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How the stadium deal shakes out

A new Viking stadium has over the past year or so replaced The Weather as a topic of obsessive conversation among Minnesotans. Where will it go, who will pay for it and why should we bother when they can barely win a game have been questions asked at bars, coffee shops and parties, and over breakfast tables and water coolers across the state.  

I have a personal interest, since my home is only two blocks from the Metrodome. And although I don’t love football, I wouldn’t be happy seeing a giant hole in the ground when I pull up the blinds each morning. And losing a major league team, would kind of reduce the Twin Cities to a secondary market. On the other hand, I wouldn’t be thrilled to see taxpayers (including me) shouldering a huge financial burden when the economy is still scraping by.

So it was with some trepidation that I elbowed my way past throngs into the governor’s press briefing this morning.

Gathered under the TV lights were Zygi Wilf, the team’s mustachioed owner, the Gov, of course, Mayor R.T. Rybak, Ted Mondale, head of the Metropolitan Sports Facilities Commission, and assorted business, legislative and union leaders, all of them endorsing a deal for a new “People’s Stadium,” which they had worked out behind closed doors. Supposedly the $975 million project will require no sacrifices or pain from anybody. Hmmm.

To answer the first question: the new stadium (yes, it will have a dome or a roof, at least and a “game-day plaza”) will sit to the east of the old structure. Placing it there will save taxpayers about $500 million on transportation improvements that would have been necessary had the Vikes moved to Arden Hills. All roads and light rail already lead to the Metrodome.

vikings site detail
Minnesota VikingsA map of the new stadium proposal

If everything goes according to plan, the team would be able to continue playing in the Metrodome during construction except for one season, when it will go to TCF Field. So, although I would be living with construction noise and dust for the three years or so that construction will take, my view will ultimately be safe.

As a further plus, I would be able to savor the enjoyable sight of thousands of workers building the thing, enriching themselves and the economy. According to stadium backers, the project will support 13,000 jobs and pay $300 million in wages for construction workers who now have a 20 percent unemployment rate.

The question of payment

That’s all well and good, but who’s gonna pay?

Well, here’s how the deal-makers say it shakes out:

The state will dredge up $398 million in taxes from charitable electronic pull-tabs. Currently, charities market paper pull-tabs to raise money, and about half of their revenues, some $37 million, go for taxes, which of course, charities aren’t happy about. They believe adding electronic pull-tabs would draw greater numbers of participants.

Minnesota Management and Budget estimates that the state’s take would total about $72 million annually (though today the governor said $98 million), with maybe half of that apportioned to stadium expenses. To raise the upfront cash, the state will float nearly $550 million in appropriation bonds. Pull-tab revenues and $150 million from the City of Minneapolis convention sales and hospitality taxes will go to repay the bonds.

Of course, that $550 million does not include financing costs. So, while Gov. Mark Dayton crowed that the stadium deal would not use any general fund dollars—the money that normally goes to fund nursing homes, schools and the like — taxpayers will be on the hook for interest payments.

About half of the dough will come from the Vikings themselves. Reporters clamored to learn who’s supplying it, but neither Wilf nor any of his amanuenses would say. “Private sources,” they all intoned. Maybe the Vikings have a Super PAC.

Meanwhile, in addition to the cost of construction, there’s another $516 million of operating expenses for the 30 years of the stadium’s useful life. Erecting a new building is a lot like buying a car. It’s not the purchase that kills you but the expense of ownership. The state won’t be on the hook for any of that, but Minneapolis has promised $189 million.

High hopes

Where that would come from was a bit murky. The deal-makers have high hopes that the new stadium will attract a professional soccer team, NCAA finals and even the Super Bowl to cover some expenses. A separate bill would retire Target Center debt; without it, said Mayor Rybak, the Vikings deal couldn’t go forward.

Whether any of it will go forward is an open question. Few state legislators are eager to vote in favor of a controversial project in an election year. Especially when anti-government fervor is gripping taxpayers. And especially with the Vikings’ less than impressive record on the field. And the Minneapolis City Council has shown no willingness to take up the project either.

Whose approval would need to occur first to make the whole thing viable? “The chicken and the egg have to come at the same time,” said Rybak.

And if the deal doesn’t get done? Nobody threatened to relocate the team in Los Angeles, Azerbaijan or anywhere else. For his part, Dayton said he would keep working on it.

Comments (15)

  1. Submitted by Walt Cygan on 03/01/2012 - 02:30 pm.

    Doing the math

    $300 million in wages / 13,000 jobs = $23,076 wages per job. So if the stadium construction will take 3 years, these jobs must last for a small fraction of the construction time. It drives me a little nuts when the number of jobs is quoted like this. If someone comes in to do 2 weeks of work, is that one job created? Seems like the math is a little sketchy.

    I can appreciate that $300 million is a lot of money to go into the construction industry, but it is also a lot of money coming out of the pockets of people sitting in bars playing pulltabs.

    Here is my math: Total public contribution (construction + operating) = $737million / 300 games over 30 years = $2.46 million per game / 60000 attendance per game = $40.94 per ticket.

    It seems like minimally the people who will be the beneficiaries of the new stadium (people who attend games and the networks that broadcast the games) should pay at least some part of the cost.

  2. Submitted by Tad Bornhoft on 03/01/2012 - 03:25 pm.

    Cost over-runs

    Did I miss the explanation of how (inevitable) cost over-runs will be covered? This was a key part of the deal for Target Field.

