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Is there enough money to finance the Vikings stadium?

Conceptual design submitted by HKS for the Vikings facility
HKS Inc.
At $975 million, the facility is monumentally expensive.

The new Vikings stadium is a done deal, but I won't completely believe until I see crowds pouring into it in 2016, when it's supposed to open. 

My biggest worry: there won't be enough money to finance the thing. At $975 million, the facility is monumentally expensive -- and who's to know that there won't be cost overruns? For the same kind of dough, we probably could have built a real tourist attraction, like the Pyramid of Khufu. It couldn't have cost much more, even with a Jumbotron.

My concern goes beyond that of the normal fan. The Metrodome sits a block outside my bedroom window, and it's the first thing I see when I wake up — after my husband and "Morning Joe." If the site becomes a 33-acre surface parking lot, I'll need a lot more Prozac.

So you can imagine how agitated I was when I read about this note in the state budget forecast released the other day:

Projected new gambling revenues from stadium legislation are expected to be $18 million (51 percent) below end-of-session estimates. For both the FY [fiscal year] 2014-15 and FY 2016-17 biennia, estimates have been reduced $9 million (7.7 percent). The forecast reduction reflects a slower than expected implementation of electronic gaming options and reduced estimates for daily revenue per gaming device. As a result, the stadium reserve balance is now expected to be $47 million by the end of 2017, $36 million lower than end-of-session estimates.

Just to remind you, the state's $350 million share is to come from taxes on the expansion of charitable gambling to include electronic pull-tabs. A shortfall is not good news.

Still, nobody seemed terribly perturbed about this turn of events. Michele Kelm-Helgen, chairman of the Minnesota Sports Facility Authority, told MinnPost's James Nord that right now the state has no bond payments to make; so underperformance this year doesn't matter. "The state had much higher coverage than what’s needed for the bonds to be repaid,” she added. Even under the new projections, the state will have a $47 million cushion by the end of 2017, albeit only half as much as the expected $83 million.

Al Lund, the executive director of Allied Charities of Minnesota, the trade association of nonprofits benefiting from the gambling, also pooh-poohed the revenue shortage. Getting electronic pull-tabs up and running takes time. "Virginia adopted them three years ago, and they've just got it implemented this year," he says.

Right now, there's only one company providing the electronic gizmos, and only 70 of the total 2,300 charities are participating. Many organizations are hanging back, he says, until more vendors come into the market maybe offering better pricing. Even though his predecessor King Wilson had shared doubts with me last spring that electronic pull-tabs would pull in enough, Lund is upbeat. "We're very excited about electronics," he says.

Vikings' finances?

I was somewhat reassured -- but what about the Vikings? Their finances are a black box. The stadium authority will be allowed to examine the team's books but is forbidden by law from disclosing any of the information to the public.

Under its deal with the state, the team is supposed to contribute $477 million. That's more than owner Zygi Wilf's $310 million net worth, as estimated by Sports Illustrated, and I doubt that he and his family will sell all the shopping plazas  and office buildings they own to pour the proceeds into the building fund. And then a few weeks ago I heard that the Vikings were surveying their ticket holders to see who among them might be interested in buying personal seat licenses. (Paying a fee for the license gives you lifetime rights to purchase season tickets for a particular seat.) I thought oh-oh. If the team is doing that, it could be hard up for dough.

It turns out, however, that selling personal seat licenses to help pay for a new stadium is now S.O.P. among team owners who "will do anything they can to avoid borrowing money and paying interest," says Rick Eckstein, professor of sociology at Villanova University and co-author of “Public Dollars, Private Stadiums.” "Only a small number of NFL owners have taken out loans to pay for stadiums."

Examples: the San Francisco 49ers sold some $670 million in seats and luxury boxes to help finance their new Santa Clara stadium. Fees for seat licenses at the new Cowboys stadium in Dallas ran as high as $1 million.

Minnesota has no oil billionaires, however, and the Twin Cities are not in or near Silicon Valley where tons of people own chunks of Cisco Systems or Google and are happy to pay extra for the right to buy expensive season tickets. And Vikings fans expressed some sales resistance -- more like rage -- when the Vikings survey appeared in their mailboxes. "$1,000 a year per seat is hard enough for me to justify. Stick a $10,000 license on there, and I am done," commented one ticket holder.

Still, Eckstein says, "Fans can scream all they want, but then they turn around and pay the fee."

