MoneyGrabber: Looking at the Vikings' Value to Minnesota

By now, everyone in Minnesota, and plenty of people outside of the state, knows that the Minnesota Vikings are in the market for a new stadium. A few weeks ago the team announced that they were going to partner with Ramsey County to build a retractable-roof stadium at the Twin Cities Army Ammunition Plant in Arden Hills. Financially, it breaks down to the Vikings paying $407 million (plus any construction overages), Ramsey County raising $350 million through a .5% sales tax, and the state contributing $300 million.

Even though the Vikings are willing to pay more than the one-third portion of the project cost that the proposal authored by Representative Lanning (R-Moorhead) and Senator Rosen (R-Fairmont) originally called for, their effort to seek public funds for an NFL stadium during a recession has been framed, well, like this. 

The fabulousness of this song not withstanding, I don't think that characterizing the Vikings this way, as some Minnesota Legislators have done, is accurate and I don't think it is fair to the organization.

Much more money talk after the jump.

It's possible that using public funds to build facilities for professional sports teams is a bad idea, but the day for making that argument passed us by decades ago. Now, it's a commonly accepted practice and if cities and states want professional sports teams, this is the cost of doing business. It may not be right, but it's a practice that cities and states around the country have been embracing for decades and Minnesota has not been immune to the practice--anybody remember a place called Target Field? The Twins paid 30% of the cost of Target Field.

I think it is interesting how dirty the word "subsidize" has become when connected to the Vikings stadium proposal. Politicians have turned up their noses at the idea of subsidizing a successful business like the Vikings, but I would like to note that just about everyone in the United States has benefited from a subsidy at one time or another. Have you or your children ever attended a public school? Taken part in the school lunch program or milk program? Have you ever ridden a bus or Light Rail? Visited a public library? Attended a state college or a community college? Received a federal grant or loan when you were in college? Has the organization you work for been awarded a government grant? Ever filled up your car or truck with ethanol? Engaged in farming? I could keep going, but if you answered yes to any of those questions, congratulations, you've benefited from a government subsidy.

So, perhaps more important than getting hung up on the word subsidy, we should look at how Minnesota benefits if the Vikings stay in Minnesota because of a new stadium. With $650 million of the cost of the new Vikings' stadium being funded through taxes, it's particularly important to see how keeping the Vikings in Minnesota affects the tax base.

According to the Vikings organization, every year the Vikings contribute $18 million in state and local taxes. Not only does the team contribute to the tax base, but so does the stadium they use-the Metrodome has generated $304 million in tax revenue for the state of Minnesota since it opened. If Minnesota lost the Vikings, we would see a direct loss of millions in tax revenue that the team, and its stadium, brings the state.

Losing the Vikings means the tax base would also suffer indirectly from the loss of Minnesota jobs. Including all the staff, coaches, active players, and practice squad players, the Vikings organization employs approximately 200 people. Vikings' game days at the Metrodome, including staff, players, and coaches, support 2,800 full- and part-time jobs.

Consider this too, if Minnesota lost the Vikings and the Vikings' employees, then Minnesota would lose, just from the 53-man active roster, taxpayers who pay 7.85% in Minnesota income tax. This means if a player earns $1 million a season, Minnesota gets $78,500 from that player in income taxes. But for someone like Brett Favre who was being paid $25 million for two seasons with the Vikings, that's $1,962,500 for the State of Minnesota.

Minnesota also benefits from the Vikings employees living in Minnesota and contributing to the local economy though homeownership and paying property taxes. If the 200 people the Vikings employ live in Eden Prairie, Minnesota (where Vikings headquarters Winter Park is located), and if they follow the 69.74% home ownership rate in Eden Prairie, then 139.48 of the Vikings' employees are paying Eden Prairie property taxes. The median home value in Eden Prairie is $426,339 and the property tax on that home puts money into both the city of Eden Prairie as well as Hennepin County. Even if the property taxes on that home were only 1%, that is still $4,263.39 going to the city and county.

In 2010, a study on the economic impact of a single Vikings playoff game was done in collaboration between the University of Minnesota and Meet Minneapolis. This study, prepared by Brigid Tuck and David Nelson of the University of Minnesota Extension Center for Community Vitality, makes for interesting, if a little dry reading. And, if you want to have the full low-down on the findings, I suggest you track the study down and read it because I'm not going to fully address it here. I was surprised to find that approximately 40% of Vikings season ticket holders live outside of the seven county metro area, and 22% of season ticket holders live outside of Minnesota. Non-metro residents are key in this economic analysis because they represent money that would not have been spent in the Twin Cities if not for the Vikings' games.

This University of Minnesota study found that for the January 17, 2010 playoff game between the Vikings and the Dallas Cowboys, the average non-metro Vikings game visitor spent $230 per person-mostly on restaurants, lodging, and retail items. The study concluded, that this single playoff game weekend resulted in visitors to the Twin Cities putting $5.8 million dollars into the metro economy. That's right, a single, solitary playoff game brought $5.8 million dollars into the Twin Cities' economy that would not have been spent there if there had not been a Vikings game. So, during a recession, a single Vikings playoff game got people to visit Minneapolis/St. Paul, Minnesota in January and to spend millions while they were here. I find that nothing short of amazing.

Considering the way last season went, it might be harsh to mention the amazing playoff victory that sent the Vikings to the NFC Championship game. Since playoffs are far from a certainty, you might be interested in an earlier study by Conventions, Sports and Leisure (CSL). The CSL study found that a non-metro resident attending a Vikings game spent an average of $187 per person in the metro. Clearly, the ante is upped for a playoff game and the urge to buy merchandise is greater, but even non-playoff games are a source of significant revenue in the Twin Cities.

It isn't an exaggeration to say that without the Vikings the State of Minnesota stands to lose millions in direct tax revenue. Actually, it might even be an understatement.

Governor Mark Dayton and the Minnesota Legislature are currently at odds over the state's budget shortfall and, however the governor and legislators eventually resolve their differences and agree on a budget for Minnesota, it seems safe to say that chasing off tax-paying businesses that provide jobs and stimulate millions in local revenue probably won't help Minnesota. And that's before we even get into a discussion on how a construction project like a new stadium would benefit the construction industry that has been facing a 40% unemployment rate. Oh, and I didn't even mention all the charitable work that the Vikings organization has done in Minnesota.

Considering the economic stimulus and tax revenue golden goose that the Vikings are for the State of Minnesota, I can't help but wonder whom is really being subsidized. It makes the Minnesota Legislature's reluctance to address a new Vikings stadium begin to look like this... 

 

*Special thanks to Jeff Anderson, Assistant Director of Public Affairs for the Minnesota Vikings and to Cory Merrifield, founder of SavetheVikes.org for helping me with my research for this article.

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