In what could be a franchise-altering moment, Nationals owner Mark Lerner tells Barry Svrluga of the Washington Post that the team has enlisted New York-based investment bank Allen & Company to explore the possibility of selling the franchise or adding new investors/partners to the current ownership group. Lerner emphasized that the process is “exploratory” in nature and added that there’s no “set timetable or expectation of a specific outcome.”
The Lerner family purchased the Nationals, formerly the Expos, from Major League Baseball for a sum of $450MM back in 2006 after the former Montreal franchise was folded and moved to Washington, D.C. Forbes recently estimated that the franchise is worth $2 billion — a four percent increase from last year and the 12th-most of any MLB franchise. Sportico placed that same $2 billion estimate on the franchise’s value back in March 2021. Longtime control person Ted Lerner, who’s now 96 years of age, ceded control of the franchise to his son, Mark, back in 2018. At the time, as Svrluga points out, the younger Lerner was adamant that the family would never consider selling the team. Clearly, that mentality has shifted.
The Nationals’ open willingness to explore a sale of the club comes at a time when the on-field product has been largely torn down following last summer’s fire sale, which saw Max Scherzer, Trea Turner, Kyle Schwarber, Daniel Hudson, Yan Gomes, Josh Harrison, Brad Hand and Jon Lester all traded for younger, more controllable players (and, in some cases, salary relief). Of that bunch, Turner was the only one who’d been controlled beyond the 2021 season. He’s now earning $21MM with the Dodgers. The rest of that group signed elsewhere in free agency (or, in Lester’s case, retired).
The Nats did reinvest some of those resources into the 2022 team, but their overall payroll is nearly $40MM lower than its 2021 level. Most notably, Nelson Cruz joined the club on a one-year deal worth a guaranteed $15MM. Cesar Hernandez ($4MM), Anibal Sanchez ($2MM), Steve Cishek ($1.75MM), Ehire Adrianza ($1.5MM), Sean Doolittle ($1.5MM) and Alcides Escobar ($1MM) all signed in the offseason as well, as did non-roster veterans Dee Strange-Gordon and Maikel Franco, who both made the club. None of those players are signed beyond 2022, though Cruz’s deal contains a mutual option for the 2023 season. That’s largely an accounting measure, as mutual options are very rarely exercised by both parties.
When looking at the potential sale of the franchise, there are various complicated factors to consider — even beyond the standard complexities associated with any multi-billion dollar sale of a team. Firstly, the Nationals have been mired in ongoing litigation with the Orioles regarding their television rights fees for the better part of a decade. The Mid-Atlantic Sports Network (MASN) broadcasts Nationals games but is owned and operated by the Angelos family — who also own the Baltimore Orioles. At stake are hundreds of millions of dollars in revenue.
The team’s long-term payroll outlook, of course, also impacts the sale price. That’s one reason that last summer’s broad-reaching sell-off was of some note, but it also shines a particular light on the Nationals’ thus-far unsuccessful efforts to extend superstar Juan Soto, who reportedly rejected a 13-year, $350MM extension this winter.
Of more concern to potential buyers than money that perhaps ought to be earmarked for extending a franchise cornerstone is the money that’s still owed to a host of players who no longer even play for the Nationals. The Lerner family has habitually included deferred money in deals for their free-agent signings as a means of tamping down present-day value. That overwhelming slate of deferrals, however, is beginning to mount.
For instance, the Nationals owe Max Scherzer $15MM in deferred salary each season from 2022-28 — even though he’s now pitching for the division-rival Mets. They’re paying Stephen Strasburg a third $10MM installment in deferred salary from his prior contract this year, before even considering the salary he’ll earn under the new $245MM deal he signed on the heels of his World Series heroics. That new deal for Strasburg calls for him to receive three equal payments of $26,666,667 each July from 2027-29 — the contract itself ends in 2026 — plus a final installment of $3,999,974 on Dec. 31, 2029 (hat tip to Cot’s Contracts for the specific figures).
Those are far from the only deferrals to consider. Patrick Corbin’s $140MM contract contains $10MM in deferrals to be paid out from 2024 through 2026. The Nationals will pay Brad Hand a combined $6.5MM from 2022-24 as part of the one-year, $10.5MM deal he signed to pitch the 2021 season. They are, somewhat incredibly, still even on the hook for $2MM annually to Rafael Soriano through 2025. Soriano retired after the 2015 season.
The enormous slate of deferrals and messy television rights dispute notwithstanding, the Nationals’ franchise value has undeniably skyrocketed from the point at which the Lerner family purchased the team. And given the relative rarity with which Major League franchises are put up for sale, there ought to be considerable interest, whether from an entirely new ownership group or from some wealthy investors looking to get a foot in the door as minority stakeholders with an eye toward growing that share over the years.
Fisher should be next with Oakland.
One of em is 96! Probably has sum heavvvvvvvvvy shares!?
That World Series trophy sure did cost some money and then some… and then some…. and then some…. and a little more, Patrick Corbins agent says hi
How’s you time Jeff Wilpon!
