Why did Minnesota United’s owners even bother asking for a property tax exemption for a new stadium?

MinnPost photo by Peter Callaghan
Unlike all who had come before, Bill McGuire said that he and his fellow Minnesota United owners would buy the land and build an open-air soccer stadium on their own dime.

It seemed like simple math.

When the prospective owner of Minnesota’s prospective Major League Soccer franchise, Bill McGuire, finally said what he wanted from government when it came to building a prospective new stadium, the case was made that foregoing tax revenue wasn’t really foregoing tax revenue.

See, the argument went, if no soccer-specific stadium is built at a site near the Minneapolis Farmer’s Market, then no sales taxes on construction equipment and materials would be collected. And if a stadium is built without having to pay those taxes, then the government entities get exactly the same amount of revenue as they would have had nothing been built at all.

It’s the same math that’s used by politicians supporting all sorts of tax breaks — for everything from computer server farms to Super Bowl tickets to just about anything built in Greater Minnesota: if wasn’t here, there wouldn’t be any of that revenue anyway.

As Billy Preston might say, nothing from nothing leaves nothing.

That’s why the “ask” by McGuire on behalf of himself and his prospective co-owners seemed to be somewhat warmly received, at least at first. Gov. Mark Dayton and some legislative leaders who had been saying “no, no, no” moved to, “well, maybe” once they heard what McGuire actually wanted — a sales tax exemption for facility construction materials; a property tax exemption; and limits on future local taxes — and, more important, what he didn’t. 

Unlike all who had come before, McGuire said that he and his fellow Minnesota United owners would buy the land and build an open-air soccer stadium on their own dime. They would own it and run it without the need for the fig-leaf of a public stadium authority or city ownership — both of which give control and most revenue to the teams. (It also means he won’t be getting lower-interest rates available when government sells construction bonds.)

But that fact, refreshing as it might seem, gave stadium opponents — somehow epitomized by Minneapolis Mayor Betsy Hodges — an opening. Hodges is opposed to any tax breaks for the stadium, be they sales, property, income, whatever. And she gets points for consistency, since she didn’t support the Vikings stadium deal while on the city council, either.

But in an official statement, prepared by city staff but posted on her private web page this week, Hodges showed how the old argument about the second part of the McGuire request — the property tax exemption — doesn’t hold up. Turns out that the city is, in fact, already getting property taxes on the private parcels targeted for the soccer stadium.

In fact, if the purchase price for the land is around $30 million (a number McGuire revealed earlier this week), taking the land off the tax rolls would mean a loss of revenue of around $350,000 a year. And letting McGuire (not to mention his partners, which include the Pohlad family, which owns United Properties) develop the land tax free ends the chance that the city of Minneapolis could collect the enhanced property tax assessment from another private-but-taxed development.

Hodges went further, mixing some solid arguments with some peripherals (wondering why the new team couldn’t play at another facility; stating that a new stadium could compete with city-owned Target Center for concerts) in a kitchen-sink anti-stadium treatise.

But by piercing the property tax provision, she pointed the way for other attacks. While lots of businesses in Minnesota get sales tax breaks, none apparently get an exemption from paying property tax. There’s a reason for that, offered Minneapolis City Council Member Andrew Johnson — the state constitution seems to prohibit it.

If McGuire wanted the sort of property tax breaks that all the other stadiums in the Twin Cities get — no sales tax as well as no property tax — he would need to have it under public ownership, as is the case with those other facilities.

In that scenario, though, McGuire and his co-owners would not own the land under and around the stadium. And though Hodges et al would still assuredly be opposed to that arrangement, at least there would be a precedent for it. There is no precedent for a privately owned anything getting a property tax exemption.

So is this all just a real estate play? For McGuire, there is certainly some sort of beneficence in coughing up the $100 million franchise fee to MLS, the $30 million for the land and the $120 million for an 18,500-seat-plus-standing areas-plus suites stadium. And since MLS teams don’t make money, some annual losses should be included in the budget. But couldn’t he and his fellow owners make some of it back by developing the area around the stadium (which is near the proposed-but-not-funded Southwest LRT light rail line)?

Or maybe the owners just figure it wouldn’t be fair for them to pony up for a stadium that jump- starts redevelopment in a part of town that needs it — and then get hit with much-higher property tax payments on much-higher-valued land they helped make happen.

Either way, it’s not much money. Sales tax on a $120 million stadium wouldn’t be much more than $3 million. And property taxes on a place assessed at $150 million or so would be in the range of $1.5 million to $2 million a year.

The Minnesota United ownership group has a lot of money, of course, and it could be argued that at least two — the Pohlads and Glen Taylor — were made significantly richer when the teams they own, the Twins and Timberwolves, respectively, received new or renovated taxpayer-supported facilities. Spending some of that money on a new sports team is either poetic justice — or an indirect means of putting tax dollars into another new stadium. Or both.

So why does McGuire bother, with the aggravation and the personal attacks for a few million bucks? If other professional sports team owners in other cities are a guide, it may just a matter of getting a little bit of love from a place you think you’re helping out. And given how much the other sports owners are getting (hello, Wilfs), it might just be embarrassing to be the only team getting absolutely nothing at all.

McGuire now must be wondering why the most-generous offer by any owner in Minnesota yet wasn’t better received. He has to get his arms around the fact that politicians who were saying “no-direct subsidy” are now refusing to take ‘yes’ for an answer. Then he can either walk away or carry on.

So what’s the endgame? Any deal would take legislation at the state level, and Senate Majority Leader Tom Bakk — not exactly a soccer enthusiast, anyway — said he wouldn’t move without support from the city of Minneapolis, which is divided. And that’s for the sales tax part only. As for the property tax — that might take changing the state constitution, and it’s hard to imagine a Sports Owners Relief Amendment having much (or any) chance at the polls.

At the press extravaganza announcing the franchise, both McGuire and MLS Commissioner Don Garber didn’t seem all that concerned that a stadium wouldn’t happen. Only when pressed did Garber even acknowledge something resembling a deadline for finalizing a stadium deal, and he always followed any gloom and doom talk with a forceful statement of his confidence in McGuire, et al. So the July deadline that is being tossed around is a phony —  or at least flexible — one. Having come this far and offering up this much private money, it would be a shock for the owners to walk away over a few million bucks in taxes.

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Comments (77)

  1. Submitted by Dan Hintz on 04/17/2015 - 06:32 pm.

    McGuire made the mistake of assuming Betsy Hodges was an honest politician and not a shameless hypocrite. Her principles were nowhere to be found when approving money to subsidize the billionaire owner of the Timberwolves in renovating the Target Center.

    None of the teams playing in “publicly-owned” stadiums pay property taxes. McGuire just wanted a level playing field. But because he is paying for the stadium himself instead of asking for a handout, he gets an additional cost the others don’t. That’s part of the reason the Target Center later became president publicly-owned after initially being privately built.

    My prediction is that the deal that gets worked out will result in the soccer stadium being publicly-owned as well. We’ll see if this is really about principle, or whether it’s just anti-soccer bias and doing the Vikings dirty work for them.

    • Submitted by Hiram Foster on 04/18/2015 - 09:53 am.

      Shamelessness of hypocrites

      I kind of suspect that McGuire is hoping that Hodges is a shameless hypocrite as opposed to being an honest politician. Stadiums are not popular with voters, and therefore it’s hard for them to be publicly popular with politicians, particularly with those politicians whose constituents are stuck with the bill for them. But they are popular with the folks whose support politicians need to get elected, that is, with unions and business. So the short term political problem for any politician is find a way to get the stadium built without being blamed for it. To do this, outstate politicians have to do a lot of the heavy lifting. What history has taught us is that in order to get stadiums built, we don’t need the support of Minneapolis politicians, all we need is their benevolent opposition.

      • Submitted by Dan Hintz on 04/19/2015 - 09:25 am.

        Stadiums

        I think voter feelings about stadiums are much more complex. The question “do you want to keep your professional sports team” will poll differently than “do you support giving your hard-earned tax money to billionaires,” but ultimately it’s the same question in the current reality of professional sports. Can you name any politicians that lost their jobs for stadium votes?

