Tax exemptions may be part of Super Bowl game plan

ST. PAUL -- As they're sorting through requests for more funding from programs and agencies from across Minnesota during the upcoming 2015 Legislature, lawmakers likely will be asked to help out a huge New York City-based nonprofit: the National ...

ST. PAUL -- As they’re sorting through requests for more funding from programs and agencies from across Minnesota during the upcoming 2015 Legislature, lawmakers likely will be asked to help out a huge New York City-based nonprofit: the National Football League.

2015 is the year when any additional tax exemptions for the league related to the 2018 Super Bowl would likely be passed, and stadium officials have confirmed they will be making requests.

The question of what Minnesota taxpayers would be giving the NFL for hosting the big game has been in limbo since league owners accepted Minneapolis’ bid in May.

As recently as June, according to a confidential draft memo released recently by the state Department of Revenue, there were “no plans to pass additional tax incentives.”

But Michele Kelm-Helgen, chairwoman of the Minnesota Sports Facilities Authority, said last week that stadium officials and leaders of the Super Bowl organizing committee likely will ask the Legislature to extend an existing exemption on game tickets to cover tickets to related events, too.


“I think the other-event ticket tax exemptions are probably something that we would look at. That to me from the NFL’s perspective seems pretty straightforward,” Kelm-Helgen said.

According to documents released by the Revenue Department in response to a public records request by St. Paul-based Public Record Media, waiving the tax on tickets to the “NFL Fan Experience” would mean about $400,000 in forgone revenue to the state.

That’s not a lot of money in the context of biennial state spending north of $40 billion.

The state could have acted last session, said Senate Majority Leader Tom Bakk, DFL-Cook, but “going into an election year, it’s difficult to provide incentives to millionaire owners and millionaire players.”

Bakk said that whatever additional tax breaks are passed would not take effect until 2018, so they wouldn’t be competing with other spending priorities for the 2016-17 biennium.

Gov. Mark Dayton said he won’t commit to supporting additional tax exemptions until he consults with leaders of both parties in the House and Senate.

In March, Dayton and the legislative leaders wrote a letter to be included with Minneapolis’ bid package committing to nothing specific but pledging general cooperation in the attempt to bring the game to town.

The DFL governor acknowledged that some will argue that the state was awarded the game with its existing law on the books and therefore shouldn’t give the NFL another dime.


“There will probably be a very strong sentiment for just leaving things the way they are,” he said. “They’ll have to make a very convincing case for why they need the additional money, and also what the economic return to the state would be for that investment.”

Rep. Kurt Daudt, R-Crown, who will take over as House speaker when the Legislature convenes in January, said he doesn’t have “a huge appetite to do additional tax breaks.”

However, he said: “I think we want to live up to whatever agreements were made at the time. We’ll certainly take a look at it.”

Bakk said the leaders have generally agreed to do what other host cities have done, but that varies.

According to the Revenue Department documents, Indiana offered a broad set of tax incentives in its successful bid to host the 2012 Super Bowl in Indianapolis, including income tax exemptions, that almost met what the NFL requires.

New Orleans used its existing exemption from state taxes for the stadium for the 2013 game and also rebated more than $500,000 to the NFL for lodging, property and other taxes paid related to the game.

Minnesota would not be authorized to grant such rebates, the Revenue Department said. Any levies or exemptions would have to be approved by the Legislature or the Minneapolis City Council. The game will be played in the $1 billion stadium currently under construction in downtown Minneapolis and scheduled to be completed in 2016.

For last year’s game, New Jersey had a sales tax exemption for tickets and parking but nothing more, according to the Revenue Department.


In being picked to host the 2018 game, Minneapolis beat out Indianapolis and New Orleans.

Exemptions list

It’s unclear what promises to the NFL were contained in Minnesota’s Super Bowl bid. Kelm-Helgen’s agency and others involved have declined to make it public, citing a need to keep the details under wraps for competitive reasons.

Other than indicating there will likely be a push to exempt related events from tax, Kelm-Helgen hasn’t specified what the wish list will be for the next Legislature. She and others involved will meet with the NFL after the first of the year to “really understand exactly what it is they need.”

