OCT. 2: The sale of the Marlins to the Sherman/Jeter group closed this morning, reports Jackson (on Twitter). Their group now officially owns the Marlins, and a press conference with new ownership will be held later this week.
SEPT. 27: The 29 other Major League owners have approved the sale of the Marlins to the ownership group led by Derek Jeter and Bruce Sherman, Barry Jackson of the Miami Herald reports (Twitter link). As per an announcement from Major League Baseball, the 29 owners voted unanimously in favor of the Jeter/Sherman group in a conference call held this afternoon. The approval will only be fully official once the sale closes between the new owners and outgoing Marlins owner Jeffrey Loria, though that deal is expected to be finalized next week. FanRag Sports’ Jon Heyman reported yesterday that a vote would be coming soon, though the quick turn-around is still something of a surprise, as Heyman’s report indicated it would be a matter of days or weeks.
The news brings a somewhat abrupt end to a rather drawn-out sale process, as several prominent names from the business, entertainment, political and baseball worlds had been mentioned as candidates to buy the Marlins from Jeffrey Loria. Jeter had long been connected to former Florida governor Jeb Bush as part of a bid, though after Bush dropped out of the partnership in May, Jeter changed course with new investors, most prominently Sherman, co-founder of the Private Capital Management wealth-management firm. The group ended up winning the bidding at the reported price of $1.2 billion.
As per Heyman’s report yesterday, that $1.2 billion price tag breaks down as $800MM in actual cash on hand and $400MM of debt. Sherman will own 46 percent of the team and will be the Marlins’ control person in the eyes of Major League Baseball. Jeter will reportedly own four percent of the franchise and become the Marlins’ CEO, as well as overseeing the baseball operations department.
“I congratulate Mr. Sherman on receiving approval from the Major League clubs as the new control person of the Marlins and look forward to Mr. Jeter’s ownership and CEO role following his extraordinary career as a player,” MLB Commissioner Rob Manfred said in the league’s official news release.
With the sale all but complete, attention will now fully shift to what the change in ownership will mean for the Marlins both on and off the field as the franchise moves on from the controversial Loria era. There have already been early reports of yet another rebuild in Miami as the new owners are looking to cut payroll, potentially more than halving the Marlins’ $115MM Opening Day payroll from this season if Giancarlo Stanton is traded.
Jeter always wins.
“Did you have any doubt?”
Nice one.
Jeter is a weasel
Why?
Jealous much?
Bitter?
Mike…. Why would anyone be bitter about Jeter? Happy belated birthday.
Just curious — How much of that $400 million debt will increase when Jeter starts taking out his $5 million/year payback, er, salary next month? And will his percentage of ownership decrease as his initial investment liquidates?
Taking your money back once the deal is struck seems like a strange way to become a baseball CEO.
Lester you have been down on Jeter since the beginning of this sale. You posted about there being no way he’d be nothing but a figure head,having no real power in baseball operations. So why not wait till the dust completely settles to see what direction things go in.
Thanks for asking. It’s not about Jeter per se. If it were Ernie Banks, Lou Gehrig, or Mohandas Gandhi doing this, I’d still wonder. Yes, you rightly point out that I was mistaken in thinking that no business mavens would grant so much apparent power to a minor investor. It still surprises me.
Also I am relating a couple of facts and questioning the sale procedure, which so many people think is an odd setup with such a large amount of debt.
1) He IS taking his investment back in the form of salary over five years. Isn’t that unusual?
2) Does his percentage of ownership thus decrease over time?
I think those are valid questions. That, and the puzzling way he let go of four longtime Marlins in the FO by delegating the task instead of doing it personally, seem to be odd behavior by such a stand-up guy.
Yes, I will look forward to seeing what happens. I’m not a business expert and didn’t sleep in a Holiday Inn last night, so if you have answers to those questions, I’d like to see them.
(BTW, when people ask these questions “after the dust settles”, they are often accused of having 20/20 Hindsight.)
Good questions that deserve answers. Thanks for the post.
I’m a big Yankees fan (full disclosure), but usually in business, the venture has to be in the black in order for the original investors to get their startup capital back. Sadly, I am not one of the investors, but I would have a problem with him getting his capital back while we all shoulder $400mm.
The only thing I can think of is that we needed the cashe of his name for our group to win ?
