Video (01:47) : The Minnesota Vikings said Friday there is "no point" in negotiating the user and development agreements for a new stadium while the state agency responsible for it is conducting an investigation of the team's owners.
The Vikings stadium project encountered fresh problems on Friday when an attorney for the Minnesota Sports Facilities Authority revealed that team owners Zygi and Mark Wilf have refused to prove they can pay their share.
The Wilfs have been embroiled in a New Jersey lawsuit where a judge found that they had systematically defrauded their partners on a real estate project there. The Minnesota sports authority has since called for an independent audit of the Wilfs.
In a statement released Friday afternoon, attorney Peter Carter, of Dorsey & Whitney, said that despite "multiple requests" for such information, the Wilfs had, to date, "refused to provide us with any personal financial information that our advisers need to obtain comfort that the New Jersey court case will not impact their ability to meet their financial obligations."
Carter's statement came in the wake of earlier remarks by Vikings spokesman Lester Bagley, who said the team was cooperating fully with the review and producing all requested documents.
That, Carter said in the statement, was "simply not true." The people of Minnesota, he said, "deserve to know that the team can finance their part of the stadium construction budget — without delay."
Bagley, contacted on Friday evening, said that "it's not productive to engage in this kind of back and forth with the MSFA. The Vikings stand behind our comments from earlier today."
Meanwhile, the New Jersey judge who had already ruled against the Wilfs on Friday again lashed out at Zygi Wilf for the way the books were kept on a New Jersey development.
After "almost 20 years as a litigator and almost 17 years as a judge, much of it doing business litigation, [I've] never seen an entity run like this," New Jersey Superior Court Judge Deanne Wilson said of the Wilfs' business practices.
Construction could be delayed
Earlier in the day, Sports Facilities Chairwoman Michele Kelm-Helgen had called on the team to return to negotiations over final stadium contract language or risk a construction delay that could push back the scheduled opening date of July 1, 2016, by at least a month.
Kelm-Helgen said that the talks, which broke down earlier this week, must resume while the authority's lawyers conduct a review of the New Jersey litigation and perform extensive background checks on the Wilfs' finances.
"If that work does not continue concurrently, our schedule could slip," she told a meeting of the authority on Friday.
Gov. Mark Dayton on Friday evening said that he strongly supports the authority's position. "The team's owners need to understand that the Board's additional due diligence is an absolutely necessary response to the severe criticisms made recently" by the New Jersey judge, he said in a statement. "The Authority did not ask for this difficult situation; it was foisted upon them. I thank the Board members for acting responsibly to safeguard our public investment."
Scott Stenman, a consultant to the authority, said at Friday's meeting that "We're risking the beginning of the 2016 football season." The Vikings are slated to play the 2014 and 2015 seasons at TCF Bank Stadium at the University of Minnesota.
After the authority meeting, Bagley said the Vikings could not negotiate agreements until the authority completed its audit. "Until they complete this due-diligence inquiry and have the confidence that we are good partners, we can't have partnership negotiations," Bagley said.
That position has stalled negotiations on use and development agreements that officials say are needed to arrange financing and begin construction.
In response to the team's position, authority members on Friday suggested that the public body stop negotiating and merely offer the state's position to the team — take it or leave it.
"We ought to slide the documents across the table … the way we want them resolved, and say, 'Sign them, that's our deal,' " said authority member and Target Corp. executive John Griffith. A delay, he said, could result in additional costs that would be the responsibility of the public, even though it is the team's outside business interests that triggered the new investigation.
Griffith said the authority also should refuse to release "one dollar" of its contingency fund for add-ons to the project. Griffith's comments, supported by other members of the authority, were unusually terse for what had appeared to be an amicable relationship between the MSFA and the team.
This was the first authority meeting since the New Jersey judge, in ruling against the Wilfs, said the family showed "bad faith and evil motive" in defrauding business partners. At the time, Judge Wilson found that the Wilfs had committed fraud, breach of contract and violations of the state's civil racketeering law. Wilson is set to award damages in coming weeks, based in part on the Wilfs' net worth.
Alan Lebensfeld, who represents a plaintiff in the New Jersey case, said of the trial's implications for the stadium: "This thing has mushroomed beyond what any of us had anticipated."
The Vikings are responsible for $477 million of the $975 million stadium, with the state and city of Minneapolis paying the rest. Kelm-Helgen and the authority hired Dorsey & Whitney to comb through the lawsuit, the Wilfs' background and finances in a process known as "due diligence."
Bagley said after the authority meeting that the team was cooperating fully with the review and producing all requested documents. But, he said, it's a barrier to negotiations with the authority.
"The due-diligence inquiry is having a negative impact on the negotiations on those fundamental documents," Bagley said, adding that the Wilfs — who have not commented publicly on the New Jersey case — are disappointed that the New Jersey suit has become an issue.
"I think they're remorseful that this has taken away the energy and excitement that is building for the stadium," Bagley said.
Kelm-Helgen said the authority would like to have the agreements signed and the due-diligence report finished by Sept. 15, so that both the team and the state can meet deadlines for securing financing and construction can begin on time. That would require the Vikings to come back to the negotiating table next week, she said. Kelm-Helgen said that if the Wilfs provide the needed information by Sept. 1, the project can stay on schedule. "We still have time," she said.
At this point, Kelm-Helgen said the worst-case scenario is a one-month delay in 2016. She said she does not believe such a delay would add to the cost or that the project would be delayed longer. She said the authority has spent $10.4 million on the project to date.
Bagley said that whatever damages are awarded in New Jersey, the Wilfs will make their commitments in Minnesota. He said the team has organized meetings with the NFL and a consortium of banks and private investors, all of whom "have said unequivocally that the Wilfs have the financial wherewithal to finance this project."
Neither Bagley nor Kelm-Helgen was willing to speculate about what would happen if the investigation produces new information that jeopardizes the current agreement.
In the public comment period, the authority heard from Chuck Turchick of Minneapolis. He pointed out that government and Vikings officials have been wrong about financial predictions before, including the ability of new electronic pulltabs to finance the state's share.
"And now we have a situation where all the decisionmakers plead ignorance about a 21-year-old lawsuit that any reasonable due-diligence would have uncovered," Turchick said. He called on the authority to release the details of the new investigation. "The public needs to see this data if they are to have any faith in this process," he said.
Staff writer Baird Helgeson contributed to this report. Jim Ragsdale • 651-925-5042
Mike Kaszuba • 612-673-4388
Janet Moore • 612-673-7752
