Field of Schemes
sports stadium news and analysis

  

This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.

June 07, 2011

Vikings stadium deal: When is a subsidy not a subsidy?

The Daily Norseman, the SBNation blog on the Minnesota Vikings, has a long post up today about the projected public cost of a Vikings stadium, and in particular whether it should be criticized as a "subsidy." After all, writes the author, if you've gone to a public school, or visited a public library, or ridden public transit, you've taken advantage of subsidies, so what's the harm in that?

Of course, there's an obvious difference between subsidizing something that's a pure public benefit like a library and a profit-making enterprise like a pro sports team — hence the book subtitle. So in an attempt to argue that the Vikings provide a public benefit beyond allowing fans to plunk down $100 to watch an NFL game, the Norseman goes on to discuss the taxes paid by the Vikings:

According to the Vikings organization, every year the Vikings contribute $18 million in state and local taxes. Not only does the team contribute to the tax base, but so does the stadium they use-the Metrodome has generated $304 million in tax revenue for the state of Minnesota since it opened. If Minnesota lost the Vikings, we would see a direct loss of millions in tax revenue that the team, and its stadium, brings the state.
Losing the Vikings means the tax base would also suffer indirectly from the loss of Minnesota jobs. Including all the staff, coaches, active players, and practice squad players, the Vikings organization employs approximately 200 people. Vikings' game days at the Metrodome, including staff, players, and coaches, support 2,800 full- and part-time jobs.

Spot the economic fallacy yet? Let's think this through: Say the Vikings skip town tomorrow for ... okay, Los Angeles doesn't actually have a stadium yet, and may not ever, so let's just put them on a barge floating down the Mississippi or something. The team and its employees stop paying taxes, sure enough. But they also stop selling tickets, and jerseys, and overpriced beers. What happens to that money?

Well, it goes back into the pockets of Vikings fans. If those are Vikings fans who live in North Dakota, then yes, they'll probably spend it on hunting for big game at the local comedy club or something. But for our suddenly NFL-bereft Minnesotans, they're likely as not going to spend it on something else: Going to the movies to fill their suddenly empty fall afternoons, buying big screen TVs to watch the Barge Vikings, drowning their sorrows in slightly less overpriced beer. And wherever they spend their money (unless they order their beer over the internet), the businesses they spend it at will be hiring people to make their sales, and will pay taxes on it.

There's even a potential benefit to having money spent this way: Unlike Vikings players, who may or may not live full-time in Minnesota (and even if they do is likely to spend a chunk of their money on things like vacation homes), the average convenience store beer salesperson is likely to spend almost all of their salary within the state. (Movies, because so much of the ticket price goes straight to Hollywood, is less of an obvious gain.) So a dollar spent on the Vikings doesn't necessarily equal a dollar spent on some other entertainment, in terms of impact on the local economy.

Those, in a nutshell, are the "substitution effect" and "leakage," the two biggest economic factors that stadium subsidy backers invariably overlook. It's absolutely fine to argue that subsidies to private enterprises are worthwhile if the payoff for local taxpayers is greater than what they'd be spending. The problem is, in virtually every stadium deal — including the proposed Vikings stadium — that's not the way the numbers work out.

COMMENTS

I especially like how she thanked Cory Merrifield (found of Save the Vikes) and Jeff Anderson, Assistant Director of Public Affairs for the Minnesota Vikings for research for the article. In other words, she just regurgitated all the mistakes they've been intentionally creating and posted it as new work. I guess if you base a paper off of bad data, you're just going to get more bad results.

