This past Tuesday, November 19, an invitation-only meeting was held at AutoZone Park in Memphis. The subject was the future of the ballpark and the Memphis Redbirds. The participants included key figures from the St. Louis Cardinals and the City of Memphis, along with the target audience, local business leaders.
The proposed set of transactions, which would seemingly resolve a tenuous financial situation, would be as follows. The Cardinals would acquire the Redbirds and the city would assume ownership of AutoZone Park, with the Cardinals leasing the ballpark from the city.
One challenge is that none of the parties have disclosed the specific financial terms, yet the City Council is going to be expected to weigh in on the matter just two weeks after the AZP meeting, on December 3.
A self-imposed deadline has been set for December 31, yet until now, it was not clear what might be behind it.
A new in-depth article in the Memphis Daily News helps shed some light on the immediacy of the situation.
Creating a sense of urgency seems important. Yet several City Council members quoted in the article are feeling rushed and remain concerned about the potential impact on city finances of issuing new bonds to fund the AZP purchase. One even wondered aloud if the price of the ballpark might go down later.
But what if another suitor emerged? Would it help push to get this deal done or could it be used against the proposal as a way to keep the city from assuming the risk associated with owning AutoZone Park?
As has been reported many times, back in 2010, Fundamental Advisors, a New York-based private equity firm, purchased the defaulted bonds issued for the construction of AutoZone Park. That put them in the financial drivers’ seat.
The reason the firm got involved seems simple – to turn a profit. Prior to the deal, they had no apparent connection to the city or to the Redbirds. They saw financial advantage in purchasing distressed assets.
While Fundamental Advisors has seemingly been content to allow the money-losing Memphis baseball operation to stabilize over the last four years, they may now be itching to get out – and could have a lever.
The Daily News article suggests the New York Mets, whose Triple-A franchise affiliation has been the equivalent of a baseball vagabond in recent years, approached Fundamental Advisors with interest in acquiring the Redbirds/AutoZone Park. The level of seriousness of the inquiry was not shared.
At this point, Lawrence Gottlieb is saying all the right things. Fundamental Advisors’ chairman and CEO made it clear his group is fully backing the Cardinals-City of Memphis deal. What was unspoken is how firm that support would remain if the decision time frame is extended into 2014 and/or the financials are adjusted.
We may soon learn if this Mets rumor will have any impact on the negotiations to close the current proposal, the details of which have yet to be divulged. What does remain clear is that the sale is not going to be a slam dunk.