So how much could the Vikings expect? Greg Carl, president of PSL Source, a Charlotte, N.C., seat license broker, says that the price of personal seat licenses depends on population, the reputation of the team, how well it's playing and a number of other factors. He estimates that the Vikings could probably pull in about $50 million to $60 million. 

But where will the Vikings find the remaining $417 million? A second source would be naming rights to the stadium. Presumably 3M or Medtronic or United Health will pay dearly to plaster their logo on the new building.  How dearly? About $10 million a year.

Eckstein says that the deal would likely last for 10 to 20 years, and the team might be able to get the money upfront. It would then have to accept the present value of the funds (the amount you'd have to invest today to receive $200 million at the end of 20 years, assuming a 4 percent interest rate). That would come to about $91 million, leaving the team with another $326 million to raise.

NFL loan

They could get some of that from the NFL's new G-4 loan program. The maximum amount available is $200 million, but only if the team invests $200 million of its own -- so it looks like a dollar-for-dollar match. That means the Vikings could perhaps count on $163 million, leaving them to somehow come up with the rest.

Neil deMause, coauthor of “Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit,” argues in his blog that the NFL loan is more like a grant because the team can use "club seat money they normally would have had to share with the league. They can now also use incremental regular ticket revenue, defined as the difference between ticket sales in the new stadium and average sales in the last three years of the old one."

I'm not sure I agree; after all, if the team didn't have a loan, they could pocket all that dough -- but I leave it to the CPAs among us to figure that out.

For the remainder "the team would have no trouble getting bank loans," says Eckstein. The collateral would be the team's value, which Forbes now puts at $975 million, two-thirds of it debt-free. Some teams, he adds, have scrimped on interest charges by persuading the local government to float municipal bonds for the team. In any case, he adds, "there will be money."

Whew, that's a relief. Still, we live in iffy times. Until I see that stadium full of people, I'm not resting easy.

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Comments (49)

I wish people would get the numbers right

We had long, detailed, and huge arguments about this. Stadium opponents won the argument but lost the vote. The numbers haven't changed. The states portion of the debt is NOT $350 million. By the time the interest on the bond is paid off it will cost around $700 million, and THAT'S just for the state portion. Don't forget MPLS is on the hook for another $300 million.

Yeah, this is the largest public subsidy in state history for a franchise that is not in distress, has a $150 million payroll for 56 employees, and is promising to create no new permanent jobs. If this is just donning on you now you weren't paying attention.

None of this should surprise anyone because we pointed out at the time that MN charities were VERY skeptical about the viability of e-tabs for a variety of reasons.

By the way, this news is radical reversal of the publicity stunt as news presented back in back in Oct.: http://minnesota.cbslocal.com/2012/10/24/electronic-pull-tabs-top-1-mill...

"The states portion of the

"The states portion of the debt is NOT $350 million. By the time the interest on the bond is paid off it will cost around $700 million..."

Pointing out that interest on bonds costs money seems so silly to me. No one says they bought a new house for the amount of their mortgage + thirty years of interest. Yes, we can all do math.

It does make sense

As 350 is the number given now, but that dollar value has commitments over time. Homes have a market value that is well understood to the common man, and in addition is well understood that most people take out mortgages with interest rates on them. I guarantee you the common Minnesotan does not understand that the $350M the state shelled out will have fiscal obligations over 30 years totalling much more than that.

Furthermore, it is important to compare apples and apples. The author did a good job being honest about the money the team would receive for naming rights. $10M a year for 20 years. OR, if they want the money up front (so they aren't taking out loans to cover the expense of building the stadium), that value is $92M in year 1, totaling what WOULD be $200M in a 20 year span. This is important to note that none of the financing the Vikings will be receiving comes with any sort of interest to repay on, while ALL the money the state and city spends has interest to repay. It makes the financial obligation split much more apparent.

If this was like a fixed-rate mortgage...

...then yes, it'd be silly to point out that bonds cost money. Clearly this is going to cost more than $350 million. But I think the broader point is that we are shepherding buckets of millions into something that we're not exactly sure WHAT the cost is going to be over the long-term, don't really have a good idea of how much interest we'll actually be paying, and don't have any tangible evidence that the investment will pay off. ("paying off" is itself an intangible, but we could go for hours...)

