Quantcast
Don't Miss
Home / News / Capitol Report / Crying Wilf: Minnesota Vikings’ move out of state is unlikely
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.

Crying Wilf: Minnesota Vikings’ move out of state is unlikely

Minnesota Vikings owner Zygi Wilf is seen on the sidelines during the game against the Arizona Cardinals on Sunday, Oct. 9, in Minneapolis. (AP photo: Genevieve Ross)

The Vikings and the NFL are playing the relocation card in their stadium push, but pro football economics make that unlikely

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.”

Local resistance

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.”

12 comments

  1. >The Vikings have a loyal fan base in Minnesota that fills the Metrodome whether they’re winning or losing.

    Small fan base. I can get a ticket, last minute, using services like StubHub for $50 a seat! I couldn’t get a ticket that price anywhere else in the NFL. I think Wilf under estimates the fan base, especially when the seating becomes overpriced to make up for new stadium costs.

    Has Wilf checked to see if it was OK to build from St. Paul? Has Wilf checked with Roseville? Arden Hills, MN purchases its water from Roseville, which purchases its water from the Saint Paul Regional Water Services.

  2. the Wilf’s would just sell the team, and the new owners would move them, you jackass.Bet your *** that they are leaving if they don’t get it done this year. You Minnesotans DESERVE to lose the team, because of your moronic logic. Remember the North Stars? gone. Remember the Lakers? gone. If you don’t want to fork over a few million in order to potentially generate billions in tax revenue, the Vikings will be gone as well. Then you can still write about how the state’s budget shortfall is worse than ever and I will laugh. MLB should have contracted the Twins, maybe then the Vikings would have their new stadium.

  3. Untutored? That’s condescending–not to mention flawed logic by deMause. This deal isn’t primarily about making all of the NFL owners more money–revenue sharing does mitigate gains made to other owners from a move in that regard. It’s first about making more money for the Vikings.

    Some of the revenues that the Vikings are looking to increase with a new stadium deal–parking, concessions, suite sales–those are either unshared revenues, or areas where the Vikings will make more at a new stadium, even though they have to share a % with the other owners–would you rather keep 40% of $100 or 40% of $200?

    You don’t even have to be a stadium supporter to understand that. I support the stadium but I completely understand why others don’t.

    At this point it’s a matter of fairness. The team deserves a yes or a no–they’ve been asking for years, have been told to wait in line, and they have, without publicly threatening to move like teams in other cities have.

    And the community need to know what the consequences of a no are. And one of the possible consequences is that the team might move, whether it’s Wilf or another owner, because truth be told, the team (and the owner, and the rest of the NFL owners) will make more money in another location than the dome–whether Arden Hills, downtown, or Los Angeles.

  4. The Vikings have brought in more income to the state of Minnesota than all of the public money combined to build sports stadiums here. Spending money on a stadium is an investment – if it is a nice stadium, we have a shot at having the Super Bowl here (even the Metrodome hosted a Super Bowl), which would bring in about twice as much in one weekend than the public would have to contribute. Not to mention all the jobs created building and operating a new stadium.

  5. If the state of Minnesota says “no” to building a new stadium for the Vikings… unless by some miracle, Wilf sells the Vikings to either a major business owner or a chief executive officer of a major corporation in the state of Minnesota who is interested in buying the team and keeping them in Minnesota, then they will move to Los Angeles.

    I have a sinking feeling that this is not going to be a happy ending. Minnesota Politicians: Please prove me wrong and help to keep the Vikings in Minnesota.

  6. It also appears that there are significant financial problems with the proposed LA stadium deal which has no real plan for financing their stadium and would require naming rights, and private seat licenses to cover the cost of the Wilfes and 30% minority owners to pay for a 350 million dollar loan. On paper this looks good but as the article below points out, the Wilfes could do the same here to get the stadium done without having to sell a portion of the team and the NFL would not approve a move unless all the financials are figured out before the move. The current LA plan would require a move before any seat license or naming rights are made and that is risky considering the LA figures appear vastly opptimistic as well as the overall cost of building both the stadium and the buildings surrounding the stadium total only 800 million which economists say are vastly under estimated. The stadium site would most likely cost a minimum of 1.5 billion if it were to start today.

