Card Sharks

The St. Louis Cardinals want your money for their $370 million ballpark. But before the game begins, somebody needs to reshuffle the deck.

The Cardinals have been clamoring for a new ballpark almost from the moment the team was bought from Anheuser-Busch Cos. Inc. in 1996. It was an amazing buy. The partners -- led by investment-firm head William O. DeWitt Jr., banker Andrew Baur and lawyer Fred Hanser -- paid $150 million for a package that included the team, four adjacent parking garages, Busch Stadium and a parking lot just south of the stadium, where the new ballpark would be built. According to the St. Louis Post-Dispatch, whose parent company loaned the ownership group $5 million to help buy the parking garages, the owners borrowed $90 million to swing the deal.

Inside of a year, the owners sold the parking garages for $91 million, $25 million more than the figure at which the property was valued when the brewery sold the team, according to documents filed with the U.S. Securities and Exchange Commission (SEC). And the owners got an additional $9.7 million by selling the land beneath two buildings near Busch. That meant the owners had recouped all but $49.3 million of the $150 million they had invested. The team last year was worth an estimated $205 million and had virtually no debt, according to business magazine Forbes. By comparison, the Kansas City Royals, one of the most financially troubled teams in the league, are being bought for $96 million.

The Cards purchase may have been the deal of the century, though the owners aren't crowing. In fact, they won't say anything about their bargain, never mind that SEC report. "What we paid for the team and what we sold some of the assets for is not public record," DeWitt says. What about that Forbes estimate setting the team's value at $205 million? "I don't think it's worth that much," DeWitt says. "I don't know what the accurate figure is, so I couldn't comment on it." Even though Forbes and DeWitt are in the same ballpark when it comes to the team's gross revenue -- the magazine says the team collected $98.7 million in 1998, the team says it took in $93.7 million and DeWitt predicts revenue will surpass $100 million this year -- DeWitt says the magazine's figures can't be trusted. "I think their numbers are very inaccurate," he says. "I think Forbes in general has been high in their valuations."

The new Cardinals ballpark would be built immediately south of Busch Stadium.
Jennifer Silverberg
The new Cardinals ballpark would be built immediately south of Busch Stadium.
Larry Kleinkemper: "It's a beautiful park. Of course, I'm prejudiced. I've been a Cardinals fan all my life."
Jennifer Silverberg
Larry Kleinkemper: "It's a beautiful park. Of course, I'm prejudiced. I've been a Cardinals fan all my life."

The owners say they've lost money every year since purchasing the club, but Forbes estimates that the club turned a $1.6 million profit before federal taxes in 1998. DeWitt claims the Cardinals lost $5 million in 1999; the magazine will publish its estimate at the end of May. Forbes isn't alone in thinking the Cardinals are making money at Busch. Andrew Zimbalist, an economist at Smith College in Massachusetts who specializes in the sports industry, says the magazine's numbers can be shaky when teams won't release their finances but also says it's a pretty sure bet that the Cardinals turned a profit last year, judging from their payroll of about $50 million and estimated annual revenue of $90 million-$100 million. "It seems to me unlikely (that the team lost money)," Zimbalist says. "They should have a net income. It's always possible to lose money if you have a company, no matter how promising the company is, if you mismanage it. It's also possible to lose money on the books when you're not really losing money by juggling things around. It's quite conceivable that their income statements are showing book losses. That doesn't necessarily mean their true operating situation is a loss."

DeWitt insists the team opened its books last year when it gave the Greater St. Louis Sports Authority an unaudited summary of the team's finances. "And what it shows is, each year we've operated the club from 1996 on, we've been cash-flow-negative when you factor in capital expenditures," says DeWitt, without mentioning that capital improvements such as upscale concession areas have helped boost the team's gross revenue. "We've opened our books."

Actually, the Cardinals owners did not "open their books" -- they handed out a short statement summarizing revenues and expenses. That's not the way they play ball in Seattle, where the Mariners have published independently audited financial statements for the past eight years. Mariners spokeswoman Rebecca Hale says it's only fair to publish financial reports, considering that the public is paying $317 million toward the cost of Safeco Field, which opened last year. "Even though we don't have to do it, we've continued to do it," Hale says. "It's a show of goodwill and good faith, because we've said for so many years that the economic viability of the franchise really did depend on the ability to maximize revenue, and that was something we had reached the top rung of in terms of maximizing revenue at the Kingdome."

Teams like the Mariners and Arizona Diamondbacks, which also publishes financial reports, make life easier for Michael Ozanian, Forbes' statistics editor. The Cardinals are another matter. "They didn't give us any financial information," Ozanian says. "I think they told us who the owner was and sort of what their stadium situation was. That was about it."

Whatever their financial situation, there is no disputing that the Cardinals are squeezing every available dollar from Busch Stadium. Since Anheuser-Busch bought the stadium from the Civic Center Redevelopment Corp. in 1982, the brewery and the current owners have spent $67 million to install a natural-grass field, premium seating, upscale concession areas and other attractions to lure fans to the stadium. Signing slugger Mark McGwire to a long-term contract also helped.

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