Hamline-Midway resident Tom Goldstein, an attorney, affordable housing advocate and frequent State House lobbyist, has been no fan of public financing packages for privately-managed sports arenas.
Over the past two years, he’s written extensively about all the different reasons he opposed the Minnesota Vikings tax bill, which passed the Legislature anyway in 2012.
At about 1/20th the cost of a billion dollar Vikings stadium, you might think the $63 million regional ballpark in St. Paul’s Lowertown would be an easier sell. After all, the St. Paul Saints have pledged to host 160 events annually at the ballpark, most of them non-Saints games. That opens the ball field to plenty of community uses.
The team has agreed (in principle, so far) to cover what could be millions of dollars in annual operating and maintenance costs, and has even agreed just recently to increase their $10 million contribution by $1 million, leaving taxpayers on the hook for the other $52 million, or 82 percent. Sounds like a swell deal, no?
Goldstein says…
“The short answer is no. (The press is reporting) the Saints agreement to cover operating costs as something new; that’s always been the ‘agreement in principle’ for the last year. … The Saints annual $200,000 rent has paid for most of the operating costs at the Midway, so I’d sure like to know what all these other expenses would be.”
“Because my reading of that statement is that their operating costs will go up because they plan to host a lot of events for which they will be the primary beneficiary, i.e., they’ll spend more to make more, thus capturing revenue that should come to the city.”
“Bottom line: without knowing the exact deal and exact terms it’s very hard to determine whether this improves anything. This is project that has morphed from $25 million in 2008 to $63 million today–and that’s not simply inflation. Why do the Saints need 7,000 seats? How much revenue does the team expect to make at the new location? While it’s technically ‘better’ that the Saints are kicking in an extra $1 million, that number is meaningless in terms of the overall deal, i.e., no property taxes generated, no actual figure on the revenue sharing, city serving as the backstop for the bonds, etc.”
“Essentially the city is kicking in another $6 million via a loan and tapping $2 million that could go to other city needs (the Vikings fund) while the Saints only shoulder an additional $1 million. Sounds to me like the team made out great while someone else is picking up the majority of the overruns.”
“This is damage control being spun as a positive, when the whole deal has been one-side(d) from the start. When the Saints agree to share half the revenue and put in $10 million up front, then we might have a deal that looks promising.”
Ouch. The Scoop would point out that the likelihood of a sports team in humble Lowertown paying for 50 percent of a new city-owned sports facility strikes the Scoop as dim odds, at best. Not even the Vikings deal was so generous to taxpayers.
That said, the Saints deal has them fronting $2.5 million of the $63 million project and paying another $8.5 million in rents over 25 years. That’s 4 percent now, 13 percent over the next three decades, and about 17 percent total.
Is 17 percent private / 83 percent public a fair split? Depends upon who you ask. Over a decade ago in downtown Dayton, Ohio, the Dayton Dragons fronted almost 28 percent, or about $8 million, to help complete public financing for their $29 million ball field, Fifth Third Field. That ball field remains a celebrated corner of a rust belt city that has been hit hard by population declines and manufacturing losses.
Last year, reporter Doug Belden did some digging and found a Wall Street Journal analysis of football stadiums. As a general rule, team owners were willing to dig deeper into their pockets depending upon how big the market was. In smaller markets, the public share of construction costs went up considerably… to about 80 percent.
Since 1995, taxpayers have paid about 80 percent of the cost of NFL stadiums in the eight smallest media markets with new stadiums, according to the Wall Street Journal, citing data from Convention Sports & Leisure International.
Taxpayers have paid less than 20 percent in the eight biggest markets with new stadiums. The Twin Cities is the 15th-largest media market.
Costs to build a Minnesota Vikings football stadium would break down as follows: state, $398 million; Minneapolis, $150 million; Vikings, $427 million.
That means construction costs are divided at 56 percent public, 44 percent private.
The Vikings would put in most of the operating and capital expenses, which means over 30 years the team shoulders just more than half the total cost of $1.49 billion.
The most recent stadium deals, according to the NFL, reflect that trend:
2010: New York Giants/Jets, $1.6 billion; 100 percent private (not counting publicly funded infrastructure improvements)
2010 Kansas City, $388 million renovation; 68 percent public, 32 percent private
2009 Dallas, $1.1 billion; 41 percent public, 59 percent private
2008 Indianapolis, $720 million; 86 percent public, 14 percent private
2006 Arizona, $455 million; 68 percent public, 32 percent private
– Doug Belden
Nevertheless, Goldstein and others have pointed out that the Saints majority owner, Marvin Goldklang and the Goldklang group, are minority owners in the New York Yankees and own other minor league teams, and they’re probably not hurting for cash.
Goldklang, a graduate of the Wharton School of Business in Philadelphia, has partnered with Mike Veeck — the more public face of the Saints ownership — and actor Bill Murray on the Saints and other baseball enterprises, according to this 2010 profile of him on Bloomberg.net. (One of his shorter-lived experiments was an Israel Baseball League, which played a single season in 2007).
