During St. Louis Cardinals Winter Warm-Up, I attended a one-hour presentation from team president Bill DeWitt III during which he covered several general topics before taking questions from the audience. Among those subjects was the team’s finances.
Here are some of his key points.
General team finances
St. Louis is 24th of 30 MLB markets, using Nielsen DMA as the measure. This does not include “outer markets.”
The Cardinals are 20th in MLB in revenue due to the size of the market and the resulting cable television deal, which runs for seven more years.
In local revenue (tickets, food, beverage), the Cardinals rank in the top five in MLB. No team has a bigger gap so greater local dependence on local revenue.
The club receives 1/30th of all MLB revenue. For example, MLB Properties for central licensing and MLB Advanced Media. This allows clubs more consistent revenue through team up and down years.
(According to a recent report from BizofBaseball.com, MLBAM alone generates a half-billion dollars in revenue annually.)
Considering all sources, St. Louis is 10th in revenue across MLB, which is the same spot as player payroll spending. They consider themselves a “top 1/3 club” along with the big market teams, but have greater dependency on ticket sales.
They are looking at changing season ticket reporting to a more consistent method across MLB. For example, eight ten-packs could equal one season ticket.
The Cardinals are implementing customer relationship management (CRM) to better understand preferences and past history.
Ballpark finances
New Busch Stadium cost $411 million, including some first season expenses.
A $100 million assistance proposal from the state did not pass. Meant they needed city help or they could not have financed the stadium.
There is a five percent city admission (or amusement) tax on entertainment tickets (including Rams, Blues, etc. – unique in MLB.) above the sales tax that was abated by the city for 29 years.
Prior to the new stadium, the five-year average (through 2002) the Cardinals paid the city was $7.7 million in admission, revenue taxes etc. It is now up to an average of $10.3 million in the last five years because of increased revenue and a higher payroll tax. City did the right thing.
State was active, too. MODOT moved up the schedule to relocate a highway exit to make room for the park and the state gave them tax credits for environmental cleanup from old gas stations. Same credits were available to any MO business. $50 million in state investment. Revenues from Cardinals to state up from $9 million average before new stadium to $18 million average since it opened.
Other than San Francisco, financed like St. Louis, the cost of most stadiums were at least 90 percent public assisted. St. Louis was about 10 percent.
The Cardinals borrowed about $300 million to build the stadium. They are able to service the debt annually, but carry a larger burden than other clubs.
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Interesting.
However, I don’t agree with the following at all:
“The club receives 1/30th of all MLB revenue”
If “revenue” was BD3′s word, he was wrong. There is no way they are evenly distrubuting “revenue”.
Now…”earnings”, “profit”, “surplus”, etc. Absolutely. But you have to subtract the cost of goods sold and related operating expenses (such as marketing, etc.) from revenue before you split it up or they are losing a fortune (on this).
He did use the word “revenue”, though I certainly understand your point that net income or the like would seem far more accurate.
I listened to the tape again. In fact, the word “revenue” was used twice. Is that like a double-negative that cancel each other out?
“The clubs all receive the same revenue, divided by 30, from all the national sources of revenue that the club receives,” was the actual quote.
They use stadium debt for quite a few “justifications”. Ask them for the names of the major bonds holders, locations……………….. check out the congressional investigations into “tax free bonds” issued in NY for both the Mets and the Yankee’s……….and how much of that good old “funny money ” was jammed into them as the Bush era passed. Cardinals sold there own bonds.
A $20-ish million dollar per year financial commitment is pretty significant. It is more than we paid any single player until, probably, next year. I don’t blame them for reminding people that they are paying for the stadium since the city would not. That is $20+MM in cash flow that we could be putting to other uses. It isn’t complaining either. When people chirp about payroll being too low, I would absolutely remind them that they are paying for the stadium – although most of the complainers don’t seem to understand that simple thing…or, I guess, care.
I also don’t see a connection between the public New York bonds and the Cardinals’ private bonds.
Every single post is a conspiracy theory. That has to be exhausting. You have quite the imagination.
The depth of your inquiry Easton, I would venture a guess, has been a life long “struggle/challenge”. “I can’t see a connection” means something different to me than to you I would guess……………………… I would very much like to here you speak on the evolution and development of the “Enron” concept…………or the true nature of the “housing bubble”.
This article isn’t particularly interesting…….but a search surrounding its origins might yield a few interesting perspectives.
http://socialistworker.org/2005-1/527/527_11_StadiumSwindle.shtml
There is a reason for the new stadium…….and the politics that encouraged it’s building.
