Wednesday, December 23, 1998

$55 million offered for Reds

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Entrepreneur asks limited partners to join him in deal

BY GEOFF HOBSON
The Cincinnati Enquirer

Jon Ledecky

        Washington, D.C., businessman Jon