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Stadium Task Force


Statement of Findings and Recommendations
Minnesota Stadiums Task Force

January 25, 2002
St. Paul, Minnesota

            The Task Force and Its Mission

            01     The Stadium Task Force was created by the Governor and the Legislature to study and 

            02     make recommendations regarding the asserted needs of the Minnesota Twins, the 

            03     Minnesota Vikings and the University of Minnesota football team for new stadiums.  

            04     Although the issue of a new baseball stadium previously had been studied a number of 

            05     times by the Legislature, the Metropolitan Sports Facilities Commission ("MSFC") and

            06     private groups, the needs of baseball and football had not been considered together.  In

            07     addition, despite the fact that the Vikings began raising the issue of a new stadium for 

            08     football several years ago, there had not been a sustained legislative discussion of what to 

            09     do, if anything, for professional football.

            10     The Task Force had eighteen members: six appointed by the Governor, six by the House 

            11     and six by the Senate.  Our membership included elected and appointed public officials 

            12     and individuals from the private sector.  Some of us had extensive experience with 

            13     previous stadium discussions and some were newcomers. 

            14     During our hearings, we listened to representatives of the sports teams, the MSFC, local 

            15     governments, architects, contractors, financiers, present and former players, other 

            16     Minnesotans who wanted their voices heard and from fans who have always shown their 

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            01     loyalties to teams and athletes with the word "Minnesota" on their uniforms.  We had the 

            02     opportunity to learn from and build on the work of many others, such as the MSFC, New 

            03     Ballpark, Inc. and Minnesotans for Major League Baseball.

            04     Though our recommendations are not unanimous, we worked toward a consensus on the 

            05     disputed issues and avoided relying on narrow majorities of task force members to reach

            06     conclusions.

            Recommendations and Rationale

            07     1.   We recommend that the Governor and the Legislature should take action 
            08           during the  2002 legislative session on proposals for a new stadium for 
            09           professional baseball and a stadium to be shared by the Minnesota Vikings 
            10           and the University of Minnesota Gophers football team.

            11     Action in 2002 is important for the Twins and the future of professional baseball in 
            12     Minnesota because there is a real possibility that the Twins could be eliminated 
            13     through the contraction of the number of major league baseball teams.  We note that 
            14     the lease for the Minnesota Twins has expired and is currently on a one year extension 
            15     for the 2002 season.  Like Minnesotans generally, none of the Task Force members 
            16     were pleased with the pressure tactics and crisis atmosphere caused by Major League 
            17     Baseball.  Regretfully, we have had to conclude realistically that the 2002 baseball 
            18     season could be the last one for the Minnesota Twins unless Minnesota acts to 
            19     facilitate the construction of a new stadium this year.

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            01     The situation for the Vikings and the Gophers is just as important, though to some it 
            02     may appear less urgent.  Some witnesses noted that the Vikings' lease at the 
            03     Metrodome extends until 2011.  Nonetheless, the Task Force recommends that 
            04     Minnesota act this year on football too.   The National Football League has a program 
            05     for assisting in the financing of new stadiums and the program is scheduled to end this 
            06     year.  The Task Force sees a significant funding opportunity that may not be available 
            07     in the future.  The Vikings also assert that without a new stadium, they will need new 
            08     revenue streams to remain competitive in Minnesota.  We also learned about the 
            09     revenue shortfalls being incurred by the Gopher athletic programs.  A facility shared 
            10     by the Gophers and the Vikings would produce revenue increases for both 
            11     organizations.

