The Stadium Issue
With 74% of the public saying they are opposed to using public funding for a new stadium, why doesn't this issue go away? Some suspect the Vikings' high-powered lobbyists and Zygi Wilf's money have something to do with it. Believe it or not, neither is really a factor for most legislators I know. The chief reason is much simpler and way more powerful. Fear. If the Vikings pack their bags and leave when their lease ends after the 2011 season, legislators are afraid pro-stadium voters will remember at election time and stadium opponents will not.
So what's the answer? Here's one possibility, but it requires looking at the transaction simply as a landlord-tenant issue.
We own a building - the Metrodome - in which the lease of our primary tenant - the Vikings - is up in a few months. Revenues from the building's other tenants are not enough to keep the building open, and keeping the primary tenant requires either major renovations of the existing building or a new building altogether. The tenant is willing to chip in $420 million toward the cost, which is unusual in most landlord-tenant situations, but that's because the tenant expects to realize additional revenues and approximately a $400 million increase in valuation, according to Forbes, if there is a new building in which to operate. As a result of having the primary tenant in place, we as the landlord will collect at least $32 million annually, in the form of rent, income taxes from the tenant's employees and sales taxes, a figure which is expected to double over 20 years.
This could support a 20-year construction loan of approximately $550 million, which is enough to renovate the Metrodome or build a new stadium. Assuming the tenant could be signed to a 40-year lease, something in which they they have expressed an interest, this would provide a significant, positive revenue stream of $65-100 million in Years 21-40 of the lease.