June 24, 2011
Prospectus Hit and Run
With his Dallas Mavericks having spared us the sight of LeBron James winning an NBA championship, owner Mark Cuban has been in the public spotlight lately. Given his billions of dollars and his past efforts to acquire a Major League Baseball franchise, not to mention a pair of ongoing ownership sagas in Queens and Los Angeles, it's no surprise that Cuban has been asked multiple times about whether he'd be interested in purchasing some portion of the Mets or Dodgers. While Fred Wilpon has found a minority buyer for the former in David Einhorn, MLB’s takeover of the latter's purse strings in the wake of Frank McCourt's financial chicanery has only amplified the chorus of voices calling upon Cuban to throw his hat in the ring. As a Dodger fan myself, I'd like to see it happen.
Certainly, some of that comes out of my desire to have almost anybody besides Frank McCourt (or ex-wife Jamie) in the owner's box. Whatever their misdeeds, no serial killer or disgraced politician ever greenlit the free-agent signings of Juan Pierre or Juan Uribe, skimped on draft signing bonuses, tried to undersell his team's television rights to fund a divorce, hired a Russian scientist to channel the "V energy," or generally used one of the game's marquee franchise as a personal credit card to fund his lavish lifestyle, so just opening the phone book to a random page and putting my finger on a name is likely to yield a better candidate. Probably a better capitalized one, too.
Cuban, who made his first millions with a software startup called MicroSolutions, and his first billions with a startup called Audionet, which as Broadcast.com was eventually sold to Yahoo! for $5.7 billion, is certainly that. The 52-year-old ranked 144th on The Forbes 400 list of the richest people in America, and unlike other suitors—Dennis Gilbert, Alec Gores, Eli Broad—that have been floated as potential buyers of the Dodgers once their end game plays out, he has a track record of success as a professional sports owner. As Forbes' Patrick Rishe put it, prior to Cuban's ownership, the Mavs (an expansion team that came into being in 1980-81) were "the L.A. Clippers of Texas." In the decade prior to Cuban's purchase, their best record was 40-42; three times they failed to reach 15 wins (once during a lockout-abbreviated season), five other times they failed to reach 30, and not once did they make the playoffs. Cuban bought the Mavs for $280 million in January 2000; since then, the team has reached the playoffs in every season, moving beyond the first round more often than not, and reaching the NBA Finals twice, finally winning it all this year. Forbes' most recent valuation of the franchise, published in January, placed the Mavs at $438 million, sixth behind the Knicks, Lakers, Bulls, Celtics, and Rockets.
The Mavs have incurred debt (more than $200 million according to minority owner Ross Perot, Jr., though wait until you see Cuban's response) and lost money ($273 million since 2000, according to Forbes), but they're still carrying less debt than the Dodgers, and where's the honor in a positive operating expense if you're going to non-tender Russell Martin only to sign Rod Barajas and not go over slot in the draft?
From the standpoint of fandom, the more important thing is that the Mavericks have gotten bang for their buck; according to Forbes' Wins-to-Player Cost ratio, they've received a better-than-average return on their payroll dollar more often than not during Cuban's reign, where the Dodgers... not so much:
One thing that's compelling about Cuban beyond the winning (oh, that) and the willingness to spend what it takes to do so is his embrace of sabermetrics as a tool in building a better team. In that regard, he has something in common with the Red Sox' John Henry, who in hiring Bill James and other smart people merely helped end Boston's 86-year championship drought. Cuban has at times downplayed the impact of his number-crunchers, noting that coaching and on-court chemistry are still keys, which doesn't seem unreasonable given the differences between basketball and baseball. At the same time, he's a partner in Synergy Sports Technology, which provides statistical analysis to teams around the league. The point is that his acceptance of advanced statistics automatically guarantees that he's less hidebound by antiquated notions of teambuilding than anybody who would willingly hand Ned Colletti a checkbook.
