Nathaniel Hood

Nathaniel Hood is a transportation planner and blogger living in St. Paul. He writes for Strong Towns and Streets.MN.

Posts about Sports

St. Paul Saints Stadium: Number Crunching

Posted by: Nathaniel Hood Updated: July 10, 2013 - 11:08 AM

Baseball math is intense. It’s called Sabermetrics, or the specialized analysis of baseball through objective evidence. It painstakingly collects every minor tidbit of information, weighs each statistic against all known variables and computes a prediction; it even addresses margin of error.

It would be great if the City of St. Paul took this approach to analyzing it's current downtown stadium proposal.

It’s designed as system of due diligence. Running the numbers, running them again, and predicting the future outlook against all known variables. 

St. Paul is in the process of building a new $66 million stadium for an independent professional baseball team with a known $29 million construction shortfall.

Ballpark Construction Capital Cost Breakdown:

Construction $54 million
Environmental Remediation [add't] $8.8 million
Local / Utility Improvements [add't] $3.3 million
Total $66.1 million

Upfront Capital Cost Breakdown (by Municipality / Private Entity):

State of Minnesota    
Bonding $25,000,000  
Economic Development Grant $2,000,000  
Total $27,000,000  
     
City of St. Paul    
Capital Improvement Budget $1,500,000 * Redirected from local infrastructure
Neighborhood Funding (STAR) $1,500,000 * Redirected from local neighborhoods
Public Works Budget $1,500,000 * Redirected from Public Works
Riverfront TIF Fund (Redirected) $1,500,000 * Redirected from Riverfront TIF Area
Sale of Previous Stadium $3,000,000 * Sale to Port Authority (PPP)
* Spending $700k to demolish old stadium
Total $9,000,000 * Agreed to provide $17 million
     *($8 million shortfall)
St. Paul Saints Organization    
Upfront Downpayment $1,500,000  
Total $1,500,000  
     
Total Monies Available $37,500,000

* $66.6m Total Cost with
$37.5m Avail. in 2013 = $29m shortfall

The St. Paul Saints have promised a $10 million contribution: $1.5 million will be paid upfront for stadium development, while the other $8.5 million will be paid in rent over the next 25 years; approximately $340,000 per year (or around $6,800 rent per game). The St. Paul Saints won’t own the stadium, so the $6,800 per game contribution is more akin to a rent. In the financing scheme, the baseball team has the advantage as they are able to spread their contribution (and financial risk) over 25 years while accuring no debt [more here].

When looking to mitigate risk and maximize public return on investment, finding long-term, sustainable funding sources for infrastructure is essential. In this case, St. Paul has a funding shortfall of $8 million from it’s promised $17 million. Where the remainder of funds is coming from is currently unknown. If a city isn’t able to cover upfront capital costs, how confident are you that they will be able to afford on-going, long-term maintenance costs of the infrastructure without pulling resources from other city essentials?

A question that reaches beyond scrutinizing numbers: why would you break ground on a stadium site in 5 days without a clear understanding of how to address an $8 million funding shortfall? (The $8 million municipal shortfall still doesn’t include the additional $8.8 million in unfunded environmental cleanup liabilities).

Running quasi-sabermetrics on the game-to-game operations doesn’t yield great returns either. The Saints currently average an attendance of approximately 4,911 per game (current capacity = 6,069). Let’s give them the benefit of the doubt that they can add an average of 1,000 additional people into the seats per game in the new stadium.

(5,911 people x $10 ticket) x 48 home games = $2.83 million ticket sales per year

These aren’t new ticket sales, so the $2.8 million is deceiving. Under the assumption of an additional 1,000 fans per game, the number reveal much fewer ticket sales.

(1,000 people x $10 ticket) x 48 home games = $480,000 new ticket sales per year

$480,000 of additional revenue will be generated per year; most of which will go to the St. Paul Saints. Even considering sales tax, this is not an economic windfall considering the City will be effectively paying $680,000 per year (amortized over 25 years) for what amounts to a 16 percent increase in ticket sales revenue. For St. Paul to make up its end of the financing bargain, they would need to immediately impose a $1.13 tax per ticket sold over the next 25 years, not accounting for debt service payments.

Let’s see how the numbers work:

Revenue Generated [Beer]    
MN Liquor Excise Tax Per Gallon $.08 per gallon * 8 pints per gallon ($.01 per beer)
MN Sales Tax .09 percent * Percentage is rounded up
Cost of Beer $4.00 * Estimated average beer price

 

Per pint of beer, the tax revenue works out to be approximately $.36 cents. Now, let’s assume each $1,000 additional fan buys 1 beer; that’s $360 in new revenue generated from alcohol sales per game. Over the course of 50 games, this generates around $18,000 in new revenue. Yet, when you examine the long-term liabilities of stadium financing and costs, does this number even move the dial?

