If the new Vikings' palace is actually the People's Stadium, as advertised, why will team owner Zygi Wilf pocket US Bank's $220 million over the next 25 years for its naming rights? After all, the Vikes are but the $15 million-a-year lessee. State taxpayers own the joint, as evidenced by the fact that it's immune from property taxes to the city of Minneapolis.
Wilf's taking of the naming rights cash for the publicly owned, maintained, and largely funded facility is but one of the insults that compose the deal that Minnesota politicians inked so our beloved football team wouldn't skip town. However, the fiscal narrative that's been sold to taxpayers would seem to be but a myth.
At the same time the monstrosity now reaching for the clouds on the outskirts of downtown Minneapolis won't cost Wilf a cent in the not-so-long haul, the smart money says the state and city will end up with a tab much larger than any budget ever promised by lawmakers of both political flavors.
Politicians and Vikings officials are quick to point out that the team's skin in the construction game now amounts to $551 million, or 52 percent of its total $1 billion-plus sticker price.
Forget for a moment what the People's Stadium is about to do for the valuation of the franchise. Last fall, Forbes Magazine pegged the team's value at $1.15 billion. Wilf bought it a decade ago for $600 million.
Published reports state the NFL has supplied the team with $200 million from the league's stadium construction fund, combining $150 million in loans with a $50 million grant. In addition to the $100 million the Vikes are said to generate in personal seat licenses, a conservative estimate for the largesse Wilf will be pulling down annually in ticket and luxury box revenues is $60 million. Add those figures, plus what US Bank will pay a year, almost $9 million, and even if the team's much-bragged about portion is close to the current figure, the billionaire real estate developer makes back his investment fast.
These numbers don't factor in the additional team revenues coming from the naming rights to the nearby "People's Plaza," commemorative brick sales, additional advertising, or game-day concession sales.
As for the little people who shoulder the lion's share of the deal, visors to block out the glare of a glorious future aren't needed.
Minnesota and Minneapolis taxpayers are on the construction cuff for a combined $498 million — the state $393 million and the city $150 million. In both cases, the public funds are being floated by taking on debt, not cash.
According to the Minnesota Management and Budget, $462 million in appropriation bonds were sold to pay for the state and city's construction portion. The borrowing came with a 4.27 percent interest rate. The longest terms are for 30 years. They're a combination of taxable and non-taxable bonds. Even at that interest rate, a $462 million debt becomes almost $488 million in just 12 months.
It all adds up to a triple whammy for Minnesotans. We get to pay the principal plus interest as well as the tax man.
Taxpayers will pony up no less than $9 million, but as much as $15.5 million annually to maintain and improve the building. Adrian Peterson gets to juke inside the tackles. The pressure is on Teddy Bridgewater to throw fades into the corners of the end zones. Wilf collects the proceeds from beer sales. But taxpayers have to pay for broken pipes, snow removal, and making the place even shinier by the time Super Bowl LII rolls into town in February 2018.
The fiscal hole for generations of Minneapolis taxpayers tunnels even deeper.
The city has gone into the red an additional $62 million through general obligation bonds for the construction of a parking ramp that's reserved for Vikings personnel and VIPs for up to 140 days a year — and at no cost to the purple and gold.
At 5 percent interest, the ramp will cost the public closer to $70 million before the first preseason game.
City dwellers are also paying for the nearby downtown park. It's been reported that its $20 million purchase price is being paid through financing. The people will fork out as much as $20 million to build the green space and will likely get stuck with annual operating costs topping out at $3 million. And here's the rub: The people can only use it a third of the time because the Vikes have first dibs.
What will the the stadium ultimately cost taxpayers? Take the over.
Consider the interest on the various bonds, almost certain cost overruns and revenue shortfalls, and a billion bucks isn't a out of the question.
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