The Great Stadium Debate! - Glenice Booker

Transcription

The Great
Stadium Debate!
The Great Stadium Debate
Metrodome, 1980 - 2013
New Minnesota Stadium (MN Vikings), 2016
Football Seating - 64,121.
Football Seating - 65,400, Expandable to 73,400.
Inflatable Fiberglass Fabric Roof, 2nd oldest NFL Venue in 2013.
Translucent Roof with Movable Side Windows, State of the Art.
Metrodome - $68 Million, $195 Million present value 2015.
Viking Stadium - $1.061 Billion
• $348 Million from MN Tax Payers
• $150 Million from City of Minneapolis
• $551 Million from Team/Contributions
• Minneapolis Hotel/Liquor Tax
• Ticket Taxes
• Special Donations Tax
What is Historical Economic Impact to the People of
Minneapolis, and the State of Minnesota ?
What is the Projected Economic Impact for Minneapolis and the
State of Minnesota ?
The Great
Stadium
Debate
Topic: The Economic Impact of Sports Stadiums on cities and regions, with a focus on the Metrodome (past) and
Vikings Stadium (future).
Overview: Background on the Metrodome and the Viking Stadium project. Bob Berg
Bars, Hotels, Entertainment, Development - Did the city of Minneapolis benefit from the Metrodome? Brian
Hickok
Sports Stadiums – the benefits of a Multiplex Stadium. Glenice Booker-Butler
How do the sports stadium impact the wealth of cities? Dan Scoggins
Why did we leave the Metrodome? Andy Meier
New” MN Viking Stadium Financing. Bob Berg
Conclusions – Dan Scoggins
Brian
Metrodome graced skyline since 1982
How much spent of Hotels etc.
• $2 million per game loss in 1986 from cancelled games
• 5-20% of how much "new" there will be
• Downtown Mpls generates sufficient new demand to absorb
HQ hotel within 5 to 6 years
• Mpls likely to see new inventory over next several years.
• Mpls downtown hotel inventory is inferior to many competitive
markets
Downtown Minneapolis Hotel Properties
Hotel, Bar, Food Financial Projections
Minneapolis tax combinations
New Vikings Stadium 2016
New Stadium
• More than 2,500 bars and restaurants across
• Minnesota will attract additional customers and provide more
charitable gaming with electronic pulltabs.
• Economic activity from a new stadium will generate over $26
million per year in tax revenue and over $145 million in direct
spending by Vikings fans inside the state.
New Stadium
• Hotel or a public airport, cannot abruptly increase capacity. As
a consequence, sports fans tend to displace other visitors.
• The new stadium will definitely make team owner Zygi Wilf a
lot richer. But it is doubtful it will do much for the pocketbooks
of the folks who will be asked to pay for most of it.
Opportunity Costs
• The cost of an alternative is what you should give up to pursue
it.
• True the new stadium will cost a lot, but will have more ROI
and keep the Vikings in MN.
• The simple reality seems to be that the people in Minnesota
either don’t want to kick in enough money to get it done, or
they don’t realize that the NFL is serious about leaving. If it’s
the former, that’s their prerogative. If it’s the latter, they need
to wake up, now.
Glenice
Sports Stadiums – the benefits of a Multiplex Stadium
Question: What are the economic benefits of a multiplex stadium like the Metrodome?
Three Sports teams – 1 stadium
The Metrodome was a climate-controlled facility hosting three sports teams – Vikings,
Twins, Gophers Football. It has been replaced by
3 stadiums, utilizing public funding dollars.
Events
More than 300 event days per year widely used by high schools and colleges, concerts,
community activities and other events
Revenue
The Metrodome did not rely on a continuing tax subsidy to finance operations,
maintenance or debt payments.
A public stadium that paid for itself!
Capacity
64,035
The Metrodome , opened in 1982 and was financially self-supporting.
