Mills Fleet Farm is paying to have its name and logo emblazoned on a new parking ramp beside U.S. Bank Stadium, but the public entities that paid to build the garage won’t see a dime from the deal.
All the money goes to the Minnesota Vikings.
The original stadium use agreement called for the team to split the naming rights with the state agency that owns the ramp and the stadium. But last year the Minnesota Sports Facilities Authority struck a new deal that allowed the Vikings to collect all the renaming revenue — an undisclosed amount — from the publicly owned ramp.
The authority paid for a share of the ramp’s construction. But the city of Minneapolis issued bonds to cover the majority of the garage’s $49 million cost — and is relying on parking revenue to pay back that debt.
“It might have been a nice gesture and helpful for the city if we could have used some of those revenues from those naming rights to help us pay back our debt,” City Council Member Cam Gordon said. “I mean if there was some revenue for that, I don’t know why we were excluded.”
The 2013 plan to split the naming revenue made the ramp unique from all other stadium naming opportunities, like the Hyundai and Delta Sky360 clubs, which benefit the Vikings. It was switched to 100 percent for the Vikings in March 2015.
Authority Chairwoman Michele Kelm-Helgen said the change came as the Vikings agreed to cover a number of unexpected stadium costs. Those included an extra $3 million to prepare a plaza in front of the stadium, $2 million for a new locker room and $1 million for retractable seating.
“When we essentially decided that we were not going to take that 50 percent of entitlement rights, it came within a much broader negotiation that we were having with the Vikings,” Kelm-Helgen said.
“Entitlement rights” for the ramp and clubs are similar to official naming rights, but she said they do not require the authority to call the facility by a new name. She said it would have been complex to split the revenue, since it would require untangling the ramp’s value from the broader package of stadium advertising Mills Fleet Farm negotiated with the Vikings.
The multifaceted nature of such deals makes it difficult to estimate what the Vikings are getting for the ramp rights, said E.J. Narcise, principal at Team Services LLC, a sports marketing firm.
“It’s impossible to say naming rights for the parking garage is [worth] X,” Narcise said. “It’s part of a bigger deal.”
Asked about the deal, Vikings Vice President Lester Bagley echoed Kelm-Helgen’s explanation that the naming rights were part of a larger negotiation. In addition to contributing to unexpected stadium costs, the team agreed to vacate their stadium offices to accommodate stadium operator SMG in March 2015. He declined to say how much the rights are worth.
Mills Fleet Farm, whose logos went up late this summer, declined to comment on the agreement.
Minneapolis issued $32.6 million in debt for the ramp, based on a term sheet approved by the City Council in 2013. The authority paid another $16.3 million from its stadium project funds, which are a mix of state, city and Vikings money.
Other perks for the team at the new Mills Fleet Farm ramp include 963 free spaces for “premium seating patrons” on game days and other Vikings events, as well as the right to sell advertising around the facility and an adjoining skyway.
The city issued debt to build both the ramp and a basic version of the adjacent Commons park. That is expected to be repaid with parking revenue from the Mills Fleet Farm facility and another underground ramp purchased by the authority.
But nothing is certain: e-mails and financial projections released in 2014 illustrated conflicting opinions behind the scenes on how well the ramps would perform.
Developer Ryan Cos. has agreed to cover shortfalls for at least the first 10 years, until the ramps twice turn a $4 million profit. Parking from new office and apartment tenants in the area, as well as events, are needed to generate enough money to cover the city’s obligations after that.
Paul Ostrow, a frequent critic of the stadium-area public expenses, said giving up the naming revenue effectively raises the public’s exposure on the project. He suggested the money should instead be put in escrow.
“Those dollars should protect the property taxpayer from shortfalls on those bonds,” Ostrow said.
‘Surprise to us’
The city is seeing some direct benefit from the ramp.
Ryan, which built and now manages the ramp, will pay the city more than $3 million if it follows through on a plan to erect a proposed office building at the facility. It is currently looking for an anchor tenant.
Council Member Jacob Frey, who represents the area, said the proceeds from that development were among the benefits secured in 2013, before he joined the council. “We could have negotiated a one-third interest [in naming revenue] and did not,” Frey said.
Tony Barranco, senior vice president of Ryan, said they did not know initially that the ramp would be renamed.
“The Authority and the Team did reach out and [asked] for some input, but it was a surprise to us,” Barranco said. “We weren’t expecting it when it happened.”
Barranco said Ryan’s primary concern since the signage was installed has been emphasizing that the ramp is open to the public.
“While I’m hopeful that most will understand that it’s not parking for a Fleet Farm store, there was concern about if out-of-towners come in and are worried that that’s not a general parking ramp,” Barranco said.
Fleet Farm isn’t the first corporation to slap its name on a stadium parking ramp. Fans heading to see the Orlando Magic at the Amway Center park at Geico Garage.