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02/03/09 9:50 PM EST
Moorad reaches deal to buy Padres
Former D-backs CEO has five years to complete purchase
By Barry M. Bloom / MLB.com
Padres majority owner John Moores has signed a contract with Jeff Moorad, a general partner of the Diamondbacks, agreeing to initially sell about a one-third interest in the franchise to his group that in the end will probably include about a dozen partners. Moores said that under terms of the deal, Moorad and his partnership will have as long as five years to buy out the controlling interest. Until then, Moores will remain the Padres' control person, representing the club at owners' meetings and sitting on numerous committees. Moorad has until Opening Day to close the initial part of the transaction. His next closing date to buy another portion of the franchise is in another year. "I anticipate that I'll remain the control person for three years," said Moores, who purchased the club in December of 1994 for $82 million. "[Moorad] has to reach a certain threshold of percentage of ownership before he becomes control person. And then that will be it for me." The deal must also be approved by 75 percent of Major League Baseball's owners, and that step appears to be all but assured because Commissioner Bud Selig and MLB president and chief operating officer Bob DuPuy have been updated on the transaction as talks have progressed. Moores said the sale value of the club, determined through a series of closings, will ultimately be more than $500 million, including debt. That means because of the team's $240 million debt service, Moorad still must come up with about $100 million to close this part of the deal. Last year, Forbes Magazine valued the Padres at $385 million, 19th among the 30 Major League teams. Moorad said during a conference call on Thursday that the structure of the deal fit the two parties very well. "John Moores and I had talked out a path to control over several discussions in the fall and as we talked about it the last few weeks of December that structure wound up ruling the day," he said. "It allowed John to transition ownership in an orderly fashion and it met the objectives of me and my group to purchase control over a period of time." Upon the initial closing, Moorad will become the club's chief executive, replacing Sandy Alderson, who intends to leave the organization. Moorad said he had several telephone conversations during the last few days with Alderson, who is attending the Caribbean Series in Mexicali, Mexico, and confirmed Alderson's intention to leave the club. Moorad lauded Alderson as "one of the best executives in the game." Alderson joined the franchise in 2006 after a tour with the Commissioner's Office as executive vice president of baseball operations. "He's an immensely talented guy," Moores said about Alderson, who is the fifth person to run the club under Moores' ownership. "He'll land on his feet somewhere." After the conference call, Alderson released a statement, saying that: "I want to congratulate John Moores and Jeff Moorad on the sale of the Padres to Jeff's group. I also want to confirm that, upon the closing of the sale, when Jeff becomes CEO of the Padres, I will be leaving the organization. Until that time, I will continue in my current role." Moorad said he plans no other immediate changes in the front office. Moorad owns about a 12 percent general partnership in the Diamondbacks, which is worth around $18 million based on the $379 million value of the franchise established by Forbes, minus the club's $235 million debt service. By contract, that stake could be absorbed by the remaining four Arizona general partners. The club's managing general partner, Ken Kendrick, said last month that that prospect was a distinct possibility when Moorad resigned as chief executive officer of the Diamondbacks to pursue his purchase of the Padres. Moorad, who immediately was replaced as chief executive by Derrick Hall, president of the Diamondbacks, said that details of that sale haven't been established yet. "That's something we'll get to when we close [the Padres'] transaction," Moorad said about selling his partnership in the Diamondbacks. "But that has not been addressed." According to Major League rules no one person can own more than 5 percent in two franchises, thus as Moorad's stake in the Padres increases, his stake in the D-backs must decrease and ultimately be eliminated. "Over time, yes," Moorad said. The status of the Padres franchise has gotten considerable media attention in part because of divorce proceedings involving John and Becky Moores. They own 90 percent of the team, and Becky shares 50 percent of that asset. Their daughter, Jennifer, owns 5 percent, and the other 5 percent is owned by Glenn Doshay, a San Diego businessman. Both will remain part of the new ownership structure until the time when Moorad buys them out. Moorad spent the past few weeks putting together the money and assembling a minority partnership as part of his new group, which he didn't want to reveal until it is approved by MLB. Moorad said his group would have the ability to buy Moores' remaining share of the club in full anytime after their first year as partners. "We have the right to buy as much as we like up to 100 percent at any time after the first year," Moorad said. "But we like the fact that John and Becky have financed the deal for us and we're likely to pay over time." Moorad, a former player agent, became part of the D-backs ownership group in August 2004, during the transition in which Jerry Colangelo sold his portion of the team. A year later, Moorad was approved as an owner by MLB with the stipulation that he was not positioned as the managing general partner. Kendrick, who owns in excess of a 12 percent share, assumed that role. That structure wasn't going to change in the immediate future, and Moorad, who spent most of his adult life working and living in Southern California, said he and his family had a strong conviction to return to their roots. Thus, buying into the Padres became a highly attractive option. When Moorad joined the Diamondbacks, it was in financial disarray, with a high annual debt on Chase Field. But after raising millions of dollars by taking in a group of limited partners and paying down substantial deferred player-related debt, the D-backs now find themselves on much more sturdy financial footing than they experienced nearly five years ago. As far as the Padres are concerned, Moores said he's invested $100 million in the team over the course of 14 years and has a sizable debt service tied to the construction of PETCO Park, at a cost of $454 million. The ballpark, after two years of court delays, opened in 2004 and the Padres assumed $153 million of the construction cost in bonds that are being paid off annually at an 8 percent interest rate. For various reasons, the two National League West franchises are similar. They maintain relatively modest player payrolls, but both have been successful recently in the division, with the Padres finishing in first place in 2005 and 2006 and the D-backs accomplishing the same in 2007 after winning the World Series in 2001. The D-backs have won the West four times in their 11-year history. The Padres, heading into their 41st season, have won it five times and have gone to the World Series twice, losing in 1984 and 1998 to the Tigers and the Yankees, respectively. "The [D-backs'] model is a good one and there certainly will be similarities in the approaches," Moorad said. "The revenues of the clubs are remarkably similar. The state of the Padres is not dissimilar to the state of the Diamondbacks a few years back. The challenge will be to convince the fan base [in San Diego] that we do have a plan, we do have an approach and those will pay dividends over the long term."
Barry M. Bloom is a national reporter for MLB.com This story was not subject to the approval of Major League Baseball or its clubs.