Amid private talks with Minneapolis officials, Minnesota United takes case for soccer stadium public

MinnPost photo by Peter Callaghan
Minnesota United team president Nick Rogers and owner Bill McGuire shown during the March 2015 press conference announcing MLS awarding Minnesota its newest franchise.

The multipurpose room at the Powderhorn Park Community Center was about half filled for a panel discussion on the proposed stadium that would bring a Major League Soccer team to the Twin Cities.

All the attendees seemed to be fans — at least none denied their affection for the sport. But there was a dividing line that separated them. There were the supporters of the lower-level Minnesota United team that could advance to MLS, many of whom appear willing to support a public financial role in the stadium deal. And then there were fans and players affiliated with Left Wing TC, who like the idea of a top-level team but balk at any taxpayer help.

It wasn’t a debate exactly. Those who might identify with the Dark Clouds supporters group asked few questions and offered fewer opinions. They left that to Minnesota United President Nick Rogers.

Public push amid private talks

The event was sponsored by 9th Ward Minneapolis Council Member Alondra Cano, who had brought together Rogers; the deputy director of the city’s economic development, Chuck Lutz; and Emmanuel Ortiz, a founder of Left Wing TC, a local chapter of a national organization that describes itself on social media as a “leftist/progressive anti-imperialist” futbol club.

Cano said she gathered the group together to get information about the proposal and assess sentiments of the residents in her ward toward the proposal. But she expressed some frustration that there isn’t much for her to react to. Owners of the prospective team met with some members of the council beginning in late 2014 but not her. And she said the rumored terms from more recent meetings keep changing.

“What might have been happening on Monday wasn’t happening on Friday,” she said. The latest is that the Minnesota Legislature adjourned without taking any action on a soccer plan, which isn’t surprising since nothing was asked of it by team owners. The next day the Star Tribune reported that private talks between some council members — led by Council Member Jacob Frey — were coming up with ideas to broker an agreement.

The ownership group led by former United HealthCare CEO Bill McGuire has said it will pay the $100 million franchise fee to MLS, purchase land in the Minneapolis Farmers Market area for about $30 million and pay for construction of a $120 million soccer-specific stadium there. It is asking for no direct taxpayer contributions for stadium construction, unlike all other pro sports venues in the metro. The owners, however, want two tax breaks that have been awarded to other pro stadium projects — forgiveness of sales tax on construction and an ongoing exemption from property taxes.

The tax break request prompted the divide between those in the room Tuesday evening.  “Like many of you I’m a lifelong, passionate fan of soccer, both as a spectator sport and as a player,” said Ortiz, co-founder of Left Wing Twin Cities. “If there are two things that people in this country, in this world, can be passionate about it’s soccer and taxes.”

City Council Member Alondra Cano

Courtesy of Alondra Cano
City Council Member Alondra Cano

Despite being a fan who described himself as being excited by the franchise announcement, Ortiz said he couldn’t endorse any level of tax breaks for wealthy team owners when Left Wing players as well as youth players can’t find adequate fields and facilities in town. “How can we provide corporate welfare, at the tune of 3 to 4 million dollars, as a show of support for soccer, when we can’t fund a soccer field in Powderhorn Park?” he asked.

The tax forgiveness rationale

It wasn’t really a question that Rogers could answer to the satisfaction of Ortiz or others who agreed with him. Rogers tried anyway. His group wasn’t asking for anything other team owners haven’t asked for and received. And the soccer group was asking for a lot less — since they’re paying the full cost of the stadium and the land.

“We don’t have any stadium in the state that is subject to property taxes,” Rogers said. (Those stadiums and arenas are exempt, however, because they are owned by public entities and authorities. As of now, the soccer owners would also own the stadium, though McGuire has said he is open to putting it under something like the Minnesota Ballpark Authority, which owns Target Field.)

