Headrick Interview

Mr. Football
Roger Headrick talks about losing, personnel problems, and being in the public eye

Corporate Report Minnesota, April 1996

(Copyright) David Brauer and CRM

1995 was a rough year for Minnesota Vikings president and CEO Roger Headrick. Headrick’s charges seemed to live up to the reputation of their historical namesakes: head coach Denny Green and Green best-buddy assistant coach, Richard Solomon, were dogged by allegations of sexual harassment; the team’s marquee player, quarterback Warren Moon, was arrested for wife-beating; the team’s biggest free-agent signee, linebacker Broderick Thomas, was twice charged with illegally carrying a loaded gun, once while driving under the influence; and in a bizarre coda to a troubled year, defensive lineman James Harris was arrested for beating one of the two women he was married to.

Football fans, from the sport that coined the bromide "winning isn’t everything, it’s the only thing," may have brushed off these public safety threats, but the playing field offered few distractions. The Vikings missed the playoffs, sold fewer tickets, and endured two TV blackouts for the first time in recent memory.

Still, it was bottom-line problems Headrick engaged most ferociously. The former Pillsbury CFO hired in large part to arrange financing for the Vikings’ highly publicized buyout of Irwin Jacobs and Carl Pohlad six years ago took on an equally ferocious boardroom foe: Jerry Jones, whose gold-plated side-deals with national advertisers threatened to undo the NFL’s socialistic revenue structure which props up balance sheets of middle-level teams like the Vikes. Beset by the perception that his payroll was penurious, Headrick cried poverty while stepped up the campaign to snare control of the Metrodome and its attendant revenues.

Six years ago, Headrick was a former executive with a generous severance package looking to invest in small businesses he might manage. Today, he is one of the Twin Cities’ best known executives. For two hours on a brilliantly cold February day two weeks after the Super Bowl, he sat down to discuss the Vikings’ troubles at length. -– David Brauer

CRM: You’ve said that the team basically broke even this year. How could you possibly not make money when your biggest expense, player payroll, is covered by network TV money before you’ve even sold a ticket.

RH: The salary cap is all based on average league revenues, and we are a below-average team by about $5 million. To be at the cap, you have to spend 62-63 percent of your revenue. A team $5 million below will spend something like 68 or 69 percent of its revenue, total revenue, to be at the cap. That means you’ve got to run everything else – training camp, this facility, travel, coaching, scouting everything else from the other 31 percent and it’s a virtual impossibility when you are that much below the cap.

CRM: Your salary cap is, what $37 million?

RH: Plus benefits, that’s another $5 million.

CRM: And network TV is…

RH: About $40 million, $41 million…

CRM: So you’re telling me that money from NFL Properties, ticket revenues, corporate sponsorships are all being eaten up by non-player expenses? That’s got to be, what $20 million? That’s all eaten up by training camps, mini-camps, front office?

RH: Yes.

CRM: But assuming the cap has any validity, the big money you’ve spent on cash bonuses in ’94 and ’95 should lead to lower payouts in the future, since the bonuses paid up-front are pro-rated against the cap in outlying years. Won’t your cash flow and bottom line get better once this transition to free-agency is amortized?

RH: But it never ends. You’ve got free agency every year. You’ve got new players coming in. Everybody tries to spend as close to the cap as they can. Bonuses were roughly 10-12 percent of compensation when we entered into the salary cap in 1994; now they are 45 percent and rising. More and more people are going -- not as far as Jerry Jones with $13 million up front to Deion Sanders with $178,000 in salary, which is ridiculous -- but more if you’ve got a player who will make, say $8 million over 4 years, you pay $4 million up front because you’re trying to compete and make sure he comes to you with more guaranteed, up front money.

In 1994, we were 21st in league revenues…this past year, 1995, we’re going to more like 25th because you have the Raiders and Rams, who were both below us, moving to new cities – the Rams went up $22 million and the Raiders went up $18 million. Then you have Carolina and Jacksonville, the expansion teams, coming in new. So both of their revenue streams will be bigger.

