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Tuesday, May 17, 2011

How New Astros Owner Jim Crane Is Like Frank McCourt

Maury Brown has a new piece up this morning in which he likens new Astros owner Jim Crane (the sale completed yesterday, for $680M) to Frank McCourt. No, that's not a typo.
The similarities between McCourt and Crane cover two areas. For lack of a better term, they were both bridesmaids in club sales. For McCourt, it was the Red Sox. For Crane, it was the Cubs and Rangers (and technically, the Astros once prior). Baseball has a tendency to bring in owners that truly want in, if they meet the financial muster.

Which brings us to what will likely be the most concerning aspect of any approval by the league’s 30 owners. Crane’s purchase, like McCourts’, is heavily debt-laden.

Of the $680 million purchase, just under half ($300 million) is going to be financed with debt. According to Mike Ozanian of Forbes, “In 2010 the Astros had operating income of $14 million, so if Crane parks $300 million of debt on the team the franchise would be in technical default of the league’s debt limit, which is 10 times earnings before interest, taxes, depreciation and amortization.”

What's disturbing about this is how MLB is bringing in one heavily indebted owner around the same time it's trying to kick out another one. Brown asks, "Is McLane and MLB more concerned about setting market value than possibly setting themselves up for another debacle, such as McCourt wound up in?" I would be inclined to answer "yes". Though the Red Sox eventually went to a group led by John Henry, they were not the high bidder, and concern around Massachusetts was that MLB steered the team into their hands.

A good half or more of the Dodgers' attendance problems can be directly attributable to the poor quality of the team on the field, but much of this can be laid at the feet of a historic reluctance to pay for international talent and underspending on the Rule 4 draft. Last year's surprise signing of LSU pitcher Zach Lee was the first time since the 2006 draft that yielded Clayton Kershaw that the team has spent more than $2M on a signing bonus. Some of that can be explained by the team's veteran lust that fritters away top draft slots for dubious free agent acquisitions, but it's hard not to see how the McCourt's personal extravagance is steadily corroding the team and the fan experience at the ballpark. One hopes, for the sake of Astros fans, that Crane isn't like McCourt in that way — and more, that this doesn't become yet another talking point in the coming legal battle between MLB and Frank McCourt.

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