Glen Taylor: How I Bought The Star Tribune, And What I Paid
Note: On Wednesday, MinnPost published the first part of a two-part interview with new Star Tribune owner Glen Taylor where he talked about the paper’s newsroom.
In this part, Taylor—who also owns the Minnesota Timberwolves and Taylor Corp.—confirms how much he paid for the Star Tribune ($100 million), his winding path to acquisition, and dickering with bankers over the $75 million in debt the paper will likely carry. Stribbers may also want to search their archives for “Jean Taylor.”
As with Part One, Taylor's answers have not been edited.
MinnPost: Let’s start with the history. You tried to buy the Star Tribune before. Was the first time four years ago, or more?
So, at that time—it wasn’t just myself, it was a number of other people in Minnesota that kind of got together and said, “Gee, if it is going to come out of bankruptcy, maybe a bunch of us guys in Minnesota should pull this thing together and keep it here.” It wasn’t my controlling it and it wasn’t anything for sure.
MP: Did somebody approach you, or was it your initiative? Because I think I remember Vance [Oppermann] was involved.
GT: Actually when I think it first started Vance and I were working together on some other business. So I think it is fair to say it was Vance and I, and then we talked to some other people. I wouldn’t be surprised if the idea actually came out of the law office of Steve Pflaum. Steve first mentioned it to me and then I was with Vance — I think it was kind of like that.
Steve had worked with me when we were trying to get the Vikings. So that was the connection. He wasn’t my normal guy.
MP: He is your “sizable property” guy?
GT: Right! [Laughs.] That’s how I recall it, with Steve. Steve was also a friend of Vance, probably said the same thing to him.
Vance and I ended up being together and we talked about it and we talked about it with some other business guys. We thought there may be an opportunity just to go out there and make an offer. We knew sort of what people had paid for it and kind of what their value would be to pick this up. We formalized it pretty good, went out there and did this.
Well, we knew Wayzata [Investment Partners, the ultimate winner] was one of [the competitors also interested]. I think in my mind—and I don’t what the other guys were thinking—I always saw Wayzata as one of the Minnesota groups. I just saw them as, “Okay, they’ve got their shares; we’ll pick these other guys up and we won’t go after their shares. It’s all Minnesota and at some date we know they’ll want to sell theirs.”
So, I don’t know the people from Wayzata at all, but they took a different attitude. When they found out that we had made this offer, they upped their offer. We found out who was going to sell and they just offered them more money than we did. And really kind of scooped in and took it out. So that happened and we came back and made another offer to another group, and they did the same thing. Then we knew.
So we went and talked to them, and I don’t know what they said—if they didn’t trust us, or that they were a different type of people, they were different type of investors. I never had any personal conversation with them. I didn’t know them.
So we began to see even if we picked up some more, we would end up with maybe 25 percent, 30 percent at best. And we didn’t want to be, let’s just call it a limited partner. So we just backed off. We were done.
So that’s the background. So then nothing happens and nothing happens. Then, probably through Steve, through his connections, he came back to us and said, “Wayzata is thinking about that they are going to sell this thing.” It wasn’t public knowledge yet, but . . .
And my guess was the person I talked to was [Star Tribune Board Chair] Mike Sweeney. . . . And I said, “What do you think Mike?” And he said, “Well I think they’re going to sell it. Are you interested?” “Yeah.”
MP: And would this be like February of this year?
GT: Before that. No, no, last year. And I said I would be interested. But there was that land thing [the Strib wanting to sell their real estate]. Basically we just waited until the land deal got sold.
I went up there and met them. . . . Met them for the first time. They knew who I was, I knew who they were. And I said, “About this land…” And they said, ‘Well, just buy it and sell the land.’ And I’m not going to buy it and end up with $40 million for only four blocks downtown. Get rid of the gol-darned land and let them sell. If it is going to sell, let’s just write into the contract we’ll separate the land over here, and I’m after the paper, you guys take the land.
Well, they weren’t going to do that. They said, ‘It is all tied together.’ And I said, ‘Well I’m not going to . . . ’
So, we waited and waited. And you watched that land, went ump, ump. [Moves hand sideways but implication was price on it going down]. And I would just say that when [the land] was sold, within a day or two we had our papers all drawn and everything and we submitted it to the board, said “Here is our proposal, we are interested in doing this.”
I don’t know exactly how it went—the lawyers were all involved in this—but eventually the board approved it. But by that time I had met Mike and talked to him a couple of times. Because I had said, “Hey, I’m not going to do this unless you guys at the Star [Tribune] want me to do this. This is not a deal where I am going to come in and do all type of stuff.”
I met Mike. I really liked him. That helped. That was part of the deal. I was kind of like, I’m not going to get into this paper unless Mike is there. Now I have got to back up a little bit, because I had talked to Mike before he had that offer. So you could back that up a little bit further. He had an offer.
MP: Are we talking the middle of last year?
