Cash, it seems, is batting clean-up in the financial contest among cities vying for two National League expansion franchises. That could prove troublesome to Tampa Bay's ownership group, which at this point relies on pending commitments from Florida banks to supply as much as $40-million. In contrast, Miami's ownership group reportedly has offered cash for all of the $95-million franchise fee, and Denver has claimed $101-million in equity and a $40-million credit line.
"It's a sign of weakness" in the Tampa group, suggested Gerald W. Scully, professor of economics at the University of Texas in Dallas and author of The Business of Major League Baseball. Debt places more financial strain on the organization that acquires the franchise, he said.
"Presumably, the lenders would have liens against portions of the franchise and would have claims that might place the franchise under some kind of financial distress," Scully said.
That's the rub. The owners of National League teams who will select the new franchises are looking for sheer financial strength of new owners and probably will view any debt financing as a negative.
If the league ends up putting the franchise in a weak location or gives it to a weak investor group, Scully said, that could frighten NL owners because the new franchise could be moved to another city.
"That's why league owners have a vested interest that anyone who buys these outrageously priced franchises is financially sound," Scully said.
On top of the expansion fee, no one will make money with a new franchise for at least five years, he said.
As an aside, the Texas professor said a case can be made that the city that does not get the expansion franchise might be the real winner.
"You probably could buy the Cleveland Indians outright for a lot less money," he said. "They desperately want out, and the team has to be sold to someone."
Team officials say the Indians are not for sale, but a pending decision on a new stadium could change that.
Tampa Bay's general partnership for baseball is busy trying to attract fresh cash from new investors buying into a limited partnership. Whatever funding needs to be made up afterward, five Florida banks are standing by, apparently ready to lend.
"We are interested in helping make baseball happen," said Eugene Taylor, president of NCNB National Bank of Florida in Tampa, one of the banks looking to lend to the local ownership group.
But until it becomes clear just how much money can be raised through the sale of limited partnerships, the role of the banks as lenders is secondary, Taylor said.
"Any time someone has cash, they deal from a position of strength," Taylor said.
But debt in and of itself is not a weakness, he argued, especially when the baseball ownership group is meeting the guidelines set on debt by the National League.
In the financial community, everyone remains focused on SunTrust Banks vice president Phillip Marshall, who is advising Stephen Porter and his general partnership on the raising of additional funds. Marshall, reached by telephone Friday afternoon in Atlanta, said he had read Thursday's St. Petersburg Times coverage of the state of Tampa Bay's baseball finances but could not comment further.
Scully said using limited partnerships has its share of pitfalls. One hurdle of this type of financing is to find investors tolerant of losses for an extended period of time.
And limited partners _ unlike the general partners _ will probably have little to no control over the baseball franchise, Scully said.
The issue could extend to profits for investors too. For example, the Cincinnati Reds have faced some legal problems between the owner and investors over the adequacy of profits, Scully said.
"As with everything else in sports, things have become more complicated as entities have gotten larger financially," he said.