Amid the more important budget-focused conference committees set to kick off this week at the Capitol, Senate File 1164 will take center stage. It’s the Vikings stadium bill — one that Gov. Mark Dayton and others are calling a “good start.”
We beg to differ.
If you call a flawed proposal after nearly 10 years of discussion and lobbying at the Legislature and at county boards and city councils from Blaine to Minneapolis, from St. Paul to Arden Hills, a “start,” OK, we’ll permit that.
But “good”? No. Workable? Passable? Not close.
Here’s what’s in SF 1164. Here’s what’s not. And here’s what we wonder about.
The first item is the state’s contribution to the plan. It includes a collection of “user fees” — new taxes, it could be argued, using Republican standards — and some grabbing of typical team revenues.
According to House Research (PDF), these new or extended taxes add up to about $30 million a year, enough to cover about $250 million to $300 million in bonding by a local community or the Metropolitan Council.
If the concept is that the state is going to kick in 33 percent of the cost — and that’s a bit unclear from the bill — that assumes a roofed stadium cost of between $750 million and $900 million.
As always, why so expensive? Secondly, do we have a construction plan that justifies such a cost? (Not yet, and no site, either.) Thirdly, why not insert a real dollar amount that the team must pay upfront? (The Twins bill had such a hard number back in 2006.)
For now, the bill states the team has to contribute “at least $1 for every $2 of state and local money,” and the team must pay for cost overruns.
The overruns clause, as it was in the Twins deal, is good. Keep it. The team’s one-third share is too small. Change it.
Here’s how the state is going to generate that $30 million a year.
• A wholesale tax of 10 percent on “sports memorabilia” licensed by ALL PROFESSIONAL LEAGUES and ALL TEAMS, not just the NFL or the Vikings. (Ya think the other leagues and local teams might be opposed to this? Some are.) Among the memorabilia items: trading cards, clothing and sports equipment.
OK, that’s fine.
• Another possible funding source included in the bill is a new Vikings-themed Minnesota Lottery game.
Sure, why not?
• Taking revenues on stadium naming rights and putting a surcharge on player salaries. Sounds good, but counter-productive. (More on these later.)
The so-called local partner or host community will be given the option “adopted by its governing body” — not referendum — to pick from a cocktail of taxes: local sales, liquor, hotel/motel, a ticket tax, etc.
But if the stadium winds up in Hennepin County and/or Minneapolis, there are provisions to use the Twins ballpark’s county-wide sales tax — once Target Field debt is covered — and/or the Minneapolis taxes used to pay off the Convention Center.
These will be topics of much local debate, including whether Minneapolis’ charter provision applies. It prohibits the city from using “resources over $10 million dollars for the financing of professional sports facilities” without a citywide referendum.
There are two proposals in the bill that the team finds onerous, and, frankly, if I were stadium czar, wouldn’t find worth fighting over.
The first is naming rights. Yes, the public will wind up paying, under this current bill, two-thirds of the stadium. And, yes, the public needs to be a player in assuring that the stadium isn’t named for repugnant products or companies.
But naming rights revenues going to the team — rather than a stadium authority — actually HELP the public. It is a guaranteed annual revenue stream to the team that allows it to go to a bank and borrow money to help it with its upfront investment. It is, naming rights expert E.J. Narcise told me, “a constant,” more than concession sales or ticket sales for a team’s revenue flow and for lenders to be comforted.
Potential sponsors want access to the team’s trademarks and logos, not to the stadium itself, said Narcise, who helped broker the Houston Reliant Stadium $300 million over a 30-year naming rights deal. While some stadium naming rights deals have been shared between a public authority and a team, that structure is uncommon. Also, naming rights to the team aid in gaining some financial backing from the NFL itself, which is important.
Rather than grab the naming rights revenues, why not simply up that “one-third” notion from the team to 50 percent? It provides more freedom for the team to market itself and its sponsors and, frankly, more policy clarity.