To your mortgage example, though, sure: no one says upfront that their $175,000 house will "actually" cost them $250,000ish over the 30-year term of the loan. You pretty much care about monthly payments and the roof over your head. But you DO know upfront what your purchase price is, roughly what you'll be paying on a monthly basis, and what your interest rate will be from now until the time you're 60. There are known quantities, and while there are "known unknowns", you generally understand what you're walking into. (Again, a bit of an assumption, but you know what I'm saying)

This particular stadium deal is sort of like a dude with three temporary jobs buying a home where the principal is *this* but is pretty much up in the air, the interest rate is sort of *something* but will probably fluctuate and become harder to deal with over time, and the only tangible benefit is that he gets a pretty little *thing* to show to all his friends. Meanwhile, the REAL benefit goes to the bank (or, Vikings) who are cashing in on the lousy specifics, blatant unknowns, with ultimate result being the full faith and credit of taxpayers on the line for this dude's mortgage. This stadium deal is SO 2006.

I guess what I'm saying in a far too long-winded way is that comparing this deal to how someone would think about the financing when purchasing a home is no better than comparing government spending to a household budget. In the case of millions in precious public money on the line for a football stadium (and I do specify "football stadium", lest my argument be extrapolated by anyone into "So, do you think we should scrutinize every street repaving and sewer lining project?" Just, no.) with questionable economic and civic benefit, we SHOULD be thinking of the "mortgage+interest" cost of the project because we will be dealing with the fallout in real dollars for decades to come.

Thanks for corroborating

although I think the example you spelled out is actually more akin to you building a home in your neighborhood for someone ELSE to use for parties (which, if you're lucky and rich enough he'll invite you to) and also rent out to people as they see fit (where they get the income), but you are occasionally allowed to throw parties in the house (as long as he isn't using it first). You get the benefits of the increased property value your neighborhood sees (akin to the increased societal value we're staking this stadium too), and your neighborhood being seen as 'up and coming' to the rest of the neighborhoods around rather than falling in to disrepair.

I also agree that the comparison to personal finances for a government is not really comparable at all. What levels of debt do corporations usually issue relative to their net revenues? MUCH different than the level of debt an individual can take on.

We'll never see the real numbers in the propaganda stream

I share your frustration here.

It amounts to misreporting, but this has become an ingrained habit in the local media, including here at MinnPost. I suppose with everyone reporting those lower numbers, a journalist might fear being out of tune if they reported the real full costs.

The full costs over time are actually UNKNOWN, but your figures are a good initial thumbnail sketch.

Gambling

Well, for one thing, any time gambling revenues fall short of expectations, it's good news, not bad news. Among other things, gambling is a drag on the economy.

Quite honestly, if revenues for the Vikings Stadium falls short of expectations, the solution is to reduce the budget for the stadium A peoples stadium truly does not require a lot of bells and whistles.

Black boxes

By the way, it's never been of concern to me that the Vikings refuse to show their books. To the extent their internal financials are relevant, and I am not sure why they are, it should be pretty easy to reconstruct them from what is known publicly.

Vikings Loan

Neil deMause clarified details about the loan. He writes:

The club seat money is entirely money that otherwise would go to the league, so that's really a grant. (The team still gets to keep its own share of club seat money.) The incremental ticket sales over the old stadium is money that would come at least partly out of the Vikings' pocket, though I don't think they'd get to keep all of it otherwise — part of it would go to the league in that case as well.

Viking internals

Since the Vikings aren't willing to produce their internal financials, they are irrelevant really to the discussion. What matters is that we get sufficient value at the price we pay, not whether the Vikings can make a profit at those prices. It's not the job of Minnesota taxpayers to ensure that the Vikings make a profit.

No, but

it IS our job as taxpayers and the job of the state legislators to evaluate the claims that the Vikings could not afford to do this without X level of state help. If we are entering in a partnership, forking over capital to them in to use to invest in a building that will bring more revenues, we deserve to understand the full nature of the situation, much like a shareholder of a corporation. A shareholder is concerned with themselves getting value, but to understad how the company will do this and to what amount of value they will receive, they are allowed to view the company's finances to make accurate and informed decisions. No difference.

Viking claims

Have the Vikings ever claimed such a thing? In any event, whether or not the Vikings could afford to build a stadium, it's clear enough that they wouldn't, so it's hard to see how their ability in that regard is relevant. In partnership terms, what matters is what the partner's is willing to promise, not what he isn't. If the Vikings weren't willing to offer enough, it really makes no difference to us whether they could have offered more.

