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Can anyone solve the Vikings stadium puzzle?

Where does the $800 million-and-increasing Vikings stadium effort stand after this legislative session? The team is declaring this a “watershed moment” for solving the matter, but how can a deal be “finalized” in 2011?

Can anyone solve the Vikings stadium puzzle?
Original concept design by Ellerbe Becket

“[H]aving an NFL team in Minnesota requires a stadium solution. This solution must be finalized in the 2011 [legislative] Session.”

—From a statement Tuesday by the Minnesota Vikings

It was a dark and stormy morning at the state Capitol two Wednesdays ago when a deftly timed bombshell dropped: the Minnesota Supreme Court ruling on Gov. Tim Pawlenty’s unallotments was released just as a Minnesota Vikings’ stadium bill, already wobbling under the weight of widespread opposition and inadequate funding mechanisms, was being heard by a Senate committee.

If the Vikings effort wasn’t already low on the governor and Legislature’s list of end-of-session priorities, it plunked off the table like a squished purple grape and dribbled below the radar, never to be heard from again in the final days.

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What now?
As the session’s dust settles — and even as the state budget deficit is presumed to reach $5 billion heading into 2011 — what now? Where does the $800 million-and-increasing Vikings stadium effort stand after this session? In their corporate statement Tuesday, the Vikings declared this a “watershed moment for the future of the franchise in Minnesota.”

 But how, as the Vikings also declared, can a stadium deal be “finalized” in 2011?

Gov. Tim Pawlenty
REUTERS/Jim Bourg
Gov. Tim Pawlenty

Pawlenty, freed now from making a tough decision on the matter, told reporters on Monday, “We cannot and should not lose the Vikings … but the details of how you put that together are important.” He argued, as he long has, that any Vikings stadium deal needs “a local partner,” meaning a city or county to foot the bill. He declared the team is “not going to stay in the Metrodome.” And he said the Vikings’ matter would have to “wait until next year” because he wasn’t about to call a special session for a stadium bill.

In that one passage, the governor was half-right.

Losing the Vikings wouldn’t be a good thing for the culture of the state, and, depending on how you balance the taxes the team contributes and the subsidy that would be created, it probably would not be a good thing for state coffers, either.

As for a “local partner,” exactly which city or county can afford to finance a stadium without state funds remains a financial and political mystery, even though Minneapolis city officials are eager to keep the franchise downtown on the current Metrodome site.

Yes, long term, the team is not going to stay in the Dome, but just because its lease expires after the 2011 season doesn’t mean the team can’t play there beyond that; the Twins did so on a year-to-year basis for six years after their Dome lease officially expired. And there is some case law — born from the Twin ballpark debate — that could provide hurdles for any Vikings’ attempted exit after 2011.

Still, the leverage, it would seem, tips toward the team once the lease officially expires and the Vikings are relatively footloose.

Wait until next year? Yes, Senate Majority Leader Larry Pogemiller told MinnPost Tuesday. He’s figuring the matter could wind up as part of a larger infrastructure package in the Legislature. (Mayor R.T. Rybak thinks a Vikings plan must also be linked to other issues.) If it’s not addressed in the 2011 session, the “franchise could be at risk,” Pogemiller said.

Council President Barb Johnson
Council President Barb Johnson

Minneapolis City Council President Barbara Johnson and City Chief Finance Officer Patrick Born met last week with Vikings’ president Mark Wilf, brother to primary owner Zygi Wilf, and other team officials and laid out to them the real problems the city faces in funding any new sports facility by itself. Any existing citywide tax simply couldn’t fund the debt for such a large project, Johnson and Born told the team. Plus, there is debt on — and improvements needed at — city-owned Target Center and anticipated financial demands long term for the Minneapolis Convention Center.

“I think they were sobered by that,” Johnson said of Wilf and his aides.

Still, Johnson told MinnPost Tuesday that she is hoping that a “working group” of legislative and, perhaps, regional leaders will get together this summer to begin exploring ideas to resolve the Vikings stadium dilemma in time for the 2011 legislative session.

Any successful group will thoughtfully analyze the value in keeping the team, the cost of doing so and, on the other hand, the real risk of losing a franchise in the nation’s most popular professional sport.

