An investment firm affiliated with personal computer impresario Michael Dell is helping former New York Yankees all-star Derek Jeter fulfill his dream of owning a Major League Baseball team, FOX Business has learned.
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MSD Partners – named after the founder and chief executive of Dell Technologies—has agreed to extend $175 million in financing to Jeter in his attempt to purchase the Miami Marlins baseball team, according to two people with direct knowledge of the matter. The financing is in the form of preferred stock, which will allow MSD to earn as much as 10 percent dividend if Jeter’s bid to buy the team is successful, these people add.
Jeter heads one of a handful of bidding teams interested in purchasing the Miami Marlins; his bid of around $1.3 billion was said to be short of the necessary cash to purchase the team. But in recent weeks Jeter’s investment banker, former Morgan Stanley executive Gregory Fleming, has been cobbling together commitments from various investors in an attempt to purchase the team, these people say.
It’s unclear how close Jeter is to coming up with the necessary cash, but he has recently received another large commitment from Florida money manager Bruce Sherman for as much as $300 million, these people add.
The other major bidding group is headed by South Florida billionaire Jorge Mas, who is said to be willing to pay around $1.1 billion for the team, these people add.
A spokesman for Jeter didn’t return calls for comment. Fleming declined comment. A spokesman for MSD declined comment, but would not deny the size or the terms of the commitment from the firm to Jeter.
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While Michael Dell isn’t personally working on the Jeter bid, he is said to be aware of the move, according to people with direct knowledge of the matter (through an email, Michael Dell declined comment). An investment team inside MSD Partners, which has done other such transactions, is responsible for the proposed investment.
The Marlins’ current owner Jeffrey Loria has expressed interest in selling the Marlins since late last year, and the bidding war for the team—one of the league’s more mediocre franchises—has captivated Major League Baseball for months because of the high-profile potential owners to have emerged. At one point, former Florida governor Jeb Bush, as well as Tagg Romney, a hedge fund manager and son of 2012 GOP presidential candidate Mitt Romney, were heading bidding groups for the franchise.
Loria paid $158 million for the team back in 2002, and the Marlins have struggled in recent years both on the field (the team is 47-53 so far this year) and financially with high levels of debt and operating losses. Still Loria could fetch a significant premium in any sale given the scarcity of MLB teams available to be purchased.
MSD is an offshoot of Dell’s family office investment fund, which manages his net worth, estimated at more than $20 billion that he accumulated largely through the eponymous personal computer company. In 2013, Dell Inc. was taken private by a consortium of private equity firms and other lenders, though Michael Dell himself is said to retain a 70 percent interest in the outfit.
While some people close to the deal say the Dell investment pushes Jeter closer to winning the Marlin’s bid, others are skeptical. MLB commissioner Rob Manfred and league officials must approve any transaction, and those officials are said to be wary about the use of debt or debt-like financing structures to buy a team, particularly one like the Marlins, which already has a significant amount of debt on its balance sheet.
Preferred stock, while considered a form of equity, also holds features that resemble debt. Like debt, preferred stock guarantees the holder a fixed payment either monthly or quarterly in the form of a dividend. Also in the case of bankruptcies, preferred shareholders are treated along the lines of debt holders in that these investments are paid off ahead of common stock holders when a business is liquidated.
“The league hates debt and any sale has to be approved by the league,” said one baseball executive with knowledge of the matter.
It’s unclear if the other bidders, such as Mas, are using debt or debt-like financings for their bid. But Mas has indicated that he could buy the team outright with his own money and a few outside investors, since he has a net worth of more than $1.5 billion and runs an infrastructure company MasTec as well as private equity interests. A spokesman for Mas didn’t return calls for comment.
Jeter, meanwhile, is said to have placed very little of his net worth, estimated at around $185 million according to Bankrate, his bid. With that, people close to the league commissioner’s office say Manfred favors the Mas bid, particularly given Mas’s ties to the South Florida community.
As FOX Business was first to report, Mas has indicated he might pull his bid if Loria and David Samson, the team’s president who is working on the sale, do not provide him with an exclusive window to buy the team at his price of around $1.17 billion.
A spokesman for the Marlins didn’t return calls for comment.