The Cardinal Nation blog

Brian Walton's news and commentary on the St. Louis Cardinals (TM) and their minor league system

Busch Stadium debt may hurt players more than taxpayers

Some major league clubs have advantageous leases that offer flexibility but shackle their communities. Others carry stadium-related debt.

A typical approach by those who believe they can personally motivate St. Louis Cardinals ownership into increasing their player payroll is to reverse-engineer estimates for revenue, expense and profit, thinking they can do a better job than financial experts like Forbes.

Busch Stadium IIIOne area the critics almost always overlook is the debt assumed in the construction of the new Busch Stadium. In a recent presentation to faculty and business students at Webster University, Cardinals president Bill DeWitt III showed this debt represents between 13 and 15 percent of the club’s annual expense.

Chairman Bill DeWitt Jr. has been even more specific, noting their borrowing of $300 million of the $365 million required to build the ballpark requires them to pay more than $20 million annually in principal and interest.

That is $20 million not available for other purposes, including paying players, which is the largest single expenditure for the organization, representing about half their annual spending, according to DeWitt III.

The purpose of bringing this up is not to show pity for the DeWitts and their partners, shrewd businessmen all. Let’s face it. Had they been able to convince the taxpayers of St. Louis to fully finance the stadium, one can assume they would have been more than delighted to accept the handout.

That is precisely the train wreck that has hit a number of other cities, including in National League Central rival Cincinnati. In a Sunday article, The New York Times paints a sobering picture of numerous municipalities, scared of losing their teams, having funded shiny new facilities only to later realize their basic revenue assumptions to repay the debt incurred are unattainable.

After tax increases foisted upon local citizens didn’t prove to be enough and the MLB Reds and especially the NFL Bengals unwilling to alter their “sweetheart” lease terms, Hamilton County, Ohio is left with no choice but to cut basic services to taxpayers and deplete a bond reserve fund. This takes money away from necessities such as schools with no plan for paying it back.

Similar problems were cited with publicly-funded sports venues in Indianapolis, Milwaukee, Columbus and Glendale, Arizona. Back-end loaded interest payments are identified as a common problem, the risks ignored at the time the original commitments were sold by wide-eyed officials to the citizenry.

Trying to squeeze more out of the Cardinals for his prize free agent Matt Holliday, spinmaster extraordinare Scott Boras recently took his personal struggle of the rich versus the richer to the people, many of whom are hard-working taxpayers and ticket-buyers alike.

The agent drew a parallel between the Cardinals and the Phillies, the latter having a payroll about 30 percent higher than St. Louis despite the two franchises being similarly valued, according to Forbes. Boras apparently neglected to mention that Philadelphia’s Citizens Bank Park was state-funded.

One can only hope the self-deputized St. Louis payroll police understand and appreciate the bullet taxpayers avoided by ensuring the owners of the Cardinals were kept on the hook to pay the vast majority of the freight for their baseball palace – just as it should be.

Folks must also realize there is no free lunch. Someone has to cover the expense. It is only common sense that having debt service when a number of other clubs do not may mean the Cardinals have less in their coffers to pay players as a result.

That shouldn’t keep fans from expecting to see a competitive team on the field, but it seems the organization deserves some leeway in how the end is accomplished.

Specifically, if the Cardinals do not overpay for Holliday and he is lost to another organization, some will expect them to quickly re-allocate every dollar to other free agents, whether mediocrities or not.

Instead, if the club decides to stash some additional cash for signing the four extra players in the early part of the June 2010 draft awarded as compensation for the losses of free agents Holliday, Mark DeRosa and Joel Pineiro, some vocal critics will not accept it.

If the organization chooses to hold back money to acquire veteran players in-season to help the 2010 club down the stretch (“dry powder” revisited), there will be those who will not believe it until they see it, despite the club having done just that in 2009.

They will instead chalk up the actions of the winter to greedy owners who had no intention of re-signing Holliday, but craftily used Boras’ delay to purposely let all the good alternatives land elsewhere before doing nothing. These same owners continue to be vilified despite bringing Cardinals fans nine winning seasons and seven playoff teams during the just-completed decade.

So it goes in the annual winter of second-guessing.

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