Big Bad Wilf: Did Zygi’s Stardust Take It All Too Far?

Judge cites real estate family for ‘fraud, bad faith, conspiracy, racketeering’

Viking Funeral?

In June 2000, Orin told the trade publication Shopping Center World, “We don’t foresee going public—we like being private.” Avoiding the spotlight had always been a key value to all the greener builders. Yet in May 2005, Zygi was general partner of an ownership group that bought the NFL’s Minnesota Vikings for a reported $600 million. (Mark and Lenny were also part of the group, along with respected New Jersey builder David Mandelbaum.) Even before the deal’s completion, it was obvious owning an NFL franchise would subject the family to the kind of scrutiny it had always avoided.

At the initial press conference announcing the sale in February 2005, then-owner Red McCombs presented Phoenix businessman Reggie Fowler as the general partner of the buyers. Fowler deflected questions about whether he could afford 30 percent of the team, and the Minneapolis media smelled chum on the water. Within a week, Fowler had to admit to mistakes and oversights on his résumé. (That the purchaser of a $600 million company would submit a resume to the media that included his Little League baseball accomplishments was another obvious red flag.) The Minneapolis Star Tribune also reported his companies had been sued more than 30 times for not paying their bills. Amid doubts about Mr. Fowler’s finances, he withdrew his bid for the Vikings in early May 2005. Zygi substituted for Mr. Fowler as general partner, and the deal was quickly completed.

The Wilfs had the money to buy the team, but how could they not recognize they were now maintaining the kind of high profile Harry and Joseph considered antithetical to the family’s success?

Just a month into Zygi’s first NFL season as general partner, the Vikings faced an embarrassing player scandal. On Oct. 6, 2005, 17 players, according to Sports Illustrated, went on a drunken sex cruise on Lake Minnetonka during the team’s bye week between blowout losses. Zygi tore into the team in what ESPN described as an “intense, profanity-laced address.” NFL Commissioner Paul Tagliabue told him he inherited a staff that “lacked discipline, structure and accountability.” The incident halted the momentum that had been building toward public funding of a new Vikings stadium. (Previous owner Mr. McCombs had tried without success during his eight-year ownership to get a new stadium to replace the generally hated Metrodome.)

It took the Wilfs and the Vikings another seven years, but they succeeded in getting the state of Minnesota to pick up most of the tab for a new stadium. They used every trick in the NFL owners’ playbook. According to the Minnesota Campaign Finance and Public Disclosure Board, the Vikings spent more than $4.3 million on lobbying between 2006 and 2012. They played hopscotch among different local governments for different sites, eventually getting the city of Minneapolis to ante up $150 million to keep the Vikings in town. They even improved on the standard tactic of threatening to move the team of Los Angeles: They got NFL Commissioner Roger Goodell to play the heavy.

Legislation on the public subsidy for the stadium was stuck in committee, until Minnesota Governor Mark Dayton told reporters on April 19, 2012, that Goodell called and was coming to visit. It took exactly one day to break the logjam in the state senate on a public subsidy for the $977 million stadium.

Observed one Minneapolis businessman who is close to the governor’s inner circle, “This is the third major stadium in four years—a new U. of Minnesota football stadium, a new Twins stadium and now the Vikings. It is crazy to have two new football stadiums for so few games a year in a metro area this size. Also, the lead article in today’s Star Tribune notes that the stadium bids are coming in over budget. And the Vikings just announced that seat licenses will cost up to $10,000 per ticket for the ‘People’s Stadium.’”

With cost overruns already projected, why isn’t the outrage greater in Minneapolis, as it has been in other cities that tried to funnel taxpayer money to ultra-wealthy team owners? Polls have consistently shown that Minnesotans overwhelmingly oppose using taxpayer money to finance this billionaires’ playground, with even the stadium-friendly Star Tribune showing public sentiment running 74-22 against.

There are a variety of theories to explain the passive resistance. One source familiar with the Wilfs’ thinking says that, in meetings with other NFL owners, Zygi is “deferential to the point of ass-kissing,” characterizing Zygi as a “kiss-up-piss-down type” who beats up those beneath him on the status chain while fawning over those above him. This source claims that the reason the Wilfs selected Leslie Frazier, without interviewing anyone else, was to alleviate intense pressure in the NFL to hire African-American head coaches, thereby ingratiating themselves to fellow owners at a time when they were asking the league to float a fifth of the stadium’s cost.

Choosing a black coach in a very liberal, nearly all-white city (Prince notwithstanding) was a shrewd political move, as well. And it helped offset commenters on the Star Tribune’s stories who kept posting links to a case in which the Clinton Justice Department accused Garden City of refusing to rent apartments to black tenants. (The Wilfs entered into a Consent Decree, agreeing to place minority-friendly ads and paid a fine of $200,000; they were later found in contempt for not pursuing those remedies, to the point where a “federal judge pushed for a $1,000-a-day fine against the Wilfs,” according to the Star Tribune.)

Another reason for the lack of real resistance to the stadium could be the near media blackout. One source, who spoke on condition of anonymity because of the Wilfs’ history of litigation as well as his own proximity to the governor, explained it thus: “Minneapolis has become a one-paper town.  And that paper, the Star Tribune, happens to own unsalable land that happens to sit where the proposed Vikings stadium will be built and happens to be majority-owned by the buyout firm Wayzata Partners, who happen to be the richest guys in Minnesota.”

Additionally, the idea of “Minnesota Nice” came up several times—the theory that fast-talking outsiders take advantage of the trusting nature of these Lake Wobegon upper Midwesterners. The Mall of America, for example, was hatched on a public eager to have “the biggest anything” by real estate titans from Indianapolis and Edmonton, Canada. But it destroyed retail downtown in the Twin Cities. Neil deMause, an authority on public subsidies for sports stadiums, told The Observer in an interview that the Wilfs played their cards expertly. “Grassroots opposition movements cannot stand up to the long game. The Wilfs basically waited everyone out.”

The political opposition faded, as well. Long before a judge accused them of fraud and racketeering, State Senator John Marty wrote a Minnesota Nice letter to his colleagues lambasting the deal on the merits. In a seven-page single-spaced analysis, Sen. Marty detailed how the subsidy came to “$77 in taxpayer funds for each ticket, at every game, including preseason ones, for the next 30 years!”

Big Bad Wilf: Did Zygi’s Stardust Take It All Too Far?