Sun Sentinel Palm Beach Edition
Marlins owner should fit like a glove
The prominent names have been the attention-grabbers in the latest and most serious bids to buy the Miami Marlins.
That New York Yankees icon Derek Jeter and former presidential candidate and Gov. Jeb Bush are among the suitors interested in acquiring the franchise gives fans notable figures to envision as owner of the team.
Ultimately, money will mean more than name appeal. It will take plenty of that to land the Marlins — likely well over $1 billion — but considerable importance also will be placed on the people involved, to ensure a palatable fit for the franchise and Major League Baseball, experts say.
“Typically, at the end of the day there are two factors that matter,” said Steve Greenberg, who has represented nu-
merous buyers and sellers in brokering sales of pro sports teams, including five MLB clubs.
“One is, what’s the price? And two is, are they a party that both the league is comfortable with and that the owner is comfortable handing the keys off to? Because many of these team owners view it as something of a legacy matter. They want to hand it off to a good steward.”
Given the escalation in the value of major pro sports franchises in recent years, there aren’t many individuals who can write a check to buy a team like Steve Ross did in acquiring the Miami Dolphins for $1.1 billion in 2008.
Whether it’s a notable sports figure like Jeter or anyone else putting together a syndicate of deeppocketed investors, the process of acquiring a team is complicated and competitive.
Marlins president David Samson last week acknowledged that discussions are ongoing with multiple groups vying to buy the team from Jeffrey Loria. He said progress toward a sale is further along than any previous negotiations have reached, characterizing it as “in the fourth inning.”
The competition could lead to a selling price that might look outlandish.
Prominent sports economist Andrew Zimbalist expressed surprise when the Los Angeles Dodgers sold for a record $2.15 billion in 2012, which he called extraordinary.
Now, Zimbalist says he anticipates that the Marlins will fetch in the neighborhood of $1.2 billion to as much as $1.4 billion. That is despite the usual factors dictating the value of sports teams — revenue from ticket sales, local television deal, stadium naming rights, corporate sponsorships, suite sales, concessions, parking — indicating the Marlins should be worth $750 million to $850 million, he said.
“Selling franchises of a professional sports team is a very thin market, and the price you get depends enormously on who the buyers are at any particular point in time and which teams are available,” said Zimbalist, a professor of economics at Smith College. “It’s just like selling a house: If you put your house on the market at the right time and the right person comes along, you might get your asking price or even more.”
Values climbing
In the case of Major League Baseball teams, the ceiling keeps rising.
The Chicago Cubs sold for $845 million in 2009. The World Series champions are now ranked third among major league teams at $2.68 billion in valuations done by Forbes.
The Marlins are 25th at $950 million.
Samson scoffs at the Forbes valuations as not worth the paper the magazine is printed on, but they do reflect the ongoing climb in the asset of teams.
When the Houston Astros sold for $680 million in 2011, it was the secondhighest price behind the Cubs. Following the Dodgers sale, the San Diego Padres went for $800 million, also in 2012.
The most recent MLB ownership transfer saw the Seattle Mariners purchased for $1.4 billion from Nintendo of America in 2016 by a 17-member group headed by Western Wireless Corp. founder John Stanton and retired Microsoft executive Chris Larson. Forbes had the Mariners valued at $1.2 billion a few months ahead of that sale.
According to Forbes’ 2017 list, the average MLB team is worth $1.54 billion, 19 percent more than a year ago. That is driven in part by the latest national TV deal and MLB revenue generators in advanced media and video streaming.
The Marlins’ value was up 39 percent from 2016, according to Forbes.
“Commissioner Rob Manfred is the reason franchises are valued so highly, because he understands his mission is to raise franchise valuations, and he’s got the people around him to help accomplish it,” Samson said, adding that current “circumstances are very favorable” for selling a team.
As Zimbalist pointed out, the Marlins are the only team on the market. Despite one of the least lucrative local TV deals (one that expires in 2020) and lack of a naming-rights partner for the 5-year-old Marlins Park, evidently those pursuing it see potential in the franchise that hasn’t been realized under Loria.
“I think that if a good owner and operator comes along — perhaps Derek Jeter would be such a person — there’s potential that could be maximized that hasn’t been maximized,” Zimbalist said.
“Miami is not a bad market. I think it’s got potential, it just needs to be run well.”
Complex process
It is difficult to handicap the chances of Jeter, Bush or other conglomerates of investors finalizing a deal, or to anticipate when it will get done.
Samson said it can take “anywhere from one month to forever.
“It’s a complicated, long process to do any transaction like this. And there’s not a guarantee that a transaction will happen.”