We deal with corporations all the time without being privy to their books. With respect to the Vikings, we aren't really in the position of either partner or shareholder. Rather we are in the position of purchasers of what they have to sell, NFL football. It comes with a price, in this case a new stadium. The question for Minnesotans is whether what we get is worth the price we are asked to pay for it.

Nope

The city is not the purchaser of the "product" being the NFL football experience. The citizens of our wonderful city and state are customers of the NFL. They need us more than we need them - in the 12 years the Vikings threatened to leave, they never did. Outside Los Angeles (which is only one city being tossed around for relocation for MANY other NFL franchises), Minneapolis is a major media market (16th) with major business climate, prosperity, television eyes, and disposable income. We are their market, not the other way around. That a Vikings stadium provides a positive public service in the form of civic events and tourist-drawing activities (possibly) like the Final Four, Superbowl, and other local events is the reason we as the public become partners with the Vikings organization.

Strong-arming cities or states with the threat to move somewhere else unless better tax breaks, financing, or flat out cash has become commonplace for large businesses (whose executives love to praise the notion of the free market yet take handouts whenever possible).

Getting the numbers right

I agree with Paul about the numbers.. I wrote about it in previous stories, including Allied Charities' skepticism. I just didn't want to drag readers too far into the weeds. I often lose them there.

stadium costs

The dtadium costd will overrun and take a massive bite out of the mn. taxpayer. It was put togeher with too many assumotions on revenue streams.

stadium funding

If we can spend that much money for a "people's stadium" (ha!), why can't the state help subsidize the critical arts institutions in our Twin Cities. Like the Minnesota Orchestra and the SPCO and maybe a few others. These institutions make us a great place to live and are one reason companies and people in general like to live here. I don't know that that many people want to come here to go to the "people's stadium" games.
The last figures I read indicate that more people attend things at our wonderful music and art centers and the like then ever go to professional sports games.
Why aren't we talking about subsidies? Oh, I know, we're all broke, aren't we?

What?

Critical arts institutions. They deserve money taken from people and given to others? Says who, comrade worker? Get your own money for your personal agenda you think makes your life better and leave everyone else alone with the money they worked hard to earn.

enough money?

just cut the orchestra musicians and libraries and we should have enough for Ziggy and his fans!

Enough Money

We must have a bunch of idiots in this state running the government. Please tell me how the City of Green Bay with only 90,000 residents can PROFIT 12 million dollars per Packer game, with predictions for next year to be 27 million per game? I will tell you how, Lambeau Field is in an area that can be expanded not crunched into a downtown area. They just cut a deal with Cabela's for 150 million dollars to allow them to build a store next Lambeau, the lease is several million per year after the 150 million. They just sold the naming rights to a gate, yes a gate, to Fleet Farm for 1 million a year. They are working on selling the naming rights to the stadium with several interested businesses for 100 million per year. There is also several businesses interested in expanding into the area next to Cabela's for millions per year. But no, the GOP in this state, Zeller's and his ilk are so opposed to anything that we wind up with another white elephant downtown being built on the cheap. And people keep voting for these idiots.

Bad Idea

Tax incentive financing is often a tool the GOP uses because of their close tie to business leaders and their belief that lower taxes are better for their operations, profits, and therefore the local economy. The Packers and Green Bay profit so much not because they "use so much land" but because they are able to charge much higher for their season tickets, are a much bigger national brand (clothing, advertising, etc), and have done a great job convincing their own fans to help finance many of the investments they make (by issuing "stock" that can't be traded, sold, or increased in value) in their stadium - they have far more club/box seats that net them more money.

Has nothing to do with land use or allowing a Cabella's next to the stadium. How is it that the Yankees, Red Sox, Cubs, and any other number of urban stadiums are huge revenue generators? Also keep in mind the taxable value of a 100-acre Cabella's site where 80% is parking spaces is not nearly as valuable as a 100-acre urban, dense area with a multitude of bars, restaurants, shopping choices, homes, apartments, etc. Not even a comparison. I encourage you to read Minnesota's own Chuck Marohn on StrongTowns.org to see for yourself.

Bad Idea

The City of Green Bay has nothing to do with ownership of the Packers. They own the stadium, along with Brown County and the land. The Green Bay Packers are a publicly owned non-profit and are not owned by the City of Green Bay. The official name is Green Bay Packers Corporation, Inc. The Packers have always played in a stadium owned by the city. As the Packers out grew City Stadium, the city and Brown County bought the land in anticipation of a new stadium. The stadium was completed in 1978 at a cost of 978,000 dollars. It has been upgraded several times. Land use has everything to do with it.

