Team says proposal is a good start for debate
A Minnesota Vikings stadium bill hasn’t been officially introduced yet, but its proposed funding sources are already drawing skepticism from people like Ray Crump.
Crump, who has owned and operated a sports memorabilia shop near the Metrodome in Minneapolis since 1986, said the bean counters are “dreaming” when they talk about raising $17 million a year with a tax on sports memorabilia.
“When they say they are going to tax sports items, they can’t even put a urinal in the bathroom for what money they are going to get out of that,” Crump said, adding that the tax would just encourage more people to buy online.
The bill, which is expected to be introduced this week, will require the state, the team and a yet-to-be-determined local partner to share in the cost of a nearly $900 million covered stadium with sports memorabilia taxes and other funding sources.
It is unclear who the local partner would be or where the stadium would be built, but the state’s contribution would be limited to $300 million and would not include general fund revenue.
Team officials have some concerns about provisions in the bill that would put them, in their view, at a competitive disadvantage. But the team and its supporters say it’s a good start.
“The bill provides the framework to get the conversation started and to resolve the issue here and during this legislative session,” said Jeff Anderson, a Vikings spokesman. The football team, which played in the 29-year-old Metrodome until its roof collapsed in December, does not plan to renew its lease when it expires next year.
At least one prominent national economist, however, was leery of the proposed funding sources, which include the memorabilia tax, a surcharge on players’ income tax, luxury suite taxes and a sports-themed lottery game.
Andrew Zimbalist, an author and economics professor at Smith College in Massachusetts, said the idea of a surcharge on player income taxes is “unworkable” and the sports-themed lottery game is a “bad financing mechanism.”
“Lottery tickets are bought overwhelmingly by lower-income people. You are taking money from poor people and giving it to [Vikings owner] Zygi Wilf, who last time I checked wasn’t poor,” said Zimbalist, who has written numerous articles and books on sports economics, including “May the Best Team Win: Baseball Economics and Public Policy.”
New taxes, a lottery
The Minnesota Legislature’s nonpartisan House Research Department says that the annual “net result” of all the proposed state funding mechanisms is “about $30 million in 2013, growing thereafter,” and that it would be “sufficient to cover the necessary state share.”
Patrick McCormack, director of the House Research Department, said a fiscal note for the bill is yet to come.
Based on 2009 numbers, House Research estimates the sports memorabilia tax would generate the most money – about $17 million per year – followed by the lottery game at $2 million, and digital video and suite taxes at $2 million total.
The player income tax surcharge would be based on service days in Minnesota. So, for example, if an opposing quarterback plays one game in Minnesota, he would be taxed on his salary for that game day.
It’s hard to put a precise number on proceeds from the income tax surcharge, but it would be “several million” dollars, McCormack said.
Stadium naming rights are “whatever you can negotiate,” but House Research estimates it would be $5 million to $7 million, McCormack said. One location could presumably bring in more naming money than another, McCormack said.
Another wild card is the local bid. If a city or county offers to chip in less than a third, say $100 million, it would be up to the Vikings to decide if they want to cover the rest, McCormack noted.
Under the proposed bill, a local partner would be authorized to impose a 0.5 percent sales tax, or a new tax on expenditures like entertainment, liquor, food and lodging to go toward a stadium.
Local governments or the Metropolitan Council would be allowed to sell bonds, and Hennepin County would have the option of using excess money from the county’s tax for Target Field, where the Twins play.
The Vikings would be obligated to pay at least one-third, McCormack said, so there would be no incentive for a bidding war between local entities.
Anderson, the Vikings spokesman, said the player tax surcharge would pose “some challenges for competitive reasons,” but he added that the bill is likely to go through some changes.
“We are just happy to get the dialogue started,” he said.
Zimbalist, who has studied the economics of professional sports and written widely on the subject, said he can understand the player income tax surcharge on philosophical grounds, but from a practical standpoint he described it as “unworkable.”
“No. 1, I think insofar as it is a real tax and it is going to raise real money, it will be a disincentive for players to play for the Vikings,” he said. “Why would you want a new stadium and an inferior team?”
Moreover, Zimbalist said, the National Football League’s collective bargaining agreement already requires players to help finance new stadiums, so an additional tax probably would not “make a whole lot of sense.”
Personal seat licenses, stadium naming rights and taxes on luxury suites make more sense, but the team probably wants to keep that money for its own purposes, Zimbalist added.
Opposed to subsidies
Like Zimbalist, the Washington, D.C.-based Tax Foundation isn’t big on public subsidies for stadiums.
Mark Robyn, a staff economist with the Tax Foundation, said that it “doesn’t make sense for the government to be involved” in paying for stadiums, and that if people didn’t go to football games, “they would be spending their resources elsewhere.”
“The employees are often part-time, low-income employees – except for the players and owners who are earning very high wages,” Robyn said. “Even if this has an economic impact, there would be a much better economic impact using the same government funds elsewhere.”
If public money goes toward such a project, the least-offensive mechanisms are true user fees, not something like a general sales tax that would be borne in part by “people who don’t know the first thing about football,” he said.
Vikings fan Cory Merrifield, founder of a pro-stadium group called Save the Vikes, has a different perspective.
Merrifield says a new stadium could be built without using general fund money, general sales tax or property taxes, and he suggests using gambling revenue as part of a plan that would split the stadium’s cost among the team, the fans and the state.
The state proceeds, under his plan, would come from a racino operation at Canterbury Park.
As for the funding ideas suggested in the forthcoming bill, Merrifield said it’s good to see something happening, although he doubts the surcharge on player income taxes will make it to a final bill.
“I think it’s great and about time our state lawmakers stepped up,” he added.