Gov. Mark Dayton, the prime political force in the drive to build a $975 million stadium for the Minnesota Vikings, questioned the team owners’ business ethics Thursday and urged a review to ensure that team’s commitments in the stadium deal are “truthful and accurate.”
“I find it very, very concerning,” Dayton said Thursday
Dayton’s harsh critique came after a New Jersey judge said that Vikings owner Zygi Wilf and his family’s real-estate business committed fraud, breach of contract and violated the state’s civil racketeering statute in a two-decade-old real estate deal. The lawsuit began long before the Wilfs purchased the Vikings in 2005, but Dayton said it raised serious questions about the state’s own dealings with them as they edge toward the Aug. 23 signing of the final agreement for the new $1 billion stadium.
“I would urge the board to have its legal counsel assure them and the people of Minnesota that all the representations made by the team and its owners are truthful and accurate,” Dayton said in a statement.
The team says the lawsuit has nothing to do with the family’s ownership of the Vikings or the stadium deal with the state and the city of Minneapolis.
“The Vikings have spoken with Governor Dayton’s representatives and the Minnesota Sports Facilities Authority and [have] assured all parties that this lawsuit will have absolutely no impact on the stadium project,” Zygi Wilf and his brother, Mark, said in a statement. “We look forward to our continued work with the MSFA to build this statewide asset on time and on budget.”
At the Farmfest trade show Thursday, Dayton did not accuse the Wilfs of any questionable dealings with him or the Legislature, which approved a publicly-funded stadium in May of 2012. Referring to the New Jersey case, he said: “It’s just far away from the kind of standard we have for business here in Minnesota. It’s very distressing.”
‘Bad faith and evil motive’
The lawsuit involved a dispute over a business partnership that built a 764-unit apartment complex in Montville, New Jersey. Superior Court Judge Deanne Wilson found that the Wilfs failed to meet the “barest minimum” of their responsibilities as partners. “The bad faith and evil motive were demonstrated in the testimony of Zygi Wilf himself,” Wilson said, according to an account in the New Jersey Star-Ledger.
“This is a business dispute about terms of a deal from 21 years ago,” said Lester Bagley, vice-president of public affairs for the Vikings. “It’s an ongoing legal matter so we can’t really comment. But the Wilfs have always operated with honesty and integrity and they’re good partners and they’re good partners with the state of Minnesota and the city of Minneapolis.”
The resolution of the civil suit comes as the authority and team are in the final stages of negotiating stadium use and development agreements, and just weeks before the state plans to sell taxpayer-backed bonds to help finance its portion of the construction. The stadium financing legislation calls for the state of Minnesota and city of Minneapolis to pay for $498 million of the $975 million construction cost. The Vikings would pick up the remaining $477 million through an NFL loan, stadium naming rights, sponsorships and seat licensing fees.
About $200 million of the team’s commitment will come from a fully guaranteed NFL loan that will be repaid over 15 years. Brian McCarthy, a league spokesman, said Thursday in an e-mail that the outcome of the Wilf’s civil case will have no bearing on the team’s standing or the NFL’s commitment to the stadium project. “League financing remains on track and unaffected,” McCarthy wrote.
Michele Kelm-Helgen, who helped put the deal together as a top Dayton aide and now chairs the Minnesota Sports Facilities Authority, said the authority “takes the allegations raised in the New Jersey lawsuit and the comments from Judge Wilson very seriously.” She said the agreements with the team include “a detailed audit and oversight of the Vikings financing plan for the stadium, along with a review of their assets and financial position that will back their stadium financial plan.”
The Vikings and the Wilfs also have assured her that the civil court battle “will have no bearing on the stadium. They will have the resources to move ahead,” she said.
Bagley declined Thursday to identify the sources of the team’s financing. But in their statement, Zygi and Mark Wilf said “several leading financial institutions” were involved and that “the funding is secure.”
Dayton said he believes there is no need to revise the state law that spelled out the agreement among the state, the city and the team. “But again if there were representations made as part of the negotiations [that] prove to be untruthful and inaccurate, that changes the situation entirely,” he said.
Minneapolis Mayor R.T. Rybak said he was surprised by the Wilfs’ legal problems.
“We should continue to negotiate jobs on the public’s behalf to ensure that we have the safeguards in place to ensure this is a successful project,” Rybak said. “So far, my experience with the Vikings tells me it will be.”
The stadium is expected to open for the 2016 NFL season.
Dayton’s concerns over the Wilfs’ business practices is the latest in a series of financing controversies that have plagued the project the past year.
Last November, the governor sent a sternly-worded letter to the Wilfs and threatened to undo the deal after the team sent a survey to season-ticket holders to gauge their willingness to pay thousands of dollars more for personal seat licenses to secure the best seats.
The Wilfs held their ground and Dayton later backed off, but only after team officials and the stadium authority said they would continue to study the licensing issue.
Earlier this year, Dayton was forced into action again when it became clear that the original plan to fund the state’s portion of construction with tax revenues generated from electronic pulltab and bingo games was a bust. Dayton proposed a new source, which the Legislature approved this year — revenue from the increased cigarette tax and from closing a corporate tax loophole.
Staff writers Rachel E. Stassen-Berger and Jennifer Brooks contributed to this story.