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March 02, 2012
Vikings stadium plan: Team pays less than half, keeps 100% of football revenues
As regular readers here know, I'm always quick to criticize news outlets that respond to every mayoral press release with excited "We have a deal!!!" headlines. So props to the Associated Press for leading their story on yesterday's Minnesota Vikings stadium announcement like this:
It has taken the Minnesota Vikings nearly a decade to get this far in their quest for a new stadium.
There is a lot more work to be done.
After yesterday's press conference by Gov. Mark Dayton, Minneapolis Mayor R.T. Rybak, and Vikings owners Mark and Zygi Wilf, here's where we stand:
- As first revealed a week and a half ago, the state would kick in $398 million, the city $150 million, and the Vikings $427 million toward a $975 million stadium. The city and the Vikings would share operating costs, with the city putting in $189 million over 30 years and the Vikings $327 million.
- The state money would come from revenues from electronic pulltab gambling, as first proposed back in January. The city would use money currently being used to pay off its convention center, as first proposed back in December. And the Vikings would presumably use stadium revenues for their share (including naming rights money, though state legislators have previously indicated that they want that to count toward the state's share), plus a $200 million G-4 loan (really a grant) from the NFL.
- The Vikings would get 100% of revenues from NFL games, including concessions and ad signage. The state stadium authority would get revenues from any non-NFL events.
- The stadium would be built on the current Metrodome site — actually part on its current footprint and part in what's now the east parking lot, which could conceivably allow construction to begin before the Vikings are forced to relocate to the University of Minnesota's stadium, but if so not by much.
The Wilfs are trying to spin this as "the Vikings are paying more than half the cost," but that's only true if you count stadium operations costs in the year 2045 as the same value as up-front construction dollars, which isn't economically kosher. And in any event, the Vikings would clearly be getting far more than half the benefits from the new place, unless you think the Final Four is going to be played there multiple times every year.
The plan now goes to the Minneapolis city council, which already has a majority saying it will reject it without a public vote; if Rybak can somehow get the bill through there, it moves to the state legislature, where it's uncertain to pass as well. It doesn't help that the alleged pro-stadium votes include guys like Minneapolis councilmember John Quincy, whose enthusiasm looks like this:
The Vikings are privately owned, and it's for their benefit and their need, and they would be the beneficiary of a new facility. Why do we have to — we being the overall state, not just the City of Minneapolis — why do we have to help pay for that?
That's the philosophical hang-up I had when I started thinking about it, but it's something I turned over when I looked at the larger picture...
I think we have to recognize it's a jobs plan, and is it appropriate for public financing for a jobs plan? I would say yes. Especially in this economic climate. It's called a stimulus, and that seems appropriate even if these are short-term construction-only jobs...
We're talking about all the restaurants, the hotels, all those ancillary businesses that benefit, retail in the downtown area and the city as a whole and the state as a whole. We have to think of our place as an economic engine for the state and then it makes sense that there is a local partnership.
Expect the Vikings and their backers to be hammering hard on the "It's economic stimulus!" argument in the coming weeks, as well as the "They'll move to L.A.!" argument. No matter that neither argument holds much water — the city and state could get ten times the bang for their buck if they spent the money on other projects, and even a less lucrative deal would be more tempting to the Vikings than what's being offered in L.A. It's Chapter 4, after all.
"electronic pulltab gambling, as first proposed back in January."
Maybe first proposed for the stadium back in January, but supporters of various projects have been trotting that out as a potential revenue source for at least a decades. Never mind that it will cannibalize other revenues and presumably has some negative social costs, when you are pushing for a project those facts don't matter.
Posted by Joshua Northey on March 2, 2012 10:18 AM
"And in any event, the Vikings would clearly be getting far more than half the benefits from the new place..."
This is the crux of the matter. They are getting pretty much all the benefits.
The natural way to analyze what is good public policy is to approach this from the public's perspective.
If the Vikings were not militating for a stadium what kind of facility would the city/state need? What would be the scope/costs of that facility?
Then you look at how much what the Vikings demand varies from those costs and make them pay the difference.
But the problem is from a public perspective the Metrodome is 100% suitable and adequate for everything the public could want. So the entire cost of the new facility is for the Viking's benefit.
The benefit for the state high school football championship of playing in the new stadium vs the Metrodome is extremely marginal.
That leaves the Vikings in an awkward place where they need to resort to economic development arguments (where the numbers do not work) or brute threats/extortion.
Posted by Joshua Northey on March 2, 2012 10:30 AM
Just wait, soon some Viking players will be visiting local schools donating used weight equipment to show what pillars of the community the team is (then your local rags will gush about how generous the team is--this is part of what happened in Santa Clara).
Posted by santa clara jay on March 2, 2012 12:28 PM
A Stadium Authority?
Uh oh.
Watch out Minnesotans.
In the original Term Sheet for Santa Clara, the 49ers share was $493 Million and Santa Clara's Stadium Authority share was $330 million (on top of Santa Clara's direct subsidy of $114 Million.)
Then during the campaign,the Stadium Authority's share was hidden from view and lumped in with the 49ers share to tell voters that the 49ers/NFL/stadium revenues would pay for $823 million (88%) - although our mayor sometimes said 92%.