The view from St. Paul Mayor Chris Coleman’s office is a lot more flattering, and Parks and Rec Director Mike Hahm has called the un-finalized deal with the Saints a “win-win-win” in terms of getting a new state-of-the-art facility built in a relatively quiet warehouse district that could use a boost. Gov. Mark Dayton last year pledged $25 million in state funds to the project, and it appears city officials are eager to jump on that offer before the political winds change.
A news release on Thursday about the ballpark included upbeat comments from the mayor, City Council President Kathy Lantry and Council Member Dave Thune…
July 18, 2013
Important taxpayer safeguards included in preliminary agreement between the City of Saint Paul and the St. Paul Saints
City Council will hear amended budget resolution on July 24, 2013 allowing ballpark project to move forward
SAINT PAUL, Minn. – At its next council meeting, the Saint Paul City Council will review an amendment to the budget for the Lowertown Ballpark that will reflect increased costs due to recent soil contamination findings.
The City of Saint Paul has also reached a tentative agreement with the St. Paul Saints ownership on key financial terms that include important safeguards for taxpayers. The Saints have agreed in principle to increase their contribution by $1 million and to be responsible for operations and day-to-day maintenance costs at the ballpark.
Also, the city would share a percentage of the Saints’ net revenues from the ballpark and a percentage of the proceeds if the team is sold within seven years.
The above financial arrangements mark the first time in Minnesota sports history that a team would share with a governmental unit both annual revenues and a percentage of sale proceeds should the team be sold.
“The Lowertown Ballpark will be a facility that makes the city, community and neighborhood proud,” Saint Paul Mayor Chris Coleman said. “While unforeseen environmental contamination at the site of the ballpark means that the city will contribute more than it had expected, I am pleased that there are important safeguards in place that protect Saint Paul and Minnesota taxpayers. This preliminary agreement on key financial terms is good for Saint Paul, good for the team, and good for our community,” Coleman said
“We are absolutely thrilled,” added Saints President Mike Veeck. “The tentative agreement shows the commitment of the Mayor, local businesses, Lowertown residents and the entire community to make this a gem of a ball yard. Saint Paul citizens will proudly bring out-of-town guests to this lovely sweet spot in Lowertown. We are excited to move forward,” he said.
The Saint Paul City Council will vote to use $2 million in available funds and a $6 million internal loan to cover the costs of the environmental cleanup at the Diamond Products site. The city will be responsible for managing the design and construction of the project. Ryan Companies will provide a guaranteed maximum price for the project that will protect taxpayers from any additional cost overruns. The city will continue to pursue funds from other entities, including grants related to environmental cleanup, to repay the $6 million loan.
“The Diamond Products site is in desperate need of redevelopment, and in situations with large clean up expenses, it is almost always incumbent on a government entity to step in and make the necessary investments for the good of the community,” City Council President Kathy Lantry said. “This project will benefit the entire state and will positively change the landscape of Lowertown for generations to come.”
“I am encouraged to see our private sector partner understand the importance of these safeguards for Saint Paul and for Minnesota taxpayers,” Councilmember Dave Thune said. “This is a complicated project that will intimately affect the Ward 2 community and it is important that we are good stewards of these funds.”
The city expects to formally finalize agreements with the St. Paul Saints in the coming weeks.
About the Lowertown Ballpark
The Lowertown Regional Ballpark will act as home to the Saint Paul Saints and amateur baseball teams from across the region. It is expected to bring 400,000 people per year to downtown Saint Paul and will have a yearly economic impact in the millions of dollars. The project is expected to create 500 full and part-time jobs and will become a center for statewide youth and amateur sporting events.About Saint Paul Parks and Recreation
Saint Paul Parks and Recreation is a nationally accredited and gold medal award-winning organization that manages more than 170 parks and open spaces, AZA accredited Como Park Zoo and Conservatory, 25 city-operated recreation centers, four municipal golf courses, more than 100 miles of trails, an indoor and two outdoor aquatic facilities, a public beach, a variety of premium sports facilities, and Great River Passage – which is the new identity for all proposed public development along Saint Paul’s more than 17 miles of Mississippi riverfront. For more information about Saint Paul Parks and Recreation, visit www.stpaul.gov/parks.About the St. Paul Saints
The St. Paul Saints are one of the leading professional minor-league teams in the country, and nationally known for forward thinking, creative promotions and charitable giving. They have been featured on ESPN, CNN, MSNBC, FOX News, The Today Show, radio stations across the nation, and in major newspapers and magazines. Major League teams have purchased the contracts of 110 Saints players, including three currently pitching in Major League Baseball: Caleb Thielbar (Minnesota Twins), Tanner Scheppers (Texas Rangers) and Brandon Kintzler (Milwaukee Brewers). Visit www.saintsbaseball.com.
So what do you think, dear Scoop reader? Is the city getting its money’s worth with a new $63 million public ball park, or should the St. Paul Saints be contributing more than operating and maintenance costs, $2.5 million upfront and $8.5 million in rent over 25 years?