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Glen Taylor on Flip, KG, and the economics of owning a newspaper

The Timberwolves and Star Tribune owner talks his team’s future — and potentially buying the Pioneer Press.

MinnPost file photo by Craig Lassig

Glen Taylor’s career in public service and private business is among the most storied in the state, but today he is primarily recognized as the owner of the NBA’s Minnesota Timberwolves, a business with a far rockier track record than that of Taylor Corp. or even his recent acquisition, the Star Tribune. The team is on its third management group since 2013, the result of the failed tenure of general manager David Kahn and the untimely death of team president Flip Saunders just over a year ago.

Saunders’ passing undid a plan that would have allowed for long-term local ownership and provided Taylor with a smooth path to eventual NBA retirement. Instead he has returned to active management at age 75. With each transition Taylor has revised the organization’s structure and its approach to basketball operations in hopes of finding the recipe for a return to playoff competition for the first time since 2004, the longest drought in the NBA.

TCB interviewed Taylor at length this summer in his modest Mankato office. He spoke with extraordinary candor about the realities of pro sports and the difficulties of repeatedly recalibrating a business in the public eye. He also touched on the evolution of Taylor Corp. and the future of Twin Cities newspapers in light of his 2014 purchase of the Star Tribune

—Adam Platt

Twin Cities Business: Management continuity is a hallmark of the best Minnesota businesses. In sports, though, it seems as if management continuity is the exception, even in Minnesota. What’s different about sports?

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Glen Taylor: The comparison I’d make is to publicly held companies and the influence of the markets on those businesses. In sports, we’re so public that when things go wrong, your fans expect change. You can change players or leadership, and the decision always is which one to change; and if the losing is long-term, you end up changing both. In that sense it’s nothing like my private companies.

Now, I err on the side of keeping people too long. People know Glen is supportive of people who have been loyal to him. Mostly that’s an asset, occasionally a liability.

TCB: You fired Flip Saunders after a decade as coach in 2005, and after there was believed to be bad blood between him and the organization. When did you resurrect your relationship?

GT: I always spoke to Flip, I never cut off communications. We talked about basketball, broadcasting, etc. We had a nice relationship and kept it going. One day [probably in 2013] Flip came down to Mankato and he said, “You don’t sound like a guy who wants to sell his team.” (At the time I was looking for a limited partner to become a majority partner.) I said I guess I don’t, really, but I’m planning for the future.

He said “I have a suggestion: Why don’t you forget about that idea? Let’s partner and I’ll come in and take over a lot of the responsibilities of running the team.” We decided that’s what we’re gonna do. He said, “My happiest time in my life was working with you. I’d like to get back to that.”

TCB: What was the upside for you in bringing back Flip?

GT: Having a person like that would change my outlook on staying in ownership. He said, “I was in Detroit and Washington with owners at the end of their careers. They never lost their interest in the team, though, and my guess is you are the same way. Don’t give up on the team.” I thought things were improving on the basketball side and Flip could help orchestrate it, and it would allow me to stay on without being in such an active management role.

TCB: Had you grown frustrated with years of different strategies that never delivered real success on the court?

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GT: Yes. I brought in David Kahn and Kurt Rambis [in 2009], two relative unknowns; it was high risk. It didn’t work. Then I brought in Rick Adelman [in 2011], a veteran coach, the opposite really. Flip would complement his seasoned approach. I did not expect Rick would retire as quickly as he did [in 2014].

TCB: So Flip was more than a general manager. He was destined to be in leadership here for as long as you remained owner. 

GT: And beyond. Flip understood more than basketball. He understood business. He understood how to bring in business, talk to customers and did it regularly. He had a natural ability. He liked it. Most basketball guys have to be talked into that side of things. It intrigued me to have a partner who could watch both sides of the business.

TCB: Was there a plan for how Flip’s ownership would vest?Does the separation of basketball and business operations in pro sports have parallels in your other businesses?

GT: No. Typically you have a CEO who is responsible for everything. Ownership tends to get more involved in the basketball side because so much money is spent on player salaries. The decisions are so big that you’re not apt to turn it over to a CEO. [Editor’s note: But it was the CEO role that Taylor envisioned Saunders taking on.]

