Soccer Stadium in Minneapolis (cancelled)

[holmstar]

While I would certainly hope he, or any other uber-wealthy individual, does donate much of his fortune to charity eventually, it isn't up to us to decide that.

[amiller92]

If the city/county decides to raise taxes significantly, then the team would certainly have to make up for it.

Or lobby against that, or for an exemption in the future.

[acs]

He wouldn't be losing just $2 million a year though, he'd be losing $250 million plus $2 million each year after that. The $100 expansion fee represents the equity value of the team itself. Finance 101 says the value of an asset is the sum of it's future cashflows discounted back to their present by the time value of money. Because the team would be a money-losing venture, what that means is not only is the present value of the team less than the $100 million cost, it would be a negative value and the $100m a complete loss. For McGuire to even hope to make money off the eventual sale of the franchise then over the course of his ownership they would need to become profitable (higher ticket prices, lower costs, greater TV revenue) at a level above and beyond the opportunity costs of investing that $100m in an asset of similar risk. So yeah, the operating profit/loss of the team plays a huge role in whether that $100 m expansion fee maintains/gains value, loses some value, or is a complete loss for the owners.

Regarding the $150m for the stadium, there's really no way to avoid this being a loss. I'm really glad he's offering to build it with his own dollars and not ask for public assistance on that part like all the other owners did. It's going to cost him $150m plus interest at either the city borrowing rate or the higher rate in the private market. If he does pay the higher rate and own the stadium then he does get to deduct the depreciation on his taxes, but if my estimate of his wealth composition is accurate then he might not even be able to deduct the full amount. This could be part of the reason he's willing to give the public ownership of the stadium. Either way, there isn't a scenario where the value of this stadium doesn't decline to near zero.

[David Greene]

Oh, what we will do for the poor billionaire?!?

[EOst]

While I would certainly hope he, or any other uber-wealthy individual, does donate much of his fortune to charity eventually, it isn't up to us to decide that.

It is, however, up to us to decide whether we should give him money when he doesn't need it.

[BigIdeasGuy]

While I would certainly hope he, or any other uber-wealthy individual, does donate much of his fortune to charity eventually, it isn't up to us to decide that.

It is, however, up to us to decide whether we should give him money when he doesn't need it.

Correct. But if we decide not to give him money we can't be mad if McGuire decides not to bring a team here.

[John21]

It shouldn't be up to the taxpayers to guarantee a business is profitable.

[holmstar]

It is, however, up to us to decide whether we should give him money when he doesn't need it.

What money is that? They asked for a waiver on sales tax for materials, which is an incredibly common request for any large project, and they agreed to pay the current property taxes on the site. They just wanted an assurance that the property taxes wont increase. No, if I want to build a house, I don't get those, but my house also wouldn't bring 300,000 people to downtown minneapolis each year. The benefits to minneapolis are almost certainly higher than what the owners are asking.

[acs]

It shouldn't be up to the taxpayers to guarantee a business is profitable.

Oh come on now, government is heavily involved in picking winners and losers whether you like it or not. Just on the front page of the two biggest business publications I found the following projects that used taxpayer money to do exactly what you hate:

http://www.bizjournals.com/twincities/m ... linic.html
http://finance-commerce.com/2015/06/cir ... expansion/
http://finance-commerce.com/2015/06/pro ... -upgrades/

Maybe the better question isn't "why do these businesses need tax breaks or subsidies to be profitable?" but rather, "why are our taxes so high that these businesses aren't profitable without relief?" Oh wait...

http://www.startribune.com/minneapolis- ... 299517811/

[LakeCharles]

Maybe the better question isn't "why do these businesses need tax breaks or subsidies to be profitable?" but rather, "why are our taxes so high that these businesses aren't profitable without relief?" Oh wait...

http://www.startribune.com/minneapolis- ... 299517811/

Well I take issue with the first sentence there, and if you had done even the tiniest bit of research on the second part you'd see that those accusations were false:

http://www.startribune.com/minneapolis- ... 307203581/

[TroyGBiv]

Thanks LakeCharles... we need to pull back off of some of the rhetoric (especially when it starts to nudge on some racist issues- and no I'm not calling anyone racist here - just acknowledging how many racist attacks the Urban League has weathered over the decades)...
The Soccer stadium issue seems like it could have been resolved by having the team play in a existing stadium and build audience and sponsorship and revenue prior to building a brand new stadium. This market is really tapped out on the US Bank stadium and I am afraid that the stadium may be the avoidable deal breaker.

[Didier]

The Soccer stadium issue seems like it could have been resolved by having the team play in a existing stadium and build audience and sponsorship and revenue prior to building a brand new stadium.

This is already happening. Minnesota United has sold out every game this season with 9,000-plus fans at the National Sports Center.

[TroyGBiv]

So the team players are the same for this professional level team? I guess I thought they would have to build a new team with a higher level of skills to compete on the top professional level. I admit that I have never understood farm teams and semi-pro leagues etc.

[Indy2MN]

Without going into too much detail, MLS expansion teams that come up from the NASL will start with the same roster but the league will also host an expansion draft whereby the new team can select from a pool of players on existing teams. Further, Minnesota United will start making moves to build up finances (for example selling NASL star Miguel Ibarra) in order to round out the roster with better talent and/or sign a high profile designated player. Orlando City made the jump from NASL to MLS this season.

https://en.m.wikipedia.org/wiki/2014_ML ... sion_Draft

[TroyGBiv]

This is great to know - thanks! That makes a better argument for the stadium to be built sooner since the team will be up to "speed" pretty much right at the beginning.

[HuskyGrad]

Minneapolis city council adds item to agenda: Creating a Major League Soccer stadium work group.

https://twitter.com/CallaghanPeter/stat ... 3964977152

[Wedgeguy]

About a year late for this work group I'm afraid!!

[acs]

Please be a joke...
http://www.startribune.com/brooklyn-par ... 309395681/

[Nick]

always & 4ever

http://www.theonion.com/video/indianapo ... -for-26149

[nfschauer]

The fact that tomorrow is the "deadline" Garber gave McGuire, you'd think there would be more news around this today!