        Acknowledging that reality is not hypocritical at all. McGuire is just asking for what everyone else got. Actually, he is asking for much less. The hypocrisy comes from Hodges’ new found self-righteousness right on the heels of approving a subsidy for a different billionaire sports team owner.

  2. Submitted by brian hanf on 04/17/2015 - 07:10 pm.

    5 million per year

    One 120 million property in city currently pays 5 million a year in property tax.

  3. Submitted by Hiram Foster on 04/18/2015 - 06:26 am.

    Frustration

    To some extent, McGuire is paying the price for some of the less than desirable stadium deals that were made before, particularly the Vikings deal. And as even the governor recognizes, there is no public appetite for stadiums. But the fact is, despite all the public rhetoric, despite all the the public and fierce opposition of Minneapolis politicians, Minnesota has never, ever rejected a ultimately stadium deal no matter how outlandish. In the final analysis it’s hard to see how we will be able to reject this one.

  4. Submitted by Peter Rachleff on 04/18/2015 - 08:12 am.

    The best “free” press money can buy

    Deals like this reveal so much about the actual machinations behind the ways our institutions work. This morning’s STAR TRIB presents, on page one, with color photo, the stadium deal as a generous gesture from Dr. McGuire, and editorializes in favor of it, without revealing that one of McGuire’s business partners is STAR TRIB owner Glen Taylor! We have the best “free” press that money can buy.

  5. Submitted by Connie Sullivan on 04/18/2015 - 11:32 am.

    I mistakenly thought that this article would address the real question here: Why do these billionaires need public tax money at all? Need, not want.

    Surely they’re not kindergartners who cry “But he got some! Why not me?” This is what this article claims underlies the request that Minneapolis taxpayers, and Minneapolis taxpayers only, cough up a perpetual increase in their property taxes to fund the zero-taxes McGuire-Carlson-Nelson-Pohlad-Taylor consortium wants for their stadium.

    If this private business owns property that does not get taxed annually by city, city parks, city schools, and Hennepin County (our property tax in Minneapolis), other businesses will want the same deal. Slippery slope, indeed! Slipperier than the slope Callahan does mention: we’ve already been snookered in Minneapolis for the Target Center, Target Field, and the Vikings stadium, so why not just add another stadium?

    We might want to ask the state of Minnesota to subsidize this stadium, through a one-time exemption from the purely-state sales taxes on construction materials. Not, however, the Minneapolis and Hennepin County sales taxes–you know, the only steady public funding for the Vikings’ stadium. We would force this ownership consortium of incredibly wealthy folks to pay the local sales taxes that go to fund the Vikings stadium, Target Center, and Target Field, just as the rest of us do.

    But a permanent property tax exemption is ridiculous for this group to ask for. It would a public stupidity on a millions-per-year scale (taxes foregone) comparable to renting your broadband modem instead of buying one once.

    As one of her constituents, I hope Mayor Hodges continues to point out boldly the scam these soccer folks are asking Minneapolis to fall for. Again. (Note: we are a national laughingstock for how the Wilfs snookered us). Think of the names: Pohlad. McGuire. Carlson-Nelson. Taylor. They can afford to pay property taxes and sales taxes. They may not want to, but. . . .

    • Submitted by Dan Hintz on 04/19/2015 - 09:28 am.

      Nope

      Every other stadium in town gets the property tax exemption.

      • Submitted by RB Holbrook on 04/20/2015 - 01:13 pm.

        Not exactly

        Target Field and the Vikings’ new Temple of Excess are both owned by public bodies. There is a real constitutional issue raised by giving private property a tax exemption.

        • Submitted by Dan Hintz on 04/20/2015 - 06:11 pm.

          Doesn’t matter

          What is a public stadium? Can I go play baseball in Target Field with my friends?

          The teams control the use and revenue from the public stadiums. The only thing public about them is that the public paid for them and they don’t pay property taxes. And even though McGuire is paying for the stadium construction himself, the soccer stadium will likely end up being public as well. The constitutional issue, which was raised in the 3rd-grade legal analysis of council member Johnson, can be easily solved.

          • Submitted by RB Holbrook on 04/21/2015 - 09:19 am.

            It matters

            Yes, it matters who is the official owner. Even though the teams control the “use and revenue from public stadiums,” the stadiums are nonetheless owned by public bodies. Sure, the public gets no money from them and doesn’t have the right to use them (I’m getting a flashback to the recent MOA thread), but the legal owner is still the public. It was a bad deal, but the legalities are clear.

            Please explain what you mean by “the 3rd-grade legal analysis of council member Johnson.” Article X section 1 of the Minnesota Constitution seems to be quite clear in this regard.

            • Submitted by Dan Hintz on 04/21/2015 - 03:14 pm.

              Johnson

              You are correct that the constitution is quite clear in this regard. And its also quite clear to Bill McGuire and his lawyers, and to Betsy Hodges and to the City’s lawyers. But they all know that there are numerous ways around this problem, most of which revolve around designating the soccer stadium as public. And that’s all the public/private distinction is – a designation. If the teams control the use and the revenue, they don’t care if they don’t actually own the stadiums. That’s why the Target Center, which was once private, is now owned by the City.

              The legal analysis is 3rd grade because it looks at the obvious constitutional provision and stops. It ingores the long-history of tax-relief deals (both sports and non-sports-related) and related legislation and caselaw that deals with them. Everyone else involved is aware of the constitutional provision, but is already thinking way past it. This clown on the city council (who is not a lawyer) then pops up like he has discovered something no one else noticed. Thanks, captain obvious.

              • Submitted by RB Holbrook on 04/21/2015 - 05:20 pm.

                Numerous ways

                So, there are “numerous ways” around a clear constitutional provision. That makes them neither right nor advisable. The public has received bad deals for so-called public stadia in the past. Why do we want to repeat those mistakes?

                It seems to me that the proponents of a new stadium have the burden of proving that we should take this on. If your best argument is “look at the other deals that have been cut,” you haven’t done it. If your way around the obvious constitutional obstacle is that it can be got around because it was done before, I’m even less convinced (incidentally, I have been a licensed attorney for a long time, so I may be qualified to read the Minnesota Constitution). You might tell us about all the “related legislation and caselaw” that deals with tax-relief deals, and why they compel a conclusion that this deal should go through without objection.

                • Submitted by Dan Hintz on 04/22/2015 - 10:42 am.

                  Two issues

                  There are two issues at play here – 1) whether or not it should be done, and 2) whether or not it can be done in light of the constitution.

                  The second one is easy – it can be done and has been done many times. Betsy Hodges, who threw out every bit of nonsense she could in opposing the stadium, didn’t mention the constitution at all. Council member Johnson is like one of these Tea-Partiers or “strict constitutionalists” who reads the text of the constitution but ignores 200-some years of Federal court interpretation. Here is a pretty comprehensive resource on property taxes in Minnesota (with some caselaw, even)

                  http://www.revenue.state.mn.us/local_gov/prop_tax_admin/education/ptamanual_module5.pdf

                  The second question is tougher, and I certainly don’t think it should go through without objection. I would appreciate if the objections were honest, unlike Hodges, and not pure idiocy, like Johnson’s was.

                  To me it’s pretty simple – unlike all the other teams, Minnesota United is not asking for any money to build their stadium. This is the best stadium deal the public has seen. I understand that argument doesn’t work for you, but it’s a point worth making. People who have approved much worse deals (including Hodges) are opposing this deal out of principle.

                  The tax relief that the team is seeking on taxes that would not be paid in the first place if the stadium wasn’t there. What would be lost is the small amount ($350k/year) the site is generating now. Economic benefits of sports teams are often greatly overstated, but when we are talking about several hundred thousand instead of hundreds of millions, it’s easily a net economic gain for the City.

                  It has been argued that the land in question would have been developed eventually, and that additional property taxes will be generated (or lost if the stadium is built). Given the amount of time in which that has not occurred, the possibility that it might is not a valid argument in my opinion.

                  Finally, I like soccer. I think there is value (beyond financial value) in having a top-level team. Just as I think there is value in having the Walker and the Guthrie, neither of which pays property taxes. If you read that link I included, you will see there are tons of exceptions for various things, some of which I value (and some I don’t). Notwithstanding what that dope on the council had to say, there is nothing unusual or legally difficult about getting a property tax exemption.

