The Pohlad Empire (Part Five): Downtown Drain

[Peter Labuza]

In the final part of our look at the Pohlad's financial history, we look at how the modern real estate boom kept the family's finances alive, and how changes in the market are likely forcing a sale.

Image courtesy of © Kirby Lee-Imagn Images

"I'm so sick of defending myself, my credibility, my family, I should just sell the {expletive} team. There's a limit."
—Carl Pohlad

In 2021, the RBC Gateway became the new gem of the Minneapolis skyline. Years in the making, and developed with all private capital—no special tax district needed—it brought a Four Seasons to downtown. This particularly excited Mayor Jacob Frey, who was sick of seeing artists play venues like First Avenue and immediately hop on a plane back to Chicago.

But just above the hotel was office space that needed to be filled. Several businesses moved in there: United Properties, a real estate building company owned by the Pohlads; Northmarq, a real estate finance company owned by the Pohlads; Carousel Motor Group, an automotive group owned by the Pohlads; and even the Pohlad Family Foundation, which, you get the drill.

Practically every business owned by the Pohlads relocated from the suburbs into this new place downtown, which, if you hadn’t guessed, was built by United Properties. Of course, 2021 was an interesting time considering how most businesses were in a panic about their downtown real estate, assuming workers might never return to the office.

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For more on the history of the Pohlad family and their business interests, please see Part 1, Part 2, Part 3, and Part 4, of this series.

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In our final piece, I wanted to explore why the Pohlads are selling. When editor Matt Trueblood proposed this series, our goal (in part) was to try and understand how other business ventures of the Pohlads might explain why they operated the Twins as they did. Now that a sale is at least in the works, this final piece looks at the origin of the sale. As much as they would insist otherwise, the Twins have made the Pohlads rich beyond what Carl could have ever dreamed when he forked over $38 million. But even if the streaming and cable network bubble chaos has made the business less lucrative than it could be, the reasons for selling seem to go far beyond that. Instead, the real estate world has taken an unwelcome turn, and the Pohlads are desperate, to use their own language, “right-size our business.”

As the Pohlads moved out of banking and bottling, real estate became the prime business. They acquired United Properties in 1998, mostly focused on suburban office parks. It was “poised” to build commercial real estate following the 2008 crash as a set of new jobs in major suburban spaces came to replace older companies. From 2016-18, no company developed more real estate in Minnesota than the Pohlads'. Like many similar companies, United has relied on moving toward “mixed-use” building, meaning properties might include high-rise condos as part of its broader commercial use.

Like many real estate builders, United has often relied on tax credits and incentives to build. This includes the Loose-Wiles Biscuit Company Building ($1.8 million). A better example is Kenwood Village in Duluth. In order to ensure United Properties would build the complex, the city council handed United Properties $2.8 million in tax relief on United’s $21 million investment, despite research from the County suggesting it should take no more than $10 million. When United sold the enterprise to a New York firm for $21 million, St. Louis County valued the cost of the property at $8.34 million. When it opened, Kenwood Village had the highest prices for studio apartments in the entire Duluth area. 

Another vision of United’s public-private “partnerships” comes in the continuing drama of the Upper Harbor Area, which was sold by the city to develop parks, affordable housing, and an outdoor venue run by First Avenue in 2017. Lawsuits have ensued, and financing has been slow to get going. The property has remained controversial, with the city spending over $350 million in 2021 despite United and others technically owning the underlying real estate. The city recently learned that it may be able to retain the venue in full control. And despite all the promises of affordable housing, United’s main developer has recently suggested it may not succeed.

But the real problem for United has been its bet on the downtown area. In 2021, United was able to sell both Gateway and Gaviidae Common on Nicollet Mall. However, reports suggest these deals came at prices below their true value. With interest rates soaring due to Jerome Powell’s attempts to hurt worker power and unionization drives during 2021 and 2022, real estate transactions became harder. Office vacancies remained particularly high into 2023, though a series of punishing return-to-work policies from various companies have attempted to level the playing field for developers.

In a profile covering the Pohlads from 2022, United’s CEO Bill Katter suggested, “The city is going to find its way to a new set of priorities and a new norm. How do we make places people want to return to? The Pohlads want to help create that future.” Four days after Katter made these comments, he left the organization. 

The next venture for United is to transition to senior living, one of the most lucrative and exploitative industries at the moment. United is currently building a $40-million senior living center, which will give 147 individuals amenities like “a pet wash station, a bike repair station, yoga studio and saunas, art studio, hobby shop, library and clubhouse.” This would triple the amount of assets it has or is building in the sector. According to one report, “Senior housing accounted for just 9% of the value of United's long-term holdings three years ago, with the rest being a mix of industrial, office and retail properties. [Newly appointed CEO] Matt Van Slooten expects that figure to increase to about 40%.”

