Deconstructing the Deconstruction of the Vikings Stadium #Wilfare Narrative

Ted Glover at DailyNorseman took at look at my piece on the Vikings stadium corporate rally at the Mall of America yesterday. Fun stuff. We’re clearly not on the same page regarding whether the public should subsidize Zygi Wilf’s business (or, more accurately, but how much [between zero and $1.6 billion over 30 years]).

I’ll post Ted’s rebuttals below. If they don’t make sense out of context, read Ted’s post first.

Actually, what we’re trying to do is create 8,000 construction jobs in an area that has an unemployment rate of almost 40% in the construction industry.

Any form of spending achieves this. Money could be spent putting construction workers back to work building things we want or things we need. Personally, I think governmnet’s role should focus on the latter, while Vikings fans are free to use their own money to support the former.

@sumnums has some objective info on construction unemployment rates:

Construction Unemployment Rates

Regarding the 8,000 figure, I think a more intellectually honest way to look at the number of jobs created is to measure the full time equivalent jobs created. While construction work is clearly temporary work, the reality of the stadium construction project money and man hours tells us that we’d be spending $550 million to put the equivalent of less than 700 people to work for three years. There are more efficient ways to do this. One option that would create more jobs is to refurbish the existing Metrodome. Why would that create more jobs? Because a larger percentage of the money spent would go toward labor. If you’ve ever done a remodeling project at your home, this is pretty obvious.

Oh, we’re also trying to keep a 51 year tradition in the state of Minnesota. A tradition that has seen 3 and 4 generations of Minnesotans bond over countless moments of thrills, excitement, and yes, heartbreak.

A tradition that isn’t valued by Vikings fans enough to continue to subsidize with their own money. A tradition that the Vikings organization is willing to destroy if the public doesn’t meet their corporate welfare ransom. This isn’t the type of behavior the public should be subsidizing. Real leadership would be getting the team, fans, and local businesses into a room together to figure out how they can work together to find a solution that suits all of their needs.

Oh, and that ‘extraction’ that this post talked about? Not so much. When it’s all said and done, there’s over a $500 million payback over the course of the life of the new lease of a Vikings stadium.

According to the CSL calculations, those taxes grow to about $1 billion over 30 years — the expected life of a stadium. That would be a net surplus of about $500 million to the state over the typical life of a modern stadium. The Metrodome has lasted 30 years.

Theory one, blown out of the water. But it only gets better. Follow me, after the jump for more.

I’ve written about CSL’s numbers in the past. Ted glossed over the fact that the state isn’t putting in $300 million. Instead, it’s climbed to $400 million over the past year ($100 million more than Dayton said he’d be willing to put toward a stadium). The City of Minneapolis then puts in another $150 million. Both pay a ton of interest on that debt. Plus Minneapolis covers a big chunk of operating and capital improvement costs. Plus the public is on the hook for cost overruns. All of a sudden, the stadium deal turns from a net positive to far into the red:


Private Financing in Purple Pride vs #Wilfare Red

Granted, the net losses to the public start to even out near year-30, but it would take far longer than 30 years to make such a huge public investment pay off. If you want to make a financial case for a stadium, the best case we have is to continue to use the paid-for Metrodome.

Ah yes, let’s use the salary of an employee–a union member, to boot–to try and further blur the edges of your already weak position. What, exactly, does an individual employee salary have to do with the cost of the stadium, regardless of how much they make? Exactly nothing. If we want to go down that road, let’s break it down even further. Beer vendors who work sections could pay for the seats in that section, ticket agents could pay for their own booth, and the grounds keepers could pay for the turf. What? That’s just a silly ass argument? Yeah, yeah it is.

It matters because a millionaire is lobbying to extract money from the public through regressive taxes in order to become become wealthier. Yesterday’s stadium corporate welfare rally was an example of Jared Allen attempting to increase his wealth NOT by creating an entertaining product people are willing to pay to watch. Instead, he was demonstrating that the Minnesotans are unwilling to pay anywhere near as much as what Wilf is demanding for a stadium, so we must extract $1.6 billion over 30 years from Minnesotans to make up for the market’s efficiencies. Yes, to make up for the market efficiencies that tell us that a $1 billion stadium isn’t justifiable.

No, what Governor Dayton did is encourage stadium supporters to get politically active, and fight to preserve the MINNESOTA Vikings.