                  • Submitted by RB Holbrook on 04/22/2015 - 01:16 pm.

                    Thank you for sharing that bulletin. Yes, it addresses the issue of “can it be done” quite well.

                    I’m still not convinced it should be done. I opposed (still do, in fact) the Vikings stadium, and think the way professional athletic franchises have been subsidized in this country is little short of absurd. The fact that this is just a small subsidy doesn’t make it any easier to swallow. I think the economic value to a community of any team is negligible, at best. That may be especially true with soccer, which has been trying for decades to crack the US market (I remember seeing TV ads for pro soccer back in the late 60s).

                    • Submitted by Dan Hintz on 04/23/2015 - 12:15 pm.

                      Fair enough

                      I completely agree that subsidizing the billionaire owners of sports franchises is absurd. As much as I support the soccer stadium, on some level it does offend me that stock-option back-dater Bill McGuire is getting tax breaks. And I won’t argue that the stadiums create economic growth (or at least growth that justifies the subsidies) because they don’t. Its been studied repeatedly, and the numbers just aren’t there.

                      For me, it comes down to the fact that I like having professional sports teams around. And if you are going to have those teams, you have to subsidize billionaires. Its a bitter pill, but I swallow it. That being said, you want to get the best deal possible for the taxpayers. The Vikings stadium was atrocious, not just in comparison with other local teams, but nationally. We just got screwed. The soccer team is a much better deal for the taxpayers, again, accepting the fact that we are talking about subsidizing billionaires.

                    • Submitted by Ed Kohler on 04/23/2015 - 02:06 pm.

                      But not quite enough?

                      Dan, it sounds like you like having professional sports teams around, but not enough to actually support the financial demands of professional sports entertainment businesses without generous subsidies from people who don’t share your glee.

                      There’s absolutely nothing stopping MLS fans from telling McGuire to use his own money – and, that fans are willing to pay true market rates for tickets – other than greed.

                    • Submitted by Dan Hintz on 04/24/2015 - 06:47 pm.

                      Glee

                      You should read through the link I provided to RB Holbrook above – you will get a better understanding of just how much property is off the tax rolls. I certainly don’t share the glee of many of those benefitting, but I wouldn’t call them greedy. Context is your friend.

    • Submitted by Paul Udstrand on 04/19/2015 - 10:33 am.

      Old School reporting

      Not to insult anyone but this looks like the Old School “Mainstream Media” reporting you typically get from the Strib. It basically ignores the obvious important question and pretends that another typically non-controversial question is actually the one on everyone’s mind. It’s a way of pretending that we’ve actually had a discussion about something or “covered” something without really addressing the issue.

  6. Submitted by James Hamilton on 04/18/2015 - 01:20 pm.

    MLS teams don’t make money?

    I doubt it. There are many ways of making money off an investment which may not be reflected in an earnings report. Ownership of the stadium by one entity, leased by another; capital gains as the value of the team increases; development of surrounding properties once the area has been “seeded”. I’m sure McGuire knows more ways than I do.

  7. Submitted by Chelle Blakely on 04/18/2015 - 04:43 pm.

    Make it a Church!

    Lets get real. We worship our sports teams more than anything else in our society. So, let’s just make them tax exempt churches! Could be a few pesky details like that non-profit business (but with soccer they are not even expected to make money!). Call it the Soccer Synagogue, add a Baseball Basilica, the Twins Temple, a Timberwolves Tabernacle, a Hockey Puck Parish, Football F…, well maybe the Viking V…, no, well, the Football House of Worship pretty well describes it.

    Mr. Foster is right, we’ll end up paying one way or another.

  8. Submitted by Hiram Foster on 04/19/2015 - 06:30 am.

    I mistakenly thought that this article would address the real question here: Why do these billionaires need public tax money at all? Need, not want.

    When extraordinarily successful businessmen are in a business mode, I think they have an engrained sense that participants in any deal they are putting together should pay something approaching their fair share. They didn’t get rich by giving value away. Sports moguls are convinced that their businesses create value for the community, and that the community should at least contribute part of that value to the deal. I am not saying this is right or wrong, in terms of policy, business or economics, but I do think this is what they believe. And successful businessmen are successful not because they are right or wrong, but because of intensity and effectiveness they have in getting what they want. In the final analysis, we have a Vikings Stadium growing everyday in downtown Minneapolis, not because it was the right or wrong thing to do any sense, but because a small group of people wanted it and had the energy and aggressiveness needed to get it.

  9. Submitted by Hiram Foster on 04/19/2015 - 08:09 am.

    The deal

    I am no expert on finances, but Frank Lampard help me, this deal looks less than awful. And I like soccer; at this very moment I am watching Manchester City play West Ham United. But the problem here is to quote one of my favorite movies, “The Day of the Jackal”, the previous, sports moguls, through their less than optimal dealings with the legislature and the public have queered the pitch for those who follow. We watched the spectacle of a lot of folks around town pretending to believe that the Vikings Stadium could be paid for by a combination of gambling revenues and fairy dust, a self delusion which barely lasted through the bond issuance. The painful but unavoidable question for all sports moguls who follow, is if it was a mistake to believe the phony financing promises they made in the past, as it surely was, why should we believe their new financing promises now?

    • Submitted by Dan Hintz on 04/20/2015 - 08:31 am.

      Soccer fans

      The first two sentences immediately convinced me of your bona fides as a soccer fan. Contrast that with Betsy Hodges tortured attempt to try to do the same. Maybe it’s something that can’t be faked.

  10. Submitted by Dennis Wagner on 04/19/2015 - 09:30 am.

    Noticeably absent

    The conservative opinions that are usually exceptionally loud about fairness in taxation and the left “soaking the successful rich” !
    Here again lies the perfect example of unfair taxation pushing wealth from the bottom to the top. But as Hiram noted, the regular tax payer should be happy to subsidize sports adventures that contribute to the increasing wealth of already wealthy people.

  11. Submitted by Jesse Langanki on 04/19/2015 - 09:33 am.

    special tax district

    Going back to the Vikings stadium, what’s to stop the city from creating a special 20% Pro Football ticket tax to recapture some of the tax money lost in the project? The Vikings are welcome to drop ticket prices by 20% if they want to offset that for their customers.

  12. Submitted by Clark Starr on 04/19/2015 - 10:49 am.

    Team Profitability

    In 2011 I think a little under 1/3rd of MLS teams were profitable. I’m not sure what it is now. Franchise value has consistently gone up. They, the owners are likely believing they will profit in the long run. Billionaires become billionaires not by leaving money on the table.

  13. Submitted by Hiram Foster on 04/19/2015 - 11:16 am.

    But as Hiram noted, the

    But as Hiram noted, the regular tax payer should be happy to subsidize sports adventures that contribute to the increasing wealth of already wealthy people.

    Not my job to tell what other people to be happy about. Professional sports come with a price tag, just like a lot of other things in life. Just as the cost of a gallon of milk is about 3 dollars, the price of keeping the Vikings here was about a half billion dollars. Are those good prices or bad prices? That question calls for subjective judgments, which each of us can only make for ourselves.

    “In 2011 I think a little under 1/3rd of MLS teams were profitable.”

    I wouldn’t pay any attention at all to professional sports accounting. The fact is, sports accountants can manipulate their numbers to show anything they like, whatever is convenient for them at any given moment.

  14. Submitted by Paul Udstrand on 04/19/2015 - 11:37 am.

    Mistaken thoughts

    Hiram “explains”:

    “When extraordinarily successful businessmen are in a business mode, I think they have an engrained sense that participants in any deal they are putting together should pay something approaching their fair share.”

    I’m not picking on Mr. Foster, the point of view he’s representing clearly exists.

    Here’s the problem: You don’t ram welfare programs for the wealthy down voter’s throats and claim to be extracting “fairness”. These stadiums, arenas, and pro sports franchises are NEVER responses to popular demand, although there is some consumer demand, and teams have their fans. There’s no groundswell of demand for a pro-soccer franchise that Polad and McGuire are responding to, they’re just trying to make more money. The idea that these billionaires are merely asking for a little equity when bring their business to town is nothing more than economic colonialism. They decided to do us all a favor we never asked for and they just want us to pay our fair share in return? Bushwa!

