The Cardinal Nation blog

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

Memphis Redbirds, AutoZone Park sale may have a ways to go

Earlier this month, just as the Pacific Coast League regular season schedule was getting underway, a flurry of articles appeared. Led by the Wall Street Journal, reports of a potential breakthrough in resolving the ongoing unsettled financial status of the Memphis Redbirds and AutoZone Park caused considerable excitement.

The St. Louis Cardinals had re-engaged in negotiations to purchase their Triple-A franchise and operate it themselves. It would be an extension of the successful model the organization has in place at Double-A Springfield.

In fact, Memphis media personality Rob Fischer tweeted on April 3 that the Cardinals were “close to striking a deal to purchase the Redbirds” and that talks were “moving quickly.”

Yet, nothing visible has occurred since. The reasons appear to be at least two-fold.

First, AutoZone Park is not part of the proposed purchase by St. Louis. The ballpark is source of the problems that got the owner of the club, the non-profit Memphis Redbirds Foundation, into financial trouble. The City of Memphis would need to buy the ballpark and those approvals are not in place.

Second, the majority of the stadium’s 47 luxury suites are on lease agreements that will not be up until the end of the 2014 season, according to the Memphis Daily News. The suites represent a significant revenue stream to a new purchaser.

There is motivation, however.

While the Foundation still owns the team, it continues to fight a losing battle with its finances. Its bond payments are not covered by accrued interest, so its balance due continues to increase annually.

Fundamental Advisors LP, headed by 44-year-old chairman and chief executive Laurence Gottlieb, is in control of the team and ballpark. In late 2010, the private equity firm specializing in distressed debt purchased $58 million in defaulted municipal bonds on AZP for about 42 cents on the dollar, reports the Journal.

For that important reason, Fundamental is front and center in the sale negotiations.

The proposed deal, as explained by the Journal, would be complicated.

To purchase the stadium from the non-profit Foundation, the City would need to issue bonds to borrow money. The proceeds would be used to pay off Fundamental Advisors, which is reportedly looking for a 15 to 20 percent return on its investment.

To pay for the new bonds, the City would collect sales tax from the stadium and lease payments from the new/old tenant, the Cardinals/Redbirds. It is not clear if higher taxes would be required and if so, how much.

While the signals are encouraging, it could require another year or two for this delicate dance to complete. The primary risk would appear to rest with the citizens of Memphis, which means this is far from a done deal.

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10 Responses to “Memphis Redbirds, AutoZone Park sale may have a ways to go”

  1. JumboShrimp says:

    Thanks for bringing the Memphis Redbirds related article to our collective attention, Brian. Good stuff.
    The firm specializing in distressed bonds renders service to society by moving in, after the original folks are overoptimistic and land in bankruptcy. They are helping the citizens of Memphis by keeping the ballpark in use. They also try to help the City and MLB, in this case, the Cardinals, by proposing solutions that would enable an economically sustainable future for the City and Cards. Memphis is an important city and highly worthy of AAA baseball. We shall have to hope the parties can work out a viable arrangement.

  2. blingboy says:

    I wonder who the original bondholders were, the ones who ended up only getting .42 back on the dollar. Widows and orphans?

  3. WestCoastbirdWatcher says:

    You both realize that the deal with Fox Tenn is directly related to this issue?……… At a time when the Cards knew they were going to be using the talent there……………… You are watching true predators in action……………………… Cards won’t buy that operation………….directly………..just like they bought their own city loan bonds ……….. the beauty of Hedge fund financing.

  4. blingboy says:

    Curtis was the subject of some discussion on the Top Prospects vote thread this past winter. In a nutshell, several commenters considered Curtis to be a roster filler/non-prospect. One very knowledgeable commenter said Curtis “.. . . has virtually no chance to be added to the 40 man roster”.

    I am happy to say I was having none of that.

    “A player who has maintained an OBP above .400 all the way to AAA and still walks as much as he strikes out at that level is a prospect IMO.”

    Now I hope he doesn’t fall on his face and make me look stupid.

  5. blingboy says:

    Trade bait guy doing a nice job tonight. He’s going to be a horse.

  6. crdswmn says:

    I needed to get off Twitter for a while because I am unpopular for saying Boggs shouldn’t be sent to Memphis. People think demotion is the answer for all problems. If only Matheny had waited an inning to put Boggs in.

  7. [...] it seems, the potential sale of the Memphis Redbirds and AutoZone Park makes the news. With my last post on the subject having appeared at the end of April, the timing to revisit the matter is [...]

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