Posted by Geoff on June 7, 2011 10:16 AM

First off, a large portion of the tax revenue the Vikings bring to the state of Minnesota is in player income taxes, and that money wouldn't "go back into the pockets of Minnesotans" if the Vikings left. It'd be gone. Then, you have to factor in that 22% of season ticket holders are from out of state. If, like Meet Minneapolis estimates, each of these people spends $107, on average, outside the stadium each time they visit, that is a significant economic impact that would be lost to the state. Most of these people will tell you they would spend this money outside of Minnesota if the Vikings left. Finally, the state is getting ownership of a $1 billion stadium that it will use 300+ days a year for 500+ non-football events for $300 million. How can anyone clasify that as a bad deal for the state? Especially if the stadium attracts a Superbowl, Final Four, and other large events. As for Ramsey County and Arden Hills, they are getting a major economic engine that they don't currently have, and a toxic waste site cleaned up and developed. Not many local businesses complaining. So, while there is some truth to your post, you stop well short of being completely truthful about the benefits of keeping the Vikings here. And as for LA, they have a $1 BILLION naming rights offer from Farmer's Insurance. They already have the $$ for a stadium. They need a team first.

Posted by Josh on June 7, 2011 10:58 AM

That's great, Josh. If the choice is between losing a few million tax dollars a year if the Vikings leave or being charged 5 times that amount to keep them, it is *still* in our financial best interest to let the Vikings go. Of course, the best scenario for everyone is if they just keep playing in the Dome, but Wilf doesn't seem interested in that option.

My wife uses the same argument that you do Josh. "Honey, I just bought this $800 dress at half off! I just made us $400!"

Posted by Geoff on June 7, 2011 11:26 AM

No it's not. The state's contribution would be $300 million ($500 million with interest). Are you seriously saying that the state won't collect at least $500 million in unrecoverable tax revenue over the life of the stadium? I think you better check your math.

Posted by Josh on June 7, 2011 11:38 AM

That's great, Josh. If the choice is between losing a few million tax dollars a year if the Vikings leave or being charged 5 times that amount to keep them, it is *still* in our financial best interest to let the Vikings go. Of course, the best scenario for everyone is if they just keep playing in the Dome, but Wilf doesn't seem interested in that option.

My wife uses the same argument that you do Josh. "Honey, I just bought this $800 dress at half off! I just made us $400!"

Posted by Geoff on June 7, 2011 12:01 PM

Sorry for the double post. It said to resubmit, so I waited and boom, it was already there. Might want to get that code looked at. ;)

Yes, the state will never recover the $500M in tax revenue for the stadium. Even the Dome supporters say it only brought in $350M in tax revenue over the last 30 years, and it had the added advantage of having the Twins and Gophers play there as well as being the only game in town. A new Vikings stadium will generate far less revenue and cost FAR more than it will cost to build. And of course, there is the county portion to consider as well.

Posted by Geoff on June 7, 2011 12:04 PM

Sports fans who argue for subsidies say the stadium will pay for itself, even turn a profit. But the smartest people in the deal - the owners of the sports team - know it doesn't have a chance in hell of paying for itself. Which is why they won't pay for it with their own money. I say, listen to the smart guys.

Posted by Dave Boz on June 7, 2011 12:13 PM

You have shown nothing that says in this instance (not interested in generalized stadium studies) there won't be a payback on the stadium. So, you're saying that 30 years of player income taxes and tax revenue from the 20,000 out of state fans that attend 8-10 games a year won't add to a significant amount? I would think it would be. Add in the
opportunity cost of not being able to host large events like a Super Bowl or Final Four. I firmly believe the state would more than recoup it's $300 million investment.

Posted by Josh on June 7, 2011 12:34 PM

Geoff:

Of the $300+ million the state made off the Dome, $186 million was directly attributable to the Vikings.

Posted by Josh on June 7, 2011 12:37 PM

Geoff:

Of the $300+ million the state made off the Dome, $186 million was directly attributable to the Vikings.

Posted by Josh on June 7, 2011 12:38 PM

Geoff:

Of the $300+ million the state made off the Dome, $186 million was directly attributable to the Vikings.

Posted by Josh on June 7, 2011 12:38 PM

Josh's comments are in line with classic Keynesian 'logic' about what is seen, though smarter men like Hazlitt reminded us to look for what is 'unseen.'

