State and local officials have been haggling for months over how many taxpayer dollars they're willing to pay for a new $975 million Minnesota Vikings football stadium, and where the money will come from.
State officials have pledged $400 million to the project, and the city of Minneapolis has offered another $150 million in upfront money.
But there hasn't been much discussion about the third leg of stadium financing: the $427 million that the Vikings owners have pledged to the project.
Team officials call that part of the deal "private money." But that doesn't mean team owner and East Coast developer Zygi Wilf will necessarily foot the bill.
Instead, it appears the Vikings will employ a hallmark of real estate deals, and do much of their financial lifting with other people's money.
The Vikings owners will use a mix of National Football League funds, revenue generated by the new stadium, and money paid by fans watching games in the stadium to finance the lion's share of their upfront contribution to the project.
LOAN FROM THE NFL
The biggest part of the team share will come from the NFL Stadium Financing program. Under the collective bargaining agreement signed by the league last fall, Vikings officials think they can secure $200 million in guaranteed financing through the league.
The team has to repay the loan, but it won't do so with its money.
Under NFL rules, the home and visiting teams for each game split ticket-related revenue 60 percent-40 percent. The League's financing program pledges the visiting team's share of premium "club" seat fees to service the league's stadium loan.
Without the loan, the Vikings don't get that money, so technically, it's not theirs. But they've given up the visiting team share in a dozen other NFL stadiums where they play now, so they can claim it, at least indirectly.
Team vice president Lester Bagley disputes the notion that it's not the Viking's money.
"If you look at the League loan, we should celebrate that instead of trying to say the Vikings don't have any skin in the game," Bagley said. "Whether we borrow it from the NFL or the bank, it's private money, and it must be guaranteed, will be guaranteed by the Vikings."
Another big chunk of money likely will come from naming rights to a new stadium, likely from a local or regional corporation.
That revenue is harder to figure, because the market is so small and specialized. Met Life signed a deal for the New Meadowlands stadium in New Jersey last summer for a reported $400 million over 25 years. By contrast, the new Cowboys Stadium in Texas still hasn't sold its naming rights.
NFL watchers, like Forbes Magazine editor Kurt Badenhausen, think the market for the NFL will look a lot like the deal the Twins struck with Target Corp. for naming rights to Target Field. The Twins and the company haven't disclosed the dollar figures, but Bloomberg Businessweek put the deal at $125 million over 25 years. That's about $5 million a year.
"You'll see typical deals in the NFL are in the neighborhood of $5 million to $6 million a year," Badenhausen said. "Lucas Oil is paying in the neighborhood of $6 million a year in Indianapolis, but that deal was done before the economic downturn. These deals are all very individual to their markets."
To make an apples-to-apples calculation, the naming rights have to be discounted to present value. A long-term deal like Target Field's, over 30 years -- the expected life of a Vikings stadium -- would be worth about $62 million up front.
That leaves the Vikings to come up with about $165 million, or about 40 percent of the team's pledge.
PERSONAL SEAT LICENSES
Some of that may come from "personal seat licenses" -- essentially titles to individual seats in a stadium, like purchasing a condominium in a high rise. Seat holders still have to buy tickets separately, like paying condo association dues.
In the NFL, money from those PSLs usually goes right from the fans to stadium construction. The deal in Minneapolis actually calls them "stadium builder licenses," rather than personal seat licenses.
Around the league, those licenses range from a few hundred dollars per seat at some stadiums, to a reported six figures in Dallas.
The Vikings won't say yet if they're actually going to sell PSLs, or how much they would charge for them. The Vikings' chief financial officer Steve Poppen testified at a Senate committee meeting in December 2011, where he hinted at the possibility of seat licenses.
He asked lawmakers not to compare the Vikings with the Cowboys or New York Giants, which charged top dollar for their seat licenses.
"There's only six teams that have done just a traditional PSL program," he said of the licensed seats. "Of those six teams, the average is $50 million [in revenue]."
The NFL teams that use seat licenses typically charge the fee for about 60 percent of the seats in their stadiums. In the case of the Vikings, fans would likely pay about $1,300 for a seat license.
HOW TO COVER THE REST
If the team gets the NFL loan, sells naming rights and charges for personal seat licenses according to these estimates, it would have about $115 million of the original $427 million pledge yet to pay. Compared to the upfront price tag on the stadium of $975 million, the amount left is about 12 cents on the dollar.
Vikings officials won't talk about how they'll raise the $115 million. The team could make a cash payment, but it isn't clear the Vikings owners have that kind of money available.
According to Forbes magazine, Vikings management has made what are known as "capital calls" to obtain money from other NFL owners every year the Wilfs have owned the team. The magazine estimates the cash infusions at about $20 million a year to pay for depreciation and debt, and expects them to continue. Forbes puts the Vikings' profit at only about $18 million a year.
Steve Poppen, the team's chief financial officer, gave lawmakers a list of other revenue-raising options when he testified on a stadium bill in December.
"Tickets, concessions, suites, sponsorships," Poppen said. "That model is consistent with the Twins model. It's consistent with most NFL teams in their stadium deals within the league."
Some of that money may already be in the equation, like premium seat revenue going towards the league loan.
But higher food and drink prices, in-stadium advertising and higher ticket prices are all potential revenue sources to fill out the Vikings stadium contribution.
If that gap is filled like the rest of the deal -- with borrowed money -- it may break down something like the NFL's own stadium financing program. Fitch Ratings analyst Chad Lewis said league loans are typically for 20 years, and the bonds carry an A rating.
With current interest rates, that's likely to run between $9 million and $10 million per year in debt service. To put it in fan-level terms, in a 65,000-seat stadium, that's about $14 extra per ticket.
More sponsorships, higher personal seat license prices and more suite revenue could also buy down that figure. Higher interest rates or cost overruns could drive the number up.
Asked about such a scenario, Vikings officials didn't quibble with the math, but did take issue with the premise.
Bagley, the team's vice president, said these calculations miss a key contribution to the deal, and that's a team to put on the field.
"Ownership paid $600 million for a team, without which there would be no opportunity for an NFL loan program, no opportunity for naming rights, and no opportunity to leverage this private contribution for a public asset," said Bagley. "Again, the new facility is going to be owned by the public, used by the public. And we are essentially requiring an NFL team to subsidize the high school and amateur sports and community events that are in there."
Bagley added that the team's contribution isn't limited to the price of building the stadium. As with owning a house, you have to figure in the ongoing costs for maintenance, taxes and the like.
The Vikings have committed to paying $13 million a year in operating and ongoing capital costs, which is about two-thirds of the annual expenses. About $8 million of that is straight rent, and the Vikings say that'll be the highest rent payment in the league.
The Vikings also take issue with calculating the value of the stadium itself. The team isn't paying 12 cents on the dollar because, Bagley contends, the Vikings don't get a dollar's worth out of the place.
"We would be fine with an open-air stadium. But the state leaders require a roof," Bagley said. "And the price tag goes up. The roof allows us to have high school sports and community events."
Bagley argues that only part of the cost of the new stadium is actually directly attributable to the team, and that's why the money shouldn't have to come from the team.
EDITOR'S NOTE: A previous version of this story incorrectly reported the average seat license cost at $500.