Mortenson’s Take from Stadium Contract Hinges on Timing
The hometown construction company that built Target Field, the University of Minnesota’s TCF Bank Stadium, and the Xcel Energy Center has landed the contract to build the new $975 million Vikings stadium.
The Minnesota Sports Facilities Authority (MSFA), which will own and operate the new stadium, announced Friday that it selected Golden Valley-based Mortenson Construction as construction manager for the project.
Four firms initially showed interest in overseeing stadium construction, and the MSFA recently narrowed the list of contenders to two—Mortenson and Scottsdale, Arizona-based Hunt Construction, which formed a joint venture with Minneapolis-based Kraus-Anderson Construction Company in its attempt to win the contract.
During Friday’s MSFA meeting, Steve Maki, the organization’s director of facilities and engineering, said both firms went through “a rather intense period of contract negotiations” led by the owners and representatives of the Vikings and the MSFA and each party’s legal counsel. But Mortenson ultimately had the most attractive pitch.
Mortenson agreed to a fee of $12.5 million, or about 1.8 percent of the estimated construction cost of $690 million, MSFA Chair Michele Kelm-Helgen told Twin Cities Business on Friday. (The majority of the construction costs will go to subcontractors that perform the construction work.)
Mortenson’s cut could climb to $15 million if it achieves certain benchmarks, including completing the project ahead of schedule and on budget; the contract calls for the stadium to be finished by July 1, 2016. The company could also perform some of the construction work itself, if it demonstrates that it is offering competitive prices compared to other potential contractors, Kelm-Helgen said.
But Mortenson could also face significant financial penalties if it’s unable to complete the project on time, Kelm-Helgen said. It would lose $5 million for each NFL game that would be displaced because the company missed its deadline, with a maximum penalty of $15 million.
Mortenson is Minnesota’s largest general contractor based on its annual dollar volume of construction, and it has an extensive portfolio of sports stadiums. In addition to its major Twin Cities projects, the company built the Sprint Center in Kansas City, Missouri, and Coors Field in Denver, among others.
Because Hunt had partnered with Minnesota firm Kraus-Anderson, the chosen firm’s headquarters was less of a factor in the decision-making process than experience and contract terms, Kelm-Helgen said. Both Mortenson and Hunt had “really strong proposals” and it was “a very difficult decision,” but the MSFA is “very comfortable” that it made the right decision, she added.
The MSFA did say, however, that Mortenson’s strong local ties are a plus, and 100 percent of its work force for the project will be based in Minnesota.
Mortenson also has “a proven track record of hiring a diverse work force,” according to the MSFA. That will be an important attribute, because earlier this month, the MSFA outlined goals for the stadium construction that call for one-fifth of construction contracts to go to businesses that are women- and minority-owned—and only Minnesota companies will count toward the goal.
Mortenson estimates that the stadium construction project will involve 4.25 million work hours and employ 7,500 workers. The stadium will supplant the Vikings’ current home at the Metrodome.
Mortenson Senior Vice President John Wood, who will serve as principal in charge of the stadium construction, said in a statement that the company is “honored to be selected as the construction manager for this tremendous project in our home town.”
“This stadium will be built for Minnesota by Minnesotans and it will have a significant economic impact in the local community,” Wood said. “We look forward to beginning work on the project immediately.”