Baseball teams for Sale…
The minor leagues draw in major investors
By: Eric Fetters-Walp
Washington CEO
When Bobby Brett, his Hall of Fame brother George, and other family members and friends bought Spokanes minor league baseball team 21 years ago, they had modest goals. They wanted to have fun owning a team, but they didnt want to lose their shirts doing it. Financial hits were common in the minors.
So, even though the purchase price for the team was a paltry $137,500, they went in as a group of owners to minimize individual risk. The thought was, lets buy a team, sell it in a few years, and hopefully we wont lose too much money, says Bobby Brett.
Now, the Spokane Indians franchise is worth more than $5 million, according to knowledgeable estimates from other teams. The Indians, an affiliate of the Texas Rangers, usually turns a profit and is tops in attendance in the Class A Northwest League, drawing nearly 183,000 fans last summer.
Since a new generation of owners discovered that small baseball teams could be moneymakers if they were run well and marketed right, minor league ownership has evolved. Teams were once owned primarily by families or small local businesses, often as summer hobbies, but today, some of them have corporations in charge.
They became real businesses, says Brett. And the few families that are still involved in minor league ownership increasingly own stakes in several teams. Rare is the traditional mom-and-pop model.
Bob Bavasi, who with his wife co-owned the Everett AquaSox and its predecessor, the Giants, likens the evolution to what happened in the amusement park industry decades earlier. Back when they were kind of shoddy, backwater parks; before Walt Disney came along and said we could do something like this and make money, says Bavasi, whos still involved in the baseball business. Hes also the brother of Mariners General Manager Bill Bavasi.
It didnt hurt when Major League Baseball began requiring more standardized fields and team facilities for its minor league clubs in 1990. Cities began upgrading stadiums built a half-century earlier, and more fans came. Other cities competed to attract teams with promises of new facilities.
With only so many minor league clubs out there, demand rose, and so did franchise values. And where theres money to be made, big names rush in. Among the notable owners of minor league teams: Mandalay Sports Entertainment and Comcast Corp., as well as a host of Hall of Fame baseball players.
George Brett, originally part of the ownership group that entered Spokane in the mid-1980s, bought the Class A Tri-City Dust Devils in 2004 for an estimated $2 million. For about twice that amount, the Seattle Mariners-affiliated Everett AquaSox went in 2005 from the hands of a local family to the Carfagna family of Ohio, which owns three minor league teams in as many states. In April, the Carfagnas added former Mariner great Jay Buhner, 2004 gubernatorial candidate Dino Rossi, and several Snohomish County business leaders as minority owners.
Washington’s biggest minor league team, the Tacoma Rainiers, caught the eyes last year of Texas-based Schlegel Sports and pop singer Nick Lachey. Schlegel already owned two minor league hockey teams in the Midwest before closing the deal for the Rainiers, its first venture into baseball, last November. Its a very good sport to be in from an economic perspective, Schlegel Sports President Michael McCall says.
The Rainiers, affiliated with the Seattle Mariners, are the states only Class AAA team, drawing 313,031 fans last year. Compare that with 60,000 to 200,000 fans in 2006 for each of Washingtons four Class A teams, which play a shorter summer season.
Nationally, some AAA franchises are now worth more than $20 million. Stadiums for those teams often have luxury boxes and modern touches once found exclusively in the big leagues. The Rainiers new owners hope to grab about $15 million in public and private money to add some of those perks to Tacomas Cheney Stadium, built nearly 50 years ago. The renovation plan calls for adding box suites, a club level atop the stands and a new outfield area for families.
While minor league parks are courting corporate dollars with luxury boxes and the like, most teams have succeeded by marketing themselves as affordable family entertainment. Seats at the Mariners Safeco Field range from $7 to $60 each, while fans can score the best seats at the Everett AquaSoxs home stadium for $15 apiece. Hot dogs go for $1 in the later innings.
Theyre all still very intimate ballparks in the Northwest League, says Brent Miles, president and general manager of the Dust Devils, whose games can be seen for as little as $4. All the teams make a good effort at entertainment.
Bavasi calls the minor league product baseball as theater. Hes referring to the fact that with affiliated minor league teams, franchise owners dont have control over the quality of play on the field. The parent clubs dictate who coaches their minor league teams and which players are on the grass. Major League Baseball also demands a percentage of ticket revenue.
The trade-off for minor league owners is that they dont have to deal with player salaries or the athletes off-field antics. Instead, the owners focus on how to get fans to the ballpark.
And thats where the theater aspect comes in. Teams employ wacky promotions, offbeat between-inning giveaways and fireworks to keep families entertained.
FOR THE LOVE OF BASEBALL
For many fans, that just adds to the whole charm of the night out, Bavasi says. Which raises the question, can old-fashioned minor league charm survive the age of burgeoning monetary values and increased corporate ownership?
Mike and Laura McMurray own the Northwest Leagues Yakima Bears, the states smallest-market minor league team. The Bears are the prototypical mom-and-pop operation. She does the bookkeeping; he doubles as the teams official scorekeeper.
Were in this for the love of baseball, Mike McMurray says, and we cant wait for the season to start.
While he has watched the corporatization of the minor leagues during the last decade, McMurray says things havent really changed for teams like the Bears. And while the McMurrays see fewer owners like themselves in the minor leagues, they say there are safeguards to make sure owners cant hurt franchises by trying to squeeze out an excessive profit. For one, fellow owners in the Northwest League get to vote on ownership changes.
Within the league, when we evaluate potential owners, we look at that, to see that they have an interest beyond the bottom line, Mike McMurray says. There are also rules preventing one owner from holding more than one team in a region.
Andrew Billig, president and part owner of the Spokane Indians, says the Northwest Leagues reputation attracts better ownership for teams that have previously struggled financially.
Its an extremely well-run league, and the franchises in it are, top to bottom, wellmanaged, he says.
Billig argues that bigger, more-corporate ownership can bring stability. If teams are well-run and are attracting fans, theyre less likely to leave town. Because of these great fan bases and facilities, the fans are rewarded with great teams, he says.
In Tacoma, for example, when interest in the Rainiers faltered under the former owners, rumors surfaced that the team might leave town, McCall says. Thats not likely now. In addition to turning around attendance and improving Cheney Stadium, he says, Schlegel and Lachey may look for local ownership partners.
While Bavasi admits it would be much tougher for him and his wife to buy a team like the AquaSox today, he doesnt worry about the sports future under bigger owners. Because the industry thrives on repeatedly bringing in families every summer, owners are unlikely to mess with a winning formula.
If someone does, theyll find its a harder business to operate, and theyll end up selling it to someone who gets it, Bavasi says. Billig adds that just because some owners can boast of more money or business acumen than those of a generation or two ago, it doesnt mean they dont love the sport and fans. At Indians games, one or more of the team owners are often at the gates postgame to say goodnight, he says.
Brett, who has seen his investment in the Spokane Indians multiply over the years, jokes that his only regret was his decision to share ownership.
Weve had so much fun with it, he says. I dont think Ill ever sell it.
Eric Fetters-Walp is an Everett-based writer.
Interested in the purchase, sale or investment in a professional sports team, e-sports organization or in sports tech? We’d welcome the opportunity to chat further with you about the various opportunities that exist in today’s market. Contact: Tommy George, President, (240) 409-6297; tgeorge@thesportsadvisorygroup.com.