The other troublesome — but politically attractive — clause is to impose a 5 percent surcharge on player salaries. I have no problems with taxing the rich. But if the idea is to create legislation that builds a stadium to help the team be competitive and reduces the burden on the public, this clause won’t get you there.
What it will do is pass on costs to the team owner. Assume the Vikings want to sign a big-time free agent quarterback to help the team win, sell tickets, suites and marketing deals so they can pay their share of stadium costs. But that player needs to pay 5 percent more in state taxes. Let’s say it’s a $10 million deal; simply put, that’s $500,000 more in taxes. You think his agent might ask for 5 percent more from Zygi Wilf?
Solution: Once again, increase the upfront commitment from the team.
Remember, this legislation is not just about Minnesota; it’s also about the National Football League. Wilf will gain much support from his fellow owners to turn down a stadium deal here if he is burdened by taxes and revenue-usurping. As much as the state wants to beat up the team, it could produce fallout at NFL headquarters.
What won’t shake up the other owners is what they call “a market deal.” That is, a comparable stadium deal that they’ve eaten themselves.
The Vikings have been talking off and on about paying one-third of an open-air stadium. Years ago, the number $250 million was floated. In the bill, the team is required to pay one dollar for each two of public money, or 33 percent.
But most NFL teams have paid more in recent years for stadiums, and it’s not what the Twins wound up paying for Target Field. Metro markets differ. Teams’ revenue potentials are different. Location politics are different. Owners’ net worth is different. We understand that.
Still, even according to Minnesota Momentum, a Vikings booster group, the Dallas Cowboys Stadium used 63 percent of private money; the new Giants and Jets stadium in New Jersey was 100 percent private, with the substantial infrastructure costs coming from public coffers; Lincoln Financial in Philadelphia used 64 percent of private money.
The Vikings have argued that the Cowboys, for instance, received $444 million in infrastructure costs. Let’s put that aside for now. Cowboys’ owner Jerry Jones invested $750 million of his own dough in his new palace. He’s not going to be too sympathetic if Wilf only has to put in $250 milliion.
The one stadium the Vikings often embrace is Lucas Oil Stadium in Indianapolis, which received only 14 percent in private money, but that is an outlier for all new or refurbished NFL stadiums built since the year 2000. Even the Packers — not owned by a single rich person — put in 43 percent of the cost of renovating Lambeau Field.
As for the Twins, depending on how you analyze the Pohlad family’s contribution, it is at least 35 percent. The team paid for cost overruns and some additions it sought. According to the Minnesota Ballpark Authority, the Twins paid $195 million of a total project cost – including infrastructure – of $555 million, or 35 percent of the entire project. Plus, the Twins pay for all operational costs of Target Field. Under that “total project” model, a $1 billion Vikings facility should get at least $350 million from the owners.
That’s Minnesota’s market deal.
Where are the fans?
Another missing piece: any commitment from the fans and the business community. Stadium expert Tony Spadafora of Eden Prairie, a frequent commenter here at MinnPost, has a conceptual framework that includes the customers as being part of the stadium-funding solution.
Many teams have sold what’s known as “Personal Seat Licenses” to help finance their share of stadium construction or renovation. This is an upfront fee to retain or obtain a season ticket in a new stadium. In most instances, those PSLs are transferable and, depending on the success and popularity of the team, increase in value over time.
If the Vikings charged their 55,000 season ticket holders $2,000 each to keep their season tickets, that could generate $110 million. Even if customers could pay off that amount over five years, it wouldn’t be a burden to those who are core beneficiaries of a new stadium. This is a true user fee for those who actually use the stadium.
PSLs should be a part of this legislation. If the Vikings claim they can’t sell such a product in this market, we need to question that, the same way we need assurances that the team can sell its luxury seating inventory. Which leads to another missing part here: the so-called “business community.”
Where is the commitment in the bill from this important slice? New Metropolitan Sports Facilities Commission Chairman Ted Mondale and longtime stadium backer Sen. Tom Bakk, DFL-Cook, have challenged business leaders to come to the fore and back a stadium bill. Star Tribune business reporter Neal St. Anthony wrote last week that some CEOs have pledged $25,000 to help advocate for a stadium.