Nice way to quadruple your money in just 30 years not to mention the revenue you got along the way. This is a great example to learn from, if you ever have the chance to purchase a professional sports franchise, take it.
He’d have gotten a similar return with the S&P 500.
But I’m sure he also took a yearly salary from the Nats and he got to take advantage of writing all sorts of expenses off.
Not too bad of an investment if you can afford it.
With about half the tax breaks, tho.
The S&P 500 is 11x in the last 30 years.
The Wall Street bell or the bottom of the ninth? Which do we want to watch when we get rich?
If I was rich I’d watch both. Especially here on the West Coast where that bell rings at 1 PM.
Count my money then head to my suite at the ballpark.
Pretty nice how everyone has a fantasy rich life ha ha.
Both in a unicycle and a logo stick. I hope they have okay uk insurance, while they juggle and play baseball!?
16 years. No, the Lerner’s would not have had a similar return investing in an S&P 500 index fund.
If they reinvested all dividends as they happened, they would have had about $1.67 billion after capital gains taxes from investing $450 million in an S&P 500 index fund..
Since every team sold in the past 2 decades has sold for more than their estimated value, the Lerner family will likely see $500 million more from the sale of the team than from investing in an S&P 500 index fund.
Not many investments have an annualized return of more than 9% that you would have received from an S&P 500 index fund, except investing in a MLB team.
Yes, and investing choices are always found somewhere on the risk-reward spectrum. Larger potential rewards require accepting greater risk. A baseball franchise generates substantial rewards with very little risk.
Although I so see risk on the horizon. MLB’s current economic system overly relies on regional TV deals and with cord cutting or in many cases never even starting, that dynamic is set to change.
Streaming just makes a sport more niche/marginalized. I’m a huge boxing fan and look what happened to it once it moved off networks and basic cable. It hurt so bad it is now happy to be back on ESPN and Fox.
The risk is not nothing, I agree, but the franchises are being priced for their current revenue and projected future revenue. This is why they continue to increase in value at a fairly impressive rate. Baseball is probably the worst-managed of the pro sports and has been for a hundred years at least, but even a long history of mismanagement hasn’t killed the golden goose. History should tell us not that the investment risk is not zero but that the sport is pretty close to bullet-proof, and this is why billionaires choose to pour their money into it so willingly. They ain’t stupid.
Is it bullet-proof? Are large numbers of billionaires willing to pour their money into it? I think this is an assumption with very little basis in reality.
Like a teleprompter.
Right, no basis in reality for billionaires investing in baseball franchises other than we see it happening right before our eyes. Not that seeing anything happening right before our eyes counts for spit these days.
I also said it’s “pretty close” to bullet proof, and I didn’t use the words “large numbers” at all.
More people have watched a live game in the first week of the 2022 season than in any opening week in history and its not over yet.
A huge part of that was through streaming including a more than 75 million worldwide on MLB.tv.
75 million subscribers is what MLB is basing advertising rates on and they just sent us a notice that prices will be going up when our current contract expires.
How people watch video content is changing, but its not going down. In fact, the # of hours watching video is exploding and that includes watching sports.
At least 3 investment groups have vied for the right to purchase every MLB team that has come up for sale in the past 30 years.
All of those teams have sold for more than the Forbes estimated value.
That would point to the assumption being reality.
Belief has become the new reality.
Pretty good strategy to backload every contract then sell the team
Right, now they just need to find a billionaire buyer who doesn’t know how to read financials.
And therein lies the rub……..
They always spent. Scott Boras does it again! When he held them up for Strasburg after the WS win, they paid the salary. Just like the writers and 80% of the posters demand every owner do. Now with Boras / Soto looming, they want out.
As for their return – the profits you people think they’re rolling in are not all that great. As for then paying themselves a salary – not only did they risk money, they took on a 365 a day a year job with no end of headaches and expenses for more and more lawyers.
They’ve run the franchise first class. This reminds me of when Dick Jacobs sold the Indians at their peak. The ballpark was pretty much being sold out; Manny had signed an outrageous contract with Boston in FA (which he regretted from Day One) and Thome’s FA was around the corner (as Soto’s is today). The Jacobs made a killing on the sale, and the owners that bought it went so far in debt to pay for it that they’ve never had the money to run it properly.
Make no mistake – owning a MLB franchise is not worth the time and aggravation fans think it is. A player can’t walk into the clubhouse and blow his nose without his agent and a half-dozen lawyers getting involved. Just look at the Yankees – THE YANKEES – holding the line on outrageous contracts the past few off-seasons. The Cleveland owners haven’t found a minority partner in 2 years. The Lerner family might be the wealthiest ownership in the sport, The 5 counties surrounding DC are the 5 wealthiest counties by income in America (IRS figures). The fans come out for the games. Unions and their outrageous demands drove the US auto market into the dumper – one of the Big 3 is gone, and the other 2 are eclipsed by multiple foreign countries manufacturers.
This is a far bigger story than almost all here realize.
Foo. Billionaires who don’t understand or aren’t interested in money strains credibility to the breaking point, and then some. Sorry but I don’t believe a word of it.