The owners need the tax forgiveness to make the franchise at least break even, Rogers said. And if no stadium is built at the market site, then there is no additional property tax revenue to be collected anyway. Team owners have also accepted a suggestion from Frey to continue to pay the current property taxes collected on the warehouses and light manufacturing buildings now on the property. That way, the city and other governments who benefit won’t see a net loss in property tax money.

Minnesota United officials have also supported Frey’s suggestion that the area where an existing downtown liquor and restaurant sales tax is collected be expanded to cover the new stadium, something that would boost city revenues.

“We haven’t taken a hard-line approach,” Rogers said of the team’s proposal. “We’ve expressed an interest in talking.”

‘Is there a community that wants us?’

Rogers complimented council members like Frey who are open to conversations, but criticized Mayor Betsy Hodges for rejecting the concept of public help — or even the idea of a separate soccer stadium.

“When we sit down with policymakers and cut through the noise, most people are supportive,” Rogers said.

But Ortiz and some others in attendance weren’t buying the argument that because soccer is asking for much less than football, baseball, hockey or basketball, it is OK. “It was a high-jacking,” Ortiz said of those deals. “I don’t demonize Mr. McGuire or the owning group. I’m glad they’re bringing soccer to Minnesota.”

Yes, it is unfortunate that their request is coming at the end, after all the other sports owners have asked for received large subsidies, Ortiz said. “We’re not against soccer. What we’re against, at least what I’m against, is the tax breaks for the wealthy.”

Rogers acknowledged that the team has “clearly a very wealthy ownership group.” Without the annual property tax savings, however, the owners don’t think the team would break even. “Just because people are wealthy doesn’t mean they want to lose money forever. All our owners will stay a lot richer if they don’t do this.”

Toward the end of the nearly two-hour forum, Rogers said something that hasn’t been said by the ownership group, revealing frustration with the process so far. “Minneapolis might say to us, ‘We don’t want you here,’” Rogers said. “And we’ll have to assess our options and figure out where is there a community that wants us.”

No one reacted to what sounds like the types of threats made by other teams owners in the midst of stadium battles. Unlike those threats, however, the McGuire group has the rights to an MLS franchise in the Twin Cities only, not other cities lobbying for teams like Sacramento, St. Louis, San Antonio and Las Vegas.

Cano said she is interested in seeing if there is a way to make something happen and is hoping to find out what the soccer team brings to the community, perhaps ending in something she called a Community Benefits Agreement. She said she’d rather be part of the conversation than reject it out of hand as some on the council have done.

“I think we can figure out a way forward that is a win-win situation,” Cano said. “I’m of the pragmatic mind that you’re either on the table getting chopped up or you’re at the table figuring out how this deal is going to look.”

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Comments (34)

  1. Submitted by Hiram Foster on 05/26/2015 - 10:03 am.

    Noise

    They only perceive it as noise because they have made the decision not to listen to it.

  2. Submitted by Steve Titterud on 05/26/2015 - 10:04 am.

    Please provide us with our profits, dear taxpayer.

    So, if I follow the argument here, we must provide these owners with their profits, because they have chosen a business model that can’t make any money ??

    REALLY ??

    “a win-win situation” ? Sorry Ms. Cano, if you mean the public at large might be getting a win. Don’t get confused.

    In this latest form of public corruption – namely, handing out billions of public monies to the wealthy – the taxpayer is ALWAYS the loser, the owners and season-ticket holders are ALWAYS the winners.

    The only reason they even dare advance such insulting arguments is that the public doesn’t comprehend what a ROYAL SCREWING the taxpayer has gotten in these corrupt stadium deals. So why not sidle up to the public trough ??

    • Submitted by Dan Hintz on 05/26/2015 - 11:15 am.

      Screwing the taxpayer

      Unlike every other professional sports stadium in town, this stadium will not be built with public money. Hundreds of millions of dollars of taxpayer money were funneled away from other things, and given to the billionaire owners of the Twins and Vikings. The Wolves are now getting an infusion of public money to renovate the Target Center. In the case of Minnesota United, the cost to the taxpayer will be $0. Even the low-level minor league St. Paul Saints got tens of millions in direct subsidies. Minnesota United is asking for none.

