In nearly 50 seasons of hockey, the St. Louis Blues have seen some of the best players to play the game, a 25-season playoff streak, and more than their share of ownership changes and financial problems. These financial issues continue today.
In true St. Louis fashion, a beer distributor named Tom Stillman led a group of investors to purchase the Blues in May 2012 for $120 million.
To most people, $120 million is a considerable amount of money; however, this sum isn’t so impressive when it is the price tag attached to a top tier professional sports team. Also attached to this purchase was $60 million in debt.
Before Stillman’s ownership group, Towerbrook Capital Partners owned the majority of the franchise while Dave Checketts owned a minority share and took the responsibility of running the team. Like Stillman, the Checketts group inherited financial issues when they purchased the team as well. To be honest, the franchise’s history is littered with financial issues.
In his book, 100 Things Blues Fans Should Know & Do Before They Die, Jeremy Rutherford wrote extensively on the changes in ownership the Blues have went through over the years and how that often carried over into what was happening on the ice.
The most infamous example of pocketbook decisions impacting the players on the ice is the trade of Brendan Shanahan for Chris Pronger in 1995. More than 20 years later, people are still debating the swap of players who would eventually be enshrined into the hall of fame. What is often left out of these debates is the fact that Mike Keenan, Blues coach and general manager at the time, was tasked with cutting the team’s payroll by $11.5 million.
Finances weren’t always tight for the Blues. Their first and longest tenured owners, the Salomon family, were generous owners. In his book Rutherford wrote, “It was all part of the Salomons’ plan to make St. Louis a destination, forming the expansion franchise into one that could compete quickly and catch the attention of a town not all that familiar with hockey.” To do this, the Salomons would give players gifts for achievements, and they even sent the whole team to a resort at the end of every season.
After twelve years of ownership and a few disputes with the city, the Salomons passed the torch to a St. Louis company called Ralston Purina. The pet food company purchased the team in 1977 and were stripped of it by 1983. Harry Ornest, a businessman from Los Angeles, bought the team after the NHL had taken it from Purina.
Ornest was only worried about one thing–this may sound familiar–turning a profit. Trading away expensive players and making enemies left and right, Ornest made an estimated $30 million in profit in his three years of ownership.
Blues fans were happy to see a St. Louisan be the next person to step up as the team’s owner. Mike Shanahan Sr. owned the team from 1986 to 1991 and was responsible for bringing excitement back to the Arena. Players like Brett Hull, Scott Stevens and Grant Fuhr were brought in and paid well during Shanahan’s ownership.
There was one problem Shanahan was aware of and unable to fix: the St. Louis Arena. Originally intended to be a place for livestock shows, the Arena hosted circuses, political events, and nearly every type of sporting event that could fit inside. The building built in 1929 was known for being very loud and having an intimate feeling as players felt like the fans were right on top of the ice.
By time Shanahan sold the team in 1991, the Arena had fallen into disrepair and the Blues needed a new home to stay in St. Louis long term. A group known as the Kiel Center Partners had an answer. They spent $170 million to build a 19,150 seat arena on Clark Avenue in downtown St. Louis. Originally known as the Kiel Center and later renamed the Savvis Center, the building now known as the Scottrade Center opened in 1994.
The new building was originally planned to cost $85 million, but the price continued to rise as the building did. The building’s cost proved too much for the Kiel partnership group; they lost tens of millions of dollars in the years after the new arena opened. They eventually sold the team in 1999.
Deep pockets were needed to turn the franchise around, and that’s exactly what stepped forward in the form of Bill and Nancy Laurie. The couple had Wal-Mart money and were ready to spend it. They wasted no time before buying an NBA franchise and trying to relocate it to the new arena in St. Louis. The Laurie’s did not have success with the NBA’s relocation process and the owners eventually decided to move on from the Blues.
On the ice the Blues saw the end of a great period under this ownership. The team ended its streak of 25 consecutive playoff appearances with a 21-46-15 record in 2005-06. The Laurie’s sold the team after not achieving their goals of bringing an NBA team to St. Louis, but their deep pockets at least stabilized the franchise financially in the eight years they owned it.
This brings us back to the Checketts ownership group, which purchased the franchise in 2006. Admittedly not the wealthiest group, Checketts signed business deals that gave the team money up front. This meant that Stillman’s ownership group is receiving next to nothing from both the television deal with Fox Sports Midwest and the concessions in the building. The concession contract doesn’t expire until 2028; details of the television deal are unavailable.
