GGU MBA Corporate Finance Final Project Term Paper

1. NATIONAL
LOS ANGELES VIKINGS RELOCATION
FOOTBALL
LEAGUE PROPOSAL

2. Table of Contents
Table of Contents ....................................................................................................................................... 1
I. Overview and Proposal Hypothesis: .................................................................................................... 2
1.1 Historical Facts and Figures of the National Football League............................................. 2
Snapshot of Statistical Facts and Figures in the NFL (through 2011) ....................................... 5
2.1 Report Objective and Hypothesis ............................................................................................ 6
3.1 Minnesota Vikings Franchise Historical Background and Current Position ...................... 8
II. Geographical Observation and Comparison: Facts and Statistical Information ..................... 11
1.1 Minneapolis Metropolitan Region versus Los Angeles Region: ........................................ 11
II. Feasibility Analysis: Metrics, Formulas, and Measurements ........................................................ 14
III. Stadium Comparative Analysis:........................................................................................................ 20
1.1 City of Minneapolis New Stadium Proposal ......................................................................... 20
Restating the Position in Favor of Minneapolis ........................................................................... 20
2.1 City of Los Angeles New Stadium Proposal ........................................................................ 25
Restating the Position in Favor of Los Angeles:.......................................................................... 25
IV. Closing Argument and Final Recommendation: ...................................................................... 29
Citations: .................................................................................................................................................... 31
Appendages: ............................................................................................................................................. 32

3. I. Overview and Proposal Hypothesis:
1.1 Historical Facts and Figures of the National Football League
It is fourth and goal and a football length from scoring and winning the
National Football League’s (NFL) Super Bowl, the ultimate prize in all of professional
sports in America in the first half of the 21st Century. Only a few seconds remain to
determine whether weeks and months of
preparation leading up to this moment was worth
the investment in time and money. Unfortunately,
time is an adversary and each tick of the clock
before the final decision is made and the play is
called and engaged only exacerbate the insatiable
anticipation of finally achieving monumental
success and thus solidifying the team’s efforts and
Photo 1: Courtesy of the National Football League
its final output as distinguishable and legitimate. If
you score, you will be the toast and talk of the town, positioned nicely to sustain
longevity and potentially long-run profitability as a viable entity in the industry and
the marketplace.
For one of the League’s most storied and venerable franchises, it is fourth
and goal and the moment of truth, a decisive point in a crucial time, to determine
whether they will be able to maximize profit on an annual basis in their current
market while remaining viable in the local community or if a fresh start in a new
environment is in store to provide the franchise with a better financial and economic
opportunity is at its doorstep. The crux of this issue is at the center of debate for

4. many of the League’s teams who are close to or on the verge of losing money and,
more importantly, their fan base. This dilemma is confusing to most insiders within
the League and its entertainment industry and to those who are rabid admirers of the
sport because the NFL, since the inception of its revenue sharing system in 1961
under former League Commissioner Pete Rozelle, has experienced exponential
growth and popularity more than any other professional sports’ league throughout
the period.
The NFL was founded in 1922 and comprised of eight teams. By 1960,
following its merger with the American Football League (AFL), the NFL grow to 13
teams. Today, the League has expanded to
32 teams, represented in every region in the
contiguous United States, with a slight
exception to the Mountain West region
composed of Montana, Wyoming, Utah, and
the Dakotas and the plains of the Midwest, Image 1: Courtesy of the National Football League
notably in states such as Nebraska, Iowa, and Oklahoma.
League attendance has remained on average at a steady clip over the past
25 years at roughly 61,000 fans per game, with games played on a 16-game
schedule for a majority for those years. (The previous seasons were designed
around 14-game schedule.) In a short-run cycle, this estimates to an average
equivalent to 90% capacity. Currently, the spirited popularity of the League is
running at 94% capacity and in order to maintain this attendance capacity rate,
marginal increases from stadium-generated revenue in ticket, concession, parking,

5. and club paraphernalia and memorabilia prices must be sustain on year-to-year
basis.
At the end of fiscal year 2010, the NFL generate over $8 billion in revenue
from gate receipts, luxury boxes and suites, concessions, merchandise and apparel
license fees, stadium naming rights, trademark licensing, multi-year network, cable,
and satellite television and online media contracts, offseason appearance fees and
special programming, and advertising and special promotions.
The crown jewel that is at the heart of the enormous success of the League
and serves as the catalyst behind its phenomenal growth is the franchise stadium.
During a span of 14 years from 1990 to 2004, 19 new stadiums were built for
combined total of $6.2 billion. Prior to 1990,
many League stadiums were financed
proportionately with approximately 80% in public
funding and 20 % in private funding. Yet, since
1990, a dramatic shift occurred in stadium
Photo 2: Courtesy of Jet Kingdom.com (2003-
financing that saw 2011) a significant increase in private
backing that literally split this bifurcated funding matrix in half: public funding at 54%
versus private funding at 46%.
However, it should also be noted that there are a number of newer fan-
friendly, corporate-centric arenas within last five years that are driven by private
contributions almost exclusively with 100% private financing in some cases. Public
funding is derived from various sources in the form of state and local bond initiatives,
state, county, and city sales and use taxes, excise and liquor taxes, tolls, rental, and

