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New Vikings Stadium Could Generate 1.8 Billion Over Lifetime.

May 4, 2011 by Nick in NEW STADIUM
vikings new stadium bill


There may just be a payback to the state of Minnesota for any new Vikings stadium.

As much as stadium critics take whacks at the economics of stadiums — much of it deserved — we got our hands on an interesting chart (PDF). Have a look at it.

In recent days, Metropolitan Sports Facilities Commission Chairman Ted Mondale, Gov. Mark Dayton’s stadium point man, has been telling audiences that a new Vikings stadium would generate about $1.8 billion in state taxes over the potential life of a stadium for any $300 million upfront investment.

We scratched our head about this.

But the commission’s longtime sports business consulting agency — CSL International — has run the numbers and shared them with us.

Here are the debt assumptions:

• State puts in $300 million, via bonding.

• Interest rate over time is 5 percent.

• So, total debt service over a 20-year payoff is $481 million. That is, just like your mortgage at home, the cost of borrowing that initial $300 million becomes almost $500 million.

That’s the cost side.

Here are the revenue assumptions:

• Vikings players, visiting players and Vikings staff pay state income taxes of $12.5 million annually. As player income increases at 5 percent a year and staff at 3 percent a year, the revenue take increases.

• Sales tax collections WITHIN the new stadium, including liquor, are pegged at $5.3 million per year, with a 3 percent increase annually.

According to the CSL calculations, those taxes grow to about $1 billion over 30 years — the expected life of a stadium. That would be a net surplus of about $500 million to the state over the typical life of a modern stadium. The Metrodome has lasted 30 years.

If you extend it to 40 years — an unlikely length of a stadium’s life — you get to the larger number that Mondale has been mentioning, $1.8 billion in total state tax collection, or $1.36 billion as a net surplus to the state because of the initial $300 million investment.

Take a look at the chart, and see what you think.

Then, take your whacks.

original source can be read here Analysis: It comes down to this… The Vikings need a new home, Minnesotans need jobs, and the state of MN needs to get out of debt.  It looks like investing in a new stadium may be a way to knock out all three.  Obviously it doesn’t look good to spend the money now when were in a deficit but the state of Minnesota will only feel the pain more if the Vikings leave.  Let’s get a deal done now!

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