Have to give the Lerner family all the credit in the world. They never shied away from spending unlike many other owners who buy a team and immediately implement austerity at the expense of winning, and you know who you are (Bob Nutting et al).
Darn skippy ;( shall the weakest and most queer/strange communication again team, “say”white
In stroganoff goid&$eval
Dig the bulb manager though… By the way. I’m old tho… Just unenviable change drawers
Of the MiLB MANAGER!! Ain’t she sometime else. GO girl GO
^Totally on point^
“Pretty good strategy to backload every contract then sell the team”
You and others don’t get it……
How else could they afford a competitive top-of-the-line payroll?
You don’t think that those outstanding financial obligations won’t affect the sales price?
The money in those backloaded contracts is real enough–but the large amounts in your mind (mine, too) are not very much in the context of a $2 billion or more sale of a sports franchise. Think of it like the sale/purchase of a house, those contracts are just offset lines on the closing sheets.
More directly, there is an old line: if you have to ask how much a yacht costs, then you can’t afford it. Nobody who can afford a team and wants a team, is going to be dissuaded by the backloaded contracts or even the MASN mischief.
I think if I had that kind of money I would rather purchase Chelsea FC and then ditch all their stars.. go Tottenham lol
Come on, you Spurs!
You Can Put It In The Books
They need new investment partners because they know they can’t afford Soto.
They are putting the franchise up for sale after seeing the ridiculous amounts players are demanding (partially due to the contracts they offered). No player is worth 1/4th the value of the entire business. Soto wanting 500MM (rumored) is bad business because the more a player is paid, the more every little injury becomes a reason to go on the IL, to prevent the “possibility” of something greater occurring. Trout stating he could have played if the Angels had been in it is exhibit A. He became too valuable to play in meaningless games. Not a great business model.
Did you need a project manager for all of the projecting you did there?
Wow! That was the biggest and stinkiest pile of gobbledygook that I have ever read.
The Lerner children are looking to sell because their father is 91 and the value of the team is over $2 billion. Period.
Players are worth what teams are willing to pay them. Period.
Every heard of insurance? You can be sure that team owners have. The possibility, or probability, of a trip to the IL will not stop any team from paying Soto a huge contract.
People watch the team on TV and come to the ballpark just to see Soto. They buy Soto jerseys. He creates value. Massive value. Not signing him is bad business.
What would be ridiculous would be not paying him and the other players close to half of the total revenue of the sport. Revenue that is climbing every year in leaps and bounds.
Please sell to someone who can afford a baseball team, if you do sell. Last thing we need is more small-market-ownership mentality bogging down the sport.
Mike Piazza Pie
Investment banks/bankers are buying teams now. There isn’t many people who can find the funding outside of these big banks.
Maybe big market teams should be eliminated because small market teams have won 3 out of the last 5 World Series. Then baseball can prosper a bit better and players won’t be spoiled with high cost contracts. Then a single player wouldn’t strap a small markets payroll. Yankees, Phillies, Mets, Angels, Rangers, and Cubs spent, and haven’t got much or nothing in return.
That is simply not true. Astros 2017 are a mid market team at worst as you even not the rangers as big enough to spend. Red Sox 2018 are clearly large. 2019 Washington is maybe small but more likely to be considered a mid market with all of the DC revenue and surrounding areas. 2020 Dodgers, not at all. 2021 Braves are mid market and most publications agree with that.
Astros are a big market team. Houston is the fourth biggest city in the country and Texas is the second biggest state. The only other team for hundreds of miles is the Rangers.
The northern Va area, is one of the largest population bases in the sport. Definitely not small, and to be fair, in terms of player payroll, the Lerners have spent like a big market. Managers and broadcasters, not so much.
Rct- I was giving the prior poster the benefit of the doubt when it came to framing of market sizes
Vir or VA on the USPS envelope? Date stamp, pretty please.
What small market teams are those? 6 of the last 6 were from top 15 markets.
In terms of market size: Braves (#7), Dodgers (#2), Nationals (#9), Cardinals (#14), Red Sox (#10), Astros (#8).
Not a single one is a team receiving revenue sharing.
In terms of revenue, all are in the top 10.
The Cardinals haven’t won the World Series since 2011. You’re thinking of the Cubs, I think, who actually make your point even better (they’re #3 in market size). The fact that the Red Sox are the smallest market to win a World Series since the Royals in 2015 tells you everything you need to know. And that’s even deceptive because Boston is the home team for all of New England, which is way bigger than just the Boston metro, like the Braves are the home team for most of the South. If you leave the Sox aside, you have to go all the way back to the 2003 Marlins to find a bottom half market winning it all, other than the Royals.
You are correct. The previous team was the Cubs #3. Even worse for his argument
If you can afford to buy the team, you can afford to run it. The teams finances are generated from profit, they have NOTHING to do with owner wealth. Steve Cohen is (perhaps) an exception but it won’t last. And even he has said he’s willing to lose a bit of money for now, not that he’s reaching into his own pocket. Owners don’t do that. Fans THINK they do, but they don’t.
