In St. Paul, pain of NHL lockout more a pinch than a punch

  • Article by: MIKE KASZUBA , Star Tribune
  • Updated: December 19, 2012 - 12:31 PM

Income from sales and lodging taxes, one barometer of a city's economic health, hasn't shown a broad effect.

The National Hockey League lockout doesn't appear to be creating a large economic drag on St. Paul, despite repeated talk of financial pain by some city officials.

Some individual businesses are being hurt by the three-month lockout, but state sales taxes and lodging taxes in St. Paul were up slightly in November compared to November 2011, when the NHL was playing games at downtown's Xcel Energy Center.

State Department of Revenue officials cautioned that the tax figures don't paint a definitive picture, but said November's numbers, and the results from the NHL's 2004-2005 lockout, suggest that neither the city's economy nor the downtown core's are driven by professional hockey.

State sales tax figures increased in St. Paul during much of the 2004-05 lockout.

"If there was a significant impact of the lockout in 2004-05, it cannot be demonstrated using these statistics," said Paul Wilson, the research director at the Minnesota Department of Revenue.

Some city officials and civic leaders, who have said that this year's lockout is causing widespread economic pain, said state sales tax totals likely present a flawed perspective. .

"Tragically, and I say this with a certain amount of humor, sales tax receipts fall into the category of lies, damn lies and statistics," said Matt Kramer, the president of the St. Paul Area Chamber of Commerce. Kramer, a onetime chief of staff to former Gov. Tim Pawlenty, said that anyone analyzing sales taxes needed to be "extraordinarily careful" to compare "apples to apples."

St. Paul Mayor Chris Coleman said this week that while the lockout is having a ripple effect throughout the city, the number of businesses in financial jeopardy because of it "might be a half dozen, it might be a dozen."

Coleman said that, even with the lockout, the city was continuing to rebound from the recession and that "I'm overall very pleased with where St. Paul's at right now" economically.

Benefit not clear

John Wengler, a co-owner of Billy's On Grand, a bar and restaurant two miles from the arena, said he stopped running shuttles to Wild games two years ago because of a lack of interest. "Do you want my honest answer, or do you want me to jump on board with what everyone else" is saying about the situation, he said jokingly.

"That's not driving our economy," he said of the games.

At O'Gara's, another St. Paul bar that still has shuttles to Wild games, co-owner Kris O'Gara said the games provide a "nice boost" but said the bar was more than surviving. "We're still fine," she added.

Even at Cossetta's, the longtime Italian deli a block from Xcel Energy Center, manager Ray Vanyo said the lockout was likely curtailing new customers but that "we're still getting good business" primarily because of a nearly completed expansion.

State officials said that citywide sales tax, use tax and lodging tax figures do not show a consistent overall economic benefit or loss to St. Paul that can be associated with hockey.

Wilson said sales tax figures for the city actually increased 4.2 percent from January through May 2005, during the lockout, over the same five-month period in 2004, before the lockout. For the 2005-06 hockey season, the first year after the lockout, the figure was up again, by 2.1 percent.

In addition, Wilson said that it was also difficult to draw conclusions by examining data for a narrower geographic area that includes the Xcel Energy Center and surrounding businesses.

During the 2004-05 lockout, state sales tax collections in that narrower area dropped by 9 percent in 2004 to $30 million, and again by 3 percent in 2005 to $29.1 million. While the decreases could be blamed on the lockout, state sales taxes for that area dropped by 18 percent in 2007, to $27.5 million, when hockey was being played. Wilson said the 2007 decreases suggested that the presence of hockey was not enough to offset other, unknown, factors.

"Collections in both 2007 and 2008 [combined] were even lower than in the missing season years of 2004 and 2005," Wilson wrote in an analysis of the data.

Wilson added that the narrow geographic area including the Xcel Energy Center represents less than 20 percent of all sales tax collections in the city, meaning any losses or gains might be offset by activity elsewhere in St. Paul.

City officials said the lockout's imprint is noticeable in other ways.

For starters, they said, parking ramp revenue near the Xcel Energy Center fell dramatically from September and October 2011 compared with the same two months this year. For October, revenue from six parking ramps dropped from $364,611 in 2011 to $278,222 this year, a 24 percent decrease. The decrease from September 2011 and the same month this year was 29 percent.

City officials also said that comparing city sales tax figures from October 2004 through April 2005 -- during the lockout -- with the same time the next year showed a $300,000 boost, for a total of nearly $8.7 million.

Not yet at breaking point

At the Eagle Street Grille, across the street from the hockey arena, owners Joe Kasel and Kevin Geisen have received much publicity as they have described the effect of the lockout. In a letter to the NHL's commissioner, Kasel said that Wild games accounted for half of the business' annual gross revenue.

But Geisen said that while the lockout had significantly hurt business, it had not yet brought them to a breaking point.

"At this point, I would say no," he said last week of possibly going out of business. "[But] it wouldn't take too much to push us over."

At Alary's, a longtime downtown bar and restaurant, owner Al Baisi said the lockout has been felt as well. The bar's four shuttle buses that take Wild fans to the arena, eight blocks away, are idle. But he said he is more than surviving. "Overall, we're still doing fine here," he said.

Mike Kaszuba • 651-222-1673

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