David Blitzer, partial owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils, is acquiring a large minority stake in the Cleveland Guardians, tweets Jon Heyman of the MLB Network. Perhaps of more interest, Heyman further reports that the deal gives Blitzer an option to become the majority owner around five to six years from now.
Eben Novy-Williams and Scott Soshnick of Sportico reported this morning that Blitzer was in talks with the Guardians about acquiring a significant minority stake. Those reports come on the same day that Zack Meisel of The Athletic published his own report indicating that Guardians majority owner Paul Dolan has enlisted investment banking firm Allen & Co. to assist him in finding a buyer for a share of the team that could be as large as 30 to 40 percent. In a statement to reporters (Twitter link via Mandy Bell of MLB.com), Dolan confirmed that he and Blitzer have held “meaningful” discussions but chose not to comment any further on the negotiations.
Dolan’s search for a new investment partner comes in the wake of John Sherman’s departure from the ownership group back in 2019. Sherman held a significant minority stake himself when with the club, but he divested his interest in order to purchase a majority stake of the Kansas City Royals from then-owner David Glass. Sherman paid more than $1 billion in his purchase of the Royals, and his former shares of the Indians/Guardians franchise have been sitting in escrow since his departure, per Meisel.
Forbes’ most recent franchise valuation estimates (back in March) pegged Cleveland at $1.16 billion. Sportico’s most recent valuation was a $1.375 billion sum. Meisel, meanwhile, suggests that Dolan has placed a slightly more aggressive $1.4 billion valuation on the team. It’s not clear how amenable Blitzer has been to that $1.4 billion sum, but Sportico’s report indicates that he’s currently negotiating over what would be a 35 percent stake. That’d mean something in the vicinity of a $490MM investment (based on that $1.4 billion figure) from Blitzer, who’d be buying up Sherman’s former shares as well as some of Dolan’s stake.
This isn’t the first time that Blitzer has sought to expand his portfolio into the baseball world. Many fans may recall that Blitzer and Sixers/Devils majority owner Josh Harris were at one point seeking to purchase the Mets from the Wilpon family before being outbid by current owner Steve Cohen. At present, there’s no indication that Harris is a part of the negotiations that have taken place between Dolan and Blitzer, however.
Any sale and/or ownership change can bring about relocation concerns among the fanbase, but it seems quite unlikely any such plans would be in the works even were Blitzer to eventually take control of the club. The Guardians recently inked a 15-year lease extension at Progressive Field, guaranteeing that to be their home site through the 2036 season. The extension also came with the “potential for 10 additional years” to be added onto the agreement, per the team’s announcement at the time. That agreement called for $435MM worth of renovations and upgrades to the stadium, which has been the team’s home since the 1994 season.
The other pressing thought for Guardians fans in the wake of the report would be one of potentially increased payroll capacity, though it should be stressed that a five-year transfer of majority ownership would in no way guarantee a sudden payroll spike. Cleveland’s payroll has plummeted to among the lowest in MLB as they’ve traded away various recognizable names, including Mike Clevinger and Corey Kluber, while simultaneously eschewing any notable spending in free agency. The result is a payroll where Jose Ramirez’s $11MM salary is now the only guaranteed money on the books for Cleveland in 2022, though subsequent arbitration agreements and a smattering of free-agent pickups and/or trade acquisitions will surely boost that figure a bit.
An eventual ownership change could, of course, bring about new spending habits for an organization that has typically been one of the league’s lowest-payroll clubs. That said, the primary drivers of payroll upticks for any team will always be increased revenues through television/streaming rights, gate revenue and/or real estate holdings surrounding the park. It’s unlikely that transitioning to Blitzer or another majority owner would catapult the Guardians into the top third of Major League payrolls at any point, but a new majority owner/control person could certainly impact various organizational spending philosophies (e.g. willingness to spend on rare extensions for key players).