Unless Josh's argument is built on the league heavily subsidizing the Vikings (and I mean *heavily*), his numbers don't add up. Those player salaries are paid for by money Minnesota fans spend. Even if his claim that only 78% of such revenue is attributed to Minnesotans is true, the numbers still support his 'argument.' As Neil notes, alternative spending is more likely to produce better tax receipts. Sure, the players contribute a decent amount in income taxes (probably 5-7% or so of their salary), but the end-use result of spending money on non-Vikings items would give equal or better results for public coffers.

Of course, he's also completely ignoring Geoff's more-than-valid note about the county's contribution as well.

Posted by Erik G. on June 7, 2011 01:19 PM

You honestly think player salaries are paid by ticket sales? Wake up, the NFL makes most of it's money from it's TV contract.

Posted by Josh on June 7, 2011 01:37 PM

"You have shown nothing that says in this instance (not interested in generalized stadium studies) there won't be a payback on the stadium. So, you're saying that 30 years of player income taxes and tax revenue from the 20,000 out of state fans that attend 8-10 games a year won't add to a significant amount? I would think it would be. Add in the opportunity cost of not being able to host large events like a Super Bowl or Final Four. I firmly believe the state would more than recoup it's $300 million investment."

Don't know where to begin with this one, except to state that Josh is asking us to believe that better than 30 years' worth of data on publicly subsidized stadium construction should be tossed out the window when looking at the situation in the Twin Cities.

This ignorance of years and years of prior data that contradicts their viewpoint is a common malady amongst Vikings fans.

Posted by SierraSpartan on June 7, 2011 01:46 PM

Oh, I see that rationalization ALL THE TIME, and it still drives me nuts.

"Well, you use the parks, right? What's the difference?"

Um, there's not a group of millionaires on the other side of it, charging admission, hoping to make more.

"I'm sure the developer made loads of money when you bought that house! It's no different!"

---

Yes, I have had these actual conversations. Makes me want to vomit.

Posted by MikeM on June 7, 2011 02:02 PM

Josh isn't interested in "generalized stadium studies". Fantastic. That's another one I hear all the time.

In other words, bring up specific examples of where Josh's logic has failed in a very big way -- such as with Giants Stadium, which was knocked down recently, even with $830M in debt still remaining -- and he's not interested in the studies.

You just can't argue with that. And I don't mean that in a good way.

Posted by MikeM on June 7, 2011 02:08 PM

Sierra:

Nope. Just asking you to show me the numbers. Show me, in this situation, which tax revenue is recoverable and what is not, and show me that it doesn't add up to $500 million over 30 years. You should be able to do that, right!

Keep in mind, roughly 20,000 of the 65,000 people who attend Vikings games are from out of state. Also, unlike what some of you would like to believe, a majority of the NFL's revenue (and thus player salaries and income taxes) comes from the NFL's TV deal.

Posted by Josh on June 7, 2011 04:01 PM

Sierra:

Nope. Just asking you to show me the numbers. Show me, in this situation, which tax revenue is recoverable and what is not, and show me that it doesn't add up to $500 million over 30 years. You should be able to do that, right!

Keep in mind, roughly 20,000 of the 65,000 people who attend Vikings games are from out of state. Also, unlike what some of you would like to believe, a majority of the NFL's revenue (and thus player salaries and income taxes) comes from the NFL's TV deal.

Posted by Josh on June 7, 2011 04:01 PM

Sierra:

Nope. Just asking you to show me the numbers. Show me, in this situation, which tax revenue is recoverable and what is not, and show me that it doesn't add up to $500 million over 30 years. You should be able to do that, right!

Keep in mind, roughly 20,000 of the 65,000 people who attend Vikings games are from out of state. Also, unlike what some of you would like to believe, a majority of the NFL's revenue (and thus player salaries and income taxes) comes from the NFL's TV deal.

