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new ballpark
New Ballpark Q & A: Why Build It?

The Twins won two World Series Championships in the Metrodome. What's wrong with playing baseball in the Metrodome?

While the Metrodome has served the Twins and the Twin Cities community well, it has surpassed its usefulness as a modern-day baseball facility. This is not only the opinion of the Twins, but of the Metropolitan Sports Facility Commission, which currently operates the Metrodome.

The Metrodome does not have the fan-friendly and intimate character that the Upper Midwest has come to appreciate and expect in a facility like the Xcel Energy Center, where the sight lines are outstanding, the proximity to the playing surface is extremely close, the concourses are wide and open, and the concession stands and modern restroom facilities are plentiful. From a baseball fan's perspective, playing baseball inside the Metrodome on a beautiful summer day is the antithesis of the Xcel Energy Center experience.

With the building boom of new ballparks experienced since the 1987 and 1991 World Series, the Metrodome is generally considered one of the two worst baseball facilities in Major League Baseball by a considerable margin.

In 2002, 2003 and 2004, the Twins finished in first place in the American League's Central Division; nevertheless, the revenues they were able to generate in the Metrodome ranked only 25th out of 30 major league franchises. This is due to the configuration of the Metrodome as a football facility, as well as the lease limitations on major revenue streams such as advertising, suites and parking. This will result in the team's inability to field a competitive team and offer fans an exciting Major League Baseball experience over the long-term.

How will the new ballpark improve the fans' entertainment experience?

In keeping with our deep baseball heritage in Minnesota, the new ballpark will restore baseball to its rightful place the great outdoors. Virtually every aspect of the fan experience will improve in a new ballpark, including:

  • Outdoor baseball on real grass
  • A protective roof in the event of rain, snow or other inclement weather
  • Thousands of additional quality seats between first and third base
  • Better sightlines from virtually every seat in the park
  • Closer proximity of the seats to the playing field
  • Wide and open concourses, which enable fans to see the action while getting refreshments or visiting the restroom
  • Many more concession and novelty stands, resulting in shorter lines
  • Many more modern restroom facilities, especially for women
  • On-site restaurants for eating before or after the game

    Why is a retractable roof important to the out-of-state and Greater Minnesota fans?

    A retractable roof is actually important to all Minnesota Twins fans. Today's generation of fans has never experienced a rainout, and it has become accustomed to the certainty of watching a ballgame on the date it purchased tickets for. This has become particularly important to fans traveling long distances from Greater Minnesota and from outside the state.

    Attracting fans from outside our state borders is a significant economic generator for our region. Furthermore, these fans and Greater Minnesota fans often attend more than one game to watch a weekend series, and spend money not only on game tickets and concessions, but also in retail establishments, hotels, restaurants and local tourist attractions. A retractable-roofed facility helps expand the market and improves Major League Baseball as a major attraction for the entire Upper Midwest.

    Four other ballparks with retractable roofs have been built in locations that have significant weather related concerns: Seattle for the rain, Houston for the heat and humidity, Phoenix for the heat, and neighboring Milwaukee for the cold and rain. All of these franchises have been able to address their weather concerns and expand their markets with a retractable roof. The potential for inclement weather during half of the regular season (April, May and September) and the post-season in October makes a retractable roof a common sense choice for the Twin Cities market.

    Who would own the new ballpark?

    The Twins do not have a strong preference as to who owns the facility. Most other new ballparks are owned by a public entity or authority, such as the Metropolitan Sports Facilities Commission.

    Will a new ballpark be used for any other activities?

    While the ballpark is considered a single-purpose facility, it could also be used for amateur baseball, including the University of Minnesota team, as well as meetings and other public and private gatherings. It is also anticipated that the ballpark would contain a year-round restaurant and retail facilities.

    Will tickets still be affordable in a new ballpark?