      The site currently generates about $300,000 in property tax revenue now. As the article points out, Minnesota United will continue to pay that amount. So there is no net loss to the taxpayer at all. None. $0. The $3 or $4 million in tax revenue only occurs if the stadium is built. Without the stadium, Minneapolis doesn’t collect that money anyway. There is no screwing of the taxpayer whatsoever.

      Stadium opponents argue that this parcel of land, which has been underused for decades, would be redeveloped anyway and would generate more tax revenue. I think it far more likely that the stadium would generate growth (and tax revenue) in adjacent areas would create a bigger windfall than doing nothing. It would be a win-win for the taxpayers and the team.

      Getting a property tax break puts the team on the same level as every other team in town, as well as numerous other properties (the Walker, Guthrie, etc.). Actually, the $300,000 would be more than anyone else is paying.

      Ms. Cano is not only right, but unlike the Mayor, is showing some real leadership.

  3. Submitted by Alan Muller on 05/26/2015 - 11:05 am.

    I’m outraged…..

    At the idea of any more public subsidies for sports stadia. Enough is enough!

  4. Submitted by Bill Kahn on 05/26/2015 - 11:57 am.

    This group should get no more or no less help from Minneapolis than any other business can.

    If they want millions in tax breaks or any other form of public funding of their enterprise, I believe we get to vote on it over a certain amount, right? I vote we don’t give up any of the dwindling city revenues.

    If they want to screw us like the Vikes did, they better hit up those planning that special session of the state Legislature to see if they will help MLS screw us for them like they did for the NFL.

    • Submitted by Dan Hintz on 05/26/2015 - 12:53 pm.

      OK

      This group is asking for LESS help than most other businesses, and far less help than any other professional sports team in town. They are not trying to screw us like the Vikes did – the Vikes got hundreds of millions of dollars in public money handed over to them, while this group is asking for zero.

      The proposed property tax break does not give up ANY of the dwindling revenues. The $300,000 generated now will continue to be generated. The revenue that will be lost would not be generated in the first place without the stadium. There would be nothing to vote on because there is no cost.

      Let’s do it like this:

      Property tax revenue from site with no stadium: $300,000

      Property tax revenue with stadium and tax break: $300,000

      Public contribution to stadium construction: $0

      In comparison:

      Property tax revenue from new Vikings Stadium: $0

      Public contribution to Vikings stadium construction: $498,000,000

      Property tax revenue from Target Field (Twins): $0

      Public contribution to Target Field construction: $392,000,000

      Property tax revenue from Target Center (Timberwolves) $0

      Public contribution to Target Center renovation: $129,000,000

      That’s over a billion dollars in tax money given to owners that are already billionaires, for stadiums that do not generate any property tax revenue. Minnesota United are asking for no money and a tax break of $3 to $4 million a year on money that would not otherwise be generated, while still generating more in property tax revenue than these other teams combined.

      I understand the frustration with subsidies, but the details are important.

      • Submitted by Steve Titterud on 05/26/2015 - 01:21 pm.

        Here’s another few details of importance.

        1. The $300,000 in current taxes on that property will – under virtually any other reasonable prospective scenario of development – increase and grow over those 30 years or so of agreement – or would it in fact be longer?

        This proposal (correct me if I’m wrong here) would FREEZE those taxes in place, so the local taxpayers would never enjoy an increasing benefit of taxation as the base grew in new development.

        2. It seems you have accepted Rogers’ thesis that “…if no stadium is built at the market site, then there is no additional property tax revenue to be collected anyway.”

        This theory, which you have re-expressed as “money that would not otherwise be generated” assumes nothing else would happen to that property – that without Minnesota United, it is a dead property in terms of business/property development. If that were true, Rogers’ and your point is well taken. If untrue, this argument is fallacy.

