Are the Pohlads Secretly Selling the Twins?

[Whammy]

1 hour ago, MeleMouth said:

Please identify your models of the ideal owner. For example, the Wilfs have done most things how I'd want them to, but they haven't won much. OTOH, the Dodgers, Rays, and Warriors have basically been owned by people who made their money in private investment firms, and those teams have been pretty rewarding for their fans. 

Being owned by individuals who made their money in private investment firms is way different than being owned by a private investment firm. 

[Cris E]

A good owner is someone who likes the games, has some pride and doesn't like to lose, and has deep enough pockets that they can afford to be revenue neutral or even lose some money on the team from time to time.  A good owner also knows his limits and hires someone to hire his front office, and then trusts them to know what they're doing, and doesn't meddle too much beyond choosing bobble heads and seat back colors. A good owner finds a way to make some money in related projects but doesn't consider those projects more important than the team. A good owner thinks of the broader health and history of the game rather than simple cash flow projections a year into the future. 

Here's a simple question: When John Henry or Steve Cohen bought their teams do you think they had favorite players that they were excited to meet? Now let's try to imagine the last time Tom Pohlad sat around the house in an old Mauer shirsey.  I just don't see it.  At any rate I like the old phrasing from the math world back in college: being a fan isn't sufficient, but it is necessary to being a good owner and I think Eloise was the last Pohlad who loved the game.

[LA Vikes Fan]

Wow, I'm not one but it would be tough to be a wealthy sports guy on this board. The level of innate distrust is pretty amazing although in fairness the Pohlad family has earned it. 

I would not be surprised at all if the new limited partners came in with the idea that they might eventually buy a controlling share of the team and there may be a preexisting  agreement on when and on what terms that could happen. I have no particular insight other than what I read and years of experience litigating over corporate deals that involve buy-ins and limited partners so feel free to discount my thoughts and conclusion. My thoughts are that it wouldn't make a lot of sense for sophisticated business to make a minority investment in a money-losing enterprise unless they thought they could or at least have the option to get majority control, and/or they had a strong sense that that enterprise would be more profitable in the future. You then add in the fact that the investment came at a time when the Twins needed cash so the investors had real leverage, and the fact that the deal occurred shortly before a new comprehensive labor agreement would come into place. I think that there is probably a 75% chance that the new partners bought in with an eye to purchasing a majority share in the team and at least a 50% chance that the framework by which they could do that is already at least partially in place. Maybe it's as little as a a right of first refusal or a right of first offer, or maybe it's a set valuation formula that would be used with options to increase their share at various points in time. All of this leads me to believe that is it is more likely than not that if the new labor agreement provides cost certainty and/or a way to get increased revenue sharing or media right payments the Twins will have a new majority owner within the next few years. That could be as early as the second half of 2027. Whether that's a good thing or not depends entirely on who the new owner is, what their plans are, and what their level of investment will be in the future, but I do have to say that jumping over the Pohlads bar is a fairly low hurdle to clear.  

[old nurse]

4 hours ago, MackMan said:

I think I can speak for ALL of us when I say this: SELL THE TEAM. Now am I being realistic when I ask are they actually on the market? No. I personally don't think they're on the market unless the right offer comes. Sadly, I don't think that $2.0 Billion is going to be enough to get it done. I'd think closer to $2.5-3.0 billion will get it done. 

But alas, we shall see what the off-season brings in terms of sales, acquisitions, and losses to see where we are prepared for 2027.

Yup, selling to private equity surely will make the Twins a winning franchise.  

[Cris E]

34 minutes ago, LA Vikes Fan said:

Wow, I'm not one but it would be tough to be a wealthy sports guy on this board. The level of innate distrust is pretty amazing although in fairness the Pohlad family has earned it. 

I would not be surprised at all if the new limited partners came in with the idea that they might eventually buy a controlling share of the team and there may be a preexisting  agreement on when and on what terms that could happen. I have no particular insight other than what I read and years of experience litigating over corporate deals that involve buy-ins and limited partners so feel free to discount my thoughts and conclusion. My thoughts are that it wouldn't make a lot of sense for sophisticated business to make a minority investment in a money-losing enterprise unless they thought they could or at least have the option to get majority control, and/or they had a strong sense that that enterprise would be more profitable in the future. You then add in the fact that the investment came at a time when the Twins needed cash so the investors had real leverage, and the fact that the deal occurred shortly before a new comprehensive labor agreement would come into place. I think that there is probably a 75% chance that the new partners bought in with an eye to purchasing a majority share in the team and at least a 50% chance that the framework by which they could do that is already at least partially in place. Maybe it's as little as a a right of first refusal or a right of first offer, or maybe it's a set valuation formula that would be used with options to increase their share at various points in time. All of this leads me to believe that is it is more likely than not that if the new labor agreement provides cost certainty and/or a way to get increased revenue sharing or media right payments the Twins will have a new majority owner within the next few years. That could be as early as the second half of 2027. Whether that's a good thing or not depends entirely on who the new owner is, what their plans are, and what their level of investment will be in the future, but I do have to say that jumping over the Pohlads bar is a fairly low hurdle to clear.  

