Last Wednesday, the Minnesota Timberwolves and Lynx threw themselves a celebration to announce the grand opening of their new corporate headquarters and training center in the infamous Block E site now known as Mayo Clinic Square.
Serving as the emcee for the event, Wolves radio play-by-play announcer Alan Horton, surveying the gleaming, high-ceilinged basketball courts, offices and medical facilities, proclaimed from the podium that just 14 months earlier, the place he was standing had been a concession stand for the Block E movie theaters.
NBA Commissioner Adam Silver, fresh off crowning the Golden State Warriors the league champions the previous night, said he had been around the world and never seen facilities this modern and advanced.
In the packets handed out to the media, the Wolves and Lynx included a link to time-lapse videos of the reconstruction process. With the press of a computer key, one can watch everything become brand new at a dizzying pace.
Amid all this splendor and congratulation, the proverbial elephant in the room was just a skyway walk across the street: the ever-aging Target Center, where the Timberwolves and Lynx actually play their games and accommodate their fans. If one were able to click upon a time-lapse video of its 25-year history, it would make for an extremely boring view of gradual decay.
On Friday, in a more surreptitious announcement than the ballyhooed Mayo Clinic Square festivities, the City of Minneapolis (the owner of Target Center), AEG (the operator of the facility), and the Wolves and Lynx organization (the primary tenants) issued a joint press release stating that they have “signed a renovation development agreement, which is the next necessary step in moving the Target Center renovation project forward.”
It is the also the latest in a long line of promises for upgrading the gray old lady of sporting facilities in the Twin Cities.
A shotgun marriage
The checkered origin and ownership history of Target Center has contributed to its neglect. The place was built by original Timberwolves owners Marv Wolfenson and Harvey Ratner almost exclusively with their own money. Among the fat-cat brethren of professional sports franchise owners, “Marv and Harv” were, relatively speaking, a couple of pikers — more sophisticated in their love of basketball than in shaking down public entities to subsidize their facilities.
Unfortunately, even after the duo pinched pennies to get the arena constructed, the endeavor sapped their resources enough that within two years of its 1990 opening, Harv and Marv were pleading for some public entity to buy the building.
Receiving no immediate takers, the duo put the team up for sale. The sharks began circling, making lucrative offers to the pair that would have resulted in the Wolves being relocated to San Diego, Nashville, or — a signed deal that was vetoed by then-NBA Commissioner David Stern and a panel of the league’s owners — New Orleans.
To avoid the exodus of the Wolves, the Minnesota Legislature and the Minneapolis City Council agreed to buy Target Center — if a new owner promised to keep the team in the building. Glen Taylor acceded to those conditions and eventually purchased the Wolves in 1994.
But at a crucial point in the negotiations, the IRS ruled that the funding mechanism used for the public purchase couldn’t be exempt from taxes, putting the sale of both the team and the arena in doubt. Eventually, the City of Minneapolis became the owner, responsible for the maintenance and improvements to the building, a task that became increasingly expensive even as the city was being forced to tighten its belt because of state cuts in local government aid.
The languishing maintenance of Target Center became especially noticeable after the 2010 opening of the Twins’ new home, Target Field, right next door. In February 2011, the Wolves and the city held a joint press conference to announce an ambitious $155 million proposal to renovate Target Center. At that time, Minneapolis Mayor R.T. Rybak said the plans would take 15 to 18 months to implement, once the public-private financing was approved.
This effort was the most ambitious of the many attempts to upgrade the facility, but it was doomed from the start. Both sides wanted the other side to commit more, and in a more timely fashion, than either was willing to go.
A breakthrough of sorts was achieved in 2012, when the Legislature required the cooperation and approval of the Minneapolis City Council for a component of the byzantine financing for the new Vikings stadium. The council used the leverage to alter the terms of the Target Center arrangement. Instead of being compelled to use property taxes as the funding source for the upkeep of the facility, the Vikings stadium bill allowed the city to redirect at least $60 million of its sales and hospitality tax revenue into a pool for Target Center renovations.
