game. A group of 4 in “Club” seats will spend over $2000 per game.

    Seat license fees should be part of the funding of a new Vikings stadium because season ticket holders obviously will get much more use of the new stadium than “average” people.

    Stadium funding should be based on benefit.

  6. Submitted by Paul Udstrand on 07/21/2010 - 09:37 am.

    These bogus pro stadium arguments are so tedious. Stadiums are NOT public infrastructure, they are welfare programs for billionaires pure and simple. The economics are not “questionable”, almost every study done by anyone who isn’t working for teams or owners demonstrates that they are wash economically since they simply move entertainment dollars around instead of increasing them. It’s hard to imagine a publicly funded project that produces less bang for the buck than a stadium for professional sports teams. For instance for a billion dollars we could build two more light rail lines that would not only generate hundred of construction jobs but would also create permanent high wages jobs as well as making our community more livable economically competitive.

    I know people like their sports but it’s a game people. I don’t ask you to subsidize my Netflix why do you think your entitled to make me subsidize your football? At a time when we’re literally killing people by knocking them off of health care you want to divert a billion dollars of public money into professional sport subsidies.

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