Derek Jeter, the new CEO of the Miami Marlins, may have more breathing room than you think.
Unreported in all the stories about the Marlins plans to cut more payroll and raise a lot more money from new investors is that the new owners raised $1.276 billion to fund the purchase of the team, according to three people with first-hand knowledge of the deal.
The funding consisted of:
Common equity: $800 million
Preferred equity: $76 million
Debt: $400 million
The group, led by Bruce Sherman, paid Jeff Loria $1.2 billion. Of the remaining $76 million, about $25 million went for closing costs and working capital adjustments, leaving the Marlins with about $50 million above the purchase price on their balance sheet.
The Marlins posted negative operating income (in the sense of earnings before interest, taxes, depreciation and amortization) of $66 million in 2017. That loss includes the money they got from the league’s revenue-sharing system, which was over $60 million.
MLB teams have to submit projections to the league office for the upcoming season. Two people familiar with the numbers tell me that this season, assuming a payroll of $93 million, the team will have negative operating income of about $20 million (excluding the $50 million each of the league’s 30 teams will get from the sale of BamTech), including their revenue-sharing proceeds.
The ultimate challenge for the Marlins is going to be to increase revenue, of course. But the extra $50 million or so the Marlins raised for the purchase of the team will give the Sherman-Jeter group some breathing room.
More Info: www.forbes.com
Categories: Money Matters