Is it “Rediculous” [sic] to Call $600 Million in Public Welfare for the Vikings “Welfare”?

Bleacher View from “Bleacher View – Voyageur Country” penned a post on his/her blog yesterday regarding whether it’s appropriate to call $600 million in public subsidies to a private company welfare. The article, “Stadium Financing….Welfare? A Rediculous Assertion” [sic] breaks it down:

Some stadium opponents have a singular focus in their opposition to public support of a new Vikings Stadium. They assert that it is corporate welfare. This is an outdated, narrow minded, short sighted and pathetic argument, yet they have nothing else.

Actually, no. It’s not just that it’s corporate welfare. It’s the amount of corporate welfare. And, it’s the amount of corporate welfare being asked for in a time when the state can least afford it. And, it’s corporate welfare that, long term, simply shifts jobs 10 miles rather than creating new jobs. And, it’s corporate welfare that subsidizes the move of a company away from major highways and transit routes. And, it’s corporate welfare being offered to a company that’s part of the most profitable sports league in the United States. Move on:

First of all, what is welfare? It is a government entity GIVING money to an individual or family in need. For the purpose of this argument we’ll STRETCH it to include corporations in order to look deeper into this argument.

That’s a good point. Welfare, in a traditional sense, is a government entity giving money (or services) to individuals or families in need. Zygi Wilf, on the other hand, represents a corporate that’s not in need of public money, but is in want of public money. If we give money to people with nothing, they have the ability to eat, find safe shelter, and look for a job. If we give money to Zygi Wilf, we contribute to making one of the richest people in America wealthier.

The Vikings are contributing over 38.5% of the total cost of the project, the 3rd highest total of any NFL team.

This is true, if you ignore well documented facts. For that to be true, I would not be able to find more than two NFL teams that have EVER contributed more than 38.5% toward the cost of their stadiums. Let’s see here:

Team: Private Investment: Year
– Jets/Giants: 100%: 2010
– Cowboys: 63%: 2009
– Patriots: 82%: 2002
– Lions: 75%: 2002
– Texans: 39%: 2002

Correct me if I’m wrong, but I’m pretty sure that 5 is more than 2, which would mean that when Bleacher View said that “The Vikings are contributing over 38.5% of the total cost of the project, the 3rd highest total of any NFL team.” he/she was either painfully misinformed or just making stuff up.

My guess is the former. I bet Bleacher View was thinking about dollar amounts rather than percentages. This is one of the tricks that Lester Bagley with the Vikings likes to make. Rather than talk about the relatively poor percentage basis that the Vikings are willing to contribute toward their own facility, they talk about the raw dollars they are putting in.

For example, the New England Patriots franchise only put $340 million toward the cost of their stadium compared to the $420 million the Vikings have on the table today. But, the Patriots built their stadium in 2002, and the entire thing only cost $412 million. If you want to talk about this like adults, for the Vikings to make a comparable contribution toward their own stadium to what the Patriots did, the Vikings would need to up their contribution from $420 million to $902 million. Frankly, if the Vikings came up with $902 million, I don’t think they’d have a problem getting less than $200 million out of the state or a county for a welfare supplement.

Additionally around 28.4% of the total cost as currently constituted is NOT going to be paid by the public at large even though it is listed as a state contribution. This total is being paid by user fees, in other words by those supporting the stadium that will go to events held in the new venue, will buy sports memorabilia, or will participate in a sports themed lottery.

This is some seriously Cory Merrifield style logic at work. If the public collects revenue, the public should be able to decide what the best priority is for that revenue. Creating new public revenue sources, then earmarking that revenue for a private business is a really disgusting form of welfare. It’s Wilfare at its worst.

OK so lets recap, so far we have accounted for around 66.9% of the total cost of a new Vikings Stadium and opponents have yet to pay a single penny towards the cost and there is no burden placed on state coffers or any state program affected.

All of that is true if you’re willing to ignore reality.

The remaining 33.1% of the cost is a result of a .5% sales tax imposed by a local willing partner in Ramsey County.

First, let’s point out that “partner” is simply Vikings speak for sources of Zygi Wilfare. When they say stuff like “the state needs to be involved, but we can’t do this without a local partner” they aren’t talking about fan loyalty. They mean “a community that’s willing to extract cash from its citizens”.

