Four Track Process to Follow to Build Twin City Stadiums
Submitted to the Minnesota Legislature Stadium Task Force:
Steve Sviggum, House Speaker, and Roger D. Moe, Senate Majority Leader
A copy has been provided to: Roy Terwilliger, Larry Fitzgerald, John Marty, David Jennings, Sarah Psick, Victor Moore, Tom Hanson
Peter J. Jessen
July 23, 2001
1. Develop and implement the first of four tracks: GETTING STARTED
a. Help others too: Help the Twins, Gophers, and Metrodome solve their problem too (as Zig Ziglar would say, get what you want by helping others get what they want). Why gophers? It is important to include the Gophers because they are a part of the sports stadium equation. But they need their own, separate stadium. And with the majority of legislators being UM grads, they will get their stadium.
b. Pointing out the empirical obvious: that the market has already been proven for all four: it is already there in terms of the tickets sold and fan support already for each team, and the non-sporting events at the Metrodome, not to mention the 1.5 million international visitors to the Mall of America alone, the visitors/vacationers from the U.S., and the day trippers from the surrounding area.
c . Demonstrate how all four sites can be integrated (new stadiums for the Vikings, Twins, Gophers, and the existing Metrodome) into the regional sports-entertainment-communications-real estate industries to the betterment of the cities, the teams, and these industries, resulting in $2-4 billion additional dollars for the state economy that would otherwise not be there.
d. Develop a Red Carpet for Vikes and Red Carpet for Twins campaigns, to let Red and Carl know their teams are loved and wanted, and to approach them with the same attentiveness as the Olympics, Final Four, Superbowl, etc., not to curry their favor as boot licks but to let them know we understand their situation and are willing to join in partnership to enable them to continue to do business in the Twin Cities and Minnesota so that both the teams and the cities prosper.
e. Propose to all of the stakeholders that a David Jennings type Minnesota conversation a group to be convened to work out points above and below, especially a-b-c above (either by the legislature or by the teams or by an agreed 3rd party), using any one of a number of conflict resolution/stakeholder consensus building models, which would include representatives of the legislature, representatives of the teams involved (Vikings, Twins, Gophers), representatives of the Sports Commission managing the Metrodome, selected citizen groups of both Minneapolis and St. Paul, including www.vikingsstadium.com, retired professional football and baseball players who have gone on to post-play prominence, as well as members appointed by the Governor, by the Mayors of Minneapolis and St. Paul, by the University of Minnesota President, with two input panels, one comprised of academic and corporate economists, and one comprised with open forum citizen input. Have a draft outline of how to proceed should one be asked for.
f. Provide existing back up studies for the conversation group from the NFL, the Twin Cities, and other sources to that show the actual benefits to communities: the $1 billion in direct revenues and the $1 billion in indirect revenues each year, per team.
g. Do the same regarding other benefits to the Cities: jobs, housing, payrolls, expanded tourism, etc., following business models.
h. Provide a financing sourcing chart to begin the conversation
(1) $50 million by the owner
(2) $25-50 million by the public for infrastructure (i.e., state costs: land and site prep, streets and sewers, etc., for each stadium)
(3) $100-200 million by bonds backed by ticket and parking revenues
(4) $225 million***** from lease bonds backed by state income tax on players and coaches salaries and the salaries of visiting players and
(5) $50-100 million plus from anchors & others in non-stadium part of complex
(6) $25-50 million from interest of monies waiting to be spent
(7) $250-450 million by investors
(8) 725 million 1.150 billion TOTAL
Note: also weight the suggestions received at www.vikingsstadium.com as well as those from other citizen groups and individuals.