Posted by Josh on June 7, 2011 04:01 PM

Numbers showing that the revenue will never be recovered can be found at www.msfc.com. You know, the Metropolitan Sports Facilities Commission, whose jobs depend on building a new stadium. Look under the Metrodome Next project files. There's a PDF that breaks down expected revenues, costs, attendance projections, etc.

To be fair, they only recently figured out that they couldn't hold HS and college baseball games in a *football only* stadium. I'm not sure if the PDF has removed those projected figures, but since we're only talking 100 days of sub-250 attendance events, it's probably not that big of a deal.

Posted by Geoff on June 7, 2011 04:06 PM

Geoff:

I am aware of the source you are referencing, but that isn't quite what I was asking. We know that roughly 20,000 of the people who attend Vikings games are from out of state. How much do they spend here on hotels, rental cars, food, entertainment? The Vikings have a very regional fanbase, and thus have more out of state fans attending games than many other teams in the league. One reason generic stadium studies are useless in my opinion. Also, some of the studies out there (not all) don't factor in the economic impact of losing the team if a stadium isn't built. In this case, we most certainly would lose the Vikings and there would most certainly be some economic impact should that happen. So, I would appreciate it if someone would lay out the numbers for this situation.

Posted by Josh on June 7, 2011 05:13 PM

Josh - if it is the case that so many people from outside of MN come in to see the games, and if it is the case that a stadium will be a net-plus for any municipal entity that wants to fund it, then why are there not private-money entities lining up to pony up for the stadium? Why isn't Zygi Wilf lining up the money men from inside and outside the Twin Cities to help pay for this obviously profitable venture? Why is the up-front subsidy from the city (whether it is Minny or Arden Hills or Ramsey County) even necessary if such an endeavour will pay off in sufficient time to be considered profitable?

Some folks, ya just can't reason with.

Posted by SierraSpartan on June 7, 2011 05:46 PM

Sierra:

It is a fact that 22% of season ticket holders are from out of state and that roughly 20,000 of the fans on game day are from out of state. And if they use stadium user fees to pay the state's portion, the out of state fans would be contributing.

Posted by Josh on June 7, 2011 06:32 PM

@Josh....I don't know exact costs, but you can expect at least 2 major renovations in 30 yrs, which are not even estimated in the cost for the stadium. Also, the cost of the stadium (as proposed) does not include estimates for the annual operational costs of such a stadium (lights, heat, water, electricity, etc.). Nor does it take into account any work outside of building the stadium (like, say the roadwork, utility relocation and expansion, etc). It's very difficult to break out savings factors for not building the stadium when the cost factors aren't taken into account.

That said, the Daily Norseman article suggests that each out of town person spends $230 per PLAYOFF game. I expect that is a bit of an exaggeration, as people come as families and groups and generally one ticket for dinner is for 3 or 4 people. However, to use that figure, and yours for attendance, these out of towners contribute $1.104 Billion over 30 yrs. However, that is not how much money the state makes. Remember, there is no State sales tax on clothing, however, I would suggest that the state sales tax on everything else is lower than 10%. Using 10% as the max sales tax, the state would make $110 Million dollars...far less than the $500 million Initial investment.

Using the Daily Norseman's figures for what the Vikings contribute to State and Local taxes ($18 mil/yr, or $540 Mil over 30 yrs-again, state AND LOCAL), the State would only be breaking even at 30 yrs....again, NOT TAKING RENOVATIONS OR OPERATING COSTS INTO ACCOUNT.

And since I am familiar with commercial electric demand charges, you can expect a monthly bill of over $20,000/month for electricity alone. That's an additional cost of $1 Mil/yr. Add in the natural gas, water, sewage treatment, daily maintenance and upkeep (replacing broken items, lights, etc.) and you will have at least $6 mil in operating costs/yr, or $180 Million over 30 yrs, eating away at that "profit"

Posted by chris on June 7, 2011 07:58 PM

Wow, I go afk for one afternoon, and I miss all the fun.