You Can Put It In The Books
Cohen is spending more now while they build out the baseball ops/analytics department. His investment there side is as significant as what he’s spending on the current payroll. Make no mistake, he will continue to spend when he wants to. Plus they have some kids coming very soon. And in a few years that baseball ops investment will be churning out high-end minor leaguers to pull off significant deadline deals each year. It’s no wonder there are so many Mets-haters on this board. The future is bright and it’s already shining in their eyes.
The new owners of the Nationals will run it like a Nationals Market owner, regardless of who it is. Only Large Markets can run their team like a large market team.
Stymee: Unless it’s Mark Cuban, perhaps.
Pirates1981Guy: And to respond to the “get rid of large-markets” comment from the Pirates fan above, the only reason small markets can even exist is because of large market teams. Without them, small market teams are done…so, you’re literally cutting off your nose to spite your face, but from a Bucs fan’s perspective, whose team spends roughly 34% of money handed to them freely, it doesn’t surprise me at all…….not at all. It makes my assertion all the more valid.
The Nationals are a large market team.
Hasn’t got the money
Trump partner with Bloomberg
Or with Dave Rubenstien, who’s a HUGE fan, and has all kinds of money.
Bloomberg wouldn’t need to partner with anyone, let alone partner with someone who would devalue the franchise.
And this isn’t making it political just a fact. Polarizing a fan base would lead to devaluation.
But Trump owning a baseball team, especially the Nationals, would be hilarious.
Not really. Apolitically, he’d set the sport back.
I hate Trump but we do not know if he’d set it back. This is speculation
Trump’s worth a few hundred million tops. Which is less than the present value of what he inherited.
His stint in the USFL did not exactly help that league.
No. He’s worth billions cuz of the SPAC deal for his social media company.
The SPAC is worth zero right now because the social media company is failing. Upside down.
DWAC opened at $87 and its at $45 today and in a freefall.
I short sold it at opening on 10/22/2021 and made a small 7 figure fortune on 4/8/2022. I LOVE it and hope it falls even further.
Mr. diamond hands here.
Mike Piazza Pie
Post pics or you’re larping
Bloomberg hates Trump.
Trump overplayed his hand with the USFL and New Jersey
Generals. His decisions made the league fold and fail.
He refused an invitation to throw out the first pitch at Nationals Park in 2017 and then got loudly booed there during the 2019 World Series, so maybe not the best choice of an owner, even if he could afford it.
I still assert that Mark Cuban may make a decent owner because he has the money to spend & is competitive. But if he tries to run a baseball team like a basketball franchise, it would be disastrous.
Cruz. Says a lot about his priorities that he would sign w a team w no chance at a world series. Might help explain why he was useless in St Pete’s.
Says a lot about you to presume why a person does what he does. If Cruz hits well, he’s likely to get traded to a contender.
Precisely, if you are a vet, take the most money, perform, and you will get moved to a contender.
Most professional athletes aren’t obsessed with winning a title. They obviously want to, but it’s not at the top of their list (despite what they tend to say, which they have to). They’re not that much different than regular people. Is it your work priority that your employer beat its competition, or does that fall behind salary, benefits, time off, location, comfort level, and so on?
The people who passionately care who wins in sports are you and me, the super fans. And front offices. Most front offices anyway. Everyone else including the players has other priorities first.
Pro athletes don’t get to where they are by being complacent. Your analogy is deeply flawed.
You Can Put It In The Books
You’re an idiot if you truly believe this.
I don’t know how many players have that attitude, but certainly not all:
Pettitte accepted a lower guaranteed salary on Monday with a chance to make more if he stays healthy. The Yankees signed Pettitte to a one-year, $5.5 million contract that could pay him $12 million if he reaches incentives based on innings and roster time.
It is a much lower salary than last season, which makes Pettitte just like other disappointed free agents this winter. But it brings him back to the only place he wanted to play.
“The bottom line is, I’m a man, and I guess it does take a shot at your pride a little bit,” Pettitte said, referring to the pay cut. “But when you put all that aside, I wanted to play for the New York Yankees. I wanted to be there and I wanted to play in that new stadium.
“There’s no doubt in my mind if I went out as a free agent, I could have made an awful lot more money than what I’m signing for. In fact, I know I could have. It’s just a situation, if you want to play for one team, you’re going to have to make sacrifices for that. If it was going to be me taking a pay cut, it was going to be me taking a pay cut.”
Exactly Pink, just like Judge…whoops, maybe not.
This is a real double-edged sword for players. If they go to the team with the best chance at winning – which often means the most money – they’re viewed as disloyal mercenaries. If they sign or stay with teams with lower playoff chances, they don’t care about winning.
This definitely has the makings of a complex sale even by billion dollar asset standards.
But the opportunity to purchase a Big 4 sports team is so rare they will undoubtedly have plenty of suitors.
Hopefully MLB owners have learned from the Miami debacle that while getting the highest purchase price is good, the owner needs to then have enough money to run the organization. As the owners are more concerned with the value of their franchises than how many games the other guys win, I doubt they have learned anything.
Exactly right – blow all your money on a Rolls Royce and then can’t afford to keep gas in it.
CC: Larry & Paul Dolan
Let’s all chip in a little and have MLBTR as an owner!
