Buying up chunks of stock didn't do it. Neither did a road show this month aimed at institutional investors. And on Wall Street, the best record in baseball was little more than an honorific.
In the end, the flagging shares of the Cleveland Indians Baseball Co. got their biggest boost from the announcement last week that majority owner Richard Jacobs, who turned the team into a perennial contender and a model of fiscal discipline, was taking himself out of the game.
Mr. Jacobs said his decision to sell the team was based on the robust market for professional sports franchises and a desire to hand-pick his successor, rather than a desire to enhance the ball club's stock price. But analysts said a sale -- most likely to a corporate buyer -- is the next logical step in creating a growth business from what at present is simply a highly successful baseball team.
``The easiest way to unlock the value of the franchise was by putting it up to the highest bidder,' said Robert L. Caporale, president of Game Plan LLC, a Boston-based investment banking firm that specializes in in the sports and entertainment industries.
``You're probably looking at a (sale) price of up to $300 million, given the recent prices of franchises and the strong state of this one, so it makes a lot of sense to sell,' Mr. Caporale said.
Since the Cleveland Indians Baseball Co. went public last June at $15 a share, its stock has languished and slid to $5.375 a share last October before rebounding somewhat after the IPO's underwriter, McDonald Investments, accumulated more than 600,000 shares of its common. The stock's sagging status changed last Thursday, May 13, with the announcement that the team was up for sale. The stock price soared 64% that day.
Based on Thursday's closing price of $16.25, the team is valued at about $225 million, though observers expect the franchise to sell for considerably more.
Asked whether he believed the IPO, the first ever by a major league baseball team, had met expectations, Mr. Jacobs, 73, said, 'I'm disappointed. In my opinion, the stock should have gone north rather than south. But I don't regret the decision (to go public). I don't regret it at all.'
Mr. Jacobs, who is chairman, president, chief executive officer and controlling stockholder of the baseball company, said the sluggish performance of the stock had no bearing on his decision to sell. However, he did note that he 'found it difficult to buy companies and put them in with the Cleveland Indians.'
Mr. Jacobs said at the time of the IPO that he was interested in buying hotels, media properties or other entities that could be rolled into the public company to help boost its value.
Because of the stock's disappointing performance, Mr. Jacobs couldn't use Indians shares to make acquisitions, Mr. Caporale said. There also was a 'relative lack of available, synergistic properties' in the market, Mr. Caporale said.
One property that offers synergy with the Indians, Fox Sports Ohio, is controlled by 'an obvious choice' to be the next owner of the Indians, said Andrew Zimbalist, an economics professor at Smith College in Northampton, Mass., who has written several books about the sports business.
Cablevision Systems Corp., a publicly traded cable and sports giant based in Woodbury, N.Y., is the majority owner of Rainbow Media Holdings Inc., which owns 50% of Fox Sports Net. That network of sports cable affiliates includes Fox Sports Ohio. Rupert Murdoch's News Corp. owns the other half of Fox Sports Net.
Former Clevelander Charles Dolan is chairman of Cablevision. He and his brother, Larry, a lawyer from Chardon, were unsuccessful bidders for the Cleveland Browns franchise and tried to buy a stake in the Cincinnati Reds baseball team.
Fox Sports Ohio at the end of 1998 signed a six-year agreement with the Indians to serve as the team's cable home. The deal gives Fox Sports Ohio the right to telecast 70 games a year in the first two seasons and 75 games a year for the remaining seasons.
Joining the baseball team with Cablevision would give the cable company another high-profile sports engine to fuel growth, Mr. Zimbalist said. Through Rainbow Media, Cablevision owns Madison Square Garden in New York, which includes the New York Knicks and New York Rangers.
Morton Cohen, chairman of Clarion Capital Corp., a Cleveland-based venture capital firm, agreed that a corporate buyer makes sense.
``This is big money now; you've got to have a strategic interest to buy it, because there's not much leverage left in ticket prices and other revenue streams,' Mr. Cohen said.
Mr. Jacobs said he still enjoys owning the team -- and now makes a healthy profit on it -- but decided it was time to sell because of the strong market for sports franchises. The Texas Rangers were sold for $250 million last year, the Los Angeles Dodges fetched more than $300 million, and the National Football League's Washington Redskins recently were sold for a record $800 million, though that deal has yet to receive final approval.
Mr. Jacobs and his late brother, David, bought the team in 1986 for $36 million.
``I never had any interest in disposing of the franchise until recently, but there's a market for it,' Mr. Jacobs said. He said he has had no contact with potential buyers and would not speculate about who would be on that list, though he said it's likely that a corporate buyer would be able to pay more than an individual.
Mr. Zimbalist said Mr. Jacobs has chosen a good time to sell.
``He's old, but he's not so old that he doesn't have time to find the right buyer,' Mr. Zimbalist said. 'The Indians have a very solid organization and can comfortably turn a profit of $10 million (a year) for the foreseeable future, so that clearly puts them on the top end of what a baseball franchise can attract.'
