On speculation that USA Today Publisher Craig Moon has asked Peter Prichard to return as a senior editor -- possibly over banking industry rescue coverage, despite steep losses on his watch at Freedom Forum -- Anonymous@1:20 p.m. asks: "In all fairness to him, didn't most of the foundations take huge hits in 2008?"Here's what could distinguish Freedom Forum in its endowment slide: accumulated debt at its biggest project, the new Newseum building in Washington, D.C. The $450 million museum about news opened last April, three years late, $200 million over original estimates -- and with what may be a gaping hole in its business plan.
Prichard, 65, oversaw construction. In that photo, inset, Newseum Chairman Alberto Ibargüen, left, talks with CEO Charles Overby, center, and Prichard, blue shirt and dark glasses, during a 2006 construction site tour. Here's my hypothesis:First, the museum is the anchor tenant of a large, mixed-used entertainment, business conference and residential complex. The original plan called for 135 luxury condos. At some point, they morphed into rental apartments. That means that when it came time to replace the original construction financing with a permanent loan, Newseum officials did not have the cash from selling those condos.
For example, say the condos would have sold for $500,000 each (I'm low-balling to be conservative). Had they all sold, that would have produced about $68 million in revenue. Under this scenario, that was $68 million that could not be put toward paying off construction costs. To be sure, the apartments -- assuming they are fully rented -- produce their own income stream.
Prichard's replacement, former USAT Editor Ken Paulson, told me: "I have no comment, but I can't imagine what you're alluding to between Peter Prichard and Craig Moon."
Freedom Forum on the hook
The Newseum is legally separate from the foundation. So, in a worst-case scenario, it could go bust, without pulling down the foundation. But that would be hugely embarrassing. So, I suspect the foundation will continue to prop it up.
Indeed, by 2007, Freedom Forum gave 96% of its $60 million in grants to the Newseum vs. just 51% of $44 million only seven years before, Gannett Blog found in an analysis of public IRS tax returns.
The 2007 grant may prove to be the biggest, because the Newseum had not yet re-opened, so didn't have any ticket sales and other revenue. We will not know the 2008 subsidy until the foundation's public IRS tax return is filed later this year. That, too, is when we should see the Newseum's separate return, showing its total debt.
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The Money Trail: Tracing a $650 million fortune
Gannett Chairman and CEO Al Neuharth started Freedom Forum in 1991 with $650 million in capital that shareholders forked over under duress soon after his retirement. Employees spent more than 50 years building that fortune when it was held in the original Gannett Foundation. The company's now-depleted charitable arm was dedicated to helping newspaper carriers and other needy people in communities where Gannett does business. In an occasional series, I'm reporting on what the Neuharth family has been doing with all that money.
I want to know how Neuharth got that money to start Freedom Forum.
ReplyDelete@2:45 - you simply haven't been following along
ReplyDeleteThe money would have been better spent if he would have used it to purchase newspapers and turn them into nonprofit entities. Would have given his "legacy" more legs.
ReplyDeleteCould Gannett become a non-profit arm of Freedom Forum? Is something like that possible?
ReplyDeleteYes, GCI could become a non-profit arm of the Freedom Forum, but it would do it no good. GCI's problem is the staggering load of debt. Listen to what Geithner and others are saying, and you will see that in the future, banks and companies will no longer be permitted to carry such extravagant debt loads that are dragging down this economy.
ReplyDelete4:49. and 2:45 the Freedom Forum, HAS NOTHING TO DO WITH GANNETT. It was originally, the Gannett Foundation, before Al stole it away from Gannett, and change the name. Most of the seed money that Al used to build his ego toy museum, came from the sale of Gannett's stock, back to Gannett> Gannett had to take out a helluva of big loan, to buy the stock, mainly because rumors, Al was going to used his proxy's in Gannett to retake control of Gannett, ( I sorry I started that rumor).
ReplyDeleteNothing to do with Gannett. Eh? Then how is Prichard ankling over to USAT, while Paulson ankles over to the Newseum. D'ya think it is just coincidence?
ReplyDeletePrichard running bailout coverage makes no sense. Hillkirk is a former Money editor. Shortcomings aside, he has far more business background than Prichard. Same with Hillkirk lackey Henderson. The problem is Money's lack of experience and connections on a reporter level combined with little direction from above. USA needs some decent business reporters and editors who are sourced on Wall Street, not another Freedom Forum retread.
ReplyDeletePrichard running bailout coverage makes no sense.
ReplyDelete... so of course, that's what they'll do.
First, there's no way that Pritchard would be on the list to return to USAT. Just think about it, for heaven's sake.
ReplyDeleteSecond, Jim, you're wrong about the condo/rental switch. It was to maintain flexibility for the future (yes, they think they will expand). Once you sell condos, you're locked in. This is not my opinion. It is a fact.