Tag Archives: Wilf family

Is Zygi Claus As Generous As Local News Coverage Makes Him Out To Be?

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Billionaire Vikings owner Zygi Wilf is Minnesota’s Santa Claus. That’s essentially the message local news and sports coverage has hammered into Minnesotans’ heads over the last couple of years.

There has been a steady string of positive headlines promoting the Wilf’s stadium-related generosity: Twin Cities Business magazine: “Wilfs Commit $19.5 million More to New Vikings Stadium.”  Minnesota Public Radio:  “Vikings add 19.7 million to stadium contribution.”  WCCO-TV:  “Vikings, Wilfs To Commit to Additional $14M To New Stadium.”  The Saint Paul Pioneer Press:  “Vikings’ Zygi Wilf to increase stadium contribution.”  The Star Tribune:  “Vikings pony up $49 million for stadium accessories.”

Legendary Star Tribune sports columnist Sid Hartman regularly preaches about how fortunate we Minnesotans are to have the Wilfs lavishing us with additional stadium-related toys out of the goodness of their hearts.  For instance, under the homer headline “Vikings Stadium Will Be Spectacular,” a typical Hartman column tells Minnesotans to “take your hat off to the Wilf family,” and then essentially turns his column over to Vikings executive Lester Bagley’s pro-Wilf spin:

“The Wilf family has put in an additional $95 million since the bill passed the Legislature, because a lot of teams and communities get to this point and they start to cut things [and] we don’t want to cut things. We want to add things and make sure this is the best stadium in the league.

The Legislature had us agree to $477 million in team/private dollars and since the bill passed, on top of that $477 million, the Wilfs have agreed to contribute an additional $95 million and counting.”

In addition to his newspaper columns, Mr. Hartman even more frequently carries the same kind of Wilf cheerleading to the powerful radio airwaves of WCCO-AM.  KFAN-FM and 1500-ESPN also do their fair share to promote Zygi’s stadium contributions to their listeners.

The cumulative effect of all of this has been to paint a portrait of jolly old Zygi Claus and Lester the Elf continually delivering millions of dollars of new stadium toys to Minnesota’s football loving girls and boys.

I don’t blame reporters for those headlines.  The budget increases happened, and reporters need to cover developments like that. Moreover, I’m glad that the Wilfs are paying the extra costs.  It’s better than the alternative.

But as Mr. Wilf prepares to cut the ribbon for his new business asset later this summer, and have even more adoration heaped upon him by Mr. Hartman and others, it’s important to look at the broader context.

Others Paying “Owner’s Share”

Remember that the owner has had lots of help paying the so-called “owner’s share” of the stadium. The Vikings are getting hundreds of millions of dollars from a number of outside sources, such as a NFL loan program, seat licenses paid by fans, and enormous naming rights payments coming from U.S. Bank customers.  As Minnesota Public Radio reported:

“If the team gets the NFL loan, sells naming rights and charges for personal seat licenses according to these estimates, it would have about $115 million of the original $427 million pledge yet to pay. Compared to the upfront price tag on the stadium of $975 million, the amount left is about 12 cents on the dollar.”

Note that this April 2012 MPR analysis was done prior to the Wilf’s increasing their stadium contributions by an additional $95 million or so.   It also was done without solid numbers related to these three types of funding sources.

But details aside, the larger point remains:  What the owner is actually paying is only a small fraction of what is described in news coverage as “the owner’s share.”

Star Tribune sports columnist and 1500ESPN radio analyst Patrick Reusse also wrote an excellent 1500ESPN blog post asserting that about $450 million of the Wilf’s share will be paid by someone other than the Wilfs.  Reusse’s analysis was titled “Quite a Bonanza For Our Stadium Martyr.”  However, the radio station appears to have removed the post.

“Worst Deal From Sports Team”

Mr. Wilf is the generous one?  Really?  Minnesota taxpayers are bearing a heavy burden for the stadium, because the Wilfs insisted on it, during a decade worth of legislative warfare.  In naming the Twin Cities one of “5 cities getting the worst deals from sports teams,” MarketWatch asks:

“How do you get taxpayers to chip in $500 million on a more than $1 billion stadium when only one city, Indianapolis ($620 million), has ever paid that much?”

