U.S. Bank Stadium on Thursday gave a multimillion-dollar break to ASM Global, the company that manages the stadium, in exchange for a longer-term commitment with no option to end the agreement.
The agreement negotiated by Michael Vekich, chairman of the Minnesota Sports Facilities Authority (MSFA), and approved by the MSFA board without debate, gives ASM five extra years to pay less money than under the previous contract, which ran through 2026.
Since the stadium opened in 2016, ASM has made annual guaranteed payments to the stadium authority for the exclusive right to book and operate the building. But after COVID-19 shutdown stadium shows across the country more than a year ago, ASM came to the MSFA seeking help.
ASM will make annual payments to the MSFA totaling $110.7 by the end of 2031. If the previous arrangement had been extended through 2031, ASM would have had to pay $116.7 million.
"With the change in this contract, the authority is still in a great position and the authority equals the taxpayer as I see it," Vekich said. "There are no taxpayer dollars being spent on the stadium through 2031 for operating expenses. Those dollars are being guaranteed by ASM to the authority."
Vekich said the arrangement protects the MSFA by guaranteeing payments for a longer term, while providing no future forgiveness for shortfalls and barring ASM Global from canceling the contract outright.
ASM's annual payments to the MSFA started with $6.75 million in 2016, the first year of the contract. The payments were to increase 2% each year of the deal through 2026.
But then came the coronavirus pandemic last year, resulting in the cancellation of large touring concerts and shuttering the stadium for most events.
Recognizing that ASM needed relief and had been a good partner, Vekich said, the MSFA entered negotiations a year ago. The prospect of a broken contract or potential litigation wasn't appealing.
"Litigation would be bad for both parties," Vekich said, citing the cost in both dollars and time as well as the potential disruption of stadium operations. Instead, he said, their approach was to find "a reasonable accommodation on this, and I think we did."
COVID's impact will be felt by ASM Global over a total of three fiscal years, which began with the fiscal year 2020 ending last June 30 when ASM recorded a $1.7 million shortfall. For this fiscal year, which ends June 30, ASM projects a $2.3 million shortfall. For fiscal 2022, beginning July 1, ASM projects a $1 million shortfall.
In the new deal, ASM will have to make up the shortfalls in payments to the MSFA, but will have until the end of 2031 to do so.
Beginning in fiscal 2023, however, ASM is on the hook for the full annual guarantee of $7.3 million with no forgiveness possible, Vekich said. The new deal also bars ASM from exiting the contract.
The Minnesota Vikings, the main tenant at U.S. Bank Stadium, are not part of the ASM deal. The team, which makes its own rent payment to the MSFA, managed to play much of the 2020 season at the stadium without ticket-buying fans in the seats.
ASM Global makes more than half its revenue from giant stadium events, such as concerts, sporting events and family shows. The rest comes from smaller events and tours.
Nearly everything was canceled or postponed in 2020 and the massive events have yet to return, though they are slowly being rescheduled. The last artist to play at the stadium was Garth Brooks in May 2019.
The NCAA wrestling tournament was to be held last year at U.S. Bank Stadium for the first time ever in a stadium, but was canceled days before it was scheduled to start because of the pandemic. The NCAA currently has no plans to bring it back to Minneapolis.
Five major stadium concerts in 2020 were postponed. Rammstein, which was set to play in last August, has been rescheduled to Sept. 3, and country star George Strait rebooked to Nov. 13.
Def Leppard and Motley Crue, which had planned to perform at the stadium last year, have rescheduled to August 2022. Kenny Chesney has said he's coming in 2022 but has yet to name a date. The Rolling Stones have yet to reschedule but could be on the books by the end of the year, said ASM general manager at U.S. Bank John Drum said.
ASM is eager for a return of the crowds to the five-year-old stadium.
"We need the touring industry to continue on as they were pre-COVID-19," Drum said. "It's been a long time this building's been quiet."