Governor Dayton, in front of a crowd of rabid fans, should be asking fans how much saving the team is worth to them, then passing a hat to collect that money. Even that goes FAR beyond what a governor should do. His job is not to organize rallies on behalf of a private business owned by a buy in New Jersey.

Fight to preserve over the $12.5 million/yr in tax revenues that just the players and Vikings employees bring in.

That’s worth doing. Spending far more than $12.5 million/yr in tax revenues to save $12.5 million in tax revenues isn’t the way to do it.

@sumnums has something to say about this too:

$12.5 million?

Let’s think about that. If the team’s salaries come to less than $91 million and the top marginal tax rate in MN is 7.85%, the state would earn $7.185 million in taxes. But, not all income is taxed at that rate. And not all income is taxed. For example, one can assume that players deduct their mortgage interest, thus lowering their taxable income.

Fight to preserve over the $5 million/yr in just the sales taxes produced within the stadium in terms of beer and food sales.

Do people attending Vikings games skip a meal on the 42 weeks/yr there aren’t Vikings games? If not, see the problem with counting that revenue?

@sumnums adds:

100% tax Rate?

Fight to preserve the money that out of state Vikings fans bring in every weekend.

Good idea. But, spending up to $50 million/yr to preserve that money is a net loser.

Yes, out of state fans, who make up almost 25% of the fans on any given weekend, come into Minnesota and pump millions into the Minnesota economy, and almost 40% of fans that go to a game are from outside the Metro area. That equates to 140,000 people coming in from out of the metro area just to go to the Vikings games, and they spend an average of $107 for each game. So, 140,000 x 107 x 30 (years of the lease of the new stadium) = over $343 million.

If the Vikings leave, how do you think the state will recoup that $343 million?

Now, one of the arguments against all that money the out of staters bring in to Minnesota is what is called the “Substitution Effect’. Simply stated, that means that if you have discretionary money that you would spend on everything associated with going to the Vikings game, that if the Vikings were not there you would simply spend that money on something else within the local economy.

That’s all fine and well if you’re talking about a gameday population that mostly resided within the Twin Cities metro area…but we’re not. Let’s use an example of…me, for instance. I live out of state, about an 8 or 9 hour drive from Minneapolis. When I go to a game, I get a hotel, tickets, eat at restaurants, blah blah blah, you get the picture. The Substitution Effect says that if I don’t spend that money on the Vikings, I’ll spend it someplace else locally. Which is true. But for me, locally is St. Louis, not Minneapolis. And locally for 40% of Vikings fans isn’t the TC metro area. So that’s money that may get spent, but I guarantee you it won’t be in Minneapolis once, much less 8 times for the folks that are season ticket holders.

Some would shift to the Twins, Gophers, Wild, or Timberwolves. Some is likely tied to Mall of America trips that would still take place with or without tying in a Vikings game. Some would be lost. But, spending $1.6 billion to save $343 million clearly isn’t the answer.

So when somebody yells RAAAAAWR SUBSTITUTION EFFECT RAAAAAWR in your face, just use this as your reference. Because they’re full of shit.

If someone claimed that every dollar spent at Vikings games would be spent on another form of in-state taxable good or service, that would be true. But, no one is claiming that.

We’ve already deconstructed the financials, so I won’t rehash that. But what does it matter where one spends their discretionary income? It seems you’re looking down at these people, your fellow Minnesotans, because they’re choosing to do something that they enjoy, and it’s not harming anyone, nor is it illegal.

That’s the point of this entire debate. Why shouldn’t people spent their discretionary income on something that they enjoy, that isn’t harming anyone, and isn’t illegal rather than having the state pick a winner for that money? Nothing is stopping Vikings fans from spending money at Vikings games and on a Vikings stadium. But, the lack of financial support from fans for a new stadium is not the public’s problem to solve. Fans should take that up with Wilf.

What, would you rather they be at the publicly subsidized Guthrie Theater?

I’m cool with subsidizing the Vikings to the same rate per ticket that the Guthrie received. That’s generous considering that the Guthrie is a local non-profit while the Vikings are a private business owned by a guy in New Jersey, but I think doing so would be a net positive for the public. The Guthrie received $25 million and has nearly the same annual attendance as the Vikings. The Guthrie’s per seat subsidy over 30 years comes to $1.67, compared to the Wilf’s current demand of $77.

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