In short, I think the way Chris has broken this down is the right way: You want to add up all the marginal revenue produced by a project (i.e., the revenue you wouldn't get if the project didn't happen) and all the marginal costs (i.e., everything you wouldn't have to spend if the project didn't happen) and see which is more.

In this case — and I really should have caught it when writing my original post &mdash even the Vikings' own figures show that the team only pays $18 million a year in state and local taxes, which is far less than the combined city and state cost. Even if you accept that the entire $150 million payroll comes from out-of-state money — much of it is from TV contract money, yes, but not all of it — that's still only about $12 million more in income taxes. Let's go crazy and assume another $3 million in hotel taxes — which would assume that those 200,000 out-of-state ticket buyers a year spend $200 per person (not per family) each game on hotel rooms and such.

We've bent over backwards to assume the best, and we're at $33 million a year in tax revenues. The combined state/county cost is about $800 million, which would cost at least $50 million a year in bond payments. I don't see any way on earth that this breaks even, let alone makes money for the taxpayers.

Posted by Neil deMause on June 7, 2011 08:29 PM

Oh, and yes, the Vikings did generate lots of revenue to pay off the Metrodome. That's because they actually paid rent, and shared parking and concessions revenues. If they were offering to do that here, it would be a different story, but they're not.

Posted by Neil deMause on June 7, 2011 08:31 PM

Chris:

Factoring in POSSIBLE future rennovations is a reach. The Metrodome is 30 years old. Name the "major" rennovations and how much they cost.

Posted by Josh on June 7, 2011 08:37 PM

Neil:

First off, the Vikings haven't paid rent in the Dome for nearly a decade, and there is no parking revenue associated with the Dome. The state does get a cut of the Metrodome concessions, but they also pay all of the Dome's operating costs. In this stadium proposal, the Vikings would pay 90% of the $15-20 million annual operating costs of the stadium (not just the costs associated with Viking games). They said they are willing to share revenues, but would require the state to share costs too.

Posted by Josh on June 7, 2011 08:43 PM

The point is that the Vikings paid enough in rent and shared revenues to pay off the Metrodome and the operating costs. (See Judith Grant Long's NFL documents under "Resources" at left for the details.) In the new plan, the state/county would not get net revenue from the stadium itself. So the benefits that built the Metrodome wouldn't be available here.

Also, Josh, I had a question for you: You said earlier that the state would be using a new Vikings stadium 300+ days a year. Do you know of any NFL stadium — heck, any outdoor sports facility of any kind — that's in use 300+ days a year? Did U2 ask to set up a residency in Ramsey County that I didn't hear about?

Posted by Neil deMause on June 7, 2011 08:49 PM

Again, the Vikings have said they would be open to sharing revenue, but would require the state to pickup more than 10% of the operating costs (which would be $15-20 million now and grow with time). That's all a part of the negotiation process, which to this point the state isn't fully participating in.

And to answer your question, i'm not sure. The Metrodome activity schedule is posted online and it's currently used 200+ days a year. Granted, a majority of the activities are things like public walking, military training, and intramural athletics.

Posted by Josh on June 7, 2011 09:04 PM

Again, the Vikings have said they would be open to sharing revenue, but would require the state to pickup more than 10% of the operating costs (which would be $15-20 million now and grow with time). That's all a part of the negotiation process, which to this point the state isn't fully participating in.

And to answer your question, i'm not sure. The Metrodome activity schedule is posted online and it's currently used 200+ days a year. Granted, a majority of the activities are things like public walking, military training, and intramural athletics.

Posted by Josh on June 7, 2011 09:05 PM

So Josh, you want a regional study that shows that the new stadium won't pull in money. You're pointed to the MSFC study (using the most optimistic projections possible) that shows it won't make money. But then you say it's wrong?

When the people who are pushing for the stadium the hardest admit it won't break even, why should we take your word that it will over them?

Posted by Geoff on June 7, 2011 09:21 PM

So Josh, you want a regional study that shows that the new stadium won't pull in money. You're pointed to the MSFC study (using the most optimistic projections possible) that shows it won't make money. But then you say it's wrong?

