And speaking of franchise value . . .

The dynamics described in the previous post (i.e. diminishing franchise value freaking owners the hell out) are on display with this news item as well:

Padres chairman John Moores will spin the front-office carousel yet again Thursday when the club expects to announce that Jeff Moorad will take over as CEO, with Sandy Alderson stepping down from that position. What makes Moorad’s arrival different from that of the other four CEOs or presidents hired by Moores since he fired Larry Lucchino in 2001 is that Moorad heads a small group of minority investors and, in time, is expected to succeed Moores as controlling owner. Per complicated negotiations on the club’s phase-in sale, worth more than $400 million in present-day value, Moores will remain majority owner for a number of years . . .

. . . “John is still in control,” said a major-league executive who spoke on the condition he not be identified. “Jeff, though, has a huge amount of money involved. It’s a strange thing. In baseball, you normally wouldn’t have an announcement about a guy buying a minority interest. I guess it’s because there will be a new CEO who, from what I understand, will eventually become controlling partner. I assume Jeff has been approved by the other owners.”

Here the crisis precipitating the sale was not the real estate market, but rather, Moores’ divorce. Here’s what I think happened: With his money tied up in other ventures, there was no way for him to pay the soon-to-be-Mrs. Moores for her share of the Padres, so he needed cash and needed it fast. Enter Moorad, a willing buyer who appeared almost immediately after Moores need to sell and who, amazingly, had the full and immediate support of Selig and the other owners. It’s almost as if someone had orchestrated this in order to keep Moores from having to sell the Padres on the open market where, if the Cubs’ example is of any value, would be a far more protracted and far less-lucrative experience than anyone expected. Someone who was distressed at the notion of a team selling at fire sale prices.

Thankfully for Moores and the other owners, that’s not happening now, as with Moorad’s unique rent-to-own scheme, Moores is given the money up front in order to turn over to the missus, and gets to keep control of the team for the time being. Oddsmakers in Vegas have taken “Moores decides to buy out Moorad in a few years when his financial fortunes turn around” off the board.

Query: how many Jeff Moorads are out there, ready to swoop in and save the day the moment some distressed owner needs them? I can’t imagine there are many. If more divorces or other calamities happen, it’s only a matter of time before some owner is going to have to sell his team to the highest bidder on a real open market, at which time I suspect some serious losses are in the offing.

UPDATE: and now a third installment about all of this. The third part is the best part, I think, so unless you’re utterly sick of this, you’ll want to click through.


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Jason @ IIATMS
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Jason @ IIATMS

Last I checked, there were many mega-rich left standing, even with the market, Madoff, TARP, AIG, etc.

There will always be someone willing to belly up to the bar for a chance at owning a baseball team.  Never underestimate the power of ego when combined with mad riches.

MooseinOhio
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MooseinOhio

Gotta love having an anti-trust exemption.  The ownership shell game that Selig plays makes three card monty look legit.

J. McCann
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J. McCann

The point is: of course there are plenty of rich nerds out there who would love a team, but very few who MLB can trust not to go on a spending spree and otherwise shake things up.

(See: Marc Cuban)

Craig Calcaterra
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Craig Calcaterra
J.—Mark Cuban may be the luckiest man that the old MLB Boys’ network is in existence.  While most people have assumed his offer was a big cash bid, post-bid accounts (the links to which I don’t have handy at the moment) have suggested that his bid was a huge, debt heavy thing not unlike Sam Zell’s, with the added bonus of shooting a bit too high price-wise to account for the “outsider” thing.  If that had been accepted, he could have taken a worse bath than Zell is in the face of falling revenue and tough debt service obligations. So… Read more »
Fritz
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Fritz

It actually already happened. Peter Angelos purchased the Baltimore Orioles in a bankruptcy court auction when owner Eli Jacobs filed (or was forced, I can’t remember) for bankruptcy. The auction ended up in a bidding war between Jeffrey Loria, Angelos, and Bill DeWitt. Angelos and DeWitt joined forces to outbid Loria. I believe the winning bid was contingent on MLB approval but it was a bidding process open to anyone.

kendynamo
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kendynamo

mooseinohio: how would selling a privately owned franchise thats part of a privtaely owned conglomerate consistute a violation of the sherman anti-trust act?

i’m not trying to be flip and i’m not saying this isnt a shady selig deal, i’m just genuinely curoius as to how MLB’s anti-trust exemption comes into play.

MooseinOhio
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MooseinOhio

@kendynamo – The simplest explanation I have is by Darren Rovell of ESPN in the link below.  Essentially baseball gets to play by it’s own set of rules that no other business, even another private business, has to comply with.

http://sports.espn.go.com/espn/print?id=1290707&type=story

kendynamo
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kendynamo
appreciate the link but i get all that, however i don’t see how that allows them to play by thier own set of rules.  they still have to play by every set of rules that all other business do (they are quite a few out there), except the sherman anti-trust act.  here is a paper that argues how MLB’s exemption is meaningless. http://works.bepress.com/mitchell_nathanson/3/ its long but there are a lot of footnotes so it goes quickly and its got lots of interesting baseball history as a bonus. i agree with the author.  if i founded a wiffle ball league and… Read more »
MooseinOhio
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MooseinOhio

Will try to read it later today – appreciate the link.

Craig Calcaterra
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Craig Calcaterra
Ken—I don’t have time to read that document (I will when I get home tonight) but there is at least a sentiment—held by the owners—that the antitrust exemption allows MLB teams to control who can and who can’t buy a franchise from a willing seller. For example, if the Steinbrenners wanted to sell the Yankees to Microsoft and the other owners didn’t want it to happen, they could vote to reject the sale.  Being that, as a matter of law, the clubs are all independent businesses in competiton, such a thing is (I think anyway) collusion that would normally violate… Read more »
kendynamo
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kendynamo
Thanks, Craig.  I guess what I have a hard time reconciling (which probably makes the whole discussion moot, since its the opinion of the DOJ that matters, not mine), is the idea that MLB has a monopoly over anything, and that each team is a seperate entity and that the sum of them form a cartel.  Maybe back in the turn of the century through to WWII, when it was the only team sport that offered lucrative salaries in exchange for atheltic proformance, but to consider the MLB a monopoly now would be to completely ignore the vastly different sports… Read more »
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