I guess with Jeter, it’s always about the intangibles…
Hey Lester, does Theo Epstein earn a substantial salary with the Cubs?
It’s your math that doesn’t add up as your labels are personal assessments.
If you get past your resentment then you would realize that Jeter will earn his salary with hard work and the intangibles that he brings. His brand is winning and he clearly defined this more than any baseball player over the past two decades.
So drop the rant and move on
Mike yanks: What “rant”? What does Theo have to do with it? Theo didn’t invest a small amount and then take it back as salary. Don’t try to deflect from the point.
What math errors? Show me where the numbers are wrong.
“I’m from Missouri — you’ve got to Show Me.”
So give me some evidence that shows you know something, at least something that’s factual.
So show me something more than puerile insults.
Still waiting, mikeyank55…..or anyone else who can answer those questions.
Hey mikeyank does Theo own part of the Cubs? No! So what is your point?
I’m going to disagree with you to the extent that I don’t think it’s anyone’s business, except for MLB, what Jeter’s financial arrangement with his partners is. The only real issue is whether the new ownership has a rational plan for the future and is sufficiently well-capitalized to attempt to put a quality product on the field. Whatever Jeter is taking out isn’t going to impact that.
mike156: So no one can question such an unusual tactic?
Even in regard to your position — this is not a well-capitalized venture, with $400 million in debt.
And the projections are that the Marlins will slash budget to a bare-bones level. That $25 million payback would indeed have an impact on the product on the field: It could be used to draft or sign decent young talent.
“Show me where the numbers are wrong.”
None of us, not you, lester, not mikeyank and certainly not me, have seen the partnership agreement between Jeter and partners. Hence all this speculation about its terms is exactly that–mere speculation. On both sides, BTW. This argument would be so much more relevant if even one of the players were operating with actual knowledge rather than pure speculation.
Lester is correct to point out that Jeter is being repaid his $20MM on extremely preferential terms. Not to mention that the 4% stake Jeter bought with that $20MM would be worth $32MM if the Marlins repaid all their creditors in full tomorrow and $48MM on paper given their $1.2B valuation.
As a potential investor or CFO, I’d be suspicious of anyone earning equity on such terms unless he was as indispensable to the company’s success as the new Marlins ownership is arguing Jeter will be.
Nothing illegal or unethical here, but definitely much more than it would be worth granting most minority investors, in any setting.
1. We don’t actually know the terms
2. I don’t think you understand how capitalization works. If the Marlins magically had $400M in cash tomorrow, you are right in stating that they would be worth $400M more and Jeter would be happy, in real life they would need to issue new debt or equity leading to dilution. If companies could create value by retiring debt, you would think corporate debt wouldn’t exist.
A new era in Marlins history.
I wonder who Derek Jeter will get someone else to fire next….
That was fake news since he could not fire anyone until after today. He was not part of the ownership group until this vote.
But keep on hating. Jeter is laughing all the way to the bank with all those WS rings on his fingers.
It’s like Christmas
Now, move the team. The only way money can be made.
The shame is that trading Stanton and Ozuna will poison the baseball waters around Miami to the point where the team will no longer be viable there. A shame since no market should be more baseball friendly than Miami. But decades of roster purges have dried up any interest in the locals buying tickets. What the H will Miami do with that white elephant of a Stadium? Empty without any realistic chance of snagging a tenant.
Neither FL team has ever really showed that it can build a fan base. Loria being Loria is part of it but not nearly all of it. Florida is a big time baseball state but that just doesn’t really extend to their MLB teams.
JD nailed it. The Rays and Marlins draws are horrible. Both teams would be better off moving somewhere else.
Hey CT–the waters are poisoned by the history of a franchise that built and baited. The Stanton contract was a farce from the moments that Loria signed it. It was backloaded to get him to sell the team without paying.
If they have to clean the slate one more time and build a solid organization from the ground up, then they can afford to do it. He can be dealt to a larger market that can afford the luxury of a huge salary piece to become an instant box office piece.
Miami wasn’t drawing with Stanton. It needs desperately to build a nucleus of young talent and then nurture it to make a competitive team. The Marlins couldn’t afford his current salary and the future salary was out of their ability; hence Loria sold.
