Mayor Rybak sent out an email today requesting support for corporate welfare for the Vikings. Here’s the letter with commentary:
Yesterday, I stood with Governor Mark Dayton, legislative leaders, labor leaders, business leaders and representatives of the Minnesota Vikings to announce a two-part deal that is very good for Minneapolis.
Who was not there? The majority of Minneapolis residents and Minnesota residents who do NOT support giving the public’s money to Zygi Wilf. Also missing where Minneapolis City Council members who are honoring their constituents’ requests to abide by the City Charter, which states that spending above $10 million in pro sports stadium funding must go before voters to be approved.
If it’s good for Minneapolis to spend more than $10 million on a pro sports stadium, make the case and let residents vote on it. Minneapolis residents are not dumb. They would not turn down a deal that’s good for the city.
A new stadium at the Metrodome site, with Vikings’ paying more than half of a $1-billion investment.
The first part: We will build a new stadium Minneapolis at the Metrodome site — and the Vikings will pay more than half the cost.
I don’t believe this is an accurate statement. For example, in ADDITION to the money the public would be giving Zygi Wilf toward construction costs, Zygi is also requesting that all construction materials be tax-exempt. This, as I understand it, is an additional $40 million giveaway. Additionally, this plan would take land that currently earns property taxes and convert it to tax-exempt land for Zygi.
It simply makes sense: the site that has been the home of the Minnesota Vikings for the last 30 years will be its home for the next 30 years, on the lowest-cost site that takes advantage of the infrastructure already in place. Building the new Vikings stadium at that location has been the policy of the City for many years.
An argument can certainly be made that the location makes sense. Leveraging existing and future transportation investments made by the state is good public policy. It’s good public policy because it’s good for the state to leverage the money the state has spent on transportation infrastructure. But, for the city, it may not be the best use of that land. The land where the Metrodome sits could also be converted into continuing the residential developments near the Guthrie, expanding HCMC or the U of MN, a new Minneapolis campus for the Mayo Clinic that would give easier access to their services to the entire state, etc. Each of those options would bring more people into the city more days per year than an NFL stadium would. Some would even pay property taxes.
And it simply makes sense that the private contribution will be greater than the public contribution.
The public/private ratio is a trivial factor. What matters is whether the public GIFT to the private business is justifiable. If a boy was trying to buy a first car with some help from his parents and proposed the following options to him:
Car 1: Costs $5,000 and the boy will put in $2000
Car 2: Costs $10,000 and the boy is willing to put in $6000
Which one is a better deal for the parents?
This new stadium is a $1-billion investment
Nope. Investments are things where you put money in with a chance for a return on your investment. Zygi Wilf is offering no equity in the team, is unwilling to pay taxes on construction materials, and wants to pay no property taxes on the land where his business operates. That may be a good investment for Zygi, but it’s not for the public.
that will support 13,000 much-needed, union jobs during construction, at a time when unemployment in the construction trades is at a crisis level.
This is an embarrassingly misleading Vikings Wilfare talking point for RT Rybak to repeat. As I’ve explained here before, the wages and man-hours needed to build a stadium would NOT create 13,000 jobs over three years. An honest look at this would describe how many full-time equivalent jobs it would create, which is less than 700.
It will also support another 3,400 permanent jobs after construction. The vast majority of these jobs will go to Minnesotans, with a significant portion of them going to Minneapolis residents, especially those from neighborhoods with high rates of poverty and unemployment.
This is another embarrassingly misleading Vikings Wilfare talking point for RT Rybak to repeat. Paul Udstrand broke this down at MinnPost recently, where he explained that the “Vikings directly employ fewer than 130 people, only a handful of which work year-round, and 53 of whom are athletes. Beyond temporary construction jobs the Vikings promise no new jobs or economic expansion whatsoever, nor can we expect any indirect economic growth or expansion. What about the Dome, you say? The Metrodome employs 19 full-time workers and there’s no reason to assume more people will work at the new stadium. You get almost no multiplier effect at all with an NFL franchise because you have so few employees, and so much of the revenue is not recirculated locally.”
As in, the folks working concessions and security at the 10 games per year do that today in our paid-for Metrodome. There may be a handful of 10-day-per-year jobs if concessions and seating is expanded, but not many.
