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Home Maury Brown Potential Sale of the Astros a Case of Opportunity for McLane

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Potential Sale of the Astros a Case of Opportunity for McLane PDF Print E-mail
User Rating: / 10
Written by Maury Brown   
Monday, 01 February 2010 15:58
Drayton McLane
Drayton McLane is entertaining offers for the Houston Astros, but given
his asking price, it's a case of "make me an offer I can't refuse."

When the topic of MLB clubs sales surface, the Houston Astros have recently bubbled to the surface. Just this last month, Astros Chairman and CEO Drayton McLane offered a 30-day negotiating window to a group headed by Great Court Capital and investment firm out of New York that also includes former IBAF chair and USOC chief Dr. Harvey Schiller (read The Biz of Baseball interview with Harvey Schiller from June of 2009). That window closed yesterday.

McLane released the following statement, after the bid group did not make an official offer prior to the deadline:

“As I’ve said all along, my family and I are not actively attempting to sell the Astros. Over the years, I have been approached many times by groups interested in discussing the possible purchase of the team, and I’ve always been open to listening.

“This group was granted an exclusive negotiating window which expired yesterday (January 31), how­ever, nothing materialized.

“For 18 years, the Astros have been and will continue to be a big part of me and my family. We consider owning the Astros a public trust and embrace the responsibility to the city of Houston.

“Moving forward, we remain as committed as ever to putting a competitive and winning team on the field and making a positive difference in our community. We are anxious to start spring training and begin the 2010 championship season on April 5 at home against the Giants.”

The potential sale of the Astros is far different than the sale of the Rangers, Cubs, or even the Braves. In each of those instances, there were external forces at play (in the case of the Rangers and Cubs, it was sellers looking to eliminate debt, while the sale of the Braves by Time-Warner was a case of altering their portfolio).

For Drayton McLane, any potential sale is really about, “Make me an offer I can’t refuse.” Multiple reports have had the Astros owner looking for a price tag of around $650 million, a sizeable sum. By comparison, the Rangers sale should fetch between $520-$570 million, while the sale of the Cubs, Wrigley Field, and a 25 percent stake in Comcast SportsNet Chicago went for $845 million.

Moreover, compared to the Cubs sale, the Astros do not own some or all of a regional sports network, and Minute Maid Park, the home of the club, is owned by the Harris County-Houston Sports Authority. The Astros have a 30-year lease that began in 2000 and runs till 2029, with annual payments of $7.1 million. According to Forbes’ most recent report from last year, there was still $55 million in outstanding debt on the facility. The magazine’s annual valuation report for the 30 clubs in Major League Baseball ranked the Astros 12th in the league at $445 million, down 4 percent from $463 million in their 2008 publication. Based on Forbes most recent report from April of 2009, the operating income for the Astros, a measure of profitability, was $17 million.

Based upon McLane’s lofty asking price, and the club’s current valuation, it’s very possible that the Astros will remain on the market for some time.

Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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