Want to buy a big-league team with no money down and seller financing? Call Major League Baseball.
That's the essence of the $430 million offer from Frank McCourt, the Boston real estate developer, to buy the Dodgers from News Corp. The offer was being reviewed by MLB officials last week, but it's hard to understand why it was receiving serious consideration.
We understand that Major League Baseball is selling in a buyer's market, but there's still no reason to consider a purchase plan structured like this. We can't help but be reminded of furniture store chains ("No payments until June 2005!") or used-car lots ("We tote the note!").
MLB Commissioner Bud Selig should know better. He is a former auto dealer, and it's hard to believe he let many cars off the lot with no cash changing hands. In fact, Selig's own team, the Milwaukee Brewers, also is on the market. One suspects Selig and his ownership group would not react warmly to a suitor who wanted to buy the team with borrowed money.
McCourt intends to sell some of his real estate holdings to repay the loans, and that may take time. Yet baseball must ensure that the prospective owner of one of its crown-jewel franchises is able to support the team properly, immediately, and over the longterm. The league has a strong debt-equity policy, and for good cause, and that policy alone is enough to justify careful scrutiny.
Baseball has made much of its financial problems in recent years, but underlying the short-term losses for owners has been the promise of long-term gains — franchises inevitably appreciate in value, we were told, and owners will realize their profits when the team is sold. Now, this calculus seems in jeopardy.
So many of MLB's financial issues depend for their solutions on franchise ownership that is emotionally invested in the league and committed to the common welfare. Owners ought also to be invested in their own teams.
