The Business of Baseball

Following a 10-year effort to get a new Twins stadium built, the Minnesota State Legislature approved a stadium bill on May 21, 2006. Governor Tim Pawlenty signed it into law five days later before a Twins home game against the Seattle Mariners at the Metrodome.

Today, of course, the ballpark is standing, and indeed open for business. And, while the Target Field construction project might be done, the debate about whether it’s a good use of public dollars might never be, particularly with the Vikings looking for their own new stadium.

No matter which side of the discussion you are on, whether you think the economic and emotional impact of professional sports teams is worth the public investment it sometimes takes to keep them in a community or not, you can find plenty of studies and statistics to support your view.

There has been a lot written already about Target Field, and its relative merits, both economic and experiential. Rather than add our opinions to the mix, we thought we would instead take ourselves out of it. What follows is a Q&A series with the principals who got the stadium built and are charged with owning and operating it.

We begin with Dan Kenney, executive director, and Mike Vekich, vice chairman, of the Minnesota Ballpark Authority, a public body that was created by the 2006 legislature to oversee the construction and operation of Target Field. The MBA are part-owners of the site and the facility, and their charter says they are “committed to protecting the public’s investment, while creating a new urban landmark that will help spur downtown Minneapolis development.”  The MBA consists of five commissioners appointed by the Governor (2), Hennepin County (2), including the board chairman and the city of Minneapolis.

MNB: Where does the cost for the stadium stand?
Kenney: The total ballpark budget stands at $425,491,694 with the public infrastructure budget at $119,525,000. Under the terms of the original legislation, the public contribution totaled $350 million, which included $90 million for infrastructure and $260 million for ballpark construction. The Twins contribution totaled $130 million for ballpark construction costs and any cost overruns.

Since the legislation was adopted, the team has committed to contributing an additional $55 million ($15 million for non-land infrastructure expenses, $4.5 million for plaza enhancements and $35.5 million for ballpark enhancements). Target Corporation has contributed $4.5 million for plaza enhancements as well. In addition, public sources such as the Minnesota Department of Transportation, the Northstar Project and the Minnesota Ballpark Authority have contributed an incremental $5.525 million to the public infrastructure budget.

The Minnesota Ballpark Authority’s additional $2 million comes from the interest earnings on construction bonds; $1 million goes towards LEED Certification and $1 million for District Enhancements and Public Art.

MNB: Was this stadium a “good deal” for the taxpayers?
Kenney: We have been at this for six years, thinking about it, researching it, working with the sports facilities commission, looking around the country, determining what’s a good deal, what’s a not-so-good deal, what we should focus on. We spent a lot of time on what makes sense for this particular market for this particular baseball team. We have a 30-year lease with two 10-year renewal options. We don’t have any agreements that put triggers on a future public authority to spend money. We didn’t want any agreement that said, “Seventy-five percent of all ballparks have this shiny object; you’ve got to put it in, too.” Other teams have negotiated that, and we weren’t going to do it. We wanted to make sure that there were going to be enhancements, but we wanted to structure it in a way that those enhancements were paid for by the team and future risks were taken on by the team.

Vekich: From a business standpoint, the ROI is pretty high. You have to remember this was a very underutilized site that has now extended the boundaries of downtown Minneapolis. This is the most urban and the most accessible park in Major League Baseball. Am I satisfied? From our fiduciary responsibility to Hennepin County, and as a finance guy, yeah. The public got their return on the dollars.

MNB:  What about the enhancements?
Kenney: Ultimately, the team’s contribution wasn’t just to enhance the park, but it was to enhance the public realm. The Twins funded 100 percent of the enhancements and [roughly] 66 percent of our expanded infrastructure. By infrastructure I mean the public plaza in front of the building, the pedestrian streetscapes we’ve done in every direction so people can get to the facility, and so on. The Twins deserve a lot of credit. Teams typically put more money inside the facilities where there’s a revenue stream, as opposed to outside the gate line, where it benefits the general public.

MNB: Obviously there are hundreds of hours of negotiations and dozens of decisions to be made on a regular basis with a project of this size and scope. Describe that process.
Vekich: From my perspective, I’ve always found the Twins to be very good negotiators. They know their business extremely well, and when they said they were going to do something, they did it. It really was a true partnership, and everyone knew their own fiduciary responsibilities.

