The debate over building a new Minnesota Vikings stadium has highlighted the intense competition between two other Twin Cities sports arenas.
The Minneapolis Target Center and the St. Paul Xcel Energy Center have roughly the same number of seats. They're located just 10 miles apart. And they're both in the business of bidding for big-name bands that want to play in Minnesota. Is that competition a good thing?
The stadium bill currently being debated at the state Capitol would do more than build a new home for the Vikings. It would also let Minneapolis use some of its existing local sales taxes to renovate Target Center. That worries St. Paul Mayor Chris Coleman.
"They say, 'We need to invest $150 million into Target to make it competitive,'" Coleman said. "And the question is 'competitive against who?' And the answer is the Xcel."
MORE THAN SPORTS
Xcel Energy Center is home to the Minnesota Wild pro hockey team. Target Center is home to the state's NBA franchise, the Timberwolves. But the two buildings host more than sports. They compete to host the dozens of national music acts that come through the Twin Cities each year.
In most cases the two arenas find themselves in a bidding war to attract top artists, said Jeff Pellegrom, chief financial officer of Minnesota Sports and Entertainment, the company that runs the Xcel Center.
"They will play the buildings off each other the best they can, and we can't blame them for that," Pellegrom said. "They're businessmen just like we are as well."
The Twin Cities need only one 18- to 20- thousand seat arena, and that arena should be the Xcel Center.St. Paul Mayor Chris Coleman
Pellegrom said recent changes in the music industry have intensified competition. With CD sales flagging, bands need to play more live shows to make their money. That means they're not willing to pay the rents they used to, Pellegrom said.
"I mean I could see scenarios where we would get rent of $50,000 or $100,000 for the use of the building and a lot of those have gone away. And now the building is sometimes given rent-free," Pellegrom said.
Venues have other ways to make money besides charging rent, such as through T-shirt sales and concessions. But Pellegrom said the Xcel Energy Center is being squeezed.
"Certainly our job is very difficult right now," he said.
The city of St. Paul owns the Xcel Center and subsidizes it with local sales taxes, property taxes and parking revenue to the tune of more than $3 million annually. The state helped pay for its construction. Mayor Coleman said the building's finances would be more stable if the Timberwolves played there, too.
"L.A. has one arena for basketball and hockey. Denver, Dallas, Washington, Chicago... you go throughout the United States and cities across the country much bigger than the Twin Cities region are supporting one facility," Coleman said. "You cannot successfully support two of these arenas without doing damage to both of them."
Coleman argues the Twin Cities need only one 18- to 20-thousand seat arena, and that arena should be the Xcel Center.
"Well, eventually Target Center is a great redevelopment opportunity. Let's just say that," Coleman said.
Steve Mattson, general manager of Target Center, disagrees.
"No, I think it's a sustainability opportunity."
For Mattson, renovating the 22-year-old building isn't about dominating the market for touring shows, it is about keeping in place the balance that currently exists.
"I think the two buildings are pretty vibrant. They may run at deficits, but it isn't unusual to this industry," Mattson said. "Whether you're subsidizing a convention center or a stadium or an arena or a theater, to run those in the black I think is more of an exception than the rule."
Minneapolis spends about $13 million a year on Target Center, between paying off the bonds and directly subsidizing its operations. Having two arenas means Minnesotans get to see a lot of concerts. Mattson said.
"Some shows, maybe we should even pass on. But in order to keep our events schedules loaded, we may be more aggressive to get a show that could otherwise pass the market or pass the building," Mattson said.
That's also good for Andy Cirzan, vice president of Jam Productions, a Chicago-based concert promoter that brings shows to both the Xcel and Target centers. Cirzan points out that just because Chicago's NHL and NBA teams play under one roof, doesn't mean there's a monopoly. He has to pause to recall a market that has only one major concert venue.
"You know, like I don't know, Peoria, Ill. has one," he said, laughing. "Almost all major markets have multiple options."
There is one point that concert promoters and venues seem to agree on: whatever discounts that arise from the competition between the Xcel Energy Center and Target Center, don't get passed on to ticket buyers.