6. parking fee premiums, and other less intrusive forms of tax codes and initiatives. In
contrast, private funding for NFL stadiums is obtained through partnership alliances
from individual contributors who provide financing by direct cash, market securities
and other investment instruments such as short- and long-term bonds, or the sale of
capital assets in real estate and property.
Snapshot of Statistical Facts and Figures in the NFL (through 2011)
NFL Financials (selected listing):
 Total Annual Revenue – 2010 $8,742,998,000
 Average Ticket Price (up 4% from 2009) $75
 NFL Profit to Average Total Costs 7%
 Industry Profit to Average Total Costs 8.5%
 Broadcasting Fees through 2011 $8 Billion
 Satellite Fees $4 Billion
 Super Bowl Total Ad Revenue Over $400 Million
 Super Bowl 30 Sec Ad Average Fee $3 Million
 Average Fan Costs (FCI) per Year: Account for 4
average-priced tickets, 2 small draft beers, 4 small
soft drinks, 4 regular-size hotdogs, parking for 1 $420 per Family of Four
vehicle, 2 game programs, and 2 of the least-
expensive adult-size adjustable caps
 Player Average Salary < $2.0 Million
 Player Wages as a Percentage of Total Revenue 52.5%
 Stadium Rent Costs as a Percentage of Total
4%
Revenue
 Average Depreciation Costs of Franchise Assets
as a Total Percentage of Revenue (%): excluding 6%
player’s contracts
 Utility Costs for Stadium Use as a Percentage of
5%
Total Revenue (%)
 Percentage of Franchise Total Revenue
12.5%
Generated from Endorsements
 2009 Advertising Spending: NFL, NFL.Com Shop
$139,486,000
Website, NFL.Com Fantasy Association, NFL.Com
NFL Statistical Facts (selected listing):
 2010 NFL Regular Season Attendance Total 16,570,000
 2010 Average Attendance per Game 64,978
 US Viewership of 2010 Super Bowl 100 Million
 Average Percentage of All US Households to
42%
Watch Super Bowl since 2000
 Sports Industry Expected Annual Growth Rate 3.5%
 Average NFL Viewer Earnings per Year (highest
$62,200
of all four major sports)
 Gender Viewership Ratio: Male to Female 4 to 1
 Ethnic Viewership Percentage Breakdown:
75%; 70%; 65%
Whites, Blacks, and Latinos

7. 2.1 Report Objective and Hypothesis
The National Football League (NFL) is classified as a private organization
composed of 32 independently privately-owned and operated franchises. The head
of the League is run by a League’s commissioner who is elected by majority vote
from the League’s owners.
These owners are not only responsible for daily business operations of their
respective franchises (teams) but are also the main drivers and facilitators behind
the construction of the stadium facilities their teams perform. Depending largely on
the initial capital structure of stadium funding at its inception, many of the League’s
stadiums are funded solely by private or public finance or either by a mixed
combination of the two. The source
components that generate the funding
needed for building a stadium is derived
from various financial and investments
streams in the form of state and local
taxes, public or private bond initiatives,
Photo 3: Courtesy of New Ballpark.org (2011)
and a percentage of sales revenue
obtained through merchandise, gate receipts, concessions, parking and rental fees,
advertisement, national and local media, and other minor avenues.
Although the popularity of the sport has grown rapidly, becoming the nation’s
number one sports league out of four professional sports’ leagues – the others being
MLB, NBA, and NHL, a few of the League’s legacy franchises in smaller markets
have struggled to compete with other more profitable franchises in the League

8. primarily due to economic stagnation and antiquated stadiums that failed to stimulate
the local economy’s existing fan base and create new growth opportunities in fan
attendance. When a macro-economic crisis occurs, the sports and entertainment
industry become greatly affected, because revenue is mostly generated by individual
and corporate discretionary income. Therefore, if a venerable franchise is
established in a metropolitan area where low growth rates in population, business,
and personal income along with unfavorable rankings in lifestyle and quality of life
become the norm, it could find financial sustainability difficult to maintain. One of the
League’s highly celebrated and respected franchises has recently found itself at the
crux of this dilemma and currently is considering ways to increase revenue and
profitability of their organization and is the subject of this feasibility report: The
Minnesota Vikings.
The purpose of this report analysis is to assess and evaluate the current
financial and economic health of the
Minnesota Vikings franchise in the City of
Minnesota by using a preferred set of
financial concepts and principles, models,
formulas, metrics, and equations used in
corporate finance to determine whether a
proposal to build a new stadium in the
Image 2: Courtesy of the Minnesota Vikings and the
Minneapolis region National Football League will create long-run
growth for the organization and its surrounding community or whether a motion to
relocate to another national market with substantially better expected growth

9. potential within a newly constructed stadium: For the purpose of this report, the
preferred competing market that will be the basis of this argument is the City of Los
Angeles.
Thus, the report hypothesis is confirmed and stated as follows: Should the
City of Los Angeles build a new football-exclusive stadium to accommodate the
relocation efforts of the NFL’s Minnesota Vikings franchise from the City of
Minneapolis?
3.1 Minnesota Vikings Franchise Historical Background and Current Position
Known around the League as the “Purple People Eaters,” the Minnesota
Vikings began as an expansion franchise – the League’s 14th - which was founded
by an ownership team of businessmen lead by Bill Boyer, H.P. Skoglund, Max
Winters, Ole Haugsrud, and Bernie Ridder in 1960 but yet started its first full season
a year later in the Fall of 1961 as a part of the NFL’s National Football Conference
(NFC). Due to the strong Scandinavian influence in the metropolitan area of
Minnesota, the team was officially
awarded the name of the Vikings
by the League.
Fomented by an
aggressive marketing campaign
during the team’s inaugural Photo 4: Courtesy of NowPublic.com (2007)
season, the franchise sold on
average nearly 26,000 tickets with an average capacity peaking at 85% for its home
games at a stadium named the Metropolitan stadium, a stadium with a maximum

