By Jesse Marx
By Chris Parker
By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
Of course, today's business leaders are no dummies. They have no interest in padding the Vikings' bottom line. That's why their efforts, such as those of the reconvened Home Field Advantage group in Minneapolis, are focused on developing a uniform message that will allow the business community to "speak with one voice" to the Legislature.
For more than a year, virtually every media outlet in town has reported that the Vikings have pledged a $407 million (since increased to $425 million) "contribution" toward either a $1.1 billion stadium proposal for Arden Hills or a new building on the Metrodome site, now projected to cost $975 million.
The reality is something quite different. As noted by Mike Kaszuba in the Star Tribune last November, the Vikings' actual contribution would be around "$225 million, maybe less."
But even that figure is misleading. Kaszuba cited information from the Metropolitan Sports Facilities Commission that estimated that the sale of personal seat licenses and a loan from the NFL would bring in $175 million, leaving the team to kick in the rest. However, in that same article, Kaszuba also mentions that the "Vikings would be expected to net up to $8 million a year from stadium naming rights and another $3.2 million annually from Arden Hills parking revenue."
Got that? In other words, the Vikings would actually have no real money at risk in the project.
Here's how the scam works: The Vikings reach a deal with the state and Minneapolis (or Ramsey County) to build a new stadium. The state and the other government entity agree to put in $600 to $650 million—likely the amount necessary to cover the stadium's "hard" construction costs, though this number remains fluid as details of the plan change. The state and/or municipality sells 30-year bonds to finance the project, to be repaid with money from an unnamed source—gambling, for now—but more realistically some kind of tax (the current proposal calls for redirecting the Minneapolis sales tax to cover a portion of the construction and operating costs). Actual cost to the taxpayers, taking into account the interest that will have to be paid on the bonds: about $1.2 billion.
Meanwhile, the NFL, under its recently announced G4 loan program, lends the Vikings $200 million interest-free to be repaid over 15 years from the proceeds generated by the sale of premium seating—the extra dough the team can collect for fancier club seats, of which the Metrodome has none. (Ordinarily, premium seat revenue would have to be shared with the other 31 NFL teams, but when applied to stadium costs, that requirement is waived.) The Vikings redirect the $75 million they are expected to realize from the sale of personal seat licenses, leaving a $150 million gap.
Even if Wilf had to borrow that money, the team's annual interest payments would come to about $5 million per year, far less than the $11.2 million annual revenue stream from stadium naming rights and parking fees. (If parking revenue is not part of the package, the team still nets $3 million on the deal.)
To recap: Taxpayers are on the hook for 30 years of bond payments while the Vikings get to cover their share of the overall project by redirecting revenue streams that would not be available to them without the construction of a new stadium.
The Vikings claim that a new stadium will "support 13,000 full- and part-time jobs, including 7,500 construction jobs, over a three-year construction period."
These numbers come from a 2009 report prepared for the Metropolitan Sports Facilities Commission by Conventions, Sports and Leisure International (CSL), a Minneapolis-based consultant that has also done work for the Vikings.
While that alone does not make the numbers suspect, the fact that the firm did not conduct an independent market study suggests that the word "support" is really code for "we're making some really broad assumptions here based on unverified information."
In other words, the numbers are highly inflated, misleading, or both.
Mortenson Construction, the likely stadium contractor, calculated that a stadium project would require 4.25 million work hours to complete. While that seems like a very large figure, when you divide it by 2,080 hours—the equivalent of one year of full-time work—the number of construction jobs created would actually be 2,043.
Since this project will take three years to complete, the only way that 4.25 million hours can translate into 7,500 jobs is if most of these jobs are of a much shorter length than one year, a fact confirmed by data supplied from Mortenson indicating that the average number of hours per worker will be 567, or about 14 weeks.
Building a stadium is also a terrible public investment, given that each full-time equivalent job would cost a staggering $475,000 to create—five times the much-criticized $93,000 per job cost of President Obama's stimulus plan, and laughable in comparison to a recent U.S. Department of Commerce study that found investments by its Economic Development Administration in infrastructure projects cost taxpayers on average between $2,000 and $4,600 for each construction job created.
The other job estimates are equally dubious, at least in terms of how people normally look at regular employment. For example, the Vikings and the Metrodome employ fewer than 200 people combined, many of them part-time, yet the original CSL report attributed the number of jobs related to stadium activity as totaling 3,400. What the report is mostly describing are all those seasonal positions related to game day activities: the vendors, parking lot attendants, off-duty cops working security, ushers, etc.