Major League Baseball has promised what has been described as a “proctology” exam of a recent winning bid submitted for the Miami Marlins by an investing team that includes former New York Yankees All-Star Derek Jeter – a move some say might stall the sale of the team for months, FOX Business has learned.
Continue Reading Below
The directive – which has yet to be reported – was made during the recent baseball owners meeting in Chicago on Aug. 16 and 17, according to people present at the meetings. It was delivered not to Jeter himself, but to one of his business partners, Bruce Sherman, a former money manager and venture capitalist, who has pledged more than $300 million as part of Jeter’s $1.2 billion bid for the team, these people add.
Sherman, who is considered the top investor in the Jeter bid, attended the owners meeting, while Jeter did not.
As reported, Jeter’s investor group was selected by owner Jeffrey Loria as the winning bid for the franchise, ending a five-month contest among a slew of prominent investors and even some politicians looking to purchase the team. The Marlins are one of the MLB’s more mediocre franchises on the field, yet even worse is the team’s financial condition, which includes poor attendance, high levels of debt and tens of millions of dollars a year in losses, according to baseball executives. MLB officials are concerned that any new ownership team must have strong financial backing in order to return the team to profitability.
Still, Loria is set to cash in handsomely if the Jeter deal goes through. He purchased the team in 2002 for a mere $158 million and thanks to the scarcity of franchises available for sale, will earn a profit several times the original price if the Jeter bid passes league muster during the examination.
Key points that will be examined by MLB officials will be whether the various investors in the Jeter group, including Sherman, will be able to meet their obligations as part of the bid, and whether the bid itself contains significantly more cash than debt, according to MLB officials. MLB officials and other baseball executives tell FOX Business that the examination would likely conclude by the end of the postseason in early November, the possible last game of the World Series.
These same league executives say there is no indication at this time that the bid isn’t a good one, and that any bid would receive a rigorous review.
“The owners told Sherman that the Jeter bid will get what amounts to a proctology exam,” said one baseball executive who spoke on the condition of anonymity and has direct knowledge of the owners meeting. “And they indicated that exam could take a long time.”
A spokesman for MLB had no comment, but wouldn’t deny that the Jeter bid will come under rigorous scrutiny. A spokesman for the Marlins had no comment; Jeter’s agent, Casey Close, didn’t return calls for comment. Sherman couldn’t be reached for comment.
In order for the sale of the Marlins to be approved, three-quarters of the 30 major league owners must approve the sale, thus giving the group enormous power in whether Jeter will win the deal. Among the concerns expressed during the meeting: Whether Jeter would be the so-called “control person” of the team even though he has placed relatively little of his own money (around $20 million) into the bid, and whether anyone from the current Marlins front office would play a management role in the team going forward, these people add.
Some owners are concerned that despite Jeter’s obvious baseball prowess –he was a perennial All-Star during his long career that ended in 2014 and a likely Hall of Famer – he doesn’t have the business knowledge to take total management control of a team with as many financial problems as the Marlins.
Sherman, who is retired after a long and lucrative career on Wall Street largely as an investor, assured the owners that he would be the control person, meaning he would be the de-facto owner at least for the immediate future, people with knowledge of the owners meeting say. The Jeter bid is complex; it combines financial contributions from several other investors other than Sherman and Jeter, including a chunk of money from a firm affiliated with personal computer honcho Michael Dell in the form of preferred stock, which might pose a problem for MLB since such an investment has debt-like characteristics that the league frowns upon.
Sherman, meanwhile, also indicated he will play a hands-on role in the team's business affairs, while Jeter will play some management role, these people add. It’s unlikely anyone from current Marlins management will keep their jobs, baseball executives with knowledge of the matter say.
An MLB spokesman wouldn’t comment on the meeting but wouldn’t deny these details. Sherman didn’t return calls to comment on the remarks made during the owners meeting. A Marlins spokesman didn’t return calls for comment.
If the Jeter bid is rejected by MLB, Loria would be back to square one, possibly having to reopen the bidding process to other investors such as Miami businessman Jorge Mas, who balked at matching Jeter’s $1.2 billion bid, according to people with knowledge of the matter. Mas didn’t return calls for comment.
Meanwhile, The Associated Press is reporting that Jeter and Sherman are holding meetings on Tuesday and Wednesday at Marlins Park with various heads of departments ranging from baseball operations to marketing and sales. The purpose of the meeting, according to the AP, is to ease the transition in their investment group’s pending purchase of the team.
As first reported by FOX Business in April—the Marlins bidding war captivated both baseball and Wall Street executives who broker such deals because of the high-profile people involved in the process, including the likes of former Florida Gov. Jeb Bush, Tagg Romney, a hedge fund manager and son of 2012 presidential candidate Mitt Romney, and of course Jeter, who has made no secret of his desire to run a major league team after he retired in 2014.
Jeter hired high-profile investment banker Gregory Fleming to cobble together a group of investors to meet a hefty asking price demanded by Loria and team president David Samson of $1 billion or more. Samson didn’t return calls for comment.