The Los Angeles threat
Without making threats, the Vikings’ lobbyists — led by Lester Bagley — have done a nifty job in cementing a clear-cut message and perception: If a Vikings’ deal isn’t done in 2011, the team will play out the final year of its 30-year-lease and, presumably, pack up and move to, let’s say, Los Angeles for the 2012 NFL season, just as surely as a free agent player might select his favorite venue to bring his talents.

As Bagley has said many times — again, without any threats — “It’s now down to 20 games left at the Metrodome.”

That may not be necessarily so. As one sports economist told me last week, “If L.A. were simple to move to, it would have been done by now.”

No one doubts that the possibility is real that an NFL team could move to Los Angeles in, say, the next five years. After all, that glamorous market, with its vast TV territory and outrageous community of bling, has been without an NFL franchise since 1995. It’s the only existing rational open market for an NFL franchise.

But there are daunting economics there. First, as here in Minnesota, a stadium needs to be built. Various plans are being kicked around, but the cost is a factor when a new edifice is discussed in Los Angeles. (The new Dallas Cowboys stadium cost $1.3 billion and the new New York Giants/Jets stadium is tagged at $1.6 billion. So, L.A. would want to be in that realm.)

Because of the size of the market, and the amount of private money that could be raised there — from potential owners, corporate backers, private seat licenses and luxury suites — a $1 billion-plus stadium could, eventually, be built without public dollars in Los Angeles. Gov. Arnold Schwarzenegger has said, “In California, we don’t build stadiums with public money.”

But, whenever and wherever that stadium is built, it still needs a team, and the Vikings aren’t the only NFL franchise in play. Buffalo, Jacksonville and even the St. Louis Rams, which moved from L.A. 15 years ago, could be candidates. A more natural, potentially mobile franchise is the San Diego Chargers. The Charger ownership, too, has been in a lengthy battle for a new stadium. Wouldn’t it make sense to simply have a team that’s already geographically adjacent to the Los Angeles metro area slide into a new Los Angeles stadium?

Assuming any franchise will move to Los Angeles also assumes two whopping price tags in addition to the stadium costs. The private builders of the stadium will want to own the team or be partners in the team. Vikings lobbyists have said that the Wilf family would never move the team, but, more likely, sell the Vikings and that a new ownership group would move the team.

What would it cost to buy the Vikings to move them to Los Angeles? $800 million or $1 billion?

Zygi Wilf
REUTERS/Eric Miller
Zygi Wilf

Beyond that, what will the NFL’s other owners charge Zygi Wilf or any new owner to move to and gain control of that Los Angeles market? The number for such a transfer fee is uncertain. Could it be $500 million? More? If you are the owner of the New Orleans Saints, wouldn’t you want to pocket as much dough as possible from the guy who will gain control of the L.A. franchise and all of its revenues?

So, $1 billion for the stadium, and, let’s say, $800 million for the franchise. Add on a substantial transfer fee, and this looks like a $2 billion deal to get an NFL franchise — to get the Vikings — to L.A.

Can it happen? Sure. Will it happen? Not this week. Not this month. Not this year. Why?

Labor unrest and other things
The collective bargaining agreement, or CBA, between the NFL Players Association and the league’s owners expires after this season. Already, the 2010 season is affected by the removal of the players’ salary cap. Whether revenue-sharing among owners will continue and just what the economics of the league will look like as the new union deal is struck remain murky.

No one is going to buy an NFL team while the CBA is open and the future financial structure of the very prosperous league is subject to tinkering. This gives Minnesota some time to ponder its stadium move. It also means that local officials need to closely monitor the labor talks; the terms of any new collective bargaining agreement could affect the economics of any stadium deal here.

There are also league rules about relocation that must be followed, six pages worth (PDF).

Among them: Any franchise relocation requires a three-fourths vote of approval from other owners, and NFL “traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so.”

But a key threshold for a franchise to walk through in advance of relocation is the stepped-up involvement of the league itself in attempting to resolve any stadium stalemate. While the NFL has been closely monitoring the Vikings’ situation, the team has not yet declared that it “cannot obtain a satisfactory resolution of its stadium needs.” Tuesday’s statement crept into that zone, but the NFL has not arrived on the scene … yet.
 
