A group led by Massachusetts businessman Tagg Romney has submitted a bid slightly higher than former Florida Gov. Jeb Bush’s and former New York Yankees star Derek Jeter’s $1.3 billion offer to buy the Miami Marlins, and the Marlins and Major League Baseball are now evaluating both offers, an MLB source said Tuesday.
MLB is in the process of vetting numerous investors in both groups and a decision is expected shortly, the source said. The Marlins will make the decision on the new owner but any transaction must be approved by MLB.
“We have two very strong groups that we believe will have sufficient financial resources to complete the sale and run the team effectively,” MLB Commissioner Rob Manfred said in a statement to the Miami Herald.
That Romney remains a serious contender to buy the team is an unexpected twist because Marlins owner Jeffrey Loria recently struck a non-binding agreement — a handshake deal, as one source in the Bush camp said — that Bush would be given first opportunity to buy the team if he was able to provide proof of financing and quickly sign a purchase agreement, according to a baseball official with direct knowledge.
The Marlins fully expected that Bush would be able to close the deal.
But Bush, who submitted a list of investors to MLB officials during a meeting Monday, has neither signed a purchase agreement nor been able to definitively prove that he has the money to fund the deal. The review of his submitted list of investors is ongoing.
Because Bush has not signed any agreement with the Marlins, and was given no exclusive negotiating window with Loria, that has left an opening for Romney, whose latest bid is slightly higher than Bush’s but less than $1.4 billion, the source said.
Romney’s group includes Hall of Fame pitcher Tom Glavine, among others, but reportedly does not include his father, former Republican presidential candidate Mitt Romney.
Bush on Tuesday told a New York Post reporter that he is “confident” he will complete the sale and also announced at a Los Angeles convention that Jeter would run the Marlins’ baseball operations department.
Meanwhile, Miami-Dade county officials confirmed that local government would get a share of the profits of a sale if it is completed in the next 11 months.
Loria must share 5 percent of any sale profits with Miami-Dade and the city of Miami if he closes a deal by April 2018, according to a summary of the payout provision prepared by the county.
That could mean millions, since Loria’s original deal for the tax-funded stadium values the franchise at about $500 million. Or it could mean nothing, county officials say.
If Bush buys the team, those expecting an enormous Marlins payroll might be disappointed.
According to Fox Business, Bush indicated during a speech at the Milken Convention that instead of embarking on a spending spree, he instead would aim to “build the team patiently.”
“Baseball doesn’t have a salary cap, which is what you have to self-impose as an owner,” Bush said. “You have to have the discipline to identify players the right way. … There’s no correlation between high salaries and winning.”
He also said his efforts to purchase the team have the support of the city of Miami and a group of investors.
And Bush said he might expand the Marlins’ reach to Latin America, which he described as a potential huge new market for MLB.
As for Miami-Dade County’s stake in a sale, Loria’s original 2008 agreement with Miami and Miami-Dade allows him to make significant deductions from the proceeds before the team pays out anything to taxpayers. That includes team debt, the cost of closing the sale and taxes paid on the transaction.
Jose Galan, head of Miami-Dade’s real estate division, marked the debt, tax and closing costs entries as “Unknown” in his summary of the deal terms. That means Miami-Dade can’t estimate a profit-sharing amount on a Marlins sale, even if the deal closes before next spring. In 2012, a team financial statement listed the team’s debt at $200 million, the Herald reported in 2013.
How Loria and the new ownership group structure a purchase could be key in resetting public goodwill for the Marlins amid continued backlash against the stadium deal. Miami-Dade Mayor Carlos Gimenez, who took office in 2011 as a leading critic of the stadium deal, said Tuesday the Marlins’ deadline for sharing profits with the public is very much on his mind.
“Everybody knows if it’s after March, then we don’t get anything,” Gimenez said. “I’m sure Loria knows.”
Privately, county officials have scoffed at the possibility that Loria would actually pay the government a share of the purchase proceeds. Loria can deduct capital-gains tax on a franchise he bought for $158 million in 2002. With the Marlins described as a money-losing team, the debt tab is sure to be higher than in 2012. That could mean an even bigger deduction from the sale proceeds for Loria, leaving taxpayers with nothing.
On the potential for Miami-Dade collecting money from a Marlins sale, Miami-Dade Commission Chairman Esteban “Steve” Bovo posted on Twitter: “Not holding my breath.”
Gimenez, who frequently plays golf alongside Florida’s former governor at the Biltmore, said he’s spoken to Bush about the deal. “I do believe it would be good for the town if we get new ownership,” Gimenez said.
Miami-Dade’s profit-sharing right comes from the non-relocation agreement that Loria signed in 2008 as part of a broad deal that had the city and county borrowing nearly $500 million to build the $640 million county-owned ballpark and city-owned garages. The Marlins contributed about $150 million to the deal.
The agreement requires Loria to pay Miami-Dade and Miami a portion of the proceeds if he sells the team within 10 years of the original 2008 contract, according to the county summary. Miami-Dade estimates it would keep 85 percent of the payout, with Miami getting 15 percent depending on the value of the land that the city contributed for the stadium site in Little Havana, Galan said. The portion of the proceeds shrinks the farther out the deal goes, with Year 10 being the end of the window when taxpayers are eligible for a piece of the sale.
According to the one-page county analysis, the base value of the Marlins would be about $500 million. That’s based on the value of the franchise in 2008 of $250 million, with an additional 8 percent growth per year, as called for in the agreement. From that value, Miami-Dade would calculate the profit based on the sales price, minus the deduction for debt, taxes and other costs.
When the Marlins struck a tentative deal with Bush, their understanding was that Bush had his investors lined up. But in the past week, three prominent South Florida residents who requested anonymity said a Bush associate contacted them asking them either to invest or suggest potential investors. That development concerned the Marlins, according to the MLB source.
As he was seeking investors, Bush has continued to tell friends and associates that he has the money to complete the deal, according to two of them.
On Tuesday, Sports Business Journal reported, quoting a source, that Bush has raised all the money he needs, even though one prominent local businessman described Bush’s search for investors as ongoing.
As for Jeter, the former New York Yankees great and future Hall of Famer has never worked in a baseball front office but wants to oversee the Marlins’ baseball operations, a job now held by Michael Hill.
A source in contact with the Bush/Jeter group said Jeter isn’t looking to scout a bunch of games but wanted to be in position of authority to hire people of his choosing to run the baseball side.
Jeter declined to comment on anything about the Marlins in an appearance on CNBC on Tuesday.
Glavine told The Boston Globe recently that he feels “very good” about Romney’s offer.
Tagg Romney, 47, is a founder and partner in Solamere Capital, a private equity firm. He has worked as the head of marketing for the Los Angeles Dodgers, vice president of onfield marketing at Reebok, and director of strategic planning at Elan Pharmaceuticals. Romney founded and subsequently sold Season Perks, a software design company. He also worked as a senior aide on Mitt Romney’s presidential campaign in 2008 and during his father’s Massachusetts gubernatorial campaign in 2002.