SCP Worldwide unable to come to agreement with TowerBrook
Capital Partners on value of franchise; asking price too much
By LOUIE KORAC
ST. LOUIS -- Dave Checketts wanted to remain in St. Louis and stay on as owner of the Blues.
But as the old saying goes: money talks, and you-know-what walks. And in this case, it's all about differing opinions on what the Blues are worth.
Checketts and his partnership group, Sports Capital Partners Worldwide, were looking for an investment group that would but majority share of the Blues, Scottrade Center and the franchise's AHL affiliate, the Peoria Rivermen from TowerBrook Capital Partners, L.P. Checketts also owns Peabody Opera House, which is under renovation, but Checketts indicated that is a separate entity.
Checketts and his group could not come to an agreement on the franchise's value and thus, have put the Blues, Scottrade Center and the Rivermen up for sale, a move announced Wednesday evening. Game Plan LLC, based out of South Florida, has been brought in to conduct a search for a new owner.
Checketts and SCP Worldwide was trying to organize a group of investors, some locally, to purchase majority ownership of the franchise and buying out TowerBrook Capital Partners, a private equity firm. TowerBrook owns approximately 70 percent of the franchise, SCP Worldwide 20 percent and minority owner Tom Stillman 10 percent.
But TowerBrook and SCP could not come up with an affable number on what the franchise is worth, and thus, Checketts now becomes a seller himself instead of a buyer.
"We have tried putting together a group, which includes local investors, as well as others with the intention of buying out TowerBrook Capital Partners," Checketts said in a conference call. "This has been going on for months and the last two months having raised the money that I needed, we began negotiations in earnest with TowerBrook and we have been unable to come to an agreement with them on terms that they will accept.
"This is a story that has gone on longer than anyone would have liked it to."
This story began a year ago in May when TowerBrook announced they would be divesting it's share in the hockey club but would remain with Checketts and SCP Worldwide until a new ownership group would be put in place.
Checketts, who said he went on to announce that he would have news regarding a new ownership group by the end of the calendar year. Nothing came of that but Checketts would say that an investor group was "95 percent assembled," and that in the coming weeks, they would work on league approvals and getting things wrapped up. That timeframe was assumed to be around the NHL's All-Star break.
When nothing came of that, it was with concern that things didn't pan out like Checketts and his people had hoped. And it's come to this conclusion.
"This is a difficult, personal decision for me because we've all come to love this team, my family and I, we love the city of St. Louis and we are especially grateful to the fans who have been just terrific," Checketts said. "I could not have asked for better from the fans of St. Louis. But now, we look forward to finding a buyer that shares the same passion that we've had, and the same commitment.
"There's no timetable in this process. But I felt it was important to go public that I am no longer a buyer of the franchise but in fact a seller alongside TowerBrook. The Blues franchise and arena are all for sale as of this moment. I will not try and stay in. It will be open to a new buyer."
Checketts, who was filled with so much promise early in 2011, said the decision was made recently.
"This decision was made towards the end of last week and over the weekend, and lots of conversation with our partners (at) TowerBrook," Checketts said. "... The franchise is in really good shape, much better shape than it was when we came along five years ago."
Checketts, whose investment firm also owns Utah's Real Salt Lake Major League Soccer team, bought the Blues in March 2006 from Bill and Nancy Laurie for $150 million. According to Forbes Magazine, the franchise's value at the end of 2010 was $165 million.
The franchise is in much better shape today, but it appears that the end of the line has come.
"It's pretty simple. This is where I've been for the last couple months, trying to make a deal with TowerBrook," Checketts said. "It couldn't happen. It's just very difficult when there are differences and opinions in terms that we couldn't live with, our new investors couldn't live with and our old ones couldn't live with. As a result, just out of respect for them and frankly because we had told them this is what we'd do if we couldn't make a deal, I now have to turn and put the franchise up for sale.
"... This is simply a legacy group of investors who believed that we've made the franchise a significant amount of money and they want out at that price. It's that simple. There's nothing else here. That group of new investors, with the economy and everything else ... we just couldn't agree on the terms."
It's been reported that a group, believed to have Stillman at the forefront, made some kind of an offer to Checketts recently, but the Blues' owner brushed that off.
"I stand by what I said that we have received no credible offer for the franchise," Checketts said succinctly.
Checketts firmly stated that SCP and TowerBrook would make sure that the new owners would keep the franchise in St. Louis and that is their intent.
"Absolutely, in every way, both of us," Checketts said. "This team belongs in St. Louis. That's not even on the table, it's not a question."
The Blues, who played in Anaheim Wednesday night, appear to be on the outside looking in on the playoff picture again for the second straight season after being a playoff participant in 2008-09.
"I really care very much about this team and I'm going to keep pushing this team forward because we have a lot to be proud of," Checketts said. "We have a season ticket base of over 11,000 tickets. We have sold out pretty much every game this year, the fans are back, the sponsors have rallied around us, the Opera House is under construction ... all the things that we set out to do. With the exception of carrying the (Stanley) Cup down Market (Street), we have achieved or were in the process of achieving.
"I could not be more proud of the management team here or the way they're performing. This is a very good NHL franchise ... very good. It's not losing money anymore. It was losing barrels of money when we bought it. It is not losing money. I'm going to keep pushing them forward just the way that I have been until we find a new buyer. There's no timeframe for that. I don't know how long this will take."
With a new owner will bring new changes in ownership. But what will that do to management, particularly team president John Davidson and/or general manager Doug Armstrong and so forth? Davidson's five-year contract ends at the end of this season.
"We're going to address each of those matters," Checketts said. "I think we'll have something to say about them perhaps a little bit later. For now, those guys are all in place. They're doing a great job ... all of them.
"I expect them to remain in place during the sale process. If I were an owner coming in, I would look at this management team and what they've accomplished and say, 'They've got to stay.' But obviously, that will be up to a new buyer. For now, they are in place and I expect that any buyer would be wise to keep them."
The Blues began the season a franchise-best 9-1-2 despite being at the bottom of the league as far as team payroll. But injuries have ravaged this season throughout the season and they fell down the Western Conference ladder. And when the team dealt away assets at the trade deadline, they fell into the bottom five. Fans felt the Blues were pawning off players because the franchise was in financial dire. But Checketts made it clear that those were hockey trades and nothing else.
"They were hockey trades brought to me by our hockey people and I said, 'let's go,'" Checketts said. "Because we were in 12th place, I thought we needed to pursue another direction and that's what they've started. And yet they've kept a very good young nucleus together."
With the Blues' franchise value up slightly when Checketts bought the team and the NHL coming into a new television contract, the franchise would likely have appeal to someone else. But that remains to be seen.
"There is no doubt. We're right on the cusp of a new NHL television deal," Checketts said. "Commissioner (Gary Bettman) has done a wonderful job in building revenues at the league level, the Winter Classics ... the game has its issues just like every sport. For now, we've got relative labor peace when it seems like everybody else is at war. It's a really good time to be the owner of the St. Louis Blues and I think someone will want to take that role."
It still doesn't take away the sting of having to sell.
"Without a doubt," Checketts said. "... The NHL will not have to worry about the St. Louis Blues. It is operating well, it has cash, it has resources and it can operate not only responsibly but very well moving forward. It's a good franchise and it's in good shape.
"I've had a great five years. I want to put it in the hands of people that will protect it and care about it and be passionate about it. And if I can find someone, they're going to have a lot of fun because I think we've done a lot of the hard work. Not all of it, but a lot of the hard work, and this franchise is on a very good path."