Reading Between the Lines: The Sale of the St. Louis Blues
The worst fears of some and the expectation of others came true Tuesday night as news
broke that the “For Sale Sign” has been officially put out at 14th and Clark. Available to the strongest bidder are the St. Louis Blues, Scottrade Center and the Peoria Rivermen. Principal Owner Dave Checketts and Majority Investor TowerBrook Capital Partners (TCP) are getting out of the hockey business.
Thanks to the hard work of the Blues MSM (references at the end) sources and Checketts’ self admissions, many details have come to light with the intent to sell announcement. Some earlier assertions seem to be confirmed as well.
- Minority Owner Tom Stillman submitted a bid just above $100 million. It was rejected.
- Checketts and TCP are looking for an offer in the $189 million area that the Buffalo Sabres sold for.
- TCP estimates the value of the franchise to be $200 million. In 2010, Forbes estimated $165 million (23rd in the NHL).
- Game Plan LLC, a South Florida-based firm, has been retained to search for a buyer.
- Checketts doesn’t believe in a Laurie style salary purge to make the franchise “easier to sell”.
- The financial status quo will remain in effect. Meaning a $44/$45 million payroll budget.
- TCP still has no timetable for an exit. The current ownership and operations structure will remain in place until the buyer can be found and deal finalized.
- There is no intention of selling the club to a buyer that will move the team out of St. Louis.
- There is no Phoenix like involvement by the NHL to take over the team. At least not yet.
Far from good news, but also far from the worst. Due caution is warranted. Don’t make more out of it than it is. A hard decision had to be made and he made the correct one. If his ownership era dones’t come to a close, the Blues simply won’t grow. No matter what you think about Checketts decision (or him
personally), the man did all he could with what means he had available.
There isn’t a logical reason for Blue Bleeders to fault him for that.
At the time of his purchase in 2006 there was no one else coming to take the broken, tattered mess the Lauries left but Dave Checketts. He came in with a clear plan and honest motivation. Most importantly, a willingness to do whatever he could do to rebuild the once proud organization. Over the last 5 years and 6 NHL seasons, he has done just that.
- Transformed a debt creating machine in to a business capable of breaking even every year.
- Acquired long term assets to build a sustainable and successful primary income generator.
- Through vertical integration, stabilized and improved personnel development by buying the Peoria Rivermen.
- Increased ticket sales of an average attendance per game of 15,520 (at the 06-07 low point) to 19,150.
Dispute all Checketts has done. Many will. Some will point to the negatives simply because it’s the “cool thing to do”. Don’t expect this Blue Bleeder to be a part of that group. Subjective mindsets need not apply. Objectives, come on down.
I will offer this concession. If there is any criticism that is due, it’s Checkett’s apparently inability to take a risk. He avoided it (like Ice Girls) like the plague. Again, all kudos deserved for getting the Blues back on their feet. However, the point of diminishing returns has been met with his ownership because he was unwilling to incur any debt in the name of improving the revenue generating on ice product in the short term.
Modest losses today could have meant larger gains tomorrow.
That said, would TCP have allowed such spending? As purely an investment partner they’re looking to keep costs down to increase returns later. Most likely a matter fo semantics that will never be publicly clarified.
An interesting question none the less. Even more so for the summer ahead than at any point before. How so?
Doug Armstrong is in the captain’s chair now. There is no longer the overly cautious approach that Larry Pleau seemingly employed. A tired, but true point I keep hammering home.
With around $31 million in salary committed to next season’s roster, Armstrong has roughly $14 million to play with. Yes, he does have 10 positions to fill. Leaving money tight. Don’t think the hamster isn’t racing at 100 mph between Army’s ears. The Jaroslav Halak and Chris Stewart deals shows that he’ll pull the trigger. He understands the inherent risks of constructing a winning team and makes carefully calculated choices.
Let’s just assume that what Armstrong said after the deadline was true regarding being able to add a little payroll. Could the Blues raise their payroll numbers $46/$47 million range? Incur just a little debt in the name of making the franchise more desirable to window shoppers and get one in the door? The axiom “pay more to get more” holds true.
A team clean on the books will draw interest, but a team in the playoff picture with a near limitless ceiling to grow with a small tax added to the purchase would be infinitely more enticing. Owners get in to the business in hopes of turning a profit, but don’t underestimate their competitive spirit to win. They want it just as much as the players and staff do.
Just don’t be surprised when Armstrong doesn’t re-sign every RFA, moves another contract (or two) and brings in established assistance. The expectation is that the Blues will be active this summer, ownership situation resoled or not.
Jumping to conclusions is an understandable reaction. To be honest, I was in that mindset as I saw the news and fellow fan reaction trickle across Twitter and Facebook. Which is exactly why I’m conveying my thoughts today. A little caution and taking in all the information from all angles goes a long way to fully understanding the situation and why it’s not so bad that Dave Checketts is the current owner of the St. Louis Blues.
Please check out the MSM write-ups:
Norm Sanders article at BND.com.
Jeremy Rutherford’s article on STLToday.com.
Bernie Miklasz’s article on STLToday.com.
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