Thursday, May 26, 2005

Discretionary Spending

Over at the SBG site today, the man refreshed from honeymooning in Hawaii has some provocative thoughts on how a collector's spending to acquire the Twins medallion series may put into relative perspective the expected cost to each individual consumer in Hennepin County to fund the Twins ballpark plan. According to the ballpark plan in the legislature, I would have to spend $54,000 in Hennepin County before my contribution to the project funding would match the $81 I was willing to drop in 25 days to collect a complete set of Twins medallions. SBG acknowledges the difference between a tax and discretionary spending, but still--how long would it take you to spend $54,000 in Hennepin County, excluding housing, groceries, and clothing?

Just to be clear: I personally don't have a problem with paying contributions towards getting a ballpark built. I just oppose the deal on the table because I think the public deserves a fair cut of the revenue streams in return for funding 75% of the project. When the general public is asked for $353 million to fund an enterprise that is expected to generate large profits, it's only right that we should get cut in for our fair share of the returns. In lieu of that kind of deal, most of the public have not been persuaded by the arguments put forth by ballpark supporters.

However, SBG mentioning the difference between taxes and discretionary spending got me thinking that ballpark proponents might tip the scales in their favor if the project plan called for public funding to come from fees attached to Twins tickets and items bought inside the new ballpark. In effect, the funding then would be paid at the discretion of fans who choose to come to Twins games.

The state could also create a specially themed scratch-lottery game and offer special Twins/ballpark license plates, as they did in Washington state and other places. Why not sell series of collectibles, like medallions or bobbleheads, to raise money for the project, too? These are all more forms of discretionary spending that would allow ballpark proponents to put their money where their mouth is, so to speak.

It's clear that the general public is not being won over by the "quality of life" arguments that compare a stadium giveaway to public parks and the Guthrie. They're not convinced that the promised economic boon in the Warehouse District is worth the $353 million public investment. The idea of limiting the public contribution to a sales tax in Hennepin County has given some state politicians comfort, but it hasn't swung the polls in favor of the project. To this point, the Twins have not indicated a willingness to share the new revenue streams created by the ballpark; it's clear they expect to keep it all. So if the current proposal in the legislature fails because a referendum gets attached, what else can ballpark proponents do to break the impasse?

I've seen a number of Twins fans say they don't care who profits off this deal, and they may not even care much about the project location, who pays for it, or any other details in the fine print. They just want a new ballpark. So, if the current plan dies, let Twins fans tell the state:

We're ready to pay for this project ourselves. If it lines the pockets of Carl Pohlad and some restaurant and bar owners downtown, bless their hearts. We don't care. We'll gladly pay fees added to our tickets and concessions. We'll buy lottery tickets and license plates. We'll buy more bobbleheads and medallions. Whatever. We just want our new ballpark. Since we're paying, this is all we ask: put a retractable roof on it, please. And make it better than Milwaukee's.

Who's up for that?

30 Comments:

At 5/26/2005 10:13 PM, Blogger SBG said...

Just to clarify, the numbers on my site are correct. One percent is 0.01. Fifteen one hundreths of one percent is 0.0015. 90/0.0015 is $60,000. So if you were going to spend $81 on medallions, you would have to spend $54,000 and not $5,400 in Hennepin County to equal that amount.

 
At 5/26/2005 10:29 PM, Blogger frightwig said...

My mistake. You're right. Thanks for the correction. I'll go change that now....

As for the issue of paying for the ballpark with user fees, special lottery games and license plates, and memorabilia sales, would you support that if the current sales tax proposal falls through?

 
At 5/26/2005 11:04 PM, Blogger SBG said...

Absolutely.

 
At 5/26/2005 11:33 PM, Blogger frightwig said...

Since the main point of opposition to all the ballpark proposals has been focused on 'no taxes or public funding,' why do you think the club still has not proposed the user fees/lottery/license plates/memorabilia option?

Do you think the issue could be settled with that proposal, or would it still fail? If it would fail, what might be its fatal flaw?

 
At 5/27/2005 8:05 AM, Anonymous Anonymous said...

Interesting discussion.

With the exception of lottery games and license plates, all of these items could be offered for sale directly by the Twins and used to pay for a new ballpark. No state participation required.