    Of all of the possible business entities that could earn a public subsidy pro sports franchises are the most ridiculous. There simply is no economic rationale for the public. I don’t know Mayor Hodges and I’ve never discussed this with her but I wonder if she’s simply aware of the fact that these stadiums and arenas are little more than financial stones around the cities neck. They cost the city millions of dollars a year in outright spending, as well as diminishing the revenue stream by pulling property off the tax roll. Every stadium or arena you build in the downtown core pull huge chunks of property off the tax rolls, and downtown MPLS isn’t THAT big.

    Beyond tax concerns one can actually make a surprisingly strong case that these stadiums and arenas actually do more harm than good in a variety of economic and cultural ways.Consider the recent writers convention that filled downtown hotels- I remind you that MPLS is pulling money OUT of the convention center in order to put it into the Timberwolve’s arena… an arena that’s already costing the city around $2 million a year just to run. Rybak committed the city to hundreds of millions of spending on sport franchises without ever really explaining where the money was going to come from and now they’re stuck with it. Meanwhile MPLS schools and Park Board, and other services are facing cash shortages and budget deficits. Sports franchises distort city fiscal priorities and wreak havoc on budgets.

    Beyond the damage to city budgets these stadiums kill downtown cores, and more of them you have the worse it is. For one thing stadiums and arena’s create dead zones for a variety of reasons, consider the success of the Block E for instance, or the area around the dome, or the ongoing fiasco with the “people’s park” next to the Vikings stadium. You end up with huge structures that take up massive amounts of space, and then sit there empty for months on end. This does nothing to bring “vitality” to a city core. Of course as long as a giant stadium is sitting there those huge chunks of land cannot be used for anything else, no other kind of development, no housing or retail, or mixed use. You basically convert potential into dead space… and the more stadiums and arena’s you build, the more potential you lose.

    Consider for instance the new light rail stations being built in the warehouse district. Light rail stations are tremendous opportunities for transit related development… unless you put them right next to empty stadiums and arenas. Another stadium down in the warehouse district would effectively kill it in terms of transit related development. And stadiums and arena’s are unique structure in the sense that they are almost impossible to re-purpose in the future, your ONLY option is to spend millions tearing them down.

    Then you have the blow against cultural diversity that sports franchises deliver to any city that becomes a de facto sports complex. I’ve been to world class cities: London, Paris, Amsterdam, San Francisco, LA, Boston, and many others and I didn’t see a single a stadium or arena. MPLS is going to have THREE of them? No vibrant or exciting city in the world is a de facto sports complex. When you think of New York City do think of a baseball stadium or do you think of Broadway or Time Square? If the only people a city can attract to a downtown core in any significant number are sports fans, who go to games and then go home, you’re creating mono-cultural wasteland. You’re killing any other type of entertainment that has to compete for parking and space. Look at what happened to Block E.

    Maybe Mayor Hodges actually realizes that these sport franchises can actually be bad for a downtown core.

    • Submitted by Paul Udstrand on 04/20/2015 - 10:36 am.

      THREE stadiums and arena’s?

      Yikes, I forgot, we already HAVE three stadiums and arena’s downtown MPLS, This would be a fourth, and one of SIX between MPLS AND St. Paul.

      • Submitted by Dan Landherr on 04/21/2015 - 01:19 pm.

        I count more than 3

        Vikings Stadium
        Target Center
        Target Field
        TCF Stadium
        Williams Arena
        Mariucci Arena

        • Submitted by Paul Udstrand on 04/21/2015 - 05:10 pm.

          Counting stadiums…

          I could’ve been clearer, I was referring to pro-sports stadia. Yeah, if count all the stadiums and arenas you really get a sense of a city becoming a de faco sports complex.

  15. Submitted by Paul Udstrand on 04/19/2015 - 11:42 am.

    Billionaires and sports franchises

    Anyways, the reason these billionaires ask for or demand public subsidies is because it’s part of the business model. The truth is that they hit a growth wall and can’t raise the value of their teams any other way. The soccer league is simply trying to get established and reach a critical mass in terms of existing franchises. It’s not about raising community value, it’s about creating growing franchise value with as little of their own money as they can.

    • Submitted by RB Holbrook on 04/20/2015 - 01:17 pm.

      The other reason

      Don’t forget ego. It isn’t always about the money. For a lot of wealthy team owners, a sports franchise is an ornament showing their status in the world. What could be better than having the public pony up huge sums of money for you to keep your fancy plaything in the manner you deem appropriate.

  16. Submitted by Connie Sullivan on 04/19/2015 - 05:38 pm.

    The people involved here have much deeper pockets than do the taxpayers of Minneapolis who are being asked to subsidize their “plaything” for generations to come, to the tune in today’s dollars of at least two to three million dollars annually, maybe as much as $5 million. And let’s remember: no one else but the taxpayers of Minneapolis and Hennepin County are being asked to “chip in their fair share,” as if this project were ever going to make money for the city.

    One clarification: Minneapolis owns the Target Center, land and building, outright. Minneapolis and the state of Minnesota, own the land and structure of the Vikings stadium. Hennepin County owns the Target Field. The U of MN owns the TCF stadium. All these sports venues are public property, and therefore they are not on the tax books. They are not comparable to a private building, like any downtown high-rise condo or business tower, that pays property tax. Minneapolis can only take so much of it acreage off the tax books before it really begins to go bankrupt. (One of the unstated problems for Minneapolis is the huge, tax-exempt U of MN encroachment on city land, taking millions of property taxes out of the city’s reach. The University has expanded its Minneapolis physical presence enormously in the last twenty years, to no one’s comment.)

    What McGuire and group propose, however, is to take the privately-owned soccer stadium off the tax books, so they win no matter what: they’d pay no property taxes for several generations, and they will still get to sell that downtown land in the future.

  17. Submitted by Hiram Foster on 04/20/2015 - 06:40 am.

    ” the reason these billionaires ask for or demand public subsidies is because it’s part of the business model.”

    Well, basically I agree. This is the way they have chosen to do business. Whether we take the deal they are offering is the way we choose to business. Mr. McGuire is offering to sell us something, MLS soccer. Do we want to buy it? If so, Mr. McGuire has told us what the price will be.

    “The truth is that they hit a growth wall and can’t raise the value of their teams any other way.”

    I don’t know if that’s the case. The fact is, the internal finances of sports teams are shrouded in mystery, one that outsiders have no hope of penetrating. It’s hard for me to understand how MLS soccer teams make any money at all, even with the tax subsidy. That’s another thing, we should think about. The MLS isn’t the NFL. There is a significant chance that the league and/or the team will go broke, and what we will have paid for through tax subsidies will be not much more than a large, empty space in Minneapolis, used only for the occasional truck pull. I find it kind of amazing in fact that no one seems to talk about how risky this investment is for the people of Minneapolis and Minnesota.

  18. Submitted by Dan Landherr on 04/20/2015 - 07:55 am.

    They’ll make the sales tax exemption back quickly

    Income taxes on MLS payroll would quickly offset the sales tax exemption on stadium construction. I can’t see a reason to eliminate the property tax for the site but perhaps they could designate it a JOBZ area. I agree that McGuire’s leverage is limited but there will be a tax benefit to the state having an MLS franchise.

    • Submitted by Brad James on 04/20/2015 - 11:02 am.

      LOL

      Do you realize that the less than half of MLS teams have a payroll above $5 million? That rate would not quickly offset stadium construction.

  19. Submitted by Hiram Foster on 04/20/2015 - 09:46 am.

    The numbers

    As I said before, I don’t trust the numbers provided by sports moguls. That’s one of the reasons why I don’t think whatever they say about their internal business issues should be considered when weighing the merits of things like stadium construction. There are basically two reasons for this. First, sports moguls are invariably wealthy people who have the perfectly legal capacity to shift assets around to in effect tell any story you want. Any numbers they can quote in public are the result of the self serving manipulation of accounting statements. We have some sense of this in very gross terms when we see not very profitable sports franchises sold for millions and even billions of dollars. Why would anyone pay so much for businesses that earn so little? Clearly something must be amiss.

