There may just be a payback to the state of Minnesota for any new Vikings stadium.
As much as stadium critics take whacks at the economics of stadiums — much of it deserved — we got our hands on an interesting chart (PDF). Have a look at it.
In recent days, Metropolitan Sports Facilities Commission Chairman Ted Mondale, Gov. Mark Dayton’s stadium point man, has been telling audiences that a new Vikings stadium would generate about $1.8 billion in state taxes over the potential life of a stadium for any $300 million upfront investment.
We scratched our head about this.
But the commission’s longtime sports business consulting agency — CSL International — has run the numbers and shared them with us.
Here are the debt assumptions:
• State puts in $300 million, via bonding.
• Interest rate over time is 5 percent.
• So, total debt service over a 20-year payoff is $481 million. That is, just like your mortgage at home, the cost of borrowing that initial $300 million becomes almost $500 million.
That’s the cost side.
Here are the revenue assumptions:
• Vikings players, visiting players and Vikings staff pay state income taxes of $12.5 million annually. As player income increases at 5 percent a year and staff at 3 percent a year, the revenue take increases.
• Sales tax collections WITHIN the new stadium, including liquor, are pegged at $5.3 million per year, with a 3 percent increase annually.
According to the CSL calculations, those taxes grow to about $1 billion over 30 years — the expected life of a stadium. That would be a net surplus of about $500 million to the state over the typical life of a modern stadium. The Metrodome has lasted 30 years.
If you extend it to 40 years — an unlikely length of a stadium’s life — you get to the larger number that Mondale has been mentioning, $1.8 billion in total state tax collection, or $1.36 billion as a net surplus to the state because of the initial $300 million investment.
Take a look at the chart, and see what you think.
Then, take your whacks.
MinnPost Asks Live Interview Series
Join us on Monday, May 16, as MinnPost journalist Jay Weiner interviews Sports Facilities Commission chair Ted Mondale to discuss issues surrounding a new Vikings stadium. Click here for details and ticket information.