             Metrodome Renovation or A New Football Stadium

            12     The MSFC has suggested that renovating the Metrodome would be more cost effective 
            13     than building a new stadium.  This approach has advantages.  The MSFC described a 
            14     plan for such a renovation which they estimated would cost substantially less than 
            15     building a new stadium.  In addition there is already an infrastructure supporting 
            16     Metrodome operations.
            17     On balance, the Task Force concluded that a new football stadium was a superior 
            18     solution.  There was doubt that a renovation could be completed without disrupting at 
            19     least one football season.  We do not have an alternative venue for football if 
            20     renovation did conflict with a season.  The Vikings also raised reasonable concerns 

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            01     that cost estimates for renovation were too low.  A renovated Metrodome would still 
            02     lack many of the fan amenities characteristic of newer stadiums.  Perhaps most 
            03     important to the Task Force was the fact that the Vikings are strongly opposed to 
            04     renovating the Metrodome as an alternative to a new stadium.  The MSFC could not 
            05     finance its major renovation plan without substantial Vikings participation and a new, 
            06     longer term lease.  The Vikings made it clear they would not contribute to a renovation 
            07     and would not extend their lease at the Metrodome.  For these reasons, the Task Force 
            08     concluded that renovation of the Metrodome was not feasible and that a new stadium 
            09     shared by the Vikings and the Gophers football team was a superior solution.     

            10   2.  The Governor and the Legislature should adopt legislation providing for state 
            11         participation in financing, but not funding, new stadiums only if financing 
            12         from other sources such as private investors and local governments is 
            13         inadequate.

            14     As we discuss below, the Task Force prefers that financing for new stadiums come 
            15     from team owners or other private investors or from local governments if private 
            16     investment is insufficient.  If these other sources of financing are inadequate, only then 
            17     should the state participate in the financing, provided that there is a substantial 
            18     contribution made by the team owners.  We recognize that full private financing of 
            19     stadiums is rare.  In Minnesota, local governments have been essential participants in 
            20     previous stadium financing arrangements.    Only after an appropriate financial 
            21     commitment from the team owners and other private sources, and from the local 

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            01     unit(s) of government should there be any expectation of a possible financial 
            02     commitment from the state.  Furthermore, any participation by the state should be 
            03     financed through user fees, taxes imposed on professional sports related activities 
            04     and/or items, or through other sources that demonstrate a relationship between the 
            05     source of state funding and those that economically benefit from, or participate in the 
            06     operations of professional sports teams in the state. 
            07     In recognition of how controversial the issue of government, particularly state 
            08     government, involvement in stadium funding has been, we have these observations to 
            09     support our recommendation: 
            10     1. Some of the economic benefits claimed for sports stadiums are hard to justify.  We
            11         were persuaded that the income taxes the state receives from visiting players was 
            12         one economic benefit that could be quantified.  As player salaries have increased, 
            13         the direct benefit to the state of having our own professional teams has increased.  In 
            14         addition, the revenue spent in Minnesota by teams who benefit from revenue sharing 
            15         is derived in part from economic activity in other states such as media payments 
            16         and, therefore, is likely a net economic benefit to Minnesota.  The Task Force was 
            17         impressed, too, by the benefits many of the teams' communities received from the 
            18         charitable giving of the teams and the players.
            19     2. The facilities run by the Amateur Sports Facilities Commission and financed with 
            20         public funds have provided opportunities for Minnesota athletes to excel, and 
            21         brought outstanding athletes here from all over the world.

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            01     3. The Mighty Ducks and Mighty Kicks programs have provided state funds to help 
            02         build hockey rinks and soccer fields throughout Minnesota.
            03     4. Over the years, Minnesotans have spent millions of dollars to provide facilities for 
            04         collegiate athletics on the campuses of the University of  Minnesota system and the 
            05         Minnesota State Colleges and Universities  (MnSCU) system.
            06     5. Public financing helped build Metropolitan Stadium, the Met Sports Center and the 
            07         Metrodome for professional and amateur football, baseball, basketball, soccer, 
            08         hockey and other events and activities.
            09     6. Public financing from state and local sources was crucial to the continued viability 
            10         of Target Center and the construction of the Xcel  Energy Center.  Portions of the 
            11         public financing were premised on the use of the facilities by amateur sports teams.
            12     Finally, there are intangible benefits to having professional teams in Minnesota that 
            13     cannot be overlooked.  The Task Force has found that professional and college sports 
            14     are part of the identity of many Minnesotans.  In addition, the Task Force has found 
            15     that these teams add something that is impossible to  accurately measure, but that is 
            16     important to countless Minnesotans. The Task Force has found that, to a considerable 
            17     degree, pro and college sports play a part in the cultural vitality of Minnesota for 
            18     many, not only in the Twin Cities but across the state and  throughout the region. 
            19     The Task Force has determined that in teams such as the Minnesota Twins and 
            20     Minnesota Vikings, and in the generations of Minnesotans to whom a love of and a 
            21     loyalty to the home team has been handed down, the state has something worth saving. 

