Tuesday, May 8, 2012

Hawaii Vacation Gives O'Malley Chance to Weigh Padres Purchase

      By Ross Newhan

      Peter O'Malley and family are spending this week in Hawaii. O'Malley, wife Annette and O'Malley's sister, Terry Seidler, are coming off the Diamondhead high of last week's Dodger Stadium news conference at which the new owners of the team were introduced and treated the O'Malleys like royalty, repeatedly referring to the class with which O'Malley and his father, Walter, operated the Dodgers and repeatedly asking Peter to stand for appropriate recognition.

     O'Malley, of course, would never have returned to Dodger Stadium if Frank McCourt remained the owner. He publicly criticized McCourt, recommended that he sell to benefit the community and, for a time, was a bidder in the Dodgers' bankruptcy auction in conjunction with E-Land, a South Korean conglomerate.

     "I was certainly happy with the message and vision that (the new owners) expressed," O'Malley said before leaving for Hawaii, where he and his family will spend more time discussing the possibility of going into competition with those same owners by pursuing purchase of the San Diego Padres "It's something we have been thinking about and continue to consider. It's not a matter of competition with the Dodgers, but does it make sense for the family."

     O'Malley said that his pursuit of the Dodgers regenerated family ownership interest, and while he added that it is much too early to suggest how a Padre ownership would be structured, it is likely that his son, Kevin, and a nephew, Tom Seidler, would be involved. Seidler and Kevin O'Malley have been co-owners of the minor league Visalia Rawhide, woking with the community, revitalizing the franchise and drawing record attendance for three straight years.

    It is suspected that O'Malley would not be the only failed Dodger bidder to pursue the Padres, who have the worst record in the National League, the second worst in baseball, and are drawing some of their smallest crowds to Petco Park.

    Their current sale wasn't anticipated until January when the club was returned to John Moores after major league owners suddenly failed to approve the $530 million installment purchase by a group headed by former player agent Jeff Moorad, even though that plan had drawn initial approval in 2009 when Moores, who had bought the club for $80 million in 1994 and was significantly responsible for the building of Petco Park and much of the real estate around it, was forced to sell after his wife of 44 years filed for divorce under California's joint property provisions

   The final installment payment on the $530 million was in escrow and Moorad, who has refused to discuss the situation, had gone to the January owners meeting fully expecting to be approved only to be sent home--rejected and dejected.

   Whether it was his former player agent background or questions about his financing and the possibility that some of it was based on borrowing against a since completed TV contract (illegal under baseball rules) isn't clear.

   Reached by phone, Commissioner Bud Selig refused to go into details. He acknowledged that there was strong opposition among owners and "problems within the (Moorad) partnership."

   The club was returned to Moores, who blistered Moorad in a San Diego Union column by Nick Canepa and has hired Steve Greenberg of Allen & Co. and John Moag of Moag & Co. to handle the sale. Greenberg, baseball's former deputy commissioner, was a member of the highly regarded Steven Cohen group that may have been runnerup to the $2.15 billion purchase of the Dodgers by Mark Walter and partners. Greenberg refused to say whether hedge fund billionaire Cohen would bid for the Padres but that he expected a "fair amount" of bidders and a sale within six to 12 months.

   "You are looking at a beautiful ballpark in a beautiful part of Southern California and a young and rebuilding club in a division that is wide open and you can become competitive without breaking the bank," Greenberg said by phone.

   In March, Forbes estimated the Padres value at $458 million, while estimating the Dodgers at $1.4 billion, which was shortly before the Dodgers sold for almost twice that.

   "The Dodger sale was one of a kind and we may never see that type auction again," Greenberg said. "It's hard to estimate how that will impact the sale of the Padres, but you only have to go back to the recent sale of the (Houston) Astros ($610 million) and (Chicago) Cubs ($845 million) to see how franchise values have grown. The fact is that baseball is kind of hot right now. Revenue sharing among the clubs is clearly working, the labor situation is as good as it has ever been (and clearly better than the other professional sports), and the national and local television growth has been very impressive."

    The Padres, in fact, have the solid under-footing of a new regional network: Fox Sports San Diego. While the terms aren't comparable to the new Angel TV contract or the contract that the new Dodger owners are expected to receive, the Padres will still get $1.2 billion over 20 years, a $200 million bonus and a 20% equity stake in the network.

    It is likely that the new network will play a bigger role in the sale of the Padres than the auction sale of the Dodgers.

    "We're proud of  how the asset value of our franchises has grown because it reflects how well the industry as a whole is doing," Selig said by phone, "but I don't know how the sale of the Dodgers will impact this deal. I think you are looking at two separate things."

    Said a long-time San Diego resident familiar with the Padre situation:

   "I just don't see an Oklahoma land rush (of prospective buyers), John Moores has already reaped the benefit of the land development around the stadium (and continues to reap much of that benefit) and the TV deal compares only fractionally to the Angels and Dodgers."

   Ron Fowler, a highly respected San Diego businessman and philanthropist, is a name mentioned prominently among possible local buyers.

  Meanwhile, O'Malley is enjoying the Hawaii sun and contemplating that it shines frequently in San Diego.
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    It is hoped that the new owners of the Dodgers learned a lesson--which they concede they did--in insisting under repeated questioning at the introductory news conference that Frank McCourt has no other financial connection or involvement in their ownership other than an equity percentage of any parking lot development.

   It has since become public that they must pay McCourt $14 million a year for use of the lot.

  Will the value of their word be as good as the value of their checkbook?                                        

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