    The Minnesota Twins have historically been very fan-friendly from a pricing standpoint, with one of the lowest average ticket prices in all of Major League Baseball. There is no intention to abandon the successful strategy of providing our market with one of the most affordable forms of family entertainment, which costs less than half the average ticket price of other professional sporting events. (Average ticket prices: Twins $14.42; Vikings $61.63, Timberwolves $38.15, Wild $49.72)

    While the Twins expect the average ticket price in the new ballpark to increase to the industry average, this is primarily attributable to the increased number of quality seats. The pricing on higher quality seats and suites is actually expected to help subsidize lower priced seats within the seating bowl.

    What factors should be considered in crafting a ballpark funding proposal?

    The Twins have one primary consideration in crafting a ballpark funding plan, and that is to maintain the team's operating flexibility and resulting ability to compete over the long-term. This should also be a primary consideration for the public sector investing in a new ballpark.

    The "engine" that supports the economic and sociological success of the project is the team's ability to offer a competitive and entertaining product, thus attracting the maximum number of fans to our region, year in and year out.

    Crafting a "workable" plan for the private sector must involve weighing numerous factors, including:

  • Amount of debt burden on the team and its effect on the team's ability to compete
  • Form of the funding payment (i.e., annual rent versus up-front payment)
  • Effects of league regulatory factors, such as Revenue Sharing and the Debt Service Rule
  • Lease terms with the host community or authority, including revenue streams available to the team, responsibility for operating costs, and capital improvements
  • The allocation of construction risks, including cost overruns
  • Venue-specific assessments

    What are the Twins willing to invest in the construction of a new ballpark?

    The Twins' investment in a new ballpark will be significant. The final amount will depend on the many variables and factors discussed in the section above, including the design of the ballpark, the form of payment, the impact on league regulations, and the overall lease terms with the host community.

    The dynamics and quality of the site are also important considerations to the amount the team is willing to invest in the project. The considerations include size and location of the site; our fans' ease of access; availability and proximity of parking; proximity to existing bars, restaurants and hotels; etc. These factors are especially important, considering that a baseball season consists of 81 games.

    Paying for a new ballpark is not unlike the purchase of a house. You don't decide how much to pay or put down, or how large a mortgage to carry on the house, until you determine where the house is located, the characteristics of the lot, the square footage of the house, the number of bedrooms and bathrooms, etc.

    Do the Twins have a preferred funding structure for the new ballpark?

    Based on league rules and regulations, as well as the desire to maintain maximum operating flexibility to field a competitive team, it is the team's preference to structure its contribution as an annual rental payment, similar to the structure of the Minnesota Wild transaction in 1998.

    The Twins recognize that they will have to pay considerably more in annual rental payments compared to a one-time payment made entirely up front. For example, the Twins would have to make total rental payments in excess of $250 million, spread over 30 years, to equal the same present value of a one-time, up-front payment of $120 million.

    The Twins do not have a preference as to the source for the public sector's contribution for funding the ballpark project.

    Will the Twins commit to paying for any cost overruns in the construction of the new ballpark?

    Yes. The Twins are prepared to assume the construction risk of the project and thus limit the public's exposure. In assuming this risk, the Twins would require that they control the design and construction process. It is a customary practice for the risk taker to have primary control over the construction process.

    What type of lease commitment are the Twins willing to make?

    The Twins are willing to enter into an "iron clad" 30-year lease arrangement that does not contain the attendance-related type of escape clause that was present under the Twins' original use agreement with the Metropolitan Sports Facility Commission.

    Who will pay the operating costs in the new ballpark?

    This lease term will need to be negotiated with the host community. However, it is currently anticipated that the Twins will be responsible for paying those operating costs of the new ballpark that are directly attributable to the operation of the team. Based on other clubs' experiences, this obligation will likely cost the Twins in excess of $10 million per year.

    Do the Twins have a preferred site for the new ballpark?

    No. The Twins believe there is currently more than one site that can meet the necessary requirements relating to accessibility, size, location and parking.

    Are the Twins currently for sale? Would they be for sale if the new ballpark is built?

