Star Tribune management is getting downright cocky about the paper’s cash flow; first, they reinstated the company’s 401(k) match, and now they’re saying they’re in no hurry to sell their headquarters and parking lots for a new Vikings stadium.
From the end of Mike Kaszuba’s and Baird Helgeson’s Strib report Thursday:
Until 1998 [Jay] Cowles’ family owned the Star Tribune, which continues to be a major owner of land near the Metrodome, which Wilf has said is key to his plans to fully develop the area. The newspaper had a tentative agreement with the Vikings three years ago to sell much of that land, but the deal fell through.
[Minneapolis Mayor R.T.] Rybak, a onetime Star Tribune reporter, and Mike Sweeney, the Star Tribune’s board chair, said in separate interviews that they have not discussed Rybak’s proposal for a public-team land partnership with one another.
Sweeney said the Star Tribune is not actively negotiating to sell the property and that disposing of the land is no longer critical to the newspaper’s finances. “We’ve got plenty of cash, and we’re profitable,” said Sweeney of the paper, which recently emerged from bankruptcy. “I can certainly see us holding it for an extended period of time, until we got what we thought was a full and fair price.”
On some level, this is the Strib negotiating in the Strib, but I don’t think it’s mere tough talk. Sweeney, a dealmaker dedicated to projecting a new image of strength for the paper, has already bragged about generating $20 million of cash flow in 2010. That means the operation, with annual revenues of perhaps $180 million or so, could be sitting on $30 million to $40 million of cash by year’s end, if the paper’s 2009 Chapter 11 filings are a roadmap.
Even though the economy is recovering, the paper’s war chest is likely filling more from bankruptcy and post-bankruptcy cost cuts than revenue boosts. Print still makes up the bulk of Strib sales, and prospects for steady revenue growth in an online world are, at best, uncertain, even if a website redesign this year boosts digital income. So, negotiating position aside, Sweeney may have to tap that cash sooner than he’d like if print’s long-term decline quickens, or if the paper’s owners would like a dividend sooner rather than later.
A liquidation analysis prepared last summer projected the Strib could fetch $17.5 million to $36.1 million for its property, though that includes the Heritage printing plant on the opposite end of Downtown as well as presses, autos and trucks.
According to Hennepin County property tax records, the Strib’s 425 Portland Ave. headquarters, which sits a block from the Dome, has an estimated market value of $7 million, with the land accounting for $4.1 million of that. Two one-block parking lots on the Central Business District side are assessed at $4.5 million each, and a block on the river side of the headquarters is valued at $6.3 million, with perhaps half that in land value.
I’ll admit, I’ve viewed the Strib’s stadium stories skeptically, regarding a 2010 Vikings deal as less likely than the repeated front-page placement would indicate. (Don’t even get me started on the newest story’s trial balloon of hitting Minneapolis sales-tax payers again.) But if I’m wrong, and the buyers are now more eager than the sellers, taxpayer and football team dough could provide another several million for the newspaper’s bottom line. By the way, the idea of the Strib holding out for a higher price and holding up a stadium deal, a la Target Field machinations, would make good copy indeed.