The Cleveland Guardians may have found a new minority owner in David Blitzer
The Cleveland Guardians may have a new minority owner to go with their new name next year. Team owner Paul Dolan confirmed he’s been in negotiations with billionaire investor David Blitzer.
A changing landscape
The Dolan family bought the team for $323 million in 1999, which Terry Pluto says at the time, was the most money every paid for a MLB franchise. It’s worth $1.16 billion now, according to Forbes.
But over time, the way teams make money has changed, and Pluto says it’s left middle market teams like Cleveland at a disadvantage.
“Back then it was ticket prices, and the new stadium was a revenue-producer for them. But then the game changed where the real money came from these cable TV contracts, which highlighted the advantages that New York, Boston, Los Angeles and Chicago had to begin with was even more now.”
Sherman invests, then moves on
So, the Dolans were looking for an investor, and in 2016 Kansas City businessman John Sherman bought a 25% stake in the team.
“Things were going well. That’s when they had one of their highest payrolls in 2017 and 2018,” Pluto said.
Sherman jumped at the chance to buy the Kansas City Royals when they went on the market in 2019. So, the Dolans bought back 10% of his share, and the rest went into escrow.
“The franchise is worth well over a billion dollars, so let’s say that’s $150 million to be conservative. So, the Dolans need to pay [Sherman] $150 million just to get that thing out of escrow. So, they’re right back where they were, looking for a minor investor.”
“Thirty-five percent would take care of Sherman, plus basically firing the Dolan’s more than $200 in their pockets too, with a road to eventually being the majority owner."Terry Pluto
Enter David Blitzer
Then, last week, Sportico reported that David Blitzer is in serious talks to buy a 35% stake in the team.
Blitzer is a senior executive of the private equity firm Blackstone Group. Sportico reports he’s a partner in Harris Blitzer Sports & Entertainment, the holding company that includes the NBA’s Philadelphia 76ers, the NHL’s New Jersey Devils, the Prudential Center in Newark, NJ and a series of other sports assets.
“Thirty-five percent would take care of Sherman, plus basically firing the Dolan’s more than $200 million in their pockets too, with a road to eventually being the majority owner,” Pluto said.
Why The Guardians?
Pluto said Blitzer and his business partner, Josh Harris, have been buying up pieces of sports teams, including a less than 5% stake in the Pittsburgh Steelers. “I guess at some point trying to get the whole thing, or figuring they could sell it later,” Pluto said.
Regardless of why, Pluto said the Guardians need money. Cleveland opened the 2021 season with a payroll just south of $50 million, the second lowest in the big leagues.
Pluto says the main question is how well Blizter and Dolan would work together.
“I could easily see how Sherman and Dolan work together. They were both Midwest guys; they were not Eastern guys who are involved in holding companies and all these other investments.
Still, Pluto said he’s heard no red flags about Blitzer.
“I’ve talked to two people who know him. They say he’s pretty unpretentious. It doesn’t look like he wants to take over the world and have everyone bow down and kiss his ring,” Pluto said.
But Pluto said the Dolans did make sure to get an important piece of business taken care of before selling to a minority owner: Getting the lease at Progressive Field extended for 15 more years in exchange for $435 million of improvements.
“The Dolan family was trying to put things in place to make sure that whomever they bring in, the team stays here."
The next big question after that is, “Who becomes majority owner and when? Say Blitzer ends up buying the team. [When he] comes for the press conference, I’ll be very curious to hear what he says is his goal,” Pluto said.