Twenty-five thousand dollars? Gimme a break.
A suite will cost at least four times that in a new Vikings stadium. Shouldn’t this legislation require the team to make some kind of showing that it can sell the inventory it is seeking? Shouldn’t the state’s “business community” — which has been generally opposed to tax increases — guarantee it will purchase those 100 or 125 suites and the 7,000 or more club seats the team needs to sell to make this a success?
There’s no price and no location for this stadium. Two big missing pieces for any deal to be made.
Under the terms of this bill, a five-person Minnesota Stadium Authority appointed by Gov. Dayton will determine the site; one member from Hennepin County, one from Ramsey County and three from outside of those counties. Competing sites will submit proposals.
But there’s a big problem: The deadline is Feb. 15, 2012. That’s too far off. The Vikings lease ends after this coming season. Proposals from the already discussed sites are pretty well known: Arden Hills’ plan on the former Twin Cities Army Ammunition Plant site; the Metrodome location; and a site in Minneapolis near the Farmers’ Market and Target Field.
We’re hearing that supporters of a Dome site — either on the current footprint or just west near the Star Tribune building — are working on a significantly cheaper stadium plan. Great.
If that’s so, the site selection process need not drag out through next winter. The cheaper the plan, the better for the public and the team. The sooner we have a location, the more we can get down to the nitty-gritty of funding.
That’s why this bill should have an overall cost cap. Anywhere within striking distance of $1 billion for a football stadium in this political and economic environment would be obscene.
• Nowhere is there a nod to ticket affordability. The Twins deal had such a clause, however vague: “Any lease or use agreement must provide for affordable access to the professional sporting events held in the ballpark.” We know the team’s ticket prices soared, however. How about a clause that guarantees 10 percent of the tickets will cost no more than $25?
• There is talk of requiring the stadium to be environmentally and energy efficient, and hooray for that.
• Don’t see an urging of access to public transit. Should be in there.
• Don’t see any direction to the new Stadium Authority to begin thinking about a more global and ongoing solution to sports facilities in the state, including Xcel Energy Center and Target Center. The authority should be given that power.
• Don’t see any solution to what happens with the Metrodome, other than its land is sold. Rep. Bev. Scalze, DFL-Little Canada, and Rep. Sandra Peterson, New Hope, have introduced a bill (H.F. 1363) to form a Metrodome Task Force to examine what to do with that 30-year-old building. Good idea. It should be incorporated into the larger Vikings bill and handled by the new Authority.
• The bill would allow this new Stadium Authority to inspect “audited financial statements of the team” annually. Love the idea. All teams that get public funding for their stadiums should have to do that. But the NFL won’t even show its books to its players during the ongoing lockout. When the Vikings sold naming rights and made it “Mall of America Field,” the team wouldn’t share that with the Sports Facilities Commission.
The chances of the Vikings and NFL agreeing to opening their books – even confidentially – to the new stadium board is somewhere below zero. But asking never hurts.
• One other thing: Have we heard from Zygi Wilf or Marc Wilf that they really want to be here? (NFL Commissioner Roger Goodell said that, but that was a few months back.) Have we heard that all the controversy and wheeling and dealing soon to unfold will be worth it? Have they disclosed to anyone any “secret” deals or agreements they may have with any potential buyers in Los Angeles or elsewhere? Let’s get them on the record.
Sen. Julie Rosen and Rep. Morrie Lanning, the lead stadium lawmakers, should be applauded for trying. Kudos for bravery. In a statement, they said last week, “We are ready to get the stadium conversation started.”
That’s all that SF 1164 is. A start, but not a serious one.
MinnPost’s Jay Weiner has covered sports facilities issues in the Twin Cities since 1993 and the demise of Met Center and public buyout of Target Center. He is the author of “Stadium Games: Fifty Years of Big League Greed and Bush League Boondoggles,” University of Minnesota Press, 2000.