The implied threat driving the Minnesota Vikings stadium debate is the possibility that the team will quit the state. But national analysts of public-private stadium financing deals are skeptical about the proposition that leaving town would make financial sense for team owner Zygi Wilf.
Pro-stadium politicians, most notably Gov. Mark Dayton, are warning that the expiration of the team’s lease at the Metrodome after the end of this season opens the possibility that the Vikings will leave next year if they don’t get a new stadium. The fear is fueled by the absence of NFL football in Los Angeles and the emergence of competing stadium proposals there.
While the untutored might assume NFL team owners make more money if they play in top-tier media markets like Los Angeles, the economics of pro football wipes away the perceived advantages, said Neil deMause, author of the book “Field of Schemes” and of a blog by the same name. About 60 percent of the revenue NFL franchises rake in is shared among the teams. That includes all the money from television deals and licensing.
“In the NFL, everybody gets a cut of the TV money,” deMause said. “It doesn’t really matter where you play. LA isn’t necessarily a great lure because you’re going to make the same money in LA that you’re going to make in Minnesota.”
The Vikings have a loyal fan base in Minnesota that fills the Metrodome whether they’re winning or losing. They are also the focus of a heated, changing-by-the-day Capitol debate over plans to build a publicly financed stadium. The same is not true in Los Angeles, where several other teams are the focus of the city’s NFL ambitions, said Smith College economist Andrew Zimbalist, who has studied stadium financing battles around the country.
“I can’t imagine that the Vikings would have first dibs in Los Angeles,” Zimbalist said. “They probably would be third or fourth or fifth in line. Even though you’ll hear that discussion, I don’t think that’s a real viable option for Wilf at this point. Maybe there are some other towns down the road that could put together an attractive deal. But that would mean that some city, in this era of fiscal austerity, would have to build a $700 million stadium and give Wilf all the revenue from it and not charge him any rent. And I don’t know if anybody is going to do that, either.”
The Vikings pay the Metropolitan Sports Facilities Commission (MSFC), which is a state entity, about $6.5 million a year from all sources of revenue generated at the Dome, including a ticket tax and proceeds from concessions, said Bill Lester, the MSFC’s executive director.
Last spring, the Vikings, the state and Ramsey County announced a deal to build a publicly funded stadium in Arden Hills. Despite Dayton’s support for getting a stadium bill passed, the deal has drawn waves of protest in Ramsey County and from a bipartisan coterie of state legislators because it calls for a $300 million commitment from the state and $350 million from hiking the Ramsey County sales tax rate. The team would pay at least $407 million, a sum that includes a grant from the NFL. Even though on Thursday the team released a statement that said Arden Hills is “the ideal site,” there has been a very concerted movement by Minneapolis businessmen and city politicians to switch the focus of the stadium debate to their city.
Wilf hasn’t publicly threatened to move the team if lawmakers don’t pass a stadium bill. But NFL officials and state lawmakers have raised the specter that the Vikings could potentially take their business elsewhere.
On Oct. 18, amid Dayton’s so-called stadium week, NFL officials came to the state Capitol and told reporters that a stalemate on a Vikings stadium bill could cause the team to leave.
“We’re worried about a stalemate,” said NFL Vice President Eric Grubman. “A stalemate means there’s no lease or the lease is about to expire. There’s no plan for a stadium, and there’s an alternative plan in another city. That’s a stalemate. And the alternative wouldn’t include Minnesota. That is, in the way we look at it, a crisis.”
Threats are negotiating tool
The history of American stadium deals, however, is rife with threats to leave, both real and phony. DeMause can tick off a list of historical examples such as White Sox owner Jerry Reinsdorf’s trip to Tampa Bay as the Illinois Legislature was gearing up to vote on replacing Comiskey Park. National Hockey League officials once warned Pittsburgh that the Penguins might move to Kansas City. On the other side of the coin, teams have decamped to smaller markets. To wit: The Houston Oilers packed up and went to Nashville; the Los Angeles Rams re-established in St. Louis.
The deal making that accompanied the St. Louis and Tennessee moves came before the economy slowed and public animosity toward government stadium subsidies swelled, said Stanford University economist Roger Noll. That means the Vikings are doing well to have a supportive governor and at least one local partner that is willing to help pay for a stadium.
“Even before the recession,” Noll said, “the probability that the voters would approve a measure to offer a huge subsidy to a sports team had gone down. It used to be that two-thirds of the ballot measures for subsidizing sports teams’ facilities would pass. Now it’s down to one-third. Like any team owner, Wilf is looking for the best financial deal he can get.”
Noll points out that the trouble with the LA deal is it’s essentially a “privatized deal” in which the Anschutz Entertainment Group (AEG) would build and operate the facility to be called Farmers Field. Noll said AEG won’t put up hundreds of millions of its own money if it’s not going to own the team.
“The move-to-LA threat is almost certainly a threat of selling the team, not moving it with the same owner,” Noll said.
Another Los Angeles stadium proposal floated by developer Ed Roski would be located in City of Industry. The catch in that proposal is that the team owner needs to sell a portion of the team to Roski in exchange for development rights.
“One reason why no team has moved there yet,” Zimbalist said, “is because neither Roski nor AEG has put on the table a proposal that is sufficiently attractive to existing owners to make them want to move there.”
Unless the Los Angeles tycoons give up on trying to make money from attracting an NFL team, Wilf either needs to build a stadium somewhere else with his millions or take the best deal he can get in Minnesota.
Playing local interests against each other
“The thing is,” Noll said, “if the threat of leaving has been removed, then the only thing they’ve got going for them is to take advantage of the traditional competition among the cities within the Twin Cities area, to see if they can get cities bidding against each other, which has worked in the past. The Twin Cities area has built more sport facilities over the last 40 years than any other metropolitan area in the country.”
Wilf could certainly sell the team if things at the Legislature completely fall apart. But from a financial standpoint, his confinement to the Dome for the foreseeable future would be no cause for sympathy, Noll said.
“The Vikings are not losing money,” Noll said. “It’s not as if there’s some sort of fire sale going on here.”
The one business segment that team owners don’t share with the NFL is revenue from stadium operations. The way the Los Angeles proposals are shaping up, Wilf would not stand to generate as much concessions revenue there as he could at the Arden Hills site, which is located in an isolated part of the metro area and would have a captive market for food, alcohol and memorabilia sales.
“The way you make big, big profits is by having a great stadium situation,” Zimbalist said.
Like all other teams, the Vikings are trying to get the best return while spending as little cash on construction as possible. Even though the Vikings have consistently spurned talk of Minneapolis, Noll pointed out, the competition between Arden Hills and Minneapolis nonetheless gives the team added leverage in negotiations.
“Their hope of getting multiple hundreds of millions of dollars,” Noll said, “hinges on there being competition, whether it’s within the metropolitan area or between the metropolitan areas. If they don’t get that, though, they certainly aren’t going to close the doors because there’s no reason to shoot yourself in the foot. They’re still making profits.
“Their leverage really hinges on competition for [the stadium site]. If they don’t get that, then they’re going to come away with a lot less money than if they do have competition.”