CRM: But how much of a problem are your own interest expenses? You spent $50 million plus buying out Pohlad and Jacobs – you needed to get a league waiver on your debt…

RH: Not for that. That was our ownership set-up.

CRM: Does this company sit with as much or more debt as you had after the buy-out?

RH: Less.

CRM: Significantly less? $40 million?…$30 million?

RH: We’re well within the league limit.

CRM: Which is?

RH: $40 [million] per team, plus $10 million per controlling owner.

CRM: Do you have a controlling owner?

RH: Not in the sense of….why don’t you just say we’re under $40 million.

CRM: There have been reports that the league has pressure this group to have a controlling owner. Is there any truth to that?

RH: (Shakes head no.)

CRM: Why does this organization have any debt to work around at all? You are owned by some of the richest people in Minnesota.

RH: Because they put up a lot of money already.

CRM: They put up a lot of money, but it’s still chump change to many of them, isn’t it? If you’re paying a commercial interest rate on your debt, why would the ownership carry that?

RH: Now you’re getting into personal decisions. I don’t ask people what they do with their money. Obviously they contribute what they feel is appropriate for this investment. I don’t ask [investor] Jim Binger or anyone else what he does with his money. Why does he go into race horses and lose money? That’s not my business.

CRM: The partners have not to make any cash calls, to cover operating losses, to pay (Vikings defensive tackle) John Randle?

RH: We don’t operate that way. We operate to break even.

CRM: The press tends to focus on you, Wheelock Whitney, and Jaye Dyer among the partnership. Are there others you would term active partners?

RH:. The chairmen of the three board committees are the most active. We have an audit/finance committee that oversees the financial affairs, a public policy committee which deals with how we impact our community, we have a board affairs committee and compensation, which deals with management and board matters. Jaye Dyer is chairman of board affairs, and Wheelock Whitney is chairman of public affairs, and Bud Grossman is head of audit/finance.

CRM: Keeping Denny Green as head coach – is that a decision the board makes, or you make?

RH: I make it. If they disagree, they can tell me.

CRM: And have they told you?

RH: Not on that issue.

CRM: Has there ever been a board vote on Denny Green? Has there been a board member who came to you in the wake of the Star Tribune reports on his sexual harassment allegations (while Green was a head coach at Stanford) and said, "Roger, look at this guy…"

RH: What we talk about in the board is my business, and the board’s business.

CRM: At any rate, you seem much more relaxed with the press than when I interviewed you shortly after the buy-out. You said then, "there aren’t two reporters in every city covering Pillsbury." Now, you take more time with the press. Is that the biggest adjustment you’ve had to make to the job?

RH: There is so much public visibility, there is so much public interest. I never believed the fans would just come to us, which I believe was the philosophy before I got here. I mean, we had this fictitious waiting list for season tickets. I always thought we had to go out and marketed, but I never thought there was so much dependency on being in the public domain. And the more you’re in one’s mind, the more people are going to think about the Vikings and buy merchandise.

And that there’s this sort of natural dependence - the media on us for news and us on the media for visibility.

CRM: Some would say this has not been a great trade for you, especially this year. Do you feel the coverage in the Star Tribune has been fair? Business people often complain that the Star Tribune is not pro-business enough. I would think you might lead the list.

RH: I don’t have anything against calling it like it is. But I don’t think the coverage has been balanced.

CRM: Why?

RH: I don’t know. There are a lot of things. Maybe personalities. I’ve talked to people like David Cox, like Tim McGuire, people in other businesses about coverage they’ve gotten.

CRM: And what feedback have you gotten?

RH: Basically that there’s a bias, at least in the print media, to be critical. And to be more investigatory that may have been related to Watergate.

CRM: But there have been things to investigate. Why are the Vikings so much more prone to off-the-field troubles than other sports teams? Is there something wrong with the character of this organization?

RH: I don’t know. There are 13 Timberwolves, 25 Twins, and 60 Vikings. We have a greater chance of having a problem.

CRM: But what about your tolerance for them? Denny Green’s sexual harassment case at Stanford, and your reported pay-out of $150,000 to settle a sexual harassment claim against assistant coach Richard Solomon. Both these guys are still with the team.

