From a business perspective, the St. Louis Cardinals minor league system has enjoyed considerable stability in recent years. One reason is that the major league club owns all but three of its US-based affiliates.
The external owners of two of the three others are or will soon be actively shopping their clubs. The highest level team, the Triple-A Memphis Redbirds, is being prepared for sale. The short-season Class-A Batavia Muckdogs club has been on the market for about 18 months. The third externally-owned affiliate is the Class-A Quad Cities River Bandits.
The not-for-profit Memphis Redbirds Baseball Foundation is preparing a plan to place the team and its home, AutoZone Park, on the market, reports the Memphis Commercial Appeal. The Redbirds have been mired in a complex financial mess for several years that made it almost impossible to sell the team.
Considered one of, if not the best facility in minor league baseball, AutoZone opened in 2000. It came with a resulting heavy load, as its $80.5 million cost set a new record high for a minor league stadium. The combination of the high stadium debt, back tax liabilities and operating expenses out of line with declining revenues led to the deteriorating financial situation.
Fundamental Advisors LP, a private-equity firm, is owned more than $50 million in bond payments by the Foundation. The firm had purchased $25 million of tax-exempt bonds used to finance the ballpark after they went into default. The bonds are backed by the franchise and the stadium.
The current focus of the Foundation appears to be establishing sale parameters that would be acceptable to Fundamental Advisors, since the latter essentially has control of the team and stadium. This would provide a yardstick against which to measure prospective bids.
From the external view at least, the situation in Memphis appears to be improving somewhat. The club’s increase in attendance in 2011 of 31,000 was its first after nine straight years of decline. The business side of the team and the park have been facility-managed since 2009 by Global Spectrum, a unit of media giant Comcast.
When the Redbirds formally reach the market, it is not known if the St. Louis Cardinals will again show interest in acquiring the club. Back in September 2008, the Cardinals signed a letter of intent to purchase the team and rent AutoZone Park, but withdrew four months later due to the muddled finances.
Regarding the on-field product, the Cardinals’ current Player Development Contract with the Redbirds expires at the end of the 2012 season. The two began their relationship in the Pacific Coast League team’s first year, 1998. Agreements are typically executed in two- or four-year increments.