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An artist's rendering of the new Minnesota Vikings stadium.

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Pulltabs fall short: The plan to pay for part of the construction with gambling revenue didn’t work out.

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Taxpayer resentment: Stadium critics have voice their objections: “Help poor kids, not millionaires.”

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Wilfs court case: The Wilfs’ legal woes have raised questions about the state’s due diligence.

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Citizens have expressed their dismay with the Vikings stadium deal in many ways, including these posters taped to the front gate at the Governor’s Residence. State trooper Brent Messer took a look.

DAVID JOLES • djoles@startribune.com,

Sept. 27: Doubts, controversy persist over stadium deal

  • Article by: Richard Meryhew
  • Star Tribune
  • September 27, 2013 - 6:55 AM

 

Morrie Lanning couldn’t wait for the legislative session to end.

It was May 2012 and after months of contentious debate over financing a new Vikings stadium, the politicians and team struck a deal that seemed, after years of lobbying, to finally put the issue to rest.

“In the final stages, I said many times ‘I want to see us decide this and get it over with and get it off the front page,’ ” said Lanning, the House author of the ­stadium bill who retired from the Legislature that spring. “I thought it was done.”

Not even close.

Sixteen months after the Vikings and state political leaders signed off on a $975 million partnership to build a new downtown Minneapolis stadium, and just days before development agreements on the project are expected to be finalized, the noise and controversy surrounding the high-profile deal linger.

A plan to fund part of construction with revenues from untested electronic gambling games was officially declared a bust last week. Potentially hefty fees for stadium seat licenses have again angered the governor and threaten to alienate loyal season-ticket holders.

When a New Jersey judge Monday ordered team owners Zygi, Mark and Leonard Wilf to pay $84.5 million in damages to former business partners who sued them for fraud over a 1980s real estate deal, some critics pounced again, raising more questions about the state’s due diligence of the owners and their legal troubles at the time the stadium deal was cut last year.

As the Vikings and Minnesota Sports Facilities Authority, the public board overseeing construction, continue to negotiate final lease and development agreements, stadium critics to Gov. Mark Dayton, the project’s lead cheerleader, have weighed in, hoping to reshape pieces of the deal in the final hours before the ­shovels hit the dirt and construction begins. On Thursday, Friday’s authority meeting to approve both was postponed at the last minute and rescheduled for next week.

“It’s late,” said Rep. Bob Barrett, R-Lindstrom. “But it’s not too late.”

A ‘better deal’

When Dayton, who promoted the project as the “People’s Stadium,” last week pushed the Wilfs to put more of their own money into the deal rather than pass some construction costs to season-ticket holders in the form of seat license fees, it served as a final attempt to eke out a slightly more attractive deal for taxpayers and fans.

But it also renewed concerns among some stadium skeptics that the state got outplayed by the team and the Wilfs in 2012.

Barrett, a longtime critic, last week urged Dayton to lobby even harder, demanding that the Wilfs increase their equity stake to reduce taxpayer exposure by nearly $250 million.

As it stands, the team is responsible for $477 million of the stadium’s $975 million construction cost. The state and the city of Minneapolis will pay the rest.

“People who understand and know the business of football could have negotiated a better deal,” Barrett said.

Stephen Ross, associate professor of sport management at the University of Minnesota, said that at the time the deal was reached, “the Vikings and NFL were kind of strong-arming” legislators by implying that the franchise could be sold or moved.

“From the bottom of their hearts from a business perspective, the Wilfs and NFL did not want to move the Vikings,” Ross said. “It’s just too big of a market and rivalry in history that goes along with it. They didn’t want to do it. And I think if the state really pushed back and said ‘no, no, no, we’re not going to contribute any more than $200 million,’ I think the Wilfs would have put more money in.”

Lanning, R-Moorhead, who was involved in many late-night negotiating sessions in the spring of 2012, said it’s easy now to second guess.

At the time of the financing negotiations, he said there was legitimate concern that the Wilfs could sell the team if a new stadium wasn’t built. He also points out that the state pressed the owners for an additional $50 million late in the game, ensuring that the deal was cut, the stadium would get built and the team would remain in the Twin Cities for another generation.