A more honest way to illustrate this would be to state how many additional full-time-equivalent jobs a new stadium would create. We could start by dividing the 3,400 jobs claim by the average hours worked per person per home game. Let’s say 5 hours for that, so 50 hours per year (1.25 weeks per year) for 170,000 work hours per year by game-day workers. With 2,080 hours in a typical work year, the full-time equivalent jobs from 3,400 part time NFL stadium jobs is 81 jobs.
I can see why the Vikings and Rybak prefer the ridiculously inflated 3,400 figure over 81 full time equivalent concessions and security working positions (which aren’t all that permanent either).
This stadium will be owned by the public and open for non-Vikings events 355 days a year.
We already have one of those. It’s called the Metrodome. I haven’t heard of a single tenant of the Dome other than the Vikings demanding a new stadium.
It will be a world-class facility that will ensure that Minneapolis remains the #1 sports and entertainment destination in the upper Midwest — and that ensures business and good jobs for bars and restaurants both downtown and across Minneapolis.
If it will be such as world-class facility, why aren’t Vikings fans willing to pay for it? The Vikings and Vikings fans want a world-class facility on an economy-class budget with the public making up the ginormous difference.
Over the 30-year life cycle of the stadium, the Vikings will contribute more than half the cost — just over 50% — of building, operating and maintaining it. The City of Minneapolis will contribute less than a quarter — just 22.7%.
The building would be built to the specs of a single business. Specs far beyond what any other tenant of the field requires. Yet that business is only willing to pick up half of the operating budget? And that’s on Day 1. How often have NFL teams pled poverty to reduce their contributions to their custom built stadiums over time? Heck, the Vikings don’t even pay rent at the Metrodome. Are we sure we want them as a tenant?
Target Center, Convention Center and property-tax relief
The second part: Just as importantly, the deal provides Minneapolis with the resources and flexibility to accomplish the #1 goal of the City Council, Council President Barbara Johnson and me: securing the future of the Minneapolis Convention Center, renovating Target Center and providing property-tax relief for Minneapolis residents and businesses.
Renovating the Target Center is the City Council’s #1 priority? That’s strange, considering that Minneapolis residents have other priorities. There is no question that the Target Center is a financial disaster for the city (which makes me wonder why we want to pile on with more pro sports corporate welfare bad decisions).
For far too long, Minneapolis property taxpayers alone have unfairly borne the burden of Target Center debt. The reason that Council President Johnson and I have been at the table has been to win property-tax relief — and we’ve said all along that we would not agree to any stadium deal that did not do that. Yesterday, we won what we’ve been fighting for.
Minneapolis residents bear the burden of the Target Center debt through property taxes, the Convention Center debt through downtown entertainment taxes, the Twins field debt through Hennepin County sales taxes, the Gopher football stadium through income taxes, and are being asked to pay for a Vikings stadium through a combination of entertainment taxes and taxes from the state. Minneapolis residents are asking for their right to vote on whether it’s in their best interest to continue to pay for pro sports stadiums, as the City Charter requires.
Shifting the Convention Center tax away from a facility with a leaky roof that’s likely due for major renovations in order to remain competitive in order to meet Zygi Wilf’s corporate welfare demands doesn’t seem like the smartest decision in the world. It leaves some questions unanswered.
No new taxes
We will accomplish all of this — build a new $1-billion People’s Stadium, . . .
It’s disgusting to call this project a People’s Stadium while refusing to give the people a right to vote on whether the people are willing to tax themselves for a private business’ benefit. Redirecting an existing revenue source to Zygi Wilf that could otherwise expire sure feels like a new tax to people who’d end up paying it.
. . . renovate the Target Center, secure a competitive Convention Center and above all, provide much-needed property-tax relief — with no new taxes. We will do so by using only existing, State-authorized sales and user taxes that are currently collected in Minneapolis, the so-called “Convention Center taxes,” that are paid by the 18 million people who visit, work or spend a dollar in Minneapolis each year. Not one dollar of property taxes. Not one dollar of income taxes.
Among those most heavily taxed by this would be people who live and work downtown. The vast majority of these people do not live and work downtown don’t live and work downtown so they can live near an NFL stadium surrounded by parking lots most the time, and congestion the rest of the time. While it may not technically be a property tax, their home or work location would make them subject to funding Zygi’s business on a daily basis.