        3. And for what economic BENEFIT ??

        “Frey’s suggestion that the area where an existing downtown liquor and restaurant sales tax is collected be expanded to cover the new stadium, something that would boost city revenues.”

        Well, guess what ? That same expansion applied to OTHER types of development in the area would ALSO “boost city revenues”. So this argument, offered as uniquely in favor of this latest stadium proposal, is NOT unique – another fallacy.

        IN SUMMARY, we should remain open-minded. I’m listening closely for some arguments in favor of public subsidy that hold water.

        So far, we’re hearing only fallacies and misrepresentations.

        • Submitted by Dan Hintz on 05/26/2015 - 03:18 pm.

          ok

          We can only speculate as to whether or not that property will be redeveloped. It has been in its current state (not dead property, but low revenue generating) and there are no other plans in the works to develop it. Is the idea that it might get redeveloped and generate more revenue in the future a basis to oppose this? I don’t.

          As far as the $300,000, the article just indicates its a concession the team is willing to accept – there aren’t any details or a concrete proposal. I doubt it would be a problem to adjust that figure based on what would be generated but for the stadium.

          As far as other revenue (ie sales tax) its again pure speculation that an alternative development would generate that. If it doesn’t get redeveloped, there will be a loss of that revenue by rejecting the stadium. There will also be a property tax loss from adjacent development that will not occur. Again, its speculation, but it may be that taxpayers may get screwed by not building the stadium.

          The choice is between a stadium that will cost taxpayers nothing now and maybe nothing later vs. the possibility that someone else will come in an redevelop land that has been doing very little for decades.

    • Submitted by Steve Titterud on 05/26/2015 - 01:39 pm.

      “I believe we get to vote on it over a certain amount, right?”

      Not when the legal language’s chicanery – developed and designed specifically to do an end-run around the relevant City’s Charter provision – is allowed to go forward by the very public officials who are supposed to uphold and defend that Charter.

      The Charter language about a plebescite is a paper tiget – no match for a well-paid team of legal experts intent on de-fanging it.

    • Submitted by Brian Scott on 05/26/2015 - 01:53 pm.

      I am under the impression what they are asking for would not be voted on by the city of Mpls.

      • Submitted by Bill Kahn on 05/26/2015 - 05:49 pm.

        Wrong impression, Mr. Scott. It would have to be voted on by the Minneapolis City Council and then the the voters of Minneapolis:

        “Professional sports facility. Neither the City, nor any board, commission, committee, or department, nor any governmental body whose territorial jurisdiction is coextensive with or falls wholly within the City, may finance any professional sports facility in an amount greater than $10 million unless the voters in an otherwise scheduled election (and not an election held only for that purpose) so authorize. For this section 9.4(e)’s purposes, “finance” includes applying existing realty, infrastructure, overhead, or other resources, and FORGOING TAXES OR ANY OTHER REVENUE, as well as spending money directly, issuing bonds, or otherwise incurring debt.” emphasis mine

        The only way around this charter provision is through the MN Legislature (the charter provision is not a paper tiger, Mr. Titterud, just one that can be caged by the Legislature as they did for the Vikings; other than repeal by the voters, there is no way to get rid of it unless the Leg strikes the whole thing out).

        Now one can say locking in taxes @ $300K per year is not forgoing taxes or any other revenue, but the property is valuable for any sort of development and it is not reasonable to assume less revenue over the current $300K than $10 Million over the life of this stadium for any other development, i.e., the charter provision applies, period.

        The last cruddy deal should have been nixed and just because this one is not as cruddy does not mean that it should go through as well.

        • Submitted by Steve Titterud on 05/26/2015 - 08:37 pm.

          If the public opinion in Minneapolis is against this handout,

          …you can be sure this group will be working the Legislature for corrupt legislation, just “as they did for the Vikings.” And the City Council will go along with it, if that should succeed.

          I agree with you that ways can be found around this Charter provision. That’s why I’m calling it a paper tiger.

