By national standards, this stadium deal is better than most

Vikings stadium design

Not so fast.

Just as the big green and yellow bus was pulling up to the State Capital inviting Minnesota’s football fans to hop aboard and get fitted for their cheese-wedge hats; just as Vikings players were dreaming about palm trees, glamour and the rich endorsement deals awaiting them in sunny California; and just as Zygi Wilf was drooling over the mega-sized check he’d pocket for selling his team to the LA fat cats (the Dodgers just sold for $2.15 billion), the Minnesota House threw a wet blanket over the party by passing a stadium bill.

Now, after Monday night’s surprise, the state Senate is plotting its strategy. It’s hard not to conclude that a new stadium has surprising momentum after a near-death experience a few weeks back.

For added drama, the House bill trims $105 million off the state’s cost for a projected $975 million project and adds it to the Vikings’ tab.

That was a deft maneuver. It pushes the Wilfs’ share of stadium construction costs to above the 50 percent threshold, a magic number in the public’s mind; and it makes the Vikings a clear villain if they decide to reject the offer and depart.

Until Monday night, Zygi was holding all the cards. If a new stadium were to pass, he’d win. If a new stadium were to fail, he’d still win if he sold the team for big bucks – and a lot of people wouldn’t have blamed him for selling after so many years of stadium battles. But now it’s more complicated for him.

Public-private costs

The central issue in the stadium wars has always been public-private cost share. In a perfect world, the teams would pay all stadium costs. Unfortunately we don’t live in that world. The national market for NFL stadiums has determined that, on average, the public pays about 65 percent, although the share varies widely from city to city.

In general, team owners in larger, wealthier markets (New York, Boston, Miami, Washington, D.C., Dallas-Fort Worth) tend to pick up most – sometimes all – of a stadium’s construction cost. In smaller, poorer markets (New Orleans, St. Louis, Buffalo, Jacksonville), the public gets stuck with the larger share, probably because marginal markets need the NFL more.

What the public pays for NFL stadiums
Source: New York Times Survey, 2011What the public pays for NFL stadiums

Minneapolis-St. Paul is a mid-sized market. The House version shows that, by national standards, Minnesota taxpayers (paying 45 percent of the cost) would do remarkably well if the stadium passes. Even if the original bill is restored, with the Minnesota public paying 56 percent of the cost, it would still be an above-average deal.

Moreover, the Twin Cities could use the visibility that the NFL brings. Like it or not, having a team on the NFL map probably does more to put a city on the national consciousness than most other factors.

Public’s naming right

Corporations pay hundreds of millions of dollars for stadium naming rights because they believe in the value that the NFL can provide. The same holds true for cities, especially in an era in which they compete for attention, investment and talent. The public share of a stadium is, in a sense, a naming right.

Personally, I’m not a big football fan, but that’s irrelevant. I am a Twin Cities fan and a Minnesota fan. For us, having a place on the NFL map matters. It’s crazy because that’s not the way the world should be, but it is.

The NFL generates close to $15 billion per year in direct revenue, according to estimates. If you add the externalities: time spent watching games, beer and chips consumed, flat screen TVs purchased, etc., the impact goes much higher. Then, if you add the intangible benefits of identity, community, visibility, etc., you begin to grasp why this issue gets so much attention – and you begin to long for an end to the tiresome debate.

Comments (18)

  1. Submitted by Richard Pecar on 05/08/2012 - 02:32 pm.

    I’m still not a fan of the republican led legislature, but…

    Well…put it this way..I consider the current crop of repub’s on their very best day as a duplicitous and pandering lot, and on their worst day a harsher word applies, but at the end of this day I am glad the Vikings will stay here in Minnesota. The cost to park at the new stadium will be out of my reach, let alone buying a ticket, but hey…I can afford to watch “my team” at home in a pub while nursing a beer. That’s better than not having a home team…

    • Submitted by Steve Titterud on 05/08/2012 - 03:06 pm.

      But you CAN afford it – in fact, you’ll be subsidizing…

      …all those tickets, suites, parking – all of it !! You sell yourself short, sir !! You have plenty of money to give, and you WILL give it !!

      • Submitted by Richard Pecar on 05/08/2012 - 06:14 pm.

        Oh boy…you’re probably right, I can afford it because…

        …the legislature says I can.

        I just can’t attend the games…

  2. Submitted by Dimitri Drekonja on 05/08/2012 - 02:35 pm.

    A 3rd column would be of use in your chart– one that lists the total cost of the stadium, adjusted to 2012 dollars. Football stadiums used to be fairly utilitarian structures that had 2 functions: have a field, and hold stands. As such, they used to be built for under 100 million, and as recently as 2009 the Browns built a new stadium for under 300 million. But now, seats aren’t enough: luxury suites are needed, and giant scoreboards (to make people forget that you get a far better view at home on your TV). Thus, we have the cowboys with their 1.2 billion dollar stadium, and NY with it’s 1.6 billion dollar stadium. And now, we apparently need to keep pace with a 1 billion dollar place.

