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SBD/September 2, 2011/FranchisesPrint All
The Mets will "try to sell smaller minority stakes, in the range of $20 million apiece, to raise the $200 million the team had hoped to receive" from David Einhorn, according to sources cited by Zuckerman, Futterman & Costa of the WALL STREET JOURNAL. Negotiations with Einhorn fell through Thursday, and a source said that Mets Owners the Wilpons and Saul Katz will "reach out first to friends and family" regarding potential investment in the team. The Mets are "facing losses of roughly $70 million this year," but their willingness to end negotiations with Einhorn "may be a sign of renewed confidence within the organization over its finances." The Wilpons and Katz on Thursday said, "Ownership has provided additional capital to cover all 2011 losses and is moving forward with the necessary resources to continue to operate the franchise" (WALL STREET JOURNAL, 9/2). A Mets source emphasized that any new investors will have "no path to ownership" (NEWSDAY, 9/2). In N.Y., DeCambre & Kosman report the Wilpons and Katz "either have reached out to or are planning to reach out to a number of prospective investors," including Skybridge Capital Managing Partner Anthony Scaramucci, BTIG co-Founder Steve Starker and Marquis Jets co-Founder Ken Dichter. Banks, including JPMorgan, that have provided loans to MLB are "not expected to balk at the Mets' latest move" (N.Y. POST, 9/2). Newsday's David Lennon said, "I think the Wilpons will find other investors for this team and I think in the case of Einhorn, that was kind of a quick fix" (“Loud Mouths,” SNY, 9/1). In N.Y., Belson & Sandomir note in some ways, selling 1-2% shares of a team is "easier than trying to reach an agreement with one wealthy person or group for a 20 or 30 percent stake." Deals for "small shares of teams are more likely to win approval from Major League Baseball and from the banks, if loans are needed" (N.Y. TIMES, 9/2).
THE ROOT OF THE PROBLEM: Scaramucci, who previously expressed interest in a minority stake in the Mets, said the Wilpons and Katz "never wanted to give up control of that organization ... (and) my guess is that David wanted more than just to be a passive owner of that team say over a five or ten-year period of time." He added, "I think that's really where the strugle was" ("Strategy Session," CNBC, 9/1). In N.Y., DeCambre, Venezia & Whitehouse note the Wilpons and Katz "worried" that the proposed deal with Einhorn could eventually give him control of the team. One of the "major sticking points was a provision that would have allowed him to acquire a controlling stake in the team if he wasn't repaid his investment in five years." He said MLB Commissioner Bud Selig "assured me this should be no problem." Einhorn said that the deal he "thought was finalized in May started breaking down late last week when the Mets owners made 'extensive' last-minute changes." Einhorn added, "I didn't hear another word about it until late last week. ... I was surprised. I was very surprised." Einhorn indicated that the Mets "jerked him around starting in July, when he allowed the exclusive negotiation period to expire in good faith -- with the assumption that they were on firm footing." He said, "I received repeated assurances by the Mets' investment bankers that we had a deal" (N.Y. POST, 9/2). Fred Wilpon disputed Einhorn's assertions, saying, "We did not make any changes in the agreement or lobby against anything." In N.Y., Richard Sandomir notes talks broke down, in part, over Einhorn's "desire to be preapproved by Major League Baseball as the team's majority owner in anticipation that he might be able to buy more than 50 percent of the team in coming years." In addition, Einhorn reportedly was "seeking considerable input as a limited partner, which also may have factored in the talks' breakdown" (N.Y. TIMES, 9/2). Einhorn Thursday said further negotiations with the Wilpons would be "pointless" (CBSSPORTS.com, 9/1).
