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Minor League business Beat

edited by J.J. Cooper
February 14, 2004

Search for solution to Portland’s problems continues as Opening Day nears

Less than eight weeks before Opening Day, the Portland Beavers still didn’t know who will be paying the bills this season.

A pair of Pacific Coast League teleconferences left the situation still unresolved. The league was set to have a third meeting Feb. 13 to try to resolve the situation.

“We have indicated that we need a decision by (Feb. 13),” PCL president Branch Rickey said. “There are some toes in the door. We didn’t want to slam the door. It’s a chance to get some things worked out.”

The team, owned by Portland Family Entertainment, is deep in debt and owes the city of Portland $1.7 million in back rent. That led the city to revoke PFE’s agreement to operate and manage PGE Park. When the city gave the 30-day notice to revoke the agreement in January, it was thought that Big Game LLC was purchasing the team. Since last season, the PCL worked to line up Big Game to purchase the Beavers. Big Game, which owns the Florida State League’s Daytona Cubs, made a proposal under which principal owner Andrew Rayburn would personally guarantee future rent payments while working out a purchase deal suitable to the city, the PCL and lender TIAA-CREF, which has provided most of the money for the franchise and stadium project. But Big Game backed out of the proposed purchase in late January.

Without a buyer, the city of Portland is left to run the stadium, while the PCL is left to either take over the club or find someone to run it for the 2004 season. Meanwhile, the team’s creditors are wondering how they will be paid.

With that in mind, the PCL held a meeting Jan. 30 to discuss potential solutions, then tabled the issue for 10 days to give the league’s members time to investigate the options. During the latter teleconference, the league’s members agreed to again postpone a decision, this time hoping to resolve the situation during the Feb. 13 meeting.

The league was facing three options, all of them complicated. It could rescind the franchise and take over the team, try to find another ownership group or attempt to work out an agreement that would allow the current ownership group to maintain a prominent role with the club. “I’ve not heard of anything that really approaches it for complexity,” Rickey said.

If the league rescinds the franchise and takes over the club, there is debate about whether the league would assume the club’s debt, which includes roughly $1.7 million in unpaid rent, $1.7 million in debt to local creditors and $350,000 in baseball debts (such as PCL dues), plus $10 million in remaining debt to TIAA-CREF. While some believe the league would not be responsible for the debts, other legal opinions argue that by taking away the team owner’s prime asset—the franchise—the league is harming the creditors’ best hope of being repaid, and therefore assumes responsibility for the debts.

In addition to that sticky legal question, the league would also have to pay for the continued operation of the club, which would probably require a contribution by the other 15 PCL clubs, similar to how 29 major league teams fund the Expos.

Even if the league found new ownership willing to purchase the team, it would be difficult to get it approved by Opening Day. Rayburn’s group investigated the purchase for months before reaching an agreement. Such a purchase also has to be approved by Minor League Baseball, Major League Baseball, TIAA-CREF and the city of Portland.

Working out an agreement with some new form of PFE (the group that currently owns the club) is also an option, but any such group would have to find a way to bring new money in. A proposal by a group led by then-general manager Mark Schuster was turned down in favor of Big Game’s proposal, and since then the PCL has appointed Jack Cain as acting GM and Tom Lasley as the team’s interim president. Cain and Lasley are running the team while retaining much of the Beavers existing staff.

“We needed someone to keep the forward momentum of the offseason going,” PCL director of business operations George King said. “The people we selected are people who are respected in the industry and in Portland.”

Cain was already working as a consultant for the Beavers. He was the owner of the successful Portland Rockies of the Northwest League before selling the franchise to PFE in 2001. The Rockies moved to Pasco, Wash., and became the Tri-City Dust Devils, while PFE bought the Albuquerque Dukes franchise and moved it to Portland to become the Beavers.

While Cain is now running the club day-to-day, there is little he or the staff can do until the PCL reaches an agreement on who will operate the team in the future.

PFE’s Troubles Touch Tri-City

While the PCL debated how to solve the Portland problem, Dust Devils GM Brian Rogers went about his normal routine, which involves everything from answering phones to cutting the grass.

But while Pasco, Wash., is 200 miles from the financial trouble that has enveloped the Beavers, the aftershocks have left the Dust Devils waiting, and hoping, for a new owner.

Thanks in large part to PFE’s financial disorder, the Dust Devils have spent the past season operating on a shoestring budget. “I think after that first season in 2001, this club had had a lot of neglect,” Rogers said. “It’s not a fault of individuals, it’s a fault of how the organization got started.”

With PFE facing a crushing debt load, the Dust Devils’ mandate has been to keep expenses to a minimum, which has meant a small, underdeveloped staff and, as a result, little revenue. Rogers was the team’s only full-time front office employee last season. Now he’s been able to hire an assistant GM, Jody Sellers.

With PFE’s troubles, salvation would come in the form of a buyer for the Tri-City franchise. The cash infusion that would come from the sale of the Dirt Devils could be used to begin reconciling some of PFE’s debts, while also giving the Dirt Devils firmer financial backing.

Hersh Agrees To Buy Legends

David Hersh and his Fun Entertainment Group have reached an agreement to purchase the Lexington Legends (South Atlantic) from the Lexington Professional Baseball Company. If the sale is approved by the South Atlantic League, the National Association and Major League Baseball, operation of the team is expected to change hands shortly after the 2004 season.

Hersh’s group has agreed to pay what Legends CEO Alan Stein called Triple-A money for the team. Triple-A teams in recent years have sold for between $12 million-$15 million. The Legends paid a $3.5 million expansion fee to join the league. “We considered it one of the top 25 markets (in the minors), and we paid a top 25 price,” Hersh said.

Stein and most of the Legends staff is expected to remain in place under the new ownership group.

“This is not a case where it’s broken and we need to fix it,” Hersh said.

The Legends drew 370,656 fans in 2003 (5,372 a game). Last year, the Legends had a higher average attendance than all but eight of the 30 Double-A franchises.

• The independent Southeastern League has set a Feb. 16 date to decide whether to field teams for 2004 or reorganize for the 2005 season.

The league has lost two of its strongest franchises from the 2003 season, as Pensacola joined the Central League while Montgomery was forced out of its market by the arrival of the Southern League’s Montgomery Biscuits. Commissioner James Gamble left to take a position with the Pensacola team, which left president L.J. Dupuy, owner of the Baton Rouge Riverbats, to run the league. Dupuy said he wanted to let the other prospective owners weigh in on the decision to play or postpone. “It’s tough,” he said. “I’m going to keep trying. I want to have a team in Baton Rouge this year, but I’m not going to be stupid.”

• The independent Frontier League approved the addition of the Springfield-Ozark Mountain Ducks to the league. The Mountain Ducks took over the Kenosha franchise, completing a franchise swap that saw the Pensacola Pelicans move from the Southeastern League to the Central League, taking over Springfield-Ozark’s Central League franchise.

• The Lackawanna County Stadium Authority has hired Tom Van Schaack to serve as Scranton/Wilkes-Barre’s (International) new GM. Van Schaack had worked as an assistant GM for the Syracuse SkyChiefs for eight seasons.

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