This just in ...
Vikings will not buy Star Tribune Property
by Par Ridder, publisher and CEO August 29, 2007 -
The Minnesota Vikings have advised us that they do not intend to buy the four blocks of Star Tribune property around the Metrodome. To date there is no change to the legal status of the purchase agreement as previously announced.
While we had reached agreement on a deal in principle, the collapse of the I-35W Bridge and the turbulent credit markets have caused the Vikings to reevaluate their plans.
As you know, in anticipation of this sale, we have started work on the 425 Portland Building that will make it possible for us to move all the Star Tribune employees out of the Freeman Building and into the Portland Building.
We are going to continue with the move since the costs savings of not operating two buildings plus the benefit of everyone under one roof are worth the disruption.
We will be working with Avista and our real estate advisors over the next few weeks to determine our next steps.
The current employee parking program remains the same for now, with the exception of the 2007-2008 Vikings home games. We do have a one-year lease with Impark to manage our parking lots during Vikings home games. (See today's Stribnet story for details.)
Thank you, Par
My first question is what does the bridge collapse have to do with the Vikings backing out of this? The thing will be replaced long before they'd ever build a stadium.
I think the posters here may have been way ahead of themselves in thinking Wilf already had financing set up for the total project. It's highly unlikely he did; it was way too early in the process, and these deals typically aren't set up as one monolithic deal -- usually different entities would be financing different aspects (housing, office, etc.).
I'm not so sure Wilf doesn't have a shot at some sort of public funding in the future. Unlike the Twins, the Vikings are seen as a statewide resource, and there are a host of potential revenue streams (bringing back sunsetted taxes on rental cars, for instance) that wouldn't actually impact Joe Six-Pack too heavily. Ever rented a car in Phoenix? A line item in the taxes is the stadium authority. You're absolutely right that this was a big redevelopment with a sporting facility in the middle, and for that reason alone it will be easier for Wilf to come back with a proposal -- probably a scaled-back one involving the Metrodome site, since he has the support of the MSC -- and ask for tax dollars.Wilf was pretty bad at wooing constituencies like the high-school folks, and once you start positioning a stadium as a public resource you'd be surprised how many outstaters would end their opposition.
And while it's probably quaint to think this way, count me among those who think bad news for the Strib is bad news for the community generally.
LAMBERT: The loss of a projected $45 million will not please Avista's private equity kids -- who I suspect are getting real twitchy with this whacked-out newspaper idea along with watching their various mortgage-encumbered investments founder -- and will have to be obtained by "other methods".
You're dead-on about cutbacks. Bad day at 425. Again.
Same as the other responses with one exception. Yes public funding will now be available when hell freezes over but the public credit markets were probably the last straw.
Many of these owners love to borrow to purchase their teams. They can then use the interest payments as operating costs and make the public think they are just getting by. Their asset (the team) appreciates while they pay down the debt with their revenue stream.
The credit market has dried up for this type of deal. I'm sure Zygi lost whatever deal he had for the credit on the purchase and his odds of selling that land in the future were very minimal since it is so far from the core downtown and the Twins stadium.
Personally this is great news. The last thing we needed was a $1B football stadium.
LAMBERT: I got no beef with a $1 billion football stadium, as long as I'm not contributing a nickel to it. Hell, I've stopped attending Vikings games. It's like paying $100 to listen to a canned country music concert, since that damned music is pounding every minute except the what? 9 or 10 per game the ball is actually in motion? Zygi's a shrewd developer. Let him make another fat profit whipping together Loring Green East.
It's a good question, but I think the idea is that the bridge collapse = more money for critical infrastructure = less money for decidedly noncritical infrastructure.
LAMBERT: OK, we have a consensus. But if Zygi Wilf was counting on anything remotely like what the Twins got -- before the bridge fell -- he was delusional. Every conversation I had with Republican legislators -- I had a round last winter -- was non-committal to negative. Wilf's was seen a huge, lucrative development project that just happened to have a stadium in the middle of it.
I suspect the issue with the bridge isn't about replacing it, but rather how this dramatic proof of pressing infrastructure needs is likely to change the discussion about public funding for sports stadiums. My hunch is the I 35W collapse has moved legislative consideration of a new Vikings stadium to a back burner that isn't even lit.
If so, the Vikings probably need to protect all their options, including packing up and leaving town.
Meanwhile, what does the failure of this land deal do to Avista's near-term plans?
LAMBERT: I'm inclined to believe Avista was figuring that $45 million (and millions more to follow with the sale of the Star Tribune building's block -- a la the Philadelphia Inquirer) very carefully into their projections. The likelihood of a buyer as motivated as the Vikings seems remote. I'd expect another round of cut-backs in pursuit of the balance sheet they need to call Minnesota win and split town.
> My first question is what does the bridge collapse have to do with the Vikings backing out of this?
You know the answer to that, don't you Brian?
The bridge collapse makes public funding even less popular.
My guess is that Zigi will start shopping the team in earnest.
I imagine whats implicit is the bridge collapse destroyed any chance there would be state / local partcipation in a new Vikings stadium. Not going to happen for the foreseeable future, maybe that window will open again in 10 years.