The Metrodome - Mosquito free, temperature controlled, year round use
facility hosting three sports teams: Vikings, Twins, Gophers Football. That has been replaced by
3 stadiums, with public dollars.
The Metrodome is the only stadium in the world to have hosted all of the following major events:
NFL Super Bowl (1992), Baseball's All-Star game (1985), two World Series (1987, 1991) two NCAA
Men's Final Four Basketball Championships (1992, 2001)
The Metrodome is currently the last multipurpose stadium built.
For 20 years It was Minnesota’s Recreation Room.
Events
More than 300 event days per year used by high schools and
colleges, concerts, community activities and other events.
Only 100 days were professional sports.
Here are some of the activities.
Running – 2.5 laps per mile of indoor running for $1.
Rollerdome – Since 1990, 800,000 customers.
College Football - Victory Bowl 2002, 2008
Prep Bowl - Minnesota High School 1982-2013.
High School Soccer championships 1986-2013.
Northern Sun Intercollegiate Conference and the Upper
Midwest Athletic Conference Football
Motocross, Monster Jam, Super Trucks.
Large religious services and gatherings, Promise Keepers.
More Activities!
WrestleRock 86 drawing 23,000.
Conventions - Twins Fest, Golf shows, Home and Garden shows,
Corporate Events.
Cultural celebrations - Hmong New Year, Oromo Jilboo American
Games, 1991 World Special Olympics Summer Games Opening
Ceremonies.
Concerts - Grateful Dead, U2, Rolling Stones, Paul McCarthy, Bob
Dylan, Genesis, Black Sabbath, Guns N’ Roses.
The Metrodome is the only stadium in the world to
have hosted all of the following major events: NFL
Super Bowl (1992), Baseball's All-Star game (1985),
two World Series (1987, 1991) two NCAA Men's
Final Four Basketball Championships (1992, 2001)
No stadium in the world has ever been as well used
as the Metrodome.
1989 Timberwolves 1st season – NBA
current record of 1,000,000 tickets.
Revenue
Taxes – authorized, but not used. Funded by a 3%, Minneapolis-only liquor and lodging tax
when the site was selected. By 1984, the tax is no longer utilized!
How did they do it? 2009, the last year of Twins, Vikings in Metrodome
1)
2)
3)
4)
5)
Food and Beverage Concessions - $29,428,354
Ticket Tax - 10% admission tax on all ticket sales - $10,146,927
Rent, 9.5% rental fee on Vikings tickets, event rentals - $4,850,967
Charges for Services - $3,905,486
Sale of Advertising, Parking, Novelties - $1,965,111, $126,601, $431,246.
$50,854,695 in MetroDome revenue from multiple sports in 2009.
(Metropolitan Sports Facilites Commission, 2011)
Taxes for State of MN - $0 Cost for State!
$320 Million in tax revenue for Minnesota - since the facility opened.
Gophers Baseball
Spring games from 1982 to 2013.
Gophers Football 1982-2008.
Metrodome
Tenants
Twins – 19822009
New
Cost - year
Stadium
Target
$545 Million, 2009.
Field
33% Twins,
66% Hennepin County sales tax. .15%
rate
Vikings – 1982 Vikings $1.061 Billion, 2016.
- 2013
Stadium $348 State – bonding, gambling
$150 Minneapolis – entertainment
taxes
$551 Vikings
Gophers
TCF
$308 Million, 2009.
football 1982- Bank
52% U of Minnesota.
2008
Field
48% State, bonding.
Totals
MetroDome
$68 Million, $33 from Public
Self Sustaining since 1984.
Present Value, 2015
$589 Million
$1,100,000,000
$345 Million.
11% Restaurant total sales
Tax – in Minneapolis, due to
Stadiums, Convention center
and other state taxes.
$2.034 Billion
$195 million
The Metrodome is 1/10 of the cost of the three stadiums that replaced it.
• The Metrodome was self-sustaining since 1984 – free.
