Dean Johnson and the Minnesota Thunder, are they in Financial Peril?

The Minnesota Thunder have no general manager, no coach, 3 employees and a boat load of bills. Will they survive, and will Dean Johnson ask for help?

Four weeks ago, Inside Minnesota Soccer conducted a phone interview with Minnesota Thunder owner Dean Johnson while he was in Chicago trying to close a business deal. According to several sources, including the Minnesota Thunder and Johnson himself, he was in Chicago working on a deal to revive the club’s finances.

In the article, Johnson painted a rosy picture for the future of the Thunder and told IMS that WingField, the owner of the Thunder, had done a capital increase in equity this past year. He stated WingField had plans to recapitalize the Thunder, which was why he was in Chicago. Johnson stated WingField was in a good financial state. “We have a very stable and positive outlook in our company,” Johnson went on record as saying. However, IMS has information that is contrary to that statement. It has been reported that the Thunder owe money to its players, front office personnel, vendors, the United Soccer Leagues (USL) and to its Rochester PDL team.

Several Minnesota Thunder players reported they have not been paid for September or for end of season bonuses. In the interview with IMS, Johnson was asked about the non payments to players and the fact that front office personnel had not been paid for 9 weeks and took a mandatory week of vacation because of lack of funds.  In that interview Johnson stated he hadn’t known about the non-payment and players and staff would be paid within a week. Four weeks later, the staff and players have still not been paid.

A source close to the situation who wanted to stay anonymous said the front office personnel had felt “thrown under the bus” after Johnson’s interview with IMS when he claimed he hadn’t known about players and front office personnel not being paid. According to the source, Johnson was fully aware of the team’s precarious financial situation. Even Johnson himself stated in that same interview that he spoke to team president Manny Lagos “multiple times a day.”

Several other anonymous sources close to the situation told IMS Johnson was also aware these same employees had been paying for company expenses on their own with the hope that Johnson would reimburse them. According to their stories, numerous front office employees have fronted large amounts of cash for the money-strapped organization. The amount was in the range of thousands of dollars and was used for purchases and general expenses put on their own personal charge cards because Johnson couldn’t come up with the money himself.  These individuals have not been reimbursed.

Several sources have contacted IMS to report that several facilities in town are owed money by the organization from last winter.

Barry Neal is the president of the Minnesota Thunder Academy (MTA). Neal said the MTA is aware of the financial struggles the team are currently involved in but MTA has no reason to be concerned at this point. “The Minnesota Thunder and the Minnesota Thunder Academy (MTA) are two separate organizations,” stated Neal. “MTA is stable at this time.”

Neal explained MTA does not receive nor is dependent upon the MN Thunder organization although they do get a yearly grant of $25,000 from the Thunder to help with player scholarships.  MTA often does extensive traveling for high-level competition.

Neal said the Thunder did pay $25,000 to the MTA last year, although it was late. The payment was promised in the spring and MTA received it in June. “The next payment won’t be due until next spring,” said Neal. “So as far as we are concerned, we are on a wait and see basis with the organization. We still see value in being associated with a professional soccer team. If worst comes to worst, we could just go through a name change with the organization and become Bangu again.”

Bangu Tsunami was the original name of the soccer club before it joined in partnership with the Thunder in June of 2008 and took on the Minnesota Thunder Academy name.

According to several sources, the Thunder owe a 6 figure amount to the USL for the past season. Senior Director of USL-1, Chris Economides was contacted to confirm this but said he personally could not comment on the Thunder’s status with the league or its financial debt. He deferred to USL President Tim Holt who did not return the call.

Todd Penz, Director of Operations for the Rochester Thunder PDL team, did go on record in saying the USL has told him the Minnesota Thunder do owe money to the USL, for the USL-1 team as well as the PDL team located in Rochester, Minnesota. Penz did not want to go on record as to how much they owe the USL. Todd Penz is the son of Rochester businessman Dan Penz who owns 40% of the Rochester Thunder PDL team. The younger Penz runs the team for his father. According to Todd Penz, the USL has contacted him and told him the Thunder are no longer welcome in the USL. He said the Penz family was very happy with their first year in the PDL and were one of the top 3 teams up for “New Franchise of the Year.” He said the Penz family is excited about growing the PDL in Rochester. They’ve sold 50 season tickets for next year, and are already working on corporate sponsorships for the 2010 season. Penz says he has emailed, mailed and called Johnson to let him know they wanted to purchase the team from Johnson, but he won’t get back in contact with Penz. “We would like to purchase the other 60% of the team from Johnson but he won’t return our phone calls,” said a frustrated Penz. “The league has given us a very short deadline and we’re running out of time.”

Former Thunder head coach Don Gramenz told Inside Minnesota Soccer he was offered the job to coach for the 2010 season but has now accepted a teaching position in the same school district where he taught before coaching for the Thunder.

