VOL. 127 | NO. 74 | Monday, April 16, 2012
A story from The Memphis News
On newsstands throughout the city
DON WADE | Special to The Memphis News
One of baseball’s enduring maxims is that anytime you go to a game you’ve got a chance to see something you’ve never seen before.
Financial problems and declining attendance have plagued the Memphis Redbirds in recent years, but the team’s ownership group, the Memphis Redbirds Foundation, is looking to 2012 as the year to turn around the fortunes of the franchise. (Photo: Brandon Dill)
Apparently, this now applies off the field too, because a few weeks ago a group that included Magic Johnson as the front man paid $2.15 billion to buy the Los Angeles Dodgers from financially troubled owner Frank McCourt.
“Two billion?” Memphis Redbirds Foundation president Ray Pohlman said with a laugh. “The Redbirds are a bargain.”
The nonprofit Redbirds Foundation owns both the team and AutoZone Park. Under the right circumstances – the right price, ownership group and attitude about the franchise as a community asset – the team and stadium are very much for sale.
AutoZone Park opened Downtown at Third Street and Union Avenue in 2000 to glowing reviews and large crowds. The stadium was funded by $72 million in bonds – hot dogs and peanuts money when compared to the recent purchase price of the Dodgers – but a large investment in a minor-league venue. The Redbirds, fortunately, are not saddled with the problems McCourt faced – paying back a $150 million loan from Major League Baseball and making good on a reported $130 million divorce settlement with his ex-wife.
Still, the Redbirds do have substantial challenges. In 2009, the foundation defaulted on a bond payment. About a year later Fundamental Advisors, a New York-based private equity firm, bought the bonds for $24 million.
“It’s important that we recapitalize the Redbirds in a right-sized manner,” said foundation treasurer John Pontius. “The Redbirds were obligated on a tremendous amount of debt that was used to build the ballpark and it was just in excess of what a Triple-A baseball team could carry.”
For several years, Pontius said, there have been discussions with the city about a purchase plan for the team with the understanding that any such plan would include built-in protections for the city.
“Ray and I are volunteers representing a not-for-profit foundation and our motives are to totally do the right thing by the city – both the governmental entity and the citizens of Memphis,” Pontius said. “We’re not going to propose any transaction we don’t think is in their best interests.”
Said Pohlman: “John and I both did a stint in city government and so we understand. One of the options they’re talking about is a sale-leaseback. So the city will be paid back, whatever the sale price happens to be. And John and his team will ensure we’ll be able to live up to that obligation.”
Downtown Memphis Commission president Paul Morris said if the city took control of the stadium it could use a state sales tax rebate program to help pay off the bonds.
“But if a for-profit entity bought the stadium,” he said, “it would be difficult if not impossible for that revenue stream to survive.”
Morris, who stressed “I don’t speak for the city, I’m a facilitator for the city,” said he doesn’t believe the Redbirds’ financial situation is critical, but he sees “enough concern to continue the conversation we’ve been having the last few years.”
Late in the 2009 baseball season, the Redbirds Foundation fired Blues City Baseball and hired Global Spectrum, a Philadelphia-based national management firm. That move, along with the purchase of the bonds by Fundamental Advisors, has the Redbirds on the right course, Pontius said.
“They allowed us to use cash flow that was dedicated to make bond payments,” he said of the new bondholders. They’ve allowed us to use it more liberally to run the team and the ballpark correctly,” he said. “As long as we’re able to operate with the freedom we’ve had in the past, we’re in no particular hurry (to sell). It’s OK. There are five or six people I would consider a serious prospect. And for any ownership group to be a serious contender it will have to have significant baseball experience as part of the group.”
Several years ago, the St. Louis Cardinals, the Redbirds’ parent club, considered buying the team.
“It was before we had defaulted on our debt and it was before the broad market decline of 2008,” Pontius said. “So those discussions ended with the realization it wasn’t good timing. Since then, we’ve done a tremendous amount to make us a more salient franchise. We cleaned up our balance sheet, improved our operations, improved our accounting records and we’ve kept in touch with the handful of prospective buyers. We’re not in pricing discussions with a potential buyer.”
