Heres the article:
Checketts puts spotlight on Kiel
St. Louis Business Journal - January 12, 2007by Christopher Tritto
Dave Checketts led the 1997 acquisition and $75 million restoration of New York's historic Radio City Music Hall.
View Larger Executives at SCP Worldwide, owner of the St. Louis Blues, plan to redevelop Kiel Opera House this year and have their eyes on properties adjacent to the Scottrade Center that are ripe for complementary real estate ventures.
SCP hired former Madison Square Garden and Disney executive Dave Kerschner in early August to study real estate opportunities in Salt Lake City, where SCP owns Major League Soccer team Real Salt Lake and will soon begin construction of a soccer stadium. Now his attention is turning to St. Louis.
Kerschner joins SCP Chairman Dave Checketts, SCP partner Ken Munoz and Blues Enterprises Chief Executive Peter McLoughlin in leading local development efforts. SCP's purchase of the Blues from Bill and Nancy Laurie last year included the long-term leases of both the Scottrade Center and the adjoining opera house. But Kiel's doors have remained closed after 15 years.
"In calendar 2007, we will absolutely proceed with some development of Kiel Opera House," Munoz said. "Our goal is to open it as a first-class theatrical venue, and our hope is to book and manage it ourselves."
SCP already has opened talks with two local developers and two national developers, Munoz said, but he declined to name the companies.
Munoz said he also has met twice with city of St. Louis Treasurer Larry Williams to discuss a partnership involving the management, operation and economics of the city-owned parking garage immediately west of the Scottrade Center and Kiel. Munoz said the meetings have been productive, and he expects to have an agreement in place later this year, probably before the next hockey season begins in October.
Other long-range goals include developing adjacent real estate to complement SCP's sports and entertainment venues, Munoz said. Several properties are in SCP's sights.
"We have nothing definitive, but that's our focus," Munoz said. "We are asking, 'How do we extend and continue the downtown renaissance to 14th and Clark streets?'"
Munoz and other SCP executives have met with Mayor Francis Slay and Jeff Rainford, his chief of staff, a few times during the past several months to become better acquainted and discuss development ideas. Talks remain in preliminary stages, but Munoz said tax increment financing (TIF) or other public assistance would be a "critical component" for any development.
Neither Slay nor Rainford could be reached for comment.
Before founding SCP in 2002, Checketts spent 11 years at Madison Square Garden (MSG), including seven as president and chief executive. During those seven years he oversaw operations of the arena, the NBA's New York Knicks, the NHL's New York Rangers and the WNBA's New York Liberty.
Checketts, 51, led MSG's 1997 acquisition and $75 million restoration of New York's historic Radio City Music Hall, which opened in 1933, one year before Kiel.
Now he wants to do the same thing here and even has shows to stage. SCP is majority owner of Running Subway Productions, formed in 2004 to create, develop, produce and promote live theatrical shows. Its productions of Dr. Seuss' "How the Grinch Stole Christmas! The Musical," "Sinatra" and "Peter Pan" have played to audiences in New York and London.
Running Subway has a multiyear consulting and show investment agreement with Live Nation, the world's largest producer of live concerts, and SCP executives have close contacts with major concert promoter AEG.
A Kiel renovation would pick up the torch carried in recent years by the late downtown developer Don Breckenridge. Breckenridge died Nov. 30, 2005, just as he was closing in on plans to lease Kiel's 3,500-seat main auditorium and four smaller adjoining theaters and begin a $45 million restoration of the building. The opera house closed in 1991 when construction of the arena now known as the Scottrade Center began.
Kiel would compete with other theatrical venues, including the Fox Theatre in Grand Center and The Muny in Forest Park, as well as sports teams, movie theaters and other draws of the entertainment dollar.
Seven blocks east of Kiel, Baltimore-based Cordish Co. and the St. Louis Cardinals have plans to build their $650 million Ballpark Village. With its 50-50 development partner, the St. Louis Cardinals, Cordish expects to break ground this spring on the $387 million first phase, which will include 360,000 square feet of retail and entertainment space in addition to office space and residential units.
Cordish officials could not be reached for comment, but in its TIF application with the city, the developer said it's convinced there is strong demand from nationally based tenants and operators for space at Ballpark Village.