10. capacity of 40,800 seats. A few years later, seating capacity at Met Stadium - a
name commonly referred to by the locals – was expanded to 47,900.
For several years leading up to the mid ‘80s, the Minnesota franchise had
been one of the League’s most storied and successful franchises, the first team in
League history to make an unprecedented four Super Bowl appearances in four
straight years. Since many of the games were being broadcast nationally, these
early achievements attracted fans across the country and created a fan base that
still remains one of the League’s largest. What soon precipitated from the growing
popularity of the franchise in 1979 was a new stadium initiative to capitalize on
increased demand. Two years following a much-anticipated ground-breaking
ceremony, the Hubert H, Humphrey Metrodome was finally constructed and became
the team’s new home to the present.
For the purpose of this report, we will not cover in in depth detail the history of
the franchise and its days under the roof of this uniquely inflatable geodesic dome
design, but will focus on the main point of addressing the feasibility study to
determine the viability of the organization’s continued presence in the city of
Minneapolis. The primary argument does not solely rests on a new stadium initiative
but rather the inclusion of other direct and indirect factors – social, economic, and
environmental - that support new finance projects such as the existence of a stadium
and the professional organization (s) it serves.

11. For in the case of the proposal to retain the franchise in its current host’s city,
it should be noted that one of the critical factors – environmental - that is part of the
entire evaluation process had recently made its negative impact on the decision-
making process for franchise, the League, and many of external investors who are
fans but, more importantly, equity partners in the overall financial success and health
of the organization. Additional capital expenditures were required for structural
improvements to the indoor, air-
supported roof of the Hubert H.
Humphrey Metrodome,
caused by heavy accumulation of
snowfall that was slightly abnormal
Photo 5: Courtesy of Deadspin.com
for a short period but was not
atypical of average seasonal winter conditions for the region throughout the course
of any given year.
Therefore, it is reasonable to surmise that this among the other factors
offered in this report will leverage the decision-making process in one direction or
the other. We hope to prove our argument and succinctly and precisely make the
case for the relevance of those factors in the assessment process. And based on
final analyzes we will offer our recommendation that is substantiated on those
premises.
We will first provide a breakdown of preferred factors that are used as
assumptions in many of the statistical and data analyzes, to establish the premise
for the basis of our assessment, evaluation, and final analysis and

12. recommendations. These assumptions have been carefully identified, investigated,
and selected for relevance purity, a typical methodological strategy employed by
financial analysts in the marketplace is to calculate the present value and evaluate
financial position of a company, or entity, for comparative analysis purposes. This
procedure and financial tactic used by decision makers and their team of analysts
worldwide is in line with a similar standardized financial assessment and analytical
toolkit used in this report.
The first series of items to discuss in our breakdown analysis are facts and
statistical matters concerning geography, demographics, climate, transportation, and
cost of living between the two proposed regions: Minneapolis and Los Angeles. The
following section gives you a statistical breakdown of these component factors.
II. Geographical Observation and Comparison: Facts and Statistical Information
1.1 Minneapolis Metropolitan Region versus Los Angeles Region:
Demographic, Economic, Climate, Transportation, Cost of Living Statistics
% of or % of or
Above/Below Los Above/Below
Minneapolis, National Angeles National
Economic Impact Component Variables MN Benchmark , CA Benchmark
Demographics:
*Population 385,058 0.13% 3,958,25 1.29%
1
*Pop. Change 0.63% -1383% 7.17% -30%
*Median Age 35.7 -2.52% 35.1 -4.27%
*Household Size 2.24 -15.18% 2.88 10.42%

13. Demographic, Economic, Climate, Transportation, Cost of Living Statistics
Male Population
50.91% 3.14% 50.02% 1.42%
Female Population 49.09% -3.26% 49.98% -1.42%
Married Population 28.84% -63.49% 35.54% -32.67%
Single Population 71.16% 25.73% 64.46% 18.01%
Economic
Unemployment Rate 6.10% -49% 13.40% 32%
Recent Job Growth 0.61% 120% -0.59% 80%
Future Job Growth 35.12% 11% 25.42% -23%
Sales Taxes 7.15% 5% 8.25% 18%
Income Taxes 7.85% 20% 9.30% 33%
Income per Cap. $28,016 3% $25,274 -7%
Household Income $47,043 -13% $47,387 -12%
POPULATION BY OCCUPATION
Management, Business, and 14.62% 6% 11.58% -19%
Financial
Professional 31.18% 27% 20.60% -10%
Service 16.93% 14% 15.84% 8%
Sales and Office 24.17% -4% 23.36% -8%
Farming, Fishing, and Forestry 0.15% -353% 0.18% -278%
Construction, Extraction, and 4.39% -113% 7.75% -21%
Maintenance
Production, Transportation, 13.03% -22% 14.49% -9%
and Material Moving
Climate
*Rainfall (in.) 34.2 -7% 18.1 -102%
*Snowfall (in.) 54.5 54% 0 0%
*Precipitation Days 101 1% 26 -285%
*Sunny Days 198 -4% 284 28%
*Avg. July High 87 1% 77 -12%
*Avg. Jan. Low 6.3 -225% 49.8 59%

