Vikings Stadium Wins Approval!

So, today the Minnesota Senate passed the Vikings Stadium bill, a mere 12 hours after the House passed the same bill, which means it is now on it’s way to being signed by Governor Mark Dayton and officially made into law.  The Bill then has to be voted on by the Minneapolis City Council, but a majority of the councilpersons have already written letters of support of the bill, so that is seen as a formality.  Once that happens, construction can begin on the stadium, which is scheduled to open in 2016.

So, here are some of the promotional photos that the Vikings released months ago for a new stadium.  No official plans have been drawn up yet, so they are *very* early, conceptual images, but they are pretty cool non-the-less, especially if you’ve ever been inside the Metrodome, which, by-the-way, was voted by Time magazine as the worst stadium in the United States.

Now, I’ve spent a lot of time researching the specifics of the stadium bill, and watched most of the floor debates in both chambers of the Minnesota legislature, so I feel like I have a pretty good handle of the issues at hand and a clear understanding of the economic and cultural impact of the stadium (maybe even more than some of the politicians that actually, you know, voted on the damn thing).  In the end, the final price tag for the new stadium is $975 Million.  Zygi Wilf, owner of the Vikings has agreed to pay $477 Million of the construction of the stadium (almost 49%) and will also pay $13 Million/year in operating expenses during what will be a 30-year lease.  The Wilfs will get help from the NFL in the form of a $200 Million loan for their initial $477 Million.  This is the 3rd largest private share for a stadium in NFL history, and the Twin Cities are only the 12th largest market in the NFL.  It is also less expensive than the two most recently build NFL Stadiums (MetLife Stadium in NY, built in 2010 for $1.6 Billion and the Cowboys Stadium, built in 2009 for $1.3 Billion).

On the flipside, Minnesotans will pay for the remaining costs of the stadium.  The City of Minneapolis will pay $150 Million and the state pays $348 Million.  the City of Minneapolis will also pay $7.5 Million per year in operating costs.  The funding source for the State share will not come from any increase in taxes, or from the general fund.  Instead it will come from increased gambling revenue through the creation of electronic “pull-tabs” and “tip-board” games.  The City of Minneapolis funding source also comes from no new taxes, and they will instead re-purpose existing sales taxes that support the Convention Center to support the new stadium, and they will also be able to use that money to renovate Target Center (home of the NBA Timberwolves).  So, Minnesotans will not be paying anything more in taxes than they currently do, besides those people that choose to participate in the expanded gambling.

There were a lot of anti-stadium politicians spouting their rhetoric during the debates, and I ran across plenty of anti-stadium opinions in the comments of various articles and blog sites that I have read over the past few months.  I’m going to take a second to address most of the major arguments against public subsidy of stadium building here to hopefully show how ludicrous the arguments were.

Anti-Stadium Theme #1: “Wilfare” and the $77/ticket subsidy

As clever as that popular twitter hashtag became, it’s rooted in ignorance.  While I can certainly appreciate the idea of not wanting to publicly subsidize a very profitable $Billion private business in the form of building a stadium, and yes, there have been NFL stadiums built with entirely private dollars in the recent past in New York City and Boston, there are basic economic principles at play here.  First, is the law of supply and demand.  The supply of NFL teams is small when compared to the demand of major cities that want a franchise.  Los Angeles, San Antonio, Portland, Vancouver and even London are all cities that have attempted to secure an NFL franchise in the past, and none of them currently have an NFL team.  Any NFL team is free to move, and when a team has a lease expire, and no willing partner to help build a stadium, they will seek out whatever city is willing to give them the best deal.  Just ask the Baltimore Colts, the Los Angeles Rams or even other sports; Minnesota’s own Lakers and North Stars (oops, they’re not in Minnesota anymore).

Teams are free to shop the market, because cities compete with each other for entertainment.  The fact of the matter is, other cities ARE willing to subsidize NFL teams.  So, you can disagree with the premise to your hearts content, but then you also have to be willing to let the Minnesota Vikings move out of Minnesota.  Many politicians spoke at length about their love of the Vikings and support of building a stadium, but just without any public subsidy.  Such a response is essentially trying to have it both ways, and is not a valid position to hold on this issue.  If you’re against public subsidy, then you must also be for the possibility of not having an NFL team.  That would be a position I could respect, but I saw very little of it in the debate.

Second, is the idea that the Twin Cities could have come up with $975 Million through purely (or even mostly) private funds.  While it is true that some NFL franchises have come up with private money all on their own, those franchises also reside in the most populous regions in the US: New York City and Boston.  The level of private business and capital available in those markets far outweighs what is available in the comparatively small Twin Cities.  Outside of UnitedHealth, Target, Best Buy and maybe 3M, who else is going to help fund a stadium?  It’s worth mentioning that only one of those Minnesota companies had over $100 Billion in revenue last year.  Compare that to New York City alone, whose top 4 businesses all topped $100 Billion in revenue last year, or all of Massachusetts whose top 29 businesses topped $100 Billion in revenue in 2010.  Minnesota just doesn’t have that kind of private capital available, and while Wilf is rich, he’s *only* a $1 Billionaire.  He’s not going to spend every dime he has to build the stadium, and no one with any business sense would expect him to.

