UTK Special 6/22/20

More on Owners

Last week, I talked about how four teams were in some stage of a sale process. This can mean anything from the Mets process, which is a sale where the current owners would like to keep an interest and gradually fade away, to a minority sale - and minority is a keyword right now in the other sense.

With the Mets, they not only have to find someone with a couple billion dollars and a desire to own a ball club, but one willing to keep on the Sterling* folks for “a while,” per someone involved in the negotiations between Sterling and Steve Cohen.

*Sterling Equities is the partnership between Fred Wilpon and Saul Katz. They own almost all of the franchise, though some was sold to make payments on the below-investment grade debt they own on CitiField. Citi took some of it and Cohen came in for a bit, though there are rumors he sold his stake off when the bigger stake fell apart. Sterling is mostly involved in real estate, though they own several other businesses including SNY.

If the Philly group - Josh Harris and David Blitzer - can get this Mets deal done, it will surprise no one. The Mets ownership is hurt as much by this as anyone with loss of revenue on tickets and parking, as well as SNY revenue from games. Harris and Blitzer already own the 76ers and New Jersey Devils, so they could use SNY as something of a super-regional sports network.

Harris and Blitzer also just bought a small piece of the Pittsburgh Steelers, but that’s not anything like this deal, I’m told. It’s a single-digit percentage, leaving all the control with the Rooney family, but setting up Harris and Blitzer to come up for an NFL franchise as it came open. This is a pretty standard route to ownership and three teams are potentially on the block now in the NFL due to ownership deaths (Seattle, Houston, and Arizona, though none appear to be motivated to sell just yet. Denver has multiple lawsuits and is a whole different ball of wax.)

Apart from that, we know that the White Sox will be for sale in the near future. The Reinsdorfs have been open that they would not keep both the Sox and Bulls after Jerry Reinsdorf’s death, so having a minority partner in place wouldn’t be the worst thing. I’m told this has been an ongoing process, with the hope of finding a local owner with a real passion for the team. Again, there’s no rush here.

So who are the other two baseball teams looking for potential new owners or partners? My sources indicate that it’s the Los Angeles Dodgers and the Pittsburgh Pirates. In both situations, the ownership groups are looking to sell a small stake in order to get over the current cash crunch while maintaining control. That’s harder to find, unless you can find someone who just wants a team or that is planning for the future.

The Dodgers were purchased for $2 billion in 2012 and are estimated to be worth $3.4 billion today. Many inside the game guess higher, but Guggenheim is hardly the high flying entity that they were when they bought it and a sale to generate cash in order to not need cash from other businesses is a smart play, if it is the case. There’s still significant value in the Dodgers, but a high-value name like that could generate an easy $300 million with a ten percent sale, maybe more (and maybe significantly more.)

There’s plenty of money in California and the Dodgers would draw it out, so it wouldn’t surprise me if this would be the right time for Guggenheim to find that kin of quiet, rich minority partner in both senses. More than one person suggested Dr. Dre as a perfect partner, or letting Magic Johnson come back in. The Dodgers did just this kind of deal in 2018, so another 5-10 percent would be nothing in terms of control.

Why the Pirates? Newspapers and resorts aren’t doing so well these days and Robert Nutting is at best one of the poorest of baseball’s billionaires. Normally, the Pirates are a cash cow, but not this season. Selling now would be selling at the low point, even for the Pirates, but there’s plenty of possibilities with new tech in the Three Rivers area.

One notable one is Michael Rubin. Rubin has a major deal with MLB through his Fanatics brand, making him a great partner. He’s in business as a minority investor with Harris and Blitzer in several of their investments, including both teams. It would be easier for him to sell that off to buy a team, though he’s seemed more interested in an NFL deal - he was high bidder for the Carolina Panthers, but lost out to David Tepper’s overall bid.

What may help Rubin now is that he was a big supporter of the “Free Meek Mill” movement and Meek Mill himself has discussed growing minority support of sports. Pair Rubin and Mill - err, Mr. Williams - and that’s a nice look for the current climate. Would Pittsburgh take to a Philly owner? My guess is that anything after Nutting will be better and that even a minority share would be a move towards a later, majority buy out.

Some other teams that have been mentioned - Colorado, Arizona, and Tampa - just don’t seem to have the same kind of fire those four have. While any team could be up for sale at any point, none of those franchises have ownership groups in desperate straits or even terribly affected by the lack of cashflow.

All in all, this is not a bad situation for baseball. New ownership tends to be good for the game. While minority investors don’t get much, if any, say in how things go, especially on a macro level, they do tend to push the game forward. Someday we’ll look back on this group and wonder why the Calvin Griffith of this group wasn’t pushed out sooner or why it took longer to get a black owner in Jackie Robinson’s sport.