"The majority of the development is under active lease negotiations with the premier operators/concepts/companies in the nation and region," Cordish wrote in its TIF application. To make Ballpark Village a year-round destination, Cordish plans to add live music venues and free entertainment such as concerts and festivals.
The Cardinals expect their baseball team to drive revenue-generating real estate and media deals. Checketts shares that vision for the Blues and Kiel.
Unlike most team owners, who tend to be wealthy individuals or media conglomerates able and willing to bleed cash, New York-based SCP is in business to make money.
Checketts is convinced that the widely held view that sports properties are not investment-grade assets is an outdated one, ignoring the synergies that have arrived among sports, media and real estate. Not only the team but also the land around the arena and the potential to build a media company on the back of live sporting events are driving Checketts' venture.
"I have a very strong belief," Checketts said, "that if you have access to capital and talented people and the opportunity to create assets that are unique -- and that is what sports and entertainment assets are -- you are in for a great ride."
Some powerful investors have bought into Checketts' vision since he formed SCP in 2002. TowerBrook Capital Partners LP, a New York-based private equity firm with $2.5 billion under management, is SCP's primary financial backer in St. Louis. The firm was critical to SCP's $150 million purchase of the Blues, the Scottrade Center and Kiel last June. Wall Street powerhouses Goldman Sachs and Lehman Brothers are investors in other elements of SCP, which also owns a sports radio station in Salt Lake City and a nascent media business in partnership with IMG, the sports marketing giant of which Checketts is co-chairman.
So far, fans are not returning in SCP's first season of running the Blues, a team that bleeds at least $20 million annually. Blues attendance is the worst in the league, a product of the season-long NHL lockout a year ago and fan fury directed at the previous owners, who traded away top stars in a salary purge.
Jonathan Bilzen, managing director of TowerBrook Capital, said real estate and media are some of the reasons his fund backed Checketts in the Blues.
"Dave understands we are in it to eventually make attractive returns for our investors," said Bilzen, whose fund, in tandem with Checketts, previously backed College Sports Television, which CBS Sports acquired for $325 million last year. "We know that Dave and his team have a lot of work to do, and we are taking a very long-term view on this and don't expect the fans to immediately come back."
With the NHL's new salary cap in place, Checketts said he believes the Blues will be profitable within three years. If attendance were only to return to 2001 levels, because of the new salary cap, he said, the Blues would be profitable by 2008.
"If you look at our collective track record, we have grown earnings and cash flow everywhere we have been," Checketts said. "We have never even been close to being in trouble on loans or debt, and we're entrepreneurs, but we have very strong advisers and capital partners."
SCP is currently a $200 million company by assets, Checketts said. He projects that total to reach $1 billion within five years, based on more acquisitions and growth.
Still, it will be a tough row to hoe. TV station MSG Network carried Knicks, Rangers and New York Yankees broadcasts during Checketts' run in the Big Apple and delivered fantastic returns to Checketts' former employer, Cablevision Systems Corp. But the Blues are locked into a long-term contract with Fox Sports Net Midwest. Whether the consumer and commercial demand for the Blues could ever begin to rival that seen in a big city such as New York is an open question in St. Louis.
Bilzen said he is willing to wait longer than normal, but he still expects a return within seven years.
Checketts' current partners include two of his former MSG lieutenants, Munoz and Mike McCarthy. Their idea is to build an economic structure with the Blues similar to the one that won so much acclaim at MSG a decade ago.
"If you look at our collective track record, we have grown earnings and cash flow everywhere we have been," Checketts said. "We have never even been close to being in trouble on loans or debt, and we're entrepreneurs, but we have very strong advisers and capital partners."
SCP is currently a $200 million company by assets, Checketts said. He projects that total to reach $1 billion within five years, based on more acquisitions and growth.
Still, it will be a tough row to hoe. TV station MSG Network carried Knicks, Rangers and New York Yankees broadcasts during Checketts' run in the Big Apple and delivered fantastic returns to Checketts' former employer, Cablevision Systems Corp. But the Blues are locked into a long-term contract with Fox Sports Net Midwest. Whether the consumer and commercial demand for the Blues could ever begin to rival that seen in a big city such as New York is an open question in St. Louis.