I agree with all that, particularly the part where the money at a particularly difficult moment might have purchased a larger share than the dollars may have actually represented (eg $100m against a $2bn valuation gets you 8-10% rather than just the 5% that math would indicate.)  And I also think an option for the share swapping between one of those partners is already on the books, pending CBA outcomes. I'm sure the Pohlads would love to withdraw some sweet, sweet nostalgia money but hang on to a percentage so they can still claim to be owners. So maybe they sell down to 20% and Leopold or J-lo or whoever is lurking in silent partner land only has to produce another $1bn to step up, for example.

[LA Vikes Fan]

15 minutes ago, Cris E said:

I agree with all that, particularly the past where the money at a particularly difficult moment might have purchased a larger share than the dollars may have actually represented (eg $100m against a $2bn valuation gets you 8-10% rather than just the 5% that math would indicate.)  And I also think an option for the share swapping between one of those partners is already on the books, pending CBA outcomes. I'm sure the Pohlads would love to withdraw some sweet, sweet nostalgia money but hang on to a percentage so they can still claim to be owners. So maybe they sell down to 20% and Leopold or J-lo or whoever is lurking in silent partner land only has to produce another $1bn to step up, for example.

I think the scenario you put out is the most likely scenario out there. The Pohlads sell roughly 75 to 80% of the team to the current minority owners or some combination thereof. They then retain enough of the team still be in the pro sports business and get whatever juice comes from being the part owner of a professional sports team, sit in the owners suite at games, etc. Who knows maybe Tom still gets to be the operational partner although you would think a new GM would be hired.

[Richie the Rally Goat]

I understand and share the skepticism of PE ownership of the team, but George Hicks is “one of us”. He’s from and lives in Minneapolis, came out of the Cargill financial restructuring in the 90s.

how much worse could Varde be than the Pohlad’s?

[MeleMouth]

1 hour ago, Whammy said:

Being owned by individuals who made their money in private investment firms is way different than being owned by a private investment firm. 

Splitting hairs. The Jays and Braves are owned by corporations, and they seem to be pretty competitive. Until last fall, the Rays were owned by an investment partnership, and they did really well. The current owner of the Twins is the heir of a foreclosure banker, following two other heirs of a foreclosure banker. That hasn't gone well.

An investment firm is not the ideal owner, but you haven't identified who or what that ideal is. Being against an investment firm just because it's an investment firm is just being against stuff.

[qwerty2582]

I used to work with someone (in the 90s, so it was a while ago...) who said her house was always on the market.  She had a price, realtors knew what it was - and it was above market.  She had showings from time to time, but it was never intended to be a "I want to sell my house", but more of a "If someone shows up and hands me this much money, I will happily find a new place".

Said another way, it can be true that Pohlad is "excited and invested in the future of the franchise" and also if a limited partner shows up with a Brinks truck full of cash, he will happily take it and walk away.  Both things can be true.

It could also be similar to the Joe Pohlad situation - it was obvious he didn't want to sell, but he is not the only one with a vote in the matter...

[MeleMouth]

7 minutes ago, Richie the Rally Goat said:

I understand and share the skepticism of PE ownership of the team, but George Hicks is “one of us”. He’s from and lives in Minneapolis, came out of the Cargill financial restructuring in the 90s.

how much worse could Varde be than the Pohlad’s?

Varde's main success has come from buying distressed bonds and running lending businesses, many of them subprime. That doesn't make them good people, but it's different from the PE companies with the worst reputations from buying up operating companies, loading them with debt, and then firing a bunch of employees. Further, the league will still require them to have a control person and a managing owner, just like Jim Pohlad is the Chairman of the Executive Board and Control Owner for the Twins, while Tom Pohlad is the Chairman and CEO of Operations.

[spanman2]

4 hours ago, SteveLV said:

Does Leipold have enough money to buy the Twins, too?  I think he has done a pretty good job with the Wild--certainly better than the Twins are performing--and seems popular (not a huge Wild fan).

His worth is estimated at 3.6....another interesting nugget...Family Fortune: He is married to Helen Johnson-Leipold, an heir to the SC Johnson cleaning products fortune...I would say the money is there if he wanted to get serious about it. 

[Andy MacPhail]

IMO. the Pohlads saw selling the team as their best solution to their debt problem. With the possible salary cap & boost to the worth of the team; there is no doubt the Pohlads shifted their position. It makes sense that they made an agreement with the new minority owners for the rights for buying the future majority stock, while maybe having current say into what's going on. Pohlads might still want a minority share, which is their long-range stance.  

[Major League Ready]

5 hours ago, tarheeltwinsfan said:

At the same time, assuming that revenue sharing is going to increase significantly, and assuming that increased revenue sharing will increase the value of the Twins, then a savvy, interested buyer for the Twins, should make an immediate offer to buy the Twins at a price that is a guaranteed sale to the owner, but lower than the buyer thinks the future value will become shortly after this savvy buyer becomes a savvy owner.  Many times I have seen sellers start thinking of all the ways that they could spend this money, even though a sale price hasn't been yet agreed upon. A bird in the hand is worth two in the bush, so to speak. The Pohlads have already been willing to sell as recently as last year, so they have already crossed the thresh hold of "Do I want to sell or not?" I imagine that some of the Pohlads had already made plans on how to spend their sale proceeds last year. Now that they have had another year of turmoil and criticism, poor attendance,  and headaches, with nothing to show for it, they may be even more ready to sell, especially at a price higher than what was discussed last year. My advice to a savvy buyer is that now is the time to buy the Twins. Make an offer the owners can't refuse. 

