City of Memphis Purchases Minor League Baseball Stadium for $19.5 Million
The City of Memphis has agreed to purchase AutoZone Park, home of the minor league baseball Memphis Redbirds, for $19.5 million from Fundamental Advisors, the Wall Street firm that purchased both the team and the stadium for the bargain price of $24 million in 2010.
As Breitbart Sports reported:
...in 2000, a group of local business leaders organized a non profit corporation, the Memphis Redbirds Baseball Foundation, and borrowed $72 million in the bond markets to obtain the franchise for the expansion Memphis Redbirds, the Triple A affiliate of the St. Louis Cardinals in the Pacific Coast League, and build the stunning new AutoZone Park to house the team.
Unfortunately for the investors in the bonds, "in 2010, the foundation defaulted on the bonds and Fundamental Advisors, a Wall Street firm, purchased the defaulted bonds for a heavily discounted $24 million."
Not surprisingly, the original bondholders were not happy with the 2010 Fundamental Advisors transaction, as most of them lost two-thirds of their original investment.
The city's decision to purchase Autozone Park is not likely to make the original bondholders any happier. Fundamental Advisors is now set to make $10 million off of their bargain investment if, as expected, they are able to sell the Memphis Redbird team to the parent St. Louis Cardinals club for $15 million. Combining the $19.5 million from the sale of stadium with the sale of the team, the company will walk away with a cool $10.5 million profit on their original $24 million investment.
The Memphis City Council approved the purchase by an 8 to 4 vote on January 7. Only city councilors Lee Harris, Wanda Halbert, Harold Collins and Janis Fullilove, opposed the deal. The remaining council members, with the exception of one who recused himself, supported Mayor A. C. Wharton's proposal.
The original vote had been scheduled for December, but "two debate and angst-filled meetings" delayed it for a month.
Before the vote, Mayor Wharton urged members of the Memphis City Council to support the deal. "There are few times in life when you get to pick your partner," he said. "But we have an opportunity to pick the partner we want with the St. Louis Cardinals."
AutoZone CEO Bill Rhodes, who also encouraged a "yes vote," was the last person to speak to the council before the vote was taken. He told them "it's important to us because our name is on the building, but also because it's a vibrant part of the city. I don’t know about you, but I believe the Cardinals can run the team much better."
The Memphis Business Journal reported that the City of Memphis will pay an additional $4.5 million for improvements to AutoZone Park in 2014.