GT: Yeah, someplace [in] New York, wasn’t it? I had met him before that, and talked to him. And he knew at that time that I was interested. So I am telling you that the background is that I had met Mike. And I really liked him. He was what everybody told me he was. And maybe a little bit more. He’s a straight shooter and a smart guy. And he’s a business guy.
I mean, he’s in there to make money. A lot of guys could say, “Well I run the paper and we are a great social service to the world.” But Mike is like, “We’ve got to make this, and we’ve got to make it here and we’ve got to make it here, and we’ve got to talk business over here.”
So I remember him saying, “If you are interested in buying it, I don’t know that I am interested in leaving.” And that’s why I wanted to back up a little bit. Because there was a —
MP: Because there was a point early in the process where he wasn’t necessarily going to come with the purchase?
GT: Right. And I wasn’t going to purchase it if he didn’t stay.
MP: So you two committed to each other early in the process?
GT: That’s what I was going to say to you. This was not so much I committed to the paper as committed to him. He made a decision, but I didn’t say to him, “Don’t take the job.” I assumed he was going to take the job. And I think he thought he was going to take the job. But he changed his mind and he didn’t take the job. So it was a little bit morally …
I said, “I told him I was going to work on this so I am going to work on this.” So I kept him well informed of what I was doing and why I was or wasn’t doing this. I kept him informed as to the price I was going to do. I said, “I am not going to reach for this. This is an investment. The Star [Tribune] has got to pay for itself. And if I get it up here at this price, you guys are going to be working like the dickens just to pay back the debt.”
And you see, there is a debt. But he gets it. I’m talking to someone, you didn’t have to explain it. He got it.
So we made the offer. We sent it to the board with a pretty clear message that it is not going to be sitting out there very long. I didn’t say take it or leave it, but I did talk to Mike and said, “What do you think?” And he said, “I think the board will really be happy with you doing this.” And I said, “I’m just not going to negotiate something up here. [Puts hands up to indicate higher price.] I’ve got to get my price.” We negotiated and I moved—you always move some.
MP: And you had some interesting precedents. Especially the Boston Globe selling for about $70 million.
GT: Right. And so I guess that is the background. We had the due diligence in there and stuff like that. I have met with I would say all the management up there—but that was after the board approved it and after Wayzata approved it.
They gave me access to the total board; I met with the total board. I’d say it went really well. I think they liked me and I liked them. I was probably pretty up front in saying, “If you guys don’t want this to happen, now is the time to say it. Because I don’t need it.”
And I don’t. But I would like to do it; I think it could be exciting, I think it could be challenging. And in turn, they said it would be really nice to know who the owners are. We always knew it was going to be sold; we just didn’t know [to whom] it was going to be sold.
I don’t know if there were other people bidding. I was told there was, but I don’t really know if there were.
MP: Did you not want to consider including Vance this time? I imagine you didn’t need to because the price was significantly lower than it was four years ago and you can handle it on your own.
GT: No, I didn’t—Vance made his own decision. I didn’t exclude Vance; I just think the timing was wrong for Vance. He knows exactly what the deal is, we still are close friends, and I would say that I actually encouraged him a little bit. And he basically said to me, “Thanks, I think it is really a good price, but it just isn’t the right time for me.”
I respected that and didn’t go any further. He asked me, “Do you need me to do the deal?” And I said, “I don’t need you to do the deal. I want you.” And so he knows that.
Other people have said, “Are you looking for partners?” And at this point, I’m just going to go ahead on my own. I don’t know if there is a time or a reason to do it any other way.
MP: The only thing I can think of is legacy; for someone to pick it up and carry it forward. Is your family interested in this one? Because I know they weren’t that interested in the Timberwolves.
GT: Well the Wolves, I’ve got my son-in-laws all there. But it is a money thing, and they don’t want to lead it. In this one [the Star Tribune], the person I have talked to is my daughter Jean, who lives up in the Cities. She has already met Mike, and talked to Mike. I don’t know how she will be involved; probably on the board; have her represent the family on the board. She would be the one.
MP: And so logically she would be the one to carry the torch forward on this?
GT: Right. For awhile she was with the Taylor Corp. But she is up in the Cities now, and she is the one I have talked about representing the family. That hasn’t been formalized. We are thinking of some other ideas too, but it is too premature for me to talk about. But I think there should be a family member representing us, and it will most likely be my daughter.
MP: Most media industry people say you bought the Star Tribune for the cash flow. Would you confirm that is true, given that there really isn’t a lot of physical stuff left to purchase?
GT: That part, to be fair â¯ I will say I think it will be a good business deal. I will buy it, and there will be enough money generated for it to pay for itself. But it is not going to be the best deal I ever got into. And if that [making money] was the sole reason, I don’t think I would have done it.