          Just ask the City Attorney of Minneapolis !! She was the one who intervened with the City Council late in the game to influence the voting on the Vikings’ stadium by reassuring them the proposition would succeed in circumventing this very Charter provision.

        • Submitted by Dan Hintz on 05/27/2015 - 10:07 am.

          Actually

          Mr. Scott’s impression is right and yours is wrong.

          To allow for the property tax break, the stadium will have to become (at least partially) publicly owned. The charter issue didn’t even come up with that part of the Vikings and Twins stadiums.

          Assuming there would be alternative development generating more than $10M in additional revenue is completely speculative. That position would never survive a legal challenge.

          Mr. Titterud is correct that the Charter law is a paper tiger and easily circumvented. Minneapolis voters will not be voting on this.

  5. Submitted by Mike Hogan on 05/26/2015 - 02:30 pm.

    Build something else

    Why is there this underlying assumption that the land either has to be a tax-free stadium or a vacant lot? There are many, many more options and I’m sure a lot of developers would love to get their hands on that property.

    • Submitted by Dan Hintz on 05/26/2015 - 04:51 pm.

      Assumption

      I think that “assumption” comes from the fact that the land has been underdeveloped (its not vacant) for decades and because there actually aren’t a lot (if actually any) developers who would love to get their hands on that land. Stadium opponents have been arguing that someday someone might come along and redevelop it.

      Its a choice between a concrete plan to revitalize the area and the possibility/hope that someone else will come along and do it without a tax break.

  6. Submitted by Rob Spence on 05/26/2015 - 06:51 pm.

    Build in St. Paul

    I’ve said it before on other forums and I’ll say it again here…
    Put it on top of the dumpy Sears property by the State Capitol.
    Make it happen Mayor Coleman!

  7. Submitted by Brad James on 05/27/2015 - 08:26 am.

    Why would McGuire pay $100 million for a team that will require tax forgiveness to break even?

    Has anyone in the media ever had the courage to investigate whether or not the $100 million “franchise fee” is not some sort of marketing line? People like the author and Jacob Frey use the franchise fee as some sort of justification for the stadium, even though it is paid voluntarily, and most importantly not verifiable.

    With news of the extradition of top FIFA officials to face criminal corruption charges in the US and Bill McGuire’s own checkered past I know Mayor Hodges is making the correct moves. It is best to proceed cautiously and not be swayed by an artificial timeline.

    MN United should be treated the same as the Twins and Vikings. In 1961 the upstart Vikings and transplanted Twins came to town they played in an upgraded suburban minor stadium and built a fanbase. After proving their viability the area saw fit to subsidize a stadium. Have MLS prove its worth in this market before donating potential revenue and city services.

    • Submitted by Dan Hintz on 05/27/2015 - 10:28 am.

      OK

      So you want Minnesota United to start out in a suburban minor stadium and build a fanbase? Do you mean like they have been doing in the upgraded minor stadium in Blaine the last three years?

      Minnesota United are playing the New York Cosmos this Saturday at 7:00 p.m. Why don’t you come on up and join 10,000 Minnesota soccer fans (and this goes for everyone here) before you decide on this.

      And for the record, the Twins and Vikings did not pay property taxes on their suburban minor league stadium. If you want the same rules for Minnesota United, they should get that property tax break too. Unlike the Twins and Vikings, Minnesota United isn’t asking the public to pay for the actual stadium.

      Finally, the media has investigated the $100 million. It’s a franchise fee, which is paid by any new team in a professional sport.

      http://www.businessofsoccer.com/2013/06/11/franchise-fees-in-mls-increasing-at-a-rate-of-18-since-inaugural-season/

  8. Submitted by Paul Udstrand on 05/27/2015 - 09:08 am.

    Strange mentality

    It’s funny, it’s almost like otherwise reasonable people just suspend their ability to think clearly when it comes to sports and stadiums.