RH: What happened with Denny happened before he got here. Nothing has happened here.

CRM: Did you know about the Stanford incident when you hired him?

RH: No.

CRM: What about Solomon?

RH: When you’re talking about the Solomon case, you’re talking about the alleged incident.

CRM: But there was a pay-out of $150,000 wasn’t there?

RH: That never came from me.

CRM: Are you saying there was no payment?

RH: I’m saying the report of $150,000 was not accurate.

CRM: Are you saying there was no payment, or that the amount was wrong?

RH: The $150,000 was wrong.

CRM: Was it higher or lower?

RH: Lower.

CRM: What about Warren Moon? He’s still your quarterback – in fact, you gave him an extension for another year after 1996 in the off-season. That’s not exactly condemning him and sending him away…

RH: Look, I don’t want to say something you’d print – but the incident was deplorable, unacceptable, intolerable But they have apologized for it, in public, on TV. They sat here right where you are – Warren said he lost it, lost control of himself, that he had always prided himself on a certain discipline and control. But they’re trying to put the family back together, they are going to counseling.

CRM: Parenthetically, have you ever dealt with that situation before – an employee, sitting face-to-face, saying he was sorry?

RH: Yes.

CRM: And Broderick Thomas?

RH: For him, his illegal gun possession] charge was the second time – you have a gun; there’s no permit for it, driving 65 miles an hour with a DWI charges. Yes, he hasn’t been convicted, but he hasn’t denied that the gun was there, he hasn’t denied the alcohol thing, and he hasn’t denied he was over the speed limit. That combined with his performance on the field...

You’re not going to be spending 3,500 words on this, are you?

CRM: No. Let’s move back to sales and marketing…Denny’s just lost his TV show, there’s been this negative press, the team just finished .500, ticket sales were down although I understand ticket revenues are up. There’s an impression in this marketplace that this brand has been devalued by stuff that has gone on in the last couple of years…Are Denny Green and Roger Headrick out if this team doesn’t win in ‘96?

RH: I don’t know. I don’t worry about it.

CRM: Who’s to blame for Denny Green’s problems with the media? Is that his fault?

RH: I don’t know. Those are his problems. You’ll have to talk to him.

CRM: But you’re his boss.

RH: You’ll have to ask him.

CRM: It has been rumored that Tagliabue had a role in getting you to hired Denny…

RH: No!

CRM: He didn’t say Roger, you’ve got an unusual ownership structure, it needs a waiver, we need more black coaches in the NFL…

RH: None! Zero!

CRM: Can you analyze Green’s performance, as your most publicly significant hire?

RH: Well, I think it’s been pretty good. If you judge by 12 teams make the playoffs every year, out of 30, he’s made it three out of four, he’s won the division two out of four. I think a lot of people might be looking at a trend that might not be there. You look at the record and you might say we’re trending down, .500 last year, but we think we’re trending upward…

CRM: But what about the perception that this club accepts mediocrity. I mean, Jerry Jones never talks about the Cowboys’ difficult first-place schedule.

RH: I’m not talking about it, either. I’m not offering excuses. Simple, straightforward – I’m disappointed. Denny’s disappointed. The whole organization’s disappointed. We expected to go past the first round of the playoffs. We’ll have to pick up the pieces.

CRM: Let’s talk about the possible new stadium. The word at the Capitol was that the Twins did not consult with you before going public with their poll showing support for a new stadium with public financing limited to a hotel-motel tax. I thought you two were partners in this effort, but they cut you out of the loop…

RH: We don’t involve ourselves in their business.

CRM: But isn’t the Twins getting a new stadium integral to your efforts to raise more revenue? If they leave the Metrodome, you’re the sole tenant. It might be the most important thing to your business…

RH: Well, it doesn’t make much difference. They’re not going to be here.

CRM: When you say they’re not going to be here, what do you mean? At the Metrodome?

RH: They’ll either get a new stadium or they’ll leave town. I made they made that perfectly clear when they testified to the [Professional Sports Advisory Task Force].

CRM: But they haven’t said "give us a new stadium, or we’re gone."

