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Legislators: Minnesota loses in deal

Dear Legislator,
Last week a Brinks armored security truck flipped over while driving across a highway overpass in a poor district of Miami, Florida. Food stamps, coins and bills rained down from the heavens, and for a brief instant in time, money really did grow on trees. Commuters and residents of the impoverished neighborhood hauled off an estimated $500,000. Commentators and observers had a field day discussing the morality of the looting, and you probably did too.
Interestingly enough, Carl Pohlad, owner of the Minnesota Twins, stepped forth with a mind-numbing proposal to build a $354 million stadium on exactly the same day. Most alarming, his financing scheme requires a hefty public contribution of $200 million, give or take a few million.
Unfortunately, the billionaire banker and soft drink magnate’s ploy to steal from the public purse is attracting considerably less negative publicity than the looters in Florida.
I’m writing this letter to call that issue to your attention.
Before bending over backwards for billionaires, please consider the needs of average Minnesotans. Contrary to the claims of a phalanx of lobbyists about to descend on the Capitol like fruit flies on a Hostess Twinkie, you do not need to subsidize the business interests of Smilin’ Carl. Come on, folks, this is a man who is a fixture of the Forbes 400, an annual compilation of the wealthiest Americans, the financial cräme de la cräme of our country. Does he really need public assistance?
Minnesota’s value to sports teams and fans isn’t contingent on the residency of the Twins. The popular Vikings and Timberwolves are both in the black, and I haven’t heard of the Gophers threatening to move to a warmer climate if they don’t get public funding. Contrary to the claims of Hubert Humphrey, the absence of sporting teams will not relegate us to the status of just another cold Omaha.
Now, stadium supporters claim the economic obsolescence of the Metrodome is crippling the Twins organization. The layout, they say, is all wrong for baseball, and the Vikings and the Minnesota Sports Facilities Commission control most of the revenue.
For historical perspective, the Twins praised the dome as a state-of-the-art facility when they played their first game there less than 15 years ago. How long do you think a Camden Yards-look-alike will satisfy Pohlad’s insatiable appetite?
As a legislator, I’m sure you’ll be tempted to wave your public financing wand and prevent the Twins from exercising an escape clause in their contract that activates after financial losses in three consecutive seasons (the Twins are already two-thirds of the way there).
You might even believe a great deal has emerged after more than a year of negotiating, bargaining and haggling. Tentatively, Pohlad said he will donate 49 percent of the ownership of the team to the state as a gift (an unprecedented move for Major League Baseball). He also said he’ll contribute $82.5 million in cash to the construction of a sparkling new stadium, and he promised an additional $25.5 million in stadium revenues to the state through naming rights and advance fees for concession rights. Additionally, if the team is sold, the state has the first option to purchase the franchise.
Sounds like a bargain, you say? Think again. This generous financing package still requires the good citizens of Minnesota to cough up a couple hundred million. Although stadium proponents disavow income or sales tax increases, they haven’t ruled out a discretionary hotel, liquor and rental car tax. Others are pressing hard for a tax on public gaming enterprises.
Will casino lobbyists and other vested interests idly stand by and allow that to happen? Of course not. Ultimately, citizens like me will wind up footing the majority of the bill.
Although the public’s pockets will be picked, Pohlad doesn’t stand to lose much of anything. And that’s simply not fair.
Sure, he’s giving away 49 percent of the team and promises not to gain from the appreciated value of his franchise, but examine the fine print of the deal. The octogenarian will take the IRS-determined value of his contribution (estimated between $50 and 75 million) as an income tax deduction, and the gift will escape the 55 percent combined state and federal estate taxes assessed on Pohlad-owned businesses at the time of his death.
Furthermore, if his family opts to sell the franchise in the future, they will be able to recoup the original investment in addition to any after-tax operating losses. On top of all this, Pohlad still retains control of the team.
Publicly financing sports stadiums simply doesn’t pay. Studies by the Congressional Research Service show that economic benefits do not justify public subsidies for sports venues. One such study concluded that “a new stadium had no discernible impact on economic development in 27 of 30 metropolitan areas.” Robert Baade, an economic professor at Lake Forest (Ill.) College and critic of public financing, said of subsidies, “It’s all in the economic interests of the owners and players.”
I urge you to ignore the calls of representatives of Minnesota Wins, the organization that is building “grass-roots support” with $2 million of corporate donations from companies like Cowles Media (which owns the Star Tribune) and Dayton Hudson.
I urge you to listen to your constituents, not retired chubby loveable baseball heroes. Think reasonably and when stadium lobbyists come knocking, please do the right thing: Politely send them to another state.

Greg Lauer’s column appears every Wednesday in the Daily.

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