VOL. 129 | NO. 9 | Tuesday, January 14, 2014
Detractors Call Ballpark Deal Part of Larger ‘Quagmire’
By Bill Dries
Memphis City Council member Wanda Halbert calls it a “serious quagmire.”
And City Hall probably isn’t out of it with last week’s council approval of the AutoZone Park deal.
“Over the last two years, the mayor has come to the council … and said we are financially strapped,” Halbert said on the WKNO-TV program “Behind The Headlines.” “We’ve got to reduce service, raise taxes. The people are saying how are we consistently finding money to do some of these other projects. But we can’t pave streets like we need to.”
“Over the last two years, the mayor has come to the council ... and said we are financially strapped.”
The program, hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page, video.memphisdailynews.com.
Halbert was one of the four “no” votes on the deal in which the city bought the baseball park for $19.5 million and put up $4.5 million for ballpark improvements as the St. Louis Cardinals bought the Redbirds franchise.
So was Harold Collins.
Each said they were torn between problems they had with the terms, Memphis Mayor A C Wharton Jr.’s priorities and the prospect that a ballpark that draws 5,000 people each game to the Downtown area could go dark.
“I weigh heavily on that very same subject. Remember, I represent Graceland,” Collins said. “But at the end of the day we have to make a decision based on what kind of revenues the city and citizens will be exposed to.”
The concerns expressed by Halbert and Collins were the same as those expressed by other council members who later voted for the deal. The council members who voted for the deal said they ultimately accepted the revenue figures essential to paying back the revenue bonds with revenue made at the ballpark through bigger crowds and better marketing by the Cardinals. But even those council members who voted for the deal continue to have concerns about the overall direction of priorities at City Hall.
Collins accepts that the signing of a four-year player development agreement by the Cardinals for the Redbirds means the team is a lock to stay in Memphis for those four years.
The further away from that the 17-year financing agreement gets, the more uncertainty Collins sees in projections about the sales tax rebate revenue that is the largest revenue stream in paying back the revenue bonds.
“I’m comfortable from maybe year one to year seven. But as we get further down the line, we won’t be here,” he said referring to those now holding elected office at City Hall. “Year seven, year eight and year nine – those numbers get wider and I’m not sure we can get there.”
He wanted a contingency in which the Cardinals would have paid all of the debt from the new ballpark bonds if they moved the team before the end of the 17-year agreement, similar to the agreement for an early exit by the Memphis Grizzlies.
“What separates or makes the Cardinals different from the Grizzlies?” Collins asked. “They are no different than anyone else and we should not, in my opinion, have gotten into a relationship like that.”
Neither Halbert nor Collins have any problem with the 6 percent return Fundamental Advisors, the New York hedge fund that is selling the ballpark bonds, is getting in the transaction.
“I knew the hedge fund people were going to make money,” Collins said. “The question for me was our exposure.”
“That’s the nature of the beast,” Halbert said of Fundamental Advisors profiting.
What troubles Halbert is that city government is involved in the deal and similar ventures.
“It’s these public-private partnerships that are starting to grow out of control and there’s no rhyme or reason,” she said.
And both fault the administration for not bargaining enough or at all in such deals.
“They admitted that they didn’t negotiate with Fundamental Advisors and the Redbirds,” Collins said. “Once the council took on that role, I don’t think that the mayor and the administration could allow a negotiation period to go through because it would have looked very unfavorably on them.”
In addition, Halbert said the administration made a key misstep when details of the deal began to leak before any council member had seen the details. That was followed by a press release from the Cardinals in which Wharton was quoted as saying he supported the deal the same day Wharton told The Daily News he didn’t know all of the details.
“That was the wrong move to make,” Halbert said of the leak. “Then you start stepping into murky waters.”