What do the finances look like now?
It’s hard to pay off existing debt and invest in new areas when two of a normal team’s main sources of revenue are almost nonexistent.
About four years ago, Stillman told the St. Louis Post-Dispatch, “We are dealing with some moves made by the previous ownership that do affect our financial situation going forward. The franchise doesn’t get the benefit of that money over those (future) years. The previous ownership did some mortgaging of the future.”
How do the Blues work their way out of this hole? Time. Stillman has to find a way to keep his head above water until the franchise’s current contracts expire and he can renegotiate them for more money. Forbes seems to think he’s doing this well. On Nov. 24 the business magazine wrote:
“The St. Louis Blues posted an operating loss of $7 million in 2014-15, but rose 15% in value, to $270 million. Tom Stillman’s group took control of the team in 2012 and I think the franchise is on more solid ground than it was under the previous owners, who front-loaded concession and TV deals to make debt payments. Stillman cut overhead and the team’s attendance and average non-premium ticket prices both increased 9% last season.”
$270 million may be much better than where the franchise used to be, but the sum is still only 24th best in the league. In this category the Blues are only trailed by non-traditional hockey towns like Tampa, Nashville, Charlotte, Glendale and Miami. Even more concerning is the fact that the franchise lost $7 million dollars in 2014-15.
Other than waiting for father time to work his magic, the Blues could do their pocketbook a favor by winning more playoff games. It has been estimated that teams earn around $1 million from each playoff game they host. Even if a team is swept in a series, that’s $2 million more in the bank account.
Successful hockey teams will not only earn more money at the ticket window during the postseason, but they will also bring higher attendance figures during the regular season and create more revenue from merchandise. This is pretty simple stuff, but it’s something that owners may forget when cutting player salaries to cut costs up front.
Some fans like to point to the potential Winter Classic at Busch Stadium as a way for the Blues to make more money; however, the NHL only gives the host city money to offset any costs for hosting the event.
Also in the news has been the potential for renovations to Scottrade Center. The arena is more than 20 years old and is due for technological updates to bring it up-to-date. These renovations would make the fan experience better for Blues fans and would also help bring more events to the arena.
Over the last year the Blues worked hard to bring the World Junior Championship to St. Louis, but lost out to Buffalo. The hope is that completing these renovations would help the city win bids for more of these events. Stillman’s group would greatly benefit from bringing in these events.
Where to put the prospects?
The Blues were unable to bring the world’s most talented young hockey players to St. Louis for the World Juniors. Right now the Blues have their own young talent playing for the Chicago Wolves, but it’s not an ideal situation. The problem lies in the fact that the Blues do not have much control over the decisions made by the Wolves’ coaching staff.
St. Louis Gametime posted a terrific article a few weeks ago discussing the state of the Blues’ prospect development. Essentially, the Blues would have to completely buy out an existing AHL team or create a new one through league expansion. This move would give the Blues complete control over how their prospects are coached, but it would be quite expensive.
The Gametime article had a handful of ideas as far as where the team could be placed. One of the ideas included putting it in Scottrade and hosting occasional doubleheader nights where two teams would face off their AHL and NHL teams back-to-back. Another idea was to head down Highway 70 to give Kansas City a professional hockey team in the Sprint Center. Finally, the Blues could share the wealth with a smaller city like Springfield, MO; Bloomington, IL; or St. Charles, MO.
Another item on the to-do list for Stillman may be moving the team’s practice facility. While the Blackhawks are building a 125,000 square foot practice facility with two rinks and a plethora of bells and whistles, the Blues train inside of a shopping mall. While it’s not ideal, there’s nothing necessarily wrong with the current set up.
It’s clear the Stillman ownership group won’t be able to afford to build a new training facility or to purchase full control of an AHL team.
Many people won’t like the answer here, but fixing this franchise’s financial issues will simply require patience. Stillman must continue to do the best that he can do while he waits for arena renovations and the opportunity to rework the team’s contracts.
So far it seems like Stillman is dedicated to the team and the city for the long run. Hopefully he and his group have deep enough pockets to see his plans through and make this franchise as successful as it can be both on and off of the ice.