Paul C. Udstrand wrote up an excellent history of Minnesota sports stadium welfare debacles at Twin Cities Indymedia last month. I’ve pulled a couple highlights below, but the whole thing is worth reading by anyone seriously considering funding yet another professional sports stadium welfare program in the State of Minnesota.
The Xcel Energy Center’s failure to pay what was promised:
The arena was built with two $65 million dollar loans, one from the state of MN and the other from the city of Saint Paul. The state loan was an interest free loan to the team that the NHL is helping to pay off, and the City loan was raised via bond sales that are supposed to be paid off by rental payments from the team. In calculating the costs of the state portion McGladrey seems to assume that since it was an interest free loan, it cost the state nothing to issue it. This is an odd assumption to make. That money came from somewhere, and even if the state didn’t borrow it or issues bonds for it, it was money that was not available for other expenses. Even if that money is paid back (which is doubtful since $17 million of that loan has already been forgiven, and the team is now asking for the remaining $39 million to be forgiven) it represents a $65 million hole in the budget at the time of the loan, that’s money somebody somewhere else could have used.
The Minnesota Timberwolves dumped the Target Center arena on tax payers for $50 million less than it was worth at the time.
They play at the Target Center arena that cost $104 million dollars to build. Originally the team owned the arena and paid $83 million for the construction while the city of Minneapolis made up the difference with $20 million of financing. However by 1995 the team was losing so much money on the arena they wanted to unload it, at that point the city jumped in bought the arena. Although the stadium was only valued at $35 million dollar by then, the city paid $84 million dollars to take over the arena. Since 1995 the Target Center has continued to lose $1-$2 million a year [of taxpayer’s money]. In 2004 the Target Center underwent a major renovation but I don’t know how much that cost or how it was paid for, whatever it was, it wasn’t enough because the Mayor of Minneapolis now wants another $155 million, more than the original cost of the arena, for more renovations.
The Twins haven’t come back to the government for a fresh handout yet. However, we haven’t even reached the All-Star Break in their second season in their new stadium, so give them a bit more time. That said, due to the poor performance of the team, people are now donating their tickets to Tix for Tots rather than going themselves. If the trend continues, those tickets won’t be purchased in the first place, leading to another bail out of another stadium by another professional sports franchise.
By the way, guess what people get when they donate their tickets? You guessed it: A tax deduction. You can be sure that people are taking the deduction based on the face value of the tickets (when they were more optimistic about the Twins season) rather than what ticket holders value their tickets at today.