Having said that, I suspect the big issue with optional taxes like lottery games, license plates, etc. is that they won't generate enough revenue to fund the project.

Why don't the Twins build this ballpark themselves, either by internal funding, or by attracting investors? Why is public financing necessary at all?

 
At 5/27/2005 9:50 AM, Anonymous Anonymous said...

Good discussion.

I don't think fees attached to memorabilia would generate much money. Hard to quantify.

The problem with special lottory tickets is the opportunity cost. I don't think our state reps would go for it because they'd be saying, in effect, 'we care more about Carl Pohlad than the environment', as that is a key beneficiary of lotto sales. Maybe there would be a small marginal increase in lotto players by those who want to support the stadium and don't mind throwing money away, but I'd venture that number would be outpaced by those who currently play and just switch games.

I'm for this plan because the tax is minimal and it's paid by the local the stands to benefit the local economic boost. For that reason, I'd also support an increased sales tax just in downtown along with hotel fees.

 
At 5/27/2005 10:24 AM, Anonymous Anonymous said...

Shane has a great response to Frightwigs post. Basically the user fee approach doesn't come close to providing enough money to retire the bonds, basically $11 million a year v. $28 million from sales tax. Here's the link:

http://blog.lib.umn.edu/snackeru/greet/

 
At 5/27/2005 10:36 AM, Anonymous Anonymous said...

Lets get off all this garbage and support the plan in place. It creates a ton of construction activity, keeps the Twins here long term, and finally puts this issue to rest. All of you that think using any tax money is wrong...lets then be consistant and start tearing down everything that has tax dollars in it, like the Guthrie, light rail, Target Center, Xcel Center, public libraries, etc.

 
At 5/27/2005 10:40 AM, Blogger SBG said...

Like Shane says, the dollars from a user fee will simply not pay for the stadium. In addition, the fact that the money is not guaranteed will make lenders require a higher interest rate.

Therefore, any user fees could only be used to offset the guaranteed contribution from the county and not as a primary source of revenue.

When it comes to all things stadium, I defer to our resident blogger expert, Shane from the Greet Machine.

 
At 5/27/2005 10:50 AM, Blogger Third Base Line said...

There was public money put into the Metrodome, the Xcel, the Target center. The new Vikings stadium, if and when, will have public financing. I don't believe any of the above, with the possible exception of the Dome, have or will guarantee revenue back to the public. I don't expect a new Twins stadium to do that if it's not already par for the course. Would it be nice? Yes. Would it be ideal? Absolutely. Is it likely? Nope.

Get me a stadium, and I'll settle for the extra jobs and fan/tourist dough it brings to the area.

 
At 5/27/2005 12:11 PM, Blogger Cheesehead Craig said...

No matter what, it will never be better than Milwaukee's stadium. But, I'm a bit biased on that.

Hey, if the Twins get contracted, that will just mean that Brewers games will be shown up here on FSN, thus increasing their TV revenues and bringing even more $ into the Brewers coffers, making them able to spend more and create a World Series Champion! Finally, Selig's plan is coming to fruition. So don't support a new Twins stadium and let baseball contract them! Long live the Brew Crew!

 
At 5/27/2005 1:22 PM, Anonymous Anonymous said...

FYI. If we've ever built anything in this state that was partially funded by tax dollars at a net loss then we must by definition fund this stadium. Boy, that makes the decision a lot easier. Let's not even bother looking at the relative loss to the taxpayers.

I'm sorry to get surly, but the argument is tired and full of holes.

 
At 5/27/2005 3:27 PM, Blogger Curt said...

Let me chime on this one as well. I would love nothing more than for Pohlad and (now) Wilf to pay for their own stadiums. This is especially the case if personal seat licenses need to be used. That being said, I would pay .0015 extra tax than lose the Twins. The thought of losing such an important cultural and recreational icon, as the Twins are, literally makes me sick.

I like to think of the current plan as the same type of economic development that happens in every community in every state across the nation. Up here in Grand Forks, we can't build a stadium for our non-existent professional sports teams, but we give out property tax breaks all the time to encourage business to move and grow here. Certainly those business usually turn a profit; our community gains positives as well in terms of more jobs, which eventually will turn into more tax money. In many instances, multi-million dollar corporations gain these types of incentives. Why are the Twins any different?