When the people who are pushing for the stadium the hardest admit it won't break even, why should we take your word that it will over them?

Posted by Geoff on June 7, 2011 09:31 PM

So Josh, you want a regional study that shows that the new stadium won't pull in money. You're pointed to the MSFC study (using the most optimistic projections possible) that shows it won't make money. But then you say it's wrong?

When the people who are pushing for the stadium the hardest admit it won't break even, why should we take your word that it will over them?

Posted by Geoff on June 7, 2011 09:33 PM

Geoff:

The MSFC study doesn't look at the stadium deal on the table. There isn't a study out there that does, so don't bother throwing another study out.

Instead, lay out the numbers yourself. We know roughly 20,000 fans from out of state attend each game. Multiply that by 10 games and you get 200,000 out of state visits (calling it this because it's probably not 200,000 unique fans). Question is, how much do these fans spend in MN each time they visit? An MSFC report says $200+ while a Meet Minneapolis report says $103.

Also, how much of the Vikings $18 million in taxes ($26 with new stadium) is unrecoverable? I would say a majority of the income taxes, but how much else?

Any other benefits the Vikings bring Minnesota, both tangable and intangible?

How much does all this add up to be? Despite what many stadium opponents say, there is a number where financing a stadium makes sense. What is that in THIS situation?

Posted by Josh on June 7, 2011 10:09 PM

Also, I believe I read that a significant portion of the stadium cost would go right back into the local economy in the form of construction wages (a local industry that currently is dealing with 40% unemployment). What value do you place on this?

Posted by Josh on June 7, 2011 10:15 PM

Zero, because pretty much anything the state spends tax money on is going to go into wages. (Unless they spend it on buying krugerrands or something.) So the marginal benefit from spending on a stadium versus spending on schoolteachers or not raising taxes in the first place is zero — or actually negative, because of the leakage issue that I discussed in the original post.

Posted by Neil deMause on June 7, 2011 10:55 PM

Say it with me:

Opportunity costs! (R&D center at the U also has great benefits, why not do that?)

Substitution effects! (If I go play paintball twice a year instead of going to two VIkings games the state is actually better off)

Leakage/Passthrough! (You need to be super careful about where the money goes. i.e. do an econmic impact analysis, and an unbiased one)

Balacing/Equivalency! (Specifically yes the Vikings bring in fans, but they also mean Minnesotan's go to other states to spend money on football in nearly equal proportion.)

The only good reason for building a stadium on terms anything like the Vikings are proposing would be to try and move spending around in a metro area. There are some localization effects. Frankly there are much better ways to do that for several hundred million dollars.

I think everyone who thinks the Viking stadium idea is a good idea should all go in on it with Ziggy. But oh no, it is only a good idea if you can use other people's money.

Posted by Joshua Northey on June 8, 2011 12:42 AM

Amen, Mr. Northey.

If it were a genuine revenue generator, the owners would be building it themselves and turning what they promise to be tax generating fees for the state (an inducement to funding) into profit in their pockets.

BTW, do we get extra points for posting the same thing multiple times? Neil? Are there prizes that I am unaware of???

Posted by John Bladen on June 8, 2011 01:36 AM

I disagree Neil. We're talking about an industry with 40% unemployment. School teachers aren't seeing 40% unemployment right now.

Posted by Josh on June 8, 2011 02:50 AM

If you're looking to bail out construction workers, there are cheaper ways to do it. Burying bottles of money and paying them to dig them back up comes to mind.

Anyway, Josh, this whole argument began because you claimed the public would get enough revenue from the project that it would be a good deal for taxpayers. Can you show your math? Where do you see $50 million a year in tax benefits?

Posted by Neil deMause on June 8, 2011 07:52 AM

The key is "opportunity cost". Hennipen County lost millions of dollars building a stadium vs allowing the preivte sector to build. They lost millions in property taxes - vikings don't pay any, and have not paid rent in a decade.