Kenney: What strikes me about the process is that if you had a conversation with the team on something, you wouldn’t have to go back to it. If you agreed to it, it was done. But it wasn’t just a matter of getting it done, we were trying to get it done right. It also wasn’t just about putting up a ballpark to be used x number of times a year. Instead, it was about creating something unique on this new edge of downtown. This stadium site where we are talking right now was an unremarkable parking lot and a freeway corridor, and nothing else. That’s all it was. We really feel we’ve stretched the edge of downtown two blocks, and it really was a partnership.

Dave St. Peter started as an intern for the Minnesota Twins in 1990. Since he was named the team’s fourth president in 2002, the Twins have won four American League Central Division Championships and twice were named Organization of the Year by Baseball America. This conversation took place in the window-lined executive boardroom, underneath the Budweiser Roof Deck, in the northwest corner of the stadium.

MNB: Thoughts about Opening Day?
St. Peter: I think we're feeling privileged. It took a long time as an organization, and more importantly as a community, to resolve the ballpark debate.  And upon resolution of that debate, we set out to build a great ballpark. I feel very good about Target Field and how it will stand the test of time. Frankly, in our opinion, it will exceed expectations with the fans and finally give our fans of baseball the home field they richly deserve.

MNB: Do you have a nice, round number you can give us in terms of what the Twins mean to the community relative to actual economic impact?
St. Peter: No, we learned early on at the legislature that nobody listens to those numbers. What is impossible to quantify, and I think at the end of the day has a bigger impact, is what the team means to the community, what the team means to the state in terms of our identity and, ultimately, to individuals. I mean, how do you quantify a grandfather bringing his 10-year old granddaughter to her first-ever Twins game? How do you quantify Joe Mauer or Justin Morneau visiting a cancer patient? How do you quantify an 85-year-old fan in outstate Minnesota who doesn’t miss a single pitch in a season? How do you quantify that? You don’t.  And I think that’s what sports do for a community. It brings a community together like nothing else. The Twins, the Vikings, the Timberwolves, the Wild, the Gophers athletic programs—we’re all a part of the community.

MNB: Getting the stadium built and approved was a decade-long process, give or take. Was it contentious, and did the result make it all worthwhile?
St. Peter: Yes, obviously the relationship between the Twins and Hennepin County was where the more difficult negotiations came in, well in advance of even going to the legislature. Then the Minnesota Ballpark Authority came out of that legislation. I think there’s always been a high level of respect and a common bond to do something that’s bigger than any individual. It’s trying to preserve the Twins institution here for generations of fans. There are always going to be issues whenever you deal with a high profile project of this nature and the type of money you’re talking about. Is it perfect for everyone? Probably not. But I think it’s responsible, and I think over time it’s going to be a wonderful foundation for us to move forward and to operate and maintain this ballpark. I feel very, very proud of that. It’s what a public/private partnership should be.

MNB: Talking about the stadium itself now, are you pleased with it?
St. Peter: We had a good ballpark, in terms of our original design. I think, thanks to the Pohlad family, we now have a great ballpark. I think the additions were all put towards enhancing the fan experience. The other filter was the aesthetics in terms of the beauty of the ballpark, ensuring that the ballpark was uniquely Minnesota, a postcard so to speak for the city, the state and the region.

MNB: What are your thoughts on Opening Day?
St. Peter: I think it will be a wide range of emotions, from relief to a huge sense of community pride. This wonderful game called baseball has a way of bringing people together from a wide range of backgrounds. We have a ballpark now that the Twins and Twins fans can call their own.

MNB: You say the fans are excited; what about the players?
St. Peter: Our players are very excited, though they put it through a different filter. They’re more concerned about the size of the weight room, the location of the training room, the proximity of the batting cages to the locker room, but yeah, they’re thrilled. They also know that maybe the Metrodome has been a detriment at times in terms of fan support, so, most importantly, they sense the excitement of the community. It looks like they couldn’t be more pleased.

Jerry Bell is president of Twins Sports Inc., the company that owns the Minnesota Twins.  The affable, low-key executive is sitting in his left field office, 600 or 700 feet from home plate, with floor to ceiling windows providing an epic, expansive view of Target Field below.  A recent visitor was joking that the view was so perfect that maybe in fact it wasn’t real, that it was a painting or some other “trick.”

