The Ghost of Stadiums Past
With both the Minnesota House and Senate passing bills to fund a new billion dollar Vikings stadium it is reminiscent of the debate over the Twins ballpark. As that great philosopher Yogi Berra stated: “It’s deja vu all over again.”
It starts with the poor team owner pleading that their team can’t continue to be competitive unless they have a new stadium. The competition with other teams that have newer and better stadiums has rendered their venue obsolete. The owners make endless statements about the lack of revenue from the outdated and worn out facility where they currently play.
As the owners are building their case for a new modern facility, they refuse to give any financial records to lawmakers. The owners only produce general information about stadium revenues, claiming “it’s not enough” to be competitive. While the debate in the legislature drags on, multi-million dollar player contracts are signed, television broadcast revenues skyrocket and team value escalates exponentially. With no factual financial information publicly available, the billionaire owners continue to demand hundreds of millions of dollars in taxpayer funding to build a new sports palace for their millionaire players.
In the face of opposition from lawmakers the team owners hire dozens of lobbyists and mount a multi-million dollar public relations campaign. Their public relations efforts include everything from publishing their charitable contributions, to the taxes paid by out of state players and part time beer vendors. The public relations campaign also includes one other key message; if the team doesn’t get a new facility, they will move to another city where the “financial grass” is greener. To be clear, the owner of the team doesn’t make any statements about moving the team, but a carefully orchestrated campaign about a possible team move is played out in the media.
Next, season ticket holders, businesses and fans are whipped into a frenzy about the team packing up and leaving town. Legislators are bombarded with e-mails, phone calls and fan rallies to pressure them into doling out hundreds of millions in tax dollars only to enrich the owner of the team. With constituents panicked that their local sports team will leave town, dozens of lobbyists hounding them day and night, a constant media blitz, combined with a multi-million dollar advertising campaign, legislators capitulate to the public pressure and vote for hundreds of millions of dollars in taxpayers’ subsidies.
So what happens after lawmakers buckle to the public pressure to fund a new stadium?
A public authority which is appointed to be team friendly allows the owner to build a sports palace to the team’s liking. The multi-million dollar taxpayer funded facility has every amenity the team wants. In the first few years fans flock to the new stadium. Little do they realize they pay 10 to 20 percent more to gain entrance to the ballpark they helped build. Once inside, they pay more for a hot dog, a beer and a team jersey, just part of helping the owner make more money.
The predictable strategy to extort the fan and taxpayers, either broadly or targeted, is complete. In addition to the government subsidy, fans pay more for tickets, more for food and drinks and they pay more for products advertised or sold at the stadium. Taxpayers and fans pay more, so that the owners can pocket more.
In 2006 when the state legislature passed and the Hennepin County Board approved a financing package for a new Twins ballpark, the agreement provided $325 million in taxpayer funding for a new $520 million facility. The taxpayer portion of the funding would be provided by a sales tax increase of 3/8’s percent only in Hennepin County. Shortly after this funding package was approved by the Hennepin County Board, the Twins owner Carl Pohlad’s net worth was estimated to have increased by $200 hundred million dollars. Two-thirds of the taxpayer’s subsidy was in essence pocketed by the Twin’s owner. The end result of the “stadium deal” was the team owner got richer and the fans got poorer.
Just three years after the new Twins’ ballpark opened attendance is dropping and the Twins have the worst record in baseball. The explanation the Twins’ owners gave to legislators for the need of taxpayer funding of a new stadium was to keep the team competitive. The owners stated time and time again that without a new taxpayer funded ballpark they could not put a competitive team on the field. With the taxpayers making the bond payments on the ballpark for the next 27 years it will be interesting to see if the Twins will return to the World Series during that time.
This year’s Viking stadium funding package is different than the Twins stadium funding. The Vikings funding package has State taxpayers assuming the risk for revenues if the electronic pull tabs fall short of hoped revenues. This uncertain funding scheme puts state taxpayers directly on the hook for making the bond payments. What is certain in this deal is that taxpayers and fans will pay more and the Wilf’s net worth will increase. It’s unfortunate that as the debate on the Viking stadium funding extended into the late night hours that no one noticed the ghost of stadiums past in the Capitol hallways.