• The other stadiums require ongoing subsidy from Minneapolis entertainment taxes,
lodging taxes, Hennepin County Sales taxes, and the State of Minnesota.
Dan
Sports Stadiums - How do the sports stadium impact the wealth of cities.
If the Vikings and Twins were to leave the Twin Cities,” said former
President of the Minneapolis Chamber of Commerce Harvey Mackay, “We
would be well on our way to becoming a frozen Omaha.” (Klobuchar &
Guindon, 1986, p.XVI).
Question: Does a Sports Team add Wealth?
Three Ways to Assess the Economic Impact to the Wealth of Metro areas
1.
Tax benefits –does a stadium bring in net tax revenue? (wealth for the
community.)
2.
Quality of life – does a Stadium improve the quality of life (which is a
form of wealth and can we measure quality of life with economics?).
3.
More Jobs – does a Stadium increase the number or quality of jobs in
the community and bring in more wealth?
Sports Stadiums - How do the sports stadium impact the wealth of the cities.
Tax benefits –does a stadium bring in more net tax revenue? (wealth for the
community.)
MetroDome Next report - $32 million in annual tax Revenue
$32.2 Million of Annual Tax Revenue. $831 Million in NPV over 30 years. Taken
from direct spending, and indirect economic activity. $29.4 from Vikings activities,
$2.8 from other stadium events. (Metropolitan Sports Facilites Commission (Minn.)
Conventions, Sports & Leisure International, 2009, p. 3)
Cost of Public Bonds – $30 million in annual debt service
$462 Million in bonds sold for City and State of MN at 4.27% rate. Annual Debt
Service $30 million, $881 Million in total loan costs. Vikings contribute $477 Million
towards $975 Million Stadium (Belton, 2014).
Substitution - Would the money be spent elsewhere in the Twin Cities?
Only 5-20% percent is new money from out of the region. (Siegfried & Zimbalist,
2000, p. 105). Typically it moves from the Suburbs to the Downtown.
5-20% of $32 million is 1.6-6.4 Million, a loss of $25.6-30.4 million in Tax Revenue!
The new Stadium will NOT add directly to tax revenue. It will cost revenue
Quality of Life – does a Stadium improve the quality of life (which is a form
of wealth and can we measure quality of life with economics).
What are people willing to pay to regain lost teams
Since 1980 6 cities lost Football, 5/6 paid far more to attract new teams.
(Rappaport & Wilkerson, 2001, p. 76) We are paying $77.30 per seat for
the Vikings. (Ozanian, 2012) This cost is a measurement of quality of life.
Housing costs are higher in cities with sports teams
Rent is 8% per month higher in NFL cities, per 2003 study. Estimated 8%
house price premium. (Indirectly adds to property tax revenue!! )
(Carlino&Coulson, 2004, p. 15). Higher costs, desirable places to live!
Where does the quality of life improve – Downtown!
More restaurants, more development around Stadiums (Chema, 1996, p.
19). Focused redevelopment on Downtowns (Austrian & Rosentraub,
2002, p. 561) Suburban dollars go to restaurants, events in the
Downtown areas.
Quality of life improves, particularly in the Downtown areas
Downtown East - The Stats:
• 1.2 Million SF of office space, two 17story office buildings
• Office capacity for 5,000-6,000
employees
• 28,000 SF of retail space, street level
and skyway
• 200 residential units phase 1
• 220 residential units phase 2
• 1,625 stall parking structure
• 4.2 Acre green space
More Jobs – does a Stadium increase the number or quality of jobs in the community?
MetroDome Next report - 3000 jobs, $106 Million in annual payroll
• FT and PT jobs. With 10 football games many jobs are PT or seasonal.
• Downtown Stadiums marginally increase jobs in Tourism. (Austrian & Rosentraub,
2002, p. 562). Tourism is lower paying than other Downtown jobs.
