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Stadium commission spins Vikings plan around the state

Vikings stadium concept
ROMA Design Group
The Metropolitan Sports Facilities Commission got its first look in April at one elaborate proposal for a Vikings football stadium and related neigbhorhood development. The price tag for the Metrodome Next project: $954 million.

 

Rochester, Minn.

Minnesota's stadium debate was revved up by the Metropolitan Sports Facilities Commission and glitzed up Wednesday by the agency's gaggle of consultants.

The commission, which owns and operates the Metrodome, staged its first performances of its expensive eight-city "Listening Tour'' -- first at a lunch for 40 invited area business and political leaders and then at an evening "open house" for about 100 average Joes and Janes at a hotel.

There were the obligatory PowerPoint presentation and the computer-generated animation of a flyover above a futuristic downtown Minneapolis. There were heartfelt questions and comments from the peanut galleries. There were the scripts for commission leaders, developed by a public relations agency pulling down $317,000 in fees and expenses.

This edition of the stadium debate centers on the Vikings and where they will play come 2012, after their lease at the Dome expires, and after the Twins and University of Minnesota football team move into their respective new stadiums at a total cost of $800 million.

The Vikings' conversation is destined to contain the "B" word -- as in about $1 billion to build their stadium. The commission will play the "it's good for the community" card -- and there's some truth to that about any stadium, of course. The team, with its reps along at tour stops, will beat the drum that owner Zygi Wilf is poised to develop property around the proposed new stadium's site. True again.

But that's all run-of-the-mill sales talk we've heard, in various shades, for 15 years through a Target Center buyout and subsidy tussles over Xcel Energy Center, the Twins ballpark and the Gophers' on-campus stadium.

What's new and even intriguing in this Vikes' discussion is a 22-page report that the commission released Wednesday. The data therein have the potential to challenge key assumptions on which government entity should help fund such a project ... allowing, as in every other recent case, the public eventually pays and/or finances these sports palaces.

This time, on funding, though, think state, the whole state and nothing but the state.

Gov. Tim Pawlenty and legislators, take notice: No local community can afford to pay for this Vikings deal, nor should it. The governor's demand for "a local partner" to pay for a new Vikings stadium flies in the face of the new report, paid for by the commission and produced by two consultants, RMS McGladrey, the accounting firm, and CSL International, a sports business agency.

To mix sports metaphors, this document puts the ball directly in the Legislature's and Pawlenty's court.

The report reveals that since 1982, the Metrodome -- which cost, in today's dollars, about $190 million to build -- has generated more than $234 million for the state general fund through Twins, Vikings and Gophers sales taxes, liquor taxes and income taxes. (This is only activity in the Dome, and not some cockamamie surrounding "economic impact.") Through those 25 years, the state has contributed nothing to the Dome's costs of construction or operations.

Zilch.

It was Minneapolis (and some metrowide) liquor, hotel and parking dollars that paid down the Dome's debt, along with land sales and fees paid by fans and rent by teams. But 95 percent of all tax revenues that flowed through the Dome from teams there wound up in the state's wallet, not the city's or any county's.

Remember that when the Vikings debate begins in the Legislature in 2008 and extends into 2009 and the governor says he wants "a local partner" to step forward. Ain't gonna happen. This Vikings thing is a state thing.

Remember this, too: Tell your kid to grow up to be a consultant.

The Fleishman-Hillard PR firm, led in this effort by former Northwest Airlines spokesman Jon Austin, has a $317,000 contract to stage this "Listening Tour" and spin the commission's stadium vision.

Logistics guru Paul Ridgeway was brought on board to generate crowds in the eight stops; he'll get up to $49,500 for that. Then there's the $80,000 annually that the McGrann Shea law firm receives as the commission's fulltime legal and lobbying counsel. There's $50,000 that the commission contracted to pay RSM McGladrey to write its report, and up to another $25,000 for CSL.

One other big number: 63.

That was the share that Channel 9 had of viewers for the Vikings' game two weeks ago. Of all Twin Cities TV viewers, 63 percent watched the Vikings play. In this day of zoned news, niche Web sites and bowling alone, the Vikings are as close to a statewide campfire as we get.

So, as the tour moves to Mankato today, let's stipulate: owners are rich, athletes are spoiled, schools and roads are more important than stadiums, and nursing homes should take priority over pro football. Anybody want to fight about that?

Then, if you want, let's get on to the serious work of bringing down any stadium cost from $1 billion. Focus on how to grab lots of dough from Wilf, including some of the increased value of the Vikings' franchise. And don't forget which governmental entity benefits the most from pro sports.

Oh, it should be a glorious three years of stadium debating ... and, of course, listening.


RSM McGladrey Report

Paying for palaces

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Comments (10)

The real heartbreaker is the

The real heartbreaker is the fact that there are already going to be new Twins and Gopher stadiums. The Vikings, the Gophers and the Twins could have all shared a new outdoor stadium. The Gophers and Vikings could have at least planned to share a new stadium. Also, if the Vikings really want a $1 billion stadium, it shouldn't have the retractable roof. It would save a few million and maybe they would have a true home field advantage outside in the cold.

Any discussion of money from the team or owners must factor in the effect of Personal Seat Licensing. By charging season ticket holders for the "right" to buy their tickets, a huge portion of any financial contribution from the team is not really coming out of the owner's pocket, but from the corporations and fans that purchase tickets.