I want to see them sold at this point as much as anyone.  However, I don't think the Pohlad's are going to be convinced to sell in a hurry so that a "saavy buyer" can cash in on a valuation that is on the verge of a very substantial increase.  I would be more inclined to believe their desire to sell diminished when they figured out the league was headed for more revenue sharing.  I think they are bad owners but I don't think they are stupid.

[David Maro]

The team will be sold after the CBA is finalized so all parties know about a cap and or a floor. Another thing was brought up today on Cowherd that the owners are talking about shortening the season to 154 and changing the playoff format. These are somethings that could bring a change to the sport.

Looking back to Joe stepping down and Tom taking over that decision was probably the minority owners request for them to sign on the dotted line. They looked at some of the public statements that Joe made and wanted a more positive speaking person representing the organization.

[Coach]

Somebody list five teams that are happy with their ownership. Just curious. 

[TheLeviathan]

14 minutes ago, Coach said:

Somebody list five teams that are happy with their ownership. Just curious. 

Padres, Braves, Orioles, Dodgers, and Astros come to mind.  Blue Jays and Giants might be in that mix.  

As much as any fanbase can love a billionaire I guess.

[MeleMouth]

2 hours ago, TheLeviathan said:

Padres, Braves, Orioles, Dodgers, and Astros come to mind.  Blue Jays and Giants might be in that mix.  

As much as any fanbase can love a billionaire I guess.

Braves and Jays are owned by corporations.

I doubt Astros fans are as happy with Jim Crane as they used to be, because he's been very erratic the last few years.

Giants are owned by 36 partners that include private equity firms, a permanent capital holding company, and Buster Posey. The team hasn't given fans much reason for optimism for a few years.

Orioles and Padres just got new owners, as did Angels. Still a honeymoon, although Orioles fans want major changes in baseball operations.

Dodgers fans are probably happy and I would guess fans of Rangers and Rays also like their owners because of their track record of doing what they can to be competitive, and White Sox fans are probably positive about the upcoming change in ownership, although Reinsdorf is still main owner while he has long-term plan to transition to new owner who supposedly came close to buying Twins.

You'd think Brewers fans would be happy with their owner, but he grinded some gears a couple of years ago when he answered a question about low payroll by rhetorically asking, "Is my job to win a World Series, or is my job to provide a summer of entertainment and passion and a way for families to come together?"

I would guess that Guardians fans don't love Dolan Junior's low payrolls, but are probably OK with him because of their long run of being pretty good despite it.

A good article would be what qualities people think make someone a good owner.

[TheLeviathan]

12 minutes ago, MeleMouth said:

Braves and Jays are owned by corporations.

I doubt Astros fans are as happy with Jim Crane as they used to be, because he's been very erratic the last few years.

Giants are owned by 36 partners that include private equity firms, a permanent capital holding company, and Buster Posey. The team hasn't given fans much reason for optimism for a few years.

Orioles and Padres just got new owners, as did Angels. Still a honeymoon, although Orioles fans want major changes in baseball operations.

Dodgers fans are probably happy and I would guess fans of Rangers and Rays also like their owners because of their track record of doing what they can to be competitive, and White Sox fans are probably positive about the upcoming change in ownership, although Reinsdorf is still main owner while he has long-term plan to transition to new owner who supposedly came close to buying Twins.

You'd think Brewers fans would be happy with their owner, but he grinded some gears a couple of years ago when he answered a question about low payroll by rhetorically asking, "Is my job to win a World Series, or is my job to provide a summer of entertainment and passion and a way for families to come together?"

I would guess that Guardians fans don't love Dolan Junior's low payrolls, but are probably OK with him because of their long run of being pretty good despite it.

A good article would be what qualities people think make someone a good owner.

I think part of the nature of being a "fan" for most people is some combination of happy and mad at various, ever-changing levels.  

[Rosterman]

The joy of being a minority partner is that you share in the expanded wealth of the franchise, so you should be able to expand your own share (or purchase) at less than someone else.

Twins borrowing against the franchise is similar to borrowing against one's property. You can do a short-term interest only borrow, but eventually the bill comes due.

[tarheeltwinsfan]

5 hours ago, Major League Ready said:

I want to see them sold at this point as much as anyone.  However, I don't think the Pohlad's are going to be convinced to sell in a hurry so that a "saavy buyer" can cash in on a valuation that is on the verge of a very substantial increase.  I would be more inclined to believe their desire to sell diminished when they figured out the league was headed for more revenue sharing.  I think they are bad owners but I don't think they are stupid.

We'll just have to agree to disagree on this. 

[Cody Christie]