We put that on the back burner — let’s get this going and we can work out the details. We trusted each other. We did discuss that if I sold the team for health reasons or something similar he would be part of the successor group, but we never got to the details stage.

TCB: He had no consortium of buyers?

GT: No. I just promised to make him a part of it because of our friendship.

TCB: Flip’s health became precarious at the dawn of last season. How did you decide how to handle that season?

GT: I knew I had a big problem. Flip was everything, and I had no one else in place but myself. I felt I had no choice but to stick with Flip’s structure. I knew [coach] Sam [Mitchell]. I told him he would coach the whole season, whatever happened. I didn’t feel he could function effectively in the role without that commitment.

TCB: Often leaders who expect to be in control for a long period don’t surround themselves with likely successors, but effective No. 2s. How did you make the assessment of Flip’s lieutenants?

GT: It is like any business. You can have successors at No. 2, or you can surround yourself with people effective at implementing your vision. Flip came in to run it and brought in people loyal to him who he felt were effective. He was not at the stage to think about succession planning.

TCB: It does raise the question of whether you ever have the luxury to not think about it.

GT: It does. I didn’t have a reason to second-guess Flip, but he did not put together his team with the thought of a near-term need to replace him. We got caught on that.

TCB: How did you decide not to retain Flip’s guys?

GT: I owed it to Sam and players to let them play out the season and give them opportunity to succeed. But when it was clear that we were not going to the playoffs, I had to ask whether to stick with Flip’s folks long-term or start again. I made the decision that we needed to make visible changes so our fans could see we were doing everything we could. I couldn’t let the optimism fade.

TCB: So you were hopeful Sam [Mitchell, acting head coach] and Milt [Newton, general manager] could be successful, but you weren’t certain of it.

GT: Yes. It wasn’t just trading people for effect. I think we have a better chance to win with the group I’ve got now.

TCB: Flip’s productive period with the Wolves lasted roughly two years. What’s your sense of what he accomplished?

GT: The part that helped me most was his input on putting the roster together. Everybody has a vision, but he got us on the right track after several less-than-effective visions. He also got our fans energized—he did speeches, helped with sponsors. I’ve been able to build on it since. He re-energized our whole operation.

TCB: Flip’s son, Ryan, remains with the team as an assistant coach. Sid Hartman remarked last fall that Flip spoke about Ryan succeeding him as coach one day. Do you feel a commitment to help Ryan advance his career in his dad’s absence?

GT: Our philosophy has always been to develop young coaches for our benefit and for the betterment of the league. The plan for Ryan is to help him out in his progress to be a coach, but not necessarily just for the Timberwolves.

TCB: How did you decide how to restructure?

GT: You try to find a scenario that you’d like to live in. I looked to San Antonio, where a family owner found a team of people who were really competent [and built a culture of competency and winning that has endured]. It helped that the people I chose were looking for long-term consistency. They seemed to know I had a track record of staying with people. It was important to them, they told me.

TCB: You hired former Wolves assistant coach Tom Thibodeau as your president of basketball operations/coach and Scott Layden as his general manager. How will they function relative to Flip and his lieutenants?

GT: The difference between Flip and Scott and Thibs are that these guys come from a culture of a lot of input and creating consensus. They are looking to build a team of smart people to innovate rather than lead by instinct, as Flip mostly did.

TCB: Given that, how important to them was your own role in team operations? You seem rather hands-on as pro sports owners go.

GT: To them? Very. They wanted flexibility to make decisions and have time to implement a program. I said to Scott and Thibs that they could have that. If I’m gonna hold you accountable, I have to do that.

TCB: What’s your timeline for on-the-court improvement?

GT: I’m not going to answer that. I will say that it’s not a one-year plan.

TCB: The Wolves were often ridiculed for the stability of management. The phrase “country club” was derisively applied by sportswriters and radio hosts. What prompted the change?

GT: After 20 years of continuity, it was time. The game is changing. We need to adapt. Scott and Thibs said to me, “Glen, I’m not sure the Timberwolves have kept up with all the changes to be a playoff team.” The same thing will happen on the business side under [new CEO] Ethan [Casson] over the next 12 months.

TCB: You’ve made changes in Wolves business management as well. A number of longtime execs have moved on. Is that coincidental? 