Plus, factor in all of the good that will come from the new stadium: thousands of construction jobs, a further development of downtown, and the continued presence of a team which millions of people in the Upper Midwest follow. 3 cents for every 20 dollars seems a very small price to pay.

Curt in Grand Forks

 
At 5/27/2005 3:47 PM, Blogger frightwig said...

Shane's using numbers based on Twins revenue in 2001, when prices and attendance were much lower than we could presume to expect when a new park opens in... let's say 2010.

I'm not sure if that makes all the difference; but I know that Camden Yards was financed primarily by a lottery game. If the Twins would attach fees to tickets, concessions, seat licenses, luxury suite leases, in addition to lottery games, license plates, and memorabilia... I would be surprised if they couldn't do much better than $11 million a year.

I've seen a lot of proponents say they don't care who gets the profits or how much of a loss the state takes on the project. Supporters say that public projects don't have to necessarily bring a direct financial return to the public, but there are promises of increased tourism and economic activity downtown spurred by a new park. I think it's more likely that the economic activity will just shift from one end of downtown to another, or else there won't be much economic growth around the new ballpark because most of the spending will be captured inside it. Once the novelty of a new park wears off, we've seen how attendance often adjusts according to the success of the team on the field, anyway. A new ballpark itself has rarely proven to be a sustained, significant fan draw in its own right.

It's an old debate, and I don't expect to settle it here, but the key point I want to raise is that the proponents' side of the argument has been rejected by the general public at every turn for the last decade. Comparing the project to the Guthrie or public parks, promising construction jobs and increased tourism, saying the individual cost is only 3 cents on every 20 dollars spent in Hennepin County, and shrugging at the thought of giving away all the revenue streams generated by the ballpark is not winning the majority to your side. Your only hope of getting the current project passed is that the majority of our state legislators might choose to reject the majority will of their constituents and send the bill to Pawlenty without a referendum attached.

Barring that kind of luck, I think the ballpark proponents need to come up with some new ideas to sell. Next time out, if the Twins can't promise a guaranteed cut of the park revenue to entice the public, what else do they have to offer? The onus is on the Twins and their supporters to win over the opposition.

The way I see it, either we offer some new angles to appeal to the general public, or we decide we can just get the project built without them. So if user fees and rummage sales isn't going to fly, and the Twins aren't going to share their goodies with the public, what are some other ideas?

 
At 5/27/2005 9:25 PM, Anonymous Anonymous said...

Actually, I intentionally increased my totals by about $1 million a piece knowing that the state's totals were generated a few years ago. You might be right, though, we may be able to squeeze out a couple of million more. I must admit when I first saw the Stadium Task Force numbers, I was stunned.

Camden Yards only cost about $110 million, so a lottery game may have been the big funding source. I'd have to do more research about that one.

Before the Hennepin County plan came out, readers of my site will remember that I preached two things that I thought would finally result in a new stadium: the Twins need to pick a site, and Pohlad needs to pay much, much more. Usually I put the minimum contribution at $160 million, but I thought the Marlins proposed contribution of $192 million would be more appropriate. I even called Dave St. Peter directly to ask, based on the Marlins proposed contribution and the Gophers private financing, would the Twins follow suit. You can read about my disappointing conversation here.

When the Twins came out with this plan I thought maybe it would be enough, even without an increased contribution from the team, since they took the state out of the equation. Well, it is looking like it won't work. I just don't think this plan will get out of the Taxes committee.

So, based on that, you would think I would go back to my plan to have the Twins up their contribution. Well, as you probably know, the Florida Marlins couldn't even get a stadium built with a $192 million contribution. Their legislature turned them down. So, I'm starting to think this will never, ever, ever happen for us. Unless Pohlad pays for everything. Needless to say, I am a little depressed.

So, FW, I am all ears. I hope other people take you up on your request and start thinking of new ways to fund this thing. I'm very serious about this. Because quite frankly, no one wants to pay for a new stadium. The state, the county, Pohlad, no one. Well, actually there is someone. The only ones that want to pay for it are Twins fans, and we don't have enough.

Anyway, sorry to ramble on. Keep up the good work FW. Hopefully you won't hear from me anymore. And hopefully we can stop talking about stadiums real soon.

 
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