- The Washington Times - Wednesday, October 16, 2002

The Anaheim Angels have the rally monkeys. They have the deafening thunder sticks. And they have a place in their first World Series starting Saturday as newly crowned American League champions.
What they don't have is an owner who wants them.
With the Angels preparing for their first World Series after 41 years of existence, Walt Disney Co., the team's owner, continues a quest now entering its third year to sell the club.
Disney chairman Michael Eisner and other company executives have poured tens of millions of dollars into the team and renovation of Edison International Field hoping to improve the long-struggling club and achieve a corporate synergy with the rest of Disney's entertainment empire. The ballpark looks great, and the team's on-field success speaks for itself. But the money-losing club never really linked with the Disney monolith, either on the balance sheet or among fans of the Angels or Disneyland.
The Angels recently hired the Wall Street firm of Lehman Bros. to jumpstart the sales effort, and the hire extends a growing distance between publicly traded corporations and ownership in pro sports.
In the early and mid-1990s, more than a dozen teams, including the Angels and their sister hockey club, the Mighty Ducks of Anaheim, were acquired by public companies or became publicly traded entities themselves each with dreams of using a bullish Wall Street and new corporate opportunities to unlock unprecedented revenues. But the once-public Cleveland Indians are now in private hands again. So, too, are the Boston Celtics. Disney has its for-sale sign hung, and AOL Time Warner, owner of the Atlanta Braves, Hawks and Thrashers, is similarly considering selling those teams.
"This is a very tough economy right now. All corporations are looking at their assets and making choices," said Tim Mead, vice president of communications for Anaheim Sports, the Disney subsidiary that controls the Angels and Mighty Ducks. "There hasn't been any falling out between Disney and Anaheim Sports. In fact, they've been quite supportive [financially]. But sports is a very different type of business, and this is a very difficult economy."
The shift owes primarily to one basic factor: the wildly fluctuating and often unprofitable economics of big-time professional sports are losing their favor with nervous investors trying to protect their assets in a bear market.
Consider the Angels' situation. The club last year held its player payroll to a scant $47million, plays in the nation's second-largest media market and drew more than 2million at home. But even after nearly $10million in additional help from revenue sharing, its final 2001 books still showed a loss of nearly $5million, according to Major League Baseball executives. Forbes Magazine conversely calculated a $5.7million profit for the Angels in 2001, but the team's revenue base remains below the MLB average.
Even with the Angels' unprecedented success in 2002 and a boost in attendance this year to 2.3million, the year-end ledger again will be tight because payroll increased to $62million.
"Clearly, the revenue synergies between the Angels, Anaheim as a vacation destination and the rest of Disney never really materialized, and the company is now under greater pressure to improve shareholder value and show stronger returns," said David Miller, a Los Angeles-based analyst and senior vice president with Sanders Morris Harris. "It depends on the individual company involved, but sports teams are generally not an accretive business by definition. It's often very hard to show consistent growth every year. The larger attraction there is definitely long-term growth in asset value."
Arguably, the most dramatic success involving a public company and pro sports ownership lies with Philadelphia-based Comcast Corp., which owns the Philadelphia Flyers and 76ers, as well as several minor league hockey and baseball and pro soccer teams. The company's stock, like so many others, has been battered over the last year. But Comcast's sports team operations remain profitable, and company executives call themselves committed owners. Comcast has gone to particular trouble integrating its teams with their home facilities, two regional sports networks and a large network of cable delivery systems, all also owned by Comcast.
"Yes, we have a lot of resources at our disposal, but we've tried to be very grass-roots and very thoughtful in how we acquire and operate our teams," said Peter Luukko, president of Comcast-Spectator Ventures, one of Comcast's sports management subsidiaries. "These teams were never an ego buy for Comcast. The purchases were done for very strategic reasons."
In recent days, Eisner has downplayed the Angels' sales effort in the limelight of the team's success and has even hinted Disney might retain a minority portion of the club. But Lehman Bros. already is compiling a book documenting the team's financial history that will be distributed to prospective new owners. The firm also has received several phone calls from potential buyers.
"We've gotten a good amount of calls already," said Sal Galatioto, head of Lehman Bros. sports industry practice. "The [new] labor deal helps, and the team is obviously on a roll. It's still very early in the process. We haven't prequalified anybody yet to make a bid. But, yes, we think there are interested and qualified buyers out there."
Alabama executive Donald Watkins, who tried to buy the Minnesota Twins and Tampa Bay Devil Rays before turning his sights to Anaheim, said yesterday he is in the process of developing a second bid for the Angels. A $150million offer from Watkins earlier this year was rejected by Disney.
"I am still committed to this. I work on this project every day," Watkins said. "What I'm doing now is recalibrating the true value of the team in light of what's now happening. We're well north of $150million now. I've done my due diligence, my partners and I are working on a business plan for the Angels now, and I think we're way down on the road on this compared to anyone else. We're more than prepared to do this deal."

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