Monday, April 16, 2012

Vikings to Plot of Land East of Metrodome VII -- Charter or Charmin?

UPDATE:  events have overtaken this post. For the latest, click here.

When the Minneapolis City Council in 1997 passed a restriction to the city charter concerning the amount of money the city could spend for a new stadium, did it have any meaning? We may find out soon:

State lawmakers will mull Monday night whether to ax a provision in the Vikings stadium bill that effectively nullifies a key section of the Minneapolis Charter.

That could have major implications over whether the stadium will face a citywide vote, per a 1997 charter amendment. The Minneapolis city attorney argues that a referendum isn't legally necessary, but the bill also assures that by overriding the charter altogether.

It's a crucial question, because if the folks at the Capitol decide to let this slide, R. T. Rybak and the gang will ram things through. If not, there will be a vote and the stadium bill is effectively dead unless Rybak, Zygi Wilf and their allies can come up with an alternative funding source, and fast.

You have to wonder -- if the city charter doesn't mean anything when politicians say it doesn't, what was the 1997 vote all about? Was it merely meant to be symbolic? And if the city charter is a dead letter, why not repeal the whole thing? Just a guess -- if the charter is tossed aside, there is almost certainly going to be a court challenge.

Meanwhile, as I write, the hearing is underway and there's more ominous news for the Vikings, since once again Mike Opat, the majordomo of the Hennco board, isn't going to backstop the deal if the state's shaky financing portion of the bill comes a cropper:

Hennepin County Board Chair Mike Opat renewed his opposition to backing up any state revenue shortfalls for a Vikings stadium by tapping excess county sales tax revenues now funding the Minnesota Twins' Target Field.

In a strongly-worded letter sent Monday to Senate Majority Leader David Senjem and House Speaker Kurt Zellers, Opat said using the county's 0.15 percent sales tax for a Vikings stadium was "effectively hijacking county revenue."

The stadium plan has four funding backstops -- estimated to generate at least $9 million a year -- that might be used if the state's plan to authorize electronic pull tabs and bingo in Minnesota's bars and restaurants failed to generate at least $42 million needed each year to pay the state's $398 million share of a Vikings stadium. A 10 percent tax on stadium luxury suites would be the first backstop, and using Hennepin County's sales tax money would be a third.

Opat, no fool he, takes the Brezhnev Doctrine approach when it comes to money. What we have, we keep.

Meanwhile, you also have other representatives asking questions that stadium supporters would prefer not be asked:

The hearing began with a jolt when Rep. Dean Urdahl, R-Grove City, asked point blank: "Why should the state of Minnesota contribute to a stadium for a billionaire" owner?" Team officials were almost immediately peppered with questions asking why Vikings owner Zygi Wilf was not contributing more to the stadium, and how much the Vikings' value would grow with a new stadium.

"It's difficult to say," Steve Poppen, the team's chief financial officer, said of the team's future value.

Difficult, I suppose, because the Vikings would rather not say.

So, to sum up -- the city is promising money it may not be able to deliver, and the state is promising money that it may not be able to deliver. Other than that, this stadium deal is doing quite nicely, no?

You can tell that the Vikings are getting nervous, because Sid Hartman is now painting his latest nightmare scenario elsewhere in the Star Tribune:

While Zygi and Mark Wilf are more directly involved in management of the team, the other partners are investors who I'm sure weren't happy when recently there was a call for an additional $20 million investment, with each partner's payment based on his percentage of ownership.

The call was made because the club hasn't shown any type of profit the past couple of years and operating capital was needed.

So believe me when I report that the investors other than Zygi and Mark aren't going to keep coming up with money if the club continues to make those calls. And those calls are going to continue if the Vikings don't get a new stadium, which would generate the money they need to operate and compete and not rank at the bottom of the NFL in revenue.

If this pattern continues, Mr. Speaker of the House Kurt Zellers -- who refuses to get behind the stadium bill in the Legislature -- the Vikings will be sold and the buyer will pay a big price if he can move the team to Los Angeles, which I'm sure will happen if the Wilfs sell the team.

Now, we don't know that if the Vikings are actually losing money, because the Wilfs don't have to open their books. I'm glad Sid has his scapegoat, though. And of course there's no way that a local buyer wouldn't materialize, either, right? It's not possible to come up with a local ownership group. It could never happen, not in a million years, because we've never had local ownership of the Vikings. After all, the reason the Vikings operate out of Winter Park is because winter is the longest season in Minnesota, right? Oh, wait....

So what to make of all this?

  • If this deal were subject to the normal level of scrutiny that a billion dollar transaction faces, it wouldn't get past the laugh test.
  • The bottom line hasn't really changed at all -- dividing the funding among various government entities has always been a fiction. The deal, if it takes place, will be funded through bonding and in truth only the state would be able to float the bonds. And if the state has to pay back the bonds, that means state revenues will pay for the stadium. And the state gets its revenue, in the main, from taxes. No matter how it is disguised, you, as a taxpayer, will be paying for this stadium. If enough taxpayers are willing to do so, then the deal will go through. If not, it's dead.
  • In any event, Sid Hartman is right about one thing -- eventually Zygi Wilf and his partners will tire of the temporizing and they will find a way to cash in. So if you want to save the Vikings, don't look to the lege, or R. T. Rybak, or Mark Dayton, or Mike Opat. Look to the guys who have the money to buy out Zygi Wilf.

1 comment:

First Ringer said...

Hartman's economic arguments on a new stadium have always irked me.

Hartman et al refer to major events like a Super Bowl, NCAA Final Four and a college bowl game as though they are constant sources of income. In reality, they remain one-off scenarios that pump a relatively small (but decent) amount of money into the local economy.

It's one thing to land a Super Bowl and NCAA Final Four when your stadium cost only $68 million (as the Metrodome showed, hosting both events in 1991 $ 1992 respectively). It's entirely another when the facility runs over $1 billion. Unless we believe that we'll get the NFL & NCAA are just dying to come back to Minneapolis during February and March time and again.

We'd be far better off taking the state's share and simply dump it back into the metro area. But then isn't that what the DFL argues for every legislative session?