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The Vikings Stadium deal is a study in diminishing returns

No matter how you look at it, the ostensible gains in jobs, opportunities and revenues never add up.

The more concessions that are given to the Vikings and the NFL, the ever so more ludicrous is the claim that the public subsidies to keep pro football in Minnesota are a good return on investment for Minnesota taxpayers.
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First Zygi Wilf wanted the state of Minnesota to buy him a new stadium for the Vikings – and he got it. Now the NFL wants tax breaks from the state if it wants to host the Super Bowl in 2018. The NFL will probably get its way. One can only wonder what will be next.

schultz portrait
David Schultz

But one thing is certain – the more concessions that are given to the Vikings and the NFL, the ever so more ludicrous is the claim that the public subsidies to keep pro football in Minnesota are a good return on investment for Minnesota taxpayers.

The Vikings stadium deal has been folly from the beginning. The stated rationale for public investments in sports stadiums – including for the Vikings – has been economic development and jobs creation.

But, as has been pointed out scores of times, public subsidies for professional sports are one of the worst returns on investment a state can make. The evidence is overwhelming on this point. Whether it be from the standpoint of job creation, opportunity costs (could the same money be invested in a better way to produce jobs or stimulate the economy?), or of how significant sports are to local economies, the Vikings deal made no economic sense.

But then it got worse.

Plans A, B, C – and D?

The deal was not supposed to include general revenue dollars. Instead the state came up with the idea of electronic pull-tabs to finance its part, along with some other taxes on tickets and sports paraphernalia. Except no one really checked to see if the revenue projections were realistic.

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And they were not, forcing the state into Plan B. Plan B was a new corporate tax to fund the state’s construction costs. But Plan B will maybe generate $20 million of the $34 million needed per year for the next several years.

Enter Plan C: tobacco taxes to fill in the remaining funding gap. But even Plan C may not be enough, requiring a future Plan D, yet to be determined.

Ultimately, Minnesota’s share of the stadium is guaranteed by general revenue dollars, and it may still come to that if the NFL gets its way.

Now Minnesota wants to host Super Bowl 2018. And as a condition of doing that, the NFL is demanding sales tax exemptions on ticket sales and other events. The state will probably oblige, already offering two arguments.

Bowl is not a boon

The first is that hosting a Super Bowl will be a huge economic benefit to the state. That argument is largely overblown.

Just as analysis of public subsidies for sports stadiums have shown little economic benefit to communities, there is similarly little evidence that hosting Super Bowls pays the returns on investment its supporters claim. For example, hotels and restaurants may be sold out for the Super Bowl, but it is unclear how much of this business is new or displacing existing business. By the time added security is factored in, the real returns on a community investment are often minimal at best.

The argument for the economic benefit of hosting the Super Bowl is just as illusionary as was the claim made for St. Paul in hosting the 2008 Republican National Convention. That event also failed to realize the benefits to local businesses that city officials promised.

The second argument for granting the tax breaks is the new claim that were Minnesota not hosting the Super Bowl, the state would not have received the sales tax from it. Thus, by giving the tax break, Minnesota is no worse off than before. This too is a bad argument.

Better spent on education

First, if there is any justification in financing the new stadium and in hosting the Super Bowl, it rests in the economic windfall the state supposedly gets from new tax revenues, especially on out-of-town guests. Few Minnesotans will be able to afford or attend the Super Bowl, thereby meaning that the state cannot recoup some of its investment by taxing those who do not attend.

Moreover, given the costs to the state in hosting the Super Bowl, the tax exemption is essentially asking Minnesotans to subsidize visitors to attend the game. If these individuals are rich enough to pay the thousands of dollars it costs to attend the Super Bowl, they are rich enough to pay the tax. 

Forgoing the taxes does cost Minnesota taxpayers money – money that could be spent to repair failed Plans A, B, and C. Or the taxes collected could be spent on education, potholes, or countless other priorities.

In short, the sales tax exemption on Super Bowl activities takes money away from taxpayers or from some other state program and gives it as a subsidy to the NFL, Zygi Wilf, and all the out-of-state visitors who will come to Minnesota to watch a football game.

David Schultz is a Hamline University professor of political science and author of the “Election Law and Democratic Theory” (Ashgate, 2014) and “American Politics in the Age of Ignorance” (Macmillan, 2013). 

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