If this report from KTRK's Bob Allen is to be believed, Drayton has entered into an exclusive negotiating window with an investment group to buy the Astros. Since Richard Justice and Jose de Jesus Ortiz broke the news that Houston businessman almost purchased the Astros last season, it's not surprising that someone else stepped up.
UPDATE: All sorts of other reactions from around the web, including a number making the report seem very premature. Here's the Chronicle's story. Here's one from Astros County and two from Brian McTaggart's Twitter stream. Thanks for dousing this article with cold water, everyone! I'm leaving my thoughts in here, even if this sale looks a whole lot less secure than it was an hour ago.
There are numerous other surprising things about this deal, though, and many, many things for us to discuss after the jump...
First off, the deal is for a supposed 700 million. That's pretty high, as Forbes valued the team at just 445 million last April. While that price may have gone up a little in the past season, it's more likely to have decreased slightly due to revenue shortfalls. That means McLane is cashing out with roughly 250 million more than the overall value of the franchise and almost 600 million more than he purchased the team for in 1992.
This is a huge financial transaction for Drayton, and has to count as a win for him. I'm sure this is basically setting up the retirement of the 73-year old grocery tycoon*. The other interesting thing about the price is that Drayton seems to be insisting that a certain amount has to be paid up front. I'm not really sure why this is, considering his debt/value ratio of 12% was tied for the sixth-lowest in baseball. This excellent post by Adam Morris over at Lonestar Ball shows the Astros should be carrying about 53-54 million in debt currently, which is all the money an investor would necessarily have to cover up front. I'm sure that's still some residual debt from the stadium being built back in 2000, but it's very low, making the Astros that much more attractive to an investment team.
*Since I'm sure he lost most if his old IRA in the market, just like everyone else right? Wait, you mean he's worth over a billion dollars, even after the recession? He doesn't really need a retirement plan? Crap.
The other interesting point about this deal is that it's with a group of investors, which should contain some prominent figures around Houston. Since it's safe to assume Jim Crane won't be given another shot at owning a team, he would probably be either a minority owner (of which Allen says there could be up to ten) if anything. Other possible minority owners? Jim McIngvale? Jeff Bagwell/Craig Biggio?
UPDATE: Thanks to commenter Jeremy Mauss for the link to this story about the group being a New York investment bank.
What is clear is that there will not be one principle owner, but a group of three to five men who maintain the majority shares and that this group is from outside of Houston. This means the ways of professional sports ownership we have come to know in Houston will change slightly. Instead of the McLane/Leslie Alexander/Bob McNair/Bud Adams model with one man in charge, it sounds like the Astros would be placed into more of a situation like the Pittsburgh Pirates, circa-2006, when Kevin McClatchy was CEO heading a group of investors that also included current Bucs owner Bob Nutting. McClatchy ran the team as a the chief figure, but had to answer to a board of directors.
If this is the case with the Astros, it will be much harder to determine where the power lies in the front office. Hopefully, the team will hire someone like Andy McPhail in Baltimore or Frank Coonelly in Pittsburgh to run things effectively. Still, the power structure is a break from what we know and will take some time to sort itself out.
Having an out-of-town ownership group will also make some fans nervous about the team someday being moved. I think that's probably a moot point, as Minute Maid is a good, revenue-generating ballpark that is relatively young. The team has been profitable for a while now, even when the team has struggled in recent years. In fact, as the Forbes report shows, the Astros have made money for its owner every year for the past five.
Before news of this potential sale broke, I was already thinking about the Astros from a business sense. This article about the Washington Redskins made me ponder why the Astros couldn't be just as profitable. What is Daniel Snyder doing that the Astros can't? Opening team apparel stores around the state? Selling tickets to spring training? Is baseball so different that the economic models for successfully marketing your team regardless of winning diverge? Or is it simply because the Astro fan base isn't rabid enough to pay the prices that Snyder charges for everything? I'm sure it's the kinds of things that a new investment group will be thinking about. Surely, there will be a new blitz of marketing to make the team seem profitable right off the bat.
That leads me to another remarkable thing about this sale: it's moving incredibly fast. Drayton has agreed to the negotiating window, one that Tom Hicks waiting almost three months to decide upon. Compare how quickly the Astros could change hands to how long it took the Cubs to be sold. That stretched out for years....literally! Plus, think about the ramifications of this: Major League Baseball and Bud Selig need to approve the new ownership group. If Drayton has already entered into an exclusive negotiating window, that means he must feel good about them getting approved by Selig and the rest of the owners. How did he pull all of this off under the radar?
That's the biggest surprise. Even though the stories had broken about Drayton possibly selling, with Justice writing a whole blog post like he had sold the team already, no one knew a group had been chosen until now? Or is Drayton still trying to stick with the idea that the team has 'never been for sale, I'm just listening to offers when the come in?' Thats simply ridiculous. I can almost guarantee that he had multiple offers to sift through on this and probably silenced all the groups in order to avoid a big media push.
So, before pitchers and catchers report, the Houston Astros could be sold. Life as we know it will be changed, for better or for worse. It's a brave new world out there. Can I fit any more cliches into this last line? Nope. After reading the quotes from Drayton in the updated article, I'm not sure the team will actually be sold this time. Still, at what point does this flirtatious behavior by Drayton mean we really could see a future without him as owner? Actions speak louder than words, my friend.