After we voted, the council went into closed sessions for 18 months of negotiations, and came out with the 49ers putting in zero of their own dollars up front for construction costs (Goldman Sachs chart financing chart shows this) and Santa Clara's Stadium Authority would take on $850 Million in previously undisclosed loans for stadium construction. And that doesn't count the interest, which will be hundreds of millions more.
Then when Santa Clarans collected signatures to have a vote on the $850 million in loans, the city council said 'no' and sued the people of Santa Clara to deny us the right to vote (court date March 5th.)
If I lived in MN, I would be very very concerned about a 'Stadium Authority.' At least it sounds like the costs will be spread around and not just on one small city like ours (Santa Clara has only 117,000 people.)
Posted by SantaClaraTaxpayer on March 2, 2012 12:56 PM
It's actually the same stadium authority they've had for decades, I believe. Minnesota has built a lot of stadiums in its day.
No more public money for stadiums!! While private businesses and their facilities are good for communities, they are not services which only government can provide. Plus, business owners have more than enough cash (rightfully so) to cover costs on their own.
Neither capitalism nor owners' financial wealth is bad. Redistribution of wealth is the problem. Government has no business taking money from someone whose property it is to give it to someone who neither earns it at work nor gains it as a private gift. Even subsidies of other sports venues cannot justify handouts public cash for sports franchises. Stop the extortion!!!!!!!!!!
Posted by Chris on March 2, 2012 02:10 PM
I am a native/resident of Minnesota. I would rather the Vikings leave America's Gopher State than their ownership rape taxpayers' wallets for a new palace!
Posted by Chris on March 2, 2012 02:12 PM
Chris, the Minnesota Vikings are not going to leave Minnesota anytime soon. At least for Los Angeles because their owner has said that he wants to keep control of the team and the best offer has AEG controlling the stadium. On the other hand, if Birmingham, AL would be coming to the forefront with a new stadium for the Vikings, I would be losing sleep if I were a fan.
BTW, did anybody notice the flaw in the plan? It requires one year of playing at TCF Stadium. I don't think the NFL will allow that. If the Vikings play there, it will likely be for a long-term lease.
Posted by Jessy S. on March 2, 2012 04:05 PM
If I were a grocery store owner, I might be wondering why I can't demand that all other grocery stores be demolished in any community that I build my stores in. Surely no-one wins if I have to compete with other businesses in my sector, right?
I mean, fair is fair...
Posted by John Bladen on March 2, 2012 06:06 PM
Who covers the cost overruns?
Posted by Roberto on March 3, 2012 02:24 AM
FEDERAL reserve notes. FEDERAL. Put "public" or "private" labels on the stuff all you want, but no titles of ownership exist on money. It all belongs to the FEDERAL folk, which is gov. The gov allows the free marketeers pyramid scheme to operate and installed the laws and entitles of ownership that pertain to it. The government can do anything they please with THEIR survival coupons (money). That is a Columbian Freemason pyramid scheme symbol on the back of the dollar, and the USA gov is located in a district of Columbia and not part of the USA proper. Thoust must respect the operators of the (S&H greenstamps-like) game, cope and deal.
NYT story today: "Vikings finally have deal for stadium."
Really? I haven't read it yet.
Posted by santa clara jay on March 3, 2012 11:57 AM
Santa Clara Jay, our Metropolitan Sports Facilities Commission has been allowing the Vikings to play in the Metrodome for nine years without paying rent. That's over 4 million a year that we have lost. Those Vikings just can't ask for enough. And the MSFC has been catering to them. (Meanwhile the MSFC is supposed to represent the public.) In addition, we have a largely corrupt government which bypassed our mandated referendum on the Twins stadium. Mayor Rybak announced back in May of last year that we wouldn't be getting our referendum. Unbelievably, the stadium has been referred to as the "Peoples' Stadium". How much more provocative and insulting can these thieves get? Meanwhile, even opponents get sucked into trying to find a solution. People are slowly beginning to wake up and get angry. It may come to lying down in front of bulldozers.
Posted by Janet on March 3, 2012 09:09 PM
Janet,
Hummm, this is sounding rather foreboding but not surprising.
Once a team is in, they hold a great deal of leverage over the host city. It's not like the city is a normal landlord who can evict a non rent paying tenant from an office park--NFL stadiums/teams are pretty unique entities.
I see from your post that the template for these scams is pretty much the same everywhere: my city doesn't want to allow a referendum (even though we got the mandated signatures); my mayor is calling the 49er Stadium a "municipal stadium"'; my city council has been corrupted by this process beyond belief; I'm sure that here even stadium opponents will be sucked into to trying to mitigate damage if the stadium is built (that or move out of town).
I'd wouldn't try lying down in front of bulldozers around here. I think one would end up like Rachel Corrie. Right now the 49ers are trying to create their own (with city money) "facts on the ground".
You can say that the Vikings are keeping 100% of football revenue generated, or 95% of all the revenue the stadium generates, and it's basically the same thing. :-(
Posted by Geoff on March 5, 2012 11:05 AM