(I previously posted this elsewhere, but not on this blog – I like this one, so I thought I’d post it here)
Was the Marlin sell off an elaborately planned ruse that was years in the making? Please allow me to put my X-Files Conspiracy hat on for a few moments…
Back in 1994, the baseball strike wiped out the World Series. A chain reaction was started that led to the demise of Major League Baseball in Montreal and the rise of Jeffrey Loria. After the 1994 season, the then General Partner of the Expos, Claude Brochu, began to jettison players such as Marquis Grissom, Larry Walker and John Wetteland. Other partners in the ballclub began to develop a plan to try to infuse cash into the team, revitalize the club, and keep it in Montreal. The plan was to infuse $150MM (Canadian) into the deal by selling additional partial ownership stakes (which would dilute the shares of the existing partners).
In December 1999, Jeffrey Loria purchased a 24% stake in the team for $18MM in Canadian dollars (the equivalent of approximately $12MM in US Dollars at the time). When Loria was brought into the fold, all of the sought monies had yet to be raised. The commissioner’s office (Bud Selig) pressured the existing partners to accept Loria as the General Partner of the ballclub. Five months after assuming control of the franchise, Loria announced a capital call to the other partners.
Simply put, Loria was calling for the other partners to infuse additional capital into the franchise, as the total monies the franchise sought had not yet been raised. The other partners claimed that there would be no capital calls for a few years (after all, additional partnership stakes were being sought). However, Loria’s partnership contract allowed for provisions for a mandatory capital call from the General Partner.
The other partners had to pony up and place additional money into the franchise that was in proportion to their ownership stake, or risk having their ownership stake diluted. The other partners refused to meet this capital call and refused in infuse additional cash. Instead, they attempted to buy out Loria’s share. Loria refused, and took advantage of the other partner’s refusal to answer the call. He put an additional $18MM (US Dollars) of his own money into the team – diluting the shares of the other partners and now giving him an additional 70% of the franchise.
For a mere $30MM, and with the aid of the commissioners office, Loria had just stolen a major league franchise.
Loria immediately went on a campaign to get the Expos out of Montreal. During the 2000 season, English speaking TV and radio broadcast rights were gone. By 2002, Loria sold the Expos to Major League Baseball for $120MM – a $90MM profit from what he paid for in 1999/2000. In a deal that was then orchestrated by Major League Baseball, Loria purchased the Florida Marlins from John Henry (who was purchasing the Red Sox) for $158.5MM. The $158.5MM purchase price consisted of the $120MM that Loria had received for the sale of the Expos and a $38.5MM interest free loan from MLB.
In a very short period of time, Loria turned $30MM invested into a struggling franchise into the Florida Marlins, partially financed with an interest free sweetheart deal. No wonder Loria’s former partners with the Expos filed a RICO lawsuit against Loria and MLB (which eventually went to arbitration in favor of Loria).
Fast forwarding a few seasons, we saw the fire sale after the 2003 World Series victory by the Marlins. We saw the 2006 season where team payroll was less than $15MM. We saw the convincing of the taxpayers to fund a new stadium so that the team would stay in Miami while Loria pleaded poverty. All the while, the franchise kept on putting money in Loria’s pocket while living on revenue sharing welfare and the value of the franchise kept on increasing in value. Once the new stadium was built, the team’s value increased even more – and was not done so at the expense of Loria.
So what better way to cash in and maximize the return of your $30MM investment?
Force Major League Baseball and Loria’s buddy Selig to invoke the Best Interests of Baseball clause.
That’s right. Build up the expectation of the fan base, taxpayers and local political base that had just been fleeced – convince them that the city had finally made it to the Big Leagues to stay and that the fire sales and player dumps were a thing of the past. Convince high profile players to uproot their families and use them as pawns so that it really looks like Loria was putting his money where his mouth was and this time he’s being sincere – then pull it all away quickly. Just like he did to his partners in Montreal.
Outrage everyone. Make Selig “force” the sale, just like he forced the sale of the Dodgers when they were sold for more than $2 Billion earlier this year. The franchise was valued by Forbes for $450MM – how much would it fetch? $500MM? $600MM? More? Made all the more valuable by the crown jewel of a new stadium that the local taxpayers will be paying for long after Loria is gone and counting his pile of money.
That $30MM investment produced a pretty good rate of return, hasn’t it?
Coincidence? Or was this all planned years in advance?