According to the Revenue documents, the NFL has an extensive list of tax exemptions it requires from host cities, including the exemptions for tickets and parking for the game and related events as well as exemption from state, county, city and local taxes on income, gross receipts, corporate franchise, withholding, sales and use (on purchases and sales by the league), admission and occupancy.

The league also requires tax refunds for taxes paid by its vendors for fuel, auto rental, local food and drink and hotel and admissions taxes.

Kelm-Helgen says Minnesota didn’t agree to all of those demands. She has said previously that out-of-town visitors won’t be exempt from lodging taxes, for example.

Dayton and state leaders have also said they won’t consider exempting NFL employees from income tax.


The numbers

But waiving the income tax was certainly under consideration this past spring, according to the newly released data, consisting of more than 100 pages of emails and related documents.

The emails show communication in February and March between the Sports Facilities Authority, the Revenue Department and Meet Minneapolis, the city’s convention and visitors bureau. Meet Minneapolis prepared the estimates of the value of both potential tax exemptions and projected tax collections, which was then vetted by Revenue.

The back-and-forth culminated in a March 11 email from Kelm-Helgen intended to serve as talking points for conversations with the legislative leaders.

In the email, Kelm-Helgen estimates the total value of exemptions requested by the NFL at $10.8 million, which would go up another $2 million to $3 million if income taxes were exempted.

Of that $10.8 million, she said, $9.6 million is already exempted under the 1992 law, assuming an average ticket price of $1,200.

An additional $404,000 would be forgone if tickets to the “NFL Fan Experience” were exempt, and an additional $866,000 for exempting Minneapolis hotel revenue.

Kelm-Helgen recommends the tax-exemption estimates not be distributed in hard copy, “as we have NOT decided what exemptions we are asking for.” (Emphasis in original.)


More important, Kelm-Helgen says, is the calculation showing the state, cities and county are projected to collect $32.4 million in tax revenue from Super Bowl visitors.

“So the real question is, will our public officials be willing to forgo the $32.4 million in tax revenues, if we do NOT meet the requirements of the NFL bid specifications,” she writes. Meet Minneapolis calculated the $32.4 million in sales tax revenue on items such as food, shopping, rental cars, hotels and entertianment. The number is based on an economic impact study from the 2012 Super Bowl in Indianapolis. It assumes the Super Bowl will attract around 115,000 visitors in 2018.

Other guarantees

It’s not just tax breaks that the NFL wants.

Contrary to what Kelm-Helgen told the Pioneer Press in July, the league apparently did request priority snowplowing service during the Super Bowl.

According to a league document labeled “Government Guarantees” included in the data released by Revenue, “the NFL and Super Bowl shall receive priority over all other ice and snow removal projects, except those that directly threaten life or public safety. The NFL, in consultation with local officials, shall determine which key venues, routes, etc. should be considered priorities.”

In July, Kelm-Helgen said the league had not asked to jump to the head of the line but simply wanted assurance the community could handle snow-removal in the event of a storm. She said at the time that her staff had mistakenly included the offer of special treatment in a draft letter, which was later revised after local mayors balked.

Kelm-Helgen said last week that her earlier comments were based on conversations she had with the NFL.


The emails released by Revenue show Kelm-Helgen was in possession of the NFL’s written requirements for winter weather, but she said she didn’t read them, focusing instead on issues related to taxes and the stadium. She said she only became aware of the written requirements after being asked about them for this story.

Asked whether the priority snowplowing might still be granted but funded privately rather than through city budgets, Kelm-Helgen said she wasn’t sure.

There is $30 million to $40 million in private money being raised by the Super Bowl organizing committee to reimburse security, snow-removal and other costs that local governments might incur. That money will also backfill any costs not covered by public tax breaks.

U.S. Bancorp CEO Richard Davis, co-chair of the local bid committee that secured the Super Bowl, declined through a spokesman to be interviewed about what specifically would be covered by the private funds and what would likely be requested from the Legislature.

The Pioneer Press is a media partner with Forum News Service.

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