Monday, February 13, 2012

Moorad and Moores

Padres CEO and Vice Chairman Jeff Moorad recently met with team majority owner John Moores in Houston, where Moores lives, and Moorad said Moores told him that if Moorad were to slow-pedal his purchase of the Padres, that would be acceptable.

That's what Moorad told 1090 AM's Lee Hamilton in an interview that aired this afternoon. Moorad said nothing else on the subject.

Questioned by this blog later today, Moorad said the meeting with Moores "came at John's suggestion" and declined further comment.
Moorad declined comment when I asked him what the chances are that his group's accelerated purchase of the Padres -- a bid that MLB decided needs more study -- will now be abandoned in favor of the original, five-year payment plan that runs to 2014.

Moorad said the issue was too sensitive for comment.

The agreement between Moores and Moorad, reached in March 2009, gave Moorad's group five years to pay off Moores. So far, Moorad and his partners have completed 49 percent of the purchase. 

Although he had until 2014 to pay off Moores, Moorad sought to complete the deal last month.

Why pay off Moores now, rather than cleave to the five-year payment plan?

Moorad said constant media speculation about his group's ability to pay off Moores was becoming a distraction.

It was probable, however, that Moorad also had a financial incentive to pay off Moores early this year. At the three-year mark of a five-year purchase plan, it's not unusual for more favorable terms to kick in if the buyer can pay off the seller.

According to some reports in the mainstream media, it was a fait accompli that MLB owners, with Bud Selig's blessing, would approve Moorad as controlling owner during meetings at an Arizona resort four weeks ago. An exception was the Chicago Tribune, which suggested that Moorad's approval was in doubt but offered no explanations or sources. This blog, for what it's worth, reported in December that high-ranking baseball officials sang the praises of Moores -- the Padres' majority owner since the winter of 1994 -- during the winter meetings in Dallas.

MLB owners, to the apparent surprise of Moores, decided on Jan. 12 to table the vote on whether to approve Moorad's group becoming majority owner of the Padres. At the time, money for the purchase was in escrow.

Responding to the decision, which denied him immediate payment of approximately $150 million (UPDATE: I orginally wrote $250 million by including roughly half of the original deal's debt), Moores cast the lone dissenting vote on Selig's contract extension. Almost never does an owner vote against Selig, but even after a second vote was called, the result was the same: Moores voted against Selig.

Days later, Moores reversed course; MLB announced that Selig was approved by the owners, 30-0.

Explaining why the vote on Moorad's group was tabled, Selig cited "financial concerns" but gave no details.

This blog exclusively reported on Jan. 20 that MLB postponed the vote on Moorad's group in substantial part because it wanted to make certain that money used to pay off Moores wouldn't be money from the Padres' pending TV deal with Fox. Further, if Moorad's deep-pocket partners were to front money used to pay off Moores, they couldn't be reimbursed later with the Fox money.

Generally speaking, MLB wants to makes sure a team spends its local TV money only on baseball operations.

This blog also reported exclusively that White Sox owner Jerry Reinsdorf spoke against Moorad to fellow owners leading up to the decision to table the vote. Said to be skeptical about Moorad dating to Moorad's days as an agent, Reinsdorf is one of MLB's most influential owners and long has been close to Selig. Presumably, he also chats with the Chicago Tribune now and then.

Today, Moorad told me (and earlier, Hamilton) that the Padres will direct all money they get from the Fox deal into their baseball operations--and that was always the intent. "We made a commitment that every dollar of the TV deal will be spent on the club," he said.

What the Padres are to do with the TV money is a delicate issue for two reasons: 1) Selig denied Dodgers owner Frank McCourt's request last year to use an advance from Fox to pay off his own debts; 2) The Padres are still awaiting MLB approval of their 20-year deal with Fox.

The Padres and Fox have been in negotiations for a year, perhaps longer. Getting creative during the delay, the Padres, as reported here today, quietly locked up their lead TV color man, Mark Grant, to a long-term deal by making him a club employee.

By now, both Fox and the Padres had hoped to announce their 20-year deal. Moorad in October targeted Jan. 1, 2012 for making the Fox deal official and said the Padres stood to get $25 million in rights fees for the first season of the 20-year deal.

The Padres and Fox recently re-opened negotiations on a portion of the pact, believed to be an upfront payment. Already in place, as this blog reported, are terms giving the Padres approximately a 20 percent equity stake in the Fox regional network to be created in San Diego; agreed upon as well are the yearly guaranteed rights fees, which start out at $30 million this year and run to between $65 million and $70 million in the final year.

The $30 million rights fee Moorad negotiated for this year is $14.8 million more than what the Padres got from Cox Communications in 2011, per the final year of a 10-year deal brokered by Larry Lucchino's administration. However, because the leap in local revenues will reduce the amount of revenue-sharing money the Padres get from MLB later in 2012, the rights fee alone will pump less than $14.8 million into the team's baseball operations. But the anticipated money did allow GM Josh Byrnes to increase the payroll enough to add left-fielder Carlos Quentin,

Expect MLB to sign off on the Fox deal before the 2012 season, which would allow the "Fox Padres," with Grant and Dick Enberg behind the microphones, to make their debut in March, likely close to St. Patrick's Day.

Less predictable is whether Moorad will be majority owner by the time the Dodgers and Padres meet on Opening Day.

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