Anyway, the Star Tribune sale might be worse than it looked before.
From the net 1999 purchase price of 1.2 billion it was sold for $530
million (with McLatchey
getting the tax writeoff that can offset
the profits they received from selling
the "plums" of newspaper
"bundles" they bought. That might effectively jack the real
value of the sale up to $600 million or half price.
If you were wondering if they bought "just the newspaper".
Apparently not. I vaguely knew of the Star Tribune property but apparently
five square blocks of land
adjacent to the "Metrodome"
owned by the Star Tribune is include in the sale. Thus it looks like
the buyers "bought the boatload". As for the Metrodome,
it is an air supported stadium much like the old Pontiac, MI "Silverdome".
It has served us well but it was built "Spartan"
and is a quarter century old. The football Vikings have
an "Iron clad" lease there
until 2011. The Metrodome
is dual use but they are building a new Twins and U of MN Gopher
football stadium.
If you thinking long term (they "fast track construction
here.) the Strib
buyers could offer a land swap where they give the land for the new Vikings
football stadium and then the Metrodome
is demolished. Thinking 2012 the "Phase II" of light rail
should be running so we should have at least 60 cars. With a "tight
standing pack of 250 people per car the fleet
has a capacity of 15,000 people. Already one third of the Metrodome patrons
use the 28 cars now in service these can serve the stadium well.
Being adjacent to downtown the Metrodome
and future stadium will have plenty of parking after work hours so parking
lot land is not needed. If you live in this area in 2012 or 2015
there is also a Metrodome
light rail station. It will take you downtown for fifty cents (current
downtown fair or to the airport or
Mall of America (or by then downtown St. Paul but they roll up the
sidewalks in St. Paul after dark as the 2008 Republican convention
here will discover.) If you want "artsy-fartsy"
already the new $400 million dollar
Guthrie Theater will something like
ten stages is less than half a mile away. Oh yes, you can walk to the
Vikings game or any other event at the stadium.
Point is, this is primo
development land, especially if there is a land swap to build a new
football stadium while the Vikings continue in the Metrodome
until the new stadium is completed. The Vikings returned interest in a
downtown stadium has been news for two or three months so the Strib
buyers have had to know it. Next is the Star Tribune's relatively new
printing plant with a big "footprint". That riverfront
area is now "hot" for development. While the Strib
plant fills the presses with the lower grade three color catalog type stuff
they could easily modify the equipment to
print something like the five color glossy like Vanity Fair and still do the
Sunday newspaper. (I browse the printing trade mags
at work so I sort of understand this.)
Basic point is that the printing plant and it's "expansion land"
is still worth it's original $100 million. As for the Metrodome
six blocks I'd guess that that is worth $100 million to $200 million.
Let's take the middle, $150 million. With the printing plant that's
$250 million. Throw in a few other "non core newspaper" assets
and you have half of the $530 million purchase price. That would put
the Star Tribune and it's "core" square block office building at
$265 million. Apparently the Star Tribune gets over $100 million per
year in "net revenues". Someone tried to explain this to me.
I don't know if it's correct. "Let's say the mortgage is paid off
so no debt service is figured in. This is the revenue versus expenses
with no debt service of depreciation. The person tried to break it
down to my situation. My original mortgage, now paid off was $422 per
month for 30 years, If I bought the house today and got a market
mortgage I would be paying $1200 more. The point is my current monthly
"cost" is around $400 per month versus $822 per month with my
original mortgage of $1600 per month if bought today. I don't know if
this is correct but absent of debt
service my house cost is around $400 per month. This might be the
revues minus loan service.
The point of this is that the printing plant and it's land is sort of a
"wash" with a stable value and this stadium five blocks is the
"bonus prize" that has
logically appreciated in value greatly since 1998 when McLatchey
bought the Strib.
There was no light rail or station then and the Vikings lease was still
"iron clad to 2011.
I'd need an accounting team to really figure it out but it looks like the
"core" Star Tribune newspaper
assets declined well over half.
Here is a paste of the article link and text.
StarTribune.com
STADIUM010307
Last update: January 02, 2007 – 10:20 PM
Vikings wait for Star Tribune sale to resume talks about land
Zygi
Wilf,
who wants a new stadium, had talked to the paper already about buying its
five blocks near the Dome.
By Kevin Seifert,
Star Tribune
The Minnesota Vikings expect to continue discussions about purchasing the
Star Tribune's properties near the Metrodome,
team owner Zygi
Wilf
said Tuesday.
The Vikings, who hope to build a stadium as part of a larger downtown
project, are awaiting completion of the newspaper's sale from the McClatchy
Co. to Avista
Capital Partners. The team received word Tuesday that the deal could close
by the end of February, at which point talks to purchase the land would
resume.
Wilf
already engaged in "preliminary" talks with Star Tribune
executives prior to the sale agreement, he said.
"The Star Tribune property is part of that redevelopment [area]," Wilf
said, "and we'll probably be in talks with them to discuss aspects of
the property."
A Star Tribune official downplayed the discussions.
"At this point, it's still preliminary conversations with the Vikings,
and they haven't talked to Avista
yet because Avista
doesn't own the paper," said Ben Taylor, the paper's senior vice
president for marketing and communications. "There haven't been a lot
of discussions. ... It's minimal."
The Star Tribune owns five blocks of land near the Metrodome.
Wilf
has been pursuing redevelopment of the site since last spring, when the
Legislature failed to approve his plan for a $1.67 billion sports, retail
and entertainment complex in Blaine.
Wilf
said the Vikings initially did not know whether the Star Tribune land was
part of the sale to Avista,
which announced the agreement Dec. 26. But in response to inquiries, the
team learned Tuesday the $530 million deal will include transfer of the land
to Avista,
which has offices in New York and Houston.
Wilf,
a retail and commercial real estate developer, has supported a site study
initiated by the Metropolitan Sports Facilities Commission. The study, being
performed by ROMA
Design Group at a cost of $350,000, is scheduled to be completed Feb. 1.
No financing plans have emerged for the project, but Wilf
said Tuesday that "the critical aspect" is to receive assistance
from the Legislature, which convenes today. He said he will be patient with
the legislative process but warned of rapidly rising costs.
Staff writer Mike Kaszuba
contributed to this report.
©2007 Star Tribune. All rights reserved.
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