    I’d submit that to truly decide how good a deal we’re getting, you look at both the percentage of the costs borne by the public, and the absolute dollar number. Neither is the correct way to judge, but each by itself is misleading.

  3. Submitted by Dan Landherr on 05/08/2012 - 02:38 pm.

    Cincinnati has been crippled by stadium debt

    Detroit and Dallas are good recent benchmarks for contribution.

  4. Submitted by Rachel Kahler on 05/08/2012 - 02:39 pm.

    Uh..

    “The NFL generates close to $15 billion per year in direct revenue, according to estimates.”

    Whose estimates are these?? And are they MN revenues? Let’s be perfectly honest–this statement cannot be independently verified. BIIIIIG question here…you still at the Strib?

    • Submitted by Steve Titterud on 05/08/2012 - 03:08 pm.

      He’s still cheerleading for the Strib

      I have never seen such trivial fluff published by MinnPost – not since Mr. Berg’s LAST column !!

  5. Submitted by Brad James on 05/08/2012 - 04:01 pm.

    This deal is going to cripple the city of Minneapolis for the rest of my natural life and I’m only 27.

  6. Submitted by Andrea Friesen on 05/08/2012 - 05:05 pm.

    No.

    A billion dollars…Even Forbes can’t find a reason this makes sense…”But those touting the positive economics of the new stadium appear to be looking at history through rose colored glasses and seem to be ignoring the impact past stadiums have had on businesses and taxpayers.
    The upshot from UBS: “Independent academic research studies consistently conclude that new stadiums and arenas have no measurable effect on the level of real income or employment in the metropolitan areas in which they are located.”
    http://www.forbes.com/sites/mikeozanian/2012/05/04/vikings-stadium-not-likely-to-help-minnesotas-economy/
    Why oh why are we giving a billion dollars to uber wealthy men who want to watch other wealthy men play a game? What do we as a society gain from this? These are our values, really? I am so disappointed.
    May this die in Senate.

  7. Submitted by Bob Quarrels on 05/08/2012 - 05:09 pm.

    Chart with stadium costs

    In response to an earlier commenter, the New York Times published a chart including the prices of the stadia.
    http://www.nytimes.com/interactive/2010/09/08/sports/20100908-stadium-sidebar.html?ref=sports

    Detroit’s stadium cost half as much but that was 10 years ago. The price in Indianapolis was $220M less, but the public is paying 87% of it.

    If we should build a stadium is a moot point. The Vikings have a far more viable threat than the Twins did, and if they leave, we’re the next Los Angeles.

    Our priority should be getting a good deal, and the House, in spite of themselves, arrived at one. Given the economics of the state and the NFL, the Wilfs and their brethren should accept it.

    Thanks, Steve, for bringing this up, although it may have been useful, say, last week or anytime in the last several years.

  8. Submitted by Patrick Wells on 05/09/2012 - 12:49 am.

    Vikinngs loan request

    Negotitaion 101:

    Do not just assume Ziggi does not need Minnesota. Ziggy is just an opportunistic realist who will sell us out in a heartbeat.

    Ziggi is a real estate guy. All real estate guys are having problems. I bet Ziggi has problems too.

    Just say “no” and watch Ziggi to crack. California is in the close to bankruptcy. Is California going to buy the Vikings … I doubt it … California is close to bankruptcy.

    Green Bay owns the Packers. Our economy is down. Let’s buy Ziggy out for a low price and get the kind of deal Green Bay has.

    The economic downturn puts Minnesota in control. Why would we ignore this opportunity?

  9. Submitted by Patrick Wells on 05/09/2012 - 01:33 am.

    Stadium – note to my representative, Steve Simon

    Hi Steve Simon,

    I think you are a great representative. I had your lawn sign on my lawn during the last campaign..

    I remember that on the Twins stadium that you voted first, against, and then, for the stadium. I opposed the Twins outdoor stadium. I think that the Twins fan will tire of the new stadium.

    With the Vikings, we need a reasonable and honest assessment. I know that, on the Vikings stadium, like with the Twins Stadium, that you voted, first, against and then for the stadium.

    How about trying to do the right thing. The market is down. Ziggy is in real estate. Ziggy must be having problems like everyone else in real estate. Get smart and call his bluff. Make an offer. Buy the team and be like Green Bay. We could really like a team we owned. We would not being ripped off so obviously if we bought the Vikings for a good price. Minnesota looks so stupid and weak in the current negotiation.

    I was a banker for 30 years. I feel that Minnesota actually has an opportunity to take advantage of Ziggy’s weakness at this time. How can we not see this?

