A little more than a year has passed since Mandalay Baseball announced that all five of its franchises were for sale. Three of them should soon be coming off the market, including the Dayton Dragons, one of minor league baseball's most successful teams and one that could fetch a record price.
Mandalay has reached preliminary agreements with buyers for Dayton (Midwest), the Frisco RoughRiders (Texas) and Oklahoma City RedHawks (Pacific Coast), several minor league sources confirmed. Dayton is Mandalay's prized jewel, and the franchise that in 2011 broke a professional sports record for consecutive sellouts is expected to soon set a new high for a minor league franchise sale.
One minor league owner estimated the Dragons will sell for at least $40 million. Another minor league insider said that figure might be a bit high, but the team could still go in the mid- to high $30 million range.
"Either way, it's going to be the biggest number (in minor league history)," the second source said.
Frisco isn't far behind, and the RoughRiders are the closest to closing, with veteran minor league operator Chuck Greenberg expected to take over ownership as soon as May. The second source estimated that Greenberg will pay more than $30 million for the RoughRiders—which is also more than any other team has fetched in minor league history.
"From a financial standpoint, Dayton is more like a Triple-A team than a Single-A team and therefore would demand a greater selling price than other clubs in the league," Midwest League vice president Dick Nussbaum said. "We have other clubs in the league that approach Dayton, and I am sure they are watching with a great deal of interest what might happen in Dayton."
The prospective buyer in Dayton will be getting arguably the best franchise in minor league baseball, one that has sold out every home game at Fifth Third Field since Mandalay moved the franchise to the city in 2000 from Rockford, Ill. In the process, Dayton has set the gold standard in nearly every aspect of its operation, from customer service to ballpark promotions.
Does that track record of success make Dayton a wise investment at north of $30 million? Not everyone is sold.
"Usually there is growth potential in a team, but Dayton is already hitting on all cylinders," a third minor league insider said. "You can't walk in there and say we're going to take this to another level, because I don't know if there is another level.
"There is obviously unbelievable value in that franchise, but the question is how is that going to be valued? For most people who can afford to make these kinds of purchases, the price is often secondary to the prestige. That, to me, is what you are going to get when some of (Mandalay's) more high-profile properties are going to be sold."
Another insider countered that teams like Dayton and Frisco turn enough a profit to justify such large investments. “It is not a stretch to think the clubs will support (the owners’) investments.”
Mandalay was forced to liquidate its impressive portfolio of teams—the group also owns the Erie SeaWolves (Eastern) and shares ownership of the Scranton/Wilkes-Barre RailRiders (International) with the New York Yankees—after Seaport Capital, the New York-based private equity firm that invested in Mandalay in 2002, decided last year to sell its majority stake in the company. Mandalay originally planned to sell all five of its properties in a single bundle—a plan several insiders considered unrealistic because the cost to buy so many teams would be too steep—but has since opted to sell the teams separately.
"We kept an open mind throughout the whole process, and what we found was a lot of interest in a lot of individual clubs," Mandalay CEO Art Matin said. "There is a bit more interest in an individual team or small bundle than the entire bundle. It's just a reflection of the market and the size of the overall bundle."
Mandalay has found plenty of success during its 14-year run. The group's formula for success centered around finding distressed teams and trying to place them in new ballparks—either in a new market or new or renovated stadiums in the same market.
"They didn't just come in and buy the jewels or the Cadillacs and have just ridden them," another minor league executive said. "I'd say they worked hard and established some solid franchises."
The relocation model worked in Dayton and Frisco (which came from Shreveport, La.). Mandalay operated the Scranton/Wilkes-Barre franchise for several years before exercising an option to buy the team from the city in 2012 after local leaders agreed to finance a $43 million renovation of the ballpark.Mandalay purchased Oklahoma City in 2010, shortly after selling its stake in the Las Vegas 51s (Pacific Coast), where it could not persuade local leaders to build a new ballpark. Mandalay purchased Erie in 2003 and the team has regularly finished near the bottom of the Eastern League in attendance. Mandalay has pursued moving the team, most recently in a failed bid to Ottawa.
Mandalay also owned the Hagerstown Suns (South Atlantic) but sold the team in 2010 after years of unsuccessful attempts to land it a new ballpark. It had an agreement in place last year to buy the Lynchburg Hillcats (Carolina) in a partnership with the Atlanta Braves and move the team to Wilmington, N.C., but that deal fell apart when Wilmington residents voted against paying for a new ballpark.
The decade of work will ultimately pay off for Mandalay, as another veteran operator noted that "a lot of people are looking at them. They will get them sold. We just don't know the numbers yet."
"All of the teams have drawn a lot of interest," Matin said, "so we're going through the process as we speak."