MarketWatch also notes that Minneapolitans “will end up paying $678 million over its 30-year payment plan once interest, operations and construction costs are factored in.”

I’m not informed enough about every stadium deal in the nation to say whether MarketWatch is correct that Minnesotans got one of the worst deals ever.  But it is important to understand that Minnesota taxpayers are being extraordinarily generous to the Vikings owners, not the other way around.

Wilfs Are Takers, Not Givers

By any reasonable analysis, the Wilfs are the big takers in this scenario.  They are not, as much of the news and sports coverage has implied or asserted, the big givers.  After all, this luxurious new taxpayer subsidized stadium won’t make taxpayers’ wealthier, but it is already making the Wilf’s much wealthier.

Forbes magazine estimates that the Vikings franchise, which reportedly was purchased by the Wilfs for about $600 million in 2005, was worth $796 million in 2011, the year before the stadium subsidy was approved.  By 2015, after the taxpayer subsidy was approved by the Minnesota Legislature and Governor Dayton, Forbes estimates the value of the Wilf’s business had spiked to $1.59 billion.

That’s a remarkably quick appreciation going to Zygi Claus’s bottom line in the post-stadium approval era.  Add what the owners will be pocketing due to large increases in stadium-related revenue in the coming years, and it’s pretty clear that the Wilfs are making out like bandits.

Precise analysis is pretty much impossible on this subject, because executives are not nearly as forthcoming about details related to the loan, seat licenses and naming rights as they are about contributions. However, this is roughly what it looks like to me:  Zygi Claus is investing something in the neighborhood of $200 million to see his business valuation increase by at least $800 million, and probably quite a bit more over time.

None of this is illegal, or all that unusual.  But it also is not Santa Claus.

Give to the Max, In Context

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retro_calculatorThe 120,000 Minnesota small donors who heroically pulled together to pool an $18 million donation during yesterday’s  Give MN’s “Give to the Max Day” should be very proud of themselves.

They set an all time record!  Wooo hooo. That’s the power of the grassroots.

But just to put that in context, consider that:

  • If KSTP-TV owner Stanley Hubbard donated 1% of his estimated $2.1 billion net worth, his donation would be $21 million, 28% more than the 120,000 Minnesotans gave.  Even after such a large donation, Stanley would still have $2.08 billion dollars left over to put fishsticks on his table.

The “giving to the max “ of these 120,000 big hearted Minnesotans is noble and notable.  But honestly, this kind of news story must be greeted with a “well isn’t that adorable” chuckle from the wealthiest Minnesotans.

– Loveland

The Yard Canard: Presenting Our Featureless New Corporate Playground

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Marred_YardA few days ago, I noted an evolution happening with The Yard, the park planned for west of the new Vikings Stadium.  In the 2018 Super Bowl bid put together by corporate leaders, images of The Yard  were changed from depicting the public playground Minnesotans were initially pitched as part of Governor Dayton’s “People’s Stadium” vision into the more lucrative corporate playground the Vikings’ wealthy owners and their corporate partners covet for  Super Bowl soirees.

This weekend, a Star Tribune editorial bemoaned the Super Bowl bid committee’s proposal for The Yard:

“The public first glimpsed the Yard as depicted in Ryan’s initial renderings: a lush public expanse of grass and trees framing the city skyline. Even in winter, with snow on the evergreens and skaters on a pond, the Yard was to be the “money shot” that defined our city and state to viewers worldwide, as well as a bustling activity zone for fans on game days and for neighbors and downtown workers on the other 355 days of the year.

But a newer image adds tents of various sizes and exclusive activities for Vikings ticket holders for at least 10 days a year, plus events sponsored by the (Minnesota Sports Facilities Authority) MSFA on part of the park for as many as 40 additional days. During rare mega-events like the Super Bowl or the Final Four, garish tents could cover nearly the entire park space, largely to accommodate national security requirements.”