• Due to substitution, some of these jobs just moved, from the Suburbs to the
Downtowns. (Siegfried & Zimbalist, 2000, p. 105).
• Leakage – Athletes, pay 39% Federal tax rates, they save large sums, or take the
income out of state. Large parts of the payroll of Teams do NOT multiply to create
wealth. (Siegfried & Zimbalist, 2000, p. 106). For the quality of jobs, the
substitution, the $$ that leave – stadium jobs are a questionable investment.
Invest in Hospitality?
Lower Downtown incomes WITH sports teams
Cities with newer stadiums 2001-2009 lost $2430 in annual per capita income – due to
investment in stadiums instead of growth (Propheter, 2012, p. 457). Finance jobs left,
Tourism jobs grew. The opportunity cost of Stadiums – higher taxes, less alternate
urban investments – leads to lower incomes.
Or Invest in Code42!
Question: Does a Sports Team add Wealth to Cities?
Three Ways to Assess the Economic Impact to the Wealth of Cities
1. Tax benefits –does a stadium bring in more net tax revenue?
No – it costs tax revenue. (The Vikings stadium will cost tax revenue.)
From an Economic, Tax Revenue perspective, it is big expense.
2.
3.
Quality of life – does a Stadium improve the quality of life?
Yes – it does. From an Economic perspective, there is value and people
are willing to pay a lot for teams. People pay 8% more to live in Metro
areas with Teams. (External Development is occurring with the new
Vikings Stadium.) There is wealth increasing here.
More Jobs – does a Stadium increase the number or quality of jobs in the community?
Yes, in the Downtown area. The jobs created by Stadiums are lower quality and are very expensive.
There appears to be a significant opportunity cost in investments not made – and higher living
expenses for those who live there. Wealth is decreasing, except in a narrow downtown area.
Andy
Why Did We Leave the Metrodome?
Believed to have outlived it usefulness. Old and outdated.
Roof well past its 20 year life cycle (12-15 million to replace material)
No development. Not a draw for large events
Not worth money to renovate as it still would not compete for high-end revenue
streams
Roof Collapse in 2010
Why did we leave the Metrodome?
What were the options?
Renew Lease
Renovate
Build cheap
Stadiums
Time to
move on
Unable to
be
Modernized
Not worth
the
investment
Build top of
the line
stadium
Requires
massive
amount of
public funds
Sell/Relocate
Go where
there is
opportunity
Potential to Host Major Events
2018 Super Bowl
Estimated $350 million in local spending
Potential “crowding out” of other events
Substitution Effect
2019 NCAA Final Four
“The Road to Minneapolis”
Estimated $270 million impact
Draw large crowds from fans across the country
Higher need for talented workforce
Superbowl committee celebrates
award of 2018 Superbowl to
Minneapolis
Increased Value
• Between 1998 – 2008 the average NFL team increased value by 360% (288 million – 1.04 billion)
• Vikings worth 774 million in 2010. 30th of 32 Teams in NFL.
• Value went up by $319 million (22%) after MN State Legislature approved funding for new stadium
• Projected to be worth over 1.2 billion when Stadium opens
• Through added value of the Vikings ($319 million + Seat License agreement $147 million) Wilf
should recoup his share very quickly.
Forbes – Football Valuations, 2010
#30 – Vikings, $774 million
With new stadium under
construction. 2014
#20 – Vikings, 1.150 Million!
2005 Purchase price - $600 Million
Bob
“New” MN Viking Stadium Financing
Total Stadium Cost - $1.061 Billion
MN Vikings
$551 Million
MN Tax Payer’s
$348 Million
City of Mpls
$150 Million
MN Vikings share of Stadium - $551 Million
$150 Million - Loan from the NFL
Paid off with Revenue from the Team’s operating income
generated by TV, advertising, ticket sales, merchandise sales
$250 Million – loan by the Wilf’s
Paid off with revenue from the Stadium naming rights
$150 Million - from a Seat License Fee, $500-$9,500 per seat!
