DeLand column: Is there economic logic to a stadium?

DeLand column: Is there
economic logic to a stadium?

January 23, 2011

When Joe Friedrich looks at the issue from a
professional standpoint, it doesn’t make a whole lot
of sense.

What would be the financial benefit to Minnesota
taxpayers of paying for the majority of a new
stadium for the Minnesota Vikings? The economist
in Friedrich will tell you there really is none.

“Economists — except for those who have a vested
interest — pretty much cannot really find a
benefit/cost analysis to support a publicly financed
stadium, to the state or the government interest that
pays for it,” said Friedrich, a St. Cloud resident and
professor emeritus of economics at St. John’s
University and the College of St. Benedict (he retired
18 months ago).

“On the standpoint of strictly economic costs to the
state, I literally can’t find a study that comes up with
a positive return.”

But when Joe Friedrich the native Minnesotan or Joe
Friedrich the lifelong sports fan looks at the same
issue ... well, it’s not so cut-and-dried.

“The Vikings certainly add a lot of excitement,”
Friedrich said. “They do contribute to the spirit of
the state. Think of yourself and all the other people
for whom it’s a very real part of their life.”

Central Minnesotans who stand on divergent sides
of this issue will have the opportunity to talk about
it with Friedrich and others on Thursday.

The Eugene J. McCarthy Center for Public Policy and
Civic Engagement is hosting a discussion titled “
Your Taxes & Sports Stadiums: The Minnesota
Vikings” as part of its Politics & A Pint series.

The forum begins at 4:30 p.m. Thursday at Brother
Willie’s Pub in Sexton Commons on the SJU campus,
and the public is invited to hear Friedrich’s
economic insights on the issue.

“I’m just going to give 5-10 minutes of the ‘this is
the economic cost/benefit’ reality,” Friedrich said.
“I’m sure there’ll be a bunch of people there with
assertions. I intend to mostly ask questions back.”
The stadium issue is one that generates a lot of
emotions and a lot of passion, one way or the other.
However, economists aren’t supposed to operate on
emotion: They’re supposed to work with facts.


And according to Friedrich and other economists,
paying for a stadium doesn’t make much financial
sense to the general public. The return on other
investments — like, say, pre-kindergarten education
— is much higher.

But that doesn’t get you a football team ...

“There’s a lot of other reasons why you might want
to build a stadium,” Friedrich said. “But if you were t
alking strictly dollar-and-cents type of arguments, I
think the case is pretty clear that publicly financed
stadiums cost the public more than they benefit.

“It’s not just the Vikings — it’s just about
everybody. That’s the reason I said I couldn’t find
an economist who had a different opinion who was
an independent. (You’d have to) tell a story that’s
not false, but doesn’t tell the whole story.”

Does a new Vikings stadium make sense in other
respects? That question will be tossed around on
Thursday, and it’ll have to be answered before the
state legislature moves forward on this issue.

“The bottom line here is the state of Minnesota is
hardly in a position to be taking on too many
endeavors right now,” Friedrich said. “The
opportunity cost of a new Vikings stadium is
significant.”

In economist lingo, “opportunity cost” is what you
give up to get something else. And with a looming
$6.2 billion state budget deficit, that’s an issue.

On the other hand, Friedrich — a lifelong sports fan
— understands other viewpoints.

“I’m the kind of sports fan who in 1954 picked the
closest (major league) team to Minnesota — the
Milwaukee Braves — and has kept the Milwaukee
Braves as his team through their transfer to Atlanta,”
he said. “My favorite football team was the Baltimore
Colts — and they of course moved.”

Stadium proponents would argue that without a new
stadium, the Vikings eventually will do the same
thing.

“You try to ascertain from people, in a way that’s
truthful, how much they would pay for that benefit.
If there wasn’t the sport here, how much would you
pay to have that benefit?” Friedrich said.

“It’s environmental economics — what are the
amenity values? It’s really hard to do. But there are
methods in economics that do some of the
benefit/cost analysis.”


Proponents also tout the economic stimulus —
7,500 on-site construction jobs, by the Vikings’
estimate — that building a new stadium would
provide, and Friedrich says that might have some
value.

“Now is probably the best time,” he said. “If you had
7,500 workers you had to get away from other
construction sites, and if you had to buy concrete
away from other sites, that would bid up the price.
But right now, it’s likely there’s a lot of excess
supply in the construction industry. There is a small
gain.

“But if you spend $900 million for a domed stadium,
how much of that is really additional and how much
is just workers moving from one site to another?”

Whether public financing for a new Vikings stadium
makes economic sense or not, it’s Friedrich’s
opinion that it eventually will happen.

“I think when push comes to shove, something will
be worked out,” Friedrich said. “They’ll cobble
together a set of taxes and fee charges that fall on
people that use the facility.

“‘Use’ can be a very vague word. What they’ll try to
say is people who get the benefit from this stadium
should pay for it.

“I think at the end of the day, a stadium will be
constructed that will somehow be funded — at least
orally — by those who benefit from it. Of course,
there’ll be infrastructure expenses.”

Even if that doesn’t happen, and the Vikings do
leave Minnesota, Friedrich’s economic background
tells him the state would survive without them.

“Sid Hartman once commented that without the
Vikings, Minneapolis would be a cold Omaha,”
Friedrich said. “Well, Omaha was just listed as one
of the 10 best places in the world to live.”

But most Minnesotans would prefer that the Vikings
stayed. And not everybody uses everything that the
state government pays for.

“That’s why we tax people — everybody can say,
‘Oh, that doesn’t mean anything to me’,” Friedrich
said. “There are things in life that are not really
easily translated into dollars and cents.”

When an economist says that, you can take it to the
bank.

This is the opinion of Times sports editor Dave
DeLand. Contact him at 255-8771 or by e-mail at
ddeland@stcloudtimes.com.