Sunday, June 19, 2005

 

Sunday Fan Rant and Update

Happy Father's Day to all the other Dads out there.

Both sides continue to tweak the document from what I am told. Tomorrow they will meet again in Toronto for what is being touted as perhaps the final week of face to face. "All indications are the following. We'll see some sort of announcement this week, and then another week or so where they get everyone together to go over and ratify. This week could very well be a wild one."

So I guess that means some late nights in the Chatroom for all of us, and midnight email updates...get some sleep....

Today's Sunday Fan Rant comes from an anonymous hockey journalist upset with the announcement that the Blues are possibly for sale due to a 12.6% tax issue.

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I appreciate that the 12.6% tax is high, but the facts here simply don't add up...

1) The team will be forced to spend $20+ million less per season on player salaries (assuming they don't exceed the $29 million luxury tax threshold, and why would they?), yet they still don't think they can turn a profit. Interesting...

2) They claim to have lost $60 million over the past two years. My guess is that a lot of those losses came this season, when the Savvis Center remained completely dark nearly every single night while they still had to make debt payments on the building.

3) They want to sell because of the tax, and they want the team to be purchased by someone who will keep it in St. Louis. By itself, ignoring all other issues, these two points don't add up right. If the tax is a reason to sell, it's also a reason not to buy.

Here are some numbers worth chewing on. If the Blues make $1 million per home game, the tax would amount to a total of $6.3 million based upon 50 home games. If they make $1.5 million per home game, the tax would amount to a total of $9.45 million based upon 50 home games.

However, if they're making $1.5 million per home game, it also means that they've lost out on $75 million in revenues from this year's Blues games that weren't played. Puts the $60 million of losses into perspective, doesn't it?

Moreover, the debt payments the team is making haven't changed - they bought an already-built building. If they did their due diligence before buying the team in 1998, wouldn't they have concluded that the taxes and debt payments would make a team with a $50 million payroll an economic failure?

So how then would those numbers have changed so dramatically over the past six years, to the point where a team with a $30 million payroll would still be an economic failure?

Finally, let's imagine the tax getting cut in half, to a more reasonable 6.3%. Are they trying to convince us that the $3.15 million per year difference in taxes is enough of a reason to sell the team? Isn't there some other way for them to make that money back? For if there isn't a way to make that money back, who in their right mind would buy the team and keep it in St. Louis?

Let's look at this for what it really is: a ploy to try to get the state and city to reduce the sales tax on tickets. If they succeed, the team will suddenly be "profitable."
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