    The Pohlad family's current interest is simple and straightforward: To seek a new ballpark solution which will help secure the future of Major League Baseball in the Upper Midwest and the Twin Cities for generations to come.

    One of the essential elements of sustaining Major League Baseball in our community is a new ballpark that serves the Upper Midwest as a defining landmark facility offering affordable family entertainment and an opportunity for the team to be competitive over the long-term.

    While the Pohlad family cannot reasonably commit to owning the franchise in perpetuity, they have no current intent to sell the team, even with an acceptable new ballpark deal.

    Will the Twins realize a windfall profit from the construction of a new ballpark?

    To the extent there is a windfall, the Twins are willing to enter into discussions regarding a sharing arrangement with other investors or participants in the development of the ballpark.

    What assurances are there that the Twins will be competitive in a new ballpark?

    While there are no guarantees in any competitive activity, there are several factors that suggest the Twins would be competitive in a new ballpark.

    First, the Twins have a proven baseball organization that has demonstrated the ability to field competitive teams with limited resources. The incremental revenues generated by a new ballpark should help stabilize the franchise and provide the team with additional resources to be competitive.

    Second, the league has taken significant steps to improve competitive balance, increase the amount of revenue sharing with small and middle market teams, and improve the league's financial stability with the Debt Service Rule.

    In each of the last four seasons, the Twins have shown that they can compete in the Metrodome. Why do they need a new ballpark to be competitive?

    Over the past three seasons (2002-2004), even though the Twins won the American League Central Division, they sustained significant cash losses each year due to the limited revenue opportunities in the Metrodome. As a result of these budgetary constraints, the Twins have been unable to retain some of the long-time players that led them to the division title.

    With the increasing salaries of their successful, homegrown players, the Twins have been forced to make some difficult player moves in order to pay for these payroll increases, as well as to sign free agents to fill their roster and competitive needs. As a result, players such as Eric Milton and A.J. Pierzynski were traded while LaTroy Hawkins, Corey Koskie and Cristian Guzman signed free-agent contracts with other clubs.

    As a middle- to low-revenue team, the Twins will always be forced to make some unpopular player moves while operating within their budgetary constraints, even when playing in a new ballpark. However, with the incremental revenues generated by a new ballpark, the Twins should have more operating flexibility to keep their core roster in tact.

    What has Mr. Pohlad done to help stabilize the baseball franchise in Minnesota?

    Mr. Pohlad has incurred significant and recurring operating losses to provide Minnesotans with a competitive baseball team. This commitment has resulted in World Series Championships in 1987 and 1991, Divisional Championships in 2002, 2003, and 2004. In the past 16 years, only the New York Yankees have achieved a higher success rate in the American League. This is particularly impressive given the limited resources available to the Twins in the Metrodome.

    Additionally, Mr. Pohlad has fought during the past decade as an advocate for increased Revenue Sharing for the lower revenue clubs, improved competitive balance, and the need to implement industry-wide financial stability tests.

    What is the status of contraction?

    In connection with the Collective Bargaining Agreement (CBA) entered into with the Major League Baseball Players' Association (MLBPA) in 2002, Major League Baseball (MLB) agreed not to contract any club during the term of the CBA, which extends through the 2006 playing season.

    In return, the MLBPA agreed not to oppose contraction after 2006, provided that the MLBPA receives adequate notice of the club's intent to contract and that MLB bargains the "effects" of its decision to contract with the MLBPA.

    How many other new Major League ballparks have been built in recent years?

    By the start of the 2005 season, 16 clubs will have built and opened new ballparks since 1991. Of these ballparks, all are single-purpose, open-air ballparks with natural grass; four of them have retractable roofs.

    New ballparks will open in Philadelphia and San Diego in 2004, and significant negotiations are taking place for new ballparks or renovations in St. Louis, Miami, and Kansas City.

    How have the new ballparks been funded?