I would love every mouthy fan to put all their life savings into a team. When they all go bankrupt and have to get second jobs we all won’t have to hear how the owner of their favourite franchise is cheap for not wanting to sign a 35 year old to a 7 year contract.
Like the Green Bay Packers have went bankrupt?
Teams are not allowed to be run by a committee. A single person has to be appointed as the managing partner. Typically that person is also the CEO.
Wouldn’t need to put my life savings into it to be a minority owner, just have to find someone willing to sell and the other owners approving the sale.
Given the multitude of mouthy fans, there’d be enough investors that nobody would have to put in their life savings — unless their life savings didn’t amount to much.
You can have my $1.25 right now…I’m committed to this thing we have. I want to sign Soto to a 23-year, $700M contract. Make it happen.
Breaking, Elon Musk buys the Nationals.
That would set the sports world All-A-Twitter.
He does not have the liquidity to buy a team. He could borrow the money, but MLB frowns on a team having that high of a % of debt service, so I doubt the other owners would approve the sale.
Musk has been selling his Tesla shares for a long time now, and diversifying. He could make a few billion liquid in no time.
Musk is paying $11 billion in taxes because he just exercised his options on Tesla stock. He now has more than what he held at any other point.
He could sell his 9% holding in Twitter, but if he sold off $2 billion in Tesla he would tank the stock price and make his own stock worth much less.
Mike Piazza Pie
Musk just bought 10% of Twitter. He could find the funding no problem. He never even took spacex public and that was always his real money maker
9%. 10% requires public disclosures that he probably doesn’t want to make or he would have bought a larger share.
@ Pads Fans;
You’re a joy to read!
I don’t follow the markets as closely as when I was younger. When I come on this site to discuss the game – a site with primarily talks about salaries – I find myself in a fantasy world in which there is no end to increased players salaries and demands.
I’ve owned some Tesla for years. It’s done very well for me. Have staggered buys the past 4-5 months or so as it’s corrected some. Will continue to do so in 2022. They’re on the way to being the biggest company in the world. As for Mr. Musk – he has far more investments than Tesla/ With his private companies he has investors to deal with that the public knows next to nothing of.
The entire lack of financial perspective in both the articles and comments is something I don’t deal well with – it’s like discussing adult financial responsibilities with a teenager.
Mike Piazza Pie
It doesn’t change my point
If you think musk doesn’t have the funds, you’re silly
Not funds. Liquidity. According to Musk, he had to sell other assets to buy the 9% share of Twitter which cost him $2.64 billion. He would have to sell something to buy a $2+ billion baseball team.
BTW, Musk chose not to accept a seat on the board because it would have required him to become a fiduciary of the company. Meaning he could not talk bleep about it because he would have had a duty to the shareholders.
Now he has no more say in the company than any shareholder. He is also not the largest shareholder anymore. Vanguard is.
By market cap, Tesla is not in the top 5 in size. Apple is #1, followed by Aramco, and Microsoft.
If Musk takes SpaceX public, then that would be huge, but then he loses control of the direction of the company and will be responsible to shareholders.
By revenue or by earnings, Tesla is not in the top 100.
Does his amount of wealth impact the debt service ratio? I do home loans and there’s a category called “ability to repay in full” in the non-traditional loan world which basically states they’ll grant you the loan if you can prove you have the ability to repay it in full.
In this case, if a man with billions in stock needs to service one billion or so in debt, he could easily pay it off in full.
Does anybody know if that impacts MLB’s rules?
Same with car insurance and other insurance. If you’re willing to prove you can do cover the cash minimums with cash/assets, then no insurance premium for you. Might be better to have some insurance in case that case blackberries is eclipsed by further lawsuits or disastrous unknown events.
It’ll be Bezos. He already owns the Washington Post. And Amazon’s building a huge campus in the DC area.
Bezos would take away the players bathroom breaks, rightly claiming there is no provision in the CBA requiring them.
That would be interesting… he might get a Soto deal done and advertise it MORE on Amazon
Musk does not have the cash.
He is a “paper billionaire” at the mercy of the markets.
When the market goes down, so does his net worth by 10’s of billions of dollars.
Seems like the Lerners are trying to unload a lemon like a bunch of used car salesmen
Someone want to give me a lemon like that? I’ll take it!
Everyone’s talking about Jeff Bezos buying the Commanders, should the NFL force Dan Snyder to sell. Wonder if Bezos prefers baseball.
Heck, Bezos should buy both lol
Why buy one when you can have two at twice the price?
You mean that the owner of the town newspaper would own the team it covers??? That would be like Red Sox owner John Henry owning the Boston Globe!!!!
I’ll buy it and fire the entire stadium staff. They suck.
lol there’s gotta be a story here…
There is, there is.
Damn, they initially bought it for 450m? Some guys will get paid more then that for the totality of their contract when they’ll be free agents. Maybe a Vlad, or a Juan Soto if he hasn’t got his extension yet, or whichever superstar. They bought that team rather cheap considering the money being thrown around at free agents, and the ones to be in the future.
I’d love to see Vince McMahon buy them!!!!!
