Vikings stadium plan similar to others
ST. PAUL -- The Minnesota Legislature is considering financing two-thirds of a new Vikings football stadium with taxes and other public funds, about average for football venues built or renovated in the last 14 years and in the middle of those in...
ST. PAUL -- The Minnesota Legislature is considering financing two-thirds of a new Vikings football stadium with taxes and other public funds, about average for football venues built or renovated in the last 14 years and in the middle of those in comparable markets.
More than half of the National Football League's 32 markets have built or renovated stadiums since 1997 with taxes on lodging, car rentals, hospitality, food and beverage and other public sources covering an average of 62 percent of the costs, according to the Metropolitan Sports Facilities Commission, which owns the Metrodome. That is where the Vikings have played for three decades, but the team says it will not sign a new lease after next season.
Public financing has ranged from 94 percent in Cincinnati, where a 0.5 percent sales tax increase and state grants helped cover the cost of a nearly $450 million stadium that opened in 2000 to one in Foxboro, Mass., where the New England Patriots privately financed more than 80 percent of their $412 million complex.
The Vikings are seeking funding for a building expected to cost between $700 million and $900 million. The team believes the markets most comparable to the Twin Cities are Phoenix, Indianapolis, Seattle, Denver and Detroit because they are similar in size and also are home to multiple professional sports teams. Public football stadium investments in those markets has ranged between 65 percent and 86 percent.
Hospitality taxes were the main force of public funds used in building Ford Field in Detroit. The public financed one-quarter of the $440 million building with the team covering the rest.
When the economy lagged, there have been times when funds were tight but the Detroit-Wayne County Stadium Authority has never had to dip into reserves to cover bonds, said co-chairman Bill Wolfson.
And having Ford Field has allowed the city to host several prominent concerts, a Super Bowl, a college basketball Final Four and a college hockey Frozen Four, he said. The city uses the stadium and a nearby baseball park to draw people downtown in hopes that they will also spend money at casinos, restaurants and other venues.
"It has drawn people into Detroit that otherwise would not have come into the city," Wolfson said.
The Denver Broncos were the beneficiaries of a 0.1 percent sales tax first imposed on the six-county metro area to build Coors Field, a baseball park that opened in 1995 for the Colorado Rockies.
That tax was scheduled to expire after 20 years. But when the economy boomed in the mid-1990s, revenue from the tax increased from $13.9 million annually to $41 million, which allowed the Denver Metropolitan Major League Baseball Stadium District to pay off Coors Field debt nine years early, said Ray Baker, chairman of that board and the Metropolitan Football Stadium District.
The Denver Broncos were seeking a football stadium at the time. Voters approved a referendum using proceeds from the tax to build Invesco Field at Mile High, which opened in 2001. The agreement with the football team required ownership to pay 25 percent of the $400 million stadium, plus any cost overruns.
The football team added club seats and additional suites to the stadium "at no cost to the taxpayer," Baker said.
The stadium authority also negotiated into its lease half the revenue from naming rights. So, when the football stadium bonds are retired early next year, revenue from the naming rights will be distributed back to the municipalities that contributed sales taxes to the stadiums, possibly as much as $4 million to $5 million a year, Baker said.
In addition to memorabilia and sales taxes imposed in a local partner market, the current Vikings proposal calls for the state to collect any revenue from naming rights. Vikings officials have said that proposal and one adding a surcharge on player salaries could hamper their ability to compete.
David Carter, executive director of the University of Southern California's Sports Business Institute, said taking naming rights revenue away from the team eliminates a source the team could use as collateral on loans while taxing players gives players who already want to be in bigger markets a reason to look elsewhere for employment.
"Playing for the Vikings should not be punitive," Carter said.
Baker acknowledged the naming rights negotiations were difficult, but added that he thought it was important for taxpayers to benefit from that revenue.
"I think we made the right choice to the betterment of reducing the taxpayer obligation," he said.
In Indianapolis, the Colts contributed $100 million toward a $720 million facility. Marion County raised taxes on auto rentals, food and beverage and innkeepers. Six surrounding counties increased food and beverage taxes. Colts license plate sales also contribute, said John P. Klipsch, executive director of the Indiana Stadium and Convention Building Authority.
Construction of the stadium, which is used 150 days annually and the expansion of the Indiana Convention Center were planned as one major project. Together the buildings are projected, over 10 years, to add nearly $2.3 billion to the state and regional economy and $26 million in tax revenues.
"Equally important, the addition of the stadium greatly boosts the capacity for the city to host major conventions," Klipsch said. "For both the public and private sectors here, it is a major financial boost and gives Indianapolis national - and even international - recognition."
Tellijohn is a Twin Cities freelance writer.