Lack of Minority Investors Is Weakening Lerner Bid
Wednesday, April 12, 2006
With Major League Baseball officials saying they now expect a decision on the new ownership of the Washington Nationals by the end of next week, there were strong indications yesterday that a paucity of local minority investors is hurting the chances of one strong contender to purchase the team.
According to multiple highly placed sources, the group led by local businessman Theodore "Ted" Lerner and his family has jeopardized its chances of landing the team for the $450 million purchase price by not moving as quickly as baseball had expected in adding minorities to its ranks.
The Lerners assured MLB weeks ago they would resolve their lack of minority representation in their group, but still have failed to do so, according to the sources, who spoke on the condition of anonymity because of the sensitivity of the process.
As a result, the other local group among the presumed front-runners, led by businessmen Fred Malek and Jeffrey Zients, may have improved its chances. The Malek-Zients group, the wealth of which is spread among far more investors than that of the Lerner family, includes several high-profile black investors, including former secretary of state Colin L. Powell and lawyer Vernon E. Jordan.
"Do the Lerners want to be given the team first, then make public who they'll include in their group?" one source said. "That's not usually how it works."
Mike Shapiro, a spokesman for the Lerner group, said the Lerners were unaware of any dissatisfaction on the part of MLB regarding their minority representation. "The Lerners do have minority investors committed to the group whom they have identified to Major League Baseball," Shapiro said. Shapiro declined to reveal the exact number of investors, or their names, but said that "some" are local.
CBS NFL host James Brown, a graduate of DeMatha High, has said he "planned to become involved" in the Lerners' group but Shapiro would not comment on any investors.
A third group, led by Indianapolis-based media executive Jeffrey Smulyan, whose local investors include ex-NFL players Calvin Hill and Charles Mann, both of whom are African Americans, also is believed to be in the running, although Smulyan's bid appears to suffer from concerns about Smulyan's money being tied up in a publicly traded corporation.
It has long been assumed that former Atlanta Braves president Stan Kasten, who fronts a group seeking the Nationals, is considered a vital factor in the decision, particularly if he merges with one of the other front-runners. According to one high-ranking source involved in the decision, if the Malek-Zients group were to take on Kasten, it would improve the group's standing in the eyes of Selig, a longtime Kasten admirer.
Baseball has been heavily criticized for not having selected a new owner more quickly. The Nationals have already begun their second season in Washington.
"Thirty years from now, I want people to look back and see that this was done right," Commissioner of Baseball Bud Selig said by telephone. "I hope people say that maybe I took too long, but the process was honest. Did it take too long? Okay, probably true. [But] that's my style."
MLB President Robert A. DuPuy, in an informal interview in the press box during the Nationals' 7-1 loss to the New York Mets, said he would be "very surprised" if the new owner isn't picked by the end of next week. "Of course, there have been delays [in the ownership selection process] in the past," DuPuy said, "so I guess I'm easily surprised. . . . The fans deserve a decision."
While every group had some area of weakness in Selig's view, the Lerners were presumed to have the easiest problem to fix -- adding locally based partners with minority backgrounds before a final decision was made.
"The two key qualities that you want in ownership," Selig said, "are stability and viability."
While Selig was accused of engineering the 2001 sale of the Boston Red Sox to baseball insiders John Henry, Tom Werner and Larry Lucchino through a series of mergers -- a process some baseball insiders view as potentially being repeated in Washington -- Selig has consistently denied it.
"I didn't put the [ownership] team together in Boston and I'm not doing it here," Selig said. Potential ownership groups "have to figure that out themselves and make the strongest possible case."
Malek and Zients both attended yesterday's home opener at RFK Stadium, while Smulyan attended with several members of his group, including Hill and Mann. The Lerners were represented by Lerner's daughter, Debra Cohen, and her husband, Ed, who is part of the prospective ownership group.
Although yesterday's crowd of 40,530 was several thousand fans shy of a sellout, DuPuy said he was not concerned. The Nationals are playing at RFK until the $611 million stadium in Southeast Washington, the lease for which was approved by the D.C. Council in February, is ready to open.
"There have been some problems and growing pains since last season," DuPuy said. "But a few thousand empty seats is nothing compared to what the new ballpark in Washington and the development projects in Southeast will do for the city. . . . Once there is an owner in place here, all of that is going to fade into the background.
"That's how it worked in Milwaukee and San Francisco and other cities where there were [stadium] battles and delays. But once they got an owner, all of those problems were resolved. This [non-sellout] is absolutely not a problem."
Selig had been in St. Louis on Monday, attending the Cardinals' opener at their new stadium -- which, like their previous one, is called Busch Stadium. He said the experience showed him the importance of building a top-flight stadium, which might lead the new Nationals owner to contribute funds to make the proposed Washington stadium better.
"What I saw in St. Louis convinced me again that you need an owner who understands the importance of having a great ballpark. Don't skimp," Selig said. "But, in Washington, I think both [prospective] groups would do that."
Staff writer Thomas Heath contributed to this report.