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SBJ/Dec. 6-12, 2010/This Week's Issue
Mandalay: New deals will make us stronger
Published December 6, 2010
Mandalay Baseball Properties President and Chief Executive Art Matin said the company’s portfolio of minor league clubs has emerged much stronger following a flurry of deals over the past several months.
Mandalay last month exercised an option with the New York Yankees and Lackawanna (Pa.) County to purchase the publicly owned Class AAA Scranton/Wilkes-Barre Yankees for $14.6 million. Mandalay will become an equity partner with the New York Yankees for the minor league franchise within their joint venture, SWB Yankees LLC.
The pact follows a four-year run in which Mandalay managed the day-to-day operations of the club. It also follows September deals for Mandalay to purchase the Class AAA Oklahoma City RedHawks from a group led by Bob Funk Sr., and to sell the Class A Hagerstown (Md.) Suns to a group led by Florida businessman Bruce Quinn.
The Suns deal helped fund the RedHawks acquisition.
Along with the Scranton purchase comes $40 million in planned, publicly funded renovations to 21-year-old PNC Field and a long-term lease at $750,000 per year for the club to play there. Numerous steps remain to finalize both the purchase agreement and the stadium-renovation funding, but the deals are expected to be completed.
“We’re very excited about our portfolio as it stands right now,” Matin said. “Adding Oklahoma City and deepening our commitment in Scranton really strengthens the mix. It’s our long-term desire to be in strong baseball markets and execute well within them, and up and down our portfolio, we definitely have that.”
Mandalay also owns the Class A Dayton (Ohio) Dragons, which have sold out 774 consecutive games; Class A Staten Island (N.Y.) Yankees; Class AA Erie (Pa.) SeaWolves; and Class AA Frisco (Texas) RoughRiders. As with Scranton, Mandalay is a co-owner with the MLB Yankees for the Staten Island club.
The timing confluence of all the deals was coincidental, Matin said. The portfolio shuffle also arrives in a period of executive change for the company, as Jon Spoelstra, Mandalay managing director for professional sports franchises, in late October completed a long-planned exodus to focus more on his series of business and management books.
“Each one of these has a pulse of their own,” Matin said. “Oklahoma City, we worked on for nearly a year. Scranton, we were there four years before this [memorandum of understanding] happened. These things have sort of all come together at the same time, but the common undercurrent is that we remain very optimistic about the health of minor league baseball.”
To that end, Matin said the company may add additional teams to the portfolio.
“There’s nothing imminent,” he said, “but we’re definitely investing and building in this business, and we continue to look for unique opportunities that make sense.”
Under the new structure in Scranton, Mandalay and the New York Yankees will seek to address a troubling situation in which total attendance for the club in 2010 fell to 12th in the 14-team International League and has fallen 42 percent since 2007, the first year of both Mandalay’s involvement and the affiliation with the Yankees.
The sale of the franchise at a price now allegedly below market value and the public financing of the stadium renovation, predictably, has generated local controversy in Scranton, including competing lawsuits from Lackawanna County and neighboring Luzerne County.
But county commissioners believed the deal with SWB Yankees was the best way to ensure the long-term survival of pro baseball in northeast Pennsylvania, in part due to state aid for the renovations that required local contributions, with that money derived in part from the franchise sale.
“Basically, the commissioners have viewed this as an opportunity to reinvent baseball in this community,” said Frank Tunis Jr., solicitor for the Lackawanna County Multi-Purpose Stadium Authority, which has owned the franchise and PNC Field. “There aren’t really public funds to continually rehab the stadium as we’ve been, so we’re seizing upon this opportunity.”