Cleveland Indians sold for record $320 million

Price paid by attorney also reflects favorably on value of Orioles

November 05, 1999|By Jon Morgan | Jon Morgan,SUN STAFF

The Indians announced yesterday that a Cleveland-area attorney had agreed to buy the baseball club for a record $320 million, continuing the dizzying upward spiral in the value of U.S. sports teams.

Lawrence J. Dolan, 68, vowed to improve the franchise, which has reached the top of its division the past five years and the World Series in 1995 and 1997, where it lost both times. The team last won the series in 1948.

"I don't want one World Series for the city of Cleveland," Dolan told reporters in Cleveland. "I want a string of them."

The price falls short of that paid for several recent NFL franchises, but it eclipses the $311 million paid last year for the Los Angeles Dodgers. Riding a boom fueled by a robust economy and American's insatiable appetite for sports, all four major leagues have seen franchises sold for record prices within the past two years.

The trend augurs well for Peter Angelos' investment in the Orioles, a franchise that is, in many respects, a mirror image of the Indians. Both play before sellout crowds in modern downtown stadiums built by taxpayers.

The Orioles are not for sale, but if they were able to fetch the same price, it would nearly double the $173 million that Angelos' investment group paid in 1993.

The handsome price paid for the Indians also provides fodder for critics who say teams are more profitable than their owners let on and that the public's investment in stadiums is misplaced.

The Indians' managing partner, developer Richard E. Jacobs, has profited handsomely from his ownership. He and his late brother paid $35 million in 1986. He issued stock in the Indians last year, creating the only publicly traded team in Major League Baseball, but retained voting control.

"I've had a lot of fun with the team," Jacobs, 74, said yesterday. "But life is going to go on. I don't think I'll suffer from seller's remorse."

He oversaw the rejuvenation of the franchise from a perennial doormat that once threatened to move to New Orleans if it didn't get a new stadium to one of the most successful in baseball.

His agreement with Dolan calls for stockholders to receive between $22.25 and $22.75 a share, depending on final negotiations. The stock debuted at $15 in June 1998. With the purchase, the team would again be privately held.

The purchase must be approved by Major League Baseball, a process that is expected to take until early next year.

Dolan and his brother, Charles, the chairman of New York-based Cablevision, have been trying to buy a professional sports franchise for some time. They went after the Cincinnati Reds and New York Yankees in baseball and the NFL's Cleveland Browns and Washington Redskins.

Cablevision is the majority owner of the NBA's New York Knicks, the NHL's New York Rangers and Madison Square Garden. But Larry Dolan said that his brother and Cablevision are not involved in the Indians deal.

Charles Dolan is reportedly interested in purchasing the New York Jets, and his company is pursuing the Mets.

"The owner of the Cleveland Indians is going to be myself. My brother, Charles, is not involved," Larry Dolan said. "What he does is his business. I did tell him, `Charles, what we need is a pitcher. If you can't pitch, we don't need you.' "

According to documents filed with the Securities and Exchange Commission, the Indians posted an operating profit of $12.7 million last year on revenues of $144.6 million. Jacobs, as chairman, received a salary of $467,424 last year.

Those figures reflect a solid return, comparable to other industries and investments, said Mark S. Rosentraub, an Indiana University professor whose book "Major League Losers" provided a scathing analysis of the nation's stadium-building binge.

The investment is all the more appealing considering baseball's protected status under antitrust laws, shielding it from competition.

"He made an operating profit, and he made a sale profit on the team, and the players are doing very well," Rosentraub said.

The public investment in Cleveland's stadium, Jacobs Field, amounts to a taxpayer subsidy for the team, he said. The Indians lease the $175 million stadium.

"It's just what we've been saying all along. These subsidies do nothing but transfer wealth to some of the most privileged members of society," Rosentraub said.

Supporters argue that new stadiums benefit communities, too, providing pride, jobs and a spark for development in beleaguered downtowns.

Of course, not every team enjoys the enthusiasm shown by Cleveland fans and the revenue of a new ballpark. Jacobs Field, which opened in 1994, has been sold out for 373 consecutive games. The Indians announced plans yesterday to raise ticket prices an average of 10 percent.

One team that has done well is the Orioles, whose Oriole Park at Camden Yards opened two years before Jacobs Field and boasts a similar array of cash-generating luxury seats that appeal to the corporate set. Both teams rank among the best attended in baseball, and, as a result, are among the top revenue generators.

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