The deal for the city of Memphis to buy AutoZone Park and the St. Louis Cardinals to buy the Memphis Redbirds franchise is on its way to a mid-February closing.
Shelby County Commission approval of the county’s part of the deal Monday, Jan. 27, came with a lot of reluctance and some of the same complaints Memphis City Council members had last month – primarily that they were being rushed.
The Shelby County Commission has approved the county’s part of the deal for the city of Memphis to buy AutoZone Park while the St. Louis Cardinals buy the Redbirds.
(Daily News File/Lance Murphey)
Memphis City Council member Shea Flinn, monitoring the commission’s debate via Twitter, had some insights on what changed the votes of council members earlier this month who had similar problems with the call for a rapid vote on the deal.
The commission delayed the item in committee sessions last week but commission Chairman James Harvey added the item to Monday’s agenda anyway, saying it was “time sensitive.”
Leaders of the Memphis Redbirds Foundation lobbied commissioners individually after last week’s committee delay insisting they have to close the deal among four basic parties in the transaction as well as others by Feb. 15 or risk losing the rating on the revenue bonds to be issued and already approved by the Center City Revenue Finance Corp.
“There’s also a closing that involves many parties, mostly the bond holders … the franchise buyer and the Memphis Redbirds Foundation, and of course the city of Memphis,” said John Pontius, treasurer of the foundation after the commission vote.
“Those four are the major parties. But there are a number of other people that have to do something to help us to get to a closing.”
The Memphis City Council approved Jan. 7 the city’s purchase of the ballpark conditioned on the St. Louis Cardinals buying the Memphis Redbirds franchise.
The county bought the land under the ballpark along with the city in the late 1990s. So as part of refinancing the ballpark, the county had to turn its interest over to the city but retain its right to half of any available profits from the ballpark if there are any.
The county would also continue to assign its $462,000 annual payment through a payment-in-lieu-of-taxes agreement for tax breaks on the William R. Moore building and adjoining parking garage to pay the new debt service from the new bonds. They finance the city’s purchase of the ballpark and $4.5 million of ballpark improvements by the city.
“I’m going to vote for it,” said Commissioner Mike Ritz. “But I am not a fan of the situation. … I don’t think the government – city or county – negotiate real estate deals with sophisticated borrowers and lenders very well. I think we get, frankly, out-negotiated and out-lawyered. I don’t know what we do about that.”
Pontius walked the commission through the details of what he said was “a continuation of the deal in place today.”
That included a sales tax rebate on items sold at the ballpark including tickets. That is the central revenue stream for paying off the bonds. Under the current deal that dates back to the ballpark’s construction, about 95 percent of the sales tax revenue goes into paying the debt including the share of that revenue that would otherwise go to fund local education, according to Shelby County Finance Director Mike Swift. The remaining 5 percent goes to the state.
Commissioners questioned Swift and others closely on the detail, which remains in the new financing agreement.
“Maybe we got a bad deal 14 years ago,” Commissioner Terry Roland said. Roland was the only “no” vote on the matter.
Commissioner Walter Bailey wanted to see a market study to back up claims by the Cardinals that they can boost attendance by about 100,000 a year, which is the premise behind the sales tax revenue projections that the Cardinals and the city expect to grow as well.
“What analysis do you have … that would suggest this deal will float better … when it failed under Dean Jernigan’s operation?” Bailey asked, referring to the driving force behind the ballpark and formation of the nonprofit foundation.
Pontius and others have conceded the ballpark that was built was under-financed from the start and over the years came to operate in what Pontius described as “severe financial distress.” Pontius said the Cardinals organization has increased attendance at other minor league franchises it owns in smaller markets.
Cardinals CEO John Mozeliak has said that while there isn’t enough time before the start of the 2014 season for physical improvements to the ballpark, the season that begins in April will see a noticeable difference in the ballpark experience and how it is marketed.
“I guess I can say this now,” Flinn tweeted. “But the big change in city council votes was the Cardinals very real intent to walk away.”
Flinn was recused in the council vote because he is attorney for Flinn Broadcasting, which includes the radio station that broadcasts Redbirds games.