Business With MLB Goes Beyond Price Tag
Sale of Nationals Reveals Selig's Deliberate Style

By Thomas Heath, Barry Svrluga and David Nakamura
Washington Post Staff Writers
Sunday, May 7, 2006

On Sept. 29, 2004, Commissioner of Baseball Bud Selig set some priorities regarding the franchise he was moving from Montreal to Washington.

"The sooner we have a new owner," Selig said, "the better off we'll all be."

Selig's chief lieutenant, Robert A. DuPuy, said in January 2005 that he hoped to have the sale "buttoned up" by the time the newly renamed Nationals opened their first season in Washington. A month later, Selig made a revision, telling reporters he wanted to have an owner "by early spring." In May, another revision: "This can be done by midsummer," Selig said. When midsummer came and Selig spoke at the All-Star Game in Detroit, he said, "We will be done this summer, there's no question."

Yet it wasn't until 11:30 a.m. Wednesday when a secretary of Theodore N. Lerner, waiting anxiously in a conference room in his offices at the Washington Square complex on Connecticut Avenue and L Street, sent a message to her boss. Selig was on the phone. He granted Lerner and his group of investors the right to pay $450 million for the Nationals.

Five hundred eighty-one days passed between the moment Washington landed baseball and the day its team landed an owner. The process that led to the naming of the Lerners was fraught with delays and distractions, and it revealed much about the District's political climate. But more than anything, it showed how Selig -- who rules over a $3 billion enterprise that since 1922 has held a unique status as the only sports league exempt from antitrust rules -- works at a pace all his own, influenced more by his methodical, plodding style than by cries from anyone on the outside to speed up the process.

In the end, Selig achieved his goal of putting the team in the hands of a respected local owner with deep pockets, ending a four-year period in which the franchise was a ward of baseball's 29 other teams. But by taking so long to make up his mind, Selig left unaddressed most of the franchise's long-running problems. The Lerners, who take over the club in a month, will inherit a team with a substandard farm system, its executives working on six-month contracts, its fans unsure when they are able to watch games on television and its players wondering who will sign their next paycheck.

The process also exacerbated a rift between the District's politicians and Major League Baseball, resulting in an explosive situation in the final weeks in which the racial makeup of prospective ownership groups became a public debate.

"Bud has his own timetable," said Tony Tavares, the current Nationals' president who was hired by Selig in 2002, when baseball bought the struggling Montreal Expos franchise for $120 million. "To think that he was going to act differently about this versus what he has done in the past, I think, was folly."

On March 7, the D.C. Council voted 9 to 4 to approve a construction contract for a 41,000-seat baseball stadium to be built along the Anacostia River for the Nationals, capping spending at $611 million. Yet even as the city cleared what baseball officials had called the last hurdle to naming an owner, the decision took nearly two more months.

"I called Buddy and said, 'Why don't you get an owner?' " said Bowie Kuhn, a former baseball commissioner and a native Washingtonian. " 'We are losing opportunities right and left. Without an owner, we aren't going to pick up players.' He said he was working on it."

Positioning

Selig surrounded himself with a tiny group of advisers during the Nationals sale process that included DuPuy, Chicago White Sox owner Jerry Reinsdorf and Selig's daughter, Wendy Selig-Prieb, who ran the Milwaukee Brewers until the Selig family sold the team in 2004. The tight-knit structure forced each of the eight potential ownership groups to determine what they might need to do to curry favor with the commissioner.

One quality that Selig valued was discretion. Washington entrepreneur Jonathan Ledecky sabotaged his chances by aligning with D.C. council member Marion Barry (D-Ward 8) and publicly saying he would pay for cost overruns on the new ballpark. Tennessee businessman Franklin Haney Sr. brandished a $100 million check at the John A. Wilson Building, Washington's city hall, in an attempt to win public favor. It only drew the ire of Selig, who loathed such public stunts.

Publicly, baseball officials maintained that each of the eight groups remained in the running until the end. But as one investor from a losing group said, "I don't think there was ever a time that we thought there were more than four groups."

The group led by Lerner was one. Local businessmen Frederic V. Malek and Jeffrey Zients, who formed the Washington Baseball Club and were instrumental in bringing baseball back to Washington, led another. Indianapolis media mogul Jeffrey Smulyan, the former owner of the Seattle Mariners, was a third. And Stan Kasten, the former president of the Atlanta Braves, brought strong credentials that included ushering the Braves into their new ballpark.

Even before they launched independent bids for the baseball franchise in Washington, Lerner and Kasten began a long process of feeling each other out, neither with the idea that they would end up working together.

On Dec. 18, 2003, Lerner picked up the phone and called Kasten, just a month removed from his resignation as president of not only the Braves, but basketball's Atlanta Hawks and hockey's Atlanta Thrashers. Baseball was actively seeking a new home for the Expos, but Washington had not yet been selected. Lerner, who had long wanted to own a team and had failed in a bid to buy the Washington Redskins in 1999, liked to talk about baseball, about the opportunities that might be out there for him.