Major League Baseball monitors every potential sale of a franchise. Any possible purchaser is required to submit an application to the league, said Matt Bourne, MLB vice president of business public relations.
A source with knowledge of the situation confirmed to the Sun Sentinel earlier this month that MLB is aware of the interest from Jeter and Bush.
MLB thoroughly vets each potential purchaser as well as the proposed structure of any transaction, Bourne said. No sale agreement can be executed without MLB signing off.
That involves getting approval of the ownership committee and then an endorsement of the executive council.
Ultimately, 75 percent of the teams must vote in favor of the deal to complete the sale.
Recalling when Loria purchased the Marlins from John Henry in 2002, Samson said, “It was 1,000 pages of documents that lawyers love to read six times on Sundays, getting time and a half. So it’s a process.”
Considering that was a $158 million transaction, it is likely that the complexities of the process have increased in the years since.
Samson declined to identify the principal players in the current bidding because “everyone wants to finish first and no one wants their names involved if they’re not finishing first.”
Jeter, who helped spearhead five World Series championships with the Yankees, might need to exceed his reputation as Mr. Clutch to come out a winner in this game.
Jeter earned more than $266 million in salary during his 20 years with the Yankees and millions more in endorsements and merchandise sales. But, like on the field, he will need a formidable team behind him — in this case loaded with financial wherewithal — to fulfill his stated desire to own a franchise, whether the Marlins or another.
That was the case with Hall of Fame basketball player Magic Johnson, who put in $50 million of his money to be a visible point man in the purchase of the Dodgers by the Guggenheim Partners.
Greenberg, managing director of boutique investment bank Allen & Company — and the son of Hall of Fame baseball player Hank Greenberg — said it can be an asset to have a prominent former athlete pursuing ownership.
“Obviously, in L.A. having Magic Johnson involved in the Dodger transaction was a huge plus. Magic is an icon in Los Angeles, even though he is not a baseball guy,” Greenberg said. “But these are usually not people who are, with the exception of [Charlotte Hornets owner] Michael [Jordan] who had the money, they’re not the major investor.”
Playing matchmaker
Another factor that can help expedite a sale is to have league officials involved.
That was the case when Vinnie Viola and Doug Cifu bought the Florida Panthers in 2013. NHL Commissioner Gary Bettman aided in connecting Viola with Cliff Viner, who was eager to sell the team.
The deal came together in about six weeks after Viola, a former minority owner of the New Jersey Nets before the NBA franchise moved to Brooklyn, expressed interest in acquiring the Panthers during a lunch meeting with Bettman that was arranged by then-NBA Commissioner David Stern.
“A very nice lunch,” Bettman said at the announcement of the sale. “I was working on a couple of other franchises, but I knew of Vinnie’s interest and I knew where Cliff was, and it was a perfect fit.”
Peter Luukko joined the Panthers as executive chairman after Viola bought the team, but in 25 years as president and CEO of Comcast-Spectacor in Philadelphia he was involved in numerous franchise deals including the sale of the NBA’s 76ers in 2011.
Luukko said every sale is unique in structure and how it comes together. But it is always a challenging process to satisfy all contingencies.
“I remember at ComcastSpectacor we even bought minor league baseball teams, and they had a very diligent vetting process,” Luukko said. “From the ownership structure, they want to know you’re financially capable of operating a team and that you’ll also be a good partner in the league. That’s very, very important to these leagues.
“You’re coming into a partnership and they want to have good partners.”
Greenberg, who acted as an agent in the Astros sale, noted that the new ownership group is a consortium of Houston-area businessmen headed by Jim Crane, a desirable arrangement for strengthening the team’s ties to its community.
“Jim Crane put together a great group of local businessmen along with himself whose companies then go out and buy a suite or encourage their friends at cocktail parties to go out to an Astros game,” Greenberg said. “So there’s other benefits to having a strong local group in terms of making it sort of a community activity beyond just spreading the rest of the capital around.”
Whether or not Jeter joins the ranks of big-name athletes who have ascended to the owners’ suite, including Johnson, Jordan and Mario Lemieux (Pittsburgh Penguins), or if Bush follows older brother George W. Bush, who once owned the Texas Rangers, into the MLB fraternity, the clock appears to be ticking down on Loria’s tumultuous stewardship of the Marlins.
Speaking in general terms, Luukko said: “The bottom line is, obviously, in any league there’s a limited number of teams and at this point in all of pro sports there’s certainly a lot more buyers than there are teams.
“So there is a high demand to be a professional sports owner.”