    Secondly, however, and this goes to some larger issues as to how the news is reported, is the fact that the news media is simply incapable of digging deep enough, as a general matter, to give us something like an accurate picture of sports moguls finance. They simply lack the forensic accounting skill necessary, and the person power in this era of cutbacks to do the job seriously. There is a fundamental debate these days, about what reporters do, and it’s demonstrated most vividly by the Judith Miller matter. Briefly, Ms. Miller argues that her reporting on Iraq was good because she reported accurately what her sources were saying even though her sources were wrong. This morning, on “Morning Joe”” a New York Times reporter challenged her saying that it was her job to go beyond her sources and report the truth. Philosophical merits aside, the fact is it’s extraordinarily difficult for any reporter to go beyond reporting what someone tells them and that’s just as true when covering sports mogul press conferences as it is, when reporting middle eastern politics.

  20. Submitted by Paul Udstrand on 04/20/2015 - 10:33 am.

    Making we we and income tax assumptions

    Hiram says:

    “Mr. McGuire is offering to sell us something, MLS soccer. Do we want to buy it?”

    Yes, we have a mechanism to determine whether or not “we” want to “buy” teams, they’re called referendums. But stadium supporters have a million and one reasons for by-passing referendums because “we” know the actual answer to the question is. “we” don’t want to buy. So is that the end of the discussion?

    “The fact is, the internal finances of sports teams are shrouded in mystery, one that outsiders have no hope of penetrating.”

    Not true at all. Several economists have studied sports economies over the decades now and the revenue, salaries, costs, etc. can be calculated with a pretty high degree of confidence. Here’s what we know: Eventually sports franchises hit a revenue wall when they can’t attract more people to their stadiums (note many of these stadiums actually have fewer seats that the ones they’re replacing). They can’t charge more for tickets, and they can’t charge more for luxury boxes that are outdated and not so much luxury anymore. There’s also a limit as to how much growth revenue they can get from sharing broadcast deals and what not. And, owners have to deal with a unionized work force that’s extremely well paid with very specialized talent, so they don’t have the option of cutting payroll’s that other business’s might have. The only way a guy like Pohlad or Wilf can grow revenue is with new stadiums, that someone pays for. Typically a new stadium doubles the value of the team by making higher ticket prices, seat license’s, new luxury boxes, etc. possible. They also re-negotiate their tax liabilities as part of the deal as well. None of this mysterious, it’s all well documented at this point.

    Mr. Landherr suggests: “Income taxes on MLS payroll would quickly offset the sales tax exemption on stadium construction.”

    “Quickly?” You nave to remember that most of the athletes aren’t MN residents so they only pay MN income taxes on the portion of their salary that’s calculated to have been earned in MN. So for instance, the Vikings team payroll for 2015 is around $137 million. Only half of that is subject to MN income tax ( 8 out of 16 games). That leaves us with $68 million subject to MN income tax rates of around 9% which would bring around $6 million IF the athlete paid tax on every dollar. It’s safe to bet that these millionaire athletes pay good money to talented accountants who tally up as many deductions as are humanly possible, so more than likely the State’s take is less than $6 million. Now the Viking’s stadium cost a billion dollars to build (ten times more than the proposed soccer stadium), so the sales tax exemption for construction was probably worth around $30 million. Scale this to fit the soccer stadium and soccer payroll’s, but it looks like it would take 6-7 years for player income taxes to cancel out the sales tax exemption. I don’t know if that’s “quick” or not. And remember, that income tax is divided up, it doesn’t all go MPLS so you really don’t have an apples to apples pay off.

    • Submitted by Dan Landherr on 04/20/2015 - 11:13 am.

      The opponents also pay income tax in Minnesota

      For every away game you lose payroll on you gain when the opponents are paid in Minnesota.

      MLS payroll is around $4M per team. Assuming 10% state income tax that would pay off a $3M sales tax exemption in about 7 years.

      McGuire isn’t asking Minneapolis to compete with St. Paul so there is no incentive for the city to provide any concessions. The state is who will benefit the most from MLS and they could choose to provide a modest incentive to get the deal done sooner rather than later.

  21. Submitted by Brad James on 04/20/2015 - 11:09 am.

    Why does

    anyone believe that the MLS really requires a $100 million expansion fee? In 2014 Forbes estimated that less than half the teams in the league are worth more than $100 million. It is all posturing, there has never been a verifiable third party to prove that such a fee has ever been paid. Until something substantive like a document from a financial institution that shows a payment of $100 million to the MLS the media should treat it as hype.

    The MLS is a joke. Contrast the league to the NBA. The MLS just had a team fold in Los Angeles, a market that would seem to be perfect for soccer. The NBA’s second favorite team in LA just sold for $2 billion. Even mentioning The MLS in same paragraph as the NFL, MLB, NBA, NCAAFB shows a craven misunderstanding of magnitude.

  22. Submitted by Paul Udstrand on 04/20/2015 - 11:17 am.

    Actually

    Here’s a really nice graph that illustrates the way new stadiums bump revenue streams that have hit a wall for sport franchises. You can see the that MN Twins are plugging along with dome with revenue growth of around 4% on average, 12% on their best year, and that’s ALL they’re EVER going get the dome, if that. The last three years at the dome they were seeing less than 2.5% growth. Then in 2010 they move into the new stadium and BAM they see a 32% increase in revenue.

    http://www.statista.com/statistics/196669/revenue-of-the-minnesota-twins-since-2006/

    And getting back to the sales tax vs. income tax pay off, now that I think about it doesn’t work no matter how you look at it because sale tax revenue and income tax revenue don’t go into the same pot anyways. Sales tax revenue goes all over the place while income tax revenue goes into the general fund. It’s entirely possible that forgone sales taxes are actually lost revenue forever because we don’t pay-back lost sales tax revenue out of the general fund.

  23. Submitted by Paul Udstrand on 04/20/2015 - 11:26 am.

    Oh, and one more thing…

    Everyone keeps going on about who “owns” the stadium, I remind you that ownership can change. Remember the Timber Wolves originally owned their arena until they conned MPLS into buying it for more than twice what it was worth at the time. Could well be that Pohlad and McGuire have a similar long game in mind. Once you build something like the last thing a city wants to have an abandoned stadium in their downtown core so the owners have more than a little leverage… once it’s built. So again, building these stadiums is NOT a win-win for everyone.

  24. Submitted by Hiram Foster on 04/20/2015 - 11:39 am.

    Yes, we have a mechanism to determine whether or not “we” want to “buy” teams, they’re called referendums.

    There are many ways to decide whether we want to buy stuff, and referendums are one of them and one of the rarest. I can’t recall the last time I, for example, used a referendum to help me decide to buy groceries.

    The founding fathers, in their finite wisdom, pretty much were terrified at the prospect of turning over political decisions to the voters. That’s why only one half of one branch of the government they established was popularly elected. In the case of sports franchises, a decision to go to a referendum on the building of a stadium is a decision to vote no. But then, if we held a referendum to tear down the Twins Stadium and turn the property into condos, the vote there would probably be no too. Referenda are ambivalent things.

    “Several economists have studied sports economies over the decades now and the revenue, salaries, costs, etc. can be calculated with a pretty high degree of confidence.”

    I was referring to the internal accounting of sports teams, not the economic impact generally. We have wandered off the initial question posed by the article, but the fact is, we have no idea why Mr. McGuire wants the public subsidy he does other than the obvious reason is that he wants what he wants a little cheaper, as we all do.

    I wouldn’t assume, by the way, that the economic of soccer teams are the same as the economics of the NFL. For one thing, the soccer stadium used 20 or 30 times a year which might have in fact a bigger economic footprint than a Vikings Stadium used only 8 times a year, is a lot cheaper.

    • Submitted by Paul Udstrand on 04/20/2015 - 04:40 pm.

      Founding fathers?

      ” a decision to go to a referendum on the building of a stadium is a decision to vote no.”

      Exactly, the answer is “no”. These stadiums get built despite public opposition, so the public’s “fair” share would be exactly- zero. The laws requiring referendum are passed by our elected representatives and signed into law by elected executives, and our courts have upheld them. There’s no constitutional issue with referendums, they exist as per our founding fathers design. What part of: “no” is unclear? Just because the answer to some other hypothetical question might also be: “no” doesn’t negate the will of the people in a democracy.