To back up these moves in new directions, the Pohlads have always relied on Northmarq, a firm that does financing and brokerage for real estate investments. In 2024, they were the sixth-largest intermediary for real estate deals in the nation. In 2023, the company made deals and sales worth around $22 billion. In 2024, S&P Global raised its rankings as a commercial private loan company.

To give just a flavor, it has sold a 97-unit property in Baltimore ($54 million), 17 acres near Phoenix ($14.5 million), and three manufacturing properties in the Pacific Northwest ($14.3 million). That said, more and more deals by Northmarq appear to be those where they are mere brokers, rather than something they themselves acquire. They’re passing money between hands, but not gaining it themselves.

The business is changing though. Northmarq recently acquired Morrison Street Capital, which specializes in investment management to fund real estate deals. Whether that means just investing in Fortune 500 companies or, say, cryptocurrency, is for the future to decide.

Notably, perhaps, United and Northmarq haven't been plagued by the dramatic conflicts with regulators or competitors that marked so many of the Pohlads' earlier ventures. They've been involved in a few lawsuits, but there's nothing as salacious or as shady as several of the things that happened under Carl Pohlad in his various ventures in other sectors.

United has come under scrutiny for foregoing unionized workforces, despite the owners' Progressive bona fides. Centro de Trabajadores Unidos en la Lucha (CTUL) is trying to stop such working abuse. But this is ultimately small potatoes compared to the stories we could tell about Carl. The last two decades have been good for real estate developers, and thus good for the Pohlads. But like the end of the RSN payday, that bubble is popping. Most of the talk in the real estate world is about being more targeted. You can learn on the Northmarq website how to target success. As Van Slooten pointed out, United has survived because they “are able to develop properties with our own equity” as well as “selectively start several projects with our capital,” which is to say, when you have billionaires, you sometimes can get a head up in the real estate game by having access to capital when others do not. And with federal interest rates still high, a quick cash infusion—say around $1.5 to $2 billion—might be able to do the job.

But sometimes you might have a little pain. In November of this year, Bob Pohlad quietly put his RBC Gateway Condo inside the Four Seasons up for sale. Bought for $4.3 million, it might sell for only $4.5 million. 

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If you asked a casual Minnesota sports fan about the Pohlads, you would probably get an answer about how often they've felt nickeled and dimed. It always felt so silly—when you have access to billions, why not waste a little to break a silly curse and create a generation of new fans? But the truth is, the Pohlads aren’t being cheap on their teams to spend it on other businesses. Being cheap is the way the Pohlads have always done business.

There’s no guarantee of a new owner changing the system or infusing cash, and there’s even more to worry about if the new owners have little to no connection to the state where the team plays.

But that’s the truth about private ownership in sports: They get to run it, and you don’t. And unless you fight for a different system—one where we can all invest into a team—the only thing you can scream is “Sell the Team.”

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[LewFordLives]

"With interest rates soaring due to Jerome Powell’s attempts to hurt worker power and unionization drives during 2021 and 2022, real estate transactions became harder."

 

Interesting set of articles, but can we leave personal politics and non-baseball conspiracy theories off of this website?  I come to this website to escape this stuff.

[arby58]

However, reports suggest these deals came at prices below their true value. With interest rates soaring due to Jerome Powell’s attempts to hurt worker power and unionization drives during 2021 and 2022, real estate transactions became harder. Office vacancies remained particularly high into 2023, though a series of punishing return-to-work policies from various companies have attempted to level the playing field for developers.

This is nothing but a left-wing strawman (and for the record, I'm a Democrat). There are plenty of exogenous variables that don't fit with this neat and tidy 'beat down the working person and coddle the developers' claim. 

The series has been illuminating, but this sort of rhetoric detracts from it.

[Peter Labuza]

“To be clear, strong wage growth is a good thing, But for wage growth to be sustainable, it needs to be consistent with two percent inflation.” -Jerome Powell at the Brookings Institute, not sure how else to read this beyond “workers should make less money and have less spending power.”

[NYCTK]

5 minutes ago, Peter Labuza said:

“To be clear, strong wage growth is a good thing, But for wage growth to be sustainable, it needs to be consistent with two percent inflation.” -Jerome Powell at the Brookings Institute, not sure how else to read this beyond “workers should make less money and have less spending power.”

This is a very common and accepted principle. Around 2 percent inflation is a target for every educated economist. 

