St. Paul overstates hockey’s economic impact

Mayor Chris Coleman worries labor strife within the National Hockey League could damage St. Paul’s economy. But a closer look at the math casts doubt on the city’s claims about the economic impact of the Minnesota Wild, which has already seen two preseason home games canceled because of a contract dispute between its league and its players’ union.

St. Paul says the last NHL lockout in 2004 sucked $60 million out of its economy, because the league ultimately cancelled the entire season. The city arrived at that number by comparing the sales tax revenue it received during two past hockey seasons.

Over the course of the season that would have started in October 2004, St. Paul pulled in $8.4 million in sales tax. The next season, hockey was back on at the Xcel Energy Center, and the city booked $8.7 million in sales tax. Because the city’s sales tax is .5 percent, $300,000 in lost tax revenue equals $60 million in lost sales.

The problem with St. Paul’s reasoning is that it looks at only two years of data. When you examine the last fifteen years of hockey season sales tax revenue, it’s hard to see the impact of the ’04-’05 lockout.

Wild economics chart.jpg

MPR Graphic. Data provided by the St. Paul Finance Department.

When the Xcel Center opened in 2000, St. Paul saw a noticeable bump in sales tax proceeds during the hockey season. But when the lockout happened in 2004, the effect was difficult to detect.

In fact, sales tax revenue actually increased that season by $138,000, in spite of the lockout. According to city data, sales tax revenue rose during every hockey season from 2003 to 2006.

Mayor Coleman’s office defended its economic impact estimate.

“I would be the first one to tell you that it isn’t an exact science,” spokesman Joe Campbell said.

As we reported last week, St. Paul’s claims about the economic benefit of the new ballpark it plans to build for the Saints weren’t supported by its own numbers.