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Baseball investors found better opportunity; Dome left reeling

Tampa Bay's baseball effort was tagged out because its finances fell apart _ largely the doing of two out-of-town millionaires who decided that, instead of owning a baseball team, they'd rather invest their money elsewhere. That's the scenario that emerged Tuesday as baseball officials and investors tried to piece together the story of what happened to Tampa Bay's once-strong bid.

Simply put, Sidney Kohl of Palm Beach and his brother Allen, of Beverly Hills, Calif., found a better investment. Instead of putting in $50-million toward a team, they reportedly decided to put in $5-million.

"Something else came along," explained August Urbanek, a South Florida philanthropist and partner with the Kohls in a number of real estate projects.

He would not say what that better opportunity was, and the Kohls did not return a reporter's calls. But the "something else" left the ownership group's managing partner, Washington lawyer Stephen Porter, scrambling for money. And it apparently left St. Petersburg Assistant City Manager Rick Dodge in the dark until it was too late to do anything about it.

By the time Dodge, the city's point man for baseball, was looking frantically for an infusion of cash, Major League Baseball was already making up its mind. Tampa Bay didn't get a chance to be judged on the strengths of its demographics or media market, or on the suitability of the Florida Suncoast Dome in St. Petersburg.

Instead, Major League Baseball decided St. Petersburg's baseball finances weren't up to snuff. The National League expansion committee decided May 29 that two new teams should be awarded to Miami and Denver, committee chairman Douglas Danforth said. The decision, made public Monday, could be ratified by baseball's owners within 10 days.

"The ownership composition was not quite what we liked, not what we preferred," Danforth said of Tampa Bay on Tuesday. "I think that the target kept changing in Tampa. It kept moving. Who was the principal owner? Who would be the equity partners?"

"They kept changing," Danforth said. "First it was X number of people. Then it changed, and the amounts of money changed."

The equity partners, as announced last June when the group was formed, were supposed to be the Kohls, whose brother, Herbert, is a U.S. senator from Wisconsin and owner of the NBA Milwaukee Bucks. The Kohl brothers turned a family grocery store fortune in Milwaukee into a small empire of real estate holdings across the country.

Sidney and Allen Kohl were in the baseball group for a reported $50-million, the largest share of the $95-million expansion fee. Other investors, including Porter and his cousin, New York businessman S. Joel Schur, agreed to put up smaller sums. Californian Roy Disney, the nephew of Walt Disney and an influential investor in his own right, had "a minority position" in the group, according to Clifford Miller, a Disney associate.

Throughout the expansion process, Porter said the group met baseball's requirement that loans not exceed 40 percent of the $95-million.

But at some point recently _ the timing has not been publicly disclosed _ the Kohls dramatically reduced their investment. Sidney Kohl, according to his friend Urbanek, "didn't pull out because of not having the funds. It was something else he was looking at."

That caused the group's capital structure to change. And Fred Kuhlmann, chairman of the St. Louis Cardinals and Major League Baseball's ownership committee, said the group did not meet the 60-40 equity-loan rule.

He also said the National League attorney made Porter's group aware of the problem. "I didn't want to be behind the eight ball of people saying they didn't know there was a problem," Kuhlmann said.

Porter still contends his group, which included minority shares by local beer distributor Claude Focardi and lawyers Henry Esteva and J. Rex Farrior Jr., would have had the money. "If we had won and we had been called upon to write the check next month, we would have written the check. We would have had it all in place," he said.

Two weeks ago, however, the check might have had to wait. A confidential memo dated May 23 _ a time when Porter and city officials said they were set to get a team _ stated that the Porter group was seeking additional investors, according to William R. Hough, president of William R. Hough & Co., a St. Petersburg municipal bond firm. Hough was shown the memo and was asked to invest with the Porter group. He agreed to.

"It would appear as though the Kohls did not come up with a substantial sum of money, and came short of the sum needed to fund the franchise," Hough said Tuesday. "It appears as though the financing was undercapitalized."

By then, there was little time left. "The principal problem with seeking new investors here was the late hour of the attempt, and the marginally attractive package," Hough said. He would not say why the investment was only marginally appealing, but said that financially, "it could have been made more attractive."

Dodge said he only learned "a week ago Saturday" that there could be financial questions that might concern Major League Baseball. The date would have been June 1, a full week after the Porter group's May 23 memo, and after May 29, which Danforth said was the date of the expansion committee's decision. Dodge said he spoke to Porter, but that Porter "was surprised because they had not gotten any of that feedback from the National League."

In the following days, Dodge said, he heard rumors about baseball's concerns again. But "we didn't know whether it was just an opinion and misinformation or what." Dodge said those concerns were not confirmed until last week.

The specific concerns of baseball, Dodge said, were "that the Kohls were not as strongly financially supportive of the proposal as they may have been at a previous time. I immediately shared that with Steve (Porter)." And confidential sources inside baseball told them that "if you can find anyone locally, even on short notice, that wants to step up, that might be helpful," Dodge said.

Baseball then announced last week that the decision would be delayed. Dodge and Porter immediately initiated an all-out effort to find new investors. But no investors to replace the Kohls had been announced when, on Monday, Major League Baseball announced Miami and Denver as the preliminary winners.

Finances were St. Petersburg's primary problem. That is not to say that if the Kohls had stayed committed to their earlier investment, Tampa Bay would have won a team.

But Tampa Bay might have been considered more for the strength of its market than that of its ownership group.

"I think the city of St. Petersburg and the staff of the city of St. Petersburg and the local investors here did everything they possibly could and they did it very well," said Hough.

But as for the other members of the group, "Well, it would appear that they didn't invest the money that they implied they would invest when they received the nod to secure the franchise. . . . I'm speaking specifically of the ownership group that was awarded the territory rights to apply for the franchise. Whatever that group was, whoever was in it."

Porter's group beat out two other groups headed by local businessmen when the National League expansion committee named the list of cities it would consider for new teams.

Hough said he and other local investors would be willing to "band together to attempt to bring an existing team from somewhere else" to St. Petersburg. But he said, "I kind of doubt that people will want to be involved with people from way up north as investors. . . . I think that that was one of the problems."

_ Times staff writers Thomas C. Tobin and Marc Topkin contributed to this report.