Early in 2004, Kasten and Lerner met at Lerner's offices in downtown Washington. The two sat alone at a conference table. They then spent an hour at Lerner's home just outside the District in Chevy Chase. "Ted asked me about baseball teams, how to buy a baseball team, which ones might be for sale and the business of baseball," Kasten said.

But when baseball moved to the District, Lerner and Kasten were on separate paths. They spoke in October 2004 and met again a month later. For the first time, they talked about joining forces, but Kasten said he was left with the impression that "the Lerners were committed to this being a family enterprise."

Even as they pursued separate bids, Kasten's networking through his nearly three decades in professional sports began to lead to unexpected intersections with the Lerners.

Michael Shapiro, a sports consultant who worked under Kasten with the Braves, was hired by the Lerners to help guide their bid. Last October, Kasten had lunch with a lawyer he knew from his NBA days, Joseph M. Leccese, before Kasten had any idea Leccese represented the Lerners. Fred S. Zeidman, the chairman of the U.S. Holocaust Memorial Council, was an investor in Kasten's group; Debra Cohen, one of Lerner's daughters, sat on Zeidman's board.

"We had commonality," Kasten said. "We had a lot of friends and points of intersection."

As spring training approached this winter, members of most groups felt the sale would be imminent. Kasten's group began to believe that its bid, as it stood, would fall short.

"We got to a point that we recognized that we probably didn't have everything we needed," said Rodney E. Slater, secretary of transportation under President Bill Clinton and an investor in Kasten's group. "There were clearly others who were probably better positioned."

Lerner's group was one of them. Selig prefers the insular group of baseball teams to have one voice for each of the 30 franchises. Lerner, should his group be chosen, would serve as the contact point for the Nationals. Eventually, as Lerner, now 80, became less involved in the family business, his son Mark would be the point person. Selig respected the way the Lerners had followed baseball's guidelines, avoiding the spotlight even as District politicians clamored that they didn't know the family well enough.

"Baseball told these [bidders] to keep their mouths shut and be patient," said one person close to Selig. "And that's what the Lerners did."

Partnership

As spring training opened in mid-February, the Nationals, unable to sign marquee free agents during the offseason at least in part because baseball officials had left them without an owner, felt unstable.

On top of that, there was still no lease on the proposed $611 million, publicly financed ballpark, the jewel that sold baseball on Washington in the first place. League officials -- who the previous year had said repeatedly that the sale was imminent -- now were adamant that without a lease, defining the terms under which the team would rent the stadium, there would be no owner.

That the lease emerged as a last-minute stumbling block caught both the District and baseball by surprise, according to officials on both sides. It took months for city and baseball lawyers to agree on a lease document, and once that was done, it needed to go to the council for approval. Mayor Anthony A. Williams (D), baseball's chief political backer in the city, and league officials had believed the lease would be a formality. Instead, by being thrown back to the council, it resurrected the heated debate of late 2004 over whether the city should be building a stadium for the Nationals.

What little goodwill that had been built up between the league and the council during the Nationals' first charmed season quickly dissipated.

Selig refused to budge on the sale. "No buyer is going to buy a franchise and say, 'Where do I play?' " said Houston Astros owner Drayton McLane Jr., a Selig confidante. "It was a more valuable franchise to sell when there was a stadium deal done."

Williams began lobbying Selig in several telephone conversations to time the announcement of an owner with the approval of the lease. Selig would not agree. In the meantime, there was significant political pressure building.

Malek, a former aide to President Richard Nixon, had many influential friends around town. Sens. Arlen Specter (R-Pa.) and Dianne Feinstein (D-Calif.) both contacted Selig on Malek's behalf. Williams and several council members had long backed the Malek bid, not in small measure because of the work the group had done to land a franchise in the first place.

Smulyan is close to Reinsdorf from their days as owners together. Smulyan, despite some fears that he wasn't from Washington, had gained favor with the D.C. Council because his group, which included several prominent Washington area African Americans, worked behind the scenes to bridge the gap between baseball and the council on the lease agreement.

The lease was finally approved on March 7. A couple of weeks later, as he stopped by the Nationals' spring training in Florida and met with the team's general manager, Jim Bowden, Kasten had a revelation.

"Reading the tea leaves, it became apparent to me that the presence of a predominately Washington-based owner was going to rule the day," he said. "I came to understand that my group was not going to prevail."

From the outside, the potential advantages of a marriage between Kasten and another group seemed obvious. In late 2001, when the Boston Red Sox were sold, Selig chose a group led by John W. Henry and Tom Werner that included Larry Lucchino, a seasoned baseball executive who had successfully run both the Baltimore Orioles and the San Diego Padres, a man who Selig trusted would do a superior job. The same theory seemed to apply in Washington, where Kasten, now believing he couldn't succeed on his own, became a free agent.