      Unless someone is telling you what groceries to buy and making you buy them whether you want them or not, I fail to see your point about groceries and stadium referendums. The difference between public policy and private consumerism is kind of obvious.

      I wasn’t talking about the economic impacts in general, I was talking about the revenue and pay roll of the Vikings specifically as an example, the point is it’s not THAT mysterious, why pretend it is?

      “but the fact is, we have no idea why Mr. McGuire wants the public subsidy he does other than the obvious reason is that he wants what he wants a little cheaper, as we all do.”

      That’s an interesting logical non sequitur. We have no idea, except for the idea we have, and that idea must be false, even though the conclusion is obvious and undisputed. That was fun, reminded of me my college philosophy days.

      From an economic perspective the different team sports franchises are irrelevant, as far as the business model is concerned, they all use the same model, and there’s nothing mysterious about the model. As for economic impact, whether it’s 80 MLB games or 8 NFL games it’s a wash because those are all entertainment dollars that get spent anyways. All we’re doing with public subsidies is moving dollars towards sport franchises instead of bowling alleys, bike shops, and movie theaters.

      I personally think I can make a decent argument that moving that much money into the hands of billionaire sports franchises and out of state millionaire athletes at the expense of local business is actually bad for the local economy. As a matter of policy we’re doing this in a huge way, we’ve got 5 stadiums and arena’s and these guys want to add a 6th. The Twin Cities Metro market is not THAT big. But that’s a whole nuther story.

  25. Submitted by Hiram Foster on 04/21/2015 - 06:24 am.

    These stadiums get built despite public opposition, so the public’s “fair” share would be exactly- zero.

    But the public likes them once they are built. No politician, except for one guy in Wisconsin ever lost an election for supporting a stadium. Plenty of things can be “fair” that might lose or win an election. California has tons of referenda, and I would say fairness wins them about fifty percent of the time. Our founders had no use for referenda. They didn’t have much use for the public generally.

    “I was talking about the revenue and pay roll of the Vikings specifically as an example, the point is it’s not THAT mysterious, why pretend it is?”

    The Vikings are a vastly profitable franchise. The business situation of an MLS franchise, which will never be very successful, indeed which will struggle to survive in this competitive market, is totally different.

    “We have no idea, except for the idea we have, and that idea must be false, even though the conclusion is obvious and undisputed. That was fun, reminded of me my college philosophy days. ”

    How a sports team makes sense depends on how it fits in with Mr. McGuire’s personal finances. We know neither how it does that or even if it does. Maybe this is just a vanity purchase on his part that makes no sense on any business or economic level. We just don’t know, and we don’t have to know. What we do need to know is whether he is a reliable partner. We don’t want to be left with an empty stadium. And the fact that this is an MLS team, not a fiscally stable NFL team, raises that concern.

    Wash arguments assume a no growth economy. A dollar here means a dollar taken away from somewhere else. It’s akin to the broken windows theory. But actually businesses, and sports franchises are businesses like any other grow, creating more value than was initially invested in them. Not all of them do, of course, but that goes to whether the decision to invest is a sound one.

    • Submitted by Paul Udstrand on 04/21/2015 - 09:29 am.

      What?

      Hiram:

      “But the public likes them once they are built. ”

      You keep saying stuff like this but the facts don’t support you. Minnesotan’s consistently say time and time again that they’d rather loose the Vikings than build them another stadium. We have 3 million people in the metro area and what? maybe 40,000 of them go a Vikings or Twins game? Even fewer have season tickets.

      Just because people go to the games doesn’t mean you have de facto approval after the fact. Let me get this straight, you don’t trust referendums, but you trust ticket sales? So if a tiny fraction of our population buys tickets to soccer games in the new stadium, that means the public wanted to pay for it’s construction?

      Wash arguments do not assume no growth in the economy, they merely acknowledge the fact that sports franchises, especially new stadiums for existing franchises, don’t grow the local economy. Unlike almost any other business you subsidize sports franchises are actually prohibited from adding new jobs (No sports franchise can hire “more” athletes because they got a new stadium) and any additional revenue they generate gets sucked out of the local economy for the most part. Local economies may grow, but not because sports franchises or new stadiums, in fact on the contrary. A study of sales taxes in St. Paul showed that sales receipts city wide actually went UP during the Hockey lock-out because people were spending their entertainment dollars elsewhere, and spending more of those dollars.

      • Submitted by Hiram Foster on 04/21/2015 - 10:28 am.

        The public

        You keep saying stuff like this but the facts don’t support you.

        Mike Opat keeps getting re-elected. Candidates I work for who supported the stadium keep getting elected. Those facts support my argument just fine.

        “Just because people go to the games doesn’t mean you have de facto approval after the fact.”

        Sure it does. Why don’t the fans boycott the stadium like just the other day Newcastle United fans boycotted their team. There is nothing stopping them.

        I know of no law that prohibits sports franchises and those who do business with them from adding new jobs. There just isn’t anything unique in business terms about sports.

        • Submitted by Paul Udstrand on 04/21/2015 - 11:04 am.

          Why?

          Why do politicians get re-elected despite stadiums? Because most voters are adults. You understand that if I vote for you despite the fact that you voted for the Iraq war, it doesn’t mean I think the Iraq war was a great idea.

          Why don’t fans boycott stadiums? Because they’re fans. If they didn’t want to watch the team play they wouldn’t be fans. Dude, look at this way: 99.99% percent of the MN population IS boycotting the stadium! What do make of that? In fact, an even greater number of Minnesotan’s are refusing to go to the stadium than ever said they didn’t want to pay for it in the first place! Unless you think 60,000 people are some kind of majority in a population of 6 million.

    • Submitted by Dan Landherr on 04/21/2015 - 09:41 am.

      Empty stadiums aren’t that hard to redevelop

      Look at Bloomington for example

      • Submitted by Paul Udstrand on 04/21/2015 - 05:02 pm.

        Empty stadiums

        Dude, at the time the mega-mall subsidy was the largest public subsidy in MN history. Getting that mall built was not “easy”. Both St. Paul and MPLS have a long and documented history of huge white elephants that have sat for years, structures that literally couldn’t be given away. Consider the old Grain Belt brewery for instance. The locations are quite different as well and location can make a huge difference.

        It’s hard to say how difficult redevelopment would be, but I can why MPLS wouldn’t want to roll the dice. The Sears building sat empty for almost a decade, and some old schools have been redeveloped as condos, but you can’t do anything with an abandoned stadium other than tear it down, and that costs tens of millions of dollars.

  26. Submitted by Hiram Foster on 04/21/2015 - 09:21 am.

    Wash transactions

    The argument seems to be that money spent on a stadium is a diversion from other activities and therefore a wash. How does this apply in specific cases?

    We are spending a billion dollars on a Vikings Stadium which will be meaningfully used 8 times a year. Let’s say that’s a wash. So what happens when we build a soccer stadium for roughly a tenth of the cost of a Vikings Stadium that will be meaningfully used roughly four times as often? Can what appears to be a much better deal, also be a wash?

    That’s a pretty big oversimplification of the issues, but what I think it suggests is that it is impossible to generalize effectively about business deals. And what I would suggest is that investing in a sports business is just like investing in any other business, in the sense that some investments are good investments, others are not.

    • Submitted by Paul Udstrand on 04/21/2015 - 11:07 am.

      Washes and sports…

      I hate to this and examined the specific implications for all of our stadiums arenas back in 2011. It’s a pretty thorough economic analysis and you can find it here: http://pudstrand.fatcow.com/blog/?p=108 and here: http://pudstrand.fatcow.com/blog/?p=123

      I’m not going to duplicate all that work here, basically, a wash is a wash regardless of the amount of money involved, that’s why it’s called a: “wash”. As a general rule the less money the public puts into a stadium or sports franchise the lower the wash, but it’s still a wash. What do I mean by that? I

      It’s not that complicated; in any given geographical area you a given population with certain amount of disposable income that gets spent on entertainment. That spending is divided among all possible entertainment venues. That pool of entertainment dollars may be larger or smaller, or it may grow with population but typically that growth is accompanied by a growth in entertainment venues as well. When the population grows you get more theaters, restaurants, water parks, bike trails, bowling alleys, whatever. All this means is that if someone brings a new sports franchise to town, they’re not growing entertainment dollars or increasing the amount of entertainment dollars spent, they simply competing for available entertainment dollars. It doesn’t matter how much the franchise costs, or how expensive the stadium is, whatever. So in this regard, there’s no difference between a NFL franchise and a soccer franchise. You may as well compare the Vikings stadium to a put-put golf.

