Buy the Twins, Then Build a Stadium
by David Morris
December 31, 1996
The baseball debate in Minnesota has put the cart before the horse. Playing baseball outdoors is a grand idea. But fans are not being asked to finance a new stadium for the pleasure of watching ball played in its natural habitat but to keep the Twins in Minnesota. If that is the goal then a much cheaper and lasting solution exists. Fan ownership.
Simple arithmetic supports this conclusion. A new stadium will cost upwards of $350 million. The public is being asked to pony up $125 to $200 million. Yet the Twins can be purchased outright for $74 million to $108 million. And Carl Pohlad and sons have indicated a willingness to consider fan ownership.
Fans can buy the Twins for half the cost of a new stadium. Fan ownership guarantees the Twins will stay in Minnesota. Building a stadium doesnÕt. At best the Twins will sign a 20 year lease and we can look forward to building them an even bigger stadium in the year 2017. At worst we can look to the experiences of Baltimore and Oakland and other cities as evidence that a stadium lease does not guarantee a team’s continuing presence.
I first raised the idea of fan ownership of the Twins back in 1984. The purchase price then was $36 million. Today it is two to three times more. If we build the Twins a stadium the teamÕs market value may double again. This may be the last time we can reasonably consider fan ownership.
To become a reality, fan ownership must overcome three obstacles. Some are concerned that 200,000 fans will insist on voting for the starting lineup. Nonsense. The Green Bay Packers are owned by thousands of fans yet its management runs a very professional operation. The Packers have $20 million in the bank, a debt free new stadium and a team that may end up in the SuperBowl.
A more serious objection is that other major league owners will never accept fan ownership . There will be a fight all right, but Minnesota will have powerful allies. Today major league baseball is exempt from anti-trust laws. That allows owners to restrict the number of teams and thus inflate the value of the teams. Yet the owners have granted themselves the right to move their teams. This gives them enormous leverage over cities. Congress is considering abolishing the anti- trust exemption. I am confident the entire Minnesota congressional delegation would support such an abolition if major league owners reject fan ownership.
In this fight Minnesota can count on the vigorous support of at least a dozen cities. Seattle, Indianapolis, New York City, Boston, Pittsburgh and San Diego are fighting the same build-us-a-new-stadium-or-we-will-leave-town battle as we.
The third obstacle to fan ownership involves economics. Minnesota is a small media market and baseball owners, unlike their football counterparts, do not share media revenues. According to a recent investigation of the Twins’ financial books, total taxable losses incurred by Pohlad and sons in the last 12 years have reached $ 72 million. About half of these losses came in the baseball strike year and the year after. The losses have been offset by $29 million in tax benefits. Thus the Pohlad’s net loss has been about $43 million, or $3.5 million a year.
The conclusion? Even if the Twins continue to lose money, it will be a modest loss. If use the $79 million loss figure, which excludes the tax benefits and ignores the impact of the baseball strike, we could still buy the team and cover anticipated losses for the next 15 years for less than the Twins are asking us to invest in a new baseball stadium.
After we buy the Twins is the time to talk about a new stadium. And I’m convinced that when that discussion occurs in the context of fans wanting outdoor baseball rather than owners wanting increased income, we will end up building a much less expensive structure. As Philip Bess points out in a recent article in Real Estate Issues, new stadiums are two to three times more expensive than traditional ones because they are driven by the owners’ desires for luxury seating and broad concourses. Moreover, he notes that new stadiums tend to “promote fewer and less diverse forms of adjacent social and economic activity than their traditional counterparts”. I’m confident we can build a beautiful fans oriented stadium that blends in with its surroundings and truly helps local businesses for a price tag considerably less than $350 million.
The Governor and the Twins’ have announced their interest in fan ownership. We need the creative skills of Minnesota’s investment bankers, tax attorneys and accountants to design an appropriate ownership structure. But first we must put the horse before the cart. Fan ownership of the team, not fan financing of the stadium should be our number one priority.
David Morris is vice-president of the Institute for Local Self-Reliance