The Lerners, Kasten and baseball officials said the family and the former Braves president came together on their own. Kasten called the origins of the partnership "organic." Still, he said he came to understand that "if I wanted to talk to other groups, [baseball] wouldn't frown on that. That would be fine."

'Overnight Leaders'

During the first two weeks of April, negotiations between the Lerners and Kasten intensified. But at the Wilson building, District officials were growing even more frustrated with the process and with the possibility that the Lerners would be chosen over Malek or Smulyan. Each had more racial minorities in their groups than did the Lerners.

When the Nationals opened their home season on April 11, they lost to the New York Mets in front of a crowd at RFK Stadium that didn't fill all the seats. The frustration over the situation was growing. "We need an owner soon," said outfielder Jose Guillen, whose talks over a contract extension had stalled. "This is too long to be like this."

On that same day, baseball officials began to give hints that the choice would not be the Lerners unless they diversified their group. A story in The Washington Post the following morning said the Lerners were hurting their chances because they were not moving swiftly enough to add minorities to their group. Within several days, Slater and another of Kasten's investors, Alphonso Maldon Jr., met with Lerner's two sons-in-law -- Edward L. Cohen and Robert K. Tanenbaum -- in the Lerners' Washington Square office. Slater and Maldon, both African American, came away impressed.

"The most striking thing about it was the ease with which the family worked together and finished each other's sentences," Slater said.

Within a week, the Lerners and Kasten formally merged forces, consummating more than two years of off-and-on conversations. Overnight, the Lerners had a person with solid baseball experience in Kasten, several prominent African Americans, an African American woman and two leading Hispanics as part of their group. Some had been with Lerner for months, others had been part of the Kasten bid.

Together, in the words of one member of a losing group, they became the "overnight leaders."

In a counter move, Smulyan's group decided to aggressively and publicly push the idea that its heavy African American participation could put the Nationals in a unique position in professional sports.

"The commissioner was interested in making sure the winning group was a diverse one, and it would advance his agenda to reconnect baseball with the African American community," said Eric H. Holder Jr., a former deputy attorney general and one of Smulyan's investors. Holder said 25 percent of the equity in the group's bid came from minorities, and Smulyan was determined to name a black team president. "There was a historical thing that could potentially be happening," Holder said.

Yet on April 24, DuPuy flew from New York to Washington to meet with the new Lerner bid, which now included Kasten, at the home of one family member in Northwest. When the meeting ended, Kasten drove DuPuy to Reagan National Airport.

The next day, the most prominent members of the Malek-Zients bid -- Malek, Zients, Howard University President H. Patrick Swygert, businessman George Haywood and Verizon Washington, D.C., President Anthony A. Lewis -- boarded Malek's private plane and headed to Milwaukee, where they met with Selig and DuPuy. A day later, Leccese, the lawyer working for the Lerners and Kasten's longtime acquaintance, visited MLB headquarters in Manhattan.

Smulyan wasn't asked to meet with the commissioner again.

"We were disappointed, but we weren't sure it meant much because people in baseball told us they were only doing it to meet with new investors that they hadn't met with," Smulyan said. Still, members of Smulyan's group began to feel as if their chances were dwindling, that Selig had wanted local ownership all along.

"If they were looking for local ownership, they should have called Jeff Smulyan eight months ago," said Robert Pincus, chairman of Fidelity & Trust Financial Corp. and a member of Smulyan's group. "It was a long process [in which] they could have eliminated people sooner."

At the Wilson Building, however, the long-simmering issue of race and the Nationals franchise began to boil.

On April 25, council member Vincent B. Orange Sr. (D-Ward 5), once one of MLB's top allies on the lease negotiations, called Selig to air his concerns. "When the conversation got on the Lerners, Bud said, 'What is the problem with the Lerners?' " Orange said. "I told him, 'For one thing, I don't know the Lerner guys. I don't know the makeup of their team. I don't know what kind of minority equity they have.' He said they were still talking and no decision had been made, but I walked away with the impression that it was going to be the Lerners."

The next day, Orange declared that he would introduce an emergency resolution before the council calling on baseball to name either Malek-Zients or Smulyan as the new owners. Then last week, Orange, Barry and boxing promoter Rock Newman held a news conference. They bemoaned the addition of African Americans to the Lerner group -- a list that included Slater, banker B. Doyle Mitchell and BET executive Paxton Baker. Barry likened it to "blacks being rented for a day."

Selig, who for weeks had been leaning toward Lerner, and other baseball officials let it be known that the news conference had infuriated them. If anything, it stiffened Selig's resolve to give the team to the Lerner group.

Within hours, Selig told close associates to proceed as if the Lerners were going to be the choice.

Staff researcher Julie Tate contributed to this report.