Cardinals to purchase AAA Memphis Redbirds

by on September 17, 2008 · 2 comments

The ink has barely dried on the St Louis Cardinals’ agreement to continue to partner with the Memphis Redbirds as its triple-A affiliate through 2012.

The Pacific Coast League’s Redbirds have been a mainstay in Memphis as the club’s highest level minor league affiliate since the Cards broke affiliation with the Louisville Redbirds (now the Louisville Bats, an affiliate of the Cincinnati Reds) after the 1997 season.

Now comes word that the Cardinals will purchase the Redbirds from the non-profit Memphis Redbirds Baseball Foundation.

From the Memphis Business Journal:

If it goes through, the deal would follow what Dave Chase, president of baseball operations for the Memphis Redbirds, called a growing trend of major league baseball teams buying minor league affiliates.

“The Red Sox have done it, the Yankees are doing it and the Atlanta Braves have been the kings of it, owning all of their minor league franchises,” Chase said.

I could think of a lot worse franchises to model your player development system after than the Braves and Red Sox (the Yankees I’ll leave alone).

The Cardinals already own their affiliates in Springfield, MO and Palm Beach, FL – AA and A clubs, respectively – and are apparently anxious to add the Memphis market to their stable.

More from the Memphis Biz Journal:

Even though the two sides have been discussing the possibility since the beginning of the summer, the deal is far from finalized and the best scenario would have the deal done in a matter of months. However, it must be approved by Major League Baseball, Minor League Baseball and the Pacific Coast League.

There is also the matter of transferring the assets of the non-profit Redbirds Foundation to the for-profit St. Louis Cardinals LP.

So clearly, there are hurdles to be crossed.  I’m no expert on the subject, but I would suspect that MLB, MiLB, and PCL approval are a mere formality.  Where I could see things getting sticky is in the non-profit to profit transition.

According to the Redbirds Foundation page, the Memphis club is/was the only not-for-profit organization in the country that ran both the baseball club and the facility, AutoZone Park.

The Foundation did a lot of good things in and around Memphis with their RBI program and STRIPES program.  I can only imagine that part of the deal will be the Cardinals’ continuation of these great programs, and continued involvement in the greater Memphis community.  It behooves the organization to keep close ties with this community, both developmentally and financially.

Memphis is a significant minor league market, one that is unique in its ability to support a minor league stadium the size of AutoZone Park (it seats 12,512 – or approximately 4,000 less than the Florida Marlins have averaged in attendance this season), as well as its proximity to the St Louis market (it is decidedly within the Cardinals’ ‘United Country (State?) of Baseball’).  The Memphis Nielsen DMA is ranked 48th in the United States for 2008-2009.

Perhaps just as important as the Memphis market is avoiding the affiliation dance that typically comes along with minor league affiliates.  The Cardinals will no longer have to renegotiate a Player Development Contract with Memphis every few years.  I have to believe this advantage is more than the casual fan will ever know, staying away from possibly contentious negotiations and contract talks with increasingly profitable minor league team owners.

Indeed, Minor League Baseball has seen a steady rise in both popularity and profitability.  While all of the advantages laid out previously are valuable and I’m sure quickly realized, there is another great benefit to this acquisition for the Cardinals.  Forbes.com recently ranked the Memphis Redbirds as its second-most valuable Minor League Baseball team.

From the Forbes article:

On average, the top 20 teams are worth $21.2 million and pulled in $9.8 million in revenue per team, of which 49% came from tickets. The great economics of the minor leagues: Player costs–typically between $10 million and $15 million a season for scouting, salaries and bonuses–are paid by the big league affiliates. As a result, margins for clubs that draw well are often fat, and these 20 clubs generated average operating income (earnings before interest, taxes and depreciation) of $3 million.

At number two, the Redbirds are valued at $26.1 million, with revenue of $13.4 million and operating income of $6.9 million.  As mentioned in the quote above, one of the great economic advantages of a minor league club is that the big club affiliate is basically paying all of your large expenses – namely, the roster.  So it seems like a no-brainer that the Major League clubs would want to own their own affiliates right?  Well, I’m certain it is no coincidence that the Springfield Cardinals, also owned by one William DeWitt III, is ranked number eighteen on the list.

I’ve learned a lot about the workings of these deals in a short time tonight.  I think long-term this deal is wonderful for the Cardinals both financially and logistically.  They have great fan support in Memphis and won’t have to worry about the affiliation dance.  Short-term, I think there are still some hurdles to cross with the non-profit to for-profit transaction, and I will be interested to see how that shakes out (and how long a process it winds up being).

Assuming the Cardinals maintain the community presence in Memphis and don’t quickly alienate the fan base already established there, I can’t see this deal as anything but a win-win for the organization.

Here’s hoping this means the youngsters start developing quicker so they can put together a win-win in St Louis…we desperately need a couple…

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On a recap note, Danup over at Get Up, Baby has posted his Top 7 Cardinal Prospects.  It is just as good a read as the other bunch posted last week, so check it out.

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Writing about the Cardinals and other loosely associated topics since 2008, I've grown tired of the April run-out only to disappoint Cardinal fans everywhere by mid-May. I do not believe in surrendering free outs.
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