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May 27, 2005

Stadium revenue sources

Frightwig has written a thoughtful piece today discussing, again, his opposition to the current ballpark plan and his desire for Hennepin County to be able to capture some of the revenue a new ballpark is sure to create. Yes, this would be wonderful, there is no doubt about it. FW also writes that since most Twins fans are so rabid about getting a new ballpark, why don't we propose to pay for it through ticket taxes, memorabilia taxes, lottery tickets, bobbleheads, license plates, etc. Could it be done?

This is actually an idea that gets thrown out there a lot. Why don't we pay for a stadium with all of these funding sources? Why don't we put a tax on tickets, have those that benefit the most from the stadium pay for it, and finally put this issue to rest?

Truthfully I think all of these ideas should be used to fund a stadium. No doubt about it. I would play a lottery scratch game every day of the week and twice on Sunday if it meant a new Twins stadium could be built. However, there are a lot of problems with building a Twins stadium in this fashion. No more problems than building a Twins stadium with tax money, true, but problems nonetheless.

First of all, there is no way any of these possible revenue streams could raise enough money to pay off the debt on a new stadium. Not even if we combined them. The Minnesota Stadium Task Force of 2003 looked at all of these funding sources and came up with these figures (PDF) for the amount of revenue each could generate. Since these figures were put together in 2003 I will generously round up the amount of money I think we could reasonably expect from each of these revenue sources:

$3 million per year -- sales tax on food and alcohol in new stadium
$3 million per year -- 10% ticket tax
$3 million per year -- clothing and memorabilia tax (statewide!)
$2 million per year -- lottery scratch game (per game offered)

Keep in mind that I am rounding up the state's figures. That is only $11 millon per year. Obviously this is a far cry from the $28 million per year needed to retire the debt. What if we just increase the fees? I think the state was wise in putting these estimates together. I think this may be all that the citizenry of our state would be willing to pay in fees.

Another problem is the fact that these funding sources would be shaky at best. What if the Twins don't draw well one year? What if no one plays the lottery game? What if the money we were counting on from these funding sources just doesn't pan out? Who pays then? Neither the Twins or the state want to have to worry about that. Quite frankly, these possible revenue streams would not produce the kind of money that anyone could count on to get the job done.

Another group that wouldn't want to worry about the lack of "hard" money in this kind of scheme are the people lending the money to build the stadium. These funding sources are so shaky that the interest rates on the debt would probably be higher, which obviously would mean that the debt would be larger.

Finally, using all these funding sources is too complicated. If we have found anything out about our legislature in the last few years of this stadium debate, it's that they don't like complexity. Too many funding sources would mean too much bureaucracy and too much red tape. The Twins don't want that, and the state doesn't want that either.

The Hennepin County plan is not perfect. But it will 1) raise enough money to get the job done, 2) produce consistent revenue that everyone can count on year after year, 3) raise enough money to probably retire the debt early, and 4) it is relatively simple. That is why it has the best chance to finally get a stadium built.

Having said all of this, I still think Frightwig's idea has a lot of merit. We should use all of these funding sources regardless of the complexity that has dissuaded the team and the state from using these revenue streams over the years. However, it won't be enough. If we lived in a perfect world we could have the team pay for the rest. But Pohlad has already made it clear he won't do that. Needless to say, it is very frustrating.

Sigh. I am sick of this argument. I am sick of thinking about this. I just want it to be over. Build a stadium or don't build a stadium. Let's just make a decision.

Posted by snackeru at May 27, 2005 8:11 AM | Stadiums


As always, you have the facts and great analysis. Good work.

Posted by: SBG at May 27, 2005 10:25 AM

You gotta see my comment on frightwig's site...

Posted by: Cheesehead Craig at May 27, 2005 12:12 PM

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