Bolstered by this change in the funding mechanism, the city, Taylor and arena managers AEG announced an “implementation committee” in the summer of 2012 that would spend up to $135 million in public and private monies to renovate the building. Estimated completion time for the project was, again, 18 months.
But that 18 months was spent on bickering over details, priorities and proportional funding commitments from each of the three parties rather than any tangible improvements.
It wasn’t until late October of 2013 when the sides finally hammered out the first tangible funding solution for a Target Center upgrade — downsized to just $97 million, with $48.5 million from the city, $43 million from the Wolves and Lynx, and $5.5 million from AEG.
In the space of 30 months, the proposals had shrunk from $155 million to $135 million to $97 million. Meanwhile, while haggling over commitments, the principals had missed a period of cheaper labor and construction materials that would have at least given them more bang for their diminishing bucks.
That was made evident last fall when the project’s general contractor, Mortenson Construction, informed the parties that their $97 million commitment would only buy them about $86 million worth of planned improvements because of rising market costs. Ironically, some of that inflation was a result of new stadiums being built for the Vikings and the St. Paul Saints, plus an upgrade to Mariucci Arena on the University of Minnesota campus — projects that were all predated by the proposed improvements to Target Center.
Confronted with the reality of what their downward spiral was actually going to buy in terms of improvements, the city increased its commitment to $74 million, with Taylor and AEG making more modest increases, to $49 million and $5.9 million, respectively, for a new bottom-line budget of $128.9 million.
It’s always complicated
And yet, incredibly, even after the City Council had approved the increase in early April, a formal commitment via a signed renovation development agreement among the three parties still hadn’t been executed as late as a week ago.
For that matter, Wednesday’s announcement, while significant, doesn’t totally resolve the matter enough to ensure that construction will go forward as planned. Once again the parties could be buffeted by fluctuations in the market.
“We have a construction contract with Mortenson, but we don’t have a contract that says exactly what will be done and how much it will cost,” says Kevin Carpenter, the chief financial officer for the City of Minneapolis and one of the six members of the Target Center Design Group, made up of three representatives from the Timberwolves and Lynx, two from the city and one from AEG.
Now that the renovation development agreement has finally been signed, Mortenson will come back with hard estimates on each proposed component, establishing a Guaranteed Maximum Price. When — and only if — the three parties agree to pay the GMP, construction can at long last begin.
Part of the delay in reaching a renovation development agreement was establishing terms and incentives for getting a GMP signed. Under the new agreement, a signed GMP will extend the Wolves lease at Target Center and AEG’s operation of the facility another three years to 2035.
So why — even as other expensive stadium projects have dutifully moved along and the Wolves and Lynx themselves were able to invest $25 million in Mayo Clinic Square without delays —has Target Center been such a colossal drag and drain on everybody’s time and energy?
It is not as if the abiding priorities for the renovation were unclear. As far back as the initial $155 million pipe-dream renovation proposal in early 2011, it was clear that the antiquated facility needed better loading docks, more than one elevator, and more flexible, user-friendly seating and concourse designs. A change in the primary entrance to better accommodate traffic patterns as a result of Target Field has also long been on the drawing board.
Part of the delay has been a Catch-22: The level of financial participation by each of the three parties had to be negotiated at the same time that spending priorities were being established. Each of the parties had difficulty committing resources until they knew what their investment would yield, but those priorities couldn’t be finalized without knowing the overall budget. Meanwhile, the estimated cost of each area and phase of renovation is also in flux until a definitive GMP is signed.
Although everyone acknowledges the abiding priorities, how they are funded becomes “a trading game,” Carpenter says. For example, an ambitious show like Cirque du Soleil or Aerosmith requires up to 25 or 30 trucks to unload their materials. Since the construction of Target Field has robbed those vehicles of nearby idling space, they often have to circle the interstate waiting for an opening on the loading dock, creating a ridiculous competitive disadvantage compared to the Xcel Energy Center across the river in St. Paul.
As operator of the facility, AEG benefits from these concerts and performances much more than the Wolves and the Lynx, as does the city, which reaps more tax dollars from ticket sales.