    All of the new ballparks have required a combination of public and private participation. There has generally been a direct correlation between the amount of private funding and the market size of the franchise. For example, ballparks constructed in the large market area franchises of San Francisco, Detroit, and Philadelphia have had some of the highest private participation (more than 50%). It is well known that San Francisco has had the highest participation of private funds, exceeding 90%. On the other hand, the funding of ballpark construction in smaller market areas such as Pittsburgh and Cincinnati has included more modest private participation (below 20%).

    The average private participation for small to middle market clubs, such as in the Twin Cities, has been in the $50-million range for open-air ballparks (including Atlanta, Baltimore, Cincinnati, Cleveland, Colorado, Pittsburgh, San Diego, and Texas), and $95 million for ballparks with retractable roofs (including Arizona, Houston, Milwaukee and Seattle). The comparable new ballpark case studies presented by Mr. Lester during the initial hearing of the Screening Committee included private participation that ranged from 17% to 27% for Milwaukee, Pittsburgh, Seattle and Colorado. The average private participation for these four clubs was 21%.

    The public participation in funding these ballparks has generally come from a combination of public sources, including state, county and host community revenue sources. These sources have generally supported revenue and general obligation bonds, both taxable and tax-exempt.

    With the new reforms in Major League Baseball, why is a new ballpark still necessary?

    While the league has undertaken several initiatives and measures to "level the playing field," enhance competitive balance, improve financial stability covenants, and provide Revenue Sharing credits to reward new ballpark projects, the burden continues to lie with the local club and the local community to resolve their local facility issues.

    There is no "silver bullet" to addressing local franchise issues; rather, it is the combination of league economic initiatives and local initiatives (such as new ballparks and local broadcast networks) which will ultimately assist in enhancing franchise stability and competitiveness.

    Why hasn't the new ballpark in Milwaukee been as successful as those in Colorado, Baltimore and Cleveland?

    Milwaukee will always be disadvantaged as one of the smallest markets in all of Major League Baseball. Since 1995, the Brewers' ownership and management teams have taken every action possible for this franchise to survive in its small market. The benefits of these actions were ultimately realized in 2001 with the opening of Miller Park, when the franchise drew 2.8 million fans.

    In anticipation of opening their new ballpark, the Brewers increased their player payroll more than 100% in an effort to be competitive in the year they began playing in their new facility. This business strategy had been successfully executed by several clubs opening new ballparks.

    However, from 2001 through 2003, Milwaukee's significant investment in free agents and player signings yielded limited success, and the Brewers continued to finish with one of the worst win/loss records in all of baseball.

    Beginning in 2002, the fan interest waned and the club's operating losses mounted as the Brewers experienced historic declines in fan interest and attendance. In reaction to these events, the Brewers have decided to cut their losses in 2004, trade their highest priced and most popular players, and downsize their payroll to match their diminished revenue levels until they can put a more competitive product on the field. The fans and public have reacted loudly to the roster restructuring.

    The Twins took the same downsizing approach in the late 1990s, and that decision led to a nucleus of Twins players that led to back-to-back division championships.

    The lesson to be learned from this case study is the importance of maintaining a competitive product on the field while sustaining the success of a new facility.

    Will Major League Baseball guarantee that the Twins will fulfill their lease obligation?

    No. Major League Baseball considers lease negotiations a local issue between the franchise and the host community. As a result, Major League Baseball does not provide such guarantees.

    Will Major League Baseball participate in funding the new ballpark?

    Major League Baseball does not provide direct funding of ballpark projects. However, it does recognize the benefits that new ballparks provide, and as a result it provides significant incentives for clubs to invest in new ballparks in the form of credits against Revenue Sharing obligations. The credits permit clubs to offset shared revenues with the depreciation of new ballpark investments, rent payments, and stadium operating expenses.

    The Xcel Energy Center has been an extraordinarily successful sports facility for the city of St. Paul, the Twin Cities metropolitan area, and the state of Minnesota. Would a financing structure similar to that of the Minnesota Wild work for the Twins?