      For instance when you open a movie theater in the West End of St. Louis Park, you’re not increasing the amount of money people spend on entertainment, you just giving them a new place to spend those dollars. People don’t come and spend their dollars at your new theater IN ADDITION to all the dollars they were spending before, they just spend their dollars for the most part in one place instead of the another. They go to the West End instead of Uptown.

      If you want specific examples I’m afraid you’ll have to go to my blog, I look at the Vikings, the Twin, the Timber Wolves, and the Wild.

      I’m not the oversimplifying things. I’m not the one trying to compare a public financed corporate welfare program to buying a loaf of bread at the supermarket. Is one stadium a better “deal” than another? “Deal” for whom?

      Stadiums aren’t public investments in public infrastructure. Stadiums are business subsidies for billionaire franchise owners who are the primary beneficiaries. Stadium’s and arena’s are vehicles that give franchise owners the ability to generate and capture more revenue, and sports franchises are incredibly small business’s that have minimal impact on the community at large. For instance do you know that Metrodome only had 9 full time employees on the payroll? The Vikings are getting upwards of $500 million for less than 150 employees? We’d get a better deal if we just gave 150 people a million bucks a piece.

      I wrote a community voices article for Minnpost back during the Viking debate comparing the Vikings subsidy, which is now the large public subsidy EVER given to a private company in MN, to the next largest subsidies: https://www.minnpost.com/community-voices/2012/02/vikings-vs-nwa-does-nfl-really-deserve-largest-subsidy-minnesota-history The point is that it’s almost impossible to see these sports subsidies as being any kind of good “deal” for taxpayers. These subsidies aren’t even necessarily a good deal for fans.

  27. Submitted by Paul Udstrand on 04/21/2015 - 09:33 am.

    What again?

    “How a sports team makes sense depends on how it fits in with Mr. McGuire’s personal finances.”

    Yeah, and that’s not an unknowable mystery of the universe… here’s how the sport franchise “fits” into McGuire’s personal finances… it makes him money, if it didn’t, he wouldn’t own it.

    • Submitted by Hiram Foster on 04/21/2015 - 10:31 am.

      Money

      Well, we don’t really know if an investments in MLS soccer will make the owner money. Despite the name it isn’t really a major league operation. I think as a league, the MLS ranks about tenth in the world. In any event, whether it makes him money isn’t the public’s concern. What is the public’s concern is whether he is a reliable business partner. As I have said, MLS soccer is a far riskier investment for the public than Twins baseball, Vikings football, or even the Timberwolves.

      • Submitted by Paul Udstrand on 04/21/2015 - 10:55 am.

        Sheesh….

        “Well, we don’t really know if an investments in MLS soccer will make the owner money. ”

        Maybe they’re taking a risk, maybe it will pay-off or not, whatever… but we know they’re not trying to LOSE money. We know why they’re pursuing this. Sure, you win some you lose some but you’re not trying to lose. Just because there are only two things in the universe that are for sure doesn’t mean that a billionaire’s motivations are beyond comprehension… on the contrary as Hiram pointed out… you don’t get to be a billionaire by losing money.

        • Submitted by Hiram Foster on 04/21/2015 - 12:17 pm.

          but we know they’re not trying to LOSE money.

          I don’t know that we know that. To begin with, MLS franchises are hardly a sure thing investment, one reason why we should be wary about investing in them. Mr. McGuire is a billionaire, and maybe he looks on the MLS as a play thing, not something that will ever earn him money. In any event, his subjective motivations are not our concern. What is our concern is the quality of the investment we are asked to make particularly with respect to the financial stability of the MLS. We don’t want to put money into a stadium only to see it’s principal tenant go broke, certainly a real possibility here.

          • Submitted by Paul Udstrand on 04/21/2015 - 01:13 pm.

            We know

            “I don’t know that we know that. To begin with, MLS franchises are hardly a sure thing investment,”

            We know the Pohlad and McGuire aren’t buying a soccer team so they can lose money together, yes, we know that. It doesn’t have to be a sure thing, billionaires takes chances, especially with other people’s money. They ask for public subsidies to minimize their own risk. It’s the old gambit of private profits and socialized risk or costs.

            None of this is our concern actually. As a taxpayers and a community our only concern really is how another stadium might negatively impact the area. Our responsibility is to determine what if any damage such a structure might cause to the neighborhood or city. Beyond that this is just some business guys making a business decision, if they want to buy the land and build a stadium on it that their business. As taxpayers we’re not required to make “deals” and subsidize business. The only “deal” these guys are talking about is asking us how much money we’re willing to lose in order for them to make more money. No one’s subsidizing my Netflix why should I subsidize your soccer?

            Look, by way of comparison, the city of MPLS put someting like $60 million towards the Target headquarters in sight preparation, tax increment financing, a minimum wage waiver, and a parking ramp (that the city owns). In return, Target brought something like 7,000 jobs, employees, downtown every day M-F until for the next 15 years, until the last round of lay-offs. They also opened a retail store that serviced residents and workers downtown AND sponsored the Holidazzle parade. Now I’m not even saying THAT’S a good deal for the public but how many people work for a soccer team? A soccer stadium sits there empty for what 312 days out of the year?

            I think the only concern for the public is to require that anyone who builds another stadium downtown creates a trust fund that will cover the costs of demolition should the site have to be abandoned in the future. The danger here is that huge useless structure will end being abandoned on otherwise prime real estate next to the downtown core. We should pay for the privilege of taking that risk.

  28. Submitted by Paul Udstrand on 04/21/2015 - 09:51 am.

    Anyways again…

    In some ways this article is a good illustration of what happens when sports mentalities leak into public policy discussion. Why these guys would ask for a public subsidy is actually a silly question because no one’s pretending that it’s any kind of mystery in the first place. They may or may not get what they ask for, but why they ask is obvious.

    The reason I think we can consider this to be a form of sports mentality is because of the inconsequential nature of the question. Sports related discourse is almost by definition inconsequential. Outside of crimes and injuries games are entirely artificial human activity. Games are made-up, and the only consequence that can possibly result is that a game is won or lost. This is the universe of sports mentalities, an artificial universe devoid of consequence outside the game.

    Sports discourse is filled with inconsequential debates about what could have happened differently, or what might happen if something or another was different. People don’t have these discussions because they’re important, they have them because they’re fun… it’s an extension of the game.

    When that mentality leaks into public discourse about actual policy matters of consequence you sometimes see people struggle to find something consequential to talk about because they’re outside of the game, and it’s just not a place their accustomed to being. They have trouble thinking like a citizen instead of a “fan” or a spectator.

  29. Submitted by Jay Willemssen on 04/21/2015 - 06:25 pm.

    Sports entertainment and billionaire welfare again?

    Who in their right mind objectively supports these absurd, obscenely wasteful perversions of government?

    If you’re a billionaire team owner or media owner (or both, in Taylor’s case), or if you’re a cheap fan, or you’re part of the corporate box seat set, or you’re in the building trades, or you’re a politician who works at the behest of any of these people – we get it. You want freebies. But please don’t embarrass yourselves making lame attempts to make the ridiculously unreasonable seem rational.

    Professional sports has an odd way of attracting, to put it gently, ethically compromised individuals as owners. Which is fine, it’s a free country. It’s just very odd that a large number of normal people think it’s a good idea to be shoveling huge piles of taxpayer cash at these owners.

    And if you think “they got free money, where’s mine?” is a good argument, you should remain silent and think harder.

  30. Submitted by Hiram Foster on 04/22/2015 - 06:31 am.

    Who in their right mind objectively supports these absurd, obscenely wasteful perversions of government?

    People who benefit from them. Construction companies and those they employ; a very strong force at the state capitol. People who do business at the stadiums and with the teams. What you have to keep in mind that benefits of public construction ar e very focused on specific individuals who are very good at dealing with the relevant players. And the opposition isn’t focused, doesn’t know who makes decisions and why and doesn’t have the ability to maintain sustained political pressure.

