Originally Published: December 28, 2016 6 a.m.
Move over Ozzie and Daniel Silna. The brothers parlayed a $1 million investment in an American Basketball Association team in 1974 into an estimated $800 million return from NBA television rights over a period of 40 years. That deal is considered by many to be the greatest sports investment of all time. Miami Marlins owner Jeffrey Loria is about to trump that.
In 1999, Loria, an art dealer who was educated at Yale and Columbia, purchased a 24 percent stake in the Montreal Expos for a mere $12 million investment, also becoming the team’s managing general partner. At the time, Loria was viewed by the locals as the savior of baseball in Montreal. Little did they know that he was really a wolf in sheep’s clothing. Loria quickly proved to be a deft opportunist and a master at taking advantage of fortuitous circumstances.
In 1999, the Expos were a train wreck of a franchise. The team that only five years earlier had the best record in baseball and one of the most productive farm systems in the game, had fallen on hard times. After the players’ strike in August 1994 resulted in the cancellation of the remainder of the season and that year’s World Series, Montreal fans and politicians lost their appetite for baseball. Attendance at cavernous and incurably flawed Olympic Stadium plummeted and momentum for a new stadium dissipated virtually overnight. With the franchise starved for cash in the pre revenue-sharing era, Loria initiated a number of cash calls with the knowledge that his partners – a group of local businessmen who had welcomed his arrival – would not ante up. As a result, within two years of his initial investment, Loria’s percentage of ownership in the franchise rose from 24 to 94 percent.
Loria immediately began casting a wayward eye south of the border. Without the promise of a new stadium in Montreal, MLB was amenable to relocating the team, the only question being where? John Henry, owner of the then-named Florida Marlins, was in a similar situation to Loria’s. Unable to convince the local politicians to fund a new ballpark, he wanted out of South Florida. At the same time, the Yawkey Trust was trying to sell the Red Sox in order to maximize benefits to the trust’s beneficiaries. That confluence of circumstances led to a three-way switcheroo in 2002, with Loria selling his stake in the Expos to MLB and simultaneously purchasing the Marlins from Henry, while the latter ended up owning the Red Sox.
Loria received $120 million for the Expos three years after his original investment of $12 million. In addition, MLB gave him a $38.5 million interest-free loan to complete the purchase of the Marlins for $158.5 million. Thus, Loria effectively became the new owner of the Marlins for $12 million.
Loria immediately took up where Henry had left off, campaigning for a new stadium. He threatened to move the franchise, no idle threat as fans and politicians had just witnessed with the Expos. Loria also pleaded poverty, claiming to be losing money while pocketing tens-of-millions of dollars in revenue-sharing, courtesy of his MLB partners. Finally, he secured commitments from local and county governments for a new stadium which will ultimately cost taxpayers an estimated $2.4 billion including principal and interest. Total cost to Loria for the new ballpark? Essentially, none, although he did agree to share a portion of the sales price should the franchise be sold within five years of construction. That five-year period is up, meaning Loria is now in position to pocket 100 percent of any sale proceeds.
The latter point is relevant because Forbes recently reported that Loria, 76, has put the team, now named the ‘Miami’ Marlins as a concession to the source of the ballpark funding, on the market. Asking price: $1.7 billion. That’s not a bad return on an investment of $12 million. And don’t forget the revenue sharing funds Loria has pocketed to date.
Loria is either astute, lucky, conniving or some combination of all three. While he may not have known in 1999 that he would soon be operating in Florida, he certainly knew how to take advantage of circumstances that presented themselves. And because of that, Loria’s original investment in MLB is arguably the greatest sports investment of all time.
Kobritz is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in and Chair of the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com The opinions contained in this column are the author’s. Jordan can be reached at firstname.lastname@example.org.