THE METRODOME: HOME OF THE MINNESOTA VIKINGS
The Hubert H. Humphrey Metrodome, known simply as "the Metrodome,"
was once the home of the MLB Minnesota Twins and University of Minnesota’s
football team in addition to serving as the home field of the Vikings. Each organization has long felt
that the arena was past its prime, however:
the Twins vacated in 2010 and the University of Minnesota Golden Gophers
beat their retreat back to campus in 2009.
For their part, the Vikings have been pushing the state and Minneapolis
officials for a new stadium deal for years; the discussions have been heated at
times. While progress has certainly been
made (as of Thursday morning, the Vikings owners agreed to pony up $50 million more of the over $400 million they've agreed to pay and the deal had required approval by the Minnesota State Senate), there is a heightened sense of urgency as the
Vikings’ lease for the use of the Metrodome expired in 2011. With the future of the Vikings’ venue
undecided, talk of the Vikings being sold and/or relocated to another city—with Los Angeles being one
possibility—persists.
(By the way, see
if you can say “Minnesota State Senate” five times fast.)
STADIUM FINANCING BASICS
Generally speaking, there are three ways to finance a
stadium: (1) sale of bonds to the
public; (2) a combination of state and private money; and (3) paying entirely
with private funds. Let's examine some examples
of NFL stadiums built under each method:
All Public: Sale of Bonds
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| Hmm, I wonder why they called him "Curly"? |
Iconic Lambeau Field, situated only blocks from the shores
of Green Bay, has been home to the Packers since 1957. Originally named City Stadium, it was renamed
in 1965 to honor Curly Lambeau, the team’s founder, player and long-time head
coach. Lambeau Field was the first
stadium built just for an NFL franchise.
Under threat from the NFL to move the team to larger Milwaukee, the
citizens of Green Bay voted overwhelmingly (70%) for the issuance of bonds to
pay for the new stadium. The cost was
$960,000, and the bonds have been paid off since 1978. Isn’t that quaint?
The Packers have an ownership structure that is not only one
of its kind in the NFL, but is unique to all of professional sports in the U.S. It is a publicly owned nonprofit corporation
owned by the Green Bay community. Stocks
were first sold in 1923, and have been sold only five times over the teams
history when additional funding was needed; most recently for a renovation of
Lambeau Field that took place in the early 2000s. Under the team’s Articles of Incorporation, the
number of shares an individual may own is limited, and shares can neither be
sold nor traded, ensuring that no one person or entity can acquire controlling
interest in the team. In fact, the
Articles of Incorporation state that if the team is ever sold that the proceeds
from the sale, exclusive of expenses, will go to the Green Bay Packers
Foundation, a nonprofit that supports various charities and other institutions
in the state.
Not only is this form of ownership unique in the NFL, but it
can never be duplicated; the league forbids this type of structure, but the Packers
were grandfathered in when the rule went into effect.
Combination of Private
and Public Funding
Concocting a mix of public and private funds is the most
typical path to football stadium construction, yet it is by far the most
controversial to take—just like sausage, no one wants to know how the deals get
done. Just look at the situation in
Minnesota: nobody wants to see the Vikings
move, but the main sticking point is how much of the cost should be borne by
the public (through taxes and gambling revenues, which come with their own
issues) and how much the team should have to pony up.
Just how easy or difficult the process is will depend, in
part, on the tolerance of the community for public spending on the venture—which
is influenced, no doubt, by the passion that particular community has for its
team. To illustrate the point, let’s
look at two contrasting cases: Cowboys Stadium
in Arlington, Texas and Santa Clara Stadium in Santa Clara, California.
Cowboys Stadium (a.k.a. “The
House That Jerry Built”): Originally
budgeted for a construction cost of $650 million, the final tally when the
2,100-inch hi def jumbotron was plugged in was $1.15 billion. The retractable-roofed stadium is a temple to
gridiron glory generously fed by the passion the Dallas area has for its 'Boys. Aside from the largest hi def
screen in the world, the facility boasts more than 3,000 LCD displays
throughout the stadium. The area behind
the stands at each end zone is framed by 120-foot high glass doors that can be
opened; the tallest movable glass walls in the world. The stadium’s most interesting feature, in my
opinion, is the presence of luxury suites at field level. All of
the luxury suites have the latest amenities and plush surroundings, but these
suites are positioned eighteen inches below field level, to maximize the
feeling of being part of the action.
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| The view from a corner field level suite |
Once the site in Arlington, Texas was established (Dallas
County officials didn’t want to ask the taxpayers for approval to foot the bill
for $425 million public share), the local officials and residents jumped on
board relatively quickly. In July of
2004, Cowboys owner, Jerry Jones, announced that the team was in negotiations
with the city of Arlington; in August the city council voted unanimously to put
the necessary tax increase to the voters.
In November, the taxes to raise the city’s $325 million share were
approved by the voters. The taxes include increases of the city sales tax by 0.5%, the hotel occupancy tax by 2% and the car rental tax by 5%; bonds were also used for financing.
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| "When should I tell the city I lost the remote for the jumbotron?" |
The NFL itself also kicked in $150 million
through a loan program established to encourage the construction of new
stadiums throughout the league. At the
time, the program was called the “G-3” fund and the maximum loan amount was
capped at $150 million.* Fortunately for
the 49ers, this changed in 2011…
…You'll see why in my next post!
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