SBJ/July 18 - 24, 2005/Other News

Groups show interest in Reds

A half-dozen investment groups have expressed an interest in buying the Cincinnati Reds. All six want more than the 51.5 percent in ownership stakes that are on the market.

The Reds have been under the control of Carl Lindner Jr. since 1999.
All are hoping to take operating control of the team from Cincinnati financier Carl Lindner Jr.

“Everyone we’re talking to is interested in ultimately running the team and being the principal owner,” said Steve Greenberg, managing director of Allen & Co., a New York-based investment banking firm. “Whether that happens in the near future or distant future is really up to Mr. Lindner.”

Greenberg was hired in March to sell shares on behalf of three of the team’s minority shareholders — Louis Nippert, George Strike and the Gannett Co. Greenberg described the sale process as being “probably in the third or fourth inning,” but predicted he’ll have a deal by the end of the baseball season. He wouldn’t identify any prospective ownership groups.

Four of the six have received Major League Baseball’s blessing to participate in the bidding process, he said. Two others are awaiting such approval, which is required for the groups to receive an offering document.

Recent reports indicate Broadway producer Rick Steiner, who maintains an office in Cincinnati, is part of one bidding group. Steiner’s business partner, Rocco Landesman, recently told The New York Times that he might sell a piece of his theater operating company to finance the Reds purchase.

Reds ownership percentages
Carl Lindner Jr.
37%
Louise Nippert
29%
George Strike
12%
William Reik
11%
Gannett Co.
10.5%
Lindner acquired operating control of the Reds by paying Marge Schott $67 million for her controlling interest in the team in 1999. He solidified his hold on the club by signing a “CEO for life” contract with the club’s other owners. Both Lindner and minority owner William Reik, a New York-based investment banker, have a right to match any offer for other minority shares.

When the sale of the Nippert shares was announced in March, Lindner and Reik both said they weren’t interested in selling. Lindner has given no indication since then that he’s changed his position. Last week, Lindner declined to comment.

But one expert in sports economics said this could be the best possible time for Lindner to sell his shares. Why? Because franchise values are rising at a relatively modest rate of 3 percent to 4 percent a year, said Dennis Coates, a professor of economics at the University of Maryland-Baltimore County. With the minority shares in play, Lindner has “added power” to negotiate a selling price for his shares that exceeds the annual increase in value he can expect over the next decade.

“Given his circumstances, he probably could do as well or better by selling it now and doing something else with the money,” Coates said.

Dan Monk writes for Business Courier in Cincinnati.

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