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SBD/Issue 13/FranchisesPrint All
MLB will announce at an afternoon press conference that the Expos will move to DC for the ’05 season, according to multiple reports today. The team will play three seasons at RFK Stadium before moving into a new $440 ballpark near the Anacostia River (Mult., 9/29). In DC, Thomas Heath reports that a three-pronged agreement to appease Orioles Owner Peter Angelos includes an Orioles/Expos RSN; MLB agreeing to make up for any revenue shortfall the Orioles might suffer because of the new team; and MLB guaranteeing that the Orioles’ value “will not decline below a certain level in the event of a sale.” Sources said that MLB “would make up the difference” if the revenue or franchise value falls below the set thresholds. Angelos “reportedly wants the financial guarantees to be effective indefinitely, while baseball wants the guarantees to last only as long as Angelos owns the team” (WASHINGTON POST, 9/29). ESPN.com’s Jayson Stark cited a source as saying that while MLB and Angelos have not reached agreement “on all issues, they are now close enough on the parameters of a deal” for MLB to make the announcement (ESPN.com, 9/28).
RSN RAMIFICATIONS: In Baltimore, Morgan & Waldman report one scenario has the Orioles receiving a “disproportionate share of the revenue” from the RSN, “at least for a certain number of years.” But such a move could “reduce the price a buyer would pay for the relocated Expos. ... That would undermine the intent to make as much money as possible on the sale for the 29 other [MLB] owners, and might hurt the franchise’s financial performance down the road” (Baltimore SUN, 9/29). Meanwhile, MULTICHANNEL NEWS’ Mike Reynolds noted that the Orioles are in the third year of a five-year TV rights deal with Comcast Sports Net Mid-Atlantic, and a CSN Mid-Atlantic spokesperson was “unaware of any contact from MLB on the issue” of a new RSN. The spokesperson: “If and when something does happen, I’m sure we’ll sit down with the appropriate parties” (MULTICHANNEL.com, 9/28).
OH MARYLAND, MY MARYLAND: Maryland Stadium Authority (MSA) Exec Dir Alison Asti was “glad to hear Angelos and [MLB President & COO Bob] DuPuy acknowledge the public’s stake in the outcome of the negotiations.” The SUN’s Waldman & Morgan note that because the Orioles pay rent based on a percentage of their revenues, the MSA “could also suffer from any financial harm the Orioles might incur.” Angelos said that he “has been in touch with” Maryland Gov. Robert Ehrlich Jr., adding, “I want to protect the city and its well-being. I want to protect the state’s investment. And, if we do that, we’ll protect the Orioles franchise” (Baltimore SUN, 9/29).
WORKING ON A BUILDING: The AP’s Joseph White cited a source as saying that MLB has “produced a 30-page document that would conditionally award” the Expos to DC, pending approval of the new ballpark by the DC City Council. Meanwhile, MLB Marketing Communications Manager Carmine Tiso said that the MLB Rangers, which were the Washington Senators from ’61-71, retain the rights to the name “Washington Senators” (AP, 9/28). In DC, Eric Fisher reports DC officials hope to introduce the ballpark legislation to the DC Council “by the end of the week. The urgent timetable is needed in order to have enough time to ensure passage by the end of the year, as well as leaving enough time to renovate RFK Stadium for baseball” (WASHINGTON TIMES, 9/29).
WHO’S IN CHARGE HERE? In DC, Thom Loverro writes MLB “likely still will make the personnel and roster decisions for the team.” Expos President Tony Tavares “doubts the franchise will be sold to new owners in time to make personnel decisions, such as signing free agents, that are often made in November and December,” saying that it is “possible that a new ownership group might not take over operation of the Expos until May or June.” But Tavares expects payroll to be greater the Expos’ $37M from this season. Tavares: “One of the things we have to negotiate with [MLB] is that we are going to increase our revenues substantially by moving to [DC]. I want to get some kind of relationship going with what my payroll is versus what my revenues are” (WASHINGTON TIMES, 9/29). Meanwhile, in N.Y., Lee Jenkins reports the Mets have reached an agreement to hire Expos GM Omar Minaya as head of baseball operations. Mets GM Jim Duquette “is expected to remain with the organization, but will work under Minaya” (N.Y. TIMES, 9/29).
NO, VIRGINIA, THERE IS NO BASEBALL TEAM: In DC, Laris & Shear report that under a last-minute suggestion by the relocation committee to the Virginia Baseball Stadium Authority (VBSA), the state of Virginia would have given “the hundreds of millions of dollars in tax revenue expected from the ballpark to baseball or team owners, who would then finance the ballpark themselves.” The VBSA “rushed to secure assurances from Attorney General Jerry W. Kilgore that such handouts –- totaling about $1[B] over 30 years in one scenario –- were legal.” Virginia Gov. Mark Warner said of the proposal, “They are taking more of the risk and getting more of the upside. That’s business. My responsibility was to guard the fiscal situation for the taxpayers.” But VBSA sources said that the plan “appears to have foundered,” and efforts to “sweeten the deal by adding sources of revenue” also failed (WASHINGTON POST, 9/29).
