Alabama businessman details plan for profitability
Posted: Tuesday January 29, 2002 7:33 PM
Donald Watkins isn't much of a baseball fan, but the attorney/businessman has his eye on purchasing the Minnesota Twins. If he can close the deal -- likely to end up in the neighborhood of $140 million for the club and another $350 million for a privately financed stadium -- Watkins would emerge as the first black controlling owner in the major leagues. Watkins is the son of Levi Watkins, former president of Alabama State, a historically black college in Montgomery. The would-be team owner received his law degree from the University of Alabama law school in 1973 and went to work for Fred Gray, the state's leading civil rights lawyer at the time, representing the NAACP and the Southern Christian Leadership Conference. CNNSI.com senior writer Mike Fish spoke with Watkins about his interest in baseball and the Twins, in particular. CNNSI.com: What drew you to the Twins?
Donald Watkins: The process started in May. I looked at the Tampa Bay Devil Rays and I heard about the possible availability of some other franchises -- Los Angeles (Dodgers), (Anaheim) Angels, (Philadelphia) Phillies, (Detroit) Tigers and Twins. I didn't want to start with some guy who wants $300 million. I looked at the ones hovering above $100 million and I focused on the Minneapolis opportunity, an existing franchise with a long track record.
CNNSI.com: You'd be the sole owner, right?
DW: Yes, but there might be others involved in certain components, though. If you take stadium financing, typical project financing usually includes some personal equity from you -- just like building a house -- a naming rights component and an institutional investor component, usually life insurance companies or reinsurance companies. And then the component involving non-game day revenues come from a variety of sources. Are there other people involved? Yes, but in different ways.
CNNSI.com: How can an individual owner compete against the conglomerates that are buying into the sport?
DW: I have resources, too. I am not worried about that. I have relationships and resources. I don't mind competing.
CNNSI.com: If major league baseball says the Twins can't generate the revenue to survive in Minneapolis, why are you interested?
DW: There are plenty of things I could be doing with my time and financial resources. I look for value opportunities. I'm not a neophyte in business. Nobody who knows me can point to any business that I've been in that did not achieve profitability and exceed industry standards for profitability. I have a pretty good grasp of how to run a team.
CNNSI.com: How do you make the franchise profitable?
DW: The value zone I will focus on is the stadium component and the complimentary enterprises at the footprint -- a museum, retail outlets, movie theaters. These are things I would arrange with other partners, so you have a revenue flow about every day of the year. The key is to enhance value in that zone beyond what teams generally get now. What happened is a lot of teams in baseball struck deals with governments and other partners that restrict flexibility to maneuver within that valuation zone. Anytime you're financing off other people's money, with tax breaks and what not, you have to pay the price for that. I don't want to follow a model that has resulted in 25 teams out of 30 bleeding red ink. If I see 25 planes take off, crash and burn -- why do I want to go that route? Let me go the route that has produced for me in different industries.
CNNSI.com: Part of your plan calls for attracting in excess of $150 million for stadium naming rights, how can you remain so optimistic in the current economic market?
DW: It starts with the fact the successful completion of this project will be historic and it will be positive. There are some companies that want to be intimately associated with a historical event of global proportions, a positive story covered by everybody in the financial and sports journals for years. That separates me from a lot of typical would-be purchasers.
CNNSI.com: What time frame are you looking at?
DW: It is my No. 1 business priority and I'm spending a lot of money on it every day. It is in my interest to move it along as quickly as possible.