Indeed, for now, no local political leader has developed a strong relationship with NFL Commissioner Roger Goodell. It may be time to begin developing one.

There is one other Machiavellian matter to consider. In sports league economics, there is an advantage to the NFL to keep the Los Angeles market open. Keeping L.A. available to move a team — but never used — allows owners in Minnesota or Buffalo or Jacksonville with a hammer to threaten their communities with a place to go.

On the other hand, moving San Diego to Los Angeles wouldn’t allow for the revival of an aggrieved market. That is, should the Vikings move one day, you could be certain that Minneapolis-St. Paul would be viewed as a perfect site for another NFL team to move, if and when it wanted to and if and when Minnesota built a new stadium. (This is how the NHL got St. Paul and the state to build a new arena after the North Stars left for Dallas.)

If San Diego’s team simply moved to L.A., that wouldn’t really “open up” another option market for NFL owners to point to. It would be relocating a team within that greater Southern California sprawl.

Another exercise for any “working group” to perform is to begin thinking like an NFL owner: What are the benefits and drawbacks to losing the Minnesota market?

Back to Minnesota
However many hoops there are to navigate, it is crunch time here for a Vikings stadium. With the march toward the Dome’s lease expiration and the noisemaking by the Wilfs intensifying, it’s clear that various political forces in Minnesota will try to develop a rational, understandable Vikings’ stadium plan. (Rational to some people, that is.)

The team itself needs to come to the table with some ideas, too, and, undoubtedly, more private money than the Wilfs have mentioned so far. In the halls of the Capitol, an owners’ contribution of $250 million isn’t nearly enough for an $800 million stadium that will increase the value of the franchise substantially.

Rep. Tom Emmer
Rep. Tom Emmer

The gubernatorial election will be extremely pivotal. As one DFL lawmaker told me last week, “Tom Emmer is the Vikings’ worst nightmare.”

If the Republican candidate for governor wins, his no-new-taxes, reduce-government penchant — like that of Gov. Pawlenty — could stall any effort to finance a stadium with any sort of public participation.

House Speaker Margaret Anderson Kelliher, the DFL-endorsed candidate, has been more open to a Vikings’ discussion. She is based in Minneapolis. She voted to approve the Twins ballpark and Gophers football stadium in 2006. And imagine the optics: the state’s first woman governor “saving” the football team for all those purple-and-gold face-painted yahoos. It would be Nixon-going-to-China, Minnesota style. (But then, if Mark Dayton were to beat Kelliher in the DFL primary, the Vikings could also be in a world of hurt.)

Meanwhile, Independence Party candidate Tom Horner has said he’s willing to use state funds to help build a Vikings stadium. (Horner’s public affairs firm, Himle Horner, is currently consulting on strategy with the Vikings.)

What could be in any governor’s tool box?

A collection of user fees, such as hotel taxes, rental car taxes and sports apparel taxes that were shot down by Pawlenty, but could be revived.

Dick Day
Dick Day

There’s always former Sen. Dick Day’s racino plan, which never gets any traction from the DFL or some anti-gambling foes but seems to have citizen support. Whether the NFL or bond counsel would rely on gambling money exclusively for stadium debt is worth exploring.

Talk of using a Minneapolis Convention Center tax seems, for now, to be dead; As city officials did at the Capitol earlier this month, Rybak, Pogemiller and Johnson all rejected it in interviews Tuesday.

There could be a regional approach with state involvement. Johnson hinted at that, with some idea to bring all of the public assembly facilities — such as Target Center, Xcel Energy Center and the St. Paul and Minneapolis convention centers — under one umbrella with a new Vikings stadium. How to fund that? Could there be an economy of scale in such a plan?

The sale of private seat licenses to Vikings fans and corporate sponsors was the core of the final bill passed by a committee this month. How much can the team and community raise privately to minimize any public subsidies?

Mayor Rybak has talked of the public capturing the increased value of real estate adjacent to any new stadium. How would that work?

And, then, of course, there is some sort of naked state funding for a statewide asset that pours about $20 million annually into the state treasury via income and sales taxes.

Other ideas will have to flow as the 2010 legislative session fades away, the 2011 session approaches and the Vikings are set to begin their 29th season of a 30-year-lease.

Jay Weiner has reported on Minnesota’s stadium debates since their earliest days.