GT: I felt like we couldn’t upgrade one side and not the other. Our new CEO’s expertise is in sales and marketing. If we’re going to produce the payroll to get a championship, we need to grow sales. Otherwise we’re only going to break even. And I think there is great opportunity right now because expectations are high; there is anticipation for this season.

TCB: How did you select Casson?

GT: He came from the [NFL San Francisco] 49ers and when he joined them they had many of the same needs as us and he was very successful. Because he had worked for us [for 11 years] prior to them, he could hit the ground running here rather than losing a year. 

TCB: The Wolves are a decade from their last winning record. What have you found the effect of losing to be on the business?

GT: If you’re like [the NBA’s] Sacramento [Kings], and the only team in town, fans want something to support, and losing doesn’t hurt you quite that much. Here, with every pro sport and [NCAA Division 1] college sport, you don’t have the luxury to lose; and in Minnesota, people love a winner. Your fan base doubles when you win. That was our experience with the Lynx. Losing just destroys your income.

TCB: What about corporate relationships?

GT: The same, because they all have choices too. They want metrics and want eyeballs, and the more fans watching on TV or in Target Center, the more they will pay.

TCB: I’m intrigued with this idea that effort and outcomes aren’t always congruent in sports. Best practices don’t always pay off.

GT: Here’s why: Sports is set up for half the teams to win and half to lose every day, week, what have you. Business doesn’t work like that. I can be successful and my competitor can be successful. It’s not mutually exclusive. In sports there are teams that are run well that lose. I feel like we’ve gotten into that trap with injuries, draft picks that looked good on paper, bad luck.

TCB: Have the economics of owning a pro sports team played out as you expected [when you bought the team] in 1995?

GT: We foresaw a continuous line of growth that was relatively consistent. But instead we’ve had spikes with revenue sharing, new [labor] agreements, salary caps, etc. They have been mostly unknowns, unpredictables that have driven major changes in economics.

TCB: Were there years when the team was in the red?

GT: Yes. We purchased the team for $88 million. I borrowed half. So we laid out a program to pay off the debt, which we did. We started losing money during the years we were winning and had big investment in player salaries. I couldn’t afford Kevin [Garnett’s] $120 million salary. But I couldn’t afford not to. The other period we lost money was during the years where the [NBA’s] player agreement had 57 percent of revenues going to player salaries. It was not a Wolves issue, it was a league issue; 23 of 30 teams were losing money. That’s why we took the lockout to get it back to 50/50.

TCB: How has the success of the Lynx benefitted the Wolves?

GT: It has given us some credibility in the community that we do know what we’re doing, that we’re able to build a successful team from scratch and sustain it.

TCB: Let’s look ahead. Target Center renovations are beginning, but they are modest and you will be the only team in the region without a 21st-century venue. Will it be an impediment to your business goals?

GT: A new arena was not in the cards. I had to deal with reality. The politicians were tired, and I was on the bottom of the list. Also, my own history [in the state legislature] and political beliefs made it difficult for me to make too big an ask. We’re spending $49 million on upgrading the fan experience with an early emphasis on suites and premium options, which we are very behind on.

TCB: Mayo Clinic Square (the team’s new practice and training facility/headquarters paired with a sports medicine clinic run by Mayo) seems to have been a win-win.

GT: It’s the best facility of its type in the league. Mayo is very happy with it, and our players and employees love it. It helps us with hiring and retention.

TCB: The Wolves just announced Kevin Garnett will retire and not play the final year of his contract. He is the connection to the team’s only era of success, the only likely Wolves hall-of-famer. What is his future with the organization?

GT: Because of Kevin’s stature in the league, I’ve tried not to pressure him. [I want to] let him decide what he wanted to do and help him achieve that. He came back [to the Wolves] due to his relationship with Flip. That’s gone.

TCB: Do you see Kevin as part of the Wolves long-term in a non-playing capacity?

GT: Yes, but you can’t push that on someone.

TCB: The team was sued last year for its electronic ticketing system that restricts resale of seats on the secondary market. Are there changes planned for this season?

GT: To my knowledge [there] are not, but I have brought in Ethan to be the new CEO and I’m sure it’s something he’s going to be looking at. Common sense says that since there’s a pending lawsuit, I probably shouldn’t say anything else.

TCB: You’ve recently taken on partners. Why? The Twins are 100 percent family-controlled.