And second, “willing partner”? You must be ignoring Ramsey County Commissioner Tony Bennett’s own admission that the only way that Ramsey County will give money to Zygi Wilf is if they are forced to give money to Zygi Wilf rather than voting it down via referendum.

This sales tax will not be paid solely by Ramsey County residents but by any person conducting business in Ramsey County.

If Ramsey County had the money today that an extra 1/2 percent sales tax would provide, what would they choose to spend that money on? A stadium? Yeah right.

This will lead to economic growth on land with limited development potential.

Land 10 miles from two downtowns, in a good school district with limited development potential?

The increased growth will lead to new revenue streams and reduce the likelihood or the severity of any future levy increases.

Question: Would the Vikings pay property taxes?

It will also lead to additional job opportunities which again leads to additional revenue and a reduction in state benefits paid.

Question: How does moving a stadium lead to new job opportunities?

Additionally this portion of the bill could be replaced by several other potential revenue streams to reduce any potential negative impact on the average citizen. Several options being considered are expanding the use of user fees, a rental car tax which is more likely to be paid by visitors to Minnesota than by residents. Another popular option is the passing of a Racino bill with portions of the revenue being dedicated to a new stadium and the remaining funds going into the state general fund, or using legacy funding which is set aside for the outdoors and arts/entertainment.

Additional revenue streams could be created in the state. We just had a shutdown where additional revenue streams would have been one way to solve the shutdown and the legislator chose not to use that approach. We still have the same legislator. So, good luck with that. That being said, if the state did generate additional revenue from any of the many creative ways that could be done, where would a stadium fall as a priority for those funds? For example, if we had a racino, wouldn’t the revenues be better spent funding schools than professional sports stadiums?

Several other important points include the fact that the venue would be owned by the state of Minnesota. It would be available for numerous state events including state high school tournaments, and increase the states competitiveness in attracting regional and national events which again leads to increased revenue.

Think with your head: If it benefitted Zygi to own it, he’d choose to own it. He could rent it to high schools for events and be the one who profits. But, but not owning it, he doesn’t pay property taxes, can force us to upgrade it over time, and he can demand that we build him a new one when his lease expires at this one.

Due to the states involvement the cost of the project has increased several hundred million dollars to make it usable for state not Vikings events. Despite the fact the state would own the venue the Vikings would pay over 90% of the operating costs of the venue. They would also cover any project overruns, not the state of Minnesota.

Again, if it’s such a great deal to own professional sports stadiums, why don’t team owners want to own them? It’s almost as if they want to socialize the costs while privatizing the profits. Why own a depreciating asset when you can get the public to pay for more than half, lease it, then demand a new one when your lease is up?

The Vikings currently are responsible for around $20 million going into the state general fund annually which would increase to $25-30 million per year in the new venue. Using the low end of those revenue numbers means the Vikings will be responsible for $750 million of revenue at a minimum over a 30 year lease.

The Metrodome is paid for, so most of that $20 million actually does contribute to the state. Increasing that a bit sounds good, until you consider that the interest payments on $600,000,000 are around $28 million per year, so we’d lose money every year for the next three decades rather than make $20 million per year. $750 million in revenue sounds like a lot until you consider than the cost of borrowing $600 million at even a low interest rate of 2% for 30 years would be ~$800 million.

This is in addition to any potential rent and/or annual maintenance payments the Vikings would be responsible for under terms of the lease.

Again, if it’s a good deal, why doesn’t Zygi want to own the stadium?

This would be a state owned facility that the state would profit from, government entities do not profit from welfare. The payment of welfare strains a government budget, the welfare recipient does not improve the governments budget situation.

Again, it doesn’t look like the public profits from the stadium deal. Beyond that, correct me if I’m wrong, but isn’t welfare designed to help people get through hard times so they can get back on their feet? Perhaps you should talk to some people who’ve been unemployed in the past about whether the government benefitted from helping them out in the short term?

Your criticism of welfare for the needy in defense of welfare for the greedy is disgusting at best.

The last stadium built for the Vikings and several other tenants, who have since received their own venues which have proven to be worthwhile investments for the community, was built from a $55 million dollar bonding bill. There was not a single general fund dollar used or state program affected by the investment. The stadium was paid off in roughly half the mandated time and the state received revenue of $340 million, in addition to the funds used to pay off the bonds, of which over $186 million was as a result of the Vikings.

