Checketts drops bid for Blues

[RangerBoy]

John Davidson, the NHL's lead television announcer for the Outdoor Life Network, will report on his radio show today that Dave Checketts has withdrawn his offer to buy the Blues and the Savvis Center lease

http://www.stltoday.com/stltoday/sp...A4B71976750138DB862570B700212B47?OpenDocument

Checketts feels the $150 million asking price is steep considering the Blues are the worst team in the NHL

Click to read more...

 

[Fugu]

http://www.stltoday.com/stltoday/sp...A4B71976750138DB862570B700212B47?OpenDocument

Checketts feels the $150 million asking price is steep considering the Blues are the worst team in the NHL

I have to wonder what the Blues ownership was thinking when they gutted the team. I believe they thought the star player contracts they were carrying were like an albatross around the team's financial neck. Thus ridding themselves of these should have appealed to a potential buyer.

It has had the opposite effect in that the team was turned into the worst team performance-wise in the league, and with poor performance comes poor attendance.

Does this indicate that someone dropped the ball in determining what the "assets" are in team valuations?

 

[hillbillypriest]

I have to wonder what the Blues ownership was thinking when they gutted the team. I believe they thought the star player contracts they were carrying were like an albatross around the team's financial neck. Thus ridding themselves of these should have appealed to a potential buyer.

It has had the opposite effect in that the team was turned into the worst team performance-wise in the league, and with poor performance comes poor attendance.

Does this indicate that someone dropped the ball in determining what the "assets" are in team valuations?

I think the choices were simpler than that. The Blues had 3 "albatross" assets - the contracts of Tkachuk, Weight and Pronger. However, while the former 2 could not be traded because they are so out of the market even after the 24% rollback, the casualty was Pronger because his contract could be renegotiated. The Blues made the purely financial decision not to buy out Tkachuk and Weight - the equivalent of paying money for nothing.

Since it's not my money, I don't think anyone can blame them for this choice, particularly when the team has incurred pretty spectacular financial losses along the way. However, this meant that Pronger was the one to go. Probably the last of the three that you'd want to see moved from a St. Louis fan perspective.

 

[Fugu]

I just checked the Blues estimated franchise value for '03 and '02 per Forbes. It was in the mid to upper 140's to start, with a -3% decline from the first year to the next.

The buyer should be looking at market potential, but perhaps with the high debt the team is carrying, the buyer believes the franchise has peaked in value and all they would get is the....debt?

 

[Ted Hoffman]

$150 million is too steep - reportedly Laurie dropped to $140 million and Checketts thinks it's still too steep.

The Blues have several issues facing them, most notably their arrangements with the City of St. Louis. The city has an entertainment tax on tickets of 12.8%, the highest of any professional sports team in North America. The baseball Cardinals got some relief from this when they struck a deal to build the new stadium. The football Rams have it in their lease where part of this tax money goes to improvements on the Edward Jones Dome, so the Rams aren't responsible for maintenance. From what I gather, the Blues don't own the Savvis Center (the city technically owns it) but are responsible for the debt service on the bonds and all maintenance to the arena. They do get some part (but I don't think all) of the revenues generated inside the arena (I'm checking on all of this right now).

Bill Laurie's paid consultants decided the team would be more attractive to a potential buyer if the team had no long-term contracts (or the threat of long-term contracts) associated with the team. That's why Chris Pronger was dealt to Edmonton - not because Larry Pleau had a whim, because Bill Laurie and Mark Sauer directed him to do it. But as pointed out, this just further gutted the team of value - but Laurie didn't care about the long-term value. He's more concerned with spending as little money as possible between now and the time the team is sold. That's why Pleau didn't exercise a buy-out of Weight and Tkachuk, Laurie figured the team would be sold by February and thus it would be cheaper to pay both to stay than pay 2/3rds to get rid of them.

