May 17, 2011, 9:13 AM EDT
Jim Crane met the media as the owner-in-waiting for the Houston Astros yesterday, and that led to a couple of glowing reviews of his business acumen and his plans for the future of the organization. It also led to a report in Forbes that says $300 million of the $680 million sales price of the team will be debt-financed.
It’s hard to place this in any kind of context because the Forbes report is thin on (actually devoid of) detail. What kind of debt is this, short or long term? Does that include the fairly standard line of credit that Major League Baseball extends all teams or is that separate? Is this secured by team property and future revenues or is it secured by, say, Jim Crane’s other businesses and/or personal property and that of the others in the ownership group? All of that matters. And, even if the report is true and the debts impinge on team assets, it’s in no case as bad as the McCourt financing of the Dodgers which represented far more than 100% of the purchase price.
But for all of the unknowns, the debt situation is worth looking into as the deal approaches closing. Recent history has shown us that team debt matters, and seeing how the Astros sale is being handled will provide us some amount of insight as to whether Major League Baseball has learned anything from recent history.
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