Schafer: Vikings review is an exercise in the obvious

  • Article by: LEE SCHAFER , Star Tribune
  • Updated: September 5, 2013 - 8:24 PM
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Mark and Zygi Wilf.

Photo: Carlos Gonzalez, Star Tribune

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David Mandelbaum’s name doesn’t often appear in the Star Tribune, which is almost certainly just fine with him.

Mandelbaum, like Mark and Zygi Wilf, has been active in real estate and has done well in his career. Among the assets he controls is an interest in Vornado Realty Trust worth more than a half-billion dollars.

Alan Landis is in real estate, too, and his name doesn’t appear much in our local newspaper, either. He did make a late 2011 edition of the Palm Beach Daily News in Florida, when he and his wife bought a condo described as “one of the more spectacular in Palm Beach” for $5.48 million.

Mandelbaum and Landis are not of much interest here in Minnesota, except they happen to be minority owners of the Minnesota Vikings.

That would have made them part of the due diligence effort by the Minnesota Sports Facilities Authority that concluded this week that the team can meet its obligations toward a new stadium in Minneapolis.

Determining whether an ownership group that includes people like Mandelbaum and Landis can pay its bills would seem to have been an exercise in finding the obvious. It doesn’t take a car full of Dorsey & Whitney associates to figure out that the members of the Vikings ownership group just might be well-off.

This due diligence project came about only because the team’s most prominent owners, the Wilf family, have lost a high-profile and complex lawsuit in New Jersey, getting harshly criticized by the judge in the process.

In a brief conversation with Michele Kelm-Helgen, the chairwoman of the sports authority, she made a perfectly sensible case for why the authority had to quickly figure out how big the damages tab could run in that court case and whether there were any more potential judgments or lawsuits just like it out there.

But the Vikings ownership group is in fact a team that can weather some fierce storms. Zygi Wilf leads it, but his partners include not only his brother Mark and his cousin Leonard Wilf, but also Mandelbaum, Landis and the entrepreneur Reggie Fowler, who was instrumental in bringing the Wilf group to the Vikings opportunity.

Leonard is interesting in that he’s not well-known here but appears to be every bit as high-profile in the greater New York area as his cousins.

It was Leonard who was pictured with Mark, both with 2-foot-long scissors in hand, at the October 2010 ribbon cutting at Wilf Hall at the New York University School of Law. Last year Leonard’s son, Orin, explained to the New York Times that he and his dad own between 5 and 10 percent of the New York Yankees baseball club, in addition to his dad’s interest in the Vikings.

The three principals of the Vikings, the Wilfs, are said to own 80 percent of the team, and while they were all involved in the New Jersey case, the other investors in the team had nothing to do with it.

I can understand wanting to know how the team’s ownership is structured and the obligations they have to each other, because there have been plenty of ventures that tipped over when wealthy partners declined to kick in any more money.

But in a typical closely held business that needed money and couldn’t borrow it, its managing partner would issue a notice called a capital call. The other owners would either come up with a check or see their percentage ownership reduced.

Does anybody really think that the likes of David Mandelbaum can’t manage a capital call? Or that he would walk away from a highly valuable and appreciating asset like a National Football League franchise?

There’s also the question of just how big any Vikings owner’s obligation in the stadium project might be.

The team has agreed to provide $477 million. The Vikings can finance $200 million through the NFL, and maybe get some of the remaining $277 million by selling builder’s seat licenses, which is the right to purchase tickets to games. These licenses have raised a lot of money in other NFL markets, with some that top out at $80,000 per seat selling well for the new San Francisco 49ers stadium.

There are naming rights to the stadium to be sold, too, which in Minneapolis can also fund the Vikings’ contribution. That, too, has gone well in San Francisco, with a May announcement of a $220 million rights deal with Levi Strauss & Co. showing just how much economic value there is in an NFL stadium’s name.

San Francisco is a larger media market than the Twin Cities, so the figures here would likely be smaller. But the proceeds here, along with seat licenses, might still be enough so that not only can the Wilfs and their wealthy partners meet all of their financial obligations, there’s a chance I could have.

So of course this due diligence effort really wasn’t about finances at all. The authority could have managed any financial risk without a showy investigation.

What we just saw was political, and even as politics the due diligence project seems to be of limited value.

Opponents of public financing for a football stadium will not be convinced of a single thing. And while Kelm-Helgen explained that due diligence had already occurred and more was planned, hustling to check out the Wilfs now, only after learning of the outcome of a case in New Jersey, gives the public the impression that no one thought to do any real spadework before.

The team and its owners had no choice but to cooperate, but it will be interesting to see what happens with the bill the Vikings will get for the extra diligence work.

It would not be the least bit surprising to find out that it takes a good long while for that bill to be paid. And not because the owners don’t have the money.

 

lee.schafer@startribune.com • 612-673-4302

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