Saturday, April 23, 2011

What could be safer than Vikings' T-shirt revenue?

A  tax on T-shirts (and other sports memorabilia, income tax on players' salaries, and assorted other items, too) is back as the way to finance a new stadium for the Vikings. This idea came up last year, too. In fact I wrote about it, here. If the idea can come back, so can my post. Here it is:

- o O o -

Hey Mort, you want the house to buy some of those new Minnesota bonds?

Which ones?

You know, the new ones for the new football stadium for da Vikings. The ones backed by the T-Shirts.

Naw, Eddie, let’s find something safer, some commercial junk bonds, maybe.

o O o

Which is why, of course, the State of Minnesota will issue general obligation bonds to raise its “share” of the cost of a Viking stadium. It would be hard to find a bond house dim enough to buy bonds backed by this:
They [legislators supporting the stadium] say only those who would benefit from the stadium would pay for it -- through new taxes on metro area hotels and rental cars, sports memorabilia and a sports-themed lottery scratch-off game. Those sources would provide $527 million over 40 years, with the team contributing $264 million.
But consider this: the Vikings don’t want a forty year lease; that, and the “life” of Metropolitan Stadium and the Metrodome suggest it won’t be a forty year asset.

Twenty-five years from now, when the Minnesota Rams or the Minneapolis Dolphins, or whoever is playing in the stadium wants another new one, the State will still have fifteen years of payments to make.

Or look at it this way: your sixteen year old says, “Dad, help me buy a car. My friend is selling one that he swears has at least a couple years left in it. He only wants $2,000 for it. I’ll pay you back, every penny, I swear, five dollars a week, until it’s paid for.”

And then you remind your offspring — a sweet kid, really, but kind of a dreamer — that even without interest, it would take over four years to pay off the $2,000, and that the car is not expected to last that long.

Your child then says, “Well, I was kind of hoping you would forget about it after a while.” And most indulgent parents probably would.

But the bond holders won’t.

It is also somewhat, well, disingenuous, to say that “only those who would benefit from the stadium would pay for it .” If T-shirt sales hold up, maybe true.

But make no mistake, this is not a revenue bond deal; it’s a general obligation bond deal that looks to the entire treasury of the state for repayment.

- o O o -

And this will be true this time around, too. The confidence games and flim-flam artistry around the construction of stadiums is genuinely awe inspiring.

No comments: