VOL. 6 | NO. 16 | Saturday, April 13, 2013
In Need of Relief
DON WADE | Special to The Daily News
Perhaps it is only too appropriate that baseball is played without a clock. For securing the future of the Memphis Redbirds may require extra innings, not to mention extra effort.
Chad Huffman of the Memphis Redbirds warms up before taking the field. The St. Louis Cardinals are looking into buying the Redbirds, but the city will need to be involved. (Photo: Lance Murphey)
The ballpark was on the leading edge of revitalizing Downtown when it opened in 2000 at Third and Union. This, of course, was “B.G.” in Memphis – Before the Grizzlies. Also, before FedExForum. The city was ready for something big and bold – something that showed Memphis could overachieve, not underachieve.
Back then, Dean Jernigan insisted that he and wife, Kristi, be referred to as the Redbirds’ “founders,” not owners. The Redbirds existed in large measure, Jernigan said, to be a “community asset.”
Today, the nonprofit Redbirds Foundation owns the Redbirds and AutoZone Park, and the name of the game is debt. In 2013 that celebrated overachievement that was, is, AutoZone Park now looks like a major miscalculation that cannot be solved easily or quickly.
The recent news that the St. Louis Cardinals were again exploring the possibility of buying the Redbirds immediately created hope, but also reminded of a complicated reality.
“Whether it’s with the Cardinals or anybody else, the city’s going to have to be involved” in any sale of the team and stadium, said foundation president Ray Pohlman. “Forty-seven suites is a lot of suites and 12,500 permanent seats is a lot of seats in a minor-league ballpark. God love Dean and his vision, but we would do a lot better with 8,000 seats.”
A quick look at the scorebook details the challenges: The construction of the ballpark was funded by $72 million in bonds. In 2009, the foundation defaulted on a bond payment.
Local management group Blues City Baseball was dispatched in favor of Global Spectrum, a Philadelphia-based company. In 2010, Fundamental Advisors, a New York-based private equity firm, bought the bonds at a discount – for a reported $24 million.
Rocky the Redbird entertains the crowd as the Memphis Redbirds open the season against the Oklahoma City Redhawks at AutoZone Park. The recent news that the St. Louis Cardinals were again exploring the possibility of buying the Redbirds immediately created hope, but also reminded of a complicated reality – the need for the city’s involvement. (Photo: Lance Murphey)
In 2011, the Redbirds’ expenses approached $18 million while their revenue was just under $14 million. The size of the original debt and the year-to-year revenues/expenses equation has made it difficult for the foundation to make any headway. Foundation treasurer John Pontius in 2012 described the debt as “just in excess of what a Triple-A baseball team could carry.”
How much in excess? On paper, more than $57 million of the original stadium debt is still owed, Pohlman said. Meantime, interest is outpacing bond payments. Pontius said in an email: “Our payment (on the bonds) is less than the interest that is accruing, so our balance goes up each year.”
Pohlman said a deal with the Cardinals, or anyone else for that matter, “is not imminent.” But recent comments from Cardinals chairman William DeWitt Jr. to the Wall Street Journal seemed to leave the possibility of a Cardinal connection wide open: “The city of Memphis is Cardinal country. We’ve been there since the park opened and we hope this transaction would keep us there for many years to come.”
Pohlman said Jernigan always had in mind the idea of selling to the Cardinals and that discussions have continued for several years. But the Cardinals have no interest in owning the ballpark, just their Triple-A affiliate (the Cardinals own some of their other minor-league affiliates, including their Double-A team in Springfield, Mo.).
“Nobody out there is going to want to buy a stadium,” Pohlman said.
Unfortunately, this might include the city of Memphis unless all the layers of detail can be worked out to satisfaction. Memphis Mayor A C Wharton Jr. issued a statement that seemed to walk the line between trying to ensure AutoZone Park remains open for business and yet doesn’t put the city in a vulnerable position. The statement said, in part, that the city would “exercise the required due diligence as we reach a decision as to how the city can protect its interest and this critical asset.”
Asked if AutoZone Park is “too big to fail,” Pohlman replied: “In my mind, it’s too important to fail.”
Cardinals chairman William DeWitt Jr. told the Wall Street Journal: “The city of Memphis is Cardinal country. We’ve been there since the park opened and we hope this transaction would keep us there for many years to come.” (Photo: Lance Murphey)
In theory, if the Cardinals were to purchase the Redbirds and the city to purchase the stadium (something that would require council approval), the Cardinals would sign a long-term lease and their lease payments ultimately would pay for buying the ballpark. Even so, the city might have to borrow millions of dollars to buy the park in the first place.
“Fundamental Advisors still owns the bonds and the foundation still owns the franchise and the ballpark,” Pohlman said. “They’re both for sale. What the foundation wants is to make sure that whatever deal is presented is in the best interests of the community. We’re trying to make sure we can continue to play baseball at Third and Union. That’s our goal.”
