By Joel hammond
Crain’s Cleveland Business
Published: November 19, 2010
Paul Dolan told The Plain Dealer this week he and his father weren’t looking to sell the team. But I couldn’t help but wonder how closely the Indians would listen if someone offered a big sum.
That wondering increased this morning, when news of the Houston Astros getting serious about selling broke. Astros owner Drayton McLane has hired an investment banker to help with a sale and he wants — are you sitting down? — $800 million. He bought the team for $117 million, though anyone’s purchase would include a stake in a new Comcast regional sports network created for the Astros and Rockets.
According to Maury Brown of BizofBaseball, the Astros have gained $116 million in value since 2001.
The Indians, according to Forbes, still are worth $391 million, though that’s down from $417 million in 2008 but up from $292 million as recently as 2004. So there’s value there.
But the differences in the situations lie in the markets and the RSNs. CSN Houston likely holds far more value, because of what this chart clearly lays out: Coverage areas are vastly different.
Additionally, the market plays perhaps the biggest role.
Indians team president Mark Shapiro often has laid out the challenge here in this way: Cleveland has lost vast amounts of people, and many of those people have been some of the region’s biggest earners. In other words, when Fortune 500 companies leave the region (or close), and take their well-paid employees with them, it hurts the Indians doubly: fewer fans with less money to spend, and fewer corporate clients to splurge for front-row tickets or one or two of Progressive Field’s vastly overbuilt 121 suites.
“In Houston, oil and gas are huge parts of the economy, but it’s also diverse,” said Michael Rapkoch, the president and founder of Addison, Texas-based Sports Value Consulting LLC, in a Friday morning phone call. “In Cleveland, the economy’s not as strong. What’s the draw?”
As an aside, think about this: McLane, according to Forbes, is worth $1.6 billion. And yet he still finds owning a pro sports team a drain on his finances. That’s alarming, folks, and it tells me that we haven’t seen the last of sports team sales; far from it.
If you want my opinion — and if you’re reading this, you probably do — I’d tell you that if someone offered the Dolans $400 million, or $375 million, or $350 million, for the team, they’d sell in an instant. They bought the team, reportedly, for $323 million, from Dick Jacobs.
“In this current economy, there’s not going be the right price,” Mr. Rapkoch said. “Buyers are being more cautious about lending, not offering exorbitant amounts of money.”