Stadium Task Force
D R A F T
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
- 1 -
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
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.
- 2 -
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
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
- 3 -
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
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
- 4 -
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.
- 5 -
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.
- 6 -
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
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.
- 7 -
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
- 8 -
01 based on sports betting, but decided to recommend gaming-related revenue
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.
- 9 -
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
- 10 -
(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
- 11 -
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.
- 12 -
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
- 13 -
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.
- 14 -
(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
- 15 -
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.
- 16 -