Thursday, February 16, 2012

An overlooked small piece?

If Jeff Moorad and his limited partners were to buy out John Moores now instead of in 2014, would they get a discounted price in return for speeding up the purchase? And, given that Moorad's group owed Moores roughly $300 million at the start of the deal (not including some $200 million in ballpark-related debt), wouldn't it take a hefty price cut, seemingly worth eight figures, to motivate Moorad and friends to pay the remaining $150 million two years in advance?

Logic says, yes and yes.

Logic also says that, in turn, seasoned negotiators such as Moorad and Moores would've stipulated an early payment window within their agreement announced in March 2009.

Since '09, Moorad has said many times that he can wait until 2014 to buy out Moores. And he may wait until 2014, as he first hinted to 1090 AM's Lee Hamilton and later this blog a few days ago, and as Moores said in a story yesterday by's Barry Bloom.

Let's go back to when Moorad and Moores announced their pact to transfer the club through installment payments. Moorad cited the 2014 deadline more than once, but he also made subtle reference to 2012, saying the purchase's target date was three to five years.

Next month is the three-year mark. Given that Moorad's accelerated bid began in December, March could be the final month within a window to pay off Moores at a discounted price. "We don't know the actual sale price," Moorad said in 2009. "There is some flexibility given the duration and terms of the purchase."

Should Padres fans care what price Moorad pays to become control owner? Somewhat, I suppose, considering that so many people within baseball told me the sale's reported initial price was much higher than they would've guessed. Consider the discount, or, better put, the probability of one for an early purchase, a piece in the puzzle -- but only a small piece, even if it hasn't drawn mention in the mainstream media.

The largest puzzle piece is, of course, major league baseball -- specifically Bud Selig and the other 29 owners.

As we all know by now, their approval is required, not only for Moorad to become the "control owner," but also for Fox's 20-year, $1-billion deal with the Padres to become a reality.

Let's jog back once again to 2009 and what else Moorad saw in the year 2012: A looming TV deal for the Padres, and one whose dollar potential seemed greater than the expiring deal with Cox Communications because Cox had decided not to make Padres telecasts available to all potential customers.

If San Diego's ranking as a bottom-five TV market in terms of size wasn't exciting or likely to improve much in the next decade or two, the probability of local TV revenues rising was at least intriguing. But would Moorad's limited partners be enticed enough to help Moorad buy out Moores at the three-year mark? And would Selig and the owners require that Moorad, the team's CEO and Vice Chairman, become majority owner in return for their green-light on the TV deal?

What Moorad couldn't have foreseen then was Dodgers owner Frank McCourt behaving so badly that Selig and MLB intervened in Dodgers business affairs in 2011. Selig ultimately vetoed McCourt's attempts to get a Fox advance, arguing he wouldn't have used the money entirely for baseball operations. Make no mistake: McCourt's shenanigans, which included plundering Dodgers operations for his own purposes,  induced MLB to proceed with greater caution when considering the potential majority owners of the Astros and the Padres.

As part of signing off on the Padres-Fox deal, whose negotiations began a year ago, if not longer, MLB would have to believe the Padres targeted the TV money entirely for their baseball operations, which I reported was a concern in January (and Bloom also mentioned as a concern in yesterday's article featuring exclusive quotes from Moores).

Then again, anticipating that MLB owners would vote on their accelerated buyout in early January, Moorad and his partners wrote checks for the $150 million in December. The money went into escrow, where it still sits, ready to pay off Moores. Given the stink over McCourt and McCourt's propensity to litigate -- a threat worth considering should McCourt believe MLB treated the Padres better than it did him --  it challenges logic to think Moorad, who owns a 40 percent stake in the limited partnership, would proceed without being asked to guarantee from the start that all of the TV money would go into baseball operations. And stay there.

Moorad made himself known on the subject in recent comments, saying every dollar would go into baseball ops. He said he's now been vetted by MLB. In other words, play ball.

If there's a powerful person who needs convincing regarding Moorad becoming "control" owner, his identity isn't in doubt to readers of this blog.

White Sox owner Jerry Reinsdorf, as reported here exclusively on Jan. 20, painted Moorad in unflattering light while addressing fellow owners last month. Diamondbacks owner Ken Kendrick isn't a friend to Moorad, either, but he isn't the power broker that Reinsdorf is within MLB. Moorad couldn't have been suprised that Reinsdorf spoke against him. A former player agent, Moorad knows that some owners view him with suspicion. For his part, if Moores underestimated Reinsdorf while telling on Jan. 8 that Moorad would be approved at the Jan. 12 meetings, I doubt he would underestimate him a second time.

1 comment:

  1. Maybe we should thank McCourt for forcing MLB to be more cautious. It would have been a crime (metaphorically speaking) to allow any team to use upfront TV money for any purpose other than for the product.

    Just think what may have happened, Artie Moreno and the Angels are all-in with Pujols for the next decade with their TV bonanza and here 'we' are 100 miles away and if Moorad used that money to pay for team we would be dead in the water for ANOTHER decade.