Tuesday, March 01, 2005

Why Fowler?

I know that I promised more draft analysis and more on the Moss trade, but there is another issue that begs for attention and which simply will not, and should not, go away. That issue is why Reggie Fowler would be named the lead man in the potential purchase of the Vikings.

Since Fowler agreed in principle to purchase the Vikings from Red McCombs, countless hordes have debated Fowler's ability to complete the transaction. The most optimistic figures suggest that Fowler has assets worth slightly more than $400 million. Whether this figure is accurate, I will leave for the NFL to decide.

More pressing among my concerns is why any group would put forth Fowler as the lead figure for a prospective ownership group. Let's assume that the $400 million figure is accurate. To serve as lead owner, Fowler must come up with one-third of the proposed sale price of the Vikings, or approximately $208 million and some big change. That looks like a tall order.

Fowler does not contest the $400 million or the evaluation of his net worth. He simply contends that he has the means to purchase the Vikings. But, in addressing the means issue, Fowler often lapses into references of "we"--as in, "we have the means." "We" is not Fowler. "We" is Fowler's investment group.

For Fowler to come up with the $208 million or so that he will need to come up with to purchase the Vikings, he must either sell at least half of his assets or borrow against those assets. Unfortunately, Fowler does not deny what the records appear to indicate. Namely, that Fowler has already borrowed heavily against his assets.

That means that, to come up with the $208 million or so, Fowler must sell much of his assets--maybe all of his assets given the extent to which they already are leveraged. That's fine if he can do so in short order. But, in the long run, it begs the question of how Fowler can make a go of owning the Vikings in the short term?

Fowler has already stated that the team is not viable without a new stadium. Given the dynamics of stadium construction, even if Fowler were to build the stadium on his own dime, there will be no new stadium until at least 2008. Which means that Fowler not only will have no new stadium revenue to finance the purchase of a team that Red found impossible to make a go of with debt on a much lower purchase price, but also that Fowler will be attempting to control the team minus approximately half of his current assets, and likely the assets that are most valuable given the need for him to make a quick sale of those assets to purchase the Vikings.

But, again, this is not about whether Fowler has the means to own the Vikings. In the end, he may have just enough to purchase the Vikings.

The larger and more puzzling issue, however, is why Fowler is the lead on this prospective deal? Why put someone at the fore who, even if they have the means to close on the sale of the Vikings, would only barely have the means?

Numerous people have suggested that this is all about race. That the NFL wants a minority owner. While it might be true that the NFL would welcome a minority owner, it is unclear why the NFL would champion a paper tiger. Moreover, this claim suggests that the NFL is brokering the entire deal. Yet, unless the NFL is actually funding the deal, there is no reason for the NFL to back this particular deal as it appears to leave the Vikings in a more precarious financial situation than the one under which they currently operate. What does the NFL gain from havign such a weak franchise in Minnesota?

What is interesting about this whole case is that Fowler remains tight-lipped about his investment partners. We have been told that his partners are billionaires, but, with the exception of tossing out the name of Landis, who purportedly is but one of the other investors, we have been told nothing. But if Fowler has billionaire partners, why is Fowler, a relative pauper as a multi-millionaire, put forth as the lead owner by that group? What is that group hoping to conceal about itself? About its own interests and designs as members of a Vikings' ownership group? What is there that we ought to know about this group that we cannot know at present?

And if the NFL is in on this deal, to whom are they selling what?

I'll have more on this later, but feel free to offer your thoughts as I dish out some more draft thoughts including from whence Matt Roth came onto page one of draft day.

4 comments:

Anonymous said...

Geek, I think you are right on. Here is the most favorable interpretation I can come up with (most favorable isn't necessarily most likely).

By all accounts, Fowler's partners are all real estate developers. Guys like that are used to making their money by capital appreciation, not with annual revenue flows. If their plan is to do a major real estate project, one in which the stadium, team headquarters, practice facility, training camp, etc are just a small part, then they may be willing to subsidize team operating expenses until the stadium is built. In this scenario Fowler is the lead investor just because he is the guy interested in owning a team. The others are willing to let him lead because that is the hook on which the development hangs.

If this is right things will be good for the team on the financial front. Let's hope it's reality.

Ringmeister said...

You present an interesting conspiracy theory, VG. From everything I've read, it appears Fowler is indeed intended to be the "paper tiger" of which you speak. Several other points I find interesting include Glen Taylor's potential involvement. He places an "11th hour" bid, he presumably could cut a check right now, and he's obviously already vested in Minnesota. Why does Mr. Taylor "wait" until the last minute to low-ball Mr. Fowler's bid? Was Taylor unaware of Fowler's impending bid, and/or just unwilling to give up $25 million more than his orginal, albeit too late, offer? Surely Red would take the lump sum now from one guy, rather then have to orchestrate a multi-owner deal. I guess Red must tender the first offer (Mr. Fowler's), but certainly an all-around better business deal seems to point to Glen Taylor. ESPN says the NFL is salivating at the prospect of a black NFL owner. Surely ESPN's wisdom precludes Taylor's bid. Just a brief aside here: Remember when ESPN actually used to be about sports?????

Vikes Geek said...

I remember when I actually watched ESPN. ESPN has become to sports, however, what MTV is to music television. ESPN has far too much loud talking from talking heads who are both uninformed about the subjects on which they speak and unconcerned about that fact and is far too much of an infomercial for itself and its sister/parent station(s).

I think Taylor actually believed--and perhaps still believes--that his was the best offer. But it all depends on perspective. If you are the NFL and looking for stable ownership that cares about the local team, Taylor easily beats Fowler. If you are Red, Fowler easily beats Taylor.

Sadly, nothing good appears likely to come of this "transition" period. As the previous poster suggested, things could be good if Fowler's fellow investors pony up the cash for this team. But why would that happen given the position that Fowler already has taken (i.e., that the team cannot compete without a new stadium)?

I also continue to fail to understand why anyone would make Fowler the front guy in this deal. How does Fowler's involvement grease any wheels that need to be greased. What am I missing?

VG

Lichty said...

Fowler is the one who put the deal together and his ego will not let him be a second bananna to a couple of East Coast real estate moguls. We know who Mark Cuban is because he is THE owner. We know who Al Davis is because he is THE owner. Fowler craves that.

When assessing the potential Fowler it is important to note that that Fowler sold one of his spiral divisions (flight simulator) for over 1 billion greatly increasing his net worth. Perhaps Fowler and his partners knew this would break.

Fowler is anything but a done deal however. He has a strange marital situation which could Clancy him and make his bid impossible to accept.

Taylor's actions waxed a little desperate to me given that I think he is still convinced the Fowler bid will falter. I think it is still a 50% chance that Taylor ends up owning the Vikes.

Needless to say, only the Vikings could have this much drama surrounding an ownership change, well unless it was the Pohlad antics with the Twins or the Norm Green antics with the North Stars and the Marv and Harv antics with the wolves. So I guess its a Minny thing.