David Samson on the Importance of the A's Valuation
A couple of days ago, we discussed the fact that Oakland A's owner John Fisher has hired a company to help find investors for the team. In other words, help him find someone, or a number of someones, to sell a portion of the team to that would net him $500 million to funnel into the ballpark project.
Former Miami Marlins President David Samson said on his Nothing Personal podcast a lot of what we mentioned a few days ago, but he also brought up a couple of very interesting points.
The first being that while the group has been hired, none of the reporting has specified exactly where they're looking. "He needs the money even if it's not for a stadium in Vegas. Because he's got to build a stadium somewhere." Samson believes the articles that have covered the topic should be saying that the team has taken a step forward in trying to finance a new ballpark in a "as yet to be determined location."
Without the necessary documentation for funding and construction agreements, Samson is not convinced that Vegas is a done deal.
This is a sentiment that a lot of people are starting to believe with the lack of progress the A's have made since securing public financing in Nevada nearly a year ago. In the past 11 months the A's have been granted permission from the owners to relocate the franchise, but not much else. While many took that owner's vote as the final nail in the A's relocation, giving someone permission doesn't do much if they don't have the rest of their ducks in a row.
Reader, I grant you permission to go purchase the house of your dreams. Do you now own that house? Are you any closer to owning that dream house with my permission? Same thing with the owners approving relocation.
The other interesting part of Samson's discussion on the topic goes off of the valuation of the team for this partial sale, something we have been mentioning for months now. Yet, he takes it a step further.
"We'll see what the valuation is for the Oakland A's, which will be a very telling thing that MLB is watching for. The valuation is when you try to raise money with limited partners, and you're offering 10% of the team, there is a full purchase price number that is a pegged number. We are going to value this team at a billion dollars. For 10%, give me $100 million. If the team is valued at a billion and they're trying to get $500 million, then that means that he's going to have to sell 50% of his team.
"It's going to be fascinating to see how baseball gets itself involved in A) who these partners are, and B) what valuation is used for this team. Because other owners are looking. John Fisher is getting Vegas without a relocation fee. He's going to put money into a stadium like the rest of the owners have had to do. But imagine if he gets limited partners in at a valuation of $2 billion. More than the Orioles sold for. You don't think owners are going to say, 'wow, the team in Oakland isn't worth $2 billion. How's he getting the ability to get limited partners at that valuation and we're not charging him a fee to put himself in a better position in Vegas than he was in Oakland?'"
The valuation has always been the fascinating part of this process, and you have to imagine that the reason that he hasn't been able to find a limited partner is because they'd either want control of the club, or they're not getting the right percentage of the team due to the valuation Fisher is looking to sell at. That would lead us to believe he's not looking for the current valuation, but a number closer to what the club could potentially be worth once the ballpark is built.
This entire relocation process has been messy from the beginning. Fisher could be angering the other owners by skating around the relocation fee, then only selling part of the team to (potentially) skirt the flip tax they put in place to avoid this very scenario. They've been letting him slide because they don't want to set too many precedents with kicking other owners out of the league, but at some point their patience could run out. If Fisher's plan unfolds the way that Samson laid out, you have to wonder how much rope the owners are wiling to keep giving him when he's costing them all money on numerous fronts.
JASON BURKE
Jason is the host of the Locked on A's podcast, and the managing editor of Inside the A's. He's a new father and can't wait to take his son to his first baseball game at the Coliseum.