Now what for the St. Louis Blues?

The news of the Blues being for sale has left many fans wondering if their days are numbered in St. Louis.

Take a deep breath, the Blues aren’t going anywhere.

One thing we do know about Commissioner Gary Bettman is that he isn’t interested in re-locating traditional franchises. That includes the St. Louis Blues who broke into the NHL back in 1967. Bettman fully understands the history and tradition of the Blues and he’s not about to let someone swoop in and relocate the team to Winnipeg.

One other thing I can tell you about Bettman is that he and the league are very much involved in the situation involving Blues ownership. In fact sources confirm the $110 million offer made by Tom Stillman was delivered directly to the NHL and Bettman, not to Dave Checketts or TowerBrook Capital.

To what level the NHL is involved remains somewhat unclear. It’s safe to assume the longer this goes on the greater the involvement will become.

The NHL has very broad powers and they can certainly control how much a team is sold for and when the team is sold. The situation in Phoenix confirms the idea that the NHL has the wherewithal to allow this to last for several months even if that takes us into free agency.

How much are the Blues worth?

Just because the Buffalo Sabres sold for $189 million doesn’t necessarily mean the Blues hold the same value. What about the Tampa Bay Lightning that recently sold for less than $100 million?  That transaction also included a good chunk of land that surrounds the stadium the Lightning play in.

At the end of the day any franchise is worth whatever price someone is willing to pay. The NHL didn’t just dismiss the offer made by minority Owner Tom Stillman and his group. Sources confirm the NHL told the group the offer isn’t good enough “right now”.

Could that change down the road?

Possibly, obviously if someone comes along and offers $130 or $140 million then the $110 million offer already made is no longer credible.

For several years I’ve heard from local individuals complaining about what’s wrong with the Blues and how they would fix things. This includes people with heavy pockets who could make a run for the franchise.

Memo to all the big boys….Here’s your chance to put your money where your mouth is. Now’s the time to step up.

The NHL needs to be careful in terms of how much they value the St. Louis Blues to be worth. Someone may be able to purchase the team at $190 million but can they afford to fund the losses for years down the road?

If your offer is $110 and you have a capable capital structure in place that allows you to sign free agents, isn’t that better than a group that overpays and finds itself forced to sell a few years down the line?

I have no idea if Stillman will pull this off but nobody should be so quick to dismiss a local group looking to run this franchise. This group would have the ability to generate far more local corporate support than any outsider who comes in. What good is St. Louis without its professional sports teams? Who wants to see St. Louis turn into Tulsa?

It’s the obligation of local corporations to support businesses such as local professional sports teams.

I’ve already reported Stillman’s group includes Cardinals President Bill Dewitt III. This partnership would allow both franchises to cross promote as well as bringing an individual on board with some background on running a pro sports team.  Would Dewitt III be involved on a day to day basis? Not likely but he would certainly be a resource for the group.

I give credit to Checketts and SCP for doing their best but at the end of the day private equity companies aren’t known for running sports franchises. Sure TowerBrook Capital owns around 70% of the Blues but the transaction was heavily financed as they borrowed at least $100 million. The actual sale price was in the $132 Million range, less than the $150 number that’s been tossed around.   

One criteria for owning a sports franchise is having cash flow. Stillman and company believe they have enough to make it work. There are names involved in this group that will remain quiet for now but I wouldn’t recommend suggesting this group doesn’t have the capital structure to make it work. Just because they made a low offer doesn’t mean this is all they can afford. All it really says is this is what they believe the Blues are worth.

Is the organization distressed? Sure but still not to the point where the league is forced to accept their low offer today. Time will tell if that changes.

The idea the Blues just went on the market yesterday is incorrect. Sources say this franchise has been for sale for quite some time.

More to come,
Andy Strickland
Strickland.andy@gmail.com