2. Develop and implement the second of four tracks: LEGISLATION
a. Help the legislature see how they can work with all four entities to provide only the basics, i.e., minimal public funding help for each (infrastructure sewers and streets).
b. Agree to permanent taxation revenue source legislation regarding revenue bonds: use an agreed amount (conservatively figured), backed by (1) the income taxes from both players and coaches of each professional team, (2) the income taxes onnon-resident visiting players and coaches of each out-of-state visiting professional team, and (3) an agreed upon amount of the ticket and parking revenue.
c. Agree to state safety net legislation regarding an escrow account to back the investment side: Agree to put the amount needed to complete the project minus the amount represented by the revenue bonds of #2.b. above, in escrow (an amount estimated to be $200 million, although the escrow amount could be for the entire amount, if necessary), to be returned to the owners after at least that amount (more is anticipated) is raised through the infusion of investors (with the DreamWorks or other model).
d. Agree to no holding the bag legislation ready to relieve the state of any obligation regarding any future black hole of future tax payer obligations, that the business model of #3 below is what gives the agreement substance.
e. Agree to private-public partnerships as part of the stadium complex, to include revenue sharing with the state of the entities. This would include moderate housing on the periphery of the site, for workers of the complex, from which the state would receive a fixed percentage of a fixed amount of overall revenue as an additional state revenue source; conference/exhibition hall to work in conjunction with the citys other entities, which could include extensions of museums, zoos, training and educational facilities, etc. (in other words, what are some of the must haves of the legislature in this regard that could become a part of this complex?).
f. Owners agree to front the $5 million need to put the whole pre-construction phase package together (the first of three owner contributions).
g. Agree to front the $50 million non-materials costs needed to get the bricks and mortars in place (which would be the second of three owner contributions).
3. Develop and implement the third of four tracks: PRIVATE FUNDING
a. Develop an investment vehicle to cover the rest above and beyond the revenue bonds (the third and final contribution of the owner).
b. The recommended investment model is that of DreamWorks: which is weighted for success, as DreamWorks keeps 65% of the profits, a time-tested model proven to satisfactory to all parties concerned, given the non-material benefits as well. DreamWorks raised $2 billion this way, avoiding the crushing burden of debt. The teams could do the same, which could also be used to eliminate existing debt and prevent any black hole expenses.
c. To further prevent any potential obligation black hole, adopt an entertainment model of operations and use as many of the 40 ways of 26 revenue categories (among the many known and already in existence) in order to ensure profitability and continuous cash flow year round, each also generating more tax revenues.
i. This would include an agreement by the clubs to develop and obtain the financing for a shopping experience location and an office tower complex to be included on the site, to be privately financed by teams in agreements with anchors and tenants.
ii. This would include moderate housing on the periphery of the site, with first residence options to be for workers of the complex.
iii. This would include in stadium sources as ticket sales, permanent seat licenses, luxury and club boxes and suites, parking, signage, concessions, League shared revenues, as well as use of stadiums in off season
iv. This would include other sources as well: multi-media recording and broadcasting studio facilities, partnerships for usage in the complex, co-branding, etc.
d. Develop a navigational web portal site to cover all information: include linkages, web stickers (like those for voting), a navigational portal function to other relevant and related information, including citizen input, an Email strategy, including samples of support forms to send to the legislature, and, once ground breaking begins, a streaming movie of progress, updated weekly (the Walt Disney model of showing on TV, weekly, the progress in the construction of Disneyland.
e. Develop a communications strateg in order to keep the campaign on track, by being prepared to confront high profile attacks on the plan or any individuals involved with it for both the general press and in particular for specific individuals or groups in Minnesota, the NFL, and elsewhere, including what marketing/public relations experts call a Godzilla tape and print piece featuring well known people from around the country and state endorsing the plan and the participants, including players.
4. Develop and implement the fourth of four tracks: NFL/PLAYERS
a. Work to change from management union model to senior executive model for compensation
b. Employ a 12 part compensation structure that works to the advantage of both the owner and the players, including conditional and unconditional parts, centered on regular salary signing bonuses that are linked to golden handcuffs and golden parachutes, profits pools, investor side stock option pool, ESOPs, retirement plans, personal affairs assistance/management, tangible and intangible perks for player families, on-going year-round internal recruitment, and an information system (newsletter, Email, etc.)