The Minnesota Vikings’ most loyal fans will pay an average of $2,500 above the cost of a season ticket just to secure choice seats in the team’s new stadium, under an agreement approved Thursday by the public board overseeing the project.
Personal seat license fees, which are often used to help build or restore NFL stadiums, were part of lease and development agreements OK’d by the Minnesota Sports Facilities Authority, which is supervising construction of the $975 million multipurpose venue.
The team and authority agreed to attach a one-time fee to 75 percent of the seats in the 65,000-seat stadium, charging season-ticket holders anywhere from $500 to $10,000, depending on the seat. The remainder of the seats, including some held by season-ticket holders, would not carry such fees.
The agreements, which took months to complete, commit the Vikings to downtown Minneapolis for the next 30 years while spelling out details of how the team and the authority will split stadium operating costs and revenues.
The seat-license fees, however, were the most controversial piece of the contracts. They have drawn sharp criticism in the past from Gov. Mark Dayton, who boisterously campaigned for the venue he has called the “People’s Stadium.”
In a letter last month to Michele Kelm-Helgen, the authority chairwoman, Dayton urged the authority to keep fees to an “absolute minimum.”
“As far as I’m concerned, personally, $1 for a personal seat license is $1 too much,” he said Thursday.
About 80 percent of the seats where fees will apply will be charged $3,000 or less. Owners of the seats have up to three years to pay the fee without interest.
“There’s a lot more at the bottom end than the top end,” Kelm-Helgen said. She said Thursday that the team initially sought as much as $200 million in license fees.
The fees are projected to generate $100 million of the $477 million the Vikings are expected to pay for construction. The state and the city of Minneapolis are picking up the rest.
The team’s portion also includes a $150 million loan and a $50 million grant from the NFL. The rest will come from team cash and loans, Kelm-Helgen said.
“For most Minnesotans, this will look like a questionable deal because the economics of professional sports are questionable all over this country,” Dayton said, addressing the issue before the board meeting. “But we had to make a deal and we had to get the owners of the team to agree to a deal.
“I think this is a good deal,” he added. “And I think it’ll look a lot better in a year when thousands of Minnesotans are working on it.”
Such fees have been used by 17 of the NFL’s 32 franchises. Fees vary based on seat location and the team’s market.
They have generated more than $400 million at new stadiums in San Francisco and New York and more than $500 million in Dallas.
The authority’s approval of the agreements paves the way for construction to begin this fall.
Before that can happen, the builder — Mortenson Construction — must deliver a guaranteed maximum construction price. The team will close on its financing shortly thereafter, allowing the state to issue $498 million in bonds to finance the public portion of the project.
Kelm-Helgen said the groundbreaking is planned for mid-November. The team’s current home, the Metrodome, will be razed early next year after the current NFL season ends.
The Vikings will play the 2014 and 2015 seasons at the University of Minnesota’s TCF Bank Stadium. The new stadium will open by the 2016 season.
The lease agreement calls for the team to rent space for 30 years with an option to renew for up to an additional 20 years. The Vikings will pay the authority $8.5 million annually in rent and $1.5 million annually for capital improvements.
They also will pay all gameday expenses, with the authority capturing advertising, rental and club space revenue from all non-NFL events.
The Vikings, meanwhile, will get revenue from stadium and plaza naming rights, sponsorships and advertisements, and concessions and ticket sales. Naming rights alone could generate more than $5 million annually.
The team can play up to three home games outside the United States in the first 15 years of the agreement and up to three more in the 15 years after that.
A financial audit
The agreements also call for the team to pick up a good chunk of the cost of an extensive legal and financial audit of team owners Zygi, Mark and Leonard Wilf that was ordered by the authority after a New Jersey judge ruled in August that the Wilfs had defrauded business partners in a real estate deal.
Kelm-Helgen said the team has agreed to pay $219,000 of a $377,000 bill. The rest will come from the stadium project as part of its normal “due diligence” of the owners, she said.
Even before ground is broken, however, the stadium budget is strained.
“We’ve had to cut some things already out of the building,” Kelm-Helgen said, adding that in pricing the cost to build a first-class venue, some of the extras were more expensive than anticipated.
She said the Vikings have pledged to advance $13.1 million to cover the cost of “adding back in” items that have been cut.
“We want to make sure we have that first-class facility,” said Don Becker, who helped negotiate for the Vikings. “We know there are things that we want to include in this building and we consider them ‘must-haves.’ ”
Frills the team doesn’t want to lose: state-of-the-art video boards and premium space for clubs and areas where fans can congregate.
Shortly after the authority approved the agreements, more than a half dozen citizens addressed the board to criticize the deal. One, Minneapolis mayoral candidate Jeff Wagner, threw his shoes on the table in disgust, saying, “This is fricking ridiculous, man.”
Rep. Bob Barrett, R-Lindstrom, a longtime stadium financing critic, also delivered harsh words, saying the board approved the agreements before the public had a chance to comment.
“I think that should make Minnesotans very angry,” he said. “It makes me very angry.”