Marlins sale: Can a new ownership group alone turn the Fish’s ink from red to black?
If the transaction is completed, the sale of the Miami Marlins to a group with the brand power of future Hall of Fame member Derek Jeter should supply a temporary spike in the business. How long that will last remains to be seen, however.
The news that a group led by former MLB shortstop Derek Jeter and former Florida governor Jeb Bush has won a bidding war for the rights to purchase the Miami Marlins for $1.3 billion has been preemptively celebrated by Marlins fans as a legitimate chance at liberating the team from one of sports’ most beguiled owners, Jeffrey Loria. After the parade dies down, however, the heroes of the Marlins sale will have to deal with the same set of challenges that Loria has since he bought the team in 2002.
One reason that fans should tamper their excitement is that the sale process is nowhere near completion. All the Bush/Jeter group has done is win a bidding process similar to what takes place in Monopoly when a player lands on a property and has the exclusive right to buy it for the stated priced on the property’s title-deed. No actual money has changed hands, and it’s now up to the members of the group to prove that they can actual come up with $1.3 billion. If that happens, then the sale would still have to be approved by MLB. It’s going to be a while.
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In the meantime, the group will probably be ascertaining the Marlins’ financial situation. The team has had a negative operating income in three of the past five seasons. That comes thanks to paltry attendance (the estimated season ticket holder list is under 5,000), perhaps the least-lucrative local television deal in MLB, and a payroll designed to live off the league’s corporate welfare.
Being part of MLB is what has kept the Marlins swimming, and it’s lucrative enough to attract buyers apparently. The revenue from MLB Advanced Media, which all 30 teams share equally, continues to grow. Add in that the Marlins get an annual check from the MLB baseball-related revenue sharing pool. That comes to millions of dollars in revenue that the Marlins themselves did little if any work for.
There’s the promise of the Marlins’ bad TV deal expiring in 2020, and what other teams have gotten recently for the rights to broadcast their games locally may have had investors salivating. That might be a red herring, however. The prices that broadcasters are paying for these rights can’t continue to escalate, especially given growing trends of fans choosing to watch sports on the web as opposed to television. While it’s true that streaming rights are usually included in the broadcast contracts, it’s questionable whether the Marlins will get a premium in a market that is indifferent at best to the team.
Consider as well that right after the Marlins’ current TV deal expires, the ominous date of Giancarlo Stanton’s player option arrives. Stanton can opt out of his current contract after the 2020 season. Barring an unprecedented financial turnaround over the next four years, the Marlins badly need him to do so. Most of the $325 million total value of the contract is in the years after his player option. If Stanton chooses to continue in his current deal, that would significantly handcuff Miami’s ability to field a competitive team. Failing to field a team that is competitive on an annual basis could further the sentiments of the local population that ownership isn’t interested in winning.
That’s the huge challenge that any new ownership group will face, and it will take hiring a public relations team capable of working miracles. The damage that Loria’s mismanagement of the franchise and looting of the taxpayers in the stadium deal has done may be irreversible until a new generation of Miamians that has never known Loria come of age. While the new owners wait for that to happen, they will still have to deal with the realities of the situation as it stands right now.
If further evidence of how poor the sentiment in Miami is toward the team is necessary, consider the fact that the commercial space attached to the stadium is only half full, and that after years of the city working to sell the space. In many other MLB markets, commercial real estate connected to the venue which an MLB team plays its home games in is in high demand because of the amount of foot traffic. In Miami, being connected to the Marlins can be seen as a detraction from public appeal.
If revenue from local sources like TV money and ticket sales stay low, the new owners will face the same situation that Loria has for years. They can either gut payroll to get under budget and risk being perceived as no different from Loria in that regard or continue to spend what it takes to field a competitive team and hope that winning solves problems. Either way, it’s a huge risk and ultimately the former scenario will become the more likely of the two, especially if Stanton doesn’t opt out.
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There’s no better opportunity to create a narrative around the team of a new day than a complete change in ownership. The details of the situation make turning the Fish around an arduous task, however. The current has been moving strongly in the other direction for years.