Jeez I haven’t heard that name since his idiot wife ran for Congress. Is he even still alive?
RIP Vince Foster
New buyers should insist on subtracting all those differed payments from the sale price…
And we thought around here that it was the O’s ownership who were positioning themselves to sell their team…
as a Phillies fan I hope they sell the team to the Wilpons. for decades they were the gift that kept on giving.
It’s easy to pick on the Wilpons, but the Mets kicked our butts plenty before the 2007-2011 run.
Could see one of our crooked politicians spending some of that insider trading money
For Love of the Game
I offer $2.5 billon. Can someone arrange me a non-recourse loan for $2.5 billion?
Do it the Nats way. 10 dollar down and the rest deferred at a dollar a year over the next two billion years.
MLB only allows for about a 30% debt service ratio, not including ballpark construction related costs. You and other investors will have to come up with about $1.75 billion to buy the team for $2.5 billion.
That’s know as Loan to value. 30% LTV is how anyone would say that who is familiar w commercial loans. Very odd to see it stated the way you did.
DSCR is typically EBITDAR/ Debt Service (Principal + Interest)
That’s not what MLB is loaning on.
MLB calls it debt service ratio in their documents, so I called it debt service ratio. Take it up with Manfred.
Ugh those deferrals are not looking very sexy.
Would the Lerners knock the deferrals off the $2 billion value?
Sure, and it would make basically no difference in their overall profit. None to speak of anyway. The beauty of really big numbers.
deferred money should be banned
Why? No harm no foul near as I can tell.
Jeez, jinx seamaholic!
Why? Players can choose accept it or not and owners sometimes use it. No harm, no foul.
Leave the money. Ban the shift.
The Shift is fine. Hit it where they ain’t! Take the basehits and they’ll stop shifting on yas
Ok, leave the shift, take the cannolis
Shift da cannolis ova here.
NOOOOOOOOOOOOOOO! Keep the shift AND the cannolis. How can life go on without a good cannoli?
Bobby Bonilla disagrees.
Mike Piazza Pie
Somewhere Scott Boras is crying. Nats probably won’t bail him out as much with big money owners.
Lazy writers and barstool jockeys are always going after the Nats for deferrals (and after the Mets for Bonilla. Do the Dodgers and Freeman next).
Deferrals are common across the league and they are not new in Major League Baseball.
This story hyperventilates about roughly $195 million in deferrals through 2029. If you average that out over 17 years (starting the clock at the Soriano signing and counting that year) you get a little over $11.5 million a year, which (without accounting for inflation) is less than the annual cost of a J.P. Crawford. If you average that over 15 years (starting the clock at the Scherzer signing and including that year) you get about $13 million, which is less than the annual cost of a Brandon Crawford.
Where the deferrals may start to hurt Washington’s ability to do team building is in the middle-late part this decade, when the perfect storm of Corbin, Scherzer and Strasburg deferrals combine to exert greater pressure on the payroll than the mean average of all the deferrals in this story (and yet, the Nationals could still afford to make Juan Soto a no-deferral offer of $350 million that overlapped with deferred money owed to those three pitchers. Please, commenters, tell me more about how cheap the Lerners are https://legacy.baseballprospectus.com/compensation/cots/national-league/washington-nationals/).
Washington’s deferrals do not matter as much as the author suggested and they’ll be essentially a non-issue for a new majority owner who’s looking at holding the team as long as the Lerners will have done. Do yourself a favor and read the story in the Washington Post about this if you want real some perspective on why ownership may have done an about-face on their promise not to sell.
Ahh, I see you are a practitioner of the Crawford scale.
It’s a good thing the younger Lerner didn’t leave the details on his laptop…. The WoPo would have reported it was Russian dis-information.
I’ll pass on this one.
Cohen is going to double up.
Badly mismanaged long term payroll.
TV revenues would be 100’s of millions higher if
they could get out of the Orioles deal or renegotiate it.
The usual suspects will bid on the team including Bezos, Gates, Balmer etc…
Then the Lerners’ might as well trade Soto and get multiple top 50
young players and prospects for him.
In a few years, new ownership will have a contender.
Lerners are obviously equity rich and cash poor with the Nats.
Pandemic most likely squeezed their cash reserves since Mark Lerner
was not wanting to sell.
Now, it appears that they have to sell to get out from all the extra debt and float
they took on during pandemic.
“I will NEVER sell the team.”
“It’s estimated to be valued at two billion dollars.”
“Call a broker.”
Fever Pitch Guy
Fuzz – Deferrals of that magnitude are not common at all.
Even my big market team has a tiny fraction of the Nats’ deferrals:
Pedroia $2M/per thru 2028
Ottavino $3M this year only
Ramirez $2M/per thru 2026
That’s all she wrote.
And what matters is from here on out, the past is irrelevant.
What Lerner has been doing reminds me of Loria heavily backloading Stanton’s contract, and then selling before the heavily backloaded years arrived. In the stock market the new buyers are called “bagholders”.
I’ve always found it a bit shocking the Nats have been willing to defer so much money.
To your Sox examples you pointed out — those make more sense, as does even Soriano’s in Washington’s case.
