By CP Staff
By Olivia LaVecchia
By Chris Parker
By Jesse Marx
By John Baichtal
By Olivia LaVecchia
By Jesse Marx
By Olivia LaVecchia
What about Plan A? The Pohlads kick in their $95 million or so, the ballpark would still cost $300 million, so the public tab is $205 million with no way to offset the investment. And the Pohlads keep any profits as well as the tens of millions in franchise appreciation.
"One problem," cautions the Metrodome's Lester. "Winnipeg."
Those who followed the National Hockey League Winnipeg Jets' flirtation with the Twin Cities earlier this year may recall that the Manitoba provincial government lost nearly $40 million after it agreed to cover any Jets operating loss in return for minority ownership of the team. On the other hand, the Canadian province did not have control of the club or a revenue-rich new stadium. Opponents of public ownership also claim that Major League Baseball would not allow public ownership because it requires a controlling ownership group. But consider the structure of baseball's newest team, the Arizona Diamondbacks.
According to the Arizona Republic, the managing partners who actually run the Diamondbacks' day-to-day operations contributed just $1 million of the total $108.5 million equity in the team. Other investors, known as limited partners, paid the rest and thus own 99 percent of the team.
Here, Minnesota taxpayers would be the limited partners, and could hire a private individual or individuals as managing partners to run things. The Arizona deal heavily incentivizes the managing partners to pay off the limited partners, who are promised a 5 percent return on their original investment until it is paid off. Then, the managing partners get 25 percent of the annual profits with the limited partners still receiving 75 percent.
The general partners are paid a generous salary--in Arizona, either $2 million or 3 percent of the annual revenue, whichever is greater. The Diamondbacks' public offering predicts first-year revenues of $82 million, which would translate into $2.46 million for the managing partners. But the Diamondbacks also project $21 million in first-year profits for the limited partners--cash that could generously offset Minnesota taxes if public ownership became a reality here.
All right, so assume it doesn't. The cash flow prospects suggest one reason why the publicly unflappable Pohlads might want to hang on to the team while the stadium debate plays itself out. Jim Pohlad, ever amenable, insists that "the important thing for us is that we don't want to keep funding losses. We'd like to operate on a break-even basis and ultimately get the cash we put in back."
Assuming legislators bite the bullet, Bell paints a happy vision of a financially safe and therefore competitive team in a modern-day ballpark. Longtime season ticket holders will not be bumped upstairs by big cigars purchasing the latest modern scourge: the private seat license, a one-time fee of hundreds or even thousands of dollars just for the privilege of buying a good seat. Bell also claims that subsidizing the whole plan, while enormous as a lump sum, is digestible in bites.
He says a 1 percent liquor tax in the seven-county metro area could pay for the public's chunk of a $250 million stadium. But a study of Minnesota excise taxes, such as liquor levies, shows them to be highly regressive; the poorest 10 to 30 percent of Minnesota households pay seven times as much relative to their income as the richest 10 percent of households. The other suggestion, a one-tenth of 1 percent metro sales tax, would raise $27-$30 million a year, easily enough to pay off the ballpark. Here, the tax is only slightly better: The poorest households pay about 2.5 times what the rich do, while middle incomes pay twice as much.
In interviews and before legislative committees, the Twins president has drawn one early line in the sand: "We must have a retractable roof." Some in Twin Cities media have taken up Bell's demand in the name of the families from Fargo and Winona who trundle into town for a weekend and ought not have to deal with acts of God such as rainstorms. Such arguments ignore the success of Cleveland's Jacobs Field, with that city's bitter weather, or Baltimore's Camden Yards, which draws a substantial part of its fan base from Washington, D.C.'s Virginia suburbs, nearly two hours away.
Candidly, Bell acknowledges that the plucky long-distance fan is not the real reason the Twins want a roof: Cash flow is. "What we need is for fans to buy tickets in advance, not wait for a nice summer day and then walk up to the gate," he says. ("We've done a great job with the Metrodome of selling people on the idea that you can't play baseball here in April and October," says Lester with a trace of irony.) The quicker the Twins get your money, the more they earn in interest--surely a pleasant thought to a banker and his family.
Whatever the driving force behind a retractable roof, the Twins--and Metropolitan Sports Facilities chair Henry Savelkoul, who has also been outspoken on the issue--might literally be selling the public blue sky.
Savelkoul has touted the virtues of Arizona's retractable top, the only one in a new, cheaper generation of retractables that is more than architect's sketch. (All retractables work against the actuality of Toronto's Skydome, an overbuilt leviathan whose price tag topped $600 million U.S., or Montreal's Olympic Stadium, whose lid is stuck in the closed position.) Savelkoul paints a picture of a compact, affordable, unobtrusive top that will barely obscure the Camden Yards-like appeal of a natural grass, retro-modern ballpark.