  3. Submitted by Paul Udstrand on 03/01/2012 - 04:02 pm.

    Did I read this right?

    They’re actually going to take money away from charities and give it to the Vikings?

  4. Submitted by Raj Maddali on 03/01/2012 - 04:39 pm.

    Electronic pull tabs are being added

    In addition to the paper pull tabs. How is that taking money away from charities.

    • Submitted by Rachel Kahler on 03/01/2012 - 06:46 pm.

      Because

      People don’t simply increase the money they spend on frivolities when more frivolities become available. If I have $100 free to spend on stuff I don’t need, I don’t spend $150 because there’s more stuff I don’t need available. In other words, electronic pull tabs will only be successful if they successfully compete with the paper pull tabs that make money for charities. This is basic economics.

      • Submitted by Raj Maddali on 03/02/2012 - 08:22 am.

        Actually

        Electronic pull tabs increases the spending on pull tabs. More basic market economics.

        http://minnesota.publicradio.org/display/web/2012/02/02/pulltabs/

        Similarly i find it funny that people who are all in a tizzy about state giveaway to the Viking go into total denial when the issue of give aways to tribal casino gaming on a much larger scale are brought up.

        • Submitted by Rachel Kahler on 03/05/2012 - 09:38 am.

          Not exactly

          Accuracy is important. That’s not what that little blurb said. It said it could generate more than expected, but it didn’t say it wouldn’t take away from current pull tab spending.

          Having read many of your posts, I thought you were a fiscal conservative. If you are, you ought to know that wishful thinking doesn’t multiply your money. A dollar is a dollar, regardless of what you spend it on. If you spent it on regular pull tabs, you don’t automatically get a magic second dollar to spend on electronic pull tabs so that we can have a Vikings stadium AND help out little Bobby’s football team.

  5. Submitted by Paul Udstrand on 03/01/2012 - 06:48 pm.

    Ah, I see

    So the concern is that the electronic pull tabs will draw customers away from the paper ones, hence decreasing money for charities.

  6. Submitted by Bill Schletzer on 03/02/2012 - 07:25 am.

    ticket prices

    I think the guy above who predicted 40 dollar tickets was dreamin’, no offense. I bet the average ticket price is more than that now and I woulld guess the average ticket price to start will be closer to 100 dollars. No telling what it will be in 20 years or so when they start complaining about how inadequate the stadium is.

    I stand with the brave Minneapolis City Counsil people who are against this without a referendum. That law should have been followed for the twins stadium too but money can trample on laws.

    • Anonymous Submitted by Anonymous on 03/02/2012 - 08:06 am.

      I think he was saying there would be a $40 PUBLIC SUBSIDY for each football ticket sold for the life of the stadium.

    • Submitted by Luke Ferguson on 03/02/2012 - 08:27 am.

      Ticket Increase

      Bill, I think the above poster talking about 40 bucks per ticket was implying that a 40 dollar per ticket *increase* over current prices would totally cover the cost of the stadium.

      The frustrating thing is, I am sure tickets are going to get more expensive, maybe by 40 bucks per seat, maybe more, and that money is all going to go to the Wilfs to pay their paltry share of their stadium. Paltry especially considering the NFL is offering the Wilfs 200 million or so to offset part of their share.

      I think that NFL loans, ticket price increases, partial public ownership, seat licenses, and any other innovative solutions people can come up with should have been part of the discussion, rather than rehashing the same old losing prospects (losing for the taxpayers, anyway) that have been prevalent in stadium economics for years.

  7. Submitted by James Hamilton on 03/02/2012 - 09:22 am.

    Better math

    There are 5.3 million people in Minnesota. If 40% of us want a new stadium, and the public’s “share” of this idiocy is $550 million, it can be paid for by 2.12 million supporters each kicking in $259.43. No loans; no carrying costs; no direct public funding; no new gambling games. Set up a non-profit charitable organization to receive the donations and contributors get both state and federal income tax deductions and/or, make it a lottery with a handful of lifetime season passes in sets of 4 as the payoff and a $250 buy-in.

    Of course, this will never be considered, especially at this stage of the game. It’s far easier to convince legislators to dip into the public purse.

    There are far more important things crying out for funding, yet we engage in “bread and circuses”, while cutting back on the bread to pay for the circus.

  8. Submitted by Dan Landherr on 03/02/2012 - 09:34 am.

    More doing the math

    $975M, estimate a 40 year lifespan, 10 football games a year – works out to $2.4M per football game. The public is on the hook for $1.4M per game before operating expenses.

    Median NFL payroll is currently $110M and the state collects taxes on NFL players that they wouldn’t collect if the players were somewhere else. That’s $8.6M a year in just income taxes at the current 7.85% top marginal rate. NFL payrolls are growing rapidly ($20M a team in 1990, $60M in 2002 from various sources I found around the internet). At that rate we may see $200M payrolls in 2020, and $500M in 2035. Couple that with Dayton’s proposed 11% tax bracket on high income earners and the state might do well with this deal.

  9. Submitted by Raj Maddali on 03/04/2012 - 07:29 am.

    Even Better math

    Are we willing to have the above mentioned idea, you pay if you want, for all other govt. spending too. Like education, bloated pensions.

    Its not like we are not spending on “bread” anymore. In fact we pour billions into “bread” and a lot more expensive “circus” called tribal casino give aways.

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