SBD/3/Franchises

NEW ROYALS OWNER: GREATER KANSAS CITY COMMUNITY FOUNDATION

     The IRS approved a complicated plan established by the late
Royals Owner Ewing Kauffman that would allow for the team to be
owned by local Kansas City charities, according to this morning's
K.C. STAR.  The team will have six years to find a buyer that
promises to keep the team in K.C., before opening up bidding to
an outside entity.  The charitable group that will own the team
is the Greater Kansas City Community Foundation and Affiliated
Trusts -- a collection of smaller groups managing 400 charitable
funds and 11 affiliated trusts with combined assets of $170.6M.
Although the foundation is to own the team, the Royals will be
directed by a five-member group led by current Royals Chair/ Wal
Mart CEO David Glass.  Royals President Michael Herman also will
be on that board.  The Kauffman plan still needs to be approved
by MLB owners (Charles Crumpley, K.C. STAR, 5/3).      HOW IT
WORKS:  The Foundation must raise $50M in donations from the
community at large, with the interest (perhaps as much as
$3M/year) directed towards some of the losses the team regularly
incurs.  Any additional losses would be paid from a different
reserve fund of $37.5M that Kauffman donated before he died.  The
six-year search for a new owner could begin as soon as June, when
the team is expected to be officially turned over to the
Foundation.  When a buyer emerges, the $50M would "flow back to
the community foundation."  A large share of any funds beyond the
$50M purchase price also would flow into "special donor accounts
at the community foundation, and that money also would be given
to various charities."  Among the donors to the $50M fund:  $5M
each from Kauffman and his late wife, Muriel;  $1m from the
Kansas City Star Co. and a foundation tied to its parent, Cap
Cities/ABC (KANSAS CITY STAR, 5/3).
     THE FINANCIAL SHAPE:  Kauffman came up with the plan to buy
time for the city in the hope that MLB's new economics would help
the small markets.  Last year the team lost a reported $25M, but
Herman said with cost-cutting measures they hope to break even in
a couple of years.  Kauffman had said "several times that no one
would want to buy a baseball team that consistently loses
millions of dollars and had little prospect of making money
because it was in a small city."  Glass has expressed interest in
buying the team but was unavailable for comment (KANSAS CITY
STAR, 5/3).
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