Furthermore, Cuban is accessible, and vocally passionate about his franchise, its biggest fan as well as its owner. It's clear that he gives a damn in a way that all too many owners—McCourt among them, but you can extend the list to include even more faceless ownership groups across other sports—do not. His willingness to criticize referees and league policies has earned him a reputation as the enfant terrible of NBA owners, and at times the sideshow has overshadowed the main event. Nonetheless, he has long been far ahead of his peers when it comes to marketing his team and his sport, an evangelist of sorts. And he has matured during his time as an owner, most notably occupying a cone of silence during the Mavs' championship run so as not to detract from the team's accomplishments.
Not everybody thinks that letting Cuban into the country club is a good idea. Start with former commissioner Fay Vincent, who last week on ESPN Radio compared Cuban to the late George Steinbrenner, and then revealed more than he intended to about the old boy network that runs baseball:
"I think it's more important for owners to be gentlemen, play by the rules, respect the authorities, do what's good for the sport, than it is to manage his franchise into total success... The subtleties make the difference. George Steinbrenner was a real problem in baseball, and I think Mark Cuban is a real problem in basketball."
Gentlemen playing by the rules! Doing what's good for the sport! Like McCourt and Wilpon? Like Bud Selig and Jerry Reinsdorf, who owned teams during baseball's shameful and extremely illegal late-‘80s collusion scandals? Like Marlins owner Jeffrey Loria, rung up for pocketing revenue-sharing money instead of reinvesting in the team? Like Royals owner David Glass, who used the cost-cutting principles he employed as CEO of Wal-Mart—where he busted unions—to turn his franchise into a doormat, pocketing-revenue sharing money as well? Like every owner who was around during the 1994-1995 players strike, which itself was a hamfisted attempt at union-busting?
Heaven forbid the national pastime should find a willing owner too ungentlemanly to join those esteemed ranks. Poor Lew Wolff might be overcome by the vapors and need to retire to his fainting couch—if only Bud would sign off on a plan to let him purchase one in San Jose.
Vincent may equate Cuban with Steinbrenner, but apart from the occasional volume of the two owners' bluster, it's difficult to see why. The Maverick's rants don't evince the kind of cruelty the Yankee Doodle Dandy willingly inflicted when he talked of Ken Clay spitting the bit. Cuban's transgressions don't go much further than his criticism of the NBA, and he's used the $1.7 million in fines that he's been levied as an excuse to donate matching funds to charity. He hasn't been suspended from his sport, or convicted of any felony (though he has been investigated by the Securities and Exchange Commission regarding allegations of insider trading).
Then again, Steinbrenner may haunt Vincent, who as commissioner of baseball from late 1989 to late 1992 clashed with the Yankees owner, banning him for life on July 30, 1990 after it was revealed that Steinbrenner paid small-time gambler Howard Spira $40,000 to dig dirt on Dave Winfield. Steinbrenner was reinstated less than three years later, after Vincent was ousted by an ownership bloc that included Selig, Reinsdorf, and others who desired to curb player salaries. A gentlemanly ownership bloc full of men who played by the rules and respected authority, of course.
Ultimately, when it comes to a prospective owner, the opinions of a former commissioner matter little relative to the opinions of a sitting one, and it's presumed that this is where Cuban might run into real trouble. Selig, with his broad influence over the game's owners, effectively controls who can gain admission into their country club. The Chicago Tribune's Rick Morrissey could envision the scene when Cuban mounted an attempt to purchase the Cubs in 2008:
But it's hard to shake the image of Commissioner Bud Selig holding Cuban's application by his thumb and index finger, and at arm's length, as if he were holding a rat by the tail. That's probably unfair to Cuban, who runs a successful NBA franchise, but it seems to sum up baseball's general estimation of him.
Cuban reached the second round of bidding on the Cubs with what was reportedly the highest bid at $1.3 billion. He ultimately backed off his pursuit when the economy went south; it was widely reported that he received negative feedback from MLB over the amount of his bid. Ultimately, he lost out to the Ricketts family, who paid considerably less, albeit in a much different economy.