Put another way, I took some clients from out of town to dinner in downtown last week. Their share of the tab would make them part of the 18,000,000 who paid something toward Zygi’s corporate welfare. They did not attend a game (the Vikings don’t play in February very often). But, more importantly, they’ll end up paying around 1/365th as much as toward Zygi’s stadium as friends of mine who live downtown, and around 1/260th as much as friends of mine who work downtown.
As I understand the state’s funding scheme for Zygi, the state would attempt to raise their corporate welfare share via electronic pulltabs, which could cut into revenue currently going to local amateur sports teams and other charities such as Catholic Eldercare, who benefits from pulltabs at Elsie’s. In addition to hurting existing charities, if the money fell short, general fund money could be used to make the state’s stadium debt payments, which would be income taxes paying for Zygi’s stadium.
The economics and politics of a good deal
Like a lot of people, I’m a fan of Minnesota’s professional sports — but I’m not a fan of the economics of professional sports.
That’s an easy problem to deal with. Just stay out of professional sports’ way. Let them build a stadium wherever they’d like with money they have, can raise from fans, or borrow privately. Or, let’s offer them a LOAN with interest rather than a GIFT.
Despite that context, this is a very good deal for Minneapolis. For less than one-quarter of the total project cost, we will secure a $1-billion investment that will create tens of thousands of jobs, and that will give us the flexibility and resources to accomplish our top goals of lowering property taxes and ensuring the future of the Target Center and the Convention Center.
A huge chunk of those matching funds come from the State of Minnesota, where Minneapolis resides. So Minneapolis residents will be able to match their gift to Zygi with an additional gift to Zygi.
In the political context, too, this is also a very good deal for Minneapolis. As I’ve said before, the Legislature has the power simply to take away the Convention Center taxes — and legislative leaders made it clear that they might do just that, which would put an even greater burden on Minneapolis property taxpayers. But because Council President Johnson and I were at the table fighting for Minneapolis, those revenues —paid by 18 million people a year — will come in for three more decades. And for the first time ever, we can use them for property-tax relief.
The city should make the case that the Convention Center and stadiums are state assets. The teams aren’t named after the city. The city just happens to be a decent place to plop a stadium that’s paid for by the team.
Coming together in a great city
Now that the City, State and team have come together on this very good deal for Minneapolis, the City Council and the Legislature must approve it.
The City, State and team have NOT come together. City residents oppose this deal. The City Council opposes this deal. State of Minnesota residents oppose this deal by about the same percentage as Rybak receive in his last reelection. As in, a lot.
The question they must answer is, what kind of city and state are we going to be?
We should be a city and state that the NFL wants to be in because it’s a great football community. Not a city/state the NFL wants to be in because we heavily subsidize their highly profitable franchise.
Minneapolis is a great city because we have made big investments that have made it a great place to live. This deal builds on that tradition.
Out of all of the reasons a person may choose to live in Minneapolis, where does being the host of one of 32 NFL franchises fall? Minneapolis residents are proud of being on the map nationally as America’s:
– most bike friendly city,
– most gay friendly city,
– a city with a ton of performing arts,
– a city with great trails,
– a city with more and more great beer
– a great city for the advertising industry
– a retail industry leader
– a medical technology innovator
– an academic powerhouse
These are strengths that attract smart people to the city. That create jobs. That have no limit on national prominence and job creation compared to a sport with a finite number of players and games in a league designed for parity. Financing an NFL team is financing mediocrity. Unless you’re the team owner, where public financing socializes the costs while privatizing the profits.
But Minneapolis is also a practical city, where our residents rightly demand that we look out for their wallets. This deal builds on that tradition as well.
Prove it. Have the decency to put it to a vote, as the City Charter requires.
In a great city that has accomplished great things, we can come together to approve this deal to create another great place for people to come together for the next generation.
Subsidizing an NFL team does not accomplish great things. It’s a known quantity with limited upside. Support the team, but leave the financing issue to the team, fans, and the NFL.
Council President Johnson and I strongly urge you to contact your City Council member, State Senator and State Representative and ask them to come together to support it.
Please do contact your City Council Member, State Senator, State Representative, and Mayor Rybak, to let them know whether you think this plan deserves a vote by Minneapolis residents as the City Charter requires.