    Yes. The Xcel Energy Center was funded 50% by an interest-free loan from the state of Minnesota, to be fully repaid by the team in rent over a 25-year lease term. The other 50% was funded by revenue bonds issued by the city of St. Paul. The team received 100% of the revenues generated by the facility, but in addition to rent, they were required to pay for 100% of the operating costs of the facility.

    The Twins believe this precedent is an excellent and fair model. The state would fully recoup the amount of its loan from the team, and the host community would issue revenue bonds to support its portion of the project financing.

    Why doesn't a local referendum make sense?

    The Twins do not believe it is appropriate for a local referendum to determine the fate of a statewide attraction. State legislators frequently make difficult economic and financial decisions on behalf of their constituents. The Twins believe the decision regarding the direction of Major League Baseball in Minnesota can best be determined by state legislators and interested host communities.

    Prompt, decisive action is required to complete the project on a timely basis, to begin expending the millions of dollars necessary to plan and design the project, and to assure that a favorable interest rate environment is seized. Further delays and conditions such as a referendum could result in the failure of this project and affect the long-term future of professional sports in Minnesota.

    Is tax-exempt financing available to finance the new ballpark?

    Yes. While tax-exempt structuring is very complex and restrictive, our financial advisors believe this structure has the potential of saving the project $40-45 million on a present value basis.

    The Twins believe this level of savings should be among the highest priorities in structuring the transaction. Alternatively, if 100% of the bonds cannot qualify for tax-exempt treatment, a portion of the project should be structured accordingly. Tax exempt financing has been used in several ballpark transactions on a full or partial basis. The Twins believe it makes good business sense to try find ways to utilize this most efficient financing structure and the related cost savings.

    Why should the public help fund a ballpark for a privately owned team?

    Major League Baseball provides economic and social benefits to millions of state and regional fans. The burden of financing a new ballpark should not be borne by any one group or entity, but rather should be a combined effort of the public and private sectors. This conclusion has been reached in virtually every community in which a new ballpark has been built since 1990.

    Allocating the financing burden to the private sector should be a function of the local market size and the many other factors discussed previously.

    Clearly, the state reaps the benefits of player income taxes, which would not be collected without the presence of Major League Baseball in Minnesota. Significant state sales taxes are also generated from the sale of tickets and concessions. The Twins estimate that the present value to the state of Minnesota of only the incremental sales and income taxes that would result from within the new ballpark exceeds $100 million.

    The host community arguably realizes the most significant economic benefits of attracting two to three million fans to its community each year. The benefits a sports facility can bring to the host community have been dramatically demonstrated by the impact of the Xcel Energy Center on St. Paul, which have been quantified to exceed $200 million per year. Even if this amount is half right, the impact is significant.

    While the ultimate allocation of each entity's participation varies on each new ballpark project, it is clear that the state, the host community, and the team should all be at the table. Again, the financing of Xcel Energy Center provides an excellent example of how the state, a host community, and the team can all come together to create a workable solution.

    When is the earliest a new ballpark could open?

    If construction on a new ballpark began today (early 2005), the soonest the first game could be played there would be April 2009.

    What are some of the amenities and special features that are being considered for a new ballpark?

    The conceptual Twins ballpark design is a product of HOK Sport + Venue + Event, the same group that designed Saint Paul's Xcel Energy Center, Baltimore's Camden Yards and San Francisco's SBC Park (formerly Pacific Bell Park). While a site is yet to be determined, the proposed ballpark has been designed to fit on a generic four-square city block. Once a site is selected, variations in the design will be necessary in order to accommodate the site, surrounding structures, infrastructure needs, etc.

    The new Twins ballpark will honor Minnesota's rich baseball heritage and reflect the state's dynamic blend of urban sophistication and rugged outdoor vitality. Featuring the most intimate seating configuration in the game today, Minnesota's new ballpark will mark the return of outdoor baseball for a new generation of Twins fans. More importantly, the ballpark's retractable roof will offer the best possible fan experience and give fans across the Upper Midwest comfort in planning a baseball outing regardless of the weather.