Sounds like a multi-sport stadium made sense. In fact, that investment continues to be seen as a wise choice as long as the Vikings continue to use that facility.

Show me a definition of welfare that includes a profit and increased revenue streams for a governmient entity, espescially in a stagnant and/or declining economy.

Here are examples of the ROI from various welfare-to-work programs that have been tested. But, since you’re trying to justify the government giving money to a profitable private business in an effort to make that business more profitable by spending the government’s money rather than its own (or borrowing on the private markets like those of us living in the real world) it doesn’t seem unreasonable for the public to hold this particular welfare queen, Zygi Wilf, to a positive ROI bar.

Show me a definition of welfare that includes job stabilization and job growth.

If the government hires someone, there is job growth?

Show me a definition of welfare where the state is more competitive when competing with other communities in attracting events to our state, in attracting new businesses, and new citizens.

That’s all good stuff, but the numbers have to make sense.

Show me a definition of welfare where tourism to the state is increased and the state receives free national advertising.

Are you suggesting that if we GIVE the Vikings money, we’ll receive FREE advertising in return? I guess that depends on what your definition of “free” is.

Without the Vikings, Minnesota will lose revenue, jobs, attractiveness to new residents and new businesses, opportunity, identity and a great state asset.

Prove it. For example, Los Angeles County has grown at a faster rate than Hennepin County over the years since Los Angeles last had a football team.

Los Angeles County vs. Hennepin County Population

And the City of Portland has outgrown Minneapolis without a pro football team providing “revenue, jobs, attractiveness to new residents and new businesses, opportunity, identity and a great state asset.”

Portland vs Minneapolis Population

What do we gain by their loss? Are we willing to risk all our previous investment, 50 years of history along with their imprint on our culture just to appease a handful of people that exist solely to argue and make other peoples lives miserable?

That sounds like a question for Zygi Wilf. It’s his business. It’s his decision.

Are we willing to pay exponentially higher amounts later when we see the error of our ways, much like we did when we lost the North Stars?

Nope.

Just a reminder we could have kept the North Stars for a $20 million investment to renovate Met Center, instead we listened to the few that can’t or refuse to see the big picture and the team left for Dallas in 1993. Dallas won a Stanley Cup in 1999 with our team and we got to start from scratch with the Wild in 2000, after a 7 year absence and over $300 million invested.

That makes sense, if you think that a dollar spent in 1993 is the same as a dollar spent in 2000.

That is deja vu I think we can do without.

It sounds like a Vikings fan is confused about who’s hold who hostage here. Zygi Wilf is demanding $600,000,000 from a public that simply does not have the money. If the public was able to generate more public revenue than what it has today, it would be best spent on one of more of the much larger priorities we’re facing, such as skyrocketing higher education costs, underfunded K-12 education, uninsured residents, unemployed residents who’ve contributed in the past but need some help during our current tough economy, our crumbling bridges, etc.

It’s not that we don’t WANT a new stadium. It’s just that it’s a WANT and not a NEED compared to the actual NEEDS that we would be insane to not address first.

4 thoughts on “Is it “Rediculous” [sic] to Call $600 Million in Public Welfare for the Vikings “Welfare”?”

  1. $600,000,000 is corporate welfare is exactly what this is, and for only 200 jobs where the highest paying jobs are for out of state residents who will take their salary and spend most of it back home where their families live.

    If this is about jobs, they could give $100,000 to 6,000 small businesses with the best job growth potential instead…6,000 MN jobs would be secured with an almost exponential job employment growth upside instead of being limited to this same-old tired pro sports model.

    People, especially public leaders, have got to stop thinking this is 1970, or even 2000. Times have changed and we can’t keep wishes they haven’t.

    Huge unnecessary development projects, now that the economy has been trapped by bad loans, are what is causing the drain on society, we have to think smaller and more agile…even if the party boat holds less people, it is still a good time for you and your neighbors.

  2. Great post. You should mention that S&P downgraded Minnesota’s Bond rating today. (see my blog for a link to the article…) Oh, and the median income of Minnesotan’s is down 2% as well…

  3. @Craig, so you’re telling me that, while the Vikings are asking for the public to borrow $650,000,000 for Zygi Wilf’s Zygi World dream of building 21,000 spot parking lot in Arden Hills, public revenues will be dropping due to lowered median incomes AND the cost of borrowing money just went up?

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