But man, Max and Stras — those are massive numbers.
The cost of the backloaded Stanton years was precisely accounted for in what the new owners paid for the team, I’m 100% certain. Are people really this naive about how rich people do business, or rather how the really smart people around them do business? They didn’t get rich by missing that trick!
Fever Pitch Guy
seam – I agree with you. However unless the new owner is willing to spend like Cohen, those deferral amounts will weigh heavily on the Nats’ ability to spend for years to come.
As for the Marlins, the backloaded Stanton contract forced the new owners to get virtually nothing (unless Devers turns into a star) in return for a 27-year-old reigning MVP who should have landed them a major haul of talent if not for the contract.
While each situation did/will bring down the sale price a bit, determining how much future revenue was/will be lost because of those past financial decisions would be nearly impossible to calculate.
Find another owner named Loewe and you’ve got yourself a hit.
Time for another hedge fund billionaire.
Steve Cohen buys them and ‘hedges’ his investment with the Mets – because that’s what he does.
He’s going to sell the team back to Montreal. There goes the Rays next home!
“Dad we will never sell the team, this will be our family legacy as a tribute to you.”
Now to his siblings “dad apparently is never going to die and we aren’t getting any younger, chances are he will never know…we can make sure he only gets newspapers from 2021 and he will always think we are in a pandemic and he owns the team…besides, we are just testing the waters to see if there is interest (wink, wink)”
In short, I guess the trust funds just aren’t enough for their entitlement lifestyles.
Nats should cut a deal with the Orioles.
Orioles take on all the deferred payments owed to players in exchange for waiving claims of the never ending lawsuit for all years prior to 2022.
Cut a reasonable deal for 2023 going forward on the MASN tv and the value of the franchise would go up substantially.
The O’s ownership have not honored the MASN deal so far. Why would anyone expect them to honor it in the future?
The O’s were given controlling interest in MASN as payment for allowing the Nationals to move into their market. No matter what happens, the Nationals have to honor that as long as they are in the DC market.
The Orioles may have to pay the Nationals $100 million for 2002 to 2006 broadcast rights, but they will still have controlling interest in MASN and the Nationals cannot back out of that.
That is in the NY State Appeals court right now. Has been since last year. A decade long legal fight.
Well let’s be clear now – Soto doesn’t sign b/c of this ownership situation & will stay if it is resolved before he’s a Free Agent. His Next big deal is to sign with Yankees !! Claro que si !
Hello Dan Snyder.
When the NFL forces his hand, he can just pivot to the MLB. Just when you thought you could get rid of him, D.C.!
Maybe Bob Nutting could sell the Pirates to an owner that cares then take the proceeds and buy the Nationals. Just think, DC could have Nutting AND Snyder.
Nutting won’t go to D.C because 1. He doesn’t own the Washington Post new outlet 2. He couldn’t build a ski resort. Niagara Falls Pirates? Plenty of snow and great views!
Nutting sold the ski resort last year.
There can be lots of reasons for the Lerner family doing this now including long term estate planning.
That said the time is right, new CBA, new National TV contract, plus as noted elsewhere, I believe months prior to the pandemic MLB changed rules related to ownership, now private equity funds are allowed to take LP stakes in teams. Bonus points, the Met’s transaction is very current + *touch wood* pandemic is in the rear view mirror.
You could also argue that they’ve taken the badwill hit for trading off the team and while I’m sure the fandom wants Soto signed, his deal is 100% the kind of deal where ownership is directly involved.
I don’t look at the deferrals as an issue, in fact I think they were in part desired by the players as a more tax effective way for them to be paid. These are fixed $ amounts and now that interest rates are on the raise those outflows can be purchased more cheaply. While deducted in the final accounting this is in no way a deterrent to anyone buying the team.
The only real messy thing is the local TV rights/litigation with the Orioles. I suspect that while MLB has been mostly hands off, they’ll get involved now that it’s interfering with a club valuation in a potential transaction.
Mike Piazza Pie
He doesn’t know they’re planning another pandemic
MLB has been anything but hands off in the Nationals v Orioles TV deal debacle. They have been right in the middle of it and their involvement actually is what sent the lawsuit into the appellate courts.
MLB has loaned the Nationals $250 million during the decade-long running feud.
The Orioles still own a controlling interest in MASN. That won’t change.
I hear you, but this is a sale, either by taking on new LPs or a straight up change in ownership group. Whichever form, a sale impacts valuations for all 30 franchises. So MLB’s role to this point has been as mediator, now their role will change.
Quite frankly you wonder if Washington ownership group are doing this in part to force MLB/Baltimore’s hand. Not saying an Peter Angelos owned team is lawyered up, but…..
FWIW, I do not believe it has to do with ownership structure of MASN but rather what rights fees the Nats should be paid by the MASN to air their games. Normally this is done either between companies with common controlling ownerships OR by unrelated 3rd parties. Is there even a similar scenario elsewhere in MLB?
No other team has moved into an existing teams protected market for decades before the Nationals did. They knew the price going in and that is for the Orioles to permanently own the controlling interesting MASN without the ability for the Nationals to opt out or negotiate with another broadcast partner.