14. Demographic, Economic, Climate, Transportation, Cost of Living Statistics
Transportation
Commute Time 23.6 -17% 32.2 14%
COMMUTE MODE
*Auto (alone) 59.94% -27% 66.53% -14%
*Carpool 9.92% -8% 11.27% 5%
*Mass Transit 13.99% 65% 11.30% 57%
Work at Home 4.19% 3% 5.07% 20%
COMMUTE TIME TO WORK
Commute Less Than 15 min. 26.96% -6% 18.55% -54%
Commute 15 to 29 min. 49.55% 27% 34.47% -5%
Commute 30 to 44 min. 16.47% -20% 26.42% 25%
Commute 45 to 59 min. 3.36% -123% 8.95% 16%
Commute greater than 60 min. 3.66% -121% 11.61% 30%
Cost of Living
Overall 108 7% 147 32%
Food 109 8% 108 7%
Utilities 97 -3% 109 8%
Miscellaneous 114 12% 106 6%
Favorable Index: <100
Unfavorable Index: >100
*The asterisk indicates key assumptions factored into the
report.
2.1 Minneapolis Region vs. Los Angeles: Other qualifying variables not
included:
 Ethnicity and Racial Composite:
The City of Minneapolis racial groups are 60.34% of people are white,
19.04% are black, 6.47% are Asian, 2.17% are Native American, and
11.99% claim 'Other'. 12.70% of the people in Minneapolis, MN, claim
Hispanic ethnicity (meaning 87.30% are non-Hispanic).
In contrast, Los Angeles racial groups are 45.67% of people are white,
9.48% are black, 10.48% are Asian, 0.80% are Native American, and
33.57% claim 'Other'. 50.74% of the people in Los Angeles, CA, claim
Hispanic ethnicity (meaning 49.26% are non-Hispanic).

15.  Average Viewers by Ethnic Groups:
Figure 40: Professional sports viewership, by race/Hispanic origin, February 2011
Total White Black Asian Hispanic
Base: Adults aged 18+ with access to 2000 1495 300 100 300
the internet
% % % % %
Any viewership 85 85 88 84 83
Football 70 70 75 51 65
Baseball 53 55 49 46 52
Basketball 43 38 71 41 44
Hockey 26 28 21 16 20
Average # of sports followed 3.2 3.1 4 2.8 3.1
Source: Mintel
 Education Comparison:
Education Minneapolis, MN Los Angeles
2 yr. College Grad. 6.22% 5.86%
4 yr. College Grad. 25.73% 18.78%
Graduate Degrees 15.67% 10.00%
High School Grads. 87.06% 72.06%
The information indicated above represents many of the assumptions that factor
into the feasibility study report and sets the foundation for interpreting our various
mathematical analyzes to help formulate and arrive to our final argument and
conclusion, and recommendation, which we elaborate in detail in the ensuing section.
II. Feasibility Analysis: Metrics, Formulas, and Measurements
Before executing the feasibility analysis, it is important to gain insight on the
general success of the League and its financial performance record during a specific
period of 5-10 years. By analyzing KPIs (key performance indicators) such as League’s

16. revenue streams, attendances, player salaries - which makes up a substantial portion of
all costs (51%) on average per squad - and other variable costs notably associated with
concessions, parking, stadium and corporate facilities maintenance, and fixed costs
such as stadium and corporate utility, leasing, some corporate administrative salaries
that are unlevered by multiple bonus package incentives as one would find in players
multi-year contracts, developing a credible feasibility analysis report for the Minnesota
Vikings franchise to determine which market is more conducive to long-run profitability
and sustainability will be achieved.
The table below on the following page is a scaled-down sample version of some
KPIs generated by the League that function both as an exploratory and comprehensive
feasibility study analysis. With all things being relatively equal, since the primary source
of revenue generated is predicated on gate receipts and various forms of PSLs and
luxury boxes, etc., the most crucial key performance indicator must be “city population”
because of the obvious implications involved in creating a sufficient fan base and
demand for the product on the field, the main catalyst behind revenue sales..
Immediately following this chart is a regression analysis report. As mentioned in
the previous paragraph, the KPI that this report will focus its research between the two
proposal regional sites regards variables urban areas where populations tend to be a
driving force behind mounting a fan base large enough to provide an annual ROI and a
steady marginally steady growth rate that is inflation adjusted. However, for the integrity
of this report, it must be noted that there is only one outlier in the League for which
urban population size does not impact the success of the franchise and that is
demonstrated in the League’s reigning Super Bowl champions, the Green bay Packers,

17. a team in which the population of its metropolitan area is roughly 300,000 inhabitants,
as compared to an average of approximately 1.5 million.
You will discover in this report that the population size is a clear determinant and
the independent variable designated when feasibility analysis is conducted by
engineering design firms who are usually the facilitators behind new stadium proposals
and possible relocation agendas. The old adage states that success on the field puts
“butts in the seats.”
A Sampling of NFL Stadiums and Selected Variables used In Regression Analysis
Total Annual
Revenue
Metropolitan Average (weighted) for
Team and Stadium Area Team Value ($ in Stadium Total Ticket Home Games:
Stadium Name Owner Population billions) Costs Price 2006-2010
Dallas
Cowboys:
Cowboys City of
Stadium Arlington 6,300,000 $1,850,000,000 $1,200,000,000 $110 $403,692,300
Washington
Redskins:
FedEx Field Team 5,358,100 $1,555,000,000 $251,000,000 $79 $341,509,890
New England
Patriots:
Gillette
Stadium Team 4,522,900 $1,401,000,000 $325,000,000 $118 $405,660,400
New York New
Giants: MetLife Meadowlands
Stadium Stadium Co. 19,006,800 $1,300,000,000 $1,400,000,000 $112 $441,428,960
Green Bay
Packers: City of Green
Lambeau Field Bay 307,000 $1,089,000,000 $259,000,000 $72 $254,669,760
Denver
Broncos: Metropolitan
Sports Football
Authority Field Stadium
at Mile High District 2,506,600 $1,046,000,000 $401,000,000 $77 $291,438,070
San Francisco
49ers:
Candlestick City of San
Park Francisco 4,274,500 $991,000,000 $25,000,000 $76 $260,797,040
Minnesota Metropolitan
Vikings: Hubert Sports
H. Humphrey Authority
Metrodome Commission 3,229,900 $796,000,000 $55,000,000 $76 $236,213,320

