Monday, May 09, 2005

For Pennies a Day....

They say it's going to pass, like it or not.

Despite polls showing significant public opposition to any Twins ballpark project which requires public financing, particularly amongst the population of Hennepin County, it looks like Team Pohlad has finally polished off a scheme that will get the club an outdoor ballpark in their desired location near the Target Center. The Hennepin County Council voted, 4-3, to send the plan to the legislature for approval, and media reports have indicated that the club will have the votes to approve the deal in the capitol. Just a little political back-scratching may be needed in the House, is all. Mere details. It's all but a done deal, says the press.

So, after all the failed proposals over the past decade, what's changed?

The buzzwords are, "No State Money." The new plan requires no direct funding from the state budget, unless the legislature should want to kick in $100 million to add a retractable roof to the project. Purely optional, though! Not a deal-breaker! If the esteemed legislators of our great state don't care to keep our baseball-loving citizens warm in early Spring or Fall, or to guarantee our outstate kin that their weekend trips to the big city will not be spoiled by rain or snow, then that's between them, their constituents, and God. Dave St. Peter and his bosses only need permission to raise a sales tax of .15% in Hennepin County. The rest of the funding is promised to come from the ballclub and private sources.

This has been the entire focus of all media coverage of the proposal. "No State Money." If you shop or eat in Hennepin County, the plan would only cost you 3 cents on every 20 dollars you spend. For everyone else, why should you object? Dick and Bert run through those talking points every night with all the pleading urgency of someone asking us to adopt a child in Africa or help find the cure for juvenile diabetes. Call it St. Jude's Appeal for a Twins Ballpark: we will never give up the fight for Major League Baseball to return to the outdoors in Minnesota, on the public dime, as God and Bud Selig intended. Well, except that the club executives have been hinting that if this plan doesn't pass, then they just don't know what to do but throw in the towel. So pay up, Minnesota, or the orphaned, diabetic ballplayers will be doomed to their Metrodome squalor until they're forced to pack up like the Joads and go to Portland or Las Vegas. This time, we mean it.

Clearly, many state legislators are glad to see a plan that gives them political cover from their constituents who oppose paying taxes to build Carl Pohlad a ballpark. Never mind any other issues involved, legislators from outside Hennepin County can vote for this plan and claim: 1) they raised no state taxes, nor carved out any funds from the state budget, and 2) they helped Save the Twins. Meanwhile, some of them see an opportunity to trade their votes for permission to raise sales taxes for special, worthy projects in their own home counties. If the quid pro quo works out, and there isn't too much bad publicity about these extra taxes in the fine print, then some outstate officials can take credit for community projects back home, too. Pork barrel politicking in its finest form.

Any politician from Hennepin County may take heat for voting for the bill; but they may also take cover in the fact that the tax is a relatively small addition to the county sales tax rate, and they may point out that Hennepin County stands to gain the most from the project by its infrastructure improvements and the promised economic development in downtown Minneapolis.

Indeed, why should any reasonable person be against this?

Well, one thing that's been bothering me about the media coverage is the complete lack of attention paid to what the public gets back for its investment in this project, and how much we stand to lose once the Metrodome no longer takes in any baseball-related revenue. Even if the plan has cleverly found a way to remove state funding from the equation, the project still requires $353 million from We the People--which represents 74% of the projected cost. We're entitled to some kind of fair return on our investment. Are we getting it from this plan?

Well, the public gets "ownership" of the ballpark, under the care of a Ballpark Commission comprised of five government appointees. This commission would be responsible for allocating $1.4 million in annual maintenance and regular upkeep, or about 70% of the planned costs, which would rise with inflation. (This is the proposed estimate of upkeep costs, although the Metrodome authority has an expenditure budget of $14.3 million for operations, debt service, and passthrough this year.) It would also hold a 30-year lease signed by the ballclub. However, all revenue from naming rights, seat licenses, concessions, luxury suites, facility parking, and non-baseball events would go to Carl Pohlad's ballclub, which would be in charge of managing the facility. In my book, the man who takes in all the profits from a facility and pays a minority share of upkeep costs is not only the real owner of the joint, but he's playing his investors like chumps.

In fiscal 2003, the Metropolitan Sports Facilities Commission earned $41 million in operating revenues from the Metrodome and claimed $61 million in total assets at the end of the year. An outdoor facility built primarily to host baseball may not match those figures, but the loss of 81+ event dates spanning half the year would still represent a sizeable chunk of dough. Also figure the loss of Gophers baseball and perhaps some summertime events being shifted to the sparkly-new outdoor facility, and this is no small source of revenue we're giving away.

