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Experts call on MLB to step in on Marlins sale

The Miami Marlins sale is chaotic and disorganized, and requires Major League Baseball to step in and fix it, sports finance experts said.

“I have done a lot of deals in my life, and the commissioner needs to step in and say to [Marlins owner Jeffrey] Loria, ‘You ran your process, now drop the price and get it done,’” said one banker familiar with the situation.

This banker and several others, either connected to the process or outside of it, voiced a plea to MLB to straighten out the situation. The bankers spoke on the condition of anonymity because they are involved in the Marlins sale or do business with MLB.

In a tumultuous 48-hour period during MLB’s All-Star Game activities earlier this month in Miami, when many had expected at one time for a deal to get done, conflicting media reports declared two of the three bidding groups as nearing a deal. Then Loria himself said he wasn’t sure when or if there would even be a sale.

Sports finance experts say MLB should push Marlins owner Jeffrey Loria to get a deal done.
Photo by: GETTY IMAGES
“Everybody sells something, maybe. Everybody gets married or unmarried, maybe,” Loria said at the time.

For much of this year, Marlins President David Samson has run the sales process, which now involves three known groups: one led by former New York Yankees shortstop Derek Jeter; a second led by Miami-based businessman Jorge Mas; and a third involving former Florida Gov. Jeb Bush and Tagg Romney, son of former Republican presidential candidate Mitt Romney. Among the three, only one has a traditional adviser: Mas is using The Raine Group.

Several problems have emerged. Samson does not have experience running a team sale, and while hiring a banker as most teams do wouldn’t solve all problems, the process could have been smoother.

However, the Marlins appear to be immune to complaints their price is too high. An initial value of $1.6 billion has proved too high for a club slated to lose as much as $150 million between this year and next, not to mention one with management that alienated the community during its push for public funding for Marlins Park. The club is also saddled with $300 million in future player salary obligations, and has one of the worst local TV deals in baseball, paying about $20 million annually.

Problems exist, too, on the bidding side. One sports finance source said bidders such as Jeter and Romney are offering little of their own equity, and would take a fee for running the team and a percentage of assets, similar to how a hedge fund operates.

That type of structure in which Jeter and Romney are trying to line up deep-pocketed partners to back them runs counter to MLB Commissioner Rob Manfred’s stated preference for having a lead investor in a team also serve as its designated control executive.

Meanwhile, sources said Mas, the wealthiest of the known bidders, is considering dropping out of the hunt altogether. Representatives of the bidding groups could not be reached or did not want to comment.

Several MLB team sales have produced drama and unexpected twists, notably the bankruptcies for the Texas Rangers and Los Angeles Dodgers, but most that have stayed outside a courtroom have followed a more orderly process. Former MLB Commissioner Bud Selig was known within the industry for keeping a tight hold on many team sales and ultimately landing his preferred bidder, such as the sale of the Washington Nationals in 2006. Leaks and rampant erroneous media reports were rare if not unheard of during his lengthy tenure, a contrast Manfred essentially referenced during the All-Star Game.

“My only concern with the timing perspective is that given we’ve had these leaks, the sooner we get to resolution, the sooner the sale of the club is no longer a story, and the sooner people can go back to covering baseball, which is what I would prefer,” Manfred said.

League sources said there is no plan to take a more active role in the sale or clamp down on bidding groups speaking about their efforts. Part of that deference is thought to stem from the fact that despite the drama surrounding the sale, nothing is directly harming the day-to-day operations of the club or play on the field, unlike how the Dodgers’ finances became intertwined with the divorce of former club owners Frank and Jamie McCourt.

But the Marlins are also a large recipient of MLB revenue sharing, and many clubs are eager to see a changing of the guard in a market still critically important for baseball’s outreach to Latin America.

One sports banker said he has received numerous calls from clients asking advice after being solicited for contributions by Jeter and Romney, and has advised them to turn the requests down because he considers the sale price completely out of line with team economics.

“It’s like herpes,” the banker said of the calls. “It never goes away.”

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