Frank McCourt reportedly has been offered $1.2B to sell the Dodgers to a group led by L.A. Marathon Founder Bill Burke and "indirectly financed by the government of China," according to Bill Shaikin of the L.A. TIMES. The proposed sale price "would set a record" for an MLB team. But the bid "was received with skepticism within MLB, where executives wondered whether the proposal might be used by McCourt to stir negotiations with other potential buyers or to persuade a Bankruptcy Court judge to keep McCourt in charge of the team." A source said that the offer, disclosed in a letter to McCourt on Tuesday, was "unsolicited." It is "uncertain whether the embattled Dodgers owner is receptive to the offer." The bid was "presented on behalf of the Burke group by Signal Capital Management of New York." The letter indicated that the bid terms "call for an all-cash payment to buy the Dodgers, all real estate related to the team and the team's media rights." The letter also states that the offer is open for 21 days, with "the goal of closing a deal within 90 days, subject to the approvals of MLB and the Bankruptcy Court." The letter "did not specify who would finance the Burke bid, other than to say the money would come from 'certain state-owned investment institutions of the People's Republic of China' and unidentified American investors." One source said that McCourt has "spoken with at least two other groups about a sale of some portion of the Dodgers and could use the $1.2 billion as a minimum value in those discussions" (L.A. TIMES, 9/2). Sources said that this "is not the first billion-dollar bid" for the Dodgers. One source added that it is the latest "in a line of bids trying to capitalize on Frank McCourt's tenuous hold on the Dodgers" (SPORTS.YAHOO.com, 9/1).
RED FOR THE WHITE AND BLUE? In L.A., Vincent Bonsignore notes "only time will tell how serious all this actually is." Bonsignore: "What will Major League Baseball think of 'certain state-owned investment institutions of the People's Republic of China' owning one of its storied franchises? And how inclined will McCourt be to give up his silly fight to retain ownership? ... Chances are McCourt will pass, still intent to fight this thing till the bitter end" (L.A. DAILY NEWS, 9/2). YAHOO SPORTS' David Brown writes, "Sounds like the Chinese are trying to make McCourt an offer he can't refuse." MLB Commissioner Bud Selig "wants McCourt out -- but would he take ol' Red China as a business partner as a means to an end?" Foreign investment "is rare, but isn't new in Major League Baseball; a group from Japan owns a stake in the Seattle Mariners." Still, the U.S.' "relationship with China is a little different." Brown added, "The men from China might not even be the issue here. Does McCourt even want to sell his beloved parking lots, along with the rest of the Dodgers? Considering how financially leveraged he's become -- with the club filing for bankruptcy and all -- selling the Dodgers for that much cash money might be the only way to get himself out of debt" (SPORTS.YAHOO.com, 9/1). ESPN L.A.'s Ramona Shelburne wrote under the header, "Right Owner Matters, Not The Price Tag" (ESPNLA.com, 9/1).
The Nationals Saturday night will hold their first postgame, in-stadium concert with rock band Lifehouse, part of an aggressive series of promotions and discounts slated for the Labor Day weekend. Other efforts will include $5 ticket availability both Friday and Monday, and Sunday programming that includes a set of youth initiatives and an exhibition softball game involving local celebrities and the Wounded Warrior Amputee Softball Team. The weekend set of games will also include an extensive set of food and beverage coupons distributed through club sponsor the Washington Post. "This is part of an overall effort to generate new programs around our team and bring in new fans," said Nationals COO Andy Feffer. "It's sort of an interesting case study of how you stay relevant when you're not in a pennant race and when you have injuries to key players this year like we did with [P Stephen] Strasburg and [3B Ryan] Zimmerman." Feffer said at least 125,000 in total attendance for the set of four weekend games is likely. Before slating the Lifehouse concert, the Nationals consulted with several other clubs that have pursued similar initiatives, including the Rays and Pirates, as well as MLB. Meanwhile, a large crowd is also expected Tuesday for the return of Strasburg to the majors after more than a year's absence due to Tommy John surgery. Specific ticket sales figures thus far were not available. But Feffer said, "It will be a high-demand, at least near-capacity, game. And to have that the Tuesday after Labor Day is a big indicator of the excitement Strasburg generates."