18. Sample Linear Regression Chart:
Y Variable = Population Total for NFL Metro Regions: Variables of significance are
total Team Value and total Stadium Costs/Price, which was expected.
SUMMARY
OUTPUT
Regression
Statistics
Multiple R 0.839169968
R Square 0.704206235
Adjusted R 0.660384936
Square
Standard 2497472.346
Error
Observations 32
ANOVA
Df SS MS F Significance
F
Regression 4 4.00937E+14 1.00234E+14 16.06995 7.58E-07
Residual 27 1.68409E+14 6.23737E+12
Total 31 5.69346E+14
Standard Upper Lower Upper
Coefficients Error t Stat P-value Lower 95% 95% 95.0% 95.0%
-
Intercept 877917.9484 3075741.855 0.28543291 0.777491 -5432983 7188819 5432983 7188819
Team Value - -
($ in billions) 0.007394966 0.003179404 2.325896978 0.027778 -0.01392 -0.00087 -0.01392 -0.00087
Stadium
Total Costs 0.007414349 0.001909151 3.883583436 0.000602 0.003497 0.011332 0.003497 0.011332
Average - -
Ticket Price 14311.31906 88075.78212 0.162488697 0.872131 -195028 166405.3 -195028 166405.3
Total Annual
Revenue
(weighted)
for Home
Games:
2006-2010 0.036169336 0.023633726 1.530411895 0.137548 -0.01232 0.084662 -0.01232 0.084662
The independent variable (population) in the regression analysis chart shows that
both multiple regression and regression squared is comfortably 70 percent or higher,
meaning that there is a strong relationship, or correlation, between the independent
variable and dependent variables. If we test our hypothesis, our null hypothesis, based
on this scenario, that states that any marginal increase or decrease in population does
not have any effect on the selected dependent variable in the above short-form
example, then we can test the validity of this hypothesis in one way by evaluating the
regression charts p-value results. Since the level of significance is set at 5 percent, if

19. the p-value is lower than the LOC (level of confidence) at 5 percent, then the null
hypothesis must not be accepted.
The chart above indicates that of the four dependent variables, only one has a p-
value less than the level of significance and that is reflected in the relationship between
total stadium cost and population, which is understandable because of the one-time fee,
fixed-charge effect and the inflationary pricing of stadiums not reflected in the constant
year-to-year growth rate and variations incurred from annual increases in prices.
The data plot below illustrates the relational trends between the independent
variable, metropolitan population, and the dependent variables. As mentioned before
there are few outliers indicated in the regression analysis because of the disparity of
spread from two of the US largest cities, New York and Chicago.
NFL Franchise Regression Analysis
25000000
20000000
per Franchise
15000000
Population
10000000 y = 111162x - 1E+06 Series1
R² = 0.5782
5000000 Linear (Series1)
0
0 20 40 60 80 100 120
-5000000
Axis Title
The standard coefficient at Y-intercept stands at 877,917 rounded. The slope
below (111,162) serves as a very important statistic because it pertains to the value
place on population size being the key non-exclusive factor that affects revenue,
attendance, and the team’s overall fan base, the lifeblood and most sustainable

20. component in the entire feasibility analysis. For each unit increase of 111,162 in
population growth, three of the four dependent variables are positively affected.
Now that the form and outline of the feasibility report purviews from both
historical context and technical description, the heart of the report analysis is primed
and ready for full disclosure. In reiteration, the primary objective, due to the nature of
this course assignment and degree program, is to demonstrate in this term paper a
comprehensive understanding of corporate finance concepts and applications by
deploying them in a practical and useful manner that illustrates sufficient competency of
materials discussed in the course. (Please refer the appendage section at the end
for a detailed description of various corporate finance methodologies and
analytical tools used in our analysis.)
Again, it must be restated that National Football League, also known as the
“League,” and its membered body of 32 independent franchises (referred to as “teams”)
are by law called “private entities” and as a result are not subject to federal mandates
set by the US Securities & Exchange Commission, a federal institution responsible for
all US businesses who have filed an initial public offering and are categorize as a
“public’ company. So, the gathering of important financial data and information that is
easily obtained for public companies ‘s 10-Q and 10-K quarterly and annual reports is
much more difficult but not impossible.
Where the lack of sufficient information and data that could be used in this
feasibility study is evident, this problem and other such-similar problems were rectified
adequately by paralleled analysis against a closely-related industry. Statistical
information used from these industries involved general growth rates in revenue from

21. sales generated by ticket and concessions operations, merchandise and memorabilia,
stadium leasing and other capital asset revenue enhancers and capital asset
investments, advertising, special licensing fees, radio and television contract fees,
expected rate of return on debt instruments for stadium funding and several others that
added to the total value for the franchise. These and other minor and less accessible
factors formulated a portfolio of basic assumptions that were used in the report.
We begin our analysis in the following two sections, first for the City of
Minneapolis followed by the City of Los Angeles. Immediately following our
comparative analysis will be a section describing our final conclusion and
recommendation.
III. Stadium Comparative Analysis:
1.1 City of Minneapolis New Stadium Proposal
Restating the Position in Favor of Minneapolis
Since it has already been well-established in previous paragraphs the history
and current economic and social positions of the Minnesota Vikings franchise in the
city of Minneapolis, it is important now to take a closer look at the team’s current
new Ramsey County at Arlen Hills stadium proposal and some of the key economic
indicators that will shed light on the City’s probability to retain its team for the
foreseeable future. As in the case of LA’s stadium proposal, the Minneapolis Sports
Facilities Commission for the City requested the services of two local firms to
conduct two separate independent studies on the overall economic impact by RSM
McGladney, Inc. and the Convention Sports and Leisure Company.