The only financial compensation being dangled before us is the promise of economic development in the Warehouse District. But wasn't the Metrodome supposed to spur development on that end of town, too? And what is over there 23 years on, but parking lots and Hubert's? The Block E project near Target Center was created specifically to draw business development and shoppers downtown, and have you been in there lately? The space is dark and either vacant or mostly another outlet for corporate chains. The ballpark project proponents talk like the ballpark would be a boon to so many local small business owners; but if it's a boost to anybody, it's more likely going to be a boon to Applebee's and TGIFriday's. Otherwise, it's as likely that 23 years after the new park opens we'll still be walking past warehouses, vacant lots, and the city garbage incinerator on our way to and from the ballgames.

Also keep in mind that while there may be some economic benefit created by the project in one corner of downtown Minneapolis, the state government estimates that two-thirds of the money raised by the special sales tax would come from the county suburbs. What kind of economic development could really be expected to occur in Bloomington, Edina, St. Louis Park, and Brooklyn Center in reward for raising the majority of the project funding?

Oh, and for those of you who hoped that getting a new ballpark built would lead to Carl Pohlad finally selling the club to Glen Taylor or any other less loathsome figure, get this: the Ballpark Commission would be paid 18% of the gross sale price if the club is sold the year ground is broken on the project, but the percentage drops 1.8% annually until it disappears in 2016. In other words, a man who would haggle with his own grandson over the price of a cup of lemonade has every incentive to keep the ownership of the club within the family for at least the next 10 years--when he or, more likely, his heirs become free to keep all sale profits to themselves. Meanwhile, of course they're sitting on a goldmine while they watch the franchise appreciate in value by leaps and bounds. The Pohlad family has no intention of selling the Twins anytime soon, folks.

In the end, the benefits of this deal come down to whether you believe that Major League Baseball played outdoors greatly improves the quality of life in the community, enough that it's worth paying $353 million, plus millions more in lost revenue each year after the Twins leave the Metrodome.

I believe in investing in a community's quality of life. It is a good thing to have symphonies, art museums, libraries, and parks in the community, whether or not I use the facilities myself. I am a passionate baseball fan. I would love to see the Twins in an outdoor ballpark, so long as they don't screw up the design like they did in Milwaukee. I believe that having the Twins in Minnesota is good for the community, whether we as individuals are baseball fans or not. I also believe in getting a fair return on our investment when profits are to be divided up, and I believe a $353 million investment entitles us to be treated with respect when entering a partnership with private business on such a large project.

How far will we bend over to appease Carl Pohlad, to stop the threats to move or contract the ballclub, and to have our outdoor baseball? At what price is your dignity for sale?

I want to see a public/private partnership on a new Twins ballpark, but I also want a fair partnership in the true sense. We're still not getting a fair deal worked out in good faith. Shame on Carl Pohlad and his minions for doing more business as usual, shame on our representatives who are playing along, and shame on the local Fourth Estate for doing nothing but act as cheerleaders for the scheme. We're being played for suckers by the lot of them.

Do you mind?

10 Comments:

At 5/09/2005 8:40 PM, Blogger SBG said...

Could you write a little about the financial arrangement for the new ballpark in Seattle and how it differs or is similar to the proposed ballpark here? If you don't want to post, I'll take an e-mail, that is, if you are so inclined.

 
At 5/09/2005 10:09 PM, Blogger frightwig said...

Safeco Field was another give-away drafted in back rooms by county officials and the governor, costing the public $340 million. The selling points of the scheme were similar to what we're hearing out of the Twins now, as well: no state money involved, it's just King County sales taxes on certain services, which would cost the average county resident just a small amount each year. There were promises of economic development around the ballpark, which really hasn't happened so much in the 6 years since it opened. The public officials in charge paid no mind to those who wanted to talk about the allocation of revenue streams directly generated by the facility.

As the Twins are now, the Mariners also promised to pay all cost overruns; but when the time came to pay up, the public had to go through a nasty lawsuit to collect. I believe the club settled because they didn't have a leg to stand on, and the public embarrassment got too great even for Major League Baseball executives. A lot of people, including Mariners fans, eventually became plenty angry and disgusted by how the finances of that project came together.

They built a great ballpark in Seattle, but the financial model is not one I'd hope to see emulated by Minnesota. People here have been standing by their principles for about a decade now. It would be too bad if all that were thrown out the window for the sake of political expediency now.

If you want to know more about the history of Safeco Field, I'll try to get together some details for you tomorrow.

 
At 5/10/2005 10:57 AM, Anonymous Anonymous said...

With all the breathless pro-stadium blog rhetoric floating around, it's nice to see your counterpoint.

I'm a passionate Twins fan as well, but remain opposed to any public funding for a new stadium.

Pohlad is a shrewd businessman. If building a new stadium was a good business decision, he would have already built it.

 
At 5/12/2005 10:18 AM, Anonymous bjhess said...

I decided to join the fray. I took a look at what economists say about these things and it ain't pretty.

 
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