Amid the unproductive wrangling over baseball's proposed realignment, last week's owners' meetings quietly produced a decision that could prove nearly as significant as scrambling the leagues. The lords of baseball passed rules that will allow teams to sell shares to the public. That doesn't mean 10,000 Minnesota Twins fans can pony up $8,000 apiece and buy the team from Carl Pohlad or that a Bostonian can amass 400 shares of the Red Sox and demand general manager Dan Duquette's dismissal. No more than 49% of any team may be sold to the public, and shareholders' rights will be severely limited.
Financially strapped teams are the most likely to raise money through stock offerings, and the transfer of part ownership could have real benefits for fans. Franchise movement might become more difficult if locals snap up the stock. Also, stock sales would likely strengthen teams by raising funds for talent. The Montreal Expos, say, could sell a quarter of the team and raise enough to cover the cost of a long-term deal for ace Pedro Martinez. Businesses often issue stock to raise funds for investment; there's no reason baseball teams should operate differently.
One probable beneficiary of the new rules is the Florida Marlins' Wayne Huizenga. Last year Huizenga held a public sale of his NHL franchise, the Florida Panthers, with stockholder-rights restrictions similar to those the baseball owners have instituted. Less than half the equity of the Panthers sold for $70 million—more than the entire team's estimated value—and Huizenga retained control of the club. Huizenga wants to sell the Marlins, which Financial World valued at $123 million in June. The team's strong play this season has surely increased its worth, and a public offering for slightly less than half the club could net $150 million or more.
Investments in the Panthers and the Boston Celtics, the only publicly traded major league teams, have provided solid returns. Celtics stock, first sold at $18.50 a share in 1986, closed at $25 last week and has yielded a 10% annual dividend; the Panthers stock has jumped from $10 to $22 a share in 11 months. Investing in a baseball team probably won't provide great opportunity for sustained growth, but it can be a wise short-term move—and it can give your favorite team a boost.