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Daily coverage of the Mariners during the season and all year long.

Category: ownership
October 1, 2013 at 10:26 AM

Mariners have more than doubled franchise value while losing big

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The Mariners have ended a fourth consecutive losing season minus one manager and with a general manager on the shortest of leashes. They face attendance declines next season and an uncertain future with an aging CEO in Howard Lincoln and president in Chuck Armstrong. An uncertain ownership future too in the wake of the death of Hiroshi Yamauchi.

But they continue to rack up huge wins in the mighty pocketbook, having more than doubled franchise value since the 2008 stock market meltdown despite putting some of the worst teams in franchise history on the field.   At the start of the 2009 season, Forbes assessed the Mariners at a value of $426 million — well down from a year earlier with a 101-loss season at a $117 million payroll helping cause that.

Over the years that followed, the Mariners kept cutting payroll, allowed long-term contracts to expire and systematically reduced their debt load across the board. Today, they have the least amount of debt of any big league franchise and their value — conservatively — sits around the $1-billion mark. I’ve heard some analysts privately say the team is closer to $1.3 billion — a tripling in value since April 2009 and the start of the Jack Zduriencik rebuilding plan regime — but we’ll stick to conservative stuff for today and the “more than doubled” estimate.

And we don’t need to go to Forbes for that. The San Diego Padres last year sold for $800 million, pumped up by a new 20-year, $1.4-billion regional sports network (RSN) deal. That’s not a Forbes estimate, that’s a real life sale and real life always trumps estimates when it comes to pegging what a team is worth.

At the divorce trial two years ago of Mariners minority owner Chris Larson, franchise valuation experts were called in to testify as to what his stake in the team might be worth. Estimates varied but the experts from both sides and a judge agreed the Mariners were worth considerably more than the Padres, relative to market size and their territorial reach.

So, if the Padres today are worth $800 million, it stands to reason the Mariners are worth considerably more. Especially since the Mariners just completed their own new RSN deal in which they assumed a majority ownership stake. Owning your own RSN — under the right market conditions — can prove more lucrative than selling your rights to somebody else.

One reason is that MLB rules make it easy for teams owning an RSN to hide money from MLB revenue sharing coffers. MLB comes up with a fixed amount it feels local TV rights are worth and the teams owning RSNs have to pay that. But there can be tens of millions — or hundreds of millions — in additional revenue taken in that gets sheltered on the “TV” and not the “baseball” side of the equation by MLB clubs.

Now, it’s not just as easy as sitting down, writing a check and buying your own RSN. It takes years of planning,  co-operation and the right setup for your market. And the Mariners, by their own admission, spent years planning their own acquisition of a majority stake in ROOT Sports starting around 2010.

In the interim, they’ve fielded teams that lost 101 games in 2010, 95 games in 2011, 87 games in 2012 and 91 games this past season. The Opening Day payroll for those teams — according to Cot’s Baseball Contracts database — went from $98.9 million in 2009 down to $91.1 million in 2010, $94.6 million in 2011, $84.9 million in 2012 and $84.2 million this year.

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Comments | More in ownership | Topics: profit; value; franchise; rsn

September 19, 2013 at 6:26 AM

Mariners owner Hiroshi Yamauchi dies at 85

Video games pioneer Hiroshi Yamauchi, who transferred his 55 percent stake in the Mariners to Nintendo of America for estate planning purposes in 2004, has died in Japan at age 85. Yamauchi retained titular control of the team after the shares transfer. Photo Credit: AP

Video games pioneer Hiroshi Yamauchi, who transferred his 55 percent stake in the Mariners to Nintendo of America for estate planning purposes in 2004, has died in Japan at age 85. Yamauchi retained titular control of the team after the shares transfer. Photo Credit: AP

Mariners majority owner Hiroshi Yamauchi has died in Japan at age 85. Yamauchi was the patriarch of video games company Nintendo Corp. and owned an estimated 10 percent of its worldwide holdings.

Yamauchi also held a 55 percent stake in a Mariners club he purchased back in 1992, along with a group of minority investors from the Seattle area. Prior to that purchase, it appeared as if the team was about to be offered to a group looking to relocate it to St. Petersburg, Fla.

“Mr. Yamauchi deserves unending thanks for his key role in saving baseball in Seattle,” Mariners minority investor Buck Ferguson said this morning.

Back in 2004, Yamauchi transferred control of his majority shares to Redmond-based Nintendo of America for estate planning purposes, but retained titular control of the ballclub. Mariners officials have insisted that all major decisions had to be run by him first.

So, now is when that estate planning by Yamauchi goes into effect. He had apparently been in failing health for much of the past year. Yamauchi never saw the Mariners play live, even declining to travel from his home in Kyoto to Tokyo in March 2012 when the Mariners played a series of exhibition games there and later opened their season against the Oakland Athletics.

His wife died nearly 14 months ago at age 82.

What does this mean for the ballclub? Likely some changes in the weeks and months ahead.

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Comments | More in ownership | Topics: mariners; majority owner; sale; nintendo;