By Dan Dorfman
Last week, we saw another one of those periodic outbursts of acquisition fever, with both Microsoft and Facebook announcing billion-dollar deals. Even more relevant to sports fans is the question of whether that fever could soon spread to our national pastime, as well, notably to the storied New York Yankees, which, according to an estimate from one financial big hitter, could command a $3-$4 billion price tag.
That’s the enticing speculation making the rounds among some big-time financial players in sports circles following the recent blockbuster $2 billion sale of the Los Angeles Dodgers to a group, including former basketball star Magic Johnson and film producer Peter Gruber, the man behind “Rain Man.” That purchase price, which will include the use of funds from insurance companies, is widely perceived as out of touch with economic reality and strictly an ego trip for rich guys , with some baseball watchers of the opinion that the buyers may have overpaid by as much as $500 million.
No doubt reflecting the massive bucks shelled out for the Dodgers, which should appreciably inflate the value of just about other Major League baseball team, there’s talk that more buyouts of baseball franchises could be on the way. Far and away the most intriguing scuttlebutt centers on a possible deal for baseball’s Rolls Royce, the New York Yankees, now in its 111th year and the winner of 27 World Series titles and 40 American League pennants. In other words, so goes the speculation, the Yankees could be in play.
Nope, there’s been no public suggestion from the family of the late George Steinbrenner that the team might be up for sale, namely from sons Hal and Hank. They took over management of the Yankees operations in 2007 in the face of their dad’s declining health and later assumed control of the baseball club following George’s death in 2010.
Neither of the sons could be reached for comment at the time of this writing, but at least some financial players, including a couple of unsuccessful bidders for the Dodgers, believe there’s a possibility the new Yankees bosses might be amenable to a deal, given the sudden surge in the value of baseball franchises.
One of the bidders, who feels “the time and price could be right for a sale by the Steinbrenners,” thinks the sooner the better, given the probability of higher capital gains taxes and changes in the tax laws. Another catalyst, he believes, might well be that the sons may really not have as much of an attachment to baseball as their father did.
Speculating on a possible sale of the Yankees, one of the Dodgers bidders thinks it’s clearly in the realm of possibility, given the giant sale price. Characterizing such a deal as “a once-in-a-lifetime bonanza” for the sellers, he notes that “only fools ignore bonanzas,” or as he quips, “an easy shot at a grand slam home run.”
That’s a reference to the lofty price the Yankees would likely fetch. One of the Dodgers bidders estimates such a transaction, which presumably would include the team’s 37% stake in the YES sports network, could run about $3 billion, give or take a few hundred million. The other bidder puts the price at between $3 billion and $4 billion.
Such prices would represent a tremendous premium over the $10 million that George Steinbrenner and a group of investors paid former Yankees owner CBS for the club in 1973. Actually, it really wasn’t $10 million since the deal also included two garages that CBS had bought from New York City. After the deal was closed, CBS bought back the two garages for $1.2 million. So the net cost for the Yankees actually ran $8.8 million, clearly one of the great all-time purchases.
Shortly before the Dodgers sale, Forbes estimated the value of the Yankees at $1.85 billion and places its current annual revenues at $439 million after revenue sharing. Judging from the current valuations being discussed, Forbes apparently low-balled the club’s value. It did the same with the Dodgers, whose value the magazine estimated at $1.4 billion.
If indeed the new Yankees management could be induced to sell the team–which, of course, is a big if–the view is there would likely be more than one buyer, given its hefty price valuation. One name that has popped up a number of times as a potential buyer is billionaire hedge fund manager Steve Cohen of SAC Capital, who, in the past, has expressed an interest in buying a minority stake in the Mets and all of the Dodgers.
Other names being bandied about as possible buyers are the Dolan family, which controls Cablevision and Madison Square Garden, the owner of the New York Knicks and the Rangers, Michael Bloomberg, Rudy Giuliani, Joe Torre, News Corp., and perhaps some Russian billionaire since one of them, Mikhail Prokhorov, Russia’s richest man, has already entered the U.S. sports business by buying a controlling 80% stake in the New York Nets basketball team.
The Yankees aside, some baseball watchers figure the next team to go is the San Diego Padres, whose numerous internal problems have been well publicized.
What do you think? E-mail me at Dandordan@aol.com
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