The clock is ticking on the sale of the Houston Astros, with only 23 days left until the Nov. 30 expiration of the agreement between would-be buyer Jim Crane and the team, sources said.
MLB owners meet next week in Milwaukee, but it is uncertain whether the logjam can be broken. MLB wants Crane to agree to move the team to the American League before approving the deal; Crane wants a significant price reduction, far more than $50 million, for the move, the sources said.
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Astros owner Drayton McLane (left) and Jim Crane are shown on May 16 when they first announced their sale agreement.
Photo by: AP IMAGES
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When Crane and Astros owner Drayton McLane announced their sale agreement on May 16, few imagined the deal not closing. The $680 million agreed-to price is one of the highest for a baseball team, especially noteworthy given the Astros’ recent poor on-field record. Crane also had previously been vetted in other purchase attempts, notwithstanding later reports of employment and war-profiteering issues with his construction company, issues that sources said had long ago been considered and dismissed by MLB.
The sides expected the owners to vote on the deal in August, but shortly before that month’s owners meeting in Cooperstown, N.Y., MLB took the sale off the agenda. Soon after, MLB communicated to the parties that it wished for the Astros to move leagues.
According to the sources, the Crane group believes such a move changes the economics of the purchase. Because of higher spending in the American League, fueled in part by the designated hitter but also by having to compete with bulging-payroll teams like the New York Yankees and Boston Red Sox, the Crane group thinks it could cost as much as $10 million more annually in payroll to operate as an AL club, the sources said.
George Postolos, who is spearheading the Crane acquisition effort, declined to comment.
“Certainly from a cost-benefit analysis you have to look at the differences between the two leagues, the DH being one, and frankly you have to look at who the competition is and how they run their business,” said Bob Caporale, chairman of Game Plan, which advises on the sale of pro sports teams. “It is well-known the Yankees and Red Sox are always going to be in that upper end and always pushing the envelope.”
MLB has offered about $50 million to the Crane group for the move, an amount that would be achieved by a combination of a price reduction and cash from MLB, the sources said. The Crane group wants significantly more.
There are other factors that also upset the Crane group, the sources said. Moving into the AL West, as would be expected, would give the Astros three divisional rivals on the West Coast and so roughly a dozen more games starting at 9 p.m. local time, which could hurt TV ratings. It’s possible the change of leagues could even trigger provisions in the team’s regional sports TV deal to allow the cable operator to redo it.
The Astros, in 2013, are slated to have their games air on the new Comcast SportsNet Houston, which debuts next year and also will carry the NBA Houston Rockets.
Crane also would need to refinance his debt deal with JPMorgan Chase because of the key change in terms. Similarly, he would need to rework equity deals with smaller investors.
Houston has been in the National League since the club’s inception in 1962 as the Colt .45s.
MLB wants to move a team to the AL to balance the junior and senior leagues. Currently, there are 14 teams in the AL and 16 in the NL. While the MLB Players Association has not conditioned its agreement to adding another wild card playoff entrant to each league on balancing the number of teams in the AL and NL, sources said the union has made its opinion clear that it would like to see 15 teams in each league.
The MLBPA declined to comment for this story, as did MLB. The union is negotiating a new collective-bargaining agreement with MLB.
