June 17, 2006

Minneapolis to subsidize Target Center losses

The Minneapolis city council voted yesterday to have the city cover half the annual losses of the Target Center on non-basketball events, up to $1.2 million. The home of the Timberwolves is owned by the city but operated by an arm of the team's ownership, which says it's losing money on the management deal it signed just two years ago.

"We don't have the choice of not supporting this building: We own it," city finance director Pat Born told the Minneapolis Star Tribune earlier this week. That's true enough, though somewhat disingenuous - when Midwest Entertainment Group, which is controlled by Wolves owner Glen Taylor, took on responsibility for running the place, it was for better or for worse, not with the intent of pocketing any profits while fobbing off losses on the public. (Well, that might have been their intent, but you know...) It's unclear what MEG could do if the council told them to stick their red ink where the sun don't shine, unless maybe there's the fear that Taylor would have MEFG declare bankruptcy and ditch the management contract entirely, leaving the city with no one willing to soak up the arena's mounting losses.

In the larger scheme of things, this is still fallout from the city's disastrous bailout of the Target Center in 1995, when it bought the debt-ridden structure from the Wolves, who had built it, for $54.6 million, thus saddling the public with years of future debts. Things only worsened when neighboring St. Paul built the Xcel Energy Center for the NHL's Wild a few years later, forcing the two venues to compete for acts. (The old Met Center in Bloomington had previously been demolished specifically to reduce competition with the Target Center.) "It does bring up the question of how many entertainment venues the Twin Cities can support," Minneapolis councilmember Elizabeth Glidden told the Minneapolis Observer. You listening, Washington state?

Finally, with the Wolves running arena operations, but the new bailout plan applying only to non-basketball revenues, there's likely to be the opportunity for all sorts of funny business about what constitutes "losses": If Taylor can't find a way to shift all his costs into the "non-basketball" column, and all his revenues into the Wolves column, he's not even trying. The new lease says that the city and MEG will keep negotiating how to manage the arena beyond May 2007; one hopes that Minneapolis will cut a better deal at that point, but if history is any guide, that ain't too likely.