Assuming that the stadium is built and the Vikings maintain their large season ticket base (in the neighborhood of 50,000) and are able to extract an average PSL of $1500 per seat, $75 million is raised. That's on top of the ticket price.

Even as a season ticket holder I am not necessarily against this type of "user fee", but credit must be given where credit is due.

Don't fall for any claims of generosity from the Vikings and their ownership group - this only makes sense for them if they keep their out of pocket expenses to a minimum!

In the movie the Godfather, when the would be drug king wanted some start up money and political protection from Vito Corleone, he offered the Godfather a piece of the action in return.

I have often wondered while negotiating these deals with sports teams, if we shouldn’t do the same thing. Why shouldn’t we get a piece of the action? If we have to come up with a third of $1 Billion, then how about we get a third of the naming rights, a third of parking fees, or concessions? Or how about the NFL and Wilf buy a couple of libraries for outstate Minnesota, or an on and off ramp for the new I35W Bridge? Just an idea.

My question: Is that Metrodome sales tax surcharge for downtown Mpls going to go away when the Dome does, or will it remain forever?

The $234 Mil to the state is a misnomer. The state would have gotten that revenue even if the Dome didn't exist. People would have spent the money on some other entertainment. The notion that sports stadiums generates new revenue is a complete crock.

63 share for ch 9 on some Sat. or Sun. afternoon isn't much of a statewide campfire. Who watches TV then except to watch "the game?" Pro sports is somebody's entertainment, no more. If I like going to the movies or bowling, I don't expect taxpayers to foot part of the bill to build a movie theatre or bowling alley, even though they also will "generate revenue" for the state.

James - I don't think there's a sales tax downtown right now for the Dome. There was a city drink tax that blinked off not too long after the Dome opened. (A ticket tax paid the freight after that.) Minneapolis does have an entertainment tax, but it's more about Target Center than anything. And the city's half-cent sales tax basically goes to the Convention Center, if I remember correctly.

Nice piece. Any truth to the rumors that Toronto wants the Vikes?

Thanks for reading . . . A few things . . .

I'm sure PSLs will be in the mix. But whether this market will respond and current season ticket holders will rebel is a big question.

I think all of us are too sophisticated to get distracted; the Vikings will have to write a check up front as part of any stadium plan. And then season ticket holders like Pat will have to follow the money. As will journalists like David Brauer and me.

As for Michael's view, the Vikings claim they are "open" to sharing some of increased value of the team. What that means and how it works remains unclear. But, surely, the value of the team will increase. The stadium helps increase it. If public money helps to build the facility, we should seek a piece of the upside.

James' concern about tax dollars and whether they would have existed without the Dome is legitimate and right on. All of these entertainment dollars are transferrable. Yes, economists say, most of the state sales taxes would have gone to movies or restaurants or other sports. BUT my main point is that transferrable or not, sales taxes generated by pro sports - and particularly the Vikings - head into the state's coffers most often, not to local governments. If there's going to be a public subsidy involved in a Vikings stadium, it's the state that benefits the most from any return.

Ticket taxes - which are generally higher than state sales taxes - are a bit more directly attached to sports economic activity. So, perhaps, they're not as transferrable to other entertainment spending.

And then there's the matter of player income taxes. They might go away if the team and stadium weren't here. But, in the context of the entire state economy, it's a pittance.

And, finally, the Buffalo Bills are going to play some games in Toronto. The Vikings are not bound for there or anywhere any time soon.

Hope you don't mind me getting another bite at the MinnPost apple here, but wanted to weigh in.

The Sports Commission is not able to be an honest broker. The commission will transfer ( give ) the Metro Dome and the land around it to the Vikings at just the right time.This will move the process to conclusion!

Another voice: This comes from noted Stanford economics professor Roger Noll, perhaps the nation's leading expert on stadiums and public financing. Much to my delight, he read my MinnPost post and wrote: "By the way, the $234 million in state tax revenues is not
net but gross. Because the existence of a stadium does
not increase the incomes of sports fans, and the taxes to
pay for it actually reduce their disposable income, spending
on other things goes down, so sales tax from other goods
also go down. The total tax on tickets is probably higher
than the taxes on other goods, so the substitution probably
is not total -- but it would be a surprise if it were not at least
half. And $120 million return over 25 years on a $190 million
investment (about $5 million per year) is a terrible pay-out:
one could do much better in tax-free municipals."

Professor Roger Noll from Stanford is right. The information on the McGladrey Report may be absolutely accurate, but the report doesn't ask & answer the next question... "What percentage of the sales and income taxes collected by MN's pro sports teams since 1961 would have been collect by sales and income taxes related to different entertainment spending of disposible income?"

There are many other questions of greater importance the McGladrey Report does not address.

I'm only seeing a lame attempt to pass Vikings stadium in 2008 because it's an election year which would require an exceptional stadium deal that's good for the Vikings and MN, and because passage of Vikings stadium legislation in 2009 could involve an "end run" around a referendum if a new 7-county or statewide sales tax is used as a funding source.

Delaying stadium legislation another year would "create a crisis" concerning the loss of the Vikings which Gov. Pawlenty could then use to justify signing an inferior bill like the Twins stadium bill which involved a referendum "waiver."