Team officials blamed the deal's collapse on turmoil in the nation's credit markets, which have made it difficult for even blue-chip companies to obtain loans. At the same time, the Vikings
said they remain committed to building a stadium on the Metrodome site and are continuing negotiations for other nearby parcels.
Lester Bagley, the Vikings' vice president of public affairs and stadium development, said there is no connection between Wednesday's news and the team's position on remaining in Minnesota.
"We have no intention to pursue any other location other than the Minneapolis site. That's the best and most cost-effective site there is. Mr. [Zygi] Wilf's position since the day he purchased the
Vikings has been that he is not moving the team. That has not changed."
The Vikings completed due diligence on the Star Tribune property.
After that, Bagley said, "We decided not to proceed with the terms of the contract."
The Vikings' decision comes four weeks after the Aug. 1 collapse of the Interstate 35W bridge in Minneapolis and two weeks after widespread flooding in southeastern Minnesota - both disasters that are to be addressed in next month's special legislative session.
"In the last 30 days, events have impacted a lot of lives in Minnesota," Bagley said Wednesday. "It's time to set the stadium issue aside. There will be a more appropriate time to engage on the
stadium." Vikings owner Zygi Wilf said in early August that the team would not press its stadium agenda during the special session.
The team has been angling for a new stadium on the downtown blocks, with a projected cost nearing $1 billion. Though Wilf's family has an extensive real estate portfolio, he has repeatedly
indicated that a Vikings stadium would need taxpayer help. The team's previous deal to build a stadium in Anoka County called for $280 million from a county-wide sales tax.
In June, the Vikings had agreed to pay Avista Capital Partners, which owns the Star Tribune, a reported $45 million for the land, which includes several blocks of surface parking and the
newspaper's 25-year-old Freeman building, the newer of its two downtown buildings. The package had been valued at $21.5 million, according to Hennepin County records.
Bill Lester, executive director of the Metropolitan Sports Facilities Commission, said the commission's top priority is to lock the Vikings into a 30-year commitment to Minnesota beyond Jan. 31, 2012, when the team's obligation to play at the Metrodome expires.
Lester said the collapse of the Star Tribune deal "doesn't necessarily mean it's dead altogether." He said he has no evidence that the Vikings felt the Star Tribune's price was too high, but
"maybe they felt that way."
Wilf had touted the Star Tribune deal as a major step toward building the stadium. But that acquisition by itself left unanswered how the Vikings would pay for the facility.
"Conceivably," Bagley said, the team could make a pitch to the 2008 Legislature. Bagley added that the canceled land sale will not affect other parts of the Wilf's vision for downtown Minneapolis.
He said the team still plans to pursue its Winter Garden concept for an indoor light-rail station, as well as other plans for commercial and residential development.
Experts say the nationwide credit crunch that originated from bad subprime mortgages is spreading quickly throughout the real estate market. Businesses are finding it tough to borrow money because Wall Street investors, who had fueled the subprime boom by buying
the risky mortgages, have stopped lending money. The Federal Reserve two weeks ago responded to the credit crunch by easing a key interest rate.
"It has been a fairly dramatic change," said Terry Kriesel, senior vice president of commercial real estate for St. Paul-based Bremer Financial Corp. The lack of credit "is creating a lot of
Mark Reiling, a principal with Colliers Turley Martin Tucker in Minneapolis, said that commercial real estate lenders have tightened their underwriting standards.
"Borrowers are getting [fewer] loan dollars than they would have a few months ago," Reiling said.
By backing out of the Star Tribune deal, Wilf runs the risk of losing the land to another buyer, although the Vikings remain the most likely owners.
Mayor R.T. Rybak said that whoever buys the downtown East property "makes a smart purchase. ... If it's not going to be them [Wilf and the Vikings] it's going to be some other smart person."
"We all as a community have learned that these stadium games have many innings and quarters," Rybak said.
Two key legislative leaders and Gov. Tim Pawlenty didn't respond to requests Wednesday for comments. Another legislator, Senate tax chairman Tom Bakk, DFL-Cook, said he wasn't surprised by Wilf's news.
"Whether his entire economic development is viable any more in this investor market is probably very much called into question," Bakk said.
The Vikings said the change of plans was limited to the Star Tribune land purchase, and Wilf plans to go ahead with buying a block between the stadium and Star Tribune headquarters that
contains the Metrodome light-rail transit station. The price for the option on that property, which is owned by the city, is $12.5 million in 2008 and $14.5 million the next year.
The Vikings previously abandoned plans to build a stadium in Anoka County. Steve Novak, that county's lead negotiator on the issue, said if the Vikings were to revive that proposal, "we would
treat them like any business."
"I can't find much logic in very many of their moves in the last few years on this issue," Novak said.
Chris Harte, Star Tribune chairman, said the newspaper may look for other buyers or just hold the land.
"We felt it was a great deal," Harte said of the Vikings agreement. "We hope later on [a deal] will happen."
In the meantime, the Star Tribune will continue to move employees out of the Freeman Building and into 425 Portland Avenue, Publisher Par Ridder said.
"I wish the deal had gone through, but it didn't," Ridder said. "We will stick to the plan."
Ridder said the loss of the $45 million, which the Star Tribune had planned to use for reducing the company's debt, would not affect the newspaper's overall financial health.
"It wasn't a make-it-or-break-it deal for us," he said.