NFL G4 Loan - Pocket cash vs pay back loan

The G4 loan allows, as you stated, the team to pay it back using funds from the sale of certain seats that would otherwise have been shared throughout the league. The 2 key points here are that 1) without a new stadium (financed over 50% by state/city) the Vikings would not have those seats, and therefore the revenue that comes with them to "pocket" (or rather, choose to share a portion and pocket the rest, which is still incremental over what they currently are bringing in). and 2) the loan is no-interest, meaning it is a no-brainer to "pay off" a no-skin-in-the-game loan with revenues they did nothing to invest to receive a return on.

People forget that while the Vikings organization is liable to spend a certain amount due to legislation, the money they get for having a stadium in the first place brings down their actual investment to roughly $100-150M (less is they do go forward with seat licenses).

This is where they magically had the money to consider a retractable roof. And still, they will only do it if they feel there is a strong possibility of landing an MLS stadium (whereby they would receive all the revenues for parking, concessions, etc).

Not sure why the state and public aren't allowed to view the finances of the Vikings organization if we're putting up over 50% of the costs (not to mention the long-term finances for maintenance, repair, interest on bonds, and city operations for events) for something the city will see 10% of the revenues on. We deserve to know how much the Wilfs and Vikings were able to commit vs chose to extort.

Is there a point here?

I failed to discern one.

Yep

that we embarked on an overly costly endeavor to invest far more than was necessary for a private enterprise and now, surprise surprise, the funding method we staked a large portion of the state's contribution is not performing as "projected," leaving the state on the hook to take money from the general fund to help pay for the deal.

It's embarrassing, really, that so many people raised these questions and it still was put through legislation.

By definition, projections are always wrong

The project should have been funded by any of the number of different taxes (Mayor Coleman's drink tax, for example), but that was impossible with the legislative majorities we had. So they picked a source that could pass. That shouldn't be a surprise.

All of this nonsense about what happens if the funding is short is just that. What happens is that the current legislature and any future legislature facing the issue will have to decide. Just like every single other state project.

The Vikings

The Vikings, in all likelihood, are profitable at the moment. But the fact is, they have a stadium that isn't generating an amount of revenue the league considers adequate, which means the league feels it is subsidizing the Vikings. That's something they don't like to do, and with the changing economics of the teams, not something they are willing to do down the road. Jerry Jones just isn't willing to let the Vikes play in his zillion dollar stadium he has to pay for, in exchange for games the Cowboys have to play in the low revenue Metrodome. Without a new stadium, later or sooner, the League would have forced the Vikings to move. The question for Minnesotans was whether that was an acceptable result, or should we decide to pay the price it would take to satisfy the league and keep the Vikings here.

It isn't really much more complicated than that.

I'm confused

why it is the Minnesota taxpayers' duty to worry about Jerry Jones' subsidization of the Vikings (or any other) franchise? First, the NFL has been moving more and more towards allowing individual teams to retain revenue, through pro shops located in stadiums, boxes/suites, seat licenses, parking, and more. TV revenue share has little to do with the investment Jones made in his stadium (or any other team for that matter). In fact, this move toward less of a total revenue share is moving away from what made the NFL so popular - parity among teams even in small markets - more than any other professional sports league. This parity has allowed the NFL to strike the best TV deals, pay athletes the most, and keep fans in all geographies interested more than other sports.

So, back to my original question - why is it our problem as taxpayers that the NFL is "subsidizing" the Vikings? Which, by the way, there will always be a number of teams making less than the average, by rule, so earning less than larger markets is not leverage for the NFL to truly threaten a move, unless they want all 32 teams concentrated in the top 4 most populated cities in the country to maximize revenue. Again, the NFL needs us - our eyes on TV, our butts in the seats. The Wilfs need us as consumers more than we needed them. The fact that we promised over 50% of the initial cost (while taking on interest that the Vikings will not have to) and financed it with a risky gambling revenue scheme (whose proceeds could have also gone to other state causes like reducing our deficit) means we listened too hard to ardent fans who weren't willing to pony up more money themselves to keep the team here.

Moves

why is it our problem as taxpayers that the NFL is "subsidizing" the Vikings?

Because it provides a motive for the Vikings to move. It could be the Vikings and the NFL are bluffing. But it's important to understand that calling that bluff might very well cost Minnesota it's team.

