Tuesday, August 25, 2009

Some Realities on Vikings' Spending Habits and Translation for Stadium Issue

Since Zygi Wilf took control of the Minnesota Vikings in 2005, he has taken great pains to make public the team's willingness to spend nearly to the salary cap each year. This year, that spending has left the Vikings with approximately $6 million in salary cap space or just above the mid-point in the range of required to allowable spending under the league's collective bargaining agreement.

The Vikings have positioned their spending as an indication of the ownership's commitment to fielding a first-class team. That may or may not be the case. What certainly is the case, and what the team does not deny, is that the spending has been undertaken as part of the team's effort to secure a new publicly funded stadium.

While a new stadium would be a welcome sight for fans accustomed to the drab interior of the Metrodome, how that stadium should be funded is quite another matter. Ardent fans who pay no regard to tax issues and their cumulative effect simply argue that they want a new stadium no matter the cost and point to the Wilf's financial support of the team as justification enough for the State to support whatever request the team makes regarding a new stadium.

The question left unaddressed, however, is whether the justification of owner engagement truly is credible. And there is reason to be suspicious of this contention, or at least to be wary of its durability given a publicly funded stadium.

Although the Wilf's have spent nearly to the cap for four of the past five years, that spending has been much different than has been the spending of many other well-financed teams in the NFL. And that's largely the consequence of how salaries are attributed in the NFL.

Under each of Wilf's five years as owner of the Vikings, the team has spent money on free agents and re-signed veterans. But the team has done so by bringing most of the dollars forward. To the casual fan, that makes the Vikings look like front-runners in building a championship team. In reality, it is a reflection both of the youth on which the Vikings have relied since Wilf purchased the team, the lack of a big-ticket quarterback that would have required a long-term commitment, and the team's eschewing of contracts that pay out over a number of years.

Because the Vikings have front-loaded their players' contracts, they have realized a persistent cycle of bountiful free-agent cap space at the end of each season. That doesn't mean that the Vikings are breaking the bank to sign players, however. In fact, it means just the opposite.

While teams like Dallas, Washington, Chicago, and even Green Bay are spending large sums of money on players in both current-year dollars and future dollars, the Vikings are spending primarily in current-year dollars. Assuming a resumption of the CBA salary cap floor and ceiling after the current agreement expires, that approach eventually will catch up with the Vikings.

The point is not that the Vikings are cheap. They clearly are spending above the salary floor each year and spending more than many other teams in the NFL. But that spending has to be viewed in the context of current-year and future-year spending. Eventually, the Vikings will be forced to spend into the future or show their unwillingness to do so. The guess here is that the team is hoping that that point does not arrive until after a new stadium is funded.

All of which points to the folly of a publicly funded stadium that does not put team ownership on the hook for a significant amount of the bill. Even in a world in which public resources were limitless, such a decision would be foolhardy, at best, as it would provide the team with no incentive to continue to put a good team on the field. Currently, the Wilfs are spending because they need to give the impression that they are committed to fielding a championship-caliber team. That they are spending at such a high current-to-future dollars ratio suggests, however, that the spending is largely about creating an impression.

Supporting a new stadium--even a publicly funded stadium--does not require taking a leave of one's senses. Instead, it requires thoughtful consideration of the value to both sides of carrying or according debt. If Vikings' fans wish to have a competitive team playing in a publicly funded stadium, they would be best served supporting a funding measure that shares revenue streams based on the financial commitment of each funding party. At some point along that continuum, the team has both the financial wherewithal and economic incentive to put a competitive team on the field each season. The question for those considering a public-stadium measure is where that breaking point is and whether that point makes sense for the public.

Up Next: Vanilla is as Vanilla Does. Plus, line concerns.

4 comments:

Bruce said...

There is much talk that the lease for the Metrodome runs out in 2011 and if no deal is done, the team could move. What would stop the Wilf's from extending the lease for 2, 3 or 5 years? Why move the team if they could extend the lease, still play in the dome, and keep working on a deal? It would also show they mean it when they say they want to stay here. I do realize it is a powerful bargaining chip though.

vikes geek said...

Bruce,

There is no external force preventing the Vikings from extending their Metrodome lease. The decision essentially is theirs to make. The current lease expires after the 2011 season, however, and the Vikings have suggested that they cannot stay competitive given their near league-low stadium revenue streams. I've written on this in the past and likely will in the future; the Vikings primary source of revenue is the team's take of the league television rights agreements. That's true of all but two or three teams in the league. The CBA, as currently written, ensures that every team in the league has the revenue to field a team comparable to every other team in the league. When the Vikings claim that they cannot compete in the Metrodome, what they really mean is that they cannot make as much money in the Metrodome as most other teams make in their stadiums. Part of that is the Vikings' fault, part of that is the fault of an older stadium, and part of that is the fault of the Metro Sports Facilities Commission. But none of it means that the Vikings are without substantial revenues, even should they stay in the Metrodome. Building a new stadium, either publicly or self-funded, merely enriches the team more than the NFL already does.

vikes geek said...

Bruce,

I should note, as well, that there currently is no viable alternative for the Vikings. Were they to pack up their things and move today, they would have no place to move. And even if LA had a viable NFL stadium--which it currently does not--the NFL would never permit the Vikings to assume the most lucrative market in the league.

VG

Bruce said...

Yeah, I remember that stuff. Is it in the commission's interest though to extend a short-term lease to tide them over and give them a sweeter deal in regards to revenue? Are the suites, etc. still with Mike Lynn, etc?