“We’ve got schematic designs on how much it might involve for [better and more] loading docks,” says Carpenter. “But the price might rise from $6 million to $8 million. Then you have one or more [of the entities] saying they’ll agree to it but they don’t want the $2 million coming out of their share.” Hence, the “trading game.”
Another reason for delay and intransigence involves the changing of existing contracts, an obstacle that doesn’t exist with new construction.
“Changing the terms [of a lease agreement] not only means changing the fundamental agreements that the three parties have with each other, but all the spinoff relationships each one of us has,” says Ted Johnson, chief marketing officer for the Wolves and Lynx and a member of the Design Group. “For example, AEG has catering contracts and we have all kinds of contracts with different vendors,” including various advertising, sponsorship and media deals.
But Johnson also concedes that “each one of us has a different top priority.” For the Wolves and Lynx it would be making the club seating and amenities more attractive for their upper-end ticketholders, as well as improving the fan experience for people up in the nosebleed seats by establishing a bar or common meeting space.
That said, it will benefit basketball fans to have more restrooms and elevators for easier access in and out and around the building. “It is essential that we know and respect each other’s priorities and also that we understand that these changes benefit all of us,” Johnson says.
But how much? That’s the rub. A few years ago, negotiations hit a snag over the level of contribution by Taylor and the team, with the city wanting him to pony up a matching share of its investment and Taylor countering that his team’s games still didn’t make up half the events in the facility each year.
Too little too late?
Now that all three parties have at least put their commitment on the dotted line enough to trigger a response from Mortenson, the question becomes how much the delays have damaged the ongoing viability of Target Center in the market — or whether the facility, built on the cheap for $57 million back in the late ’80s, was always something of a lost cause.
By all accounts, even if the GMP process goes smoothly and construction proceeds apace, it is unlikely that Timberwolves fans will experience any noticeable upgrades during the 2015-16 season, and the entire renovation isn’t likely to conclude until 2017 at the earliest.
Nor will this renovation be the end of the matter — as the cliché goes, rust never sleeps. The bill passed by the Minneapolis City Council this spring balanced the $30 million raise in its current investment to the Target Center renovation with a corresponding drop of $30 million to the Capital Expenditure Fund for future investment in the facility, from $50 million to $20 million. That said, no one, including those who compiled the written estimates for the city, believe that $20 million would be enough to cover future maintenance over the next 20 years on facility the city owns.
Last year, the Target Center was the sixth busiest facility of its type in the nation, and the 17th busiest in the world. But those numbers were dramatically skewed by the sentimental decision of Garth Brooks to hold 11 straight sell-out shows at Target Center during his comeback tour. That windfall was a one-time phenomenon and with the Twins, Gophers and Saints stadia all staging high-profile concerts in recent weeks, the market is only getting more competitive.
“We are not doing this renovation on the cheap, but we are also not fixing all the sins of the original design either,” says Carpenter. “Some of them are too comprehensive and expensive to fix.” He cites the plethora of woefully inefficient stairways that circle the building, a waste of space and rapid mobility that don’t yield an easy remedy.
At what point is Target Center more trouble than it is worth?
“That’s a very good question,” Carpenter replies. “We made the calculus that because the team and AEG will be engaged here through 2035 that it was worth a sensible investment to add some functional, competitive years to the building. It has its challenges, but it has good bones.
“I’ll let the politicians speak for themselves, but we had a lot of conversation about the investment this spring. The fact that this is a place to see “Sesame Street Live” and Garth Brooks and the Harlem Globetrotters, that it is an asset for the broader community, I think that helps. Compared to some of the other [facilities], this isn’t as much some rich person’s play toy.”
By 2035, the existing leases will be expired (or extended), and the Target Center will be nearly half a century old. Even “good bones” won’t save it.
Or, as Carpenter puts it, “you repair a car along the way until the day you decide you don’t.”
By that measure, however, Target Center has been a durable jalopy, ushering in a “sports/entertainment” complex in a part of the city that now includes Target Field, the new Mayo Clinic Square and perhaps a new soccer stadium. Long after Harv and Marv have gone, it has resolutely limped along, surviving the bickering and neglect of its caretakers, operators and tenants. May it finally get its loading docks, elevators, and new bathrooms.