The Thunder, who had up to 12 employees in the front office shortly after WingField’s acquisition of the team in the fall of 2007, are now down to 3 with the departure of Gramenz as head coach. Gramenz wanted to stay with the Thunder as a coach, but because there were no paychecks coming in, he had to go looking for employment. Gramenz, who is married and has 2 children, said he hadn’t been paid for 10 weeks.

“I don’t know, maybe he does have the money coming in,” said Gramenz. “The problem for me is my financial situation doesn’t go away. If he says on a specific date that the money is going to come through I depend on that. If it doesn’t I have to move on. There’s no other way around it. I have to look for other employment so I can take care of the necessities in my life and that’s my family. One of the big things I’ve come to realize, particularly with having two young children, a wife, mortgage and bills to pay is security. I haven’t had that security for nearly 3 months. I love coaching, I’ll stay in coaching but it’s just going to be at a lower level, the youth level, the high school level, maybe even in MIAC. I also love teaching and I think coaching and teaching go hand-in-hand. I always knew I would go back to the classroom at some point. It’s just going to come a lot sooner than anticipated.”

Gramenz says he has questions for Johnson. “My question would be to Dean (Johnson), why would I want to work for an organization that doesn’t support me to coach to my full potential? It’s just the basic stuff. Paying your players on time. The best advocates for a club are its players. If you can’t take care of your players, you’re not going to have much of an organization and you’re not going to have much success on the field.”

Gramenz confirmed the Thunder players have still not been paid for September nor have they been paid their bonuses. He also confirmed he and the rest of his former front office staff had not been paid for almost 10 weeks.

“People think this is just the last couple of months,” said Gramenz. “Things have been like this for the last 15 months! The finances have slowly been coming in but Manny (Lagos) and Djorn (Buchholz) have been juggling a lot of things to keep our organization going at the USL-1 level and they’ve done a fantastic job of doing that with the resources that they had.”

Gramenz said he feels bad for Lagos and the position he is in. “I think for sure that Manny is handcuffed, particularly now. He doesn’t have any resources. The Thunder have bypassed a huge time to get corporate sponsorships. How can you get a corporate sponsor if you don’t have a league to play in and you don’t have your finances in check? Who’s going to want to partner with you?”

Gramenz also wonders if the Thunder and Johnson bit off more than they could chew.

“I know Dean has brought a lot of change and invested a lot of money into the club. But I really don’t know his true finances or if he could sustain the rate he was going at. If he didn’t have it, then his business plan should have changed.

“I have no idea why Dean is reluctant to bring in other investors. The longer the Thunder organization goes or at least the way it’s been going the last 3 months, they are slowly driving themselves underground. Even if he does come through with the financial side of it we have to make amends with so many business partners, fans, players, other clubs in the league, and other people in the soccer community, not just in the Twin Cities but Minnesota, the Midwest and the US. Now it’s a trust issue. That piece takes less time to lose than it takes to gain back. The more time that goes by with that lack of trust it’s going to take double or triple the amount of time to get it back.”

Gramenz reflected on his years with the Thunder and its future,

“As a player I was with the club 13 years and 2 years in the front office. So 15 years total with the club. Its just too bad that an organization is going to lose someone with that sort of experience, dedication and hard work. To see the club grow from grass roots to stable and then becoming not stable…

“In the end I’ll always hope that professional soccer and the Minnesota Thunder continue to be in existence because I really truly believe it’s an important piece of youth development. It’s also nice just to have high level soccer continue here. I’d love to bring my kids to those games as well.”

Johnson was asked in the IMS interview conducted by phone why he had not considered bringing in investors to help. He stated he “was not entertaining that idea at all.”

“My position would be that would be premature,” said Johnson. “My position has always been that I didn’t look at the Thunder as an investment for investment sake. It was the investment for soccer and from what I was hearing from other folks about the potential in Minnesota and the sheer pleasure of being able to facilitate that growth in the state with a professional soccer team. Therefore at the moment, I think we will have the resources to keep growing this team.”

IMS asks the question, if the bills are not paid and the team owes money to vendors, players, personnel and the league, when is the right time? There is no doubt Johnson has invested large amounts of money into the organization and presently minor league sports are struggling throughout the US. Johnson was also the victim of the economy and the real estate market. However, there’s a time to stop and admit the truth about the situation and ask for help in the way of investors. But Johnson may have backed himself into a corner with his association with the breakaway Team Owners Association (TOA) and his riff with the USL. “I think also at the moment with what’s going on as you know with the whole league issue, we are going to have to get that settled before we entertain any potential investors; they would want to know where the team is and where it’s going. I think that would be very difficult to understand at the moment for anyone outside.”

IMS has also learned through several sources that Johnson has been stating since last spring he’s been in Chicago supposedly getting a “big deal done” that will recapitalize the Thunder. The problem is, big deals take big time, and that’s something the Thunder are quickly running out of.

“It’s a sad day in Minnesota soccer that’s for sure,” said Gramenz with a sigh. “What’s the plan, what’s the date?”