On an overcast Sunday in March, 18,000 people packed the San Jose Earthquakes new stadium for the team’s Major League Soccer home opener.
Its steeply pitched seats put fans closer than any other stadium in the league. A bar and plaza stretch behind one goal line, providing fans a place to socialize and still see the game. Its wireless broadband system delivers statistics and video to fans’ smartphones.
And it didn’t cost taxpayers anything.
The growth of America’s premier soccer league from 10 to 20 teams over the last two decades was fueled by a frenzy of stadium construction — 15 of the teams have built stadiums specifically for themselves, 12 with substantial help from taxpayers and local government.
The Earthquakes’ stadium is one of the three that were built with no public money. Owners Lew Wolff, a real estate developer, and John Fisher, son of the founder of Gap Inc., paid its $100 million cost.
That’s a model Bill McGuire, owner of Minnesota United FC and former chief executive of UnitedHealth Group, and his partners are largely emulating with their proposal to spend $150 million on a new soccer-specific stadium, including $30 million for land on the northwest side of downtown Minneapolis. They’re also drawing ideas from MLS stadiums in Portland, an updated minor league ballpark, and Kansas City, a completely new venue.
The McGuire group’s stadium plan is one reason the MLS chose it over a competing bid for a team by the Wilf family, owners of the Minnesota Vikings.
McGuire’s group this month asked for several tax breaks, but state and local leaders are wary of granting them, fearful of public criticism after taxpayers helped pay for every other large sports facility in the Twin Cities. Minneapolis Mayor Betsy Hodges and the Minnesota state Senate strongly oppose any public help.
In San Jose, the owners of the Quakes didn’t ask for anything. “If you are in California, it’s just not possible to get any public funding for stadium-type projects,” said Keith Wolff, Lew Wolff’s son and business partner.
In Southern California, plans are now unfolding to build two privately financed NFL stadiums in greater Los Angeles, possibly leading three teams to move there. In San Francisco, the Giants in 2000 opened the first privately funded Major League Baseball park since Dodger Stadium in 1962. The NFL’s San Francisco 49ers, however, received public assistance for their stadium that opened last year.
In the Midwest, civic leaders in Milwaukee, Detroit and St. Louis are now in discussions with owners of pro football, basketball and hockey teams over the help taxpayers might give to build new venues.
The economics of pro soccer make it easier for owners to do it all themselves.
While surging in popularity, soccer in the U.S. doesn’t attract the fan numbers of pro football and baseball. Soccer-specific stadiums, reflecting the demand, are smaller and less expensive. Soccer fans also prefer being on top of the action.
McGuire’s ownership group is proposing an 18,500-seat soccer stadium that will be able to capitalize on the latest ideas in marketing, architecture and layout. The group includes Bob Pohlad, co-owner of the Minnesota Twins, Wendy Carlson Nelson of the hospitality company Carlson, and Glen Taylor, founder of Taylor Corp. and owner of the NBA’s Minnesota Timberwolves and the Star Tribune.
In an estimate prepared for the Star Tribune by Vrooman Sports Economics of Nashville, a stadium of that size, along with about 1,000 more premium-priced suite seats, would generate about $10 million in free cash flow annually that could be used to repay its cost. With an interest rate of 3 percent, that would take about 20 years.
For the owners, the appeal of an MLS team goes beyond the relative ease of building a stadium. From 2008 to 2013, valuations of the MLS teams increased between 11 and 38 percent annually, according to Vrooman. That’s driven up the entry fee to join the league. In 1996, the owners of the founding teams paid a $5 million fee to join. Minnesota United and a new club in New York will pay $100 million while another new club in Los Angeles will pay $110 million.
“Soccer is an ascendant sport in the U.S.,” said Andrew Zimbalist, a sports economist at Smith College. In an interview last month, McGuire said he studied three MLS stadiums closely, the soccer-specific site in Kansas City and others in Portland and Seattle, where the Sounders of the MLS share CenturyLink Field with the Seahawks of the NFL.
In Portland, a city-owned, two-sport stadium carries one important similarity to the Minnesota United project: it’s in the heart of the city and accessible by light rail. In Kansas City, Sporting Park features a field-level bar similar to San Jose’s and two levels of suites.
“We think that Kansas City is pretty good,” McGuire said. “It’s better than pretty good. It’s great.”