No matter what, Laurie is going to go down as yet another inept Blues owner who left this team in worse shape than it was when he bought it - and in the past, that's never been a good sign for Blues fans.

 

[AdmiralPred]

They do get some part (but I don't think all) of the revenues generated inside the arena (I'm checking on all of this right now).

Where are you looking for this info? My well placed google searches are just giving me the standard issue Blues articles.

 

[Squiddy*]

Laurie will crumble before the Board of govenors meeting in december. Otherwise he's going to have to keep this team for the whole season and that's something that he doesn't want to do.

 

[Ted Hoffman]

Where are you looking for this info? My well placed google searches are just giving me the standard issue Blues articles.

EDIT: OK, here's what I've learned.

The city of St. Louis owns both the Savvis Center and the attached parking garage, and collects all revenue generated from the parking garage. Laurie owns the lease to the arena, meaning that the Blues get the right to schedule events at Savvis but must also make all bond payments from the construction of the arena (currently $62 million over 20 years) and are responsible for the maintenance of the arena. In return, the Blues get all concession revenues, merchandise revenue, and other in-arena advertising.

So a sale of the team would involve the franchise itself and the lease on the arena - putting the new owner on the hook for the bond payments and upkeep but also granting the new owner the revenue generated from events at the arena.

 

[Ted Hoffman]

Negotiations between Dave Checketts and Bill Laurie are officially over.

http://forums.stltoday.com/viewtopic.php?t=311705 among other sources

 

[Fugu]

EDIT: OK, here's what I've learned.

The city of St. Louis owns both the Savvis Center and the attached parking garage, and collects all revenue generated from the parking garage. Laurie owns the lease to the arena, meaning that the Blues get the right to schedule events at Savvis but must also make all bond payments from the construction of the arena (currently $62 million over 20 years) and are responsible for the maintenance of the arena. In return, the Blues get all concession revenues, merchandise revenue, and other in-arena advertising.

So a sale of the team would involve the franchise itself and the lease on the arena - putting the new owner on the hook for the bond payments and upkeep but also granting the new owner the revenue generated from events at the arena.

Does this mean that the Blues cannot be moved?

 

[Ted Hoffman]

Does this mean that the Blues cannot be moved?

They can't be moved until the bonds are paid in full - the team playing at Savvis is the guarantee that the bonds will be paid off. Pay the bonds off, there's no further obligation on the part of the franchise to continue playing at Savvis.

So as I've said before, if an owner wants a team in Portland, Oklahoma City, Winnipeg, or Yellowknife, it will take $62 million (the amount due on the bonds) to release the team from the lease.

 

[kdb209]

They can't be moved until the bonds are paid in full - the team playing at Savvis is the guarantee that the bonds will be paid off. Pay the bonds off, there's no further obligation on the part of the franchise to continue playing at Savvis.

So as I've said before, if an owner wants a team in Portland, Oklahoma City, Winnipeg, or Yellowknife, it will take $62 million (the amount due on the bonds) to release the team from the lease.

Not necessarily true. It depends upon how Laurie's ownership of the Blues and the leasehold on the Savvis Center is structured.

If they are owned by two seperate corporations, both owned by Laurie, it is quite possible that Laurie could get break the lease and get out from under the debt burden of the construction bonds through the bankruptcy courts. This would allow him to default on his lease obligations and still sell the Blues free and clear to an owner intent on moving.

Just because you're a billionaire, it doesn't mean you (or actually a corporation you own) can't use bankruptcy to your advantage - just ask Paul Allen (who is has a lot more $$$ than Laurie).

Paul Allen did something similar with the Portland Trailblazers and the Rose Garden. His company which owned the lease rights (and bond debt obligation) to the Rose Garden was seperate from his ownership of the Trailblazers. His Rose Garden company declared bankruptcy to get out from under the debt burden of the construction bonds, and ownership/control of the Rose Garden passed to a goup of his creditors. Allen maintained ownership/control of the T-Blazers, who are now just tenants in the Rose Garden without a longterm obligation, and would be free to move if Allen decides to sell his toy.

