No announcement yet.

Blues stay-at home defense

  • Filter
  • Time
  • Show
Clear All
new posts

  • Blues stay-at home defense

    Blues have a stay-at-home defense
    By Jeremy Rutherford
    Of the Post-Dispatch

    One month after Blues owners Bill and Nancy Laurie put their hockey franchise and Savvis Center lease on the market, officials in charge of the transaction say they've made substantial progress and are optimistic that a group with St. Louis ties could be the next owner.

    The Blues have moved beyond fielding inquiries and have begun face-to-face meetings with potential buyers, who are now in the process of reviewing confidential information regarding the team and the building.

    Bob Caporale, Chairman of Game Plan LLC, the Boston-based company orchestrating the sale, said that there are multiple candidates in the area who are involved in the negotiations. Some of them met with the team late last week.

    "I think we are now at the point that we believe there is a high likelihood that the team and arena will be purchased by individuals who have every intention to keep it here," Caporale said. "People in St. Louis in particular, who saw the announcement, have picked up the phone and called us, introduced themselves and indicated they would have an interest."

    Blues President Mark Sauer, in his third such sale in nine years, said: "In a baseball metaphor, we're in about the second inning. The investment bankers have received a lot of interest. They're in the process of doing some background checks on candidates and exchanging confidentiality agreements. And those candidates are beginning to look at financial information that we have assembled about the Blues and Savvis Center."

    A timetable on the Lauries' sale remains vague, but by most accounts, the NHL's new six-year collective bargaining agreement has made the idea of owning the franchise vogue and should speed up the process.

    Hockey's $39 million salary cap and 24-percent rollback on players' salaries has created an economic structure that, Caporale said, is expected to help teams prosper. In the last NHL season that was played (2003-04), the Blues' payroll was $60 million; the payroll heading into this season currently stands at $31.3 million.

    "The new CBA is vitally important to all NHL teams, but certainly to the Blues," he said. "We believe over time the result is not only a better financial performance, but the value of teams will increase just as we've seen in the NFL after they obtained a salary cap. The preliminary indications and reactions are that the marketplace understands that."

    Potential buyers

    The names - even the number - of parties interested in buying the Blues and the operating rights to Savvis Center remain secretive.

    Michael Shanahan Jr. is believed to be heading one of the groups with "St. Louis ties" involved in the negotiations. Shanahan's father, Michael Shanahan Sr., once headed a group that owned the Blues in the 1980s and 90s.

    In June, when the Lauries announced they were selling the team, Shanahan Jr. said: "Do I have interest in the Blues? Am I interested? Yes."

    Game Plan would not confirm Shanahan's interest Friday, but sources said that it remains very high. Attempts to reach Shanahan were unsuccessful.

    The Post-Dispatch also reported recently that the Blues have spoken to AEG about buying Savvis Center's rights as a separate entity from the team. AEG owns many sports facilities around the country, including the Staples Center in Los Angeles. While the company also owns the Los Angeles Kings, it is reportedly not interested in purchasing the Blues.

    Caporale acknowledged that Game Plan has been approached by groups interested in the arena only, and he said it is an option the team is considering. He maintains that having separate ownership of Savvis Center rights and the Blues isn't as illogical as it seems.

    "What is important is how the revenues are allocated," Caporale said. "You could debate for a long time philosophically whether it's better to have common ownership of the arena and the team, but in the end, it's not the ownership, it's the revenue that's important.

    "There could be a situation where someone would be interested in the building only and someone else could view that as a great opportunity to roll up their sleeves and get into the hockey business. Those two parties could reach a new arrangement, that if both agreed upon it, you could create a partnership. That is an interesting new opportunity that's developed here. I'm not saying it'll end up this way."

    Said Sauer: "We're open to any scenario."

    The asking price

    Whether the Blues and Savvis Center are sold as a package or two pieces will determine what the asking price is. A year ago, Forbes Magazine listed the Blues to be worth an estimated $140 million. Neither Caporale nor Sauer would disclose what the Lauries are asking, but sources say the $140 million would be an acceptable figure for the team only.

    In 1999, the Lauries purchased the Blues for $100 million, which included roughly $90 million in debt on the Savvis Center.

    Six years later, the debt service (the remaining balance on the original $135 million construction bonds) is $62.4 million. Beginning in 2006, the owner of the Savvis Center lease will begin paying on the principle of those bonds, raising the annual payment to $7.2 million from $4.7 million.

    Caporale said he's unsure what sort of hurdle the debt service will be in the sale.

    "It's a factor that has to be dealt with," Caporale said. "Our goal is to be sure that those bonds are repaid. But what we don't know is if someone will assume them or refinance the building at a potentially lower interest rate. It's up to the buyer to propose how they handle it."

    Another expected obstacle is the city's 12.6 percent tax on tickets, which includes a 5-percent amusement tax. Both Game Plan and the Blues believe that any prospective buyer would want a resolution to the amusement tax issue before agreeing to a sale.

    "We're not quite there yet," Sauer said, "but I expect it will be a major concern, let's put it that way."

    Asked if the Blues and city officials have discussed the team's issues with the amusement tax, Sauer said, "I have not heard anything from them."

    The broker

    Because of the complexities of the Blues' sale, Sauer wasted little time retaining the services of Game Plan, one of the premier investment bank services in the country in sports and entertainment.