Last August, Cuban made an aggressive attempt to buy the Rangers in a bankruptcy auction (the gentlemanly Tom Hicks had overextended himself at the country club bar) but ultimately lost out to the Chuck Greenberg-Nolan Ryan group (from which Greenberg was later bumped for... his bluster). The combination of cash and debt made determining the valuations of the two bids a contentious matter, and it was reported that MLB had the option of choosing the second-highest bidder instead—yet another means by which Bud and company could protect themselves from granting admission to anyone they deemed unseemly. Again, there were reports that Cuban simply rubbed the Powers That Be the wrong way. From an Associated Press story by Angela K. Brown:
"Mark Cuban could take the Rangers to the next level, but Major League Baseball has been wary of his personality. It would not surprise me if he would be highly critical of umpires or disagree with (commissioner) Bud Selig and maybe side with the players' association," said Wayne McDonnell, a professor at New York University's Tisch Center for Hospitality, Tourism and Sports Management. "He's a bit of a wild card and very different from the good ol' boys network in baseball, but he has a burning desire for victory and the financial wherewithal to buy the Rangers and increase their value."
Disagreeing with the commissioner? Siding with the players' association? My God, he's thinking... freely! Clearly, that's the last thing anyone in baseball wants in its owners.
One twist to Cuban's pursuit of the Rangers is that he was a latecomer to the game who partnered with Jim Crane, who's currently awaiting approval as the new owner of the Astros and who has his own sordid history involving discrimination complaints (over 2,000 claims!), war profiteering, breaches of fiduciary duty, an 11th-hour cancellation of a previous agreement to purchase the Astros, an attempt to purchase the Rangers from Hicks at a higher price after the aforementioned auction had finished... and the list goes on. Just another gentleman playing by the rules and respecting authority.
Thus far, the media has expressed more interest in Cuban owning the Dodgers than the man himself has, and why wouldn't they, given his penchant for providing good copy? Cuban spoke to TMZ.com—yes, it has come to this—earlier this week about the prospect of buying the team: "I have an interest in Major League Baseball for the right deal. But it's just such a mess, right? I can't imagine that it's not going to be such a mess that it's [not] going to make it hard to turn around," he said, referring to the team's convoluted business structure, full of subcorporations and shell companies, rather than its baseball operations. "But if it's just so screwed up, that the pieces are so messed up, that it takes 20 years to fix—I mean, there's literally franchises out there that are just in such disarray and such a mess, in multiple leagues, that no one can fix. But if the deal's right and they're fixable, I'm very interested... The opportunity is not lost on me."
The Dodgers aren't for sale just yet, of course. But with Selig's rejection of the Fox television deal that constituted McCourt's lifeline, the embattled owner has no chance of making the team's June 30 payroll. In one of the most delicious ironies in all of Dodgerdom, some $15 million in deferred payments to Manny Ramirez, Andruw Jones, and the aforementioned Pierre may be the straw that breaks the camel's back. An inability to make payment would leave the team, whose day-to-day operations are already being overseen by MLB, open to seizure and ultimately a sale, though the threat of nasty litigation via which McCourt would expose other owners' finances still looms. Then again, given McCourt's knack for hiring legal geniuses and keeping his financial dealings so clean, it's unlikely Selig is lying awake at nights worrying about such a lawsuit.
Whatever the outcome of the Dodgers' mess, Selig probably hasn't learned his lesson when it comes to needing owners who are well-capitalized, creative, and hungry to win. Instead, he wants owners who will pledge fealty to his regime, who won't step out of line or spend inordinate amounts of money in an attempt to—gasp—achieve total success. Mark Cuban certainly doesn't fit that bill. When he's eventually elbowed out of a chance to buy one of the game's marquee franchises and inject some life into it, the loss won't just be the Dodgers', it will be baseball's.