The Packers

Please tell me how the City of Green Bay with only 90,000 residents can PROFIT 12 million dollars per Packer game, with predictions for next year to be 27 million per game?

Something important to understand about NFL football is that it can be conducted profitably in smaller media markets. Green Bay can be profitable just like New York. That's why the NFL feels no urgency to put a team in LA. That's why a team can find it profitable to move from a big media market like Los Angeles, to a smaller media market like St. Louis.

One of the implications of that there are more potential options for relocating a franchise, hence the threat, express or implied to do that is more viable. Contrast this with the Twins. When it came down to it, the Twins couldn't realistically threaten to move anywhere, because there isn't any place in the country that can afford a major league baseball team that already doesn't have one. In the final stage of negotiations, the Twins were forced to make the rather implausible threat that they would dissolve if they couldn't get a stadium, simply because it had become obvious that they couldn't move.

You're Joking, Right?

The move from LA to St Louis has been a massive failure for that franchise. If small markets are so viable, why is it that Jacksonville, Buffalo, and ST LOUIS are all threatening moves? Bigger markets, including MSP (yes, we are #16 and growing faster than several ahead of us and our fans on average have more disposable income), are absolutely more profitable than smaller ones. The only reason the NFL and those particular franchises have not left for LA is because the NFL sees it in its best interest to have a well-spread and covered geography, and that the moving cost for a franchise makes it NOT PROFITABLE now, especially with the ridiculously expensive stadiums they say they require (and in turn want the new host city to build). Funny that the New England Patriots were able to build their own open-air stadium in a cold-weather climate for $350M with only $72M in state infrastructure support.

I suggest you read this article to familiarize yourself more with the numbers:
http://www.citypages.com/2012-03-14/news/vikings-stadium-proposal-isn-t-...

How does gambling work?

I want to confess ignorance on this subject here and now. How does this gambling thing work? Will there be forms of gambling whose revenue is dedicated toward the Viking Stadium? And other forms where the revenue is dedicated not to a profit making enterprise, but to various charities?

If that is the case, why would anyone gamble for the benefit of the Vikings when their gambling proceeds could go to charity?

How does this work?

I can't remember the exact figures but leftover proceeds from the e-tabs are split betweenbar owners, charities, and the stadium fund. Around 83% of the total revenue goes back to winners, and the remaining 17% is divided amongst the bars, charities, and stadium fund. If I remember correctly the charities were worried because with the existing system the proceeds are split three ways (winners, bars, charities). Adding a fourth player shrinks the pot of money. E-tab proponents said not to worry because e-tabs would be soooooo popular that over-all tab gambling would increase and make more money for everyone. That prediction didn't make sense to a lot of people for so many reasons and wasn't based on any evidence or experience whatsoever- this is a new industry. Actually, now that I think about this it's possible that the charities are actually taking a hit as well because if the system doesn't expand as predicted they're left with a smaller chunk of the pie. I wonder.

Why the roof?

The possible rendition of the stadium always has a roof, which, of course, is not in the agreement that the Governor signed. Any roof must be paid for by the owner who, as far as I know, has not asked for bids on a roofed stadium.

The legislation requires a roof

It was part of what the state demanded for providing public funding, so that the facility could be used for other things in the winter.

What's not in the bill is money for a retractable roof.

All of the bids included roofs, which, as I said, is required by the legislation.

Meanwhile...

The stadium deal has already in increased the value of the Vikings 22%.

Revenue

"First, the NFL has been moving more and more towards allowing individual teams to retain revenue, through pro shops located in stadiums, boxes/suites, seat licenses, parking, and more. TV revenue share has little to do with the investment Jones made in his stadium (or any other team for that matter). In fact, this move toward less of a total revenue share is moving away from what made the NFL so popular - "

Part of the reason for that is that the interests of the owners are diverging. How highly indebted owners like Jerry Jones make their money is different from the long term owners like the McAskey's or the Rooneys. But this doesn't mean that pressures on the interests they do share in common aren't increasing, and that's particularly true for the NFL's main source of revenue, the TV contracts. For historical reasons, all NFL teams share that money equally. But that is an arrangement that isn't stable since large market teams like the Jets and Giants bring far more to the table in terms of audience than small market teams. It would be natural for them to demand a proportionate share of the revenue, the de facto arrangement in baseball. They don't, because the present setup has worked well over the last 50 years, and because the large market teams are able to maximise stadium revenues. But it also assumes that small market teams carry the load as well. If the small market teams don't do that, they may lose their equal share of the tv revenue. That's why Green Bay, under no pressure at all from shareholders, were forced to upgrade their stadium.