22. Although these studies are complete, some of the basic assumptions, as
often the case with impact study report, are subjective for the most part. Therefore,
existing forecast data and information were slightly adjusted on a conservative basis
to reflect current market conditions, as noted earlier. There are three areas that will
be analyzed in this section to how those adjustments differ from studies generated
by the firms mentioned and how those newer outcomes might be subjugated to
negative and recessive influences in the marketplace.
For instance, the CSL study reports the NPV of annual ongoing operations
(under a 30-yr stadium lease agreement) and jobs for the local economy projects
marginally lower inflation rates, which will affect long-term forecasting. Now, let’s
take a look at the NPV of four specific economic drivers outlined in the report and
adjusted to an annual inflation rate of 3.5 percent which will contribute to the local
economy long-run. The nominal discount rate of 8.675% was used, a rate that is
reasonable and should remain in the adjustment. The formula used for the NPV
(inflation adjusted) is NPV = [Cash Flow x (Inflation Rate)] ÷ Nominal Discount Rate
= [CF x (1+ri)t] ÷ [(1+rreal) x (1+Inflation Rate) – 1]t. Now, let’s analyze and compare
the figures in the table below.
Table 1 Sampling: Direct Spending - Adjusted NPV (30-Year Lease Horizon)
Interest rate 5% Real Inflation rate 0.035 $150,178,500.00
Nominal Inflation rate 0.08675
Year 0 1 2 3
CFs $145,100,000 $150,178,500 $155,434,748 $160,874,964
FV of CFs $0.00 $138,190,476.19 $131,609,977.32 $125,342,835.55
NFV $2,375,642,644

23. Table 2: Annual Economic and Jobs - Adjusted NPV (30-Year Lease Horizon)
Estimated Annual Economic and Jobs Impact Generated in Minnesota by On-Going Operations
NPV @ 5% Discount Rate
Adjusted 30-Year NPV (@ 8.675%
Year 1 30-Year NPV
nominal discount rate)
Direct Spending $145,100,000 $3,664,000,000 $2,407,969,349
Total Output $274,500,000 $6,933,000,000 $4,494,237,807
Personal Earnings $105,700,000 $2,687,000,000 $1,730,568,074
Employment 3,400 n/a
Before offering a comparative analysis on tax revenue generated by a multitude
of on-going operations activities at the Hubert H. Humphrey Metrodome, reviewing the
current tax bracket will help to understand which areas taxes are levied against. Table
3 below shows tax rates for both the State of Minnesota local municipalities.
Table 3: State and Local Tax
State Taxes: City Taxes:
• 6.875 percent sales tax • 0.5 percent sales tax (Mpls. and St. Paul)
• 2.5 percent liquor tax • 3.0 percent liquor tax (Minneapolis)
• Personal income tax • 3.0 percent entertainment tax (Minneapolis)
• 10.0 percent admissions tax • 3.0 percent restaurant tax (Minneapolis)
• 3.0 percent hotel tax (Minneapolis)
• 6.0 percent hotel tax (St. Paul)
Hennepin County Taxes: Other Taxes:
• 0.15 percent sales tax • 0.25 percent five-county transit sales tax
As noted previously, today’s stadium funding is often comprised of a mixture of
capital investments from long-term bonds, investment securities, private investments,
to, as in a majority of the cases, state and local tax revenue. The new proposed
Metrodome stadium at Arlen Hills is estimated to cost $1.057 billion. Unlike the average
residential home or commercial building, yet similar to players’ contracts, NFL stadiums
are considered depreciable assets and thus all depreciable assumptions must be
included in the analysis where the combination of leasing payments along with all tax
revenue and operating expense will attribute to NPV. Below is an estimated NPV 30-

24. Year comparison of all tax revenue collected for the Arlen Hills’ stadium between CSL’s
impact study and the adjustable NPV proposed in this report.
Estimated Fiscal Impacts
Tax Type Year 1 30-Year NPV Adjustable 30-
Year NPV
State Taxes
Sales $10,067,000 $254,300,000 $164,821,464
Personal Income 12,380,000 327,700,000 $202,690,944
Liquor 253,000 6,100,000 $4,142,230
Total State Tax Revenues $22,700,000 $588,100,000 $371,654,638
5-County Transit Sales Tax $325,000 $8,200,000 $5,321,047
Hennepin County Sales Tax $165,000 $4,200,000 $2,701,454
City Taxes
Sales $531,000 $13,400,000 $8,693,771
Restaurant 375,000 9,200,000 $6,139,669
Hotel 321,000 7,900,000 $5,255,557
Entertainment 1,716,000 44,000,000 $28,095,126
Liquor 255,000 6,200,000 $4,174,975
Total City Tax Revenues $3,198,000 $80,700,000 $52,359,098
Total Tax Revenues $26,388,000 $681,200,000 $432,036,238
Admissions Tax $5,813,000 $149,300,000 $95,173,058
Total Including Admissions $32,201,000 $830,500,000 $527,209,296
Tax
Tax Assumptions:
 NPV of estimated tax revenues over the first 30 years of stadium operations assuming a 5
percent discount rate.
 Represents a combination of taxes assessed by cities in which stadium-related spending is
assumed to take place.
 Includes the 0.375 percent sale tax increase effective July 1, 2009 due to the passage of the
Clean Water, Wildlife, Cultural Heritage and Natural Areas Amendment.
The initial cash contribution from the Minnesota Vikings applied to the new
stadium cost is $407 million (37% of all project costs). The Team is also expected to
contribute $14 million annually towards operating expenditure at our adjustable NPV of
$229,214,314. With all things being equal, thus far the adjustable NPV amount that will

