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Sports facilities commission hears stadium deal details

Mike Mullen//October 24, 2013

Sports facilities commission hears stadium deal details

Mike Mullen//October 24, 2013

Vikings vice president Lester Bagley said the team's $10 million "rent" is the highest in the NFL. (Staff photo: Peter Bartz-Gallagher.)
Vikings vice president Lester Bagley said the team’s $10 million “rent” is the highest in the NFL. (Staff photo: Peter Bartz-Gallagher.)

The panel of lawmakers tasked with supervising progress on the Minnesota Vikings stadium met Thursday afternoon to hear details about the newly signed agreement between the team and the state. The hearing was the first chance for Minnesota Sports Facilities Authority (MSFA) chair Michele Kelm-Helgen to give legislators a walk-through of the details on the $975 million public-private project.

In testimony to the Legislative Commission on Minnesota Sports Facilities, Kelm-Helgen presented an outline of the construction and lease contracts the MSFA and team signed in early October. Under that deal, the Vikings are on the hook for $477 million, while the state ($348 million) and City of Minneapolis ($150 million) are obligated to pick up the remainder of the tab.

The terms of the lease deal commit the two sides to 30 years of joint operation on the downtown Minneapolis stadium and include the option of four five-year renewals, which could give the stadium a lifespan of up to 50 years. Under the agreement, the Vikings will contribute an annual use fee of $8.5 million to the MSFA, and another yearly contribution of $1.5 million toward capital enhancements. Both figures are scheduled to increase at a rate of 3.5 percent each year to keep pace with inflation.

Kelm-Helgen testified that the $10 million annual payments will allow the state to subsidize other public uses. The stadium is expected to be used heavily by high school and college sports teams, as well as other public events. The combined amounts give the authority and the state a “guaranteed” revenue stream for years to come, Kelm-Helgen said.

Rep. Joe Atkins, DFL-Inver Grove Heights, brought up the likelihood that the two sides might someday renegotiate the terms of the lease, something which he said has happened “multiple times” with the Metrodome. In that event, Atkins said, the fact that the team’s revenue from the stadium is kept private could create an unfair advantage for the team over the public.

“What I suspect is, I think the team is going to make a lot of money, and do really well down the road,” Atkins said. “And then we may want to go back and renegotiate.”

In response, Minnesota Vikings vice president Lester Bagley said only that the agreement to keep the organization’s finances private was inscribed in the original legislation.

“We exchanged a $477 million guaranteed commitment upfront, and $10 million on an annual basis,” said Bagley, who added that the team’s “rent” contribution is the highest in the National Football League.

Kelm-Helgen said the next major step in the process would come with the offer from Mortenson Construction, which will serve as “construction manager at-risk,” meaning the company assumes the cost of any overruns. Kelm-Helgen said the guaranteed maximum price would conform to the $975 million amount agreed to by both sides.

Following that offer, November will be a busy period for the project. The team will complete its financing deal early in the month, and MSFA is anticipating its own bond sale weeks later. Also set for November is the official stadium groundbreaking.

“Right now,” Kelm-Helgen said, “we are on budget and on schedule, and that’s where we plan to stay.”

The meeting was only the third for the legislative commission, but its second during the month of October, and co-chair Sen. Bobby Joe Champion, DFL-Minneapolis, said the commission would begin to meet on a monthly basis in the future. The next hearing will be held Nov. 7. During that hearing, the commission might consider a provision to allow the Xcel Energy Center and the Target Center to someday join the MSFA, in an attempt to prevent the publicly funded facilities from competing against each other for concerts and other events.

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