The Puck Doesn't Stop Here
We all knew St. Paul Mayor Norm Coleman was slick, but in convincing local residents and a gullible media to take seriously the possibility that a pro hockey team will come to the St. Paul Civic Center, Hizzoner has outdone himself. For weeks now, Coleman has been trumpeting the latest Civic Center proposal, claiming that the 23-year-old building can be transformed into a facility capable of adequately housing an NHL franchise for $51 million, a hefty chunk of money that he says can be raised without undue risk or pain to the taxpayer. A closer look at the proposal reveals so many economic and political landmines that the plan seems more like a Coleman campaign ploy than a policy prospect.
First of all, the $51 million proposal does not factor in $7 million for asbestos removal and other "deferred maintenance" costs that Civic Center executive director Chris Hansen says will be necessary once workers start tearing apart the walls of the facility to make luxury boxes and other improvements. So the real price tag out of the gate is closer to $58 million. For the sake of simplicity, let's suppose that Coleman gets his corporate friends to chip in the $7 million. The rest would be raised through municipal bonds, to be paid off at an annual rate of nearly $6 million over the next couple of decades. Almost $4 million of that is projected to come from the City of St. Paul's sale of naming rights to the building and the permanent signage around the facility, and from a "facility fee" of approximately $1 on every hockey ticket sold.
For the rest of the money--about $1.75 million per year--the plan proposes that the Legislature give the income taxes that the State of Minnesota would levy on the salaries of the players and other franchise personnel over to the City of St. Paul. Coleman argues that because the team--and, by extension, the salaries--would not otherwise be here, that these income taxes amount to "found money." But that presupposes that the money used by local hockey fans and corporate sponsors to pay those salaries would not otherwise be spent on other goods and services within the state. Coleman counters that pro hockey would be an economic engine creating taxable jobs in attendant industries like hotels, restaurants and rental cars. Enough to make up for income tax deferments on a $40 million team payroll? Not surprisingly, the consultants hired by Coleman's business cronies at the Capital City Partnership say that it will. But the real numbers will depend on how successful the hockey franchise is in St. Paul, and for how long. In the volatile world of professional sports, that is a difficult--and potentially risky--thing to predict.
This is especially true with respect to the sport of pro hockey. With the recent huge escalation in hockey salaries, teams in the NHL have about the same payroll costs and play about the same number of games as their pro basketball counterparts in the NBA, but their subsidiary revenue streams--particularly their television contract--are a pittance compared to basketball and other major sports. To help make up the difference, pro hockey now has the highest average ticket price of any major team sport. Hockey has always had a strong working-class fan base in Minnesota, especially in neighborhoods on the east side of St. Paul; Coleman milks that passion by talking about the proposed franchise and revamped arena as "community assets" and vocally imagining the thrill of "our kids and Wayne Gretzky skating on the same ice." But if and when Gretzky does come to town, he'll be no larger than an action-figure to most children in families of modest means, who will be relegated by hockey's exorbitant ticket prices to the nosebleed sections of the arena--if they can afford to go at all.
Coleman says accommodations would be made to ensure greater community-wide access and affordability, but the cheaper some tickets are, the more expensive others will have to be. Who will pay the $75, $100, or $150 per game, or fork over $75,000 or so for a luxury box over a 40-plus game season? Even with the booming growth of high-priced houses out in Woodbury and other eastern suburbs, St. Paul is not exactly in the economic center of the Twin Cities metro area; more traditionally well-heeled folks in the tony, "fertile crescent" of suburbs west of Minneapolis will have to drive 20-25 miles each way, at night during Minnesota's frigid winters, to watch hockey at the Civic Center.
The attendance question is significant because the terms of the proposal are factored on a hockey team drawing about 14,500 people per game. Otherwise, there won't be enough of those $1 facility fees, and the building name and the signage will be less valuable. Meanwhile, the owner of the hockey team will lose his profit margin and, inevitably, either ask for government assistance or relocate the franchise. It's worth noting that Minnesota's last pro hockey team, the North Stars, had difficulty drawing 14,500 a night at much lower ticket prices in their more centrally located Bloomington arena. And in terms of the greatest inducement to fans--winning games--the North Stars were a lot more successful than the franchise most often rumored to be relocating to St. Paul, the Hartford Whalers.
Coleman concedes that fan support for a franchise in the Civic Center "won't make it if it is just a St. Paul thing; it has to be a Minnesota thing." He cites the Capital City Partnership--"35 corporations on both sides of the river"--as an example of how he can engender a broad geographical base. But when asked for a membership list, a spokesperson for the Capital City Partnership said "It was optional whether or not to contribute to the hockey [recruitment] and a lot of [the members] prefer not to."
Politically, Coleman does have a staunch ally in Republican Gov. Arne Carlson, who earmarked state money for Civic Center improvements in the budget he submitted to the Legislature (rewarding Coleman for the Mayor's support of Carlson's voucher-oriented education reforms). But there is also a former state senator and major contributor to the Republican Party who is likely to oppose, or at least complicate, the Civic Center deal: Timberwolves owner Glen Taylor.
Coleman and Carlson have a few political moves they can execute. Minneapolis wants $180 million to expand the convention center, and then there is the matter of the Twins's new stadium: Both could be held in limbo in Minneapolis interests balk at the Civic Center deal. But angry DFLers--who are not fondly disposed toward Coleman in the wake of his party defection--and Taylor's quiet but large presence on the Republican side are a potent political combination at the Capitol.
Finally, the advanced age of the Civic Center may make all these negotiations moot--or provide a Trojan horse for the construction of a new facility. Hansen says that there will soon be a major engineering study looking at the infrastructure of the 23-year-old building with respect to how viable it will be over the course of the 20-year bonds. "If they come back and say that because of the age and structure of [the Civic Center] there will be all kinds of mechanical systems that need replacing, then we have to ask if it would make more sense to take the $58 million and get some private money to build a new facility across the street," Hansen says. We haven't heard anything from Mayor Coleman about a brand new hockey arena in St. Paul. At least not yet.
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