Is Jeffrey Loria’s Marlins Sale the Most Profitable Ever? by Craig Edwards February 16, 2017 Five years ago, the Los Angeles Dodgers and San Diego Padres were sold to new owners, both partially spurred on by messy divorces. Since that time, there’s been just one change in Major League Baseball ownership, when John Staunton took control of the Seattle Mariners last season as Nintendo stepped aside. While we don’t know for sure when the next sale will be, there are rumors that Jeffrey Loria could sell the Miami Marlins for $1.6 billion, a massive increase over the 2002 sale price of $158.5 million and more than double Forbes’ current estimate of value. Loria doesn’t have a great reputation as a baseball owner, and he is absolutely going to cash in, but where would this sale rank in MLB history? Including a potential Marlins sale, there have been by my count, 33 major transfers in ownership over the last 30 years. In taking a look at previous sales, we can compare them to Loria’s potential sale and determine how he did. In terms of a straight profit with sale price minus purchase price, Loria’s is big, but not bigger than Frank McCourt’s when he sold the Dodgers. The graph below shows the 33 sales. Not all sales come under the same circumstances. A dollar in 1993 isn’t worth the same as a dollar now. Inflation impacts how much actual value a sale derived — and the longer a single owner has operated a team, the higher the raw profit totals will be. The recent Dodgers sale was massive, for example, but we have to adjust for the value of the dollar when considering precisely how massive. To compensate for inflation during the length of time between sales, I calculated the annual percentage gain of each franchise, factoring inflation into the sale price. The chart below shows the same 33 sales above, this time listed by the annual gain. Annual Return for Franchise Sales Since 1987 Year of Sale Sale Price (M) Years Owned Profit (M) Annual Increase (w/ Inflation) WAS 2006 $450 4 $330 35.2% CIN 2005 $270 6 $203 22.9% LAD 2012 $2,000 8 $1,570 18.3% BAL 1988 $70 9 $58 15.2% BAL 1993 $173 5 $103 15.1% MIA 2017 $1,600 15 $1,442 14.4% CLE 1999 $323 13 $278 12.7% SDP 2012 $800 18 $720 10.9% CHC 2009 $845 28 $825 10.8% SFG 1992 $100 16 $92 10.7% PIT 1996 $92 11 $70 10.0% SEA 2016 $1,400 24 $1,300 9.1% OAK 1995 $85 15 $73 9.1% TEX 1998 $250 9 $161 8.8% TOR 2000 $140 24 $133 8.2% ATL 2007 $450 31 $438 7.8% NYM 2002 $391 16 $311 7.1% HOU 2011 $615 19 $498 6.4% MIA 1999 $158 6 $63 6.3% BOS 2002 $660 69 $659 5.4% KCR 2000 $96 28 $91 5.3% OAK 2005 $180 10 $95 5.2% SEA 1992 $100 3 $24 5.2% TEX 2010 $593 12 $343 4.9% TBR 2004 $200 6 $70 4.8% STL 1995 $150 42 $146 4.7% MIL 2005 $223 35 $212 4.1% LAD 2004 $430 6 $119 3.0% LAA 2003 $184 5 $34 1.7% DET 1992 $82 9 $29 1.0% MON 2002 $120 11 $20 -0.9% SDP 1994 $80 4 $5 -1.5% MIA 2002 $159 3 $1 -2.4% There are six franchises that haven’t changed hands in the past 30 years. Two of them are expansion franchises, the Colorado Rockies and Arizona Diamondbacks. The other four simply haven’t been involved in a sale during that period: the Minnesota Twins, New York Yankees, Chicago White Sox and Philadelphia Phillies. For the sake of comparison, here are how those franchise numbers would match up using current Forbes valuations. Profits in a Hypothetical Sale Last Sale Sale Price Forbes Value Annual Increase (factoring inflation) Yankees 1973 $8.7 M $3.4 B 10.5% White Sox 1981 $20 M $1.05 B 8.7% Twins 1984 $44 M $910 M 6.9% Phillies 1981 $30 M $1.235 B 7.9% Diamondbacks 1998 $130 M $925 M 9.1% Rockies 1993 $95 M $860 M 9.9% SOURCE: Forbes So which owners did the best when selling their franchise? The answer is “all of them.” Collectively, MLB owners purchased the Montreal Expos in 2002 for the very reasonable price of $120 million. Any individual owner would likely have a difficult time moving a franchise due to the antitrust exemption and objections from competing markets. All the owners together had no problem, after failing to contract the Twins and Expos like they planned, moving the Expos from Montreal to one of the biggest markets in the country in Washington D.C. and then getting nearly quadruple the price paid in just four years time. Not bad, even if they did operate at a loss for a few seasons. In terms of individual team sales, Carl Lindner in Cincinnati made out pretty well buying out Marge Schott and then, a few years later, selling to current owner Bob Castellini. Then we see Frank McCourt’s sale of the Dodgers followed by two Baltimore Orioles’ sales and then we see Jeffrey Loria’s potential sale of the Marlins. On the other side of the ledger, we see a few teams sold at a loss (further explanation below), and the reigns of FOX and Disney in LA failing to yield much on their investment. Here is the same information in graph form. It might be surprising to learn that a team could sell at a loss. In the Padres case, the team was being sold right around the time of the labor stoppage, and there were considerable stadium concerns as well. The decade after the strike generally wasn’t a great period to sell. Most teams still made healthy gains even after inflation, but the bigger gains have been made in the last decade. The other sales that “lost” money are actually very much related to the biggest gainer at the time. Back in 2002, the owner of the Marlins, John Henry, wanted to buy the Boston Red Sox. Jeffrey Loria agreed to sell the Expos for $120 million and buy the Marlins for essentially the price Henry paid at $158.5 million. Loria used the $120 million from the sale plus a $38.5 million interest-free loan to cover the costs for the Marlins. The end result: Henry gets the massively profitable franchise he wants in exchange for selling low on the Marlins. Jeffrey Loria upgrades from the Expos to the Marlins in exchange for selling the Expos cheap to MLB. MLB takes control of the Expos where they will soon make massive amounts of money in exchange for getting Henry to Boston and Loria to Miami. Now we have the chart above that clearly shows a potential Marlins sale as the sixth-most profitable in terms of annual returns. What happens when we factor the above scenario into the equation as well as how Loria acquired the Expos in the first place. Not to get too deep into Jonah Keri territory, but Loria initially became a minority owner for the Expos by putting in $12 million to the team. Over the next several years, Loria made a series of cash calls that increased his share. It’s believed that these cash calls increased his shares from 24% to 94% by spending just $10 million to $15 million. Put that together and Loria essentially paid $27 million for the Marlins, not $158.5 million, and that amount might have now turned into $1.6 billion. Using the $27 million figure in the same way we did above, the annual return for Loria, factoring inflation in is 28.8%. He still comes up short of MLB in this scenario, but ahead of every other individual sale by a massive amount. So technically, maybe Loria’s potential sale isn’t the most profitable of all time, but in a more realistic sense, it probably is.