GT: I could have gotten there, but I like partners because they’re going to challenge you to run it better. My two new limited partners [Lizhang Jiang, general manager of Shanghai Double Edged Sports, and New York real estate mogul Meyer Orbach of the Orbach Group] are really good businessmen, and it will be a good investment for them, but they will work for it.

TCB: Post-Flip, you’ve come to the conclusion the next managing owner for the Wolves doesn’t need to live in Minnesota.

GT: [Local buyers] haven’t come forward to me, certainly. The possibility of one person owning a team has become nearly impossible as the valuations have risen so high. [Editor’s note: The L.A. Clippers sold for $2 billion in 2015]. A lot of the new generation of buyers are hedge fund guys, consortiums of wealthy businesspeople.

TCB: In that vein — Forbes valued the Wolves near the bottom of NBA teams at $720 million, with $146 million in annual revenue and a roughly 10 percent operating margin. Accurate? Close?

GT: My guess is we probably rank higher than that—that they’re not taking into account the practice facility, the Target Center investment, and the talent we have on our team. To me, it’s backward-looking data.

Glen Taylor: Newspaper Mogul

TCB: A couple years in, what’s your take on your investment in the Star Tribune?

GT: I’m glad I did it. It was a risk. My heart said it’s really important we have alternative communication systems in Minnesota. People need access to choices. The difficulties in newspaper economics don’t produce a lot of potential buyers.

TCB: Are newspaper economics as bad as the media tell us?

GT: On the financial side, it has gone as we budgeted. We had a long-term plan. We borrowed some, I put in some, we’re on track to pay off the debt. We’re having a good year—a little ahead of plan, but I’m not counting on that continuing. Our goals are not aggressive, but it is paying down the debt.

TCB: The scuttlebutt is that the paper is seeing very low revenue growth, but not erosion, which is a lot better than most newspapers.

GT: Everyone in the industry is down, if you take the average of most papers. We’re with just a few, the Wall Street Journal, the Dallas paper, who are slightly up. The digital side is the struggle. How do you monetize? I have that in my other businesses too. We do a lot of printing for many of these companies evolving to digital. We’re making money, but they are not, so it’s a concern. Can they afford to stay around?

TCB: Taylor Corp. [which was once known as a printing company but has diversified and now describes itself as a provider of communications products, services and technologies] has been active in acquisitions. How do you see it evolving?

GT: We’re looking at printing in terms of growth areas. Food packaging, labels, etc. We’re the biggest gift card imprinter there is. We’re looking for what is growing. Also a contracting industry means fewer competitors, fewer new entrants. That’s not always bad. Still, in a shrinking industry customers are price-sensitive and will fight over every dollar, and that’s not a good place to be in long-term.

Also we’re not truly just a printing company. We are in technology, we employ a lot of engineers. I do sales calls. My standard line is, “Tell me what your needs are.” We employ our technological skills to solve those problems for customers, and then you can charge a profitable price because we’re the only people who can do it.

That’s what I’m asking the newspaper to do—figure it out. I don’t know if it is going to do an acquisition, but we’re not telling them they can’t.

TCB: Does the St. Paul Pioneer Press ever come up in those conversations?

GT: It does, obviously. But we look at what happened in Orange County [where the Department of Justice stopped a merger between the Los Angeles Times and the Orange County Register]. Our lawyers say don’t waste your time on it until the government will allow you to do something like that.

Twin Cities BusinessTCB: That’s rather archaic, viewing the SoCal media market as a zero-sum game between two daily newspapers. 

GT: I think our big competition is not another regional newspaper but TV, the internet. The government has fallen behind the times if they think the competition is paper to paper. Our [advertisers] have many options besides newspapers to communicate with their customers.

TCB: Do you believe there’s an economic case for one day buying the Pioneer Press or otherwise creating a single metro-area daily?

GT: If the regulatory environment changed—as good businesspeople we would do it, and it probably would be a good thing for our citizens and for the efficiency of our business.

TCB: So your experience with the newspaper investment has you thinking positively about it long-term?

GT: Yes. We’re thinking about it creatively so after my death we can keep it in a foundation, etc. Otherwise we’d have to find another local ownership group that feels the same way, and that would be difficult.

Adam Platt is TCB’s executive editor. This article is reprinted in partnership with Twin Cities Business.