    Caporale, along with Game Plan president Randy Vataha, have years of experience in these ventures. Caporale, an attorney, represented several major league teams during his legal career and also was involved in the merger of the NHL and the World Hockey League.

    Vataha played football at Stanford and with the New England Patriots in a seven-year NFL career; he also was a player representative with the Patriots. After football, Vataha went to work for Bob Woolf Associates, where he helped negotiate contracts for Larry Bird and Joe Montana.

    The two had been longtime friends. In the early 1980s, they owned the Boston Breakers of the United States Football League. In 1993, after the passing of Bob Woolf, Caporale and Vataha merged again. They formed Game Plan in '94.

    "We both had been involved in operating teams," Vataha said. "With myself on the union side, and with his legal background and our operational experience, we said, 'What do you think about starting a company?'"

    In the past decade, Game Plan has engineered the sale of two of the most prestigious franchises in pro sports - the Los Angeles Dodgers ($430 million) and Boston Celtics ($360 million) - and had a large role in the acquisitions of the Ottawa Senators, Pittsburgh Penguins and Montreal Canadiens. Behind the scenes, the company also instructs sports teams on how to raise more capital, secure additional investors and find lower interest rates on long-term loans.

    "They're just amazingly well-informed and can see the big picture and can drill down all the financial details," Sauer said. "It's reassuring to have this process in their hands."

    Long-term pacts

    Part of the advice Game Plan gave the Blues about the pending sale was keeping long-term player contracts out of the books. That has been a controversial strategy, because it led to the recent trade of Chris Pronger, who some thought would have been an attractive piece for new ownership.

    "Every team should do what makes the most sense for them from an economic standpoint and from a standpoint of how it affects them in competition with the rest of the league," Caporale said. "(But) from the standpoint of a buyer looking at the player contracts, after this upcoming season, there's complete flexibility. I think our experience tells us every buyer of a team wants to have as much flexibility and opportunity to do things their way."

    The Blues aren't opposed to all long-term contracts. After trading Pronger, they signed defenseman Bryce Salvador to a three-year contract worth $4.2 million and are expected to sign defenseman Eric Brewer to a multiyear deal.

    "We're going to want to sign a few players to a couple years, but they're going to be at prices that won't have adverse effects on the big picture," Sauer said. "There's quite a difference between a $7 million (per year), five-year contract and one that's a fifth of that."

    There are, however, some concerns with the Blues' employment of Caporale and Vataha. Game Plan is the same company that made a $4.3 billion bid to buy the NHL before the end of the lockout. In that offer, Game Plan devised a three-tiered payment plan, dividing the 30 NHL teams into three groups based on franchise worth. Reportedly, the Blues were listed with 10 other teams in the bottom tier, at a value of $68 million.

    Now, Game Plan is attempting the sell the team for double that figure.

    Sauer said he is "not surprised" that the Blues were in the bottom tier. He pointed to the team's heavy taxes.

    As for Game Plan, Vataha said: "We've never commented on where the teams were listed. You can speculate on that. (And) our offer was always predicated on the system as it was before the new CBA. All of that changes dramatically with the new CBA. Being able to look at St. Louis now and put in perspective the new CBA, I don't think anybody questions that all NHL franchises are better off financially."

    The timetable

    So with a profit to be made and several suitors interested in the Blues, what is the timetable for selling the team and the arena's operating rights?

    "We don't have any specific timetable other than we are full speed ahead with the sale process and intend to stay at full speed," Caporale said. "It's a complex transaction that involves a substantial amount of money. It will take time, but we don't intend to slow up."

    Caporale said he would actually urge a new owner to take over a team just before the start of a season or in the middle of one - as opposed to in the offseason.

    "I describe it as your jumping on a moving freight train," he said. "It is moving and no one is going to stop it. It provides a learning curve, if you will."

    Sauer declined to discuss a timetable, saying, "We're getting this team ready for a sale."

    How all of this will affect the on-ice product remains to be seen. Sauer objects to claims that the pending sale won't allow the Blues to be competitive this season.

    "I don't think we can say that," he said. "There are a lot of good players on the roster. We have a new goaltender in (Patrick) Lalime, an emerging young defenseman in (Barret) Jackman. (Eric) Brewer's arrival . . . (Keith) Tkachuk, (Doug) Weight. Plus, coming out of the lockout, there have been a lot of changes."

    One development that Blues fans can be most happy about . . . at this point, it looks like the team will remain in St. Louis.

    "We know there's a strong interest from Bill and Nancy to keep the team here," Vataha said.

    "Can't buy what I want because it's free...
    Can't buy what I want because it's free..."
    -- Pearl Jam, from the single Corduroy

  • #2
    Very, very intersting.

    I'm skeptical that the team without arena rights could be sold for $140 million. The Ducks just sold for $70 million and while that was before the new CBA, I think its safe to say the buyers had a pretty good idea of what the structure was going to be regarding the salary rollback and cap.


    • #3
      Bill Laurie is smoking crack if he thinks he's gonna get $140 mil for just the team.
      You're being fucking dramatic. You own a TV and an air mattress. That's not exactly what I'd call "a lot to lose."


      • #4
        Originally posted by DC Santana@Aug 14 2005, 10:36 AM
        Very, very intersting.

        I'm skeptical that the team without arena rights could be sold for $140 million. The Ducks just sold for $70 million and while that was before the new CBA, I think its safe to say the buyers had a pretty good idea of what the structure was going to be regarding the salary rollback and cap.

        Rollback, Dollar Bill!