You realize

That by upgrading their stadium they actually contribute less to the pot, right? Suite, loge, certain club seats, and seat license fees are not seats required to share the ticket revenue by NFL rule. They were not forced by the NFL to do anything, they were forced by their own desire to increase their own revenue.

My point is, the NFL (and owners) has done a good job holding LA over states/cities as a move possibility making fans frantic that they will lose their favorite NFL team (and possibly national relevance, jobs, economic dev even though studies have shown that none of those things are true). If the NFL wants their brand and revenues to increase through bigger and better stadiums then they, and the owners, should be on the hook for taking out the debt to fund their own investment. This new Vikings stadium will undoubtedly increase the value of the franchise (just the ANNOUNCEMENT of a new stadium bumped them up $200M), not to mention yearly revenues. The point is that the state and city have taken on a far disproportionate amount of the debt to pay for a stadium (and our debt actually comes with interest whereas the Vikings' does not). I say disproportionate because the revenue in taxes the Vikings bring in, possible economic plus from hosting a major sporting event, jobs, and civic use (which could be had by a much smaller, cheaper stadium built for just that) will never be repaid to us.

Oh Always

There will always be enough money for elite sporting. We can take more from social services if we have to, there's a little bit left there. Then, if we really need to we can reduce the number of fire fighters like we do in times of difficult economic circumstances. It's very important to have very fine sporting venues in these modern times. Why? Well, because.

Always right

One of the frustrating things about stadium debates is that stadium critics have always been right and it has never mattered. Literally no one believed that gambling revenues were sufficient to support the Vikings Stadium. But stadium supporters who timed their final push for the final days of the session, the very moment when they knew that their most absurd assumptions were most likely to avoid scrutiny, particularly from a media, already hampered by a management which was committed to the building of a stadium for business reasons.

Now the deal is unraveling. The financing for the stadium is revealed as nothing more than so much hot air. The questions that we couldn't ask because of the tactically imposed rush to decision in the last days of the session are being asked now. So why can't the deal be reexamined? Now that we have time to look at it critically? Nobody even bothers to answer that question despite the fact that not a single tangible step has been taken to actually build a stadium we now know we can't pay for. When we talk about why politicians are held in such contempt by the American people, the shenanigans surrounding the stadium go a long way toward explaining it.

Foolish thinking

Now some of you folks know why you are broke, you don't understand finance!

Your $175,000 house loan for 30 years will cost you $338,197,now if you took those interest $ ($163,197/360) ~ $453.32 and monthly put them in a tax differed investment vehicle @ 5% after 30 years that vehicle would be worth ~$377,013, add that to the $163,197 you shelled out in interest, and your (Real opportunity cost is) $540,210 (Folks your short sighted thinking flushed your 401K retirement fund down the toilet, and our politicians did the same thing with our State and city fiscal stability with the stadium! That's right its arithmetic, and "the truth she hurts"
Of course the argument is that the stadium investment will cause the local economy to grow and return more $ than what we put into it, pipe dream or reality? Depends on who is looking, free market or taxpayer welfare for Millionaires and billionares?

You only did half the math

There's opportunity cost to purchasing your house with cash (what's $175,000 over 30 years at 5%?) or paying rent with after-tax money.

What's new?

The sports fans are thugs taking money from the public and tossing it at the stadium. Ironically no one seems to detect the disgrace that this is. Not unlike the actual cost of a light rail ride per person vs what is charged. Both examples of who knows? Who cares? After the economy collapses, this will be amusing. Pity.

If the NFL wants their brand

If the NFL wants their brand and revenues to increase through bigger and better stadiums then they, and the owners, should be on the hook for taking out the debt to fund their own investment.

It's not a question of what they should do, it's a question of what they will do. If the Vikings move, the fact that they shouldn't have moved will be of little comfort. In terms of stadium issues, we have to deal with the world and markets as they are, not the way they should be or would like them to be.

There is no point in complaining about the deal that was made. The mildly relevant point here is whether the deal we made is sufficient to cover the costs of the stadium. If it isn't, we must ask ourselves whether we should back away from it before we have a half built stadium with no money to finish it.

If the Vikings move...