    If you do not stand up and defend Minnesota, I will not have your lawn sign in my lawn. You are smart. Do not make us look so stupid.

    By the way, I am a 1965 University of Minnesota Political Science Graduate with a specialization in political campaigns.

    Also, I am going viral with this. I want you to stop the Ziggy rip off.

    Patrick Wells,
    3379 Brunswick Ave. S.
    St. Louis Park, Minn. 55416
    612-803-2015

  10. Submitted by Sasha Jovanovic on 05/09/2012 - 02:28 am.

    comparing public financing share is either deceptive or naive

    Minnesota’s “low” 45/56% share, which will be in the range of $400-550 million, is a higher cost than many of those other recent stadium projects altogether – even when adjusting for inflation. Adjusted for inflation, the total stadium costs of Seattle, Nashville, Phoenix, Cleveland, Denver, Detroit and Houston are in the $400-599m range. Pittsburgh and Baltimore are below $400m. These that I mention are all quality stadiums built in the stadium boom era, no already-outdated “Georgia Domes” among that group.

    Comparing percent share is meaningless because I don’t think the average stadium goer would be able to tell the difference in amenity between retractable roof Univ of Phoenix Stadium (which is a good enough venue to be in the Super Bowl rotation), which cost $455 million to build ($525m today) and a new $950 million Viking Stadium. A new stadium is a new stadium, the end result is the same for the consumer.

    The dollar cost is the burden that the people take on, not the percent share of financing. Take those absolute dollar amounts of each of those recent stadium with adjusting for inflation, THEN take the percent share of public financing of that and you’ll find out how much the taxpayers in each of those cohort cities are on the hook to pay for – then you’ll see what kind of a deal Minnesota has.

  11. Submitted by Dale Hoogeveen on 05/09/2012 - 03:20 am.

    Not everybody watches or follows professional football, but everybody pays to support the millionaires on both sides of its management and that adds to the cost of shopping in the special tax district. No one calculates the lost sales that result.

    For the life of me, I cannot understand why the Minnesota Tea Party is not screaming its head off over this, but they are missing in action on this proposed governmental outlay. There is definitely opposition in Minneapolis, though, that crosses the political lines. We will pay the most in added taxes to boot and are opposed enough in all parts of the political spectrum that stadium supporters are afraid to bring it up for a general vote. Taxation without representation; so where’s the almighty Tea Party when they could be actually doing some good for a change.

    BTW Green Bay should be dropped from the relative list, since the team is publically owned in the first place. Since that is the only place the NFL allows that, it is a special case. The team owners are actually paying the full bill there. If the Viking owners would ante up the same proportion as the Packer owners do, there would be little opposition.

  12. Submitted by Connie Sullivan on 05/09/2012 - 02:01 pm.

    Steve Berg has written a disingenuous article here, a mere booster’s rant that has dubious numbers to support an absurd hypothesis: that Minnesota taxpayers are not paying much for the new Vikings’ stadium or at least not as much as everybody else out there.

    This article has been outdated quickly, by the Senate’s action, and whatever the conference six come up with–none of the six is from the metro area except Rosen.

    The Vikings will not be asked to pay anything for the stadium (NOTE: the naming rights will more than pay for any amount the Vikings contribute to the construction of the stadium, be that the original sum, the House sum that increased it by $105 million, or the Senate’s measly $25 million increase.)

    Plus, here is a reporter who orated to Minneapolis ten days ago (in the Strib) on how it needs to be less neighborhood oriented and drastically increase its density, who now totally ignores the Minneapolis taxpayer who will be, with gambling addicts, funding the stadium. For generations.

    Beginning with a loan Minneapolis must take out, from the Vikings!, for the city’s $150 million in required construction funds. We can’t take convention center sales taxes until 2020, you see. From our future taxes, we’ll pay the Vikings INTEREST on that loan as well as the principle. And then, adding up all the intricate details like this one that Mr. Berg seems not to bother with, the Minneapolis contribution turns out to be about $890 million.

    The city alone. So, we can all see how wrong Berg’s on-the-fly analysis is.

  13. Submitted by Scott Bentrup on 05/09/2012 - 03:30 pm.

    What about the benefits?

    While I find it good that the new deal reduces the public contribution to less than 50%, any discussion of how much the public contributes and whether or not it’s a good deal is moot, if not misleading, without any discussion of who receives the benefits. Yes, in terms of the public’s contribution the Metrodome is a worse deal, but the Dome not only runs a profit, that profit is returned to the treasury of the city. Who owns the (hypothetical) profit from a new (hypothetical) stadium? I would venture to guess it’s not the city or state. If the public were paid back from the stadium or the team as if we (the public) were shareholders/investors in the stadium/team, then it’s maybe not a bad deal. But who thinks that’s going to happen?

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