MNB: How does it feel?
Bell: Obviously it is real, but after all these years of trying to get this thing done, it truly does feel unreal.

MNB: How many times did you go home and say to yourself, this thing is never going to happen?
Bell: Hundreds. Over the course of 10 years there were so many periods where it just didn’t seem like it was possible. But we kept it up and had terrific support from the Pohlad family. They wanted it to be a competitive team, a successful team, here. That was not possible in the Dome.

MNB: What was the tipping point? Describe that day when you went home and said to yourself—or your wife—that maybe there’s a chance for this thing.
Bell: A meeting was held at the governor’s residence. Governor Pawlenty said he would convene the four caucus leaders: the Republicans and Democrats in the House and Senate. And for the first time they all said “yes” to a new Twins stadium. And that took the politics out of it. If only one side said they would support it, it wouldn’t have worked. There had to be unilateral support. The bill that ended up passing in 2006 to build the stadium was basically the same bill that did not pass in ’05.

MNB: The joy of the new stadium must be tinged with a little bit of sadness that Carl and Eloise Pohlad aren’t here to share in it and enjoy it.
Bell: I’m glad you mentioned Eloise and not just Carl. She loved baseball, and to her, it was more than the game. It was an opportunity for the family to be together. They are so busy with their business interests around the country, and baseball was something that could bring the family together. She liked the game and she liked what it did for her family.

MNB: Speaking of the Pohlad family, do you think Jim has been a good steward of the club?
Bell: There literally couldn’t be any better, I really believe that. He’s been around a long time, Carl prepared him well, he has the confidence, he knows what to do, and he probably even does things a little faster than Carl, to be honest. He pulls the trigger a little quicker.

MNB: Do publicly funded ballparks make sense economically?
Bell: Economists view the world from a global perspective. They say the money spent here probably isn’t any different than the money spent on something else. There’s little dispute, however, about targeted economic development, where you say we are going to invest in this particular area, at this particular time, and there will be an economic benefit. It depends on where you are going to invest the money or even if you are going to invest the money. This ballpark will generate millions of tax dollars that go to the state of Minnesota, from sales taxes, to player payroll tax, to several other forms of tax, and that is indisputable.

MNB: Are there other ways to measure the value of the Twins?
Bell: Baseball has a greater cultural benefit than an economic benefit. Most Minnesota Twins fans will never make it to Target Field. Maybe they live too far away, or they are infirmed, or one of many other reasons, but even if they can’t see the games in person they still follow the team faithfully.

MNB: What are you most proud of?
Bell: That remains to be seen as far as I’m concerned, but we are pleased of course that it’s here. But it has to be more than that. For one, I really like the architecture a lot. It’s unique. This is not a cookie cutter ballpark. We didn’t want that. We wanted it to be reflective of Minnesota. And we want it to become an entertainment destination. And we want it to be here a long time.

MNB: We all know the area around the Metrodome didn’t lend itself to a lot of mixed use development. Does the area around Target Field?
Bell: The Metrodome was “downtown,” but it was not really downtown. This is the most urban ballpark in America in terms of its adjacency to downtown, and it’s connected to the main entertainment district of Minneapolis. To the north side of us, where there is a parking lot right now, I think if we checked back 10 or 15 years from now, I would expect to see some mixed use development there.

Talking Points: Dan Mehls
Target Field project manager, senior production executive for Mortenson Construction

» I tell you, I have been working on the project for over three years now and have been onsite every day during that time, and I am still absolutely in awe every time I enter the facility. The grandeur of the building and the iconic view—it’s just such an intimate setting in relation to other major league baseball parks. Walking out to the edge of the field, actually touching the grass—it’s incredible!

»What do I want fans to feel? The experience we all want is that there should be a little shock and awe about the building. Then we quickly want them to feel comfortable and welcome. This is a place to not only just sit and watch a baseball game, but an enjoyable place to spend an afternoon or an evening, whether picnicking on the Target Plaza or enjoying some other attraction.

» It is truly a Minnesota ballpark. The design team selected materials indigenous to Minnesota, the workers who built the building are local, and it’s a place to go for all of us. You know, 3,500 people worked on this project in total, and there is an incredible sense of pride from everyone who had a part in it.