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Volume 21 No. 1
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JPMorgan-led group loaned $300 million to new owners of Marlins

JPMorgan led a consortium of banks lending $300 million to the new ownership group of the Miami Marlins, finance sources said.

A group led by Bruce Sherman and Derek Jeter closed on the $1.2 billion transaction in October after struggling over many months to raise funds. There is roughly an additional $200 million of debt (in preferred equity and $100 million from the MLB leaguewide loan pool); Sherman put in $400 million, and the remainder came in small chunks from investors such as Jeter.

The club is trying to raise $250 million more in equity, signaling the financial challenges that the team faces. The club is a perennial money loser and has struggled with attendance and TV ratings. In response, the club is seeking to offload last season’s National League MVP, Giancarlo Stanton, and the $295 million remaining on his contract.

Bankers who have seen the lending documents say the turnaround story is straightforward: Slash payroll, increase attendance and sign a better TV deal in the coming years. How the club hopes to boost attendance by slashing payroll is a question several finance sources asked.

There was plenty of appetite for the JPMorgan loan among other lenders, in part because of the general desire for sports debt in finance markets, and also due to the strength of MLB.

JPMorgan and the Marlins declined to comment.

Because MLB restrictions link the right to borrow to cash flow, the Marlins would have needed a waiver from the league for the $300 million loans, sources said (as the club has no positive cash flow). The waiver is based on projected future cash flows, sources said.