25. be attributed to annual team-generated activities plus initial cash contribution equals
$1,163,423,610. Other revenue-generating activities such as interest payment from
bonds and other securities and miscellaneous items in the form of tax increases will
marginally or substantially add to this total. Under these aforementioned assumptions,
the current adjustable NPV gross profit totals $106,423,610.
Even though original cash flow figures have been adjusted with a higher inflation
rate, because of the immense popularity of the National Football League, you can see
from our proposed results that the League, in general, and the Minnesota Vikings’
franchise specifically, in spite recessive downturns, are capable of making a handsome
profit. Yet, as this paper referenced earlier regarding KPIs, the most crucial component
in driving revenue for an NFL franchise is largely attributed to regional population size
and population growth, the primary impetus behind sustaining an existing fan base and
obtaining newly acquired fanatics for the Team worldwide.
So, how does the City of Minneapolis new stadium initiative compare and
compete with the City of Los Angeles proposal to persuade this venerable franchise to
uproot and relocate nearly 3,000 miles away to a region that is diametrically opposite in
several ways from one to another? What are some of the benefits offered by
Minneapolis’ competitor that is convincing enough to support a franchise when the city
failed miserably on two separate occasions in recent memory? Are there logistical
attractions – some newly established – in the LA region that can assure the Franchise if
it elects to relocate that things are different this time around? To address these and
other questions, we now turn to the City of Los Angeles’ new stadium proposal at the
Grand Crossing location to better answer these and other questions.

26. 2.1 City of Los Angeles New Stadium Proposal
Restating the Position in Favor of Los Angeles:
NFL fans regularly arrive at games wearing apparel purchased prior to the
event, pay entrance fees, and freely order food and memorabilia for three hours in
an attempt to capture the atmosphere forever. The issue, however, is that the most
recently built NFL stadium, Cowboys Stadium, cost $1.15 billion, which would result
in a tax increase that Governor Mark Dayton of Minnesota ruled out as an option to
help pay for a new stadium thus pushing a vote out to possibly as late as November
2012. This delay is too long to wait for a decision partly because most people
believe voters will reject the new tax anyway. Instead, Minnesota politicians are
considering building a new casino with the intent to apply partial state revenues from
the casino to help fund a new stadium.
“If you build it, they will come.” If the Vikings are considering using other
entertainment tax revenue as a source of financial support, the ownership should
also consider the Los Angeles (LA) Stadium at Grand Crossing complex, which is
designed by the team that built the Staples Center, home of the LA Lakes, Clippers
and Kings professional teams. Because the Grand Crossing complex is the size of
600 acres, some marketing plans include non-football entertainment daily ranging
from restaurants, shopping, a theater and even a hospital, which would make this a
small community where people may want to visit regardless whether a football game
is being played and investors wouldn’t have to worry about people being forced to
stay at home due to brutal winter weather. The complex’s proximity to more than 15
million people within an hour has resulted in a fully private financing option, no new

27. tax payer dollars. Also supportive are the local governments that stand to create
18,000 new jobs and earn new tax revenue, particularly if a team from outside
California moves into the state.
The economic synergies appear to favor LA as well from a marketability
perspective. While Minneapolis is home to several Fortune 500 companies, it is the
13th largest metropolitan area compared to LA being the 2nd, so prior to committing
to relocate, the Vikings should be able to secure new marketing contracts of greater
value. Comparisons between team merchandise sales are often difficult to predict
when relocating. Initially, LA Vikings merchandise would be a highly demanded
commodity for many reasons. Southern California fans appreciate the most recent
fads and they would certainly get that with the news of a new NFL team, especially
given that the mascot symbolizes toughness often thought of as a modern day
pirate. Additionally, the team would immediately compete for the NFC West division
lead in part because some of the weaker teams in the entire League are in that
division and also because the Vikings are just one full season removed from the
NFC Championship game and led by young stars including NFL’s best running back
arguably.
But what stands out the most is the potential collaboration of two storied
franchises that showed life in Minneapolis, but relocated during difficult financial
times only to be rejuvenated in sunny LA. At the time the Vikings were joining the
NFL, the Minneapolis Lakers professional basketball team was declining. As
fortunate as the team was to survive a plane crash during a winter storm, the NBA
placed the franchise on financial probation$ in 1960, ultimately leading to the

28. decision to relocate to LA to achieve economic prosperity. Coincidently, a year after
a winter storm caused havoc resulting in the collapsed Metrodome roof, another
Minneapolis’ professional sports teams finds itself facing financial questions as well
as being courted by opportunities in LA. People say that history repeats itself. If the
Vikings choose to join the Lakers in LA, the fan base marketing leverage is already
established and can be leverage relative to a big brother paving the way.
It is possible to imagine the cross pollination of purple Vikings apparel worn to
Lakers games and purple Lakers merchandise shown off by fans at Vikings games,
but the risks loom for ownership on fourth down when deciding what play to call for
the franchise’s future considering the team has been a successful staple in the local
community for decades. An enormous driver referenced is the private funding of a
new stadium complex saving the Vikings ownership $450mm> as well as saving
local constituents the expense of new taxes related to the stadium construction. On
the other hand, the team must quantify intangibles: will fans support and embrace a
team that left its home city; what happens to the franchise if fans are disappointed by
the team’s success; would this situation lead to the same result as the Rams and
Raiders, two professional football teams that relocated away from LA?
Predicting an optimistic outcome is generally more enjoyable to consider
by human nature. That said, contingency plans will become more valuable in times
of crisis than any forward looking marketing plan. Given the long term success of
the franchise and the short term positive financial success though new benefits
including a privately funded stadium complex, predetermined advertising contracts
and defined seating revenues, the fans will be in the seats and the same successful