That's why inflation as a political weapon was a knowing lie during the last election, seeing as it was at 2.6%. Higher than you'd like to see, but not significantly so. However it rose again slightly to 2.9% in the last report. 

[arby58]

55 minutes ago, Peter Labuza said:

“To be clear, strong wage growth is a good thing, But for wage growth to be sustainable, it needs to be consistent with two percent inflation.” -Jerome Powell at the Brookings Institute, not sure how else to read this beyond “workers should make less money and have less spending power.”

That is not what it says. It says 'for wage growth to be sustainable' and says nothing about workers having less money. You do understand spending power decreases with inflation, right? Powell is saying you have to get inflation in check to have more spending power.

[adjacent]

43 minutes ago, arby58 said:

That is not what it says. It says 'for wage growth to be sustainable' and says nothing about workers having less money. You do understand spending power decreases with inflation, right? Powell is saying you have to get inflation in check to have more spending power.

But it is implied. Although I wouldn't blame Powell specifically for it. The common medicine to bring down inflation is to increase the cost of money by increasing interest rates, which is what Powell did. Sure, that means that it will be harder for anybody to get money to spend, and as always, the  lower you are in the economic totem pole, the harder it is. Actually Powell did apply this medicine with quite success, because inflation lowered without causing a recession. 

[NYCTK]

24 minutes ago, SteveLV said:

Please take the politics somewhere else, folks!  (Moderator, please step in.)

And I don't care if this is an "official" Twins Daily post, the political slants should be omitted.

 

As stated in the article, Twins Daily asked for this career retrospective. If you're going to discuss an evil billionaire that has gained, in part, his fortune through the failures and assistance of politics, both local and national, politics is going to be discussed.

And asking for a moderator to shield your eyes from a link you willingly clicked is weird. My advice would be to just close the tab. 

Now, if politics comes up in a thread about the bullpen, that's another story. 

 

[nicksaviking]

**********Moderator Note*********

This is an article, not some random topic thread; the article itself is not subject to moderation. It's been edited and reviewed by owners and contributors. If you don't like any of the political suggestions, just turn the page and find another topic to read on this site please.

Most of the article has nothing to do with politics so there are plenty of other angles to discuss.

[SteveLV]

The comment about Powell's "motive" for Fed Rates was purely gratuitous and had ZERO to do with the Pohlad's finances.  ZERO.

[PatPfund]

Polemics aside (and there is a LOT of that here; interest rates are only "high" now if you ignore historic context and the fact they "soared" in the early '20's from zero aka free money, and money can't remain free without destroying the value of that money including the money that makes up retired worker pensions), the series essentially boils down to Carl was an unpleasant businessman, and (most importantly) even though his kids may not be as bad, the collapse of downtown real estate (see recent stories on Madison Equities in St Paul or the Strib's look yesterday at Mpls) is likely driving the sale of the Twins. There is likely need for some liquidity, or at least stability in the face of other (big) concerns.

The last paragraph, though, is pure gold. That indeed is our system, except I'd add a third option to screaming or fighting, and that is to emotionally opt out. Ultimately sports are a diversion, and there are a LOT of diversions out there.

(Enough baseball fans are opting out emotionally that the sport at some point may have a reckoning between nine-figure contracts, and shrinking popular interests, the same way real estate is dealing with big mortgages and shrinking occupancy rates.)

[tony&rodney]

8 minutes ago, PatPfund said:

The last paragraph, though, is pure gold. That indeed is our system, except I'd add a third option to screaming or fighting, and that is to emotionally opt out. Ultimately sports are a diversion, and there are a LOT of diversions out there.

 

This, exactly is my takeaway. It is also why I have not been able to take part in the hate for the Pohlads. They are who they are and are just representative of how our system works (or doesn't work). Thus i will almost always just stick to the baseball side and have almost completely eliminated politics from my reading despite a lifetime of being excessively educated in it. Age tends to swirl everything together.

I did get a kick out of one comment referring to "left wing" whatever. The last person to run for president in the U.S. who was a leftist was in 1984. Our new left, if that is what one wants to call it, would be center right at that time. U.S. history has quite a few ebbs and flows. So it goes, it is what it is.

This relates to baseball and the Twins in as much as one is powerless below the Pohlads, which brings us right back to screaming, yelling, and hate and none of those seem particularly healthy to an old man like myself. So I will just stick to thinking about the games, strategies, and watching how each pitch and play develops, stuck in my own world.