You run the numbers. Do they add up?

Baseball, and sports for that matter, play an integral role in our lives. I coach baseball, play in numerous Rec Leagues and have friends who write ridiculously detailed (and occasionally insightful) pieces for major online publications covering everything (for example; Power Ranking Every Minnesota Vikings Team of the Past Decade). Sports are an important element of society, but that doesn’t mean we shouldn bend over backwards to accommodate if we’re not in a position to afford it.

Of all the stadium deals out there, St. Paul isn't the worst. There are bigger fish to fry. The stadium is tucked into a part of downtown unlikely to see development and it will add a social element to downtown that can't be rivaled at the current stadium. It's not a bad design either. I just wish I was writing this under circumstances where the financing was under control.

Vikings Stadium: Bad Neighbor

Posted by: Nathaniel Hood Updated: November 25, 2012 - 2:42 PM

Who would want to live by a football stadium? It’s virtually empty or seriously under-utilized 355 days a year and chaotic for the other 10 days a year. That sounds miserable.

A recent Star Tribune commentary asked the question, “Vikings stadium: Good neighbor or not?”.

Historically, the answer has been not; and based on all the renderings I’ve seen, the answer will continue to be not. Actually, I take that back – the stadium won’t be either a good neighbor or a bad neighbor. Why? Because it won’t really have any neighbors.

While not the final design, the most recent building renderings resemble nothing more than Metrodome version 2.0 – (it looks like someone sliced the dome’s roof to let in some air and then added a glass facade). North of the stadium, there are three city block sized open surface parking lots. To the west of the site, there are what appear to be two blocks of undefined plaza space. There is some green space and a few small building on the east side of the site, but since this space is currently an interstate highway, it’s not really clear what will happen there.

The only neighbors it would inconvenience are those who are already currently inconvenienced by the stadium. It’s likely the new stadium won’t spark new neighbors either. Do Stadiums Bring Development? Usually not.

I’ve written about this and shared these images a lot over the past year, and I continue to do so because I believe they are powerful in visually showing how little stadiums actually help.

If we build it, they will come? This argument doesn’t hold up under even the most modest of scrutinies. The Twin Cities own experiences should serve lesson that large sport and convention center venues do not create a catalyst for development.

[Minneapolis, Minnesota - 1991, 2002, 2009]

Notice the development around the Metrodome? Neither did anyone else. North of the Metrodome, near the Guthrie Theater, residential development has occurred, but little of which can be attributed to proximity to the Metrodome. The Mississippi River, cultural amenities and other forces play a larger role in redevelopment.

St. Paul has had similar results with the Xcel Energy Center.

[St. Paul, Minnesota - 1991, 2002, 2009]

The taxpayer-subsidized arena was supposed to act as a catalyst for development in St. Paul. Ten years later, there isn’t much to show for it besides renovated pubs along West 7th Street. All of which are fantastic (McGoverns, The Liffey, Eagle Street, Tom Reid’s), but the success of these local watering holes is hardly worthy of hundreds of millions dollars in taxpayer subsidizes.

Stadiums prompting development in the immediate surrounding area of new stadium construction certainly sounds like a plausible argument as large infrastructure projects do typically yield private development. However, sport stadiums appear to be the exception to the rule.

[Indianapolis, Indiana - 1992, 2007, 2010]

The new Lucas Oil Stadium in Indianapolis is pictured above. Notice the RCA Dome in the 1992 and 2007 images. It’s a now a convention center – a non-private sector development.

[Philadelphia, Pennsylvania - 1992, 2002, 2011]

Philadelphia’s sports district has seen little improvement in two decades. Sports stadiums seemed to beget only more sports stadiums … and open surface parking lots. A similar story exists in Phoenix, Arizona, where not even the seemingly omnipresent speculative housing subdivisions of Phoenix desired proximity.

[Phoenix, Arizona - 1992, 2003, 2011]

Even urban success stories of the 2000s (such as Denver and Pittsburgh) with large influxes of people clamoring for downtown and inner-city real estate struggled to fill in the empty surfaces surrounding their sport stadiums.