The disagreement is what the Orioles paid the Nationals for broadcasting rights from 2012-2016 and the Nationals won those cases in arbitration and in court. The Orioles owe the Nationals $100 for 2012-2016. The Orioles controlled MASN paid the Nationals $197.5 million for those 5 seasons and an MLB appointed arbitration panel ruled that they should have been paid $296.8 million.
Now its at the New York State Appeals Court and has been since September 2021.
Since the 2017 season there has been no dispute over broadcasting fees paid to the Nationals by MASN. The Nationals would not see an increase in those fees.
If I’m a Nationals fan I’m PROBABLY okay with further investors as long as the decision makers don’t change. A full sell off though, I would not want. The Lerner’s have been among the more desirable owners in baseball so it’s difficult to imagine them getting a better owner.
Let Cuban own the team. He’d be a breath of fresh air. MLB could use that.
Cuban doesn’t want to buy a team he said he is thankful they didn’t let him since baseball is broken.
Awful lot of zeroes involved for a team’s value in a “broken” sport!
Just asking- that deferred money isn’t calculated each year of the payout for luxury tax purposes?
Or another way to phrase my question is if it’s a 3 year 30 million contract with 20 million deferred for 10 years, that 10 million per year is counted against that luxury tax threshold?
While the payment is deferred, the contract for CBT purposes is still the total amount divided by the number of years. A 10/300 million deal is $30 million AAV for the purposes of the CBT regardless of any deferrals.
random name generator
Deferred money doesn’t effect luxury tax numbers. If you check luxury tax, it just checks the AAV of the contract. So in your example, the luxury tax number is 10 million a year for 3 years, and that’s it.
It does affect it, but in a counterintuitive way. Deferred payments reduce the present value of a contract. To offset the reduction in value, the team has to pay the player more than they would if they hadn’t delayed paying him. So if anything, deferral pushes a team into paying more CBT, not less.
I doubt that any of the players reps had 7% inflation baked into their DCF models.
Putin needs new money laundering partners…
Sell a yacht or two, cut down on the warmongering, redirect some generals to the scouting department and submit a proposal to rename the Nats as the Troll Farms. Could happen.
I would definitely lower my bid because of the Strasburg contract. Will he even pitch 200 innings from now until the end of 26?
Hey now ss is on my fantasy team. This is the logo for my fantasy team named “reverend evil als army”… At one point the team name was simplified as the army, but I talk what and changes it. Say does nbcsports still do any private league sandbox games?
GO strasburg yer my long stopper on the mound come back right and batting on the mound this year ya hear me now?
How different the MLB world would have been if, in 2002, Bud Selig would’ve let Gustavo Cisneros bid to buy the Marlins, let Mark Cuban to bid on either the Red Sox or Expos, told both Jeffry Loria and John Henry to take a hike since they can’t answer anything with a straight and honest answer, and let an even bigger open bid on the remaining franchise after Cuban made his pick.
Seems like MLB would’ve been in a more stable place. But Bud had to help his buddies Loria and Henry remain in the game, and move the Expos to DC instead of doing what was the better decision.
Just flabbergasted someone would turn down 13 years and $350M for anything. Wow.
Lets see if you can understand this example better.
If Taco Bell is offering $8.50 an hour but you have been a manager at McDonalds making $12.50 an hour, do you take the job offer at Taco Bell anyway?
Soto is arguably the best hitter in baseball and will make $17.1 million in his 2nd year of arbitration, up from $8.5 million in his first year of eligibility. According to the formula this site uses to project arbitration increases, that will go up to $25-26 million next season, and top out at $35-37 million in his final year of arbitration eligibility for his age 25 season.
Typically a FA makes substantially more than he did in his final year of arbitration and at 25, Soto will be worth investing in for the long term. Think 10-12 years.
A reasonable projection of that contract would be, at the low end, 10 years and $433 million.
Actually, it’s a wonderful time to sell. It’s an industry where even the poorest run franchises increase in value every year. Long term cable deals are guaranteed income (even if everybody cuts the cord; that’s why teams insisted on the 20+-year deals). And MLB is still content-rich at a time of the year where services are crying for content; streaming deals are a nice plus and will only move upward.
Moreover, they have labor peace for the next 5 years for sure, and likely a lot longer given the caving of the MLBPA this year. Cost certainty, guaranteed revenue, more tax breaks than most industries get, and public recognition. You won’t get those goodies just about anywhere else. And Manfred has done the impossible; convinced the grocery customer to accept poor quality meats and veggies, and pay full price, while promising the products will get better in a few years. Couldn’t do that in the restaurant business; or just about any other.
No appeal to youth? Actually, the population pyramid is so upside down now, youth is no longer the desired market. And the young uns will come back with gaming and other new technologies. soon, they’ll be able to sit in Row 12, seat 42, and face Mad Max live, in virtual reality. And that’s much closer than you think.
You know what would be interesting if Alex Rodriguez and Derek Jeter got an ownership group going to buy the Nationals. Now that Jeter is no longer involved with the Marlins and Rodriguez has finished up buying the Timberwolves maybe they partner up.