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Nightmare in Portland nearing an end
by Will Lingo
The Pacific Coast League may finally be ready to emerge from its Portland quagmire.
The league has a buyer for the team lined up and has hired a new president/general manager for the operation. The process of closing the deal will still be complicated, but by the end of the season the Portland Beavers will be a healthy franchise again.
The Beavers are a ward of the PCL right now, and have been since the league took over the franchise before last season. Portland joined the league with great fanfare in 2001, with a massive $30 million deal to renovate what is now called PGE Park, buy a PCL franchise, buy a Northwest League franchise (and move it to Pasco, Wash.), and buy a minor league soccer franchise. The deal included a $23.4 million investment from the pension fund TIAA-CREF.
Completely explaining everything that went wrong from there would take an entire book, but let's just say the team lost a lot of money and got crushed under the weight of its massive debt. The PCL finally stripped the franchise from its previous owner, Portland Family Entertainment, and tried to stabilize the operation last season while looking for a new owner.
League president Branch Rickey said the franchise is in much better shape now, and he's optimistic a deal will get done soon.
"It wasn't until we issued a new franchise that we were finally in a mode where we could discuss buyers for the franchise," he said. "The thing I'm so pleased about last year was the focus was completely on the field and the success of the team (which had the best record in the PCL)."
The league has had a buyer at the table since the middle of last season, but the complexity of the deal and the number of people involved in the process--the prospective owners, the old owners, the PCL, the city of Portland and TIAA-CREF to name just a few--have dragged the process out.
The league has negotiated a one-year lease for the 2005 season, however, and the prospective owners are working with the city of Portland on a multi-year lease beyond 2005. After that step is completed, the sale should move forward quickly.
"We're ready to get on with the business of running the entire league, and not focusing a disproportionate amount of time on one franchise," Rickey said.
Owner At The Table
Rickey confirmed that Sacramento River Cats owner Art Savage is serving as an adviser to the group that wants to buy the Portland franchise, though he will not be part of the ownership group.
"There is a group at the table which has invested considerable sums of money, that was brought to the table by Art Savage and would like to have Art Savage in an interim management role as they get started," he said.
John Cunningham, the Beavers' new president and general manager, officially was hired by the PCL to immediately run the club, but the new ownership group signed off on his hiring as well. "Obviously we were identifying personnel who would be ongoing personnel under a new ownership group," Rickey said.
The fact that the prospective owners of the team have not been publicly identified and have received an exclusive right to negotiate has generated criticism in the local press, as well as among other PCL teams. But Rickey said there was really no other way to handle it.
"While we can't be completely transparent, we have tried to work fairly in negotiations that work for each party," he said. "We have a process in place where we're recognizing the process is too multifaceted to let more than one buyer at the table at a time."
As for other buyers being shut out of the process, Rickey said he wonders where those buyers were in the three years before the league finally took it over.
"The PCL is in an exclusive relationship now with a buyer that is at the table, a buyer that has made a significant investment in keeping the team afloat," he said. "The franchise was rescinded from Portland Family Entertainment in April of last year. Through the length of the distress of this situation, there has been an open process--anyone could have bought this club . . . The PCL was not in position to sell this franchise until we took it over last year."
All's Well That Ends Well?
With the depth of Portland's financial problems, no matter how the situation is resolved, a lot of people will never be fully repaid money owed to them by the franchise. But they're still trying. Rickey said the sale of the team has been delayed by having so many groups trying to strike the best deal for themselves.
"In any multifaceted relationship, if any party thinks the deal depends on closing with them, they can stall the deal," he said.
Rickey said the process was complex enough, and at each step along the way another complication has emerged. After the PCL started negotiating exclusively with one buyer, for instance, other buyers started coming forward.
"There are willful forces that have done their best to intrude and affect the negotiations from the outside . . . groups seeking their own self-interest," he said. "There are a lot of relationships we've been respecting behind the scenes. All the negotiations have been open and very two-sided."
In a perfect world, the Portland franchise could have been put up for auction in the offseason and gone to the highest bidder. But who knows if that buyer would have satisfied TIAA-CREF or the city of Portland, not to mention the rest of the PCL or the Beavers' creditors.
And when has any franchise been sold that way, even in the best of circumstances? Deals are always about relationships, and if Rickey was most comfortable with this relationship to resolve his biggest problem then that's understandable.
The most legitimate criticism of the process is that it wasn't more open to fellow members of the PCL. Officials from three franchises either declined comment on the process or said they knew nothing about it, and they should have a better idea of what is going on within their own league.
But if you look at the PCL now in comparison to five years ago, the league is in much better shape now, with better franchises in better facilities in better markets. If in another few years we count Portland as one of those great markets, then the end will have justified the means.
You can contact Will Lingo by sending e-mail to [email protected].