The other reason—and it might be 50-50—is probably that I am leading with my heart a little bit. This was going to be sold. I don’t know that Wayzata had anybody else in Minnesota who said they were interested. My guess is that there were other newspaper chains that were interested. But I think they would run it differently and I think the headquarters could be taken away from here. And when that happens, you have a different type of group that has no leadership here, so it isn’t as strong of a group.
So my thought was, leading by the heart, I am thinking about the long run. I have enough [equity] that the ownership would probably go from Glen Taylor into a trust or a foundation. This is not a five-year type thing. It might be something that works itself out so that someday—well, I don’t know what the paper will be at that point, kind of a news organization.
MP: I am guessing that your purchase price is somewhere right around $100 million.
MP: And yes, that is a tremendous amount of money. But someone of your wealth, a couple of really bad weeks for the stock market could be $100 million, so it wasn’t that onerous.
GT: Yep, yep. And for a newspaper it is very profitable, so, I have no conditions and I can just pay cash for it. I don’t think I’ll have any trouble getting really good financing on it; in fact I’m quite sure of that, because a number of people and banks have come forward and offered to help me finance it. But at this time, looking at the [low] interest rates, why not just put in so much equity and finance at a low interest rate?
MP: And what is the right equity? Is it like a house, as much as 20 percent?
GT: I think that to get the interest rate that I want, I’ll put in about 25 percent. I don’t think I have to put that much in. But I will negotiate for a very low interest rate and I think they will give it to me.
That’s pretty much consistent with how I have done business in other ways. I buy something and come forward and I can do it with cash, but when the interest rates are this low, it seems to me like I should go to [banks and financiers] and get the interest rate tied up.
MP: You are thinking the interest rates can’t stay down.
GT: No, they can’t and I would rather keep my cash and fix that interest rate now. For my ag operations, I use a total one whole bank. For the Taylor Corp., I use a couple of banks. And for the Timberwolves, I use another bank. And they have all been really good that way in helping me. So as I go into this one I want to do the same thing.
In my head, I am thinking 25 percent. Because I want them to understand coming in that I want a low interest rate.
We had a bank that I have never done business with show up last week. They said, “We know all about this and we would like to do business with you.” They are a huge bank and they came down to Mankato to talk to me about this. Now, even if I don’t use them on this, there might be other deals later on I can use them for.
And another bank I haven’t done business with before has contacted me and they are very clear that they just want to come into the Twin Cities market.
MP: They are looking to make a splash purchase?
MP: So you are 73 now?
GT: I will be in five days.
MP: Well, I don’t want to jump the gun then. But you say you are leading with your heart on this, in some respects for the sake of the community ownership. You rejected out-of-town offers for the Timberwolves and even bought out some of your minority shareholders in the team for the same reason. Are you looking hard at your legacy now? Are you thinking: I don’t want to be known as just a rich guy, but a guy who cared about Minnesota and keeping our heritage and assets in place?
GT: I would be lying if I didn’t admit that. If you know my background, you know at one point I had nothing. Well, now I have so much.
Forbes came out with their thing a month ago — the richest people in the world. And of the 1,000 people, I am listed. Now whether that is true or not true—I mean, I don’t give Forbes any figures to go by—I just can’t really imagine it. The point is, I have been more than fortunate and lucky and good and whatever.
So, I can make a pile of money, or I can be making money and investing it back into different things. Now I have been investing huge amounts in education and those sorts of things — I’ll never know exactly how it goes, but those might turn out to be some of my best investments.
The Timberwolves? I’ll invest in that. And I’ll make a lot of money. I’m going to make a lot of money, even though I wasn’t really thinking that way when I [bought out minority partners and rejected out of town owners].
The Star Tribune? It might make a lot of money because we might figure out another way to do media.
But for the time being, you are right; I am trying to look at “What can I do? How important is the media?” And personally I think it is pretty important.
And how does this affect us in Minnesota in the future? There is other media in Minnesota, but this is one of the big ones. Can I be part of it and make sure good management stays right in Minnesota, and ensure good reporting stays here? Yes, and I feel really good about that.
There is another area of this that I haven’t really talked to anybody about. I have Mike and a couple of other people, and there are some pretty smart people there. I like to work with that kind of people. I am intrigued by it. They are going to challenge me and push me and wonder what the Sam heck I am thinking.
And a lot of people might say, “I don’t want that crap.” But I like it. It is nice to be around good people who have something to say when you ask, “What are you doing? What is going on?”
I have already had my technology people here — and I have some really good ones—up there meeting with [the Strib] technology people. What are we doing and are there ways to put it together?
And tomorrow, I am going to be looking at purchasing a big technology company. And we know the Trib is going be switching into new forms of technology—now it is digital, but what after that? All of that excites me.
That’s what I told the staff up there. They asked me, “Are you going to be hands on?” No. I’m not going to be hands on in the sense that I run the paper. But I am going to be hands on in the sense if you guys need some capital or something new. I am going to be hands on if you guys are looking at some technology that I am [already] working on over here. We can work together.