RH: They said they were $13 million short and they can’t get it out of this stadium. What more do you need said? I mean, that’s how I read it. I know they’re not going to get $13 million out of that stadium. Jerry Bell showed big black-and-white charts.

CRM: So how do think it will happen for you in, say, 1999. Do you expect the Sports Facilities Commission to flip you the keys and say "here you go, go to work?"

RH: I don’t expect them to flip us they keys because I don’t want to own the stadium. I don’t expect we’ll ever own the stadium.

Nothing’s going to happen in 1999 – it’ll either happen before or after. The Twins can leave after the 1998 season. On the other hand, a new stadium will happen in either 2001 or 2002, which means we have to share the Metrodome for the next five or six years, which means we both have to get as much revenue out of there as possible.

CRM: And that means joint management.

RH: Some kind of joint management.

CRM: And do you, in return, guarantee to pay off the Metrodome’s debt?

RH: They could pay off the debt right now, as soon as they sell the Met Center land.

CRM: But they talk about needing to keep three years of operating reserves, $15 million….

RH: You don’t need any operating reserves if the debt’s paid off.

CRM: Do you expect this will happen?

RH: I don’t know. I think it has to happen if they are going to keep both teams viable.

CRM: But how much more potential revenue is there in the Metrodome?

RH: For us? Probably close to $10 million.

CRM: From where?

RH: Well, it comes from the 10 percent admissions tax we pay, it comes from rent, concessions, stadium advertising, it comes from additional seating capacity, it comes from a new stadium club…

We would like a very similar arrangement to what the Chiefs have in Kansas City. Which is management of the facility, and the county – in their case, the county, in our case, the seven counties – having an authority that oversees capital spending and provides a certain revenue stream, either through county sources or whatever, to maintain the needs of the facility.

CRM: The Chiefs lead the NFL in attendance.

RH: And they make an incredible amount on corporate tents, things like that. It almost looks like the U.S. [Golf] Open at Hazeltine, every week, with all those tents out there.

CRM: But how much more revenue would you receive if you just won more games? How much more would you get if you won the Super Bowl, next year. Does this league reward performance?

RH: I don’t know, having never been there. We don’t have the same kind of situation as the Twins. We won’t see 3 million tickets the next year – we’re within 30,000 tickets of selling out the season right now. Our normal capacity is 632,000 tickets a year – we sold, this past year, 592,000 and the year before that, 604,000.

CRM: Full price?

RH: Yeah, essentially, there’s a little discounting.

CRM: How can you make the Metrodome a lively place? Many have tried and failed. The Twins did it with a World Series, but otherwise, it’s been brutally hard.

RH: I would think about doing something not dissimilar to what they do at Texas Stadium. A retractable roof, but something that always covers the fans.

CRM: I’ve heard that’s not technologically feasible.

RH: Anything is technologically feasible. We put a man on the moon.

CRM: That cost billions.

RH: It’s certainly technologically feasible. That Dome is going to have to be replaced sometime. And if you’re going to replace it, put some bars across the top, a la Texas Stadium, put a soft cover roof on some tracks across the bars, and open it up.

The other thing I want to do is lower the playing field and add 6,000 seats.

CRM: [Sports Facilities Commission executive director] Bill Lester said you would hit the water table and those people would be drowning.

RH: Listen – there’s no river down there. If you’ve got water down there, you just divert it.

CRM: Is that the difference between the public and the private sector? One thinks they can divert rivers?

RH: I don’t know if it’s feasible, but I have an incentive to do it so I can get a Super Bowl. 6,000 seats might be club seating. It might be PSLs. [Private Seat Licenses, a one-time fee to obtain prime stadium seats.] 70,000 is the minimum requirement to get a Super Bowl.

CRM: Does the Twins’ quest for a new stadium make it more difficult for you? It could go to referendum, the voters could kill it, the taxes to fund it might be too much, it might increase the public’s revulsion against sports owners, and your plans would just disappear.

RH: I’d like to see the Twins stay here. But the ideal situation is if they weren’t here, I think it would help us.

CRM: So you wouldn’t mind if they left?

RH: I’m for their new stadium. I’m just talking from a purely selfish standpoint, we’d probably