Minnesotans are conditioned to expect proposals for new arenas and stadiums to include large and controversial public subsidies and relatively limited private investment by wealthy team owners.
So it was refreshing Tuesday when the prospective Minnesota owners of a professional soccer franchise unveiled a plan that calls for a $120 million Minneapolis soccer stadium and $30 million in land acquisition costs to be privately financed. The group would also pay Major League Soccer (MLS) a $100 million franchise fee.
There are a couple of caveats, however, which helps explain the wary reactions of legislative leaders in St. Paul and at least one key Minneapolis official — Mayor Betsy Hodges. The ownership group led by former health care executive Dr. Bill McGuire wants lawmakers to grant a permanent property tax exemption and a sales tax waiver on materials used to build the stadium near the Minneapolis Farmers Market.
To borrow the term used by Senate Majority Leader Tom Bakk, we see those requests as relatively modest and believe the project deserves serious consideration by local and state leaders. Instead, Hodges flatly and disappointingly dismissed the proposal.
The first-term mayor, a longtime opponent of stadium subsidies, says the site’s proximity to the growing light-rail transit system will no doubt bring tax-generating redevelopment to the long-neglected North Loop area “stadium or no stadium.” She worries about the possible competition the soccer stadium would represent for the nearby, similarly sized Target Center, and she’s quick to point out that pro soccer could be played at the new Vikings stadium or TCF Bank Stadium.
Hodges also argues that McGuire’s group, which includes Star Tribune owner Glen Taylor, has not made a convincing case that it needs what she called an unprecedented property tax exemption.
Let’s consider those objections one at a time. First, there is no evidence that developers are lining up at City Hall with proposals for the rundown area. In fact, McGuire’s group is the first since the Vikings considered the area for a stadium to offer a compelling project — with private money — that recognizes the value of mass transit.
An 18,500-seat soccer stadium could compete with Target Center for a few summer concerts or other events, but the impact would likely be minimal. Soccer could be played in the Vikings or TCF Bank stadiums, but the league wants a soccer-specific outdoor facility. McGuire’s group was able to win the franchise rights despite stiff competition from Sacramento and other cities, but it hinges on an outdoor stadium.
Because they are publicly owned, Hodges discounts the fact that all of the other major sports facilities in the Twin Cities have received property tax exemptions, and several did not pay sales taxes on construction materials. But those stadiums also received millions of dollars in direct public subsidies, which are notably absent from the McGuire group’s straightforward and much less costly request.
The property being eyed for the soccer stadium currently generates a total of about $343,000 in annual city and Hennepin County property taxes. That would be lost — along with an undetermined amount of new property tax revenue from the stadium and $3 million in one-time sales taxes on the construction materials — but in return the ownership group says the facility would generate an estimated $2.6 million to $2.9 million in other city, county and state taxes each year based only on 22 games.
It’s not as if the city of Minneapolis never provides tax breaks or subsidies to private interests. The website for the city’s economic development agency lists financing “tools” ranging from low-interest loans and grants to tax increment financing.
Fortunately, pragmatic City Council members Jacob Frey, Barb Johnson, Blong Yang and others are open to the McGuire group’s proposal and see the potential benefits of a new regional asset that would draw soccer-loving millennials and members of local immigrant communities to a severely underutilized part of downtown that serves as a gateway to investment-starved north Minneapolis. The franchise would also give Minneapolis a foothold in an international sport with huge growth potential.
Although it may be true that McGuire and his group, which also includes members of the well-heeled Pohlad and Carlson Nelson families, don’t need public financial support in order to operate the team, they also don’t need to risk $250 million of their own money to bolster downtown Minneapolis.
In what may turn out to be the first major test of her vision for what Minneapolis and the region can become, we hope Hodges will come to terms with that reality before the opportunity is squandered.