First, national security officials are obviously capable of securing a small public park on Super Sunday.  Maybe skaters would have to walk through metal detectors.  Maybe snow fences and security personnel would have to be temporarily used on the perimeter, as is frequently done on the much larger Mall in Washington, DC.  Come on Star Tribune, are you really buying the Vikings’ claim that ice skaters are some kind of utterly unmanageable national security risk?

But it gets worse.   The Star Tribune then explains that the de-parkification of The Yard goes well beyond Super Sunday.

The upshot is that, yes, the Yard still aims to be both active and attractive, but unfortunately with fewer trees and fewer permanent amenities (public art, fountains, cafes, etc.) than originally imagined, and with more open space for flexible programming, most of it public but some private.

While that doesn’t rule out public skating in winter or soccer and outdoor movies in summer, all of the setting-up and tearing-down of tents and platforms will damage grass and other natural features and, more than that, will consume beauty and time that the public had expected to get.”

So, let me get this straight.  The Yard will be exactly like a park, except with few trees,  gardens, water features, art or recreational-oriented equipment or structures.  Other than lacking those typical park features, and being regularly shut down and ground to a pulp by corporate parties, The Yard will be exactly like all the best urban parks.

The Star Tribune, which will be relocated very close to the Yard, seemed disappointed to learn of the newly marred Yard.  But ultimately the editorial staff did what it often does when powerful downtown interests are in play.  It pretty much fell in line with the corporate viewpoint.

It’s nearly impossible to accomplish anything big — say, a Vikings stadium in downtown Minneapolis or an adjacent park — without the financial contributions and willing cooperation of various governments, private companies and nonprofit groups, all with competing interests. The result is often a compromise that doesn’t measure up to every expectation.

“Nearly impossible.”  So that’s what we’ve come to.  Public representatives can no longer create a public park that serves public needs, even after making a half a billion dollar public investment in the development of the area?

The next time you go to Lakewood Cemetery, take a copy of this “nearly impossible” editorial and lay it on the ground.   That rumbling you feel is one Charles M. Loring rolling over in his grave.

– Loveland

Wilf’s Minnesota Partners Should Seek Advice From Their New Jersey Partners

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Josef_Halpern_Wilf_business_partner_photo_credit_New_Jersey_Star-LedgerMinnesotans are about to become business partners with Zygi Wilf, to the tune of half a billion dollars.  To get the partnership structured correctly, part of our due diligence process should be to ask past Mr. Wilf’s past business partners what they would do if they were us.

For instance, we should consult with Josef Halpern and his sister Ada Reichman, who the court says were defrauded by their business partner Zygi Wilf.  What advice would Halpern and Reichman give Minnesotans on the eve of our business partnership with the Wilfs?

My guess is that Halpern and Reichman wouldn’t be at all focused on ability-to-pay, which seems to be the primary, if not sole, concern of the Minnesota Sports Facitilies Authority (MSFA) and the reporters covering this issue.  Minnesotans seem to be learning the wrong lesson from the New Jersey case.  After all, ability-to-pay falsification wasn’t the flavor of fraud the Wilfs served up to Halpern.  Having money wasn’t the Wilf’s problem in the New Jersey case; sharing it was.

As  Judge Deanne Wilson said, Mr. Wilf’s own testimony showed that he had “reneged” on the agreement with Reichmann and Halpern because he decided that they got “too good a deal.”  The judge also said “I do not believe I have seen one single financial statement that is true and accurate.”

So, what if the Wilf’s decide Minnesotans got “too good a deal?”  Will Minnesotans get the Halpern-Reichman treatment?

Given the Halpern-Reichman experience, I doubt very much that their advice to us would be “make sure they have enough money.”  It would more likely be “protect yourself.”

You can bet that Halpern and Reichman wish they had written a stronger accountability provisions into their contract, and regular audits reinforced with stiff fines for falsification.  You can bet that they wish they had made the Wilfs regularly disclose everything about the operation of the partnership, so that the financial funny business could have been discovered sooner rather than later.

Actually, what Halpern and Reichman probably would advise Minnesotans is to avoid partnering with the Wilf’s at all costs.  But since that doesn’t seem to be in the political winds at this stage, the MSFA should do what the Wilf-defrauded partners would surely do if they had it to do over again:  Don’t trust, verify.

– Loveland