MN United owner: New stadium would lose money, please give us tax breaks so we can turn profit

Minnesota United owner Bill McGuire gave an interview to Minnesota Public Radio yesterday, and what he said was simultaneously not surprising at all (he really wants public tax breaks to help in building a stadium) and incredibly revealing:

Host Tom Weber asked McGuire if he would walk away if he didn’t receive sales and property tax exemptions from government entities this year.

“I can’t answer that. I think it would make it very difficult to build the stadium,” McGuire said.

McGuire followed that by saying, “We are not into threats.”

“Look, we are all people that live in this community,” he said. “We hopefully do good things for this community as part of our lives. We are not into threats. This isn’t a threat.”

And:

“The people that are coming up with this money are making a significant investment into the community for something that, frankly, at this level at the beginning is not economically (profitable),” McGuire said. “It’s a lot of money to bring this here.”

MLS has said a number of its current 20 teams are not individually profitable. McGuire pegged $25 million to $30 million as an optimistic level of annual revenue for a franchise.

“Each one of these things (taxes) that cost money go against that and pretty quickly you run into the problem of financing this on an ongoing basis,” McGuire said. “So you are not asking for people to above and beyond the money that they’ve put in the beginning to write a check every year. That is just one of the elements.”

So put it all together and you get: United possibly could build a stadium without help from the public, but then their investors might lose money. So the only way to guarantee a profit — at least “at the beginning” — is for the city to let them out of paying property taxes.

Again, this isn’t an unusual argument: It’s common for developers of all types to say that without subsidies, they just won’t build anything. But with McGuire declining to even say that, what this comes down to is “We want a new stadium, but it may not make financial sense for us to do it on our own, so how about you taxpayers kick in a bunch of tax breaks and then everyone will be better off? Except you, of course.”

This is the fundamental logical conundrum of all stadium arguments: New buildings are needed for teams to be profitable, but building stadiums isn’t profitable, so subsidies are necessary to produce the profits. It’s really remarkable that fewer people never ask the obvious followup questions — If a new stadium doesn’t make money, why should anyone build one? and Why are you spending $100 million on an MLS franchise anyway if it’s such a terrible deal? — but welcome to 21st-century America.


12 comments on “MN United owner: New stadium would lose money, please give us tax breaks so we can turn profit

  1. Much obliged to Bill McGuire for giving us something resembling an honest answer to the question I’ve always wanted to ask:

    If building a stadium is as fantastic an investment as owners and cities make it out to be, then why aren’t investors, speculators, and other well-heeled backers trampling over each other to get in on the action?

  2. Ooo! A [bad public investment] MLS soccer team! What’s NOT to love?? Which ever goodwill McGuire created is gone now.
    See yourself out the door, Bill.

  3. MLS should give their bid to Sacramento.

    The only reason I liked the idea of Minnesota over Sacramento was the Vikings already did the heavy lifting and MU could’ve rode in on the NFL tailcoats & share that nice stadium. Seattle and New England play in NFL stadium, and if I’m not mistaken; Atlanta got their bid because of the Falcons new stadium……. I just can’t get past Minnesota being the exception, and if they are then send the MLS Sacramento’s way… the California government notoriously spends more than it brings in.

  4. The funny thing is that MN United is coming out of a league (the NASL) that made a big deal a couple years back of wanting to avoid the excesses of previous league attempts and actually build on a sustainable footing. And now not only is MN United asking for money, but even the NASL is getting in on the racket too!

    It appears increasingly that MLS is built on a house of cards, and that its ability to sustain itself is almost entirely off never ending expansion and subsidies that it wants on level with the other sports leagues, but with none of the clout. Its ridiculous that MLS seriously thought that a soccer only stadium would be built in a place that is already bursting at the seams with pro teams (one for every league) and that recently started construction on a $1 billion monstrosity that was sold mostly for the fact that it would be so dazzling that every single major sporting event would occur there.

  5. Since when are governments supposed to turn a profit. Governments are supposed to provide infrastructure and security. I’m not saying a minor league (MLS) or a double-minor league (NASL) stadium is a worthwhile part of infrastructure, but if the people want it (and the purely anecdotal evidence I’ve seen is that a lot of Minny yuppies & hipsters would be into it), then why not?

  6. I’m not even sure where to start here. One, a NASL/MLS team is not a government entity, despite the clear amount of subsidies to the point that cities should simply eminent domain pro sports teams. Two, even by the supposed public demand logic this thing doesn’t have enough backers. You can certainly criticize municipalities for bending over backwards for the NFL, but there is no argument that the popularity and fan participation of the NFL makes MLS look like a high school talent show. The demand simply isn’t on par. I know from past comments you are on the stadium gravy train, but this is ridiculous; they neither have the fans nor the leverage to demand such breaks.

  7. ^ They do have the fans though. The MLS average attendance for 2014 was 19,149. The NHL was 17,587 (for ’13-’14). The NBA was 17,407 (for ’13-’14). MLS’s problem is that their tv/media deals pay them a pittance. They make more from ticket and stadium concessions/services than from tv contracts. The model needs to be literally reversed in order for them to start making real money.

  8. You can’t really compare the 82 games of the NBA/NHL, to the 30 games MLS plays. How many of those games would be at that average attendance if the season was significantly larger? The only league comparable numbers wise is the NFL, which is again, blowing them out of the water.

    Don’t get me wrong, I’m in agreement that they probably do need better TV deals. But the MLS is not cranking out the raw numbers that the other leagues do, certainly not sufficient to justify getting the breaks they are calling for.

  9. “Why are you spending $100 million on an MLS franchise anyway if it’s such a terrible deal?”

    In part because, unfortunately, the assumption is that you will be able to get some help in building your stadium, making it not quite such a terrible deal.

    “New buildings are needed for teams to be profitable, but building stadiums isn’t profitable,…”

    It would be nice if we were discussing a world where this was a contradiction. For most businesses, you aren’t thinking about the profitability of your office, storefront, whatever. Securing a place for your business to operate is just a necessary cost of doing business. Profitability is only an issue for the business as a whole.

    And, please, no more “infrastructure” nonsense. Building (or helping to build) a facility for a private enterprise is NOT “investing in infrastructure”. An MLS team isn’t an essential part of a community. Even so, there are probably a half-dozen existing facilities in the Twin Cities where a team could play its games. Play there, prove your profitability, make some money, build your own stadium. Be a business, not someone looking for a handout. There’s some goodwill to be had for doing it the right way.

  10. Where is it written that “New buildings are needed for teams to be profitable”?
    Final score of the soccer games – 1-0, oops 1- nil.

  11. If only they did what dad did and demanded public funds for more than they are asking for. Rookie team owners.

  12. There are many many non-metro communities in Minnesota that have trouble finding money to replace streets and wastewater systems. These are streets where you might have 60 $80k houses on a 6 block, clay pipes that leak like crazy and are broken to bits by the freeze/thaw cycle, and the street/sewer needs $2MM in infrastructure work or the toilets will stop working soon.

    Unfortunately, the seniors and low income people in these turn of the last century houses cannot afford the $30k/house assessment replacing this infrastructure would cost, even over 10 years of property taxes.

    Now that is an infrastructure problem.

    Making sure the 86th entertainment option in a thriving metro has a really nice facility is not an infrastructure problem.