by Neal St. Anthony
Executives of Minnesota's two largest financial institutions intend to continue their
quest for a privately financed Minneapolis ballpark, despite the death of a Minnesota
Twins-pushed bill at the hands of House Republicans.
Jim Campbell, chairman of Wells Fargo Bank of Minnesota, and John
Murphy, his counterpart at U.S. Bank Minnesota, said they remain optimistic
that they can raise $50 million or more toward construction from corporations and affluent
investors, and possibly more from the general public.
The businessmen, co-chairs of New Ballpark Inc., also said their financing model
could be modified to provide a return to taxpayers on the state loan that would be
necessary in the event that they can't raise enough from Twins owner Carl Pohlad and
other private sources to finance a $250 million stadium.
An interest-free loan of $140 million from a surplus in the state worker's compensation
fund proved the stumbling block in the Twins' proposed $300 million ballpark bill at the
Legislature this month.
"We have commitments from the chief executives of Wells Fargo [Dick Kovacevich]
and U.S. Bancorp [Jerry Grundhofer] to continue with this," Campbell said.
"We'll work for a collaborative agreement this summer, something that we can go with
to the 2002 Legislature."
Campbell and Murphy head a nonprofit group formed last year by business, civic and
labor interests. New Ballpark is trying to finance a neighborhood-style ballpark north of
the Target Center.
The Twins bill pegged Pohlad for $100 million. New Ballpark's model suggests $125
million from the owner. A separate citizens' panel appointed by short-time Twins CEO Chris
Clouser last year recommended Pohlad cover up to half the cost of a $300 million stadium.
Campbell last week wrote House sponsor Harry Mares, a White Bear Lake
Republican, and other key legislators and said that New Ballpark probably could finance
about $50 million -- "in addition to what the Twins and other private investors might
On Thursday, Campbell and Murphy discussed the architecture of their plan, prepared by
investment bankers at U.S. Bancorp Piper Jaffray. It can be modified to mitigate
concerns about the state loan -- which Pohlad agreed to guarantee. The offering also may
be expanded to include small investors.
"We still have a window of opportunity," Murphy said. "Bud Selig,
the baseball commissioner, told us that. But we need a plan in place within a year. So,
we're going to keep trucking, at least until next session."
The two, who have been quietly encouraged by Gov. Jesse Ventura and key
legislative leaders, said Selig also assured them that Major League Baseball will produce
some sort of salary cap and revenue-sharing that would help so-called small-market teams
such as the Twins double their revenue to about $70 million within three to four years.
Without a new ballpark, Selig has indicated that the Twins and at least one other
small-market team might be bought out by other owners.
Campbell and Murphy said their plan won't work without an iron-clad commitment from
Major League Baseball to reform a system that has led to the New York Yankees and other
big-market teams dominating baseball thanks to huge payrolls derived from lucrative
broadcasting contracts. Any legislation would require those reforms as well or the stadium
deal would be dead.
Aides say Campbell and Murphy were concerned when the Twins launched their legislative
offensive before New Ballpark had armed itself with commitments.
"The Twins, I think, have taken a constructive approach," Campbell responded.
"The Pohlads surprised me and stepped up with their $100 million and a guarantee of
the state loan. No ball team owner on earth has done that."
The Twins bill was blessed by Sen. Roger Moe, DFL-Erskine, the Senate majority
leader, and was considered a much stronger one than flops of four years ago in which
Pohlad, a banker and businessman whose net worth is estimated at more than $1 billion,
wasn't seen as committing enough from his own wallet.
Campbell and Murphy hope to improve on this year's bill through a financing plan that
Raise at least $50 million toward construction through the sale of $130 million in
Class B preferred stock. About $80 million would be invested in corporate bonds that would
pay about 7.5 percent in interest. The investors would get about a 3.5 percent annual
dividend. The difference would go toward debt repayment over 20 years. The investors in
the public stadium corporation would hike their total return to about 5.5 percent through
the use of stadium depreciation, a non-cash expense that lowers tax liability. (The fall
in interest rates already is causing the investment bankers to lower the return
U.S. Bancorp, Wells Fargo, General Mills, businessmen Wheelock Whitney and
Vance Opperman and others have committed at least informally after reviewing the
private-offering memorandum, obtained recently by the Star Tribune.
Campbell said he learned early that some Twin Cities companies are willing to
participate, but as modest-return investors, not donors.
"Major League Baseball is not in the same bucket as the United Way," he said.
'We're not going to pay a market rate of return. We have to pay at least a competitive
rate of return.
- See the Twins buy at least $100 million-plus in Class A preferred stock, which would not
receive a dividend from Minnesota Ballpark. However, it would give the Twins a 20-year
lease and control of stadium revenues, less rent to cover maintenance and operations,
including concessions and revenue from private suites the Twins construct.
- Extend the mortgage beyond 20 years or come up with a property-tax accommodation that
would permit increased cash flow from the stadium in order to pay some minimal return, if
necessary, on any state loan contemplated by a bill next year.
- Contemplate the possible sale of a third class of stock to small investors. Campbell
pointed to a tall stack of notes on his desk. Many Wells employees and others have said
they want skin in a ballpark.
"I was nervous about getting involved in this," said Campbell, 58, who is
nearing retirement and wary of a public-relations debacle on his watch. "But our
employees and customers have been supportive.
"If we can get close to doing this deal, we might open it up to the public.
Some business leaders have indicated that part of the problem lies with the lone-wolf
reputation of Pohlad, a self-made man who made his money buying, building and selling
banks and bottling concerns.
But Campbell said the issue more directly is that many firms don't regard pro sports as
either central to their business or a community service, and just aren't interested. At
least one major corporation, Target Corp., reportedly has rejected New Ballpark
because the mission doesn't fit its business or philanthropic interests.
The predecessor companies and executives of today's U.S. Bancorp and Wells Fargo were
integral to the effort to recruit the Twins in 1960 and build the former Metropolitan
Stadium. They also were investors in the $55 million in bonds sold in 1979 to finance
the Hubert H. Humphrey Metrodome.
Last month, a Minneapolis City Council committee and Mayor Sharon Sayles Belton,
endorsed the New Ballpark approach and authorized the city staff to begin negotiations to
acquire the proposed site, an 11-acre parking lot between Interstate Hwy. 394 and Hennepin
County's garbage incinerator and N. 5th and N. 7th streets.
The city has estimated the land is worth about $10 million.
Coincidentally, an amendment to the City Charter bars Minneapolis from spending more
than $10 million in public money for a sports stadium without a citywide referendum.
"At the end of the day, we want to be able to go to the ballpark," Murphy
said. "Or at least say we gave it our best shot."