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            01     3.  We recommend that state participation in financing stadiums be drawn from 
            02          limited revenue sources, not from the general fund.  

            03     The Task Force spent considerable time discussing revenue streams that may meet the 
            04     parameters mentioned above, which could be widely considered as paid by those most 
            05     directly benefitting from the use of the facility.  The Task Force believes that the 
            06     following revenue streams deserve closer examination by state policymakers and are 
            07     potential revenue sources to finance state participation.  
            08   1.   Sports Memorabilia.  Imposing a statewide sports memorabilia tax applied
            09        to all professional sports, including clothing.  This memorabilia tax would be in 
            10        addition to the existing sales tax on memorabilia and would include a new 
            11        statewide tax on clothing items with sports insignia.

            12   2.   Player Income Tax.  Estimate the ongoing revenues from income taxes paid by the 
            13        visiting players of professional sports teams that use the facility and use those 
            14        revenues to support the state's investment in the construction of a new facility or 
            15        facilities.
            16   3.   Media Access Charge.  Businesses and individuals who use the sports facilities to 
            17        broadcast or report on games and events that take place within the facility should 
            18        be charged for access to the facility or facilities.
            19   4.   Sales Tax on Facility Food and Beverages.    Impose an additional tax on the sale 
            20        of food and beverages at the sports facility, this would be in addition to the state 
            21        sales tax of 6.5% and any local option sales tax that may be in place.

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            01   5.   Ticket Tax.  Impose an admission tax on the tickets sold to attendees at all events 
            02        at the facility, both game and non-game events, this is in addition to the state sales 
            03        tax of 6.5% and any local option sales tax that may be in place.

            04   6.   Naming Rights.  The Task Force believes that the value associated with naming 
            05        rights of the facility should be considered as a potential public participation, but 
            06        that the state may want to reserve the right to contract with the team to negotiate 
            07        with interested parties on the state's behalf, recognizing that the value of the 
            08        naming rights may be greater if negotiated as part of a more comprehensive 
            09        sponsorship package.  The state and the team would agree on what should be 
            10        considered as the revenue attributable to the naming rights, and those revenues 
            11        should be transmitted to the state.

            12   7.   Personal Seat Licensing.  The sale of personal seat licenses (PSLs) have been used 
            13        as a financing source in other facilities and result from the sale of the right to buy 
            14        a season ticket.

            15   8.   State Loans to Local Units of Government.  The Task Force recommends 
            16        consideration of low- or zero-interest loans to local units of government.

            17   9.   Gaming Revenues. The Task Force urges the Legislature and the Governor to 
            18        consider gaming related revenue streams as an option to support public financing 
            19        of new professional sports facility.  The Task Force considered certain specific 
            20        proposals including a sports-themed lottery game and a non-electronic game 

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            01        based on sports betting, but decided to recommend gaming-related revenue 
            02        generally.

            03   10.  Metrodome Assets.  Should the Metrodome be left with no principal tenants, it is 
            04        expected that the facility would be sold or demolished and the land redeveloped.  
            05        The revenue from the sale of the Metrodome land and other assets of the 
            06        Metropolitan Sports Facility Commission could be considered for a state 
            07        contribution to the costs of a new facility.

            08   11.  Sales Tax Exemption. The Task Force also recommends consideration of a sales 
            09        tax exemption on any materials used in the construction of the new facility or 
            10        facilities.  While these proceeds would otherwise be deposited in the general fund, 
            11        they are receipts that would not be available to the state but for the project. To the 
            12        extent that public funds are used to finance some portion of the construction, 
            13        imposing a sales tax could lead to the state paying more interest to finance the 
            14        sales tax.