    What isn’t being talked about is these costs also will continue to inflate for a Minnesota stadium and there is little doubt that at some point the LA groups or another city will provide an opportunity for a team to move. The bottom line appears that the move to LA certainly isn’t probable anytime soon but if the state is going to have to eventually find a way to get a stadium deal pushed through then it makes no sense to wait. The bigger question is whether the state and/or counties are willing to lose the team because they are not willing to make decisions to agree to a proposal that may compromise their votes in upcoming elections.

    The Vikings are by far the most important sports team to this state and metro and the loss of the team would hurt the spirit of the electoral long term and as seen by the building of other stadiums in the area, the electoral will quickly forget about the additional taxes once the politicians actually make a decision.

  7. The potential economic benefits vs. the costs to the public can and have been argued both ways. Depending on how you assess the benefits, public investment in a stadium can potentially pay for itself in revenue increases.

    What has been missing from the debate is how the various stadium locations might affect the metro area in other ways. For example, the transportation infrastructure in DT Minneapolis is already in place. Building in Arden Hills would require yet more investment in suburban highways, highways that would then have to be plowed and maintained. I don’t think many folks would dispute that we have enough trouble maintaining the roads we already have.

    And what about private investment that has already happened in Minneapolis? Conservatives like to say government shouldn’t pick winners and losers, but part of the argument for a stadium is the ancillary development–restaurants, hotels, etc. If the stadium is moved to Arden Hills with public support, government is picking winners and losers. The losers will be people who invested money in land and businesses based on the current stadium location (remember, it is only 30 years old), and the winner will be those who already own or get control of land near the new stadium. Under the deals proposed so far, the list of winners is pretty short: Zygi Wilf. Remember, Wilf is a developer, so don’t think this aspect of the deal is lost on him. Indeed, it is one of the main drivers.

    Lastly, should we really be using public resources to fund disinvestment in the urban core? Suburban sprawl has real, documented costs to individuals, government, and society as a whole. And without a healthy urban core, I will guarantee that the future will not be bright for the Twin Cities or the rest of Minnesota. If you doubt me, take a trip to Detroit or Cleveland, and let me know how that is working out for them.

  8. #2 (markalis) talks about “billions” in tax revenue. I think we all know from where he pulled that number.

    Recent reports said the Metrodome has generated $340M of income tax since it opened. That’s about $10M a year. So the idea of “billions” in tax is a total fantasy.

    Pro-stadium people simply make up numbers and have zero — ZERO — clue about real economics.

  9. @ Rhea

    You may be able to find a ticket last minute and for so cheap and the reason that is is not because of the poor fan base or the product on the field it is a product of the poor facility the fans have to attend. Why would you want to spend that kind of money to watch a game in the dome. The atmosphere is great yes but the facility and everything involving the stadium is terrible which is why we need a new stadium. I will buy you season tickets Rhea if they put in a new stadium and you are still able to find tickets so cheap the week of the big game.

  10. Disco, you really need to take a basic finance class to better understand the impact of inflation and compounding. Real simple drop $25m per year into a spreadsheet and use the normal NFL salary increase of 8 -10 percent per year over 30 years and u get a billion in total. Or, to think simply in 1980 the metrodome was built for 60m and now taxes collected in one year would cover one third of the cost. Three year payback not bad. The power of money over a long period of time. And, that doesn’t even include other revenue and taxes from non Vikings events.

  11. When will these stupid sports fans realize thatifthis was a good investment, Zigy would pay for it himself. But it can’t be that good when he send an old state hack like Mondale to do his whining for him.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

 

Scroll To Top