February 02, 2011

How much is a Vikings stadium worth?

My MPR appearance has concluded; you can listen to my recorded archive of the whole show here. It was an enlightening hour of conversation, with not just myself and Minnesota state stadium czar Ted Mondale, but also the incomparable Judith Grant Long, compiler of the world's best database on stadium costs and subsidies and author of the hopefully soon-to-be-released book "Full Count" on the same subject.

Mondale, in particular, was far more cautious about his promises of getting a Vikings deal done than I've heard him in the past, repeatedly stressing that Gov. Mark Dayton would only do a deal if it generated "public benefits." He also, of course, cycled through the main pro-stadium arguments, saying that a new stadium was needed to keep the Vikings in town (while later backtracking and saying that move threats were not "helpful to the cause"), asserting that keeping the Vikings would have economic benefits (Mondale claimed $18-20 million in annual benefits to the city of Minneapolis, though he didn't cite a source), saying it's important for the team to remain "economically competitive," and so on.

One of his most telling statements, I thought, came about five minutes into he segment, when the MPR host asked why the Vikings owners shouldn't just build a stadium themselves, given all the windfall profits they'd earn. Mondale's response:

"I don't think it's economically viable to think that the Vikings are going to pay for the entire new stadium. Because I don't think it fits within the value of what they are going to get back."

Read that again: The Vikings wouldn't build a new stadium with their own cash because they'd lose money on the deal. It's confirmation, in other words, that most new stadiums don't actually make money; they're actually big money losers, which can only allow teams to turn a profit if there's a public subsidy.

The big questions, then, is whether there are enough public benefits, in increased tax revenues, job creation, and just the feel-good-ness of having a pro team to root for, to make a subsidy worth it. Or rather, to better state the question: What level of subsidy can be justified in terms of real tangible public benefits?

Here's where Long gave us an intriguing glimpse at the findings of her new book:

"My prescription on [stadium] deals is that the average deal in the U.S. over the last 25 years has been a 75/25: public 75, private 25. And my best deal is actually a flipflop: 25 public, and 75 private. And my rationale actually tries to gather up some of the things that Mr. Mondale has suggested, which I believe are true — there is some benefit associated with having a stadium. And so how do we try to figure out what the correct formula is?

"My 25 percent tries to bring in the urban redevelopment component, the civic image/civic pride, the idea that having a sports team is an amenity — by the way, it doesn't even crack the top ten of important amenities for people looking for jobs, but it is in the top fifteen. So there are some benefits, but let's try to keep the benefits proportional in the deal."

I haven't seen Long's latest research yet, but from what I've found myself, that certainly sounds like in the right ballpark: Teams get about three-quarters of the benefits of a new stadium, whereas the public gets (at best) one-quarter. The question I then asked on the air: What happens if, with a price tag of nearly $1 billion, a 25/75 split turns out to be too rich for the blood of the Vikings and the taxpayers?

Mondale replied that it's entirely possible that a new stadium deal can't be made to work. It'll be very interesting to see if he says the same thing when push comes to shove in the state legislature later this spring.