Monday, November 18, 2013

Cardinals-Redbirds: Deal or No Deal?

Posted By on Mon, Nov 18, 2013 at 11:27 AM

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Local baseball fans were aflutter last Friday with the announcement by the St. Louis Cardinals that the major-league club had agreed to purchase their longtime Triple-A affiliate, the Memphis Redbirds. As stated in a release by the Cardinals:

“In an effort to rescue their financially troubled Triple-A affiliate, the St. Louis Cardinals will acquire the Memphis Redbirds. The club’s home ballpark, AutoZone Park, will be acquired by the City of Memphis.”

Hold on, though, said Memphis mayor A C Wharton later that same day. When it comes to the city’s purchase of AutoZone Park, it appears a deal has yet be struck. Said Wharton, as quoted by Daniel Connolly in The Commercial Appeal:

“I do not have a contract. I do not have an agreement or even a draft of agreement to review. . . . What we have, I guess, is sort of a clash of business cultures in which the private sector is moving at a pace that is not exactly in sync with what I, serving in the public entity, have to honor . . . .”

And so the drama continues, a story of “business cultures” now more than 15 years old, since Dean and Kristi Jernigan first secured the $72 million in bonds to build “the finest baseball stadium below the major-league level.” That glorious ballpark at Third and Union remains very much a standard to be matched by other minor-league operations. But with more than $20 million of debt giving its brick exterior an extra shade of red, the stadium’s value as an asset — not to baseball fans, really, but the city of Memphis — remains vague at best.

The fact is, AutoZone Park was a feat of financial wizardry on the part of the Jernigans. Consider that no other minor-league ballpark had cost as much as $50 million to complete. (Victory Field — home to the Triple-A Indianapolis Indians — opened in 1996 and cost all of $20 million.) Its 44 luxury suites — on two levels — are 44 more than can be found in many, if not most, minor-league parks across the country.

The stadium is the realization of a dream-like vision, but with an economic foundation no more healthy than a heaping dish of barbecue nachos. It’s one thing to own and operate the baseball team that plays in the stadium (the Cardinals seem ready and willing to play this role). It’s quite another to turn the facility itself into a source of measurable profit, particularly if the new owner is a city government weighted with declining population and stagnant, if not shrinking, business development. At the very least, the city cannot afford to lose money on AutoZone Park. Thus, Mayor Wharton’s pregnant pause last Friday.

The Redbirds are hosting an invitation-only event Tuesday evening, one where Cardinals owner Bill DeWitt and general manager John Mozeliak are expected to appear. You have to presume John Pontius and Ray Pohlman — the faces of the nonprofit Redbirds Foundation — will be there too. It will be a gathering of “players” with deep interest in making the business of Redbirds baseball a long-term success story.

Keep your eye on those 44 suites. The park’s most distinguishing luxury features were signed to 15-year leases before the park opened in 2000, meaning they are up for grabs after the 2014 season. The Memphis economy was quite different at the turn of the century. (To begin with, there were no Memphis Grizzlies and no FedExForum with its own luxury suites.) For that matter, the global economy was quite different at the turn of the century. Those suites have each brought in an average of $40,000 per season, a revenue stream north of $1.5 million. How many will be renewed, and at what price?

AutoZone Park isn’t going anywhere. The Cardinals are flush with the finest minor-league system in baseball, with Memphis the final training ground for rising stars like Michael Wacha. The big righty pitched his first Triple-A game in downtown Memphis last April, then was named National League Championship Series MVP in October. The ultimate dream for AutoZone Park, it turns out, is creating revenue streams as strong and steady as the flow of talent on its way to Busch Stadium.

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