            15   12.  Airport Car Rental Charge.   The Task Force recommends that the state impose a 
            16        charge on car rentals at the airport.  We recognize this charge does not fit neatly 
            17        into the user or beneficiary category.  Nonetheless, it has been used  to finance 
            18        stadiums in others states and is a reasonable option.   

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            01   4. Our recommendations include several other financial considerations that 
            02       should be addressed by the legislature and the Governor.  

             (Proposed for discussion)
            03   The state should consider granting a local unit(s) of government the authority to 
            04   establish a local options sales tax to finance the local government contribution.  To the 
            05   extent a community already has a local option sales tax, the State should consider 
            06   expanding the existing authority to allow proceeds to be used for facility financing. 
             (Proposed for discussion)
            07   The Task Force also recognizes there is a state interest in using these sports facilities 
            08   for either collegiate or amateur athletics.  The Task Force recommends consideration 
            09   of some state funding should the lease for any facility include provisions for collegiate 
            10   or amateur athletic use.

            11   The Task Force also recommends that any state financing be done in the least costly 
            12   way possible, without sacrificing the goal limiting the impact to the direct 
            13   beneficiaries of the facilities.  For example, if the state intends to issue debt to finance 
            14   its share of the project cost, the state should explore strategies to ensure that as much 
            15   of the state participation as possible can be done through the issuance of tax-exempt 
            16   bonds.

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             (Proposed for discussion)
            01   However, the Task Force also recognizes that several of the revenue streams identified 
            02   will be problematic as the primary source of revenues for debt service payments, 
            03   primarily because there will not be a history of collections prior to issuing the debt.  
            04   This may result in a reduced amount of debt that can be issued using these revenue 
            05   sources as the payment for the debt service, given the requirement to have sufficient 
            06   coverage on the debt, or a "cushion" of having expected revenues exceed debt service 
            07   payments by some margin.  The Task Force recommends that these limitations not be 
            08   "fixed" by issuing general obligation bonds that could pose risk to the general 
            09   taxpayers of the state.
             (Proposed for discussion)
            10   The Task Force also recognizes the efforts of the state on the Streamlined Sales Tax 
            11   Project, which is aimed at addressing sellers' concerns about the multiplicity of tax 
            12   laws and the burden created in trying to comply with tax laws across states that are not 
            13   uniform.  Recognizing that increasing uniformity may ultimately allow the state to 
            14   capture tax revenues lost on Internet sales, currently estimated at hundreds of millions 
            15   of dollars annually, the Task Force urges careful consideration of the recommendation 
            16   put forward in this report.  It may be advisable to impose a gross receipts tax on the 
            17   facility revenues, for example, rather than relying on specific extensions of the sales 
            18   tax.  The Task Force recommends that the Minnesota Department of Revenue be asked 
            19   to comment more specifically on the revenue options identified in this report and 

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            01   recommend strategies for implementation to minimize any adverse impact on the 

            02   Streamlined Sales Tax Project. 

             (Equity language proposed for discussion)
            03   The Task Force also supports the further consideration of public ownership of either or 
            04   both of the teams through the issuance of equity stock.  While accomplishing a slightly 
            05   different goal, the Task Force also believes the sense of public support accomplished 
            06   through the issuance of commemorative stock, not defined as ownership under the 
            07   Securities and Exchange Commission Rules, would justify some consideration for a 
            08   limited portion of the financing. 

            09   The Task Force also expressed concern that the state not be considered as a party 
            10   responsible for financing any cost overruns in the project budget. While there is 
            11   preference to having the franchise owners bear responsibility for ensuring completion 
            12   of the project within the funds available, the Task Force also understands that the 
            13   owners may then want the responsibility and control over construction.  The Task 
            14   Force recommends that the responsibility for cost overruns and construction 
            15   management be clearly delineated in the lease between the franchise and the facility 
            16   landlord, but under no circumstances should the state be considered as a financing 
            17   source for cost overruns.

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            01   5.  The Task Force does not recommend a particular site for either a baseball or 
            02        football stadium.