We'll be better off for it. Professional sport and the economics of these stadiums and now have such a toxic effect on our public policy, political system, and budget process that we're better off if the Vikings do go elsewhere. This obsession with keeping the Vikings here at any cost creates perverse tunnel vision that pretends the loss of 12 football games a year would somehow devastate our culture and economy. I think our culture and economy would actually be better off without this team, it's stadium, and it it's stadium debt.

Besides, if we simply acted like normal landlords these "move" threats would be impossible. Sure the Vikings can say they're gonna build a stadium elsewhere but there's no compelling reason to for the PUBLIC to revert to a year-year lease on the dome in the meantime. The lease on the dome expired folks, why not simply require another ten year lease? You can't build a stadium in L.A. in six months, where you gonna play THIS year and NEXT year? This was always an artificial crises and no one was ever gonna die if the Vikings left town. If the worse case scenario is the loss of an NFL team I'm sorry but you just don't have a real problem let alone a billion problem. And don't bother telling me we'll pay more to bring them back in the future because I'll simply point out that there's law of the universe dictating we bring them back in the future. Portland OR has never had an NFL team and they're doing just fine.

Toxic effects

Well, in the long run, the Vikings and their stadium are pretty small potatoes. But it is important to understand that the decision not to build a stadium is a decision to send the Vikings packing. It's very important that we understand that simple reality.

Maybe maybe not

If the Vikings were going to build their own stadium anywhere they wanted, sure they could leave any time they want. The problem is they have to get some other taxpayers somewhere else to build them a stadium and it's no easier to that in LA than it is in here MN. It took the Vikings what? 10 years to get this deal? These billion dollar stadiums are controversial everywhere, people all over the country have woken up to the reality of the economics and politics of these stadiums and the public subsidies are getting harder and harder to swing. The stadium in LA was supposed to be built with private money but no shovel has hit the ground anywhere yet.

Not that I care, but I think the guarantee of losing the Vikings can be overstated, sure they can move but they can't move tomorrow, they don't have anywhere else to play football next year, or the year after. As I pointed out, if we really wanted to we could actually take other actions besides building them a stadium to keep them here. If we locked them out of the dome (refusing a year to year lease) while they build a new stadium elsewhere that would dramatically changed the economics of moving. Would the NFL even let the Vikings sit out two seasons while they build a stadium somewhere else? Why should we act as a placeholder while they build a new stadium elsewhere? We could requires a lease that would only be escapable if they build their new stadium in MN. Now you'll say this is all unrealistic, and you may be right, but that doesn't change the fact that the build it or lose em crises is a completely artificial crises one way or another.

At any rate, the polling has shown for years that the majority of MN's would rather lose the Vikings than build them a stadium and I think it's pretty clear that most people understand the consequences of not building the stadium. In fact the strength of public opinion on this is so clear that avoiding any kind of public vote or referendum is the first rule of pro-sports subsidies. If losing the team were a public catastrophe referendums would be an NFL trump card rather than a death knell for subsidies.

New stadiums

The problem is they have to get some other taxpayers somewhere else to build them a stadium and it's no easier to that in LA than it is in here MN.

Or get a better deal in an existing stadium elsewhere. In any event, those are the sorts of risks we are undertaking should we call what may be the Vikings' bluff.

It is true that sports stadiums don't poll well. That's because taxes don't poll well. But once they are built, everyone seems to be happy with them. The Hennepin County commissioners who made a very bad deal for taxpayers on the Twins Stadium have been routinely re-elected.

Point taken

However public satisfaction with stadium deals after the fact may be changing due the huge cost of these stadiums. We'll see what happens with this new generation of billion dollar deals. I suspect if the funding mechanism fails and other issues float to the top the public may not be quite so complacent in the future. Stadiums aren't economic catastrophes, it's probably a good thing people aren't voted out of office them. Ironically, if the Democrats get the fiscal house in order and restore funding to education, transportation etc. that will actually lower scrutiny of the stadium as it goes forward. If they don't, the contrast between the money going into the stadium, and the money NOT going into everything else becomes a problem. I don't think Rybak is out of the woods, the deal could blow up in his face unless MPLS gets some ALG restored.

Public satisfaction

The whole point of stadium deals is to get to the point where ground is broken. Once that happens, we will be told that it is too late to turn back. Even now, with the stadium deal unraveling before our eyes, public officials are unified in pretending to believe that the stadium deal cannot be undone.