Winning Investor Group Includes Derek Jeter, Michael Jordan

The journey to find a buyer for the Miami Marlins seems to have come to an end, as an investor group led by Derek Jeter and Bruce Sherman has reportedly reached a handshake agreement to purchase the club for $1.2 billion.

According to reports, Jeter's group includes roughly 10 different investors, the largest of which is former money manager Bruce Sherman, who will reportedly be sinking $300 million into the club. Jeter, the former New York Yankees great, will be investing $25 million and potentially running the team.

Major League Baseball must OK the deal before it goes through. The league is likely eager to replace Jeffrey Loria, who is one of the most unpopular owners in the league. Loria, who bought the team for $158 million in 2002, has been insistent on a billion dollar plus valuation for the club, despite the fact that the Marlins have struggled on the field for a number of years.

There are also reports that Jorge Mas, who was one of the competing bidders, will join the Jeter/Sherman group and invest $200 million.

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The $1.2 billion valuation for the Marlins, which is roughly 25% more than what Forbes currently has the team valued at, largely comes as a result of two factors - rapidly increasing TV deals and the relative scarcity of major league franchises to purchase.

Live sports programming has increased in value to advertisers over the past couple of decades, and this has translated into increasingly lucrative national and local TV deals. In the end, sports is one of the few things that people will routinely watch live, which means that they will consume all of the commercials. This has resulted in increasingly increase TV rights deals that have lined the pockets of owners in all four of the major sports league in North America.

In addition, owning a professional sports club is something that most billionaires desire. The problem? There aren't many for sale. Steve Ballmer needed to overpay (at the time) to purchase the Los Angeles Clippers - it's not everyday that a major sports franchise becomes available, especially one that is located in a major market like Los Angeles. There aren't many franchises that come up for sale, which means that many billionaires are willing to overpay because they are so scarce.

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The other Major League Baseball owners will likely be overjoyed to replace Jeffrey Loria for a number of reasons. Loria clearly gamed the system, trading away good players to keep his payroll low so that the Marlins could collect big revenue sharing checks from the rest of the league. In addition, he promised a strong Miami Marlins team when a new ballpark was built, only to gut the team a short time later.

Collect young, cheap talent from the rest of the league in exchange for your best players. Collect revenue sharing checks from the richest teams in the league. Every 6-7 years, when your good, young talent puts everything together, make a run to the World Series. Then, burn it down, trade away all of your best players and start again. This has been the Loria formula in Miami.

Owners, however, will be overjoyed to see the $1.2 billion price tag for the Marlins, as it will inflate the value of every other team in the league.

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Source: Fox Business - Derek Jeter Has a Handshake Agreement With Miami Marlins, May Not Call the Shots

Filed under: General Knowledge