Why public funding for a Vikings stadium doesn't make sense
By John Marty
Sen. John Marty, DFL-Roseville, is serving his eighth term in the Minnesota Legislature. This commentary is adapted from an open letter he sent to his colleagues late last week.
I recognize that many legislators have strong positions on the Vikings stadium issue and many have been tracking the issue closely. However, there are a number of misconceptions about parts of the issue, and many unexamined assumptions that deserve an airing. Before we give $700 million to Zygi Wilf for a new stadium, here is some information that I hope you will consider.
Size of the subsidy
To put this proposal into terms to which we can relate, as it passed out of the Senate Finance Committee this week, the legislation would provide public money in an amount equivalent to a $77.30 per ticket subsidy for each of the 65,000 seats at every Vikings home game. That's $77 in taxpayer funds for each ticket, at every game, including preseason ones, for the next 30 years.
That's a lot of money. Especially when many Minnesotans are struggling to make ends meet. This calculation is based on 65,000 seats in the new stadium, with 10 games per season (if you don't count preseason games, the subsidy is more than $96 in taxpayer funds per ticket), for 30 years. It counts the payments for the state and city share of debt service on the bonds, and the state payments for operating expense and for the capital reserve. The real number would actually be significantly higher, because this calculation does not include the value of the property tax exemption on the stadium and the parking ramps (this subsidy is worth at least $15 million to $20 million per year more, year after year) or the value of the sales tax exemption on stadium construction materials (if it is included in the final legislation).
Putting unemployed construction workers back to work
Minnesota has a high unemployment rate, particularly among construction workers. At the same time, investments in Minnesota's public infrastructure have been falling behind the need, and the state has a large backlog of unmet maintenance and repair of existing facilities, including public housing for seniors and low income Minnesotans, and at our schools and public higher education institutions.
Public funds can create construction jobs, but those projects should serve a public purpose, constructing public facilities, not subsidizing private business investors. The need to employ construction workers is not an excuse to subsidize wealthy business owners, especially when there is such great need for public infrastructure work.
While the Vikings stadium would create construction jobs, the stadium proponents significantly overstate the number. Tom Goldstein points out that the number of construction-work hours for the stadium provided by Mortenson is equivalent to about 700 full-time jobs over the three-year construction period. Because the Mortenson numbers estimate that 7,500 workers would be at work at various times on the project, some proponents have translated that to be 7,500 full-time jobs over the three-year period. Seven hundred jobs are significant, but far short of 7,500.
Minnesota would create far more building-trades jobs by using public dollars to fix our public infrastructure.
Threat of moving
Several years ago, Federal Reserve Bank economist Art Rolnick said: "The leagues of all major sports blatantly aid and abet team owners in extorting public funds for new facilities under the threat of moving...." The Vikings stadium issue is illustrating once again the truth of that statement.
To Zygi Wilf's credit, back in 2006, he promised to keep the team in Minnesota forever: "From Day One... I have promised that I would keep the team here in Minnesota forever..." When asked whether he planned to keep the team in Minnesota , whether we had a new stadium or not, he replied, "Yes, I've stated that from Day One.... all I can tell you is this, that I live by my commitment."
The only reason for this debate over a public subsidy is that many politicians think that Wilf will break his promise and move the team, or sell it.
Both of the stadium financing proposals in Los Angeles are privately funded, without taxpayer money. Under one proposal, the investors would give the land to the team and the team owner would build a stadium without public money. Under the other, investors would build the stadium for the owner. Both L.A. proposals use revenues generated by the stadium to pay for the stadium, and the team owner gets the left-over revenue after paying for the stadium.
In other words, if the L.A. threat were serious, Wilf would have to break his promise, the league a relocation fee and still pay for his own stadium, in a community without a loyal fan base. If Minnesota refuses to force taxpayers to subsidize a new stadium, he would be better off keeping his fan base and privately financing a new stadium here.
Zygi Wilf and his partners bought the Vikings in 2005 for $600 million. They have seen the value of their investment climb to $796 million, according to Forbes magazine — a capital gain of almost $200 million, despite the recession. In addition, they have had significant operating profits in all but one of the years they have owned the team.
Many Minnesotans have seen their homes and other investments lose value in recent years. Our constituents would love to have the kind of earnings that the Vikings have had.
Why are we doing this?
Back in January, Ted Mondale said: "The whole reason we're doing this is so the team can make money. What we want is a financially viable franchise for the next 30 or 40 years."
Yes, that's the reason we are doing this: so Wilf and his business partners can make boatloads of money. Their investment in the Vikings has only made $200 million in capital gains for the team, plus operating profits in all but one year they have owned it, plus a forthcoming increase in NFL national media revenue that is worth an average of more than $80 million per year per team. That is not enough. Mondale knows that.
It's nice that he was bluntly honest about it.