SBD/March 23, 2012/Franchises

Padres' Moorad Steps Down As CEO Leaving Doubts About Future Ownership Of Team

Moorad will retain Vice Chair title and continue work on a 20-year deal with FSN
Padres Vice Chair Jeff Moorad Thursday said he will relinquish the CEO title, perhaps ending his lengthy, staged bid to purchase the franchise from Chair John Moores and further extending the ownership soap opera that has enveloped the team for roughly a half decade. Moorad earlier this month tabled his bid to accelerate the purchase from Moores and gain designed control status of the team, a move at the time that was said to be more of a procedural step. But in the face of continued opposition from current team owners, according to industry sources, Moorad has taken the further step to remove himself from day-to-day operations of the club. Moorad, however, will retain the vice chair title and continue work on a 20-year deal with FSN worth an estimated $1B to create a new regional sports network in San Diego. The network, not yet formally approved by MLB, aired its first Padres Spring Training game last week. Padres President & COO Tom Garfinkel will assume the CEO title and duties on an interim basis. Moorad had wanted to complete the estimated $530M acquisition of the club since early January, but a scheduled vote on the deal was tabled at league quarterly meetings due to what MLB Commissioner Bud Selig described as "economic concerns." Moorad, who currently owns 49% of the club, and Moores, owner of the other 51%, both declined to comment further, and it is not fully clear what will happen to the proposed deal between them, or their existing partnership that also includes several other investors brought in under Moorad. Under the original deal signed in early '09, Moorad had a five-year timetable to buy the club from Moores. If Moores were to put the Padres back out on the open market, perhaps enticing one of the soon-to-be-unsuccessful bidders for the Dodgers, it is highly likely he would be able to command a far higher price than what he agreed to with Moorad given the ongoing rise in baseball cable TV rights fees (Eric Fisher, SportsBusiness Journal).

RESISTANCE IS FUTILE? In San Diego, Tim Sullivan writes at the least, Moorad's decision "casts serious doubt on ownership control of the team." The ultimate meaning of Thursday’s news "may take months to unravel." Padres P Clayton Richard: "Shocker is a good word." The prospect of Moorad gaining controlling interest in the club was "met with stern resistance" from a group of MLB owners spearheaded by White Sox Chair Jerry Reinsdorf and D'Backs Managing Partner Ken Kendrick. Moorad served as CEO and part Owner of the D'Backs from '05-09. Sources believe that Moores himself "ultimately joined the ranks of Moorad’s opponents" (SAN DIEGO UNION-TRIBUNE, 3/23).

FACTORING IN FRANK: FOX SPORTS' Jon Paul Morosi noted the Padres will "never be as popular or as rich as their neighbors to the north," but now the "franchises are linked." MLB officials are "wary of highly leveraged owners" because of history with outgoing Dodgers Owner Frank McCourt. Morosi wrote, "Right now, the wise play for Moores is to wait for another 10 days. After that, Moores will be able to say he owns the only baseball franchise known to be for sale." Reports indicate that the Dodgers "could sell for more than $1.5 billion." Moores "won’t be able to get anything close to that for the Padres." But if he lets the Dodgers "set the record for the highest franchise sale price, he can engage the L.A. runners-up and offer his wares for more than Moorad was willing to pay" (FOXSPORTS.com, 3/22). The SAN DIEGO UNION-TRIBUNE's Sullivan notes capital gains tax breaks scheduled to expire next year "could provide Moores a multimillion dollar incentive to sell sooner rather than later." But since Moorad’s investment group "retains an option on the 51 percent of the franchise it doesn’t already own for two more years, Moores’ exit strategy might be encumbered" (SAN DIEGO UNION-TRIBUNE, 3/23).

CALIFORNIA DREAMIN': In California, Dan Hayes notes it remains unclear "how Moorad's stepping down will affect his group's attempt to move the organization's Triple-A franchise" to Escondido, Calif. Moorad's group purchased the PCL Tucson Padres in Dec. '10 with the "intention of moving them into a city-funded downtown ballpark" (NORTH COUNTY TIMES, 3/23).
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San Diego Padres, Franchises

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