Ticket Price will be $50 - $400 per games. 75% of the available
65,400 seats for MN Vikings Games will require a Seat License Fee
Zigy Wilf’s entire share will be paid back by Stadium Operations!
Zigy and Mark Wilf - $1.3 billion in wealth
widely reported – but the Wilf’s have
never revealed their actual wealth.
City of Mpls - $150 Million bonds
State of MN - $348 Million in bonds
Paid for with new Electronic Pull Tab Revenue! *
Fund Tax Revenue - $20 Million per year to pay off the Bonds
* Electronic Pull Tab machine – not
meeting revenue expectations!
2013 – 300 Restaurants, $0 net
revenue
2014 - $2.1 million per day gross,
improving, new games, more use.
MN Viking Revenue Source
Admissions
Concessions
Box Seats & Suites
Naming Rights
Signage
Parking
Media Rights per Team
Viking Stadium Rental
Total Annual Revenue – at New Stadium
Millions per Year
60.0
10.0
10.0
7.0
1.5
1.2
177.0
-0.75
265.95
$266 Million - Annual Projected Revenue for the Vikings in
the new Stadium.
All stadium revenue goes to the Vikings – to pay their
share of stadium costs - and pay Vikings their profits.
Projected Revenue from other events is
largely unknown – but it may be large.
WrestleMania - 2017
NCAA Final Four - 2019
MLS Soccer Exhibitions - 2017
Super Bowl - 2018
Who will pay to operate the stadium?
$17.5 million annually for operating expenses/capital improvement
$3.0-$4.5 of Vikings game-day operating expenses
$20.5-$22.0 million – Total Operating Costs per year
Operating Revenue
$8.5 Vikings Rent
• $1.5 million for capital improvements from Vikings
• $3-4.5 million – Game Day expenses, annually.
$13.0-$14.5 million, or 63% of the costs of operating the Stadium.
Who pays the 37%?
Minneapolis $7.5 million per year, every year!
There is an annual public subsidy every year, just to operate the
stadium.
http://www.vikings.com/stadium/new-stadium/faq.html
How will the Vikings profit, while in the new
Stadium?
$266 million annually
$14.5 rent, game day expenses
$143 million – 2015 Salary Cap
$108 million in total revenue, before taxes.
Dan – Conclusion, still to do.
References:
http://www.senate.mn/departments/scr/billdraft/members_tax_com
m_vikings_fees.pdf
http://en.wikipedia.org/wiki/New_Minnesota_Stadium
http://en.wikipedia.org/wiki/Hubert_H._Humphrey_Metrodome
http://www.geom.uiuc.edu/~math335x/Labs/Lab12/node8.html
http://www.vikings.com/stadium/new-stadium/faq.html
References
• http://www.forbes.com/sites/mikeozanian/2012/05/04/vikingsstadium-not-likely-to-help-minnesotas-economy/
• http://www.twincities.com/ci_20102156
• http://archive.leg.state.mn.us/docs/2011/other/110632.pdf
• http://profootballtalk.nbcsports.com/2012/04/19/10-things-toknow-about-the-vikings-stadium-situation/
• http://www.twincities.com/ci_20102156
• http://search.proquest.com.ezproxy.bethel.edu/docview/4178396
98/fulltext/FC518D6EBA5A49F9PQ/1?accountid=8593
References
Batchelor, L. W. (1998). Stadiums as solution sets: baseball, football and and the revival of downtown Detroit. Policy Studies
Review, 15(1), 89-101.
Klobuchar, A., & Guindon, R. (1986). Uncovering the Dome: Was the public interest served in Minnesota's 10-year political brawl
over the Metrodome? Prospect Heights, IL: Waveland Press.
