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November 30, 2010
Cardinals accused of stiffing St. Louis on profit-sharing
Out of St. Louis, a cautionary tale about the ever-popular gambit of requiring that taxpayers get a share of the sale of a sports team in exchange for granting stadium subsidies. (This was most recently proposed, and rejected, for the Florida Marlins deal.) The Cardinals agreed to a profit-sharing arrangement as part of their stadium deal back in 2003, but the reality isn't quite working out that way, according to the St. Louis Post-Dispatch:
The Cardinals also agreed to give the city a cut of profits made if any portion of the team was sold.
Then, last year, owners sold a sizeable chunk of the Cardinals — more than 13 percent. Now, a group of anti-public-stadium advocates is alleging that the team owes the city hundreds of thousands of dollars.
And, despite another multimillion-dollar budget gap anticipated for the coming year, the city isn't checking into it. City officials acknowledge that they have never really kept tabs on the agreement.
In fact, the Cardinals owners have sold about 17% of their shares since the new stadium opened, but in each case reported to the city that "there were no Ballpark-Related profits ... arising from such transfer." And city officials apparently took them at their word, with the Post-Dispatch reporting: "Several city officials, including Barb Geisman, the former deputy mayor for development, said there was no reason to double-check. They trust the Cardinals."
Longtime Coalition Against Public Funding for Stadiums activist Fred Lindecke, who first raised questions about the profit-sharing clause (until he complained, the city wasn't even releasing the sale affidavits it received from the Cards), wonders reasonably enough on what planet this could be true: "They were so desperate for money, they were willing to sell their ownership percentage for nothing more than the team was worth in 2002? That contradicts all logic. Even someone who's having their home foreclosed tries to get as much as he can."
Forbes, for what it's worth, has the Cardinals as worth $488 million in 2010, up 80% from its $271 million value in 2002. Even at that rate, the total amount owed to the city would be only about $2 million, if I'm doing the math right. Still, it's not exactly money that the city can afford to be turning down these days.