Ownership of Diamond Baseball Holdings (DBH) and its 10 Minor League Baseball teams is shifting from sports and entertainment firm Endeavor to technology-centric private equity firm Silver Lake, a backer of the original deal creating the pair.
DBH operates 10 MiLB clubs: Iowa Cubs (Triple-A; International League); Memphis Redbirds (Triple-A; International League); Scranton/Wilkes Barre RailRiders (Triple-A; International League); Hudson Valley Renegades (High-A; South Atlantic League); San Jose Giants (Single-A; California League); Gwinnett Stripers (Triple-A; International League); Mississippi Braves (Double-A; Southern League); Rome Braves (High-A; South Atlantic League); Augusta GreenJackets (Single-A; Carolina League) and Oklahoma City Dodgers (Triple-A; Pacific Coast League League).
The transaction is subject to customary conditions and approvals and is expected to close in Q4 2022, or roughly a year after the announcement of the acquisition of the MiLB teams by the newly formed DBH. Upon closing of the transaction, Pat Battle and Peter Freund will continue to lead DBH as Executive Chairman and Chief Executive Officer, respectively.
“Creating the best and most consistent fan experiences in Minor League Baseball with deep local connectivity within each community will remain our number one priority at each of the DBH Clubs,” said Peter Freund, CEO of DBH, via press release. “As we continue our active acquisition strategy, we will remain focused on key markets, historic brands, modernized facilities and local, regional and national partnerships within each of these important communities.”
“We started DBH to build brand awareness around the amazing attributes of Minor League Baseball, and to support Clubs, communities and facilities. We are grateful to Endeavor for its early support and allowing our vision for the company to flourish,” said Pat Battle, Executive Chairman of DBH, via press release. “With the support of Silver Lake going forward, and by continuing to work with MLB at the national level, we are entering into a new and exciting chapter.”
When announced, the creation of DBH as backed by Endeavor was hailed as a way to modernizing MiLB licensees with advanced technology and more. Endeavor’s holdings include entertainment agency WME; sports, fashion, events and media company IMG; and mixed martial arts organization UFC.
But the deal was also criticized by MLB Players Association, which didn’t look kindly on a deal where WME via Endeavor owned teams and also represented players. As we noted October 2021 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 in 2021 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 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.)
That Endeavor has sold its MiLB teams to Silver Lake comes at an interesting time. There are very few MiLB teams on the market–we’re told the official MLB tally has one Triple-A, two Double-A and one Single-A team available–but there doesn’t appear to be much demand among investors, either. MiLB team valuations are extremely hard to peg right now as well, say insiders, as the economics of the game have totally changed since MLB took over MiLB. We have no official word about valuations of the 10 DBH teams, though we have been told by several with inside knowledge that DBH made very fair offers while acquiring the 10 MiLB teams. But we’re sure we’ll hear plenty of valuation scuttlebutt soon enough.
“Since its launch, DBH has established a leadership position in Minor League Baseball, with its Clubs playing a pivotal role in local communities across the U.S. Given the massive live audience and reach of the minor league, we believe there is a large opportunity to invest further to support growth, drive technology-related innovation and offer improved experiences for all stakeholders,” said Stephen Evans, Managing Director of Silver Lake, via press release. “We are excited to partner with Pat, Peter and their team to help advance DBH’s mission, particularly with investment in digital technologies that are transforming baseball’s landscape today.”
In some ways this may not change a whole lot for the MiLB teams on a daily operating basis: DBH had promised operational upgrades using Endeavor tools, but those sorts of tools aren’t necessary hard to find. As a financier of the original package acquisition, Silver Lake probably won’t be surprised by anything from DBH moving forward.
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