Punctuating a very quiet Winter Meetings in Orlando, we now see the announcement of private-equity backed Diamond Baseball Holdings (DBH) and the acquisition of nine MiLB teams, with potentially more coming down the road.
This is the long-awaited deal from sports and entertainment Endeavor, which we have previewed. The five teams being acquired in this first round:
- Hudson Valley Renegades (High-A East)
- Iowa Cubs (Triple-A East)
- Memphis Redbirds (Triple-A East)
- San Jose Giants (Low-A West)
- Scranton/Wilkes-Barre RailRiders (Triple-A East)
In addition, these four teams are in the process of being approved for purchase:
- Augusta GreenJackets (Low-A East)
- Gwinnett Stripers (Triple-A East)
- Mississippi Braves (Double-A South)
- Rome Braves (High-A East)
Two other teams–Oklahoma City Dodgers (Triple-A West) and Springfield Cardinals (Double-A Central)–were also discussed at the Winter Meetings as possible acquisition targets, but some last-minute negotiations reportedly came up short in the past few days.
The acquisitions are still subject to final approvals.
“Opportunities to move into an ownership position of a sport so steeped in history are increasingly rare, and we are confident this will drive meaningful growth in the Owned Sports Properties segment of our company,” said Mark Shapiro, President of Endeavor, via press release. “Just as we’ve done for the UFC, PBR and Euroleague, we see tremendous potential to turbocharge these storied Clubs using the scale and capabilities of Endeavor. Our expertise across sponsorship sales, event operations, licensing, marketing and content creation will bring incredible value to these Clubs, supporting communities across the country who form the backbone of the Professional Development League system.”
This is not a surprise: In October we reported Endeavor was looking at buying up to 17 MiLB teams, concentrating on teams owned by MLB teams. Endeavor’s holdings include entertainment agency WME; sports, fashion, events and media company IMG; and mixed martial arts organization UFC.
Pat Battle (l) and Peter Freund (r) will oversee Diamond Baseball Holdings. Battle is Executive Chairman of DBH, bringing extensive experience at the local and national level, as well as ownership interest in two PDL Clubs. He is currently Chairman of the Board of Learfield and serves as an advisor to Endeavor across multiple companies. Freund is CEO of DBH, also bringing to the plate experience as a longtime Minor League Baseball owner and operator. Freund most recently consulted with the Office of the Commissioner of Baseball on the transition of Major League Baseball’s licensed affiliates while spearheading the formation of the MLB Draft League.
“We are excited to lead Diamond Baseball Holdings and create new opportunities for Clubs and communities that play an essential role in cultivating America’s favorite pastime,” said Battle and Freund via press statement. “We will be global in our ambitions and hyper-local in our approach, and creating incredible fan experiences will remain our number one priority. Additionally, we look forward to providing opportunities for growth to the employees of PDL Clubs whose passion and ingenuity have built the sport through the decades.”
What do all these teams have in common? For the most part, they are either totally owned by an MLB parent or feature a significant MLB investment either directly (such as the Memphis Redbirds) or indirectly. MLB teams are also the ones most likely to want to cash out of their MiLB holdings; typically, MLB-owned MiLB teams aren’t seen as very profitable, and with MLB’s takeover of MiLB, there’s no strategic reason to control an affiliate any longer: MLB teams have all the power.
In a press release announcing the move, Diamond Baseball Holdings says it will apply expertise in ticket sales, partnerships, naming rights, food & beverage, merchandising, content strategy, collectibles/authentics/NFTs and media rights, tapping into related entities like Learfield and Endeavor Analytics for expertise across the various disciplines.
“As a longtime Minor League owner and operator, I am thrilled that Hudson Valley will now be part of such a dynamic new group of Clubs,” said Hudson Valley’s Marv Goldklang, Chairman of the Goldklang Group and a limited partner of the New York Yankees for more than 30 years in a press release. “I have known Peter Freund for almost 15 years and have every confidence that with him at the helm, Diamond Baseball Holdings will continue to build on our legacy, which we are incredibly proud of.”
Following the closing of the transaction, the RailRiders will continue to be led by Team President John Adams and General Manager Katie Beekman, and remain an MLB affiliate of the New York Yankees.
“Joining Diamond Baseball Holdings is a tremendous opportunity for our franchise,” Adams said via press release. “NEPA has seen great success from our team on the field and we look forward to creating a next-level fan experience at PNC Field in the years to come. We have been adding energetic individuals to our existing staff and gearing up for 2022. We truly believe that becoming a part of DBH will greatly benefit this team and our community well into the future.”
Similarly, the Rome Braves will continue to be led by Vice-President and General Manager David Cross and remain an affiliate of the Atlanta Braves.
“The Rome Braves are looking forward to joining Diamond Baseball Holdings as the High-A affiliate of the Atlanta Braves,” Cross said in a press statement. “Our commitment to Rome and Floyd County will continue under the leadership of DBH, and we look forward to taking the fan experience to the next level.”
As we noted in October on the changing financials behind baseball, Silver Lake, which owns a significant stake in Endeavor, has been an active partner with MLB in a variety of initiatives, including Fanatics. Both MLB and Fanatics are big investors in Fanatics, and earlier this year MLB made some waves in the merchandising and collectible industries when it switched from longtime partner Topps to Fanatics on the trading-card front. A new entity, Fanatics Trading Cards, then raised $350 million in Series A funding from a trio of investors — Silver Lake, Endeavor (owner of UFC and the WME talent agency) and Insight Partners — that put a value of the new entity at $10.4 billion. (Yes, MLB holds a stake in the Fanatics Trading Cards spinoff.) The valuation comes partly as a result of the investments, and partly from the wide array of rights acquired by Fanatics: besides the MLB deal, Fanatics secured image rights from the MLB, NFL and NBA player organizations.
These are not the only MiLB acquisitions coming down the pike: we expect other sales to be approved and announced in coming weeks. Some will be surprising, but others will make sense.
Photo courtesy Diamond Baseball Holdings, by Tina Boyadjieva of Tina B Foto.