    “And if no stadium is built at the market site, then there is no additional property tax revenue to be collected anyway. ”

    Well, that’s a good reason to build something, almost anything OTHER than a stadium on the site.

    Why has the site not been developed yet? Well, for one thing because for the last 40 years people have been talking about building stadiums there. My Uncle Zollie Green was talking about plans to build to build a new baseball stadium round-about the current Twins Stadium site 40 years ago when he was a MPLS Alderman. Remember those parking lot owners who held out selling the land for decades because they were waiting for the big pay day when a stadium would be built? Where do yo suppose they got THAT idea for 30 years? Why do you think the area was one of the possible locations for the Vikings stadium for a while? All of this just provides yet another example how the business of building these stadiums actually impedes economic development. How many acres of prime real estate are going to be cordoned off completely and sitting empty for months out of the year? These are dead zones with fancy lighting and expensive windows. Vacant lots would actually be better because they’d have potential.

    • Submitted by Steve Titterud on 05/27/2015 - 12:52 pm.

      “building…stadiums actually impedes economic development”

      No kidding !! These things are always characterized as fountainheads of collateral business and residential development – leading to an indescribable orgasm of bounty for the taxpayer – and of course, there’ll be “jobs, jobs, jobs” too !! There is no upper limit to the rhetorical excesses the proponents have applied, if they could be measured.

      This theory of bounteous economic development is a load of crap – always has been in the past, and will continue to be so, and for the obvious reasons that Paul points out here.

      You might think that people who rise to the level of representing the voters might be able to think clearly about this, but you’d be wrong. King Banian, an expert in this subject matter of the economic impact of sports stadiums, spoke rationally and eloquently against it in our Legislature. They LAUGHED at him !!

      I have a feeling Zollie Green would bring some blunt language to this discussion and point out the same dynamics that you do here. I don’t recall he had any trouble calling a spade a spade. Of course he had his troubles, too, but I would prefer straight talk to the spin-meistering we see in our public officials.

      It’s too late to undo the harm to the public interest by what’s already done. But it’s not too late to stop making the same mistake, over and over again.

      • Submitted by Paul Udstrand on 05/28/2015 - 12:01 pm.

        But Steve…

        ALL the other teams got a stadium. Surely you’re not suggesting the way to get out of hole is to stop digging? How unfair of you!

  9. Submitted by Bill Kahn on 05/27/2015 - 08:24 pm.

    The FIFA arrests suggest where the real money is in professional sports of all kinds and government typically cannot touch it.

    Maybe it is time for all to forget about welfare for those poor, poor folks in professional sports. No more wink and a nod to gambling on professional sports. Get it all out in the open.

    Let them make all the potential money they can and get government’s cut in reasonable taxes and regulatory fees on it all.

    No free anything. Money is being made hand over fist and they don’t need any tax breaks or other help from us.

  10. Submitted by Paul Udstrand on 05/28/2015 - 12:11 pm.

    Anyways, about the money

    The professional sports business model in the US requires publicly subsidized stadiums and arena’s. Owner’s can make any claims they want about profit and revenue because they’re never required to open their books. How much money is McGuire making? Who knows and he doesn’t have to tell us. It’s unlikely that he bought a team as a money loser but one thing we know is that a team with a stadium is worth way way way more than a team with no stadium. We can trust that McGure ran the numbers but he doesn’t have to share his number with us. More than likely a stadium is part of the business plan that will turn a profit. It’s unlikely he wants to build a stadium at his own expense just to break even.

    At any rate, I don’t actually care, it’s not my problem and I can’t think of any good reason that any taxpayer anywhere should consider this to be their problem. This is business that’s not even going to create any jobs, and a building that’s going to sit there empty taking up acres of prime downtown space for most of the year. If the guy wants to buy the land and build a stadium we can’t stop him, but there’s not reason to chip in. If anything we should require that he set up a trust account so that if his team fails the city doesn’t get stuck with a useless empty stadium that costs millions to tear down so something useful can be built there.

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