Is Private Equity Hitting Minor League Baseball?


Private equity company Silver lake partners looking to buy up to 17 minor league baseball teams at all classification levels, with an emphasis on licensees belonging to MLB teams.

Silver Lake would be in partnership with Endeavor Group Holdings, owner of talent agency UFC and WME, on the case. Also participating in the talks, we are told: Pierre Freund, owner of Memphis Redbirds and a key participant in MLB’s takeover of Minor League Baseball. Rumors of such a spectacular buy – representing a significant part of the industry – have been swirling for weeks, with the number of teams in the deal changing often.

Why focus on MLB owned teams? Because an MLB team no longer needs to own a MiLB affiliate, and MLB teams can now monetize those assets with virtually no downside. In the past, MLB teams had MiLB teams to control their affiliates; no need to look for new affiliates every two or four years, no need to deal with pesky MiLB owners and their demands, no need to work with St. Pete on facility standards. With the takeover of MiLB by the MLB, MLB teams now have full control over their affiliates in all respects. MLB is taking the lead when it comes to facility standards, player treatment, and most MiLB operations large and small, including preferred vendors. With this level of control, the Atlanta Braves just don’t need to own the Mississippi Braves or Gwinnett’s Stripers, and the New York Mets don’t need to invest any money in them. Brooklyn Cyclones stadium upgrades.

We have said that this purchase could also include MiLB teams with a significant investment in MiLB teams. Not all MLB investments in a MiLB team are public, so there could be some surprising names when announcing a final roster.

As we noted earlier this week, Silver Lake has been an active partner of MLB in various initiatives including Fanatics. MLB and Fanatics are both big investors in Fanatics, and earlier this year, MLB made waves in the merchandising and collectibles industries when it went from longtime Topps partner at Fanatics on the front of collectible cards. A new entity, Fanatical Trading Cards, then raised $ 350 million in Series A funding from a trio of investors: Silver Lake, Endeavor and Insight Partnerswho value the new entity at $ 10.4 billion. (Yes, MLB owns a stake in the Fanatics Trading Cards spin-off.) The valuation results in part from the investments and in part from the wide range of rights acquired by Fanatics: In addition to the MLB deal, Fanatics obtained the rights image of the MLB, NFL and NBA players’ organizations.

What makes the Fanatics Trading Cards offering so different: The company would focus on direct-to-consumer (DTC) sales and minimize traditional agreements between distributors and retailers. The DTC is where the action takes place; it is not surprising that Silver Lake rumored to be part of talks surrounding potential MLB DTC streaming service – and maybe fanatics too.

Coming back to the purchase of the MiLB: This appears to represent an investment of around $ 300 million as Silver Lake and Endeavor buy the teams and fund the facility upgrades needed to meet the new MLB specifications. . The interesting question: how will the new entity get its money back? There are certainly benefits when it comes to improving operations, and some part of the team in question could certainly benefit from an investment. But there is usually not too much efficiency when it comes to managing multiple teams in multiple markets: some back office operations can be consolidated, but experience shows that ticket sales, sponsorship and groups are best carried out locally. Consolidating merchandising purchases can generate savings, and this is an area where the experience and purchasing power of some fanatics could benefit their own teams. It could just be that Silver Lake and Endeavor see a set of undervalued assets and be ready to attempt a major buy in an attempt to leverage other assets, like Fanatics, working the details out later. Either way, we could see another drastic change in the world of minor league baseball – and there’s a good chance all MiLB teams will be affected at some level with Silver Lake and Endeavor as one. major players in the industry.

About Kevin Reichard

Kevin Reichard is the founder and publisher of Ballpark Digest.

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