Those potential buyers, Pohlman says, also would have to understand this is a different game.
“The Memphis Redbirds and AutoZone Park always have been seen as something this community did right,” he said. “And the fact we’re engaging a thousand or so kids every summer in our R.B.I. (Reviving Baseball in the Inner Cities) program … this isn’t about professional sports in Memphis. It’s about the Redbirds, AutoZone Park, this gem at Third and Union.”
No question, AutoZone Park was a big-league hit. Even today, it continues to be hailed as the best ballpark below the major-league level. But the Memphis market changed – the NBA and the Grizzlies arrived, FedExForum was built, Memphis Tigers basketball enjoyed resurgence under John Calipari – and the ballpark became this outrageously nice place where, well, they played minor-league baseball.
“About 70 percent of the people who come to AutoZone Park don’t care who’s playing, don’t know any of the players’ names, don’t even know the score,” Pohlman said. “So it behooves us to re-create the experience for them” to make it fresh, like in the good old days.
This being 2012, technology will play a leading role in enhancing the fan experience. New to AutoZone Park this season is a $2 million, 3,600-square-foot high-definition video board beyond the right-field fence. The board was scheduled to be completed by April 13 for the Redbirds’ first home game.
“It will make the ballpark glow,” said Redbirds general manager Ben Weiss.
The hope is that just as fans flocked to see the park for the first time – the peak for tickets sold (887,976) was in 2001 – they’ll return to see the best video board in minor-league baseball. Last year’s attendance (493,528) represented a 7.5 percent increase from the previous year and led the Pacific Coast League.
But the video board is also literally huge for what it can mean to advertising.
“It’s a game-changer because of the ability to create a non-static advertising opportunity,” Weiss said. “Coke wants to promote Coke Zero. Bud wants to promote Bud Light, Bud Platinum. And we’ll be able to have a naming rights partner for our starting lineup. Which is something we didn’t have the ability to do in the past. It could change every third inning.”
Notable sponsors who have renewed with the Redbirds for 2012 include AutoZone Inc., FedEx Corp., Tennessee Lottery, Delta Dental, ePaymentAmerica, ServiceMaster by Stratos, Campbell Clinic and First Tennessee Bank. New sponsors include: Baptist Memorial Health Care Corp., Mission Foods, Cricket Wireless, Memphis Orthopedic Group, Prestone Antifreeze, Folk’s Folly and GO Orthodontics.
The sponsorship relationships are vital because most of the stadium’s 46 suites were pre-leased for 15 years, or through the 2014 season. And going forward, the foundation is limited in what could be done with the suites because “it’s sort of tied up with any potential transaction,” Pontius said.
“Maintenance of the ballpark and how you deal with the suites – all those details have been discussed,” Morris said, referring to the conversations between the foundation and the city.
Beyond increasing sponsorships and ticket sales, holding other events at the stadium could also boost revenue.
“Our problem is logistics,” said Pontius. “We play 72 baseball games.”
That said, the University of Memphis is joining the Big East and Weiss said they’ve already begun discussing making a bid for the conference baseball tournament.
“We pursued the SEC,” Pontius said, “so we’ve already put the whole package together with the (Memphis CVB).”
From a marketing standpoint, the Redbirds’ theme this season is “connect.” The idea being that it’s time for fans to re-connect with the team and the ballpark that once was at the core of summer plans.
“We can’t just market a player because we don’t know if they’re going to be sent down to Double A or brought up to the Cardinals,” said Adam Goldberg, the club’s director of marketing. “That’s the nature of the beast. Rockey (the Redbirds’ team mascot) is obviously the face of the franchise because he never leaves.”
On April 3, the team held an open practice and gave away free hot dogs, nachos and soda. Sitting behind home plate under a sunshine and blue sky was former TV weatherman Leon Griffin, 60, who was happy for the return of baseball but also with what he saw in the stands.
“Interesting cross-section of people,” Griffin said. “Young, old, black, white. And the kids sitting here, waiting to make their memories, that’s what this is about.”
Memories to be made on the field and possibilities for what could happen off the field, that’s what this next season is about.
“It’s spring,” Pohlman said with a smile. “Hope springs eternal, right?”