Did Price Climb To $220M?
While reports have placed prospective Brewers Owner Mark Attanasio’s purchase price of the team at $180-200M, a team source now says that the price is $220M, according to Don Walker of the MILWAUKEE JOURNAL SENTINEL. The discrepancies “stem from the complexity of the proposed transaction,” the amount of debt the team carries and “other legal considerations in the deal.” Two independent reviews found the team had $133.2M in debt at the end of ’03. One source said that the Brewers “had been able to whittle [it] down to near $100[M] this year.” The industry average is $140.1M for clubs with new ballparks. Meanwhile, Walker reports Attanasio “is looking for local investors to buy a minority stake in the team, some of whom could be current shareholders.” One source said that Attanasio’s deal to buy the team called for him “to sell 30% of the team to local owners, while another source said that was only a goal, depending on the interest locally.” Sources said that current Brewers shareholders John Canning Jr., Harris Turer and David Uihlein are possible candidates to retain shares, but all declined to comment. A source added that Milwaukee-based exec Joe Sweeney “is working with a group of potential investors who may have an interest in ownership” (MILWAUKEE JOURNAL SENTINEL, 9/29).
TIES THAT BIND: Metropolitan Milwaukee Association of Commerce President Tim Sheehy said while he is from L.A., Attanasio’s “allegiance to Milwaukee is shown by his investment of what sounds like $200[M] to buy an asset that can’t be moved from this community.” Attanasio’s Milwaukee ties include his brother Robert, who is married to the daughter of Joan and Jack Stein, who own Milwaukee-based Stein Garden and Gifts, a chain of home and garden supply stores (AP, 9/29).
SHE’S OUT: Brewers Chair Wendy Selig-Prieb she will “definitely be done with the Brewers once a sale is complete” (Dale Hofmann, MILWAUKEE JOURNAL SENTINEL, 9/29).
The AHL Wolves are “ramping up marketing efforts, offering hockey fans a chance to reserve season tickets for a deposit of $11 per seat,” which is refundable if the NHL lockout is resolved and the Blackhawks resume play this season, according to Jeremy Mullman of CRAIN’S CHICAGO BUSINESS. The Wolves began marketing the $11 deposit in the spring when the lockout “began to look inevitable.” TV ads and billboards take “direct aim at the idled Hawks, urging fans to ‘See hockey the way it was meant to be: Played!’” A Wolves spokesperson said that the number of deposits from first-time season-ticket holders “is double the year-earlier total,” but he declined to disclose numbers. Mullman notes the club has already sold about 150,000 tickets for the upcoming season compared to 320,000 for the entire ’03-04 season. But a Blackhawks spokesperson indicated that the team is not “concerned about losing fans to the Wolves,” adding, “The bottom line is that if you want to see the best players in the world, you have to come to the United Center. That’s where they play” (CRAIN’S CHICAGO BUSINESS, 9/27).
Sonics Chair Howard Schultz yesterday indicated that rumors suggesting he is “displeased with the Sonics and is seeking to sell his share of the team are untrue.” Schultz “admitted that he has been less visible around the Sonics than he had in the past, but said his absence shouldn’t be misconstrued as disenchantment” (SEATTLE TIMES, 9/29).
NET GAINS? Nets Owner Bruce Ratner, on the level of support he expects this season “with the prospective move to Brooklyn and the team’s lower expectations”: “I think the prospective move doesn’t appear to be a major factor. ... If this were a team that had been branded and marketed, it would have probably been less significant with the loss of [F Kenyon Martin]. But you have fans who basically went there to see basketball, not so much for the experience. ... Frankly, I think we’ll do better than last year in terms of the number of fans” (Westchester JOURNAL NEWS, 9/28).
SUN-NY DAYS AHEAD: In Arizona, Greg Hansen writes new Suns Owner Robert Sarver’s sports business objective “is not any different than his real estate and banking holdings that made him ridiculously wealthy by the time he was 25. This is a man who has bought 20 banks. ... He’s a businessman who has worked 58 real estate transactions in excess of $2[M].” Sarver, on buying the Suns: “There are enormous tax benefits. By amortizing two-thirds of the amount we paid for the Suns, we’ll recoup half of the $400[M] purchase price in tax savings in the next three years” (ARIZONA DAILY STAR, 9/29).