Pohlad Reconsidered, Sort of.

The death of businessman and Twins owner Carl Pohlad is getting the full treatment, bordering on hagiography, in the local media.

It's challenging to cover the life of a remarkable 93-year-old who was involved in many big deals over his lifetime and was still hatching them on his death bed. To most Minnesotans, Pohlad is seen through his relationship with the ball team and his hardball efforts to get a new stadium built, largely at public expense. What's less well-known was how he used government connections to leverage his fortune to a new level.

The Strib's Neal St. Anthony gives the episode two paragraphs.

In 1960, Gov. Orville Freeman asked Pohlad to form an investment group to bail out Twin City Rapid Transit, a bus company whose officers had just been convicted of fraud. Pohlad's group bought the company and changed its name to Minnesota Enterprises Inc.

By 1969, local politicians were upset, amid a request for an emergency fare increase, to learn that the Pohlad group had borrowed several million dollars from the company at no interest to buy an airline. It was not illegal, but eroded public trust in the operation. Pohlad and associates eventually sold the bus company to what became the Metropolitan Council.

The move was vintage Pohlad, investing in "distressed businesses that he could liquidate at a profit or fix and sell at a higher price."

Truth vs. the Machine asks an interesting question about Pohlad's involvement, but then leaps to make a point that misses the mark.

Asked to bailout the company by Gov. Orville Freeman (back when the market, not government, bailout out companies), Pohlad led an investment group that bought the company.  Can anyone picture the response if Gov. Pawlenty asked a similar favor from the major economic figures in the state today? [...]  In keeping with the character of the man and the region, the transit company made money under Pohlad.  It lost money under the government.

Pohlad probably did a good thing in rescuing the transit system. As a private company, it had been one of the best in the nation before WWII, but it was later pillaged by asset strippers and outright criminals.

Pohlad's civic conscience had boundaries, however. He was only marginally less rapacious than the crooks he supplanted, and he never went into a deal where he expect to lose money. He ran the bus line like he ran the Twins — on the cheap.

I haven't dredged up the original 1997 St. Paul Pioneer Press article referred to here, but the City Pages summary gives a bit more flavor of how Pohlad operated.

In a piece that should have been much more widely noticed (and probably not relegated to the opinion page), associate editorial page editor Steve Dornfeld takes note of the eerie similarities between the current debate and another public bailout of a Carl Pohlad enterprise--the metro area's bus system. The 1970 acquisition of what was then Twin City Lines, Dornfeld writes, "enabled [Pohlad and associates] to avoid bankruptcy and emerge with a fist full of cash that no private buyer would ever have offered." By the time it was over, Dornfeld goes on, "the taxpayers ended up paying $7.9 million for a bus company with an outdated, unreliable fleet; declining ridership; and a huge unfunded pension liability."

None of this came about by accident. Twin City Lines turned a profit for most of the 1960s. But instead of upgrading ancient buses and raising driver salaries, the money went into "diversification" as parent company MEI Inc., of which Pohlad was a big shareholder and top officer, acquired properties like the Hotel Tropicana in Las Vegas.

In 1969, after the company's drivers went on strike, the Legislature gave the Metropolitan Transit Commission power to acquire MEI by condemnation. Pohlad said he'd sell for about $15 million; the public's attorneys argued said the bus company was worth close to zero. The final price tag was $7.9 million. And that money, Dornfeld notes, enabled Pohlad to build MEI into an enterprise that would net him, by 1986, a personal profit estimated at $160 million.

Other sources claim Pohlad provoked the strike with the end game in mind. He used similar brinksmanship with the Twins franchise during the stadium struggles, first coming up with a straw buyer from North Carolina and then offering up the team for league "contraction" that would've paid him to liquidate it.

It's unlikely we'll ever get a full appraisal given today's skinnied down reporting. And the guy who wrote the 1997 piece is now working for the Met Council, the entity that operates public transit in the metro.

Comments

[Chris]

I'm ashamed to say that my first thought on the news of Carl Pohlad's death was that the estate tax will be very helpful to MN's current budget problems. Sigh.

[MNO]

Drain the bank accounts, loot the assets, screw the pensioners, anger the workers, and then beg for help from the taxpayers.

Hell of a business model.