Lastly, Senator John Marty was an ardent stadium opponent and liked to throw around a figure that claimed taxpayers were subsidizing the stadium to the tune of $77/Vikings ticket (it’s simple math!  Just multiply the number of 65,000 seats in the stadium by 10 games by 30 years, then divide that number by the total cost to taxpayers).  This claim is disingenuous at best, and an outright lie at worst.  If the stadium was only going to be used for Viking’s games, then he’d have a point.  But, it’s not.  It’s being called “The People’s Stadium” for a reason.  The Vikings will occupy the stadium for 10 days out of the year, and then the remaining 355 days of the year it will be used for whatever Minnesotans (or the Sports Council) want, including high school football and soccer, conventions, trade shows, monster truck rallies, concerts, etc.  Since they will be tearing down the Metrodome, all of those 300 events per year they host will happen in the new stadium instead, not to mention things like Major League Soccer that are planned for the new stadium.  So, if you want to do the math correctly on that, you better calculate every event that will ever take place in there, and then divide that by the share taxpayers are being ask to put up.  That would be a more honest estimate of the subsidy, but unfortunately, nobody has made that calculation, because it’s nearly impossible to make.

Theme #2: Anti-Gambling Lobby, or, Gambling is bad for your health.

The main source of public revenue comes from increased gambling.  But, this one is almost as bad as the token political cry of, “Won’t someone PLEASE think of the children!?!?!“.  Look, I understand that gambling can become addictive, and people certainly have a right to be concerned about that.  But there are a lot of things in life that are addictive.  A person makes a choice to gamble, drink, take drugs, whatever, and they have to live with that choice.  People should have the freedom to participate in legal activities, even riskier ones that have the potential to lead to addiction for some people.  But, that doesn’t mean it should be outlawed completely, or be off the table for funding options at the government level.  Let’s not forget that gambling addiction is not widespread, because it only affects about 2-5% of people who gamble.  Considering then, that about 80% of people in the US have gambled, then at best, 4.2 million people of the 5.3 million people in the state of Minnesota could be considered to be a gambler, which means this would potentially impact, at most, a few hundred thousand people.   But then again, how many of them would play an electronic pull-tab or tipboard game?  While helping people with gambling addictions is certainly a noble thing, and I applaud those out there helping addicts, I don’t think this particular form of expanded gambling should be enough of a worry to completely derail the funding mechanism.

Theme #3: Public Subsidy of Building Stadiums Isn’t Profitable for Governments.

I will preface by saying any financial information given one way or the other on the economic viability of stadium building, is merely an estimate.  Like any investment, there is no way to know for sure what kind of return will be generated.  But, building stadiums is not something new, and if it weren’t profitable, governments would have stopped helping build them a long time ago.  I mean, we’ve only been doing it for what, just under 2,000 years?

According to CSL International (consulting firm for the Minneapolis Sports Facilities Commission), and this year-old article from the Minn-post, the Vikings alone would be responsible for about $1 Billion in tax revenues for the state of Minnesota over the 30-year life of the stadium (thanks to vikings players, visiting players, and vikings staff income taxes, and taxes within the new stadium itself including liquor taxes, etc).  If you extend it past the 30-year lease, the revenues grow beyond that.  Obviously this is just an estimate, but it can’t be too far off.  When you combine the city and state share of the initial costs, plus the ongoing operating costs  for the city, taxpayers are on the hook for about $723 Million over 30 years.  Do the math there, and you’re looking at estimated profit for taxpayers of $277 Million over 30 years (or an average of $9 Million per year) from just the Vikings.  I don’t know if that $1 Billion is accurate, and neither does anyone else.  But if it is, that’s a pretty good deal for Minnesotans.  And if it isn’t, then surely the new tax revenue that would come from an MLS franchise that is planned for the new stadium could help cover any of the revenue shortfalls from Vikings games.  There is also the prospect of hosting a Super Bowl, NCAA Bowl Games and March Madness tournaments, all of which would have been virtually impossible in the aging Metrodome.  And again, that’s to say nothing of the tax revenue generated from all of the other 300 events per year that already happen in the current Metrodome.

At the end of the day, I’m glad that the Minnesota Legislature did what was necessary to keep the Vikings in the state of Minnesota.  They helped preserve a 51-year legacy.  I applaud Zygi Wilf for his patience in dealing with the politicians, and Lester Bagley for navigating the bill through all the nonsense spouted from the  politicians.  I also want to thank any legislator that voted in support for the bill, especially Morrie Lanning and Julie Rosen, chief authors of the bill in the house and senate.  Whatever your thoughts about sports and the NFL, the rich history and tradition of the Vikings means something to a lot of fans, and I for one am glad see this tradition will continue in Minnesota (at least for the next 30 years).

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