            03   The Task Force recommendations are site neutral.  The Task Force anticipates that the 
            04   state will identify parameters for determining state participation and the location of the 
            05   facility or facilities will be determined through a negotiated agreement between the 
            06   franchise (tenant) and the local unit(s) of government (landlord).  While the Task 
            07   Force believe the operations can be most successful in a site centrally located within 
            08   the metropolitan area, the only significant site factor is that any proposed football 
            09   stadium be on or near the University of Minnesota campus to allow for the use by the 
            10   University of Minnesota Gophers football team.  

            11   6.  The Task Force recommends that any state financing not be released until the 
            12        team has negotiated a lease with a landlord, which  may be a local unit of 
            13        government.   State financing, if any, would be released only if the lease 
            14        between the team and the landlord includes:

            15         a.  a listing of all revenue streams generated from use of the building with a 
            16              specification of what revenues are available to cover team operations, which accrue 
            17              to the building landlord and which are available to the state (such as naming rights),
            18         b.  clarification of the operations and management responsibilities between the team 
            19              and the landlord,
            20         c.  delineation of the responsibility for repair and replacement in the facility, including 

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            01              an annual inspection by the landlord and a representative of the state,
            02         d.  provisions within the lease that some portion of the tickets for professional sports 

            03              games are accessible and affordable,
            04         e.  protection of the public interest in the event of a default by the team or a disruption 
            05              in the season due to a player strike,
            06       f.   a lease term that is at least as long as the term of any public financing that may be 
            07            in place at the state or local level, not to exceed 30 years,0
            08         g.  terms specifying responsibilities for construction management and cost overruns 
            09              between the landlord and the team,
            10         h.  statement of public ownership of the facility, and clarification of ownership of the 
            11              furnishing and equipment within the facility, 

            12         i.   terms that outline the access and affordability requirement for some portion of

            13              the tickets to the professional sports games,
            14         j.   terms which outline the security offered by the team on the lease,
            15         k.  binding commitments of financing sufficient, when taken in conjunction with the 
            16              state financing, to ensure that the project is fully funded prior to the release of the 
            17              state funds, and
            18         l.  documentation on the final design and construction specifications.
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             (Proposed for discussion)  
            01         The state shall finance X% up to $X for a baseball facility.  Any additional project 
            02         costs beyond a total project budget of $XX shall be the responsibility of the team
            03         owners, other private interests, and other units of government.

            04         The state shall finance X% up to $X for a football facility.  An additional $X shall be 
            05         made available if there are provisions in the lease to allow the use of the facility for the 
            06         University of Minnesota Gophers football team.  Any additional project costs beyond a 
            07         total project budget of $XX shall be the responsibility of the team owners, other 
            08         private interests, the University of Minnesota, and other units of government.
             (Proposed for discussion)
            09         7.  We recommend that the Governor and Legislature make state participation in 
            10              the financing of a baseball stadium contingent in some way on the reform of 
            11              Major League Baseball's business structure.

            12         Many studies have shown that Major League Baseball teams in markets with relatively 
            13         little revenue from local media will continue to struggle financially.  The Twins will 
            14         continue to have few resources for building a competitive team even with a new 
            15         stadium unless Major League Baseball implements significant reforms.  The major 
            16         necessary reforms are more equal revenue sharing, particularly from local media 
            17         revenue, and a salary cap.  The National Football League's salary cap and revenue 
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            01         sharing have helped to create teams whose success does not depend on the size of the 
            02         local media market or the owner's bankroll.  Legislation authorizing public 
            03         participation in financing a baseball stadium should include provisions requiring that 
            04         Major League Baseball implement reform before public dollars are released.

            05         8.  We recommend that public participation in financing facilities for professional 
            06              sports be designed to ensure that professional sports events are accessible to 
            07              and beneficial for a broad community of Minnesotans.

            08         Any professional sports facilities with public financing should include specific 
            09         provisions for maintaining the accessibility and affordability of  some portion of 
            10         tickets to professional sports events held in the facilities.  The potential for use of the 
            11         facilities by high school and other amateur sports teams should also be protected.  In 
            12         addition, facilities that benefit from public financing participation should be designed 
            13         to be integrated into the host city and its neighborhood.  An architecturally significant 
            14         design could become an attraction in itself, as well as enhancing the physical 
            15         environment of a community.

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