The Marlins have never had a sell out. The only.2 times was the WBC. They should’ve never approved a new stadium that never has more than 5000 fans per home game. Half the teams that won their division don’t either. Well just the Nats and Indians.
Let’s talk reducing payroll by at least $50M and putting a young, exciting team on the field. (This is a totally serious proposal!)
Miami trades 25-man roster and DL players to Philly for the same. Net savings to Miami: $55-65
Can Philly afford it? Of course. Would they become a better team? Probably. Would they draw more fan interest? Definitely.
Would Miami field a competitive team? Absolutely. Would the team make money? Of course.
Now, the question could be raised: Would Philly do this? The answer: Let them keep a player or three if that’s what it takes. This deal takes care of Miami’s needs and lights up Philly.
Trading Stanton to boston for mookie betts would reduce salary and still give them a young allstar
So Boston would take on Stanton’s $295M salary AND lose this “young all star”? Betts has a 21.9 WAR over the last 3 years, Stanton has a 13.8.
If Stanton were a free agent today – would he get a 10 year $295M deal?
Unless this groups has buckets of cash somewhere that they’ll be able to dip into to dramatically lessen the debt-load, the Marlins will continue struggling financially for years to come.
At least until 2020 when they can get a new TV deal. Miami has a very large DMA, so the next TV deal will be much larger than MLB’s lowest TV contract that Loria negotiated.
There is also a chance that the overall value of local and/or regional television deals has already peaked right around the time MIA is ready to find their new broadcast home.
Dodgers ownership negotiated its massive but much maligned Time Warner Cable deal at the height of the market. TWC was desperate to remain relevant and significantly overpaid for the only live sports programming franchise in Los Angeles still available to defeat DirecTV locally and defend TWC from Amazon, AT&T, and others of their ilk.
Shoulda been Jorge Mas. Smh. I’ll be skeptical as a Marlins fan until this group proves me wrong. I’m ok with a complete rebuild if done well, I.E. White Sox trades the last 2 years. Then focus on a strong TV deal and getting bigger crowds in.
Wonder if Jeter will keep the Don as manager of the team? Being he was a yankee stand out in his day
What I find interesting is that the new ownership is assuming $400 million in team debt in the deal and Loria is walking away with $800 million. Isn’t the reason Loria was selling that MLB was concerned about the debt to revenue ratio of the team?
Could be that Manfred took a page out of the used car salesman Bud Selig’s book, feigning concern about debt-to-revenue ratio whenever a particular owner became too much of a distraction or nuisance and ignoring that it was a problem when the only white knight that MLB could attract to said franchise couldn’t measure up to that standard.
Provides 1/48th of the investment, gets 4% of the value.
And a return on that investment over 5 years.
YEAH JEETS!
First thing jeter needs to do is restructure Stanton contract to only the opt out for 2019. And give him 75mil for 3 years. Stanton wants to win and he’ll never get a taste of the postseason let alone win a championship with Miami.
Yeah, because Stanton will be totally cool with Jeter knocking on his door and saying “Giancarlo, what if we just forgot about $200M that I owe you?”
Why buy the team if you can’t afford the $100+ million payroll. Why keep Hill when everyone else is getting thrown overboard. This looks like its going to be a trainwreck.
So effective today, Jeter will now do the firings?
Glad it’s complete. Now trade the Phils Stanton and Yelich
How much do you think he actually owns
Marlins can draw people as long as they win… their 1997 and 2003 teams weren’t at the bottom of attendance from what I recall. Just, as a small timid market club, they need to change their approach to bring fans out. To make the game more appealing to different demographics
Agree 100%
You are right. No MLB team should be called timid….
In 2003 the only teams with worse attendance were the Rays and Expos. In 1997 they were lower half this team has never drawn..Miami has a rep for not always supporting their pro franchises.
I think if Miami Marlins had half the success of the Miami Heat there’s hope.
Who is going to be their next Lebron or Wade? Pat Riley?
Dan Jennings: I’m available, just sayin’
This is going to be fun to watch. Wonder if Jete will bark his orders via FaceTime from St. Jetersburg. Jete vs. the Ivy leagures. Crippling debt always wins out.
If Sherman finds a better CEO, does Jeter refuse to move out of his position (despite the fact that he clearly is not as good at CEO as “the new guy”) resulting in “the new guy” having to move over to the left as CFO?