U.S. Bank Stadium reserve predicted to balloon to nearly half a billion dollars by 2025
By Rochelle Olson Star Tribune
December 3, 2020 — 9:53pm
Fueled by surprisingly strong electronic pulltab proceeds even amid a pandemic, the state fund set up to pay off U.S. Bank Stadium debt is now projected to balloon to nearly half a billion dollars in the next five years.
The stadium reserve fund is expected to grow to $419 million by mid-2025, according to the budget forecast released this week by state economists. Though the fund relies on the e-pulltab games played at bars, in a year when eating and drinking establishments have endured several forced closures, it’s still expected to jump to $81 million by the end of the current fiscal year in June.
Legislators return in January for a session likely to be dominated by figuring out how to fill a projected $1.3 billion gap between tax collections and spending obligations in the ensuing two years.
“That’s going to attract a lot of attention. There’s going to be a lot of people who look at that and say, ‘Yeah, we can do something with that money,’ ” said Allen Lund, executive director of Allied Charities, whose members run the pulltab operations across the state — and who has some ideas of his own for all that pulltab money.
At the Capitol, when there’s cash collecting in a reserve, there’s no shortage of ideas on how to spend it — especially in challenging economic times.
The city of Minneapolis, home to the stadium and a contributor to its construction, is asking for relief from the state for its first $17 million payment on the building next year. Gov. Tim Walz floated the idea of using some of it to help those experiencing homelessness.
But the Minnesota Vikings, also financial contributors to the stadium, want to wait until 2023 when the debt can be refinanced on a tax-exempt basis for maximum savings — and the building could be paid off a decade early. The team got strong support for that position from both parties, and from a veteran lawmaker who was in the room when the stadium deal was cut.
“I will absolutely fight to the death anybody who thinks they can raid that fund,” Sen. Tom Bakk of Cook said this week. A former Senate DFL leader, Bakk recently turned independent, and the Senate’s Republican majority tapped him to chair the Senate’s public construction committee.
Bakk said he’s “determined” to pay the bonds back early on U.S. Bank Stadium.
“We worked on that thing for a decade and I am not going to take that apart,” Bakk said.
The Legislature legalized e-pulltabs, located in bars that host local charitable gaming operations, to cover the state’s share of the $1.1 billion, public-private stadium. The public share of the stadium tab came to $498 million, with $348 million coming from the state and $150 million from Minneapolis. The Vikings, as the main tenant, are paying the rest.
The state uses the pulltab revenue to make annual payments on the debt. Last year, the state paid $42 million. The payment will be $44 million by 2025. After the annual payment is made, excess pulltab revenue is funneled to the stadium reserve.
In 2025, the excess expected to flow to the reserve is $99 million. Underpinning the numbers are pulltab sales, which account for 95% of the state’s gambling revenue.
In the first third of the current fiscal year — July through October — gross gambling sales already hit 50% of the entire previous year at just over $1 billion. Gross sales for all of the previous year, which ended June 30, were just over $2 billion.
“After the first shutdown, we came on stronger and faster than I ever thought we would,” Lund said.
Lund has argued unsuccessfully for more money for the charitable operators. Even as profits increase, he said, charities are getting a smaller share.
Charitable gambling wasn’t “meant to help rich people, it was meant to help people that need help,” Lund said.
In 2012, the charitable operations received 6 cents on the dollar spent for pulltabs. By 2019, the number was 3.5 cents. This year it’s 3.29 cents, Lund said.
“Everybody else tends to do better every year and we keep doing worse,” he said. “We’re supposed to be the reason for the season.”
State leaders started to notice the swelling nature of the stadium reserve a year ago. The Vikings have stuck with the position that the money shouldn’t be diverted to other uses.
“We are back on the mantra of ‘use the money for its intended purpose,’ ” Vikings Vice President Lester Bagley said.
The city of Minneapolis’ stadium debt comes due next year with an expected payment of $17 million. State Rep. Mohamud Noor, DFL-Minneapolis, said the city “absolutely” wants relief from the first payment — and he said there should be a “longer-term conversation” about what to do with the rest of the reserve.
Sen. Julie Rosen, chairwoman of the Senate Finance Committee, cautioned that the reserve is still a projection and, she said, a “little vulnerable.” Paying off the debt as efficiently as possible is still the best option, she said.
House Speaker Melissa Hortman, DFL-Brooklyn Park, also sounded cautious about tapping the pulltab reserves.
“Yes, there’s a surplus there now, and it does look appealing to meet immediate needs,” Hortman said this week. “But we have to balance that against the possibility in the future of refinancing and saving taxpayer dollars.”
Rochelle Olson • 612-673-1747