“The reality is … if we had pressed for more than that, very likely the team would have been sold, and we wouldn’t have a team in Minnesota, and we wouldn’t have been able to rebuild a facility that all the other folks would be able to use,” Lanning said.

But even the former Moorhead mayor has been surprised by the continued controversy.

“I certainly knew there were going to be continuing issues, but I did not anticipate that certain issues would turn into big issues here,” he said.

Projections for electronic pulltab revenues, coming from gaming manufacturers, were so flawed and off the mark that the state, after much controversy, gave up on e-games as a source of funding months ago and turned to alternative sources. By last week, a year after the games were introduced, state officials had determined that they would not have contributed a dime to the project.

Even Dayton admitted failure, calling the funding strategy “ill-advised.”

When the Vikings surveyed season-ticket holders last fall to gauge their willingness to pay thousands of dollars in license fees to reserve the best seats, Dayton blew up, threatening in a letter to the Wilfs to undo the deal if they passed on a substantial share of the construction costs to the fans.

He later softened, but not until the team gave assurances that the pricing wouldn’t mirror the hefty fees paid in such larger markets as San Francisco or New York.

Dayton spoke out on the issue again last week, however, expressing concerns that the Vikings owners could generate so muc h money from seat licenses, naming rights and other sponsorships that they might not have to invest much of their own money in the deal.

He urged the stadium authority, which sells the licenses but retains the team as marketing and selling agent, to keep the fees “at an absolute minimum.”

“Where they set the limits for these seat licenses is going to have a huge impact on how affordable it is for Minnesotans,” Dayton said later. “A personal seat license is an add-on to the cost of the ticket. Every additional dollar takes away from the affordability for most Minnesotans.”

The acrimony between the governor and the Wilfs comes as Dayton gears up for re-election in 2014.

Barrett and others, meanwhile, wonder why more background information about the Wilfs’ legal troubles in New Jersey wasn’t known or made public 18 months ago.

Lanning said negotiators were aware of the lawsuit, which spanned two decades and initially resulted in the Wilfs prevailing in court before the case was appealed, but “no one raised it as a major issue along the way.

“He was not in trouble with the NFL,” Lanning said of Zygi Wilf, the team’s principal owner. “No matter how we may have felt about the owner’s business record, he was the owner, and we had to deal with it.”

More noise to come?

Tom Stinson, an economist at the University of Minnesota and the former state economist, said part of what’s playing out now is a sense of buyer’s remorse.

“I think there’s always a question, whenever you buy a car or buy a house or anything where there is a negotiated price, you’re always left with the question in the back of your mind ‘Could I have done better?’ ” Stinson said. “Could we have done better? Should we have insisted on this rather than that? That’s just part of the bargaining process.”

Prof. Robert Boland of New York University’s Tisch Center for Sports Management, said that to a certain extent, what’s happened with the Minnesota stadium project was inevitable. When it comes to public-private financing, he said, there are always disputes or problems involving the site, land acquisition, financing or cost overruns.

“Your set of problems are the same as everybody else’s,” Boland said. “You may have had a few more of them, but the range of them is absolutely a sign of the times.”

Although stadium groundbreaking is tentatively scheduled for early November, the political noise and skepticism probably won’t subside anytime soon.

The lease and development agreements still being negotiated will spell out terms of the team’s lease, as well as determine how much revenue the authority and team receive from advertising and sponsorships. They also will establish the terms for the personal seat license fees — the sum charged to season-ticket holders on top of the price of a ticket for the right to reserve a seat. Those fees, which can range on average from as little as $1,000 a seat to more than $10,000, count toward the team’s portion of financing.

It’s unclear why the agreements, which have been negotiated for months, were delayed this week. Stadium officials already were worried about the tight construction schedule.

“Once a deal is done and it’s built, the opposition tends to melt away,” Lanning said. “But until that happens and this moves forward and is built, the opposition will continue and people will pick at it and second guess it.”

 

Staff Writer Jim Ragsdale contributed to this report

Richard Meryhew • 612-673-4425





 

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