Don’t Believe the Hype or Why the Vikings are Minnesota-bound

A lot on people in Minnesota are buzzing about the NFL Commissioner’s visit to the Capitol in Saint Paul today intended to get movement on legislation for public funding for a new stadium for the Minnesota Vikings. This is a debate that’s been raging in Minnesota for a number of years now, and it’s coming to a head with this visit as well as rumors of the team being moved to Los Angeles. This took a particularly interesting twist today as Viking owner Zygi Wilf’s plane was reported to be in Los Angeles (but records show the plane is actually in San Diego). This development naturally led to a new Twitter account: @ZygiWilfsPlane.

While I am a big Vikings fan, my support for public funding for a new stadium has always been weak, but a recent article from a local indie newspaper The City Pages convinced me once and for all that the people of Minnesota are being played:

Here’s how the scam works: The Vikings reach a deal with the state and Minneapolis (or Ramsey County) to build a new stadium. The state and the other government entity agree to put in $600 to $650 million—likely the amount necessary to cover the stadium’s “hard” construction costs, though this number remains fluid as details of the plan change. The state and/or municipality sells 30-year bonds to finance the project, to be repaid with money from an unnamed source—gambling, for now—but more realistically some kind of tax (the current proposal calls for redirecting the Minneapolis sales tax to cover a portion of the construction and operating costs). Actual cost to the taxpayers, taking into account the interest that will have to be paid on the bonds: about $1.2 billion.

Meanwhile, the NFL, under its recently announced G4 loan program, lends the Vikings $200 million interest-free to be repaid over 15 years from the proceeds generated by the sale of premium seating—the extra dough the team can collect for fancier club seats, of which the Metrodome has none. (Ordinarily, premium seat revenue would have to be shared with the other 31 NFL teams, but when applied to stadium costs, that requirement is waived.) The Vikings redirect the $75 million they are expected to realize from the sale of personal seat licenses, leaving a $150 million gap.

Even if Wilf had to borrow that money, the team’s annual interest payments would come to about $5 million per year, far less than the $11.2 million annual revenue stream from stadium naming rights and parking fees. (If parking revenue is not part of the package, the team still nets $3 million on the deal.)

To recap: Taxpayers are on the hook for 30 years of bond payments while the Vikings get to cover their share of the overall project by redirecting revenue streams that would not be available to them without the construction of a new stadium.

But the bad fiscal deal isn’t stopping many in the Twin Cities from clamoring for a stadium deal to get made, or from buying into the threat the Vikings could move to Los Angeles. It’s so out-of-hand that I was actually told earlier in the week that L.A. already has a football stadium built and waiting for an NFL team. Never mind that’s not true, or that the proposed stadium in L.A. is privately financed. The truth is that a move to L.A. is a hollow threat and makes zero fiscal sense to Zygi Wilf, as MinnPost points out today:

But moving an NFL team, especially a team so beloved as the Vikings, is not so simple as backing up the moving trucks and heading out of town.

Relocation fees, 75 per cent support from other owners, a place to go all are real issues.

Start with that 75 per cent figure. A franchise which wishes to move must receive the support of 24 of the 32 league owners. It’s far from a given that the Vikings’ owners, Zygi and Mark Wilf, could get that sort of support.

There are any number of reasons league owners would be reluctant to grant approval for the team to leave Minnesota.

Despite the fact that the Metrodome is unloved by virtually all, there are good reasons that league owners would think twice about leaving. The Twin Cities still has more corporate headquarters than most metros in the land. That matters to the corporate NFL. Corporations mean sponsorships and purchase of expensive stadium suites and brotherhood.

There is also this fact: The lifeblood of the NFL is television revenue. The dome may not generate the sort of gate receipt money as most NFL stadiums, but even in bad years, television ratings in Minnesota are always among the highest in the league.

Are 75 per cent of the owners ready to walk away from those sorts of long-term benefits for a couple of owners they don’t know all that well?

Second, there is a multi-million dollar reason the Wilfs would be reluctant to hit the road. It’s called the league’s relocation fee. This is a sliding fee — seemingly plucked from the air — that brother owners charge the moving owner, presumably based on the escalating value of the team.

It’s generally assumed that if the Vikings (or Buffalo, et al), would move to Los Angeles, the fee could range anywhere from $200 million to $1 billion.

But this brings on a whole new set of potential stumbling blocks. Farmer’s Field would be built by Anschutz Entertainment Group (AEG), with Farmer’s Insurance paying $700 million for naming rights.

AEG has one big condition to bringing an NFL team back to LA: It wants substantial ownership in the team.

Would Zygi Wilf really sell a substantial portion of the Vikes? This is, after all, a very wealthy man who clearly finds great gratification, beyond dollars, in owning a team. (Hey, the team owner actually gets to stand on the sideline and is a VIP in Minnesota.)

If Zygi Wilf had $1 billion to pay to move the Vikings, he’d have the money to build his own stadium. Selling the Vikings now would mean a very small return on investment for Wilf, and I don’t believe he has any intention of selling just yet. It does seem interesting, to me anyways, that in the mind of the NFL and Vikings’ ownership that it would be easier to deal with the government than it would be to deal with a private investment group, like other owners have done to make their stadium dreams come true.

But the interesting thing about these Los Angeles rumors is they’re not coming from ownership, or even the NFL. It’s coming from media buzz (read: sports writers) and individual rumor mongers (like the unfortunate soul who was convinced there is a ready and waiting stadium in L.A.). The facts suggest otherwise.

There’s only one thing left to say, and I’ll leave that to Public Enemy:

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