(UPDATED BELOW)
God knows the Star Tribune has faced conflict of issues before with stadium-related real estate deals. But the latest one, wherein Vikings owner and major — emphasis on “major” — real estate developer, Zygi Wilf has a deal in place to buy four of the five blocks owned by Strib owner Avista Capital Partners near the Metrodome, puts a spike on an ethics watch.
Count me among those who find the $45 million reportedly offered for the four blocks on the low side. I know, the city values the land at something around $25 million, so at first blush this looks like a respectable premium. But other real estate-watchers far hipper to value than me placed the true value of all five blocks at something much closer to $100 million. That figure represents the interest a new Vikings stadium might have to developers and speculators, even in a cratering condo market.
In this context, the question I’m asking is whether this might be a two stage agreement. In this scenario the last piece of property — the block on which the main Star Tribune building sits at 425 Portland — would deliver the remainder of the true value of the five-block parcel. In other words, based on certain conditions, Wilf would goose that $45 million up to a number my merry band of conspiratologists believe more appropriate for a project as grand as he envisions for the east side of downtown.
Specifically, the full theory goes something like this: Wilf privately agrees to “enhance” the dollars on the entire project, by buying the final, fifth block based on the state legislature kicking in one more taxpayer subsidy for the centerpiece stadium project and thereby picking up $150-$200 million (or more) of cost. In order to gain legislative support, Wilf’s tacit agreement with Avista Capital Partners is that they keep their newspaper, still the single biggest mouthpiece for news and commentary in this market, focused on the bright and shiny upside to a world class Vikings stadium and the transformative qualities of all that adjacent acreage.
A steady stream of more positive-than-negative coverage boosted by regular “objective” editorializing and the public eventually might come around to seeing the logic and value of “stepping up” to “first-class” city-ness with a stadium that will humble Seattle and Atlanta and almost everything short of that 100,000 seat monstrosity they’re throwing up in Dallas.
If the legislature caves and agrees to a subsidy deal, Avista, which is all about profits and not all that concerned with community service to the Twin Cities, gets the fat back-end pay-off commensurate with their property’s real value. If selling that final block means moving what’s left of the Star Tribune over by Stand Up Frank’s or out to Blaine, so be it. Once that last block of real estate is carved up Avista will dump what’s left of the paper just to cut their losses.
I have calls in to the usual Journalism ethics types. We’ll see what if anything they have to say about how the Strib should handle coverage of Wilf’s campaign for public money. In the past, with the Cowles and the Dome almost 30 years ago, criticisms of their boosterism for the Metrodome had validity. It was certainly fair to raise and sustain skeptical questioning.
But with the Cowles it wasn’t like the Dome was going to make or break their overall business plan. With Avista, the suspicion is that this real estate deal is no peripheral matter. This is the guaranteed equity they came to town to harvest, and $45 million isn’t anywhere near enough to counter-balance the losses they’re looking at on the newspaper side. So … maximizing Zygi and the stadium is essential to them, not just a nice bonus after generations of doing family business in town.
For what it is worth, I spent three weeks last winter kicking around the capital at the start of the session doing mini-interviews with roughly a third of current legislators. My excessively blonde and dismayingly Republican former radio combatant, Sarah Janecek, needed an extra hand to assemble her Politics in Minnesota Directory.
Along with asking about No Child Left Behind, gas taxes, property tax relief, school funding and every other issue on the table, I made a point of asking all 70 or so of the legislators I interviewed about ponying up money for a Vikings stadium.
There wasn’t one — not one — who expressed even a hint of interest, much less enthusiasm for the deal. Disgust among the usual lefties was instantaneous. More to the point, most saw/see the Vikings stadium as the mega development deal it is, (unlike the Twins stadium), and what’s even more, a mega-development deal with a motivated, fully-capitalized mega-developer in place and ready to do what he does. Bottom line, the legislature sees Zygi Wilf as a very big boy who doesn’t need Minnesota taxpayers’ training wheels to help him make a nice buck here in Minnesota.
From super developer Wilf’s point of view, it is always better to spend other people’s money. So, if — for a piddly $40-$50 million more — he can get a jittery investment group with no long term commitment to Minnesota to get its newspaper subsidiary to play cozy ball and provide “objective” cover for nervous legislators, the deal gets has the potential to get all the sweeter.
Maybe this is black helicopters stuff. But considering the direct check passing from Zygi Wilf’s hand to Avista Capital Partners, skeptical Strib readers should prepare an acid bath for every word the paper publishes on the deal.
(UPDATE) This from Prof. Jane Kirtley at the Silha Center for the Study of Media Ethics and Law:
“Of course the Star Tribune should disclose in news stories and any editorials what interest they have in the land sale/stadium deal. This is not rocket science. Clearly, there’s a potential conflict if they are out boosting an undertaking from which they stand to profit. Business is business, but the news business requires transparency and disclosure. Media Ethics 101.
“That said, this isn’t the first time something like this has come up. I recall a few years ago something similar involving the Asbury Park Press (NJ) and some land of theirs that was being sold for some kind of business development — I think a big shopping center, but I don’t recall the details, so don’t quote me on that. In any event, I know the paper both editorialized and covered the story as a straight news story, and there were some questions asked at the time about whether they were being as forthcoming as possible. I didn’t read all the APP’s coverage, but I know that they did include disclosures in at least some of the pieces. And that’s clearly the minimum that anyone would expect.
“I don’t know what position the Strib or Avista are taking here. My guess is that if they argue against disclosure, it would be something along the lines of the way governmental entities justify avoiding state open records/open meetings requirements when they are contemplating land purchases or sales — they argue that secrecy is essential in order to protect the interest of the taxpayer in getting the best deal (lowest or highest, as the case may be). That argument never washes with me at the government level. But one would hope that a news organization that constantly argues in favor of openness would be consistent, no matter what its financial stake might be.”
Leave a Reply Cancel reply