The city will own the stadium in 2049….outright…….just in time to tear it down.
Again, this article say a few things about the funding privileges and perks…..which amount to a hell of allot more they they are paying out…………
http://www.stltoday.com/sports/baseball/professional/article_dc308b52-aaa4-5f52-aa30-9f05e6040265.html
The public will is paying for that stadium. Its just packaged very well.
http://www.stltoday.com/sports/baseball/professional/article_dc308b52-aaa4-5f52-aa30-9f05e6040265.html
I still don’t understand this diatribe about the bonds.
Anyone can sell bonds…as long as they are underwritten and there is a market for people to buy them. They are not collateralized so what they used the money for is not relevant. At least I would assume the Cardinals did not need to LC-back their bond issue. That is only done for mid-sized businesses with higher risk.
If I want to sell a billion dollars worth of private bonds to start a transvestite nude taxi service in rural America at x% interest, and people buy them willingly, did someone do anything wrong?
Public municipal bonds that just happen to be for the purpose of building a stadium (instead of, for example, redoing the sewer system, etc.) are not comparable.
I underwrote both private and public municipal bond issues for two years.
I don’t know why I bother.
I’ve said all along that the debt issue is mute. Now if they want to talk about how much they invested, I’ll listen. But whether they used debt, equity, or debt to themselves (as Westie is implying) makes no difference to me.
And really……..it shouldn’t make a difference whether they own the stadium anyway.
The question is………..are they playing to win……baseball games……..or are they preying on a witless society………… are there really people that would try to pull one over on “trusting public”.
When AP isn’t signed……….most everyone will have an opinion on why its true. I will just be happy……. we have a team…….it will kick ass if it isn’t dragging his issues around. The guy is an AH……and its not because he is greedy……..its because he is an AH.
Tony brought in Berkman to feed……..that may free up Holiday………if you thought that teams pitched around AP in 2010……….wait till this year……division teams will be doing everything they can to bait him and piss him off………..they know that the AL is the only place that could deal with a 10 yr contract……..3+ as a DH………… they will be “forcing the issue”…….Tony has been making preparation for that very scenario……….. Punto’s agent went through Tony to get here…..not Mo……. he may win a position on a team in transition…… a good speculation.
Wish they were more specific. For example $18 million is state revenue from the Cardinals? I dont buy that. Now if you want to talk revenue from businesses and activities related to the Cardinals that may be but that doesn’t sound like what he said. and city revenues doubling? just from them?
“State direct revenues coming from the Cardinals” were his words.
Of course he fails to point out the rents and lack of stadium equity of those other clubs with publicly financed stadiums
I missing a post.
Too many links.
Freed up now.
When will the stadium be paid off? And if the DeWitt group financed it without government help (excepting StL Co. bonds, to be repaid), they should own it at the end, right? Why would the city own the stadium in 2049 as Westy suggests?
And won’t that then provide a significant boost to the team, who will own an asset free and clear, who won’t have to pay to lease a facility as do teams who play in public-financed facilities?
There are actually so many, perks, subsides and tax enhancements, the city inherits the stadium at that point (2049)……… long after it is anything but a liability…………
These agreements are a piece of work……….you give perks and political backing to the right people………. and it just falls off on the taxpayer………. owners using the stadium debt to regulate all complications……….. avoiding revenue sharing agreements by claiming stadium debt in every transaction without validating transaction numbers………all ownerships share don’t show a profit?????? they sold 13% at 2002 valuations???????? no disclosure……. for days after that article showed up……..Cordish was in town showing plans………. Davis just bought a retirement housing business for 360 million at auction……less than half its value…….. and he wants to tie up money in some of the Cardinals shares…….that aren’t paying a dividend………. right…….
Check out the movie on the main site………Early Cardinal village is just an extension of stadium concessions………. viewing balconies on the office tower to guarantee renters………they have been stalling until the bond market is right????????? Some of you are probably aware of the complications in legitimizing capital of questionable origins………..
I’m calling BS… you lost me posting something from ‘The Socialist Worker’….
Likely long before that Tex……… you’re very curious……in a very restricted framework……. try to maintain a perspective.