Posted by john on June 8, 2011 12:31 PM

The key is "opportunity cost". Hennipen County lost millions of dollars building a stadium vs allowing the preivte sector to build. They lost millions in property taxes - vikings don't pay any, and have not paid rent in a decade.

Posted by john on June 8, 2011 12:32 PM

The owner of Tunheim Partners is Governor Dayton's jobs czar. Why hasn't she corrected the governor 8000 stadium jobs claim? According to Mortonson Construction in 2009, a retractable-roof stadium involves 4.6 million work hours. It's a three year construction project so each full-time job lasting three year would involve 6000 work hours. Divide 6000 hours into 4.6 million total hours and you come up with 767 full time jobs lasting three years... NOT 8000 jobs. 8000 part-time job would only involve 192 hours of work per year.

Any Comments?

Posted by john on June 8, 2011 12:32 PM

The owner of Tunheim Partners is Governor Dayton's jobs czar. Why hasn't she corrected the governor 8000 stadium jobs claim? According to Mortonson Construction in 2009, a retractable-roof stadium involves 4.6 million work hours. It's a three year construction project so each full-time job lasting three year would involve 6000 work hours. Divide 6000 hours into 4.6 million total hours and you come up with 767 full time jobs lasting three years... NOT 8000 jobs. 8000 part-time job would only involve 192 hours of work per year.

Any Comments?

Posted by john on June 8, 2011 12:33 PM

The pro stsdium individuals like to forget that recent events in North Minnepolis, the central US, and coastal Japan will provide hundreds of construction jobs. We have plenty of earthquakes, waves, tornadoes, and winds to provide jobs, don't need to create artificial disasters such as stadiums

Posted by John on June 8, 2011 12:52 PM

This website should be changed from "Field of Schemes" to "Articles of Schemes". The reality is a significant (I did not say majority) part of Minnesota's annual budget is derived from taxation having to do with the Vikings. If the State of Minnesota is not going to help fund a stadium to keep the Vikings, they need to come with a plan B of taxation to make up the void left by the Vikings.


Josh breaks it down quite nicely in his article; 120 million in NFL salary cap, 7.5% personal income tax rate comes out to about a 9 million windfall per year in tax revenue by taxing players on an NFL 53 man roster. The math doesn't get any simpler than that and I am only consideringthe 53 man roster at this point. And for those who are struggling with the math (*cough* *cough*, "Articles of Schemes"), that is 270 million over 30 years assuming the NFL has 0% growth over the next 30 years.

Posted by Josh from NJ on June 13, 2011 11:41 AM

Neil;

I know that in some other sports, players are taxed as either non or 'part time' residents in their home states. For example, when the Expos were trying to float a new stadium in Montreal, one of the claims made was that the players paid income tax only on approx 40% of their annual earnings as part time residents, and that this amount should be 'creditted' as direct funding toward the stadium. The province refused, but in the Expos case (with a then current $28M payroll, as I recall) the amount generated was a little under $5m...

Do you know if this sort of taxation scheme is the case with the NFL? (and, if so, in all states?)

Similarly, I'm wondering how states treat 'visiting team' athletes? It seems unlikely to me that they would be allowed to tax a team visiting the vikings at 1/16th of the annual rate, given that the visiting team is only present for 3 or 4 days of the year.


To 'the other Josh' point... $9m annually in revenue seems delightful - if indeed the state actually sees that much. But you can't just look at the revenue side. What does it cost the city and state to get that tax revenue in terms of policing, servicing, unfunded (by Vikings) operating costs/upgrades etc. I'd love to hear from the two levels of Gov't what the total outlay in public funds to 'facilitate' Vikings games is and what the gross revenues they receive related to game events are? If they are turning a profit, then it should be a no brainer to fund a new facility. If they are losing $10-20M annually net, not so much...

Posted by John Bladen on June 14, 2011 12:48 AM

Latest News Items

CONTACT US FOR AD RATES