By CP Staff
By Olivia LaVecchia
By Chris Parker
By Jesse Marx
By John Baichtal
By Olivia LaVecchia
By Jesse Marx
By Olivia LaVecchia
The $130 million financing plan for the construction of the RiverCentre hockey arena in St. Paul gives new urgency to the old sports adage "Root, root, root for the home team." Because if the expansion Minnesota Wild hockey franchise doesn't come up with a successful team on a consistent basis over the next 25 years, toddlers in St. Paul who wouldn't know Wayne Gretzky from Big Bird are going to feel the arena's financial bite.
By now the broad outlines of the RiverCentre deal are fairly well known. The Wild ownership group headed by Robert Naegele, Jr., is putting up $35 million. Last spring the St. Paul City Council approved a bond issue to kick in another $30 million and hoped the 1998 state Legislature would commit to $65 million in bonds to cover the rest. If the state doesn't come through, the city has guaranteed to the National Hockey League that it will make up the difference. But details of the financial package reveal a number of questionable assumptions that make it a shaky deal for St. Paul taxpayers regardless of what state lawmakers decide.
To begin with, the deal was hastily put together. Just three weeks before the NHL's deadline for accepting bids for new franchises last spring, the Legislature voted down any immediate state funding commitment to help St. Paul land a team, forcing the city to frantically improvise. "Every rabbit that was possibly in the hat has now been pulled out," was Mayor Norm Coleman's description of the last-minute proposal submitted to the league.
Even at this late date, it appears unclear just how much St. Paul officials actually know and understand about the deal. Republican Sen. Gary Laidig of Stillwater claims that Pamela Wheelock, the city's director of economic development, "signed the lease agreement but didn't bother to read it and didn't ask for information." (Calls to Wheelock's office by City Pages went unreturned.) Proponents of the RiverCentre deal such as St. Paul lobbyist Joseph O'Neill and former City Council President Dave Thune claim the best source of information is Joseph Reid, director of the city's Office of Financial Services. Numerous calls to Reid's office finally produced a very generalized two-page synopsis. Further calls asking for more information went unreturned.
Both the Coleman administration and the Wild ownership group have discouraged public scrutiny of the deal. Last month the owners refused to open their financial records to state legislators voting on a $65 million appropriation for the arena unless those elected officials signed a confidentiality agreement. And just last week the St. Paul Pioneer Press reported that the mayor's office had refused to comply with the state's Data Practices Act when the paper requested documents pertinent to a potential conflict of interest between Thune and the M.A. Mortenson Co., the contractor provisionally selected to build RiverCentre in a process that did not include competitive bidding. Only after the potential conflict was exposed and Senate Majority Leader Roger Moe threatened to launch an investigation into the deal did the Wild ownership release any substantive information to the public.
It is, however, known that the vast majority of the public's investment in RiverCentre is to be paid off through a surcharge on tickets for events at the arena. To meet the city's revenue projections, the hockey team must sell enough tickets to fill the building to 90 percent capacity for all its games through the year 2026; otherwise there won't be enough money to pay off the bonds, which are backed by the "full faith and credit"--i.e., the property taxes--of the city of St. Paul. Even the recent financial projections released by the team estimate average attendance at only 83 percent.
"If you look at pro hockey teams that are performing reasonably well on a consistent basis, I think 90 percent is a relatively realistic number," says Chris Hansen, the executive director of the St. Paul Civic Center who is expected to be named to a similar position at the new arena. "As with any professional sports franchise, we are going to have to put a quality product in front of the people. From what I understand, the North Stars drew over 90 percent every year they had a winning season at the old Met Center."
But the North Stars, who left Minnesota in 1993, played in another era, before the huge escalation in player salaries drove up the cost of watching hockey, which now boasts the highest average ticket price (more than $40) of any major team sport. And for most of the North Stars' tenure in Minnesota, they did not face direct competition from the Timberwolves pro-basketball franchise; when the Wild arrive, the Twin Cities will be one of the smallest markets in the nation to feature all four major sports franchises. The Met Center had a smaller capacity than the envisioned RiverCentre and was located in Bloomington, much closer to the demographic center of the metropolitan area. In order to watch the Wild play in St. Paul, residents of the wealthy, "golden crescent" suburbs west of Minneapolis will have to drive as many as 60 miles round-trip in the dead of winter. And finally there's the flip side of Hansen's "winning season" assertion: When the North Stars didn't have a winning season, attendance suffered at the Met--and there weren't many winning seasons in the Stars' last 10 years in town.