Austrian, Z., & Rosentraub, M. S. (2002). Cities, Sports, and Economic Change: A Retrospective Assessment. Journal of Urban
Affairs, 24(5), 549-563. doi:10.1111/1467-9906.00137
Batchelor, L. W. (1998). Stadiums as solution sets: baseball, football and and the revival of downtown Detroit. Policy Studies
Review, 15(1), 89-101.
Belton, D. (2014, January 28). Vikings stadium bond sale delay may have led to better rate. Retrieved April 19, 2015, from
http://www.twincities.com/politics/ci_25010166/vikings-stadium-bond-sale-completed
CARLINO, G. A., & COULSON, N. E. (2004). Should Cities Be Ready for Some Football? Assessing the Social Benefits of Hosting an
NFL Team. Federal Reserve Bank of Philadelphia; Business Review, 2, 7-17.
CHEMA, T. V. (1996). WHEN PROFESSIONAL SPORTS JUSTIFY THE SUBSIDY, a Reply to Robert A. Baade. Journal of Urban Affairs,
18(1), 19-22. doi:10.1111/j.1467-9906.1996.tb00362.x
Coates, D., & Humphreys, B. R. (2003). The effect of professional sports on earnings and employment in the services and retail
sectors in US cities. Regional Science and Urban Economics, 33, 175-198. doi:10.1016/S0166-0462(02)00010-8
References
Delaney, K. J., & Eckstein, R. (2003). Public dollars, private stadiums: The battle over building sports stadiums (2nd ed.). New
Brunswick, NJ: Rutgers University Press.
Klobuchar, A., & Guindon, R. (1986). Uncovering the Dome: Was the public interest served in Minnesota's 10-year political brawl
over the Metrodome? Prospect Heights, IL: Waveland Press.
Metropolitan Sports Facilities Commission (Minn.) Conventions, Sports & Leisure International. (2009). Economic and jobs impact
of metrodome next multipurpose facility. Minneapolis, MN: Metropolitan Sports Facilities Commission.
Ozanian, M. (2012, April 28). Minnesota Vikings Asking For Stadium Taxpayer Subsidy Of $77 Per Ticket - Forbes. Retrieved April 19,
2015, from http://www.forbes.com/sites/mikeozanian/2012/04/28/minnesota-vikings-asking-for-stadium-taxpayer-subsidy-of-77per-ticket/
Propheter, G. (2012). Are basketball arenas catalysts of economic development? Journal of Urban Affairs, 34(4), 441-459.
Rappaport, J., & Wilkerson, C. (2001). What are the benefits of hosting a major league sports franchise? Economic Review, 1, 55-85.
Rosentraub, M., & Mark, A. (2002). Cities, sports, and economic change: A retrospective assessment. MN: SelectedWorks.
SANTO, C. A. (2007). BEYOND THE ECONOMIC CATALYST DEBATE: CAN PUBLIC CONSUMPTION BENEFITS JUSTIFY A MUNICIPAL
STADIUM INVESTMENT? Journal of Urban Affairs, 29(5), 455-479. doi:10.1111/j.1467-9906.2007.00360.x
Siegfried, J., & Zimbalist, A. (2000). The Economics of Sports Facilities and Their Communities. Journal of Economic
Perspectives, 14(3), 95-114. doi:10.1257/jep.14.3.95
References
Minnesota Sports Facilities Authority
http://football.ballparks.com/NFL/MinnesotaVikings/index.htm
www.newminnesotastadium.com
Metropolitan Sports Facilities Commission
http://www.house.leg.state.mn.us/taskforces/StadiumRevenueSources.pdf
MFSA Board Meeting - Eden Prairie, MN (April 17, 2015)
http://www.vikings.com/news/new-stadium/article-1/Vikings-AddNorseman-Lounge-Mini-Suites-To-New-Stadium/f8940dce-1ec7-48ae-b77254d75c347f03
Timeline
http://www.leg.state.mn.us/lrl/issues/issues.aspx?issue=football

The Great Stadium Debate! - Glenice Booker

Transcription

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