Stadium deal still misplaces priorities

St. Paul Mayor Norm Coleman has made an arrangement with the owner and management of the Minnesota Twins for funding a new outdoor stadium in St. Paul. Although the arrangement would not affect most Minnesota residents, citizens of St. Paul would be responsible for one-third of the stadium’s cost. The state, although initially responsible for the entire amount of the bonding package, is guaranteed to be reimbursed for its entire share. This is a better proposal than previous versions, but it is still too dependent on financing from the public, which in the past has rejected funding stadiums.
Under the proposed arrangement, the team would be owned entirely by a group of Minnesota-based buyers to whom current Twins owner Carl Pohlad has agreed to sell. That group has not been formed yet. The team was most recently valued at about $120 million. The new 38,000- to 40,000-seat stadium would be built at one of five proposed sites in St. Paul, with any costs over the estimated $325 million to be financed by the Twins. The cost of the stadium would be equally assumed by three parties: the new ownership of the Twins, the city of St. Paul and initially the state of Minnesota.
The deal would be profitable for the Twins’ new ownership. Despite the upfront costs of $108 million — their share of the total — the new owners would be compensated by other parts of the arrangement, retaining the revenues generated from concessions and advertising in the stadium.
The terms of the deal would have St. Paul cover its third of the money through a half-cent sales tax increase on purchases throughout the city. The increase would need approval from the residents of St. Paul at a Nov. 2 referendum. While the city would obtain ownership of the stadium and a likely increase in area business revenues, St. Paul would not receive any money directly from the stadium.
In the long term, the state would have no financial responsibility for the stadium. The state would function as the lender of the $325 million. The city and the team would each repay the loan at $8.5 million per year for 30 years. An additional $8.5 million would be reimbursed to the state through the resulting increase in tax revenue, including visiting team’s income taxes, stadium liquor taxes and franchise taxes. However, obtaining approval from the state Legislature would be difficult because of a lack of public support.
Considering previous proposals for funding new sports stadiums, the current arrangement is the most practical. However, the arrangement would be a misplacement of priorities for the city and the state. St. Paul residents would have to pay a third of the stadium’s cost, which would sacrifice more necessary spending on other necessities. The return on the state’s investment would be roughly two times the initial investment, but accrued over 30 years, which is a poor return. Finally, the absence of tax revenue earned from the stadium would deny the state a large amount of proceeds.
The Legislature should consider the objections of the overwhelming majority of Minnesotans and reject the proposal.