[Major League Ready]

How is this history relevant to what is happening today or why does anyone care?  I bet nobody would care how they got their money if we were in the top 10 in spending.  The purpose is to rant about how the Pohlad's spend.  So, why not cut to the chase and do an article on how the Twins spending rank vs revenue rank compares or how their spending as a percentage of revenue compares to other teams.  We get a five part series on the Pohlad's business history but not a single Twins Daily writer willing to actually layout the facts on their spending vs other teams of similar revenue.  Sure seems like TD does not want an article that would actually quantify/illustrate the relative spend.  Why is this so? 

[NYCTK]

7 minutes ago, Major League Ready said:

How is this history relevant to what is happening today or why does anyone care?  I bet nobody would care how they got their money if we were in the top 10 in spending.  The purpose is to rant about how the Pohlad's spend.  So, why not cut to the chase and do an article on how the Twins spending rank vs revenue rank compares or how their spending as a percentage of revenue compares to other teams.  We get a five part series on the Pohlad's business history but not a single Twins Daily writer willing to actually layout the facts on their spending vs other teams of similar revenue.  Sure seems like TD does not want an article that would actually quantify/illustrate the relative spend.  Why is this so? 

I asked you this a few weeks ago and I'll ask it again: why don't YOU do the analysis that you're asking for instead of asking why someone who wrote about something else entirely didn't write about the one thing you and you alone are asking for? 

[PatPfund]

Apropos of nothing, @tony&rodney, I adore your screen name. First Twins debate I ever had was with my brother over the best Twin (I was an Oliva guy, Michael a Carew backer; no wrong answers there).

[arby58]

1 hour ago, adjacent said:

But it is implied. Although I wouldn't blame Powell specifically for it. The common medicine to bring down inflation is to increase the cost of money by increasing interest rates, which is what Powell did. Sure, that means that it will be harder for anybody to get money to spend, and as always, the  lower you are in the economic totem pole, the harder it is. Actually Powell did apply this medicine with quite success, because inflation lowered without causing a recession. 

'The lower you are on the totem pole' means you probably can't 'get money to spend' (i.e., loans, credit cards), so I don't see that as relevant. Inflation is a far bigger threat to lower income spending power. In fact, Powell and the FOMC did a great job of bringing down inflation without materially raising unemployment. I think the series on Pohlad is interesting/useful, but this straying into discussions of economic policy is woefully superficial.

[NYCTK]

53 minutes ago, tony&rodney said:

I did get a kick out of one comment referring to "left wing" whatever. The last person to run for president in the U.S. who was a leftist was in 1984. Our new left, if that is what one wants to call it, would be center right at that time. U.S. history has quite a few ebbs and flows. So it goes, it is what it is.

I don't know that I fully agree with this, although it is commonly believed. But there is no denying this country's rightward shift of the Overton window...

EDIT: to remove off topic modern political discussion

[NYCTK]

13 minutes ago, arby58 said:

'The lower you are on the totem pole' means you probably can't 'get money to spend' (i.e., loans, credit cards), so I don't see that as relevant. Inflation is a far bigger threat to lower income spending power. In fact, Powell and the FOMC did a great job of bringing down inflation without materially raising unemployment. I think the series on Pohlad is interesting/useful, but this straying into discussions of economic policy is woefully superficial.

Truly, the inflation spike was painful to be sure, but the guys in charge of the levers did a really good job minimizing the damage. 

[nicksaviking]

40 minutes ago, Major League Ready said:

How is this history relevant to what is happening today or why does anyone care?  I bet nobody would care how they got their money if we were in the top 10 in spending.  The purpose is to rant about how the Pohlad's spend.  So, why not cut to the chase and do an article on how the Twins spending rank vs revenue rank compares or how their spending as a percentage of revenue compares to other teams.  We get a five part series on the Pohlad's business history but not a single Twins Daily writer willing to actually layout the facts on their spending vs other teams of similar revenue.  Sure seems like TD does not want an article that would actually quantify/illustrate the relative spend.  Why is this so? 

Did you not read the full article? It is relevant today because it spells out the most likely reason the Pohlad's are selling the Twins. To get liquidity for their real estate empire.

This series had nothing to do with the Twins payroll.

[Major League Ready]

18 minutes ago, nicksaviking said:

Did you not read the full article? It is relevant today because it spells out the most likely reason the Pohlad's are selling the Twins. To get liquidity for their real estate empire.

This series had nothing to do with the Twins payroll.

It took a five-part series to come to this conclusion?   Do you think people are that intrigued by the reason they are selling?  Let's be real.  This much effort was a product of wanting to complain.   Nobody really cares why the Pohlad's are selling.