29. product on the field is anticipated. The more concerning scenario is that two NFL
teams have already tried to establish a franchise in LA, only to depart. As often
happens in business, the Rams and Raiders relocations appear to be politically
driven. First, the Rams chose to play home games in the Olympic Coliseum seating
90,000 fans which is too large and resulted in several local TV blackouts, so fans
could not keep in touch with their team in the same city. Once the former owner
passed, new ownership relocated the team. Then, the Raiders made the same
move into the enormous Coliseum, which was never approved by the League, but
people speculate the move was meant to leverage the demand for improvements to
the Oakland Coliseum where the Raiders returned.
While the future cannot be predicted, this opportunity for the Vikings to
relocate appears to have been thought out in more detail than previous relocations.
That said, businesses must continue to strive for improving the brand or a competitor
will take market share. The Vikings’ franchise is on a short term downwardly trend.
Had the team avoided a fumble or two, the franchise would have been expected to
win the Super Bowl and perhaps Governor Dayton and taxpayers would instead
support financing a new stadium. Clearly, a transition to Southern California would
give the Vikings a new perspective and the most important first step is to make the
community feel involved and part of the organization. Instead of a fan sitting in an
oversized Olympic track and field stadium, bring the team to the fans. Leverage the
existing economic struggles, by hiring enthusiastic fans to spread the word that the
Vikings have anchored in LA. Emphasize the addition of 18,000 anticipated new
jobs, send the lower paid enthusiastic fans on a political bus tour through greater LA

30. because enthusiastic face time can be remembered for a long duration. Sail a
Vikings’ ship along the heavily populated Southern California beaches. Want to
make someone’s day? Give away low valued common shares of the franchise along
with ticket purchases. The bottom line is to make an effort to make it easier for fans
to support the team.
IV. Closing Argument and Final Recommendation:
Decision time has arrived. It’s still forth down, now with fewer seconds on the
clock and while the commentary has been understandable, business decisions must
be justified. Below is a weighted average analysis of topics analyzed, some
subjective, but each given a value in order to determine the future of the NFL Vikings
professional football franchise.
Weighted Average Analysis
Component Weight MN vs CA
Financials
Financing New Stadium 30% CA
Cost of Relocation 20% MN
Risk Management
Customer Base 15% MN
Franchise Reputation 10% MN
Change of Direction
Complex Development 15% CA
Local Marketing 10% CA
Decision 55% CA
*Appendix 5 for justification
Multi-million dollar decisions are not completely one-sided, but the data above
reflects that the Vikings will be better off by relocating to LA. The most influential factor
is the sacred stage for athletes, the stadium, where fans of all ages share the

31. camaraderie to support their team together. The Vikings have maintained excellence
on the field for decades.

32. Citations:
Literary Sources (sample):
World Almanac Book of Facts (1923-). World Almanac: Book of Facts. New York: Press
Pub. Co. (The New York World).
Web Sources:
Convention and Sports Leisure.com (2011). What’s New. History. Retrieved September
30, 2011, from http://www.cslintl.com/whatsnew.php
Deadspin.com (2011). Deadspin: Top Stories. Retrieved September 30, 2011, from
http://deadspin.com/5823017/the-metrodome-should-be-condemned
Forbes.com (2007). Lists: The Business of Football. Retrieved September 30, 2011,
from http://www.forbes.com
Jet Kingdom.com (2003-2011). New Giants Stadium Getting Big. Retrieved September
30, 2011, from http://www.jetkingdom.com/fans/jake/new-jets-stadium-getting-big
Metropolitan Sports Facilities Commission.com (2011). The Metrodome: MSFC Reports
History. Retrieved September 30, 2011, from http://www.msfc.com/
New Ballpark.org (2011). Day 5: Cowboys Stadium. Retrieved September 30, 2011,
from http://newballpark.org/2010/08/15/day-5-cowboys-stadium
NFL.com (2011). National Football League: History. Retrieved September 30, 2011,
from http://www.nfl.com/
North Oaks Homeowners Association.com (2010). News: Vikings Stadium Site.
Retrieved September 30, 2011, from http://www.nohoa.org/news/vikings
NowPublic.com (2007). Newsroom Tools. Retrieved September 30, 2011, from
http://www.nowpublic.com

33. Appendages:
Formulas to be used for LA new stadium proposal feasibility analysis:
 Capital Asset Pricing Model (CAPM)
 Weighted Average Cost of Capital (WACC):
 NPV and Value of Leasing
 Investment, Strategy, and Economic Rents
 Measuring and Rewarding Performance: Residual Income and EVA
 Debt Financing
 Analytical Results: The Local Revenue Model: P(T) = AT–aT–q = cTc–1
Weighted Average Analysis
1) Financing New Stadium: win LA due to no taxpayer or team involvement. Resources : MN:
http://espn.go.com/nfl/story/_/id/7178766/governor-balks-new-taxes-new-minnesota-vikings-
stadium LA: http://www.losangelesfootballstadium.com/
2) Cost of Relocation: MN advantage due to location
3) Customer Base: difficult analysis as initial relocation would be very high for LA, but the
tradition of MN is strong and merchandise sales for MN are 4th among all teams:
http://www.cnbc.com/id/30111451/Saints_Are_NFL_s_Top_Sellers
4) Franchise Reputation: It is perceived that if the team stays at home, there will be little change
compared to a risk if the team chooses to relocate during difficult financial times. Due to the
level of subjectivity the weighting is relatively low.
5) Complex Development: Large advantage to LA due to the complex and proximity of 15mm+
fans within 1 hour. MN is proposing to build a casino, which on can argue the sustainability of
the casino, closer to Las Vegas or Detroit? http://www.losangelesfootballstadium.com/
6) Local Marketing is merely based on dollars available in the economy. Minneapolis 14th
ranked LA 2nd, as well as support of fans historically for present/future Hall of Fame players
such as Kobe/Shaq (LA Lakers), Marcus Allen (LA Raiders).
http://www.sporcle.com/games/Mulyahnto/USMetroEcon