Sacramento A’s owner John Fisher has reportedly updated his figure for how much additional money he needs, or at least wants, to complete his new Las Vegas stadium, and it now stands at $550 million:
John Fisher, managing partner of the Oakland A’s, is offering new shares in his Major League Baseball team at a $2 billion valuation, according to two sources with knowledge of the offering.
The Fisher family, which owns more than 95% of the Athletics, also known as the A’s, is looking to raise $550 million to finance a $1.75 billion, 30,000-seat domed ballpark in Las Vegas, according to the sources. In recent weeks, the A’s have had several investors that have been vetted by MLB who are willing to put in more than $200 million combined at an enterprise value of $2 billion, according to these sources.
That’s a lot to attribute to unnamed sources, but journalism these days, whatcha gonna do. If the reports are true, then Fisher is trying to sell off almost 30% of his ownership of the A’s to raise stadium money, so long as buyers are willing to do so at a price that assumes the entire team is worth $2 billion, which is 67% higher than Forbes’ $1.2 billion estimate. (Forbes isn’t always right with its value estimates, but it’s not usually quite that wrong.) And he’s found at least a handful of suckers willing to do so, according to sources, who are surely not Fisher cronies trying to drive up the sale price of minority shares by getting news articles saying “All the other rich kids are doing it!”
As for carving up your team’s stock to finance a stadium, there’s nothing wrong with it per se, though it does mean that Fisher would be left with only about 70% of the revenues he was counting on to pay off his share of the estimated $1.75 billion stadium cost — which even after accounting for about $600 million in state subsidies and that hoped-for $550 million in investor cash would still leave him on the hook for $600 million plus any cost overruns. It is so very difficult these days to tell legitimate business plans from shadow plays — you can watch a whole documentary about that — so we’re just going to have to wait and see whether somebody actually pays for the bulldozers or if the A’s stadium goes on the pile of Vegas sports projects that turned out to exist only in the minds, and press releases, of the people promoting them.
Def read “domed stadium” as “doomed stadium” in the above.
I don’t see why it can’t be both.
I’m a little confused on the math. So Fisher values 25% of the team at $500 million. That’s what he’s trying to find investors for, or as this article claims, “has several willing to invest $200 million”
Later in the article it mentions that after the sale the Fisher family will still control 80% of the franchise.
So “several” investors literally means 2. Cuz $400 million is 20% of $2 billion?
Why would anyone want to buy 10% of anything controlled by someone who’s clearly not capable of putting together a winning organization, while the league is in a rough economic position, poised for a dramatic lockout a year from now?
To answer your last question: never underestimate the “Greater Fool” theory of economics.
The investors are reportedly willing to put in “more than $200 million combined,” not each.
It could be two investors buying 10% each, or 10 investors buying 2% each. Only the unnamed sources know for sure, assuming they aren’t just talking out their asses.
“Well, yes sir-eee, you can maybe still get in if you act now (and don’t ask any questions…there isn’t time…)… But spaces are filling up fast!
MLB is now selling franchises on the time share model.
I think any potential new minority owners would also need to share the cost to build the stadium based on their ownership percentage in the A’s. Therefore, the potential investment in A’s is substantially more than the $550M they are asking for.
Fisher floating the $2B team valuation since 2023 and not lowering it just tells you they do need every dollar from the minority investors to get this project going. I don’t expect there to be any new interest in the A’s unless Fisher lowers his asking price, or if MLB steps in and provide Fisher with no-interest financing such as a bridge loan to fund the stadium funding GAP.
My prediction is Fisher will back out of the deal if he doesn’t get his $550M funding by June, and instead pursue a sale of the team to a local buyer or stay in Sac with Seminoles funding their new stadium in Sac.
Oof. I hadn’t thought about that. So you buy your 10-20%. Then you also have to contribute that percentage to the stadium construction plus overruns.
So $200 million for 10% plus 10% of the ownership stadium costs ($1.3 billion total, so another $130 million?)
$330 million plus your share of the overruns and you’re basically buying a nice season ticket package cuz you have no say at all.
You’d be better off taking an 1/8 of that money, investing it in the Western Toledo State Basketball team and get to experience a decade of Final Four runs
$600 million of the $1.75 billion total will be covered by the state of Nevada, and if Fisher’s plan works out, another $550 million will be covered by the sale of team equity. So that would leave $600 million to be covered by A’s ownership, meaning another $60 million from each owner of a 10% share.
Are we sure Fisher will be using the entire amount of funds from the sale for funding the stadium? He could just pocket some/all of the funds from the sale. Is there anywhere that says the sale is being done and all proceeds will be used to fund the new stadium?
I’d think if he does get someone to pony up for the piece of the A’s then he’s committed to building the stadium in Las Vegas come hell or high water
Money is fungible. Whether he uses the proceeds of equity sales to fund the stadium or uses it to line his pockets and then pays for the stadium with other money is just an accounting question, there’s no meaningful difference.
“if MLB steps in and provide Fisher with no-interest financing such as a bridge loan to fund the stadium funding GAP.”
The NFL does this for its teams who build new stadiums, but the NFL has a helluva lot more money sloshing around than MLB does.
New owners may or may not be required to commit additional funding toward the stadium. The team and the as yet non existent ballpark are separate entities…
For our purposes here the stadium can be considered a “gift” to the city of LV – albeit one that costs them money every year. Fisher and the a’s aren’t going to own it. Its just a tax dodge, but it means they aren’t “buying” anything. It is money shoveled into a hole that no one will ever see again.
In fact, this could be part of the rationale behind the high valuation… Your $200m buys 10% of the As ($120m) plus a share of this financial black hole we are building but will not own ($80m). You have no say in how it is spent, and you will earn none of the annual profits it may generate and are or may be dispersed.
Now, I think this is bullshit and Fisher just dreamed up whatever number he thinks he can get some people to pay… But that doesn’t mean it won’t work.
He only needs five dummies with $40m to burn and a will to call themselves an owner. And burn it will….
Btw, I just heard yesterday that the A’s will have the highest ticket prices in MLB (I’m assuming this is average ticket prices). From what I can tell the cheapest seats are the $70 outfield grass seats that don’t come with an actual seat (kind of like spring training where one can buy a GA seat and stake out a spot in the grass beyond the outfield fence). The A’s claim to have sold out the tickets they allotted to season tickets which it turns out is 6000 tickets out of the 14000 tickets (only about 10,600 come with a seat)
If the new “investors” are buying in at a enterprise value of $2 billion according to the report, Fisher will not be able to lower his asking price for additional investors or risk having to adjust the ownership stake of the earlier investors. Fisher apparently is currently $350 million short of what he wants. I don’t think he will get the rest because Forbes values the team at $1.2 billion, not the $2 billion valuation that Fisher wants investors to accept. Another wild card is steel tariffs which were just raised 25%. The Raiders stadium construction required 28,000 tons of steel. The A’s stadium is smaller, but the price of steel has increased nearly $250 per to $1200 per ton just since December.
If the stadium does get built, expect sky high ticket prices with only 30,000 seats planned for the proposed stadium.
Agreed on the construction cost issues. And that will only get worse as the circus in Washington rolls/stumbles on (from both parties…).
However, investment dilution risks are not a “fisher” liability.
The As are no different than GM, Tesla or bitcoin. The price you choose to buy at is not a guaranteed baseline and there is no such thing as equity protection.
If these folks choose to give their money to a clown like Fisher to ‘manage’ for them, they accept all the risk of loss that goes with that. He could claim a $10bn valuation. If you don’t like that number, don’t buy. If you choose to buy, you are implicitly accepting that valuation.
Caveat emptor