[adjacent]

35 minutes ago, arby58 said:

'The lower you are on the totem pole' means you probably can't 'get money to spend' (i.e., loans, credit cards), so I don't see that as relevant. Inflation is a far bigger threat to lower income spending power. In fact, Powell and the FOMC did a great job of bringing down inflation without materially raising unemployment. I think the series on Pohlad is interesting/useful, but this straying into discussions of economic policy is woefully superficial.

Basically, I don't disagree with you.

I would add that the subject of ownership of Sport franchises valued in billions of dollars is in itself a political discussion (even in the best sense of political) Because it affects directly the community where the franchise is situated, way beyond the score of a particular game

 

[Schmoeman5]

1 hour ago, Major League Ready said:

How is this history relevant to what is happening today or why does anyone care?  I bet nobody would care how they got their money if we were in the top 10 in spending.  The purpose is to rant about how the Pohlad's spend.  So, why not cut to the chase and do an article on how the Twins spending rank vs revenue rank compares or how their spending as a percentage of revenue compares to other teams.  We get a five part series on the Pohlad's business history but not a single Twins Daily writer willing to actually layout the facts on their spending vs other teams of similar revenue.  Sure seems like TD does not want an article that would actually quantify/illustrate the relative spend.  Why is this so? 

Because the wheel is broke. Always defending the amount that generally sits in the middle of the pack. You're  right when you say no one would complain if they were consistently in the top 10 in spending.  That would show the DESIRE to win is more important than the profitability.  And don't come back and say, well the revenue won't support that. Indeed. The current revenue wouldn't support that. Then again, wouldn't a consistently good product increase revenue. I think this 5 series article didn't need to show all the darker stuff. The main point could have been profit above all else. No matter who got in the way. 

[NYCTK]

19 minutes ago, Schmoeman5 said:

...I think this 5 series article didn't need to show all the darker stuff. The main point could have been profit above all else. No matter who got in the way. 

None of anything that's written on this website NEEDS to be written. I found it very interesting, and although questionable in some inferences or conclusions, a far more engaging read than the fact that the bullpen is projected to be pretty good. 

[Jesse hoffman]

Thank you for the excellent, very informative and well Researched series. It is always amusing and a bit sad how many people jump to defend our insane, oligarchal capitalist system and the amoral monsters who run this country, and our government, as well as the awful billionaires who control every aspect of America. We live in a kakistocracy, a country run by its worst citizens. All things are political in America. Trying to remove/ignore politics from the historical equation is an intellectually disingenuous exercise.    

[Brock Beauchamp]

1 hour ago, Major League Ready said:

It took a five-part series to come to this conclusion?   Do you think people are that intrigued by the reason they are selling?  Let's be real.  This much effort was a product of wanting to complain.   Nobody really cares why the Pohlad's are selling.

This series of articles has done very well in reads, so perhaps you're just wrong that people don't care why a family is selling a team they owned for four decades.

[Major League Ready]

2 hours ago, NYCTK said:

I asked you this a few weeks ago and I'll ask it again: why don't YOU do the analysis that you're asking for instead of asking why someone who wrote about something else entirely didn't write about the one thing you and you alone are asking for? 

I have already done a fair amount of it but I also know that you any many others would just completely ignore it if it was me posting it.  

[ashbury]

27 minutes ago, Major League Ready said:

I have to wonder how many of these posts are made while participants are getting paid by an employer.

Sick burn, bro.

[farmerguychris]

Awesome series of articles and very interesting!

I hope you'll consider doing another such article on whomever the new owners will be on how they made their money, etc.

Thank you for your efforts.

[Peter Labuza]

1 minute ago, farmerguychris said:

Awesome series of articles and very interesting!

I hope you'll consider doing another such article on whomever the new owners will be on how they made their money, etc.

Thank you for your efforts.

Thank you (and to all who found these articles interesting!). I will definitely consider that if/when we have a new owner—TD has already reported on some of the Ishbia financial dealings that made the press a couple years back. Part of the idea of this series was "we are constantly told by the Pohlads that they cannot spend anymore money on the team, so what are they spending their money on?" But especially in an era of sportswashing from Saudi Arabia to Steve Cohen, it is always important to ask how and why material power is built and how it is used.

[Brock Beauchamp]

11 minutes ago, Peter Labuza said:

Thank you (and to all who found these articles interesting!). I will definitely consider that if/when we have a new owner—TD has already reported on some of the Ishbia financial dealings that made the press a couple years back. Part of the idea of this series was "we are constantly told by the Pohlads that they cannot spend anymore money on the team, so what are they spending their money on?" But especially in an era of sportswashing from Saudi Arabia to Steve Cohen, it is always important to ask how and why material power is built and how it is used.

I think this series of articles has been excellent, Peter. Thank you for all the research and putting it together.