Can you point to something that indicates city ownership of the stadium in 2049?
http://www.stltoday.com/sports/baseball/professional/article_dc308b52-aaa4-5f52-aa30-9f05e6040265.html
The players in this article………Lindecke……….BillyIII………. a hired gun brought in by the cardinals, with a reputation for his work against stadium abuse……. radio interviewers………did a show they termed a round table discussion……….. focus may have been Cardinal Village too, but it seemed to be about the above article………….. it was mentioned there……but as I recall other places too…… if you look you will find it in small print somewhere………..
Its only relevance concerns the the bounty of privileges runs out eventually. More accurately, that was also the amount of time the city was going to take paying off the loans they made to owners………. is on line………
Nice try Westie but my microscope couldn’t find that small print.
Ask Brian for God sakes……… the information is there.
Try to do what??????????????????? inform you?????????? I’m curious. When you see it…….what does it mean to you………..do you understand its significance?
I’m sure Brian really appreciates you asking him to find evidence of one of your wild as* theories that you yourself can’t even find!
http://www.kwmu.org/programs/slota/archivedetail.php?showid=4285
Listen to this……….pay special attention around the 24 minute mark……… its actually so much more delicious than I remembered…………..Fred Lindecke is exposing a future Cardinal strategy, with a wonderful fine print exposure that you would never see in these controlled environments…………….
There are so many devious details exposed here about Cardinal secrecy and planning…. enjoy. They will turn the stadium over in 2046 it seems……..unless they step up at some point………but why would they……….. that design will be obsolete in 25 yrs………. Tell me financial planning like this doesn’t have contingencies for an AP anomaly.
These are some of the problems I have with the cross talk here……… are you ducking out here to Brian………………….. ??????????
Paper is made up of wood……it is blank…….. when you borrow 45 million for 40 years, paying no interest or principle……and you add a clause to relinquish ownership of the stadium valued at ?? at that time……………you have sold the stadium……….. Billy III stumbling along suggesting a fund developed to cover the debt is preposterous. County is paying 108 million to loan 45 which won’t clear until 2033……..and thats paying it down the whole way……….. Stadium depreciation……that loan itself as it swells will be debt enough to shelter any profits……. is this going to get me banned…………………ha ha ha ……………… all this talk about paying down stadium bonds……….just laundering……….
Westy, I don’t have the inclination to follow a difficult story line during the off-season, so I don’t know if you are right or wrong, or even what exactly you are talking about.
But there are some well known and time honored wealth management techniques that are undoubtedly at play.
One is structuring things so that earnings are capital gains rather than income. Zero coupon (stadium?) bonds for example. Capital gain being usually taxed at a much lower rate than income.
Another is owning assets which apperciate but do not produce income, and living off money borrowed against the appreciating assets. Borrowed money being even better than capital gain, as it is tax free. A reverse mortgage on an appreciating house (or stadium?) is a simple example.
None of this is cloak and dagger, any tax guy can tell you all about it.
It would be shocking if BDW were not structuring things in comparable ways, albeit even more top shelf. More power to him.
have you been following this thread BB? catch up………….. listen to Billy three get “bushwhacked”..
He thought he had the whole thing wired…….and then “yikes”.
Brian, as I study the board……and answer some of my own questions…… something very curious has come up…… I would recommend that you bury this thread…….or at least my posts. Thanks…
Did the black helicopters start hovering over your house?
Thanks, Westie, that was interesting. Ol’ Fred didnt seem to have his facts totally straight there so I wont take it as a given that he knows what he is talking about on the 2046 date (though DeWitt didn’t deny it). I need to listen to it again when I have more time.
Fred only has facts…….nothing more. He has read the public information is all……… Billy III isn’t made like the old man….he really blew it………. I’m going to let this topic go…….. I like where we’re headed.
Andy P retires and they put up a bunch of photos. How about this one. Cool shot of Colby standing with Andy on the mound at Yankee stadium.
http://riveraveblues.com/wp-content/uploads/2011/02/AP9908290993.jpg
Good one there RC…….. a keeper……..
I think the Yanks figured on him to pitch……… they have to be sweating it a bid………..
SF pitching will mature……….. Phillies own the east now……… it will be interesting to see the new Dodgers….. Should be an entertaining year………..
Save that for the “When Colby Didn’t Wear 28″ article a few decades from now. Will save us all a lot of work.
http://www.ktkz.com/article.aspx?id=2097fdd7-f34f-4a95-a33e-a27aaca16f04&catid=0
baseball is so clean………….
DeWitt’s fortune is based on Arby’s fast food franchises. The owner of the chain is putting Arby’s up for sale, since its growth opportunities are limited. DeWitt is going to need to sell a zillion roast beef sandwiches to pay Albert.