 

[Ted Hoffman]

Not necessarily true. It depends upon how Laurie's ownership of the Blues and the leasehold on the Savvis Center is structured.

If they are owned by two seperate corporations, both owned by Laurie, it is quite possible that Laurie could get break the lease and get out from under the debt burden of the construction bonds through the bankruptcy courts. This would allow him to default on his lease obligations and still sell the Blues free and clear to an owner intent on moving.

No, it's one entity that owns both. He can't default on the loans without losing the team as a result - the Blues are what backs the bonds. Default on the bonds, the bondholders get the franchise.

 

[Transported Upstater]

They can't be moved until the bonds are paid in full - the team playing at Savvis is the guarantee that the bonds will be paid off. Pay the bonds off, there's no further obligation on the part of the franchise to continue playing at Savvis.

So as I've said before, if an owner wants a team in Portland, Oklahoma City, Winnipeg, or Yellowknife, it will take $62 million (the amount due on the bonds) to release the team from the lease.

Move then to Nunavut...the Kuujjuarapik Ice Caps!



EDIT: Wait...I think Kuujjuarapik is in Nunavik in Northern Quebec...never mind...

 

[Timmy]

Move then to Nunavut...the Kuujjuarapik Ice Caps!



EDIT: Wait...I think Kuujjuarapik is in Nunavik in Northern Quebec...never mind...

Or Vancouver.

Oh, wait, he's been here.

Didn't like it here.

I feel so sad for Laurie's grizzly situation.

 

[HF_Rangers]

Or Vancouver.

Oh, wait, he's been here.

Didn't like it here.

I feel so sad for Laurie's grizzly situation.

I think the NBA in Vancouver was the worst experiment in recent pro sports history.

What are the chances of the Anschutz people buying the Blues and moving them across the state?

 

[HansH]

I think the NBA in Vancouver was the worst experiment in recent pro sports history.

What are the chances of the Anschutz people buying the Blues and moving them across the state?

None. Anschutz already owns the LA Kings, and cannot own another NHL franchise. They can _manage_ the KC arena, and that's where they intend to make their money, soaking whatever hapless NHL/NBA tenant ends up there. But they can't buy any other team -- they can only hope some local sucker^H^H^H^H^H^Howners buy a team and move it there.

 

[Free Edler]

I think the NBA in Vancouver was the worst experiment in recent pro sports history.

And how's that? Vancouver didn't fail the NBA, it was the other way around, the NBA failed Vancouver. Do your research before making silly blanket statements like that.

 

[mr gib]

And how's that? Vancouver didn't fail the NBA, it was the other way around, the NBA failed Vancouver. Do your research before making silly blanket statements like that.

i agree - the nba and stu jackson -

 

[HF_Rangers]

And how's that? Vancouver didn't fail the NBA, it was the other way around, the NBA failed Vancouver. Do your research before making silly blanket statements like that.

I never said Vancouver failed the NBA. I do agree that the NBA failed Vancouver which is why it was a failed experiment. Also, if the owners even put forth a competitive team (like what Memphis has now) I think without hockey last year the team would be the best thing going for Vancouver, and that excitement would carry over for years to come. It's a shame that fans never saw a good NBA team at the GM Place.

Back on topic, there's an column about the declining value of the Blues in today's St. Louis Post-Dispatch:

http://www.stltoday.com/stltoday/sp...16D26B611833D20C862570AC005E7D67?OpenDocument

and another by Gary Thorne in USA Today:

http://www.usatoday.com/sports/hockey/columnist/thorne/2005-11-15-scores-blues_x.htm

And I should have corrected myself about Anschutz and the Blues, I forgot that the Kings owned them. However, there are hints that potential buyers could move the team across the state. It's a shame, I'd hate to see it happen considering how popular this team can be.