[Pepsi Arena, Denver, Colorado - 1992, 2002, 2011]

[Coors Field, Denver, Colorado - 1993, 2003, 2011]

[Pittsburgh, Pennsylvania - 1993, 2004, 2010]

Is Minneapolis the exception to the rule? Will we somehow beat this stadium vacuum? It’s unlikely. When a large building fails at creating a lively mix of retail, residential, commercial and civic space – it creates an isolating space not worthy of the public affection. Developers, unless enticed with subsidizes, will likely avoid these places.

It doesn’t help that these stadiums aren’t cheap – taxpayers usually end up taking on the initial bill, and all the risk. Stadiums and their surrounding districts are the new “Bilbao anomaly”, are the new urban mall, are the new downtown casino, are the new urban renewal.

Why is TCF Bank Stadium such a failure?

Posted by: Nathaniel Hood Updated: August 18, 2012 - 2:00 PM

"Build it and they will come” is how the University of Minnesota approached the building of TCF Bank stadium, clearly, the fans and students expect more…and it’s not just about winning more games, it’s about creating a lasting game day experience that fosters school pride, passion for the Gophers, and the creation of lifelong memories.  So far after 3 years, our beautiful TCF Bank Stadium has done little of that."

Nadine Babu is correct. TCF Bank Stadium is a failure.

It's not just the Gopher's new football stadium that's a loser. It's stadiums in general, especially the 'build it and they will come' stadiums.

The proponents, and the status quo of thinking, are typically accompanied by a handful of dead arguments. One of the most prominent being that of associated economic development. If we build it, the developers will come! Unfortunately this commonplace argument is based little in reality. In fact, based on the large subsidy and lost opportunity cost, the argument can be made that places like TCF Bank Stadium actually have a negative economic impact (if you're looking for proof, just view the before and after photos of stadium development).

The same argument is made with athletes. If we build it, they will come. We'll get better recruits? That's not true either. History tells us otherwise.

That's not what Babu is talking about. She wants a better game day experience. Unfortunately her suggestions are unlikely to help much.

1. We lose, a lot.

It's true that Gopher football is awful, especially when compared to the rest of the Big 10. College football is a cultural experience, and she's right in pointing out that it is missing at the University of Minnesota. Part of the problem is that the University of Minnesota has a much different setup than other large universities: it's in the city.

If you live in Iowa City, you go to the Hawkeye's game. That's it. That's your option. The same holds true for most all large universities with big football programs (with a few notable exceptions). The urban city campus gives students options not available at other universities - that is competition for time and money. This breeds differing wants and needs - many of which are not associated with collegiate sports.

2. Cost.

Babu seems to think that $91 is too much. Considering the $300 plus million dollar taxpayer-funded stadium, $91 is a more than reasonable price. Students are on a budget. I get it. That was me once, but $91 seems more closely aligned with a bi-weekly beer budget than an excuse not to attend home football games.

3. Lack of tailgating options. Who doesn’t love a good tailgate?

Back in the mid-2000s, I’d head to baseball games at the Metrodome with a handful of friends,  grab a grill, some cheap beer and countless numbers of brats and burgers. We’d post up in the parking lot that’s now Gold Medal Park and we’d eat, drink and occasionally make it to a Twins game.

Tailgating is not only fun, but it’s synonymous with red, white and blue. It’s become a new American tradition that is seamlessly being integrated into new stadium plans. The Minnesota Vikings proposal is no exception. But, tailgating lots in an urban area? That's a terrible use of a valuable limited resource: land.

The problem with tailgating downtown is that it isn’t very productive. Having open-surface parking lots in near stadium village (or in a downtown) designed for the sole purpose of grilling 10 days a year seems unwise, even for something such as tailgating which is now deemed as a worthwhile cultural endeavor. Even if you consider that people will use the space for parking during the other 355 days a year, it still falls short. This is especially true when you consider the apartment housing boom currently underway in Stadium Village and Dinkytown.

4. The overall game day experience. There is none. Well, that's not true. Walk into Stub & Herbs before a game and tell me there isn't atmosphere. However, the spirit of Gopher football is fatalistic. You can't build a team on that. Part of the problem is that of expectation. The reality is that we've build up Gopher football bigger than it ought to be.

The State of Minnesota and the University of Minnesota collaborated to bring us a new stadium that the market could not bear. Now it's empty. The solution isn't financial for students. It has nothing to do with lowering ticket prices, offering specials, give-away’s, bundles or giving away food or young alumni points. That ain't going to do the trick.

What was suppose to bring us pride has brought us embarrassment. Gopher football just can't compete against a campus and its robust surroundings that give students options not available at a lot of other universities. Gopher football is indirectly competing against a robust urban area that offers many entertainment options.

___

Follow Nathaniel Hood on Twitter at @Nathaniel1983

 

      

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