    • Submitted by Paul Udstrand on 04/22/2015 - 08:55 am.

      Spot on

      Hiram tells us who promotes stadiums:

      “People who benefit from them…” Exactly.

      I remind people however that the question ask’s us to identify those who “objectively” support these “wasteful perversions of government”. These supporters are hardly objective.

      What Hiram has done is to accurately identify the special interests behind these welfare programs and point out that billionaires get these programs because of their disproportionate influence and access to “our” elected officials. The taxpayers and constituents simply don’t have enough influence to block these programs. We have a political system that services the wealthy at the expense of everyone else.

      Now Hiram will point out that the wealthy are citizens too, and they are. Sure, it’s also their government as well as everyone else’s. But I remind everyone that while our elected representatives were dumping almost two billion dollars on the wealthy for their stadiums and arenas these same politicians were cutting transportation funding to the point where bridges started collapsing, and cutting so much money from school budgets that thousands of teachers had to be fired, and throwing over 40,000 people out of affordable health care programs. And that’s just for starters.

      I’ve said it before; at some point we have to start talking the fact that these stadiums deals are products of corruption. When the only bi-partisan spending bill our elected officials can pass is the largest public subsidy in state history for an out of state billionaire that’s not creating a single new job beyond temporary construction, you have a corrupt system. I honestly don’t know what to do about it, but we need to at least recognize it. The question isn’t why to these billionaires take advantage of the corrupt system, the question what if anything can we do in a democratic society to eradicate this corruption?

  31. Submitted by Paul Udstrand on 04/22/2015 - 09:24 am.

    Losing vote’s for stadium deals

    Hiram claims that no political ever get voted out of office for a stadium deal, and for the most part I agree, but…

    I think here in MN we may have seen an exception in the last election cycle. We know that a significant number of rural voters turned out the democrats because they perceived an imbalance between rural and metro spending and resources. I think that billion dollar stadium deal might have contributed significantly to that perception. That stadium and it’s various fiasco’s has been in the news constantly and more than any other single publicly subsidized project. Rural voters know that a super bowl deal doesn’t do them any good, and they look at the stadium and the transit spending etc. and figure someone else is getting all attention. When your winning or losing elections by such razor thin margins we may have finally seen a stadium deals toss some folks out of office.

  32. Submitted by Hiram Foster on 04/22/2015 - 09:50 am.

    I remind people however that the question ask’s us to identify those who “objectively” support these “wasteful perversions of government”. These supporters are hardly objective.

    We are governed subjectively, not objectively. That is, decisions are made by people, not objects. I don’t know that there is any way around this.

    I do believe money corrupts in politics, but this is a battle people on my side of things have definitively lost. The Supreme Court who has the last word on the subject has ruled otherwise. That being the case, people like me have to live in the world that is, not in the world we would like it to be. And really, in no world do I know of, will a DFL legislator sitting in his office, be unresponsive to a union guy who comes in and says, “My guys need this project to put food on the table.” That’s just political reality.

    • Submitted by Paul Udstrand on 04/23/2015 - 08:26 am.

      Not to keep bickering but…

      I think it’s obvious that we’re not playing a word game here. Maybe this another example of “game” mentality leaking into the discourse but “objectivism” here isn’t a reference to an imaginary robot world, it’a a reference to objective (i.e. fact and evidence based) reasoning. People (i.e. subjects) are not only capable of objective reasoning, they actually invented it.

      Now it’s true that stadium supporters always lose the objective argument but win the vote, but that doesn’t mean that rational public policy is impossible or that it makes sense to argue in favor of irrational public policy.

      As far as construction jobs are concerned, we’ve been through this before as well. Stadiums are the worse job programs you can imagine. Beyond the project managers they create almost no full time jobs. The Vikings stadium will only the equivalent of around 600 full time jobs (FTE’s). That works out to around a million dollar per job. By contrast good job programs create jobs for around $35,000 per job. It would literally be cheaper and better economically to just give 2,000 construction workers $150,000 a piece. That would be the equivalent of creating 2,000 $75,000 a year jobs for two years.

      And again, when it’s all done you have a structure that sits there empty most of the time. By contrast for $500 million we could be building two or three Light Rail lines or street car lines simultaneously instead of picking away at them one at a time. Transit infrastructure and it’s attending development creates construct jobs for years to come at a much lower cost than a stadium, AND unlike stadiums they actually grow the local economy in a variety of ways and promote exponential public welfare and benefits.

      But someone like Hiram will point out that multiple simultaneous transit lines aren’t politically feasible, and he’s right. But that just pushes us back a different question: “Why are stadiums for billionaires more politically ‘feasible’ than public infrastructure?” The answer of course is that we have corrupted system that sometimes services the wealthy instead of the citizenry, or worse, at the expense of the citizenry.

      Maybe some people are OK with the status quo that builds stadiums instead of infrastructure, others are not OK with that. Believe it or not we do actually live in a democracy, and we don’t have to live with irrational public policies. It’s not easy to change the status quo but everyone from Suffragette’s to civil rights workers have done it. You just have to stop pretending that the way things are is the only way things can be.

  33. Submitted by Hiram Foster on 04/24/2015 - 08:09 am.

    Alternative expenditures

    When we talk about any use of money, it’s pretty much always the case that someone can say that money can be spent more effectively somewhere else. Maybe it can, but that alternative expenditure isn’t on the table, and if it were, somebody else would still be arguing that there is even a better use for the money.

    From a labor point of view, the stadiums are the deals on the table, the ones with the possibility of actually getting built. From their perspective, it’s a choice between half a loaf and no loaf at all. But what kind of track record to the people who say that have of actually delivering those jobs? How many construction jobs has the average UofM economist delivered?

    • Submitted by Paul Udstrand on 04/24/2015 - 09:00 am.

      We’re agreeing, but…

      “Maybe it can, but that alternative expenditure isn’t on the table, and if it were, somebody else would still be arguing that there is even a better use for the money.”

      Yes, but as I said, the reason stadiums for billionaires on “on the table” instead of more productive programs is a corrupted system. We can all see that that’s the way it “is”, that’s a mundane observation pretending to be special insight. Unions would support ANY construction spending, the initiative for stadiums doesn’t emerge from the unions.

      The problem with Hiram’s arguments is that they sustain a dysfunctional status quo.

      While stadium deals haven’t exactly been financial catastrophes, the bills are piling up. Historically stadiums and arena’s ding MPLS more than the county or the state, and Rybak super duper doubled down on sports spending bringing it up to around $700 million without ever really explaining where that money was going to come from. If I remember correctly this is all going to cost MPLS around $20 million a year, up from $2 or $3 million there were spending on the dome and the Timber Wolves arena. This at time when almost every city department is already short on cash.

      MPLS may actually have a problem. Historically they’ve shifted the tax burden onto home owners and consumers paying a sales tax of some kind or another but that’s not so easy to do anymore, especially when you’ve been promising people tax cuts because of all the “growth” all this sports is supposed to bring the city. I think Hodges is looking at the sports reality for MPLS when turns down tax subsidies for yet another stadium.

      • Submitted by Hiram Foster on 04/24/2015 - 11:35 am.

        Yes, but as I said, the reason stadiums for billionaires on “on the table” instead of more productive programs is a corrupted system

        Well, if you want a more honest system, don’t elect Republican presidents who nominate Republican Supreme Court justices. And elect Democratic houses of representatives and veto proof Democratic senates. And hope that once in power, the Democrats don’t break their promises. But meanwhile, we seem to be nominating a Democratic candidate who has reaped millions of dollars from the world’s really awful people and nobody seems to care. Meanwhile we have construction workers who need work, not when the millenium arrives, but right now. And who, if he doesn’t get that job, is certainly going to vote for the other party which is perfectly ok with the corruption of money in politics.

        • Submitted by Paul Udstrand on 04/24/2015 - 04:27 pm.

          Well…

          Le’s not forget… we’re not ALL construction workers. And yes, in democracies people get the government they deserve when they elect poorly. I care… and know another guy and woman who care. But nobody listens to me.

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