Existing MLS soccer-specific stadiums cost $40 million to over $215 million to build, adjusted for inflation. One team, D.C. United, has proposed a $300 million stadium for itself. The average public input for MLS stadiums across the country is 47.8 percent. By contrast, National Football League stadiums have received on average of about 55 percent public subsidy.
The league’s most-troubled stadium is the city-owned home of the Chicago Fire, called Toyota Park, in Bridgeview, Ill. The $98 million price left the blue-collar, industrial suburb unable to meet its annual debt payments, which led to a property tax increase for its residents.
San Jose is at the other end of the spectrum. Fisher and the Wolffs, who are also co-owners of the Oakland A’s, paid for every aspect of what’s now called Avaya Stadium, including the land purchase and infrastructure improvements.
Keith Wolff said their partners aren’t concerned with immediate returns on their investment and expect profitability to take some time. The leadership instead focused on a smart stadium design to maximize the fan experience, which in turn, helps to justify higher ticket prices.
The Quakes’ owners and leaders traveled to Europe and South America for stadium ideas.
“We wanted a clear break from the U.S. stadium model because we didn’t feel they offered a good soccer-fan experience,” said David Kaval, president of the Quakes. “How do we create a super intimate soccer experience that almost feels like an arena? With a steep rake so that everyone is on top of the action. And a roof to keep the sound in, so it’s really like a band box.”
At the team’s home opener on March 22, some players said they couldn’t hear themselves because the crowd was so loud. Fans themselves experienced just two hiccups: traffic jams and a Navy parachutist who landed in a parking lot instead of the field at halftime.
“It was incredible,” Wolff said. “It was really fun to see everything work the way we thought it would.”
All the concourses are open so that fans always have a view of the action, the hallways are adorned with reclaimed, old-growth redwood, which Kaval says adds a distressed contrast to the steel. Terrazzo stone from Italy wraps the drink rails at the large outdoor bar, which is also opened for non-gameday events. The Quakes landed a $20 million, 10-year naming sponsorship from network equipment firm Avaya Inc., which brought state-of-the-art technology to the stadium.
“You have to think about the value you get from every other event — rugby, high school tournaments, corporate events,” Kaval said. “We physically own the stadium and have the ability to put other events in the space. We feel confident that all those things together mean an important and effective return.”
One payoff is already clear. In 2013, the Quakes had 5,000 season-ticket holders. This year, 12,000 bought season tickets, filling two-thirds of the new stadium.
Staff reporter Mike Kaszuba contributed to this report.
Kristen Leigh Painter • 612-673-4767
Other projects, similar price tags
The owners of Minnesota United FC plan to spend $30 million for land and $120 million on a stadium near downtown Minneapolis. A list of recent comparably priced projects:
HCMC Ambulatory Care Center: $224 million, trustees approved more spending last week.
A Mill: $156 million, redevelopment of former flour mill into housing and artist studios
Riverside Plaza: $132 million, two-year renovation of public housing tower near U of M.
LPM Apartments: $118 million, 32-story apartment building near Loring Park.
St. Cloud high school: $110 million, new building proposed last month.
Wayzata schools: $109 million, work began last year to expand high school and build an elementary school.
St. Paul Saints stadium: $63 million, opens next month.
And some bigger ones:
Southwest light rail project: $1.25 billion
Minnesota Vikings stadium: $1 billion
Target Field: $390 million
TCF Bank Stadium: $296 million
I-35 W bridge reconstruction: $259 million
By the numbers
Here’s a hypothetical income statement for Minnesota United FC, prepared by Vrooman Sports Economics:
Revenue sources Amount
Tickets (18,500 regular seats,
$30, 18 games, 96% capacity) $9.5 million
Club seats (1,000 club seats,
$1,250 per season) $1.25 million
Premium seats (30 seats at
$40,000 per season) $1.2 million
Concessions ($20 per fan,
18 games, 96% capacity) $6.3 million
Parking ($20 for 105,000
cars over season) $2 million
TV deal ($90 million/year
divided by 24 MLS clubs) $3.75 million
Non-MLS rent, sponsorships $1 million
Total $25 million
Operating expenses Amount
Stadium operations $6 million
Player costs $4.2 million
General/administrative $2.3 million
Total $12.5 million
Bottom line Amount
Operating profit $2.5 million
Free cash flow for
stadium funding $10 million
At 3% interest, $10 million a year would pay off a $150 million stadium in 20 years and $12.5 million a year would pay off a stadium in 15 years.