Day to day, the running of the team and ballpark falls to Global Spectrum’s Ben Weiss, who is the Redbirds’ general manager. In 2012, the Pacific Coast League named Weiss its Executive of the Year. The 2012 season also saw AutoZone Park add minor-league baseball’s largest video board.
The Redbirds’ attendance last season was 493,706, flat from 2011 but up from the 462,041 they drew in 2010 when the economy was in a deep rut. Still, it’s a long way from the franchise record of 887,976 in 2001 (the park’s second year), or even the nearly 700,000 fans who came to the park in 2005.
What Pohlman said about AutoZone Park being too big for its own good resonates with marketing director Adam Goldberg.
“It just reduces the urgency to buy a seat in advance,” Goldberg said. “That’s why weather and walk-up is so important to us. People wait to the last minute.”
Said Weiss: “It’s very difficult selling full-season tickets when you don’t have that supply and demand.”
Weiss said the Redbirds have a little more than 2,000 full-season-ticket equivalents: “Our sales guys are here late, the phone calls are going out. We’ve got tremendous season-ticket holders in this market that love the Redbirds, love the Cardinals and come back every year. We’re lucky to have that because there are other markets not too far away that don’t have fans like we have. Once the season starts, it’s selling those group tickets, getting those picnics and little leagues out here, church groups.”
The Memphis market isn’t just challenging for the minor-league Redbirds. The Grizzlies and Redbirds both sometimes struggle with weeknight games. In the Grizzlies’ case, the opponent can play a huge factor, too. The Grizzlies usually can count on sellouts against marquee teams like the Miami Heat, who make only one trip to Memphis each season, and the Los Angeles Lakers and Oklahoma City Thunder.
John Pugliese, senior director of marketing communications, says the Grizzlies try to “push those games over the top; that will help sell lower-demand games.”
The Redbirds, however, have no big-name foes and no individual star power. It’s just the nature of minor-league baseball.
“The only icon in this organization is Rockey (the Redbird),” Pohlman said. “We’ve got one (former) player people identify with in Stubby Clapp and that’s why his uniform number is on the centerfield wall.”
Still, the Redbirds have advantages the Grizzlies do not. FedExForum’s best atmospheres are dependent on the magnitude of the games being played and the quality of the games being played. A good atmosphere at AutoZone Park really just requires a little sunshine and warm temperatures, maybe a hotdog and a cold beer. The Redbirds are featuring a lot of weeknight promotions and they have also gotten creative with, not a 5K race, but a “0K” race on June 9.
“Adam came up with the 0K and everybody loves getting a T-shirt, so let’s just get down to the fun stuff, the participation in the event, the Redbirds game,” Weiss said. “And I’m a runner. We’re not making fun (of 5Ks). It’s just a fun thing for mom, dad, the two kids.”
And it comes at a time when apparently minor-league baseball has no promotional limits. The Lehigh Valley Iron Pigs installed urinal video games in the men’s bathrooms. And yes, every bad joke already has been made – streaming media, pissing money away, making a splash, stream of consciousness, and on and on.
“It’s a European product,” Weiss said, no pun intended.
“From a marketing perspective, I like that they tried it,” Goldberg said. “I love to be on the cutting edge. Sometimes you don’t know where that is. You can’t bat a thousand when it comes to marketing ideas. I told our staff here, ‘you’re gonna fail, things will not work, but at least try these things.’”
While sales and promotions perhaps have the biggest roles in lifting Redbirds attendance and revenue, the caliber of play on the field can help. And having real prospects on their way to potential stardom in St. Louis can’t hurt. The Redbirds have that in outfielder Oscar Taveras, second baseman Kolten Wong and pitcher Michael Wacha, among others.
John Vuch, Cardinals farm director, believes Taveras, 20, an outfielder and baseball’s No. 3-rated prospect, will someday hit for average and power in St. Louis.
“He’s an exciting player, a fun player,” Vuch said. “Fans will enjoy watching him.”
The Redbirds suffered through a miserable 2012 season and manager Pop Warner said: “I heard a few things coaching third base, that’s for sure. I feel a lot of responsibility. It’s my job to get guys ready. Development is first and foremost, but winning goes hand-in-hand.”
Suffice to say, the Redbirds are looking for a better return on the investment everywhere, but baseball is not a game for hurrying. Patience is the greater virtue. Working the count in your favor. Picking the right time to hit-and-run or lay down a sacrifice bunt.
“Our bondholders, they’re looking for profit, obviously,” Pohlman said. “But John (Pontius) and I and the rest of the Redbirds Foundation’s board are just trying to make sure (any deal) gets done right. There’s no clock for this.
“The bondholders would like to see it done soonest and the Cardinals, now they’ve been identified as prospective buyers, would probably like to see it done soonest,” Pohlman continued. “But the city’s a major player in this thing. It’s going to be on the council’s timetable. I think that’s called the political reality of the situation.”