About every six months, 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 appropriate.
The new driver is an article (subscription only) in the Sunday Memphis Commercial Appeal. Writer Kyle Veazey reports this:
“City of Memphis officials are closing in on presenting a plan that is expected to involve the city taking ownership of AutoZone Park in a three-party deal that would also see the St. Louis Cardinals purchase the financially troubled Memphis Redbirds minor league baseball team.”
While this is not news in itself, the positive value is in the progress apparently being made in addressing the thorniest issue in the complex financial matters, the ownership of the ballpark.
To purchase the stadium from the non-profit Memphis Redbirds Foundation, the City would issue bonds to borrow money. The proceeds would be used to pay off Fundamental Advisors, which was earlier reportedly to be looking for a 15 to 20 percent return on its investment.
In late 2010, the private equity firm specializing in distressed debt had purchased at discount $58 million in defaulted municipal bonds originally issued to finance the construction of AutoZone Park. As a result, Fundamental Advisors essentially controls the club and facility.
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. Further municipal approvals would almost certainly be needed, meaning there is still road ahead.
The details of the Cardinals-Redbirds portion of the transaction may have already been worked out, but would almost certainly be contingent on approval of the ball park plan. In other words, it seems unlikely one would proceed without the other.
How smooth the final steps of the journey will be remains to be seen.