The St. Louis Cardinals have always been cagey when it comes to cash.
The owners, who bought the team five years ago, claim they consistently lose money in the best baseball town in America, a city that led the National League in attendance last season. Just two weeks ago, team president Mark Lamping told the Kansas City Star that the team lost between $5 million and $10 million last year, when attendance at Busch Stadium surpassed 3.3 million, a franchise record. But the Cards' owners aren't willing to back their words with proof. They've never said what the team may be worth, nor do they want anyone to know exactly who owns how much of the franchise that's asking taxpayers for a new ballpark. City officials privy to the team's financial books during negotiations for a new stadium have signed confidentiality agreements stipulating that they won't share numbers with the public.
This much is known: The owners paid $150 million for the team in 1996, a purchase that included Busch Stadium, adjacent parking garages and land beneath two downtown hotels. Within a year, they sold the garages for $91 million and the land for $9.7 million, leaving them with an investment of $49.3 million, quite a bargain for a team worth well over $100 million.
It appears Pulitzer Inc., the parent company of the St. Louis Post-Dispatch, and its chairman, Michael E. Pulitzer, may also have gotten a bargain.
On March 23, the Post reported that Pulitzer -- the corporation and the chairman -- is buying a stake in the team of nearly 4 percent. Corporate officials would not divulge the exact percentage, nor would they say just how much Pulitzer and the company paid for the share. But team general partner Fred Hanser will.
Hanser tells the Riverfront Times that the Pulitzer investment equals the amount of money Pulitzer Inc. loaned the team back in 1996, when Major League Baseball rejected a direct investment on the grounds that a Pulitzer subsidiary already owned a 5 percent stake in the Arizona Diamondbacks (under league rules in effect at the time, individuals and entities can't own pieces of more than one team). Instead of buying a piece of the Cardinals, Pulitzer Inc. loaned the franchise $5 million to help finance the parking-garage part of the purchase, but that loan was repaid within a few months, when the team sold the garages. In 1998, the Post reported that Pulitzer subsequently loaned the team another $5 million to pay for stadium renovations, but that story was wrong. "That was incorrect," says Ronald Ridgway, Pulitzer senior vice president for finance. Ridgway says Pulitzer never loaned money for stadium renovations and had no outstanding loans to the team after the garage loan was repaid. Nonetheless, even though neither Michael Pulitzer nor his company held any ownership interest in the franchise, the chairman has been listed as a team owner in the team's media guide [Bruce Rushton, "The Midas Touch," RFT, Feb. 7].
In 1999, Pulitzer Inc. spun off its broadcast properties, including the subsidiary that owned the Diamondbacks share, resolving the league's conflict-of-interest concerns. Hanser also says Major League Baseball has changed the rules to allow entities to own shares in more than one team, so long as the stake in any one team doesn't exceed 5 percent.
Although he won't discuss dollar figures, Hanser tells the RFT that the amount of Pulitzer's latest investment is the same amount as the 1996 loan. In discussing the deal, Hanser says he considers the corporation and its chairman to be a single entity.
"It's the same amount he loaned the team originally," Hanser says. "He had debt in the team, actually, some of the real estate. The intention was, as soon as baseball changed its mind [about allowing ownership in more than one team], we were, in effect, switching the debt for stock. Although that's not exactly what happened, that's what happened in effect."
At $5 million, a stake in the team of 4 percent or less would peg the value of the team at a conservative $125 million -- an amount considerably less than most informed estimates, including one published last year by Forbes magazine, which estimated that the Cardinals franchise was worth $219 million. If nothing else, the figures demonstrate that team owners, even without a new stadium, have more than doubled the value of their investment since selling the parking garages. A more sinister view is that the team, in the midst of a public-relations battle to get a $250 million taxpayer subsidy for a new ballpark, has given the parent company of the city's daily newspaper and one of its largest shareholders a sweetheart deal, granting Michael Pulitzer and Pulitzer Inc. a stake worth substantially more than what they paid.
Ridgway says he doesn't know whether Pulitzer and its chairman paid fair market value for their share in the team. "I presume we did," Ridgway says. "I really wasn't part of the negotiation. As you well know, on an athletic team, it would be pretty hard to determine the fair market value unless you sold the whole thing, lock, stock and barrel. You just assume the parties were happy with what they came up with, both sides."
Regardless of who owns the team or what they may have paid, the Post insists the Pulitzer ownership interest won't affect news coverage or editorial positions.
Post editor Ellen Soeteber says she knows readers may be skeptical, especially given a lengthy Sunday editorial endorsing massive public subsidies for a new stadium that ran five days before the newspaper reported the Pulitzer purchase. "I know -- I know -- that there will be absolutely no change or involvement in how we cover the Cardinals, how we cover the stadium issue, the editorial stance we take, which was taken completely separately and completely ignorant of these other developments," she says. "I do understand that there are people in the public who might perceive it otherwise, and that's the only level of discomfort that I get, is over the perception that people will have." In a March 25 follow-up editorial, the Post told readers the editorial board had no idea that Pulitzer and its chairman were on the brink of buying a stake in the team when the paper endorsed public financing for a new stadium on the previous Sunday. "We realized it would look defensive, but we just felt like we couldn't avoid addressing it straight-on," explains William Freivogel, deputy editorial-page editor.
Soeteber, formerly an editor at the Chicago Tribune, says she prefers this situation to the one in the Windy City, where the Cubs are wholly owned by the Tribune Co. "Even 100 percent ownership wouldn't affect our coverage," she says. "Certainly 4 percent won't. The stake is so small, you know, it's such a small part of the team. It's not like he's going to run things there. Mr. Pulitzer is not involved in the day-to-day operation of the newspaper. In fact, he's not even in St. Louis any longer on a regular basis. His principal residence now is in Santa Barbara, Calif."
Ridgway says Pulitzer executives were concerned about appearances but decided the investment was so small that no one should be worried that the corporation would have influence on the paper or the team. "As far as we're concerned, it was a nonevent for us," he says. "We are a totally passive investor, both us and Michael. I guarantee you that, having a 4 percent interest in a closely held corporation, you have nothing to say about anything." But even a tiny stake in a major-league team can prove a lucrative investment, especially when a new stadium is involved. The best example is George W. Bush, who saw a $600,000 stake in the Texas Rangers balloon into $15 million inside of 10 years, thanks to a new stadium built at taxpayer expense.
But Post readers haven't seen the newspaper draw any comparisons between the company chairman and the president. Nor has the Post gotten the story straight when it comes to money and the Cardinals.
A review of recent editorials and news coverage of the stadium issue shows remarkable differences in the way the Post describes the stadium deal. For example, the Post in editorials has said the team wants to freeze tax payments to the city at the 1998 level, a proposal that has never been reported in news pages (on March 19, the Kansas City Star reported that the team is willing to freeze tax payments at current levels). Also, the Post in its news pages pegs the state's share of the sales tax from Busch Stadium (which team owners want diverted to help build a new ballpark) at $5 million or $6 million a year, figures that Post Jefferson City reporter Eric Stern says he obtained from state fiscal notes accompanying ballpark legislation. On the editorial side, the Post in a March 18 editorial says the state collected $8.5 million in sales tax from Busch last year, more than $2 million more than what had been reported in news pages. Furthermore, the Post in a Feb. 19 editorial states, "The team wants to freeze its city tax payments at the 1998 level of about $8 million and use all new taxes to pay for construction costs." A month later, the amount the city collected -- and the amount the team wanted to pay the city to offset lost tax revenue -- had dropped by $1.5 million: "The team has offered to make in lieu of tax payments to the city of $6.5 million a year -- an amount equal to its 1998 city tax payments -- to offset lost revenue," the Post says in a March 18 editorial. In neither case did the paper attribute those figures to anyone.
Editorial writer Kevin Horrigan, who authored the February and March editorials, admits he screwed up. "You have every right to be confused," he says, explaining that the higher figure apparently includes taxes on the earnings of visiting players that were left out of the lower number. "I may have mixed apples and oranges." Where did Horrigan get his numbers? "They were given to me by the Cardinals," he says. Actually, Horrigan says, the numbers came from a study commissioned by the team and prepared by Development Strategies Inc., a consulting firm whose rosy economic forecasts were used to help build the case for the publicly subsidized downtown convention hotel. "I checked them out," Horrigan says. "They're not scientific wild-ass guessers. They do have some credibility."
Ah, credibility. No matter what the paper says, suspicions about its independence will remain, so long as Pulitzer stays a team owner, the news side prints stories about the Cardinals that aren't true and the paper bases editorial stances on figures from the team that are printed without attribution. In the meantime, workaday reporters will go on doing their jobs as best they can.
"I think a lot of people assume that Pulitzer has always owned part of the Cardinals," Stern says. "The timing of the announcement, that definitely doesn't help when we're trying to portray ourselves as an independent watchdog of what's going on in the Legislature.
"Just for me, the Cardinals lobbyists have started calling me Boss."