There are nearly one billion reasons why the Jeter-Bush team may not win the Miami Marlins after-all.
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Derek Jeter and Jeb Bush face the herculean task of having to raise nearly $1 billion in cash from outside investors if they want to complete their planned purchase of the Miami Marlins, a move that should, if successful, allow them to fulfill their $1.34 billion bid for the Major League Baseball franchise, FOX Business has learned.
Making the cash raise easier for the duo is that they have the support of just about every owner in baseball who will see the value of their team soar if they are successful, according to people with knowledge of the matter. Indeed, if the $1.34 billion deal is completed, baseball’s most valuable franchise, the New York Yankees, would be valued at around $5 billion, a 56 percent increase from its estimated value of about $3.2 billion, these same people say.
These details of the Marlins sale, which have yet to be reported, helps explain the high stakes drama taking place over one of baseball’s more mediocre franchises—and the financial tightrope Jeter and Bush must walk to secure their bid, while staying in control of the franchise if they do indeed come up with the cash.
Jeffrey Loria, the Marlins owner, purchased the team in 2003 for $158 million. Despite winning a single World Series, the team has largely underperformed both on the field and financially, accumulating a sizable amount of debt and slow revenue growth. Baseball executives believe the team is losing money.
But because of scarcity value—there are no other teams actively seeking suitors—Loria can demand a massive premium for the sale of the club, far higher than his purchase price, or the franchise’s value based on the team’s financial metrics.
The investment team led by Jeter, an all-star shortstop for the Yankees, and Bush, the former Florida governor and 2016 GOP presidential candidate, have now found themselves in the middle of this frenzy, when, as reported by FOX Business, they emerged as the “preferred bidder” for the team with their $1.34 billion offer for the Marlins.
Jeter and Bush are expected to invest no more than $200 million combined, which means they will have to raise between $800 million and $900 million in cash to complete the purchase under the guidelines of major league commissioner Rob Manfred, who won’t approve a deal with a high level of debt.
The task will be a difficult one if Jeter and Bush want to remain as the principal owners of the team—and not give up operating control to other investors-- given how much money they will need to raise, baseball executives tell FOX Business.
“How many people are willing simply to write a $100 million check and not have a say in running the team?” said one senior baseball executive who spoke on the condition of anonymity. “We all want them to succeed because Jeb and Jeter would be great for baseball, but it won’t be easy.”
A spokesman for Bush and Jeter didn’t return a calls for comment, nor did spokesmen for Romney and Rothbaum. A spokesman for the Miami Marlins also had no immediate comment.
In securing the preferred bid, Jeter and Bush bested the $1.1 billion offer from a group led by Tagg Romney, the son of 2012 GOP presidential candidate Mitt Romney, and the $1 billion bid from a group led by hedge fund investor Wayne Rothbaum, the founder of Quogue Capital.
As a result the Jeter-Bush team received what’s known as an “exclusive negotiating window” to raise money to complete the purchase, people with direct knowledge of the matter tell FOX Business. This window is expected to last at least until June, as the duo and investment banker, Gregg Fleming, a former top executive at Morgan Stanley (NYSE:MS), works around the clock dialing for dollars to close the sale, these people add.
Fleming is said have cast a wide net for investors, including seeking possible candidates from South America, according to people with direct knowledge of the matter.
The difficult task of raising so much money is why Major League Baseball has been hesitant to emphatically state that Jeter and Bush have won the bidding war, despite some initial reports suggesting they had.
A senior executive inside the commissioner’s office said that as of now the Marlins haven’t officially approached Major League Baseball about the Jeter-Bush bid. That will be done if and when they raise the requisite cash to complete the deal.
Meanwhile, other possible bidders are willing to step in if the Jeter-Bush bid falls through, the executive said.
“There are multiple bidders for the Marlins. We still have two groups involved in the process,” said Manfred at an event to commemorate the ground breaking for the Jackie Robinson Museum on Thursday. “There is no agreement in place. We're working with more than one group, and when we have a definitive agreement we'll make an announcement."