The Minnesota Vikings and the public owners of their future stadium in downtown Minneapolis have agreed on lease and financing terms.
The agreements approved Thursday night by the Minnesota Sports Facilities Authority (MSFA) ended months of public sparring between Gov. Mark Dayton and Vikings owners Mark and Zygi Wilf. In a resolution to the biggest sticking point, the team will pay for a chunk of its $477 million obligation for the project with personal seat licenses (PSLs), which Dayton had repeatedly criticized. The development agreement allows the Wilfs to raise $100 million from PSLs to cover construction costs.
The overall cost of the stadium is $975 million, $498 million of which is being paid by the state ($348 million) and the city of Minneapolis ($150 million).
Despite the authorization of PSLs in the stadium legislation he signed in 2012, Dayton made several public pronouncements criticizing their use. The level of acrimony escalated when Dayton called for a financial investigation of the Wilfs after a New Jersey judge found they had committed fraud in a 20-year-old real estate dispute. Last month, he sent a letter to MSFA Chair Michele Kelm-Helgen to “strongly urge” her to strike a development agreement that involved significant sums of money from the Wilfs’ personal finances in addition to revenues from seat licenses.
Speaking to reporters on Thursday at the Vikings current home, the Metrodome, Dayton said the $100 million is less than the $154 million that the Wilfs had originally sought.
“I accept that that’s part of professional sports, certainly part of professional football,” Dayton said. “We wouldn’t have an agreement here, we wouldn’t have a team staying here if we didn’t accede to that demand on the team’s part from the very beginning of the process with the Legislature.”
In addition to the PSL money, the Wilfs’ portion of the project will be covered by $200 million from the NFL and $177 million from either personal equity or borrowing. Of the $200 million from the NFL, $50 million is a direct grant, and $150 million is termed a loan — though it will be repaid from revenues that the team would have had to remit to the league in any case. The Vikings, meanwhile, will be able to capture several revenue streams at the stadium such as naming rights, advertising, game-day concessions and ticket sales. The development agreement doesn’t set ticket prices, and the naming rights for the stadium have yet to be announced by the team.
The development agreement actually allows as much as $125 million in PSLs. But $25 million will go toward providing interest-free three-year financing to purchasers.
Under the agreement, 75 percent of the seats in the 65,000-seat stadium will have PSLs. There will be a handful of seats that can be marketed for as much as $10,000, but the average price of a PSL will be $2,500. Kelm-Helgen said the average price would be $830 a year for people who take the three-year no-interest financing.
Dayton criticized the PSLs as barriers to attendance for fans of modest economic means. In unveiling the development, he and Kelm-Helgen said the PSL deal was more modest in scope than other recent stadium projects like San Francisco and Dallas. They labeled the deal as “Minnesotan” in nature.
“The fewer seats you do seat licenses, the more expensive those seat licenses become,” Kelm-Helgen said. “So we really weighed the pros and cons between having more seats, 75 percent, as covered by seat licenses. And having I think an average price of $2,500 is a Minnesota program. I think it makes it much more affordable.”
The lease agreement specifies the team will pay $8.5 million a year in rent and $1.5 million a year for capital improvements to the MSFA. That amounts to about $1 million per game for a 10-game season, and there’s a 3-percent annual inflationary increase. The team is on the hook for game-day costs.
The negotiations that produced the agreements have been handled by MSFA. On Thursday, some state legislators complained they had been left out of the process. Even though the Legislative Commission on Minnesota Sports Facilities was created to do oversight, the panel of House and Senate members got mired in a dispute over its leadership and went a long span of time without meeting. In the early afternoon on Thursday, just hours before the terms of the agreement were announced, the commission convened and took testimony from Kelm-Helgen. Rep. Joe Atkins, DFL-Inver Grove Heights, expressed displeasure that the members of the commission weren’t getting an advance view of the agreement.
“I’m not looking to slow things down any more than they already have been slowed down by the New Jersey lawsuit,” Atkins said. “But to sit here and not have an opportunity to ask about what’s going into the agreements and you’re going to act before we know what’s in the agreements, you can kind of understand my being ill at ease.”
There are several important dates in the next couple months for the stadium project. The NFL owners will meet on Tuesday in Washington, D.C., to approve the agreements. The Vikings are required to close on their financing by Nov. 1. The state will do its bond sale for the project in the middle of November.
In a couple weeks, the Mortenson construction firm, which was chosen to be the construction manager at risk, will present a guaranteed maximum price.
There are also a couple of pots of money that have been set aside in the case of cost overruns. Mortenson has a contingency fund for the project of $25 million. MSFA has a contingency fund of $37.5 million. The Vikings have put forward a privately financed advance of $13.1 million.