A New Jersey judge last week ruled that the owners of the Minnesota Vikings had committed fraud and breach of contract and violated that state’s civil racketeering statute against their partners in a real estate deal.
That ruling, and its blistering declaration that Zygi Wilf’s own testimony established his “bad faith and evil motive,” is alarming in Minnesota, where we the taxpayers are effectively partners with the Wilfs in a $975 million stadium deal.
The final specifics of that stadium project are supposed to be concluded this month in an agreement between the NFL franchise and the Minnesota Sports Facilities Authority.
Gov. Mark Dayton, who pushed the stadium bill through the state Legislature in the final days of the 2012 session, responded to the New Jersey verdict by urging the authority to redouble its due diligence on financial statements and commitments by the Vikings.
There are doubtless many in and out of state government with buyers remorse on the stadium bill. The public financing mechanism — electronic pulltabs — has proven woefully optimistic, and the state has already been forced to pledge general fund money as a backstop for its obligations.
But the basic outline of the deal is done and signed into law. Unless the stadium authority can legitimately conclude that the Wilfs aren’t going to live up to their obligations in this matter, it shouldn’t scuttle the stadium.
The state does, however, have a legitimate interest in making sure that the Wilfs’ obligations are spelled out precisely and that those obligations are met.
One key issue to be resolved before the state starts selling its bonds this month: who will control the construction, the Vikings or the stadium authority. The entity with the final call on construction issues will also be the entity responsible for paying for any cost overruns.
In the case of Target Field, it was the Twins who controlled construction, and the Pohlad family, according to the Minnesota Ballpark Authority, ultimately put an additional $65 million into the project.
There is considerably more public money being devoted to the Vikings stadium (the public financing is greater than the entire cost of Target Field), justified by the state’s interest in using the facility for non-NFL purposes (such as college baseball in the chill of early spring). Given the New Jersey ruling, it would be prudent to ensure that the state isn’t burdened with runover costs. It is also necessary to protect the intended non-NFL use.
That’s not an easy needle to thread, but the New Jersey case establishes that it would be rank foolishness to blindly trust the Wilfs to do the right thing. If they played hardball to the point of fraud with their partners there, why assume they wouldn’t do the same here?
Other views on this topic:
“The judge’s decision means the stadium authority’s legal counsel and their financial advisors need to renew their due diligence and really go back and review the representations made by the team and the owners. It’s very distressing.”
— Gov. Mark Dayton
“The civil lawsuit will have absolutely no impact on the stadium project. The Vikings guarantee of $477 million in private financing has gone through two years of review and due diligence by our public partners...The Funding is secure.”
— statement by Vikings owners Zygi and Mark Wilf
What we have been reminded of in the New Jersey lawsuit is that the Wilf family didn’t accumulate its wealth by winning the Powerball. Hardball is their game. The Wilfs are real-estate developers in one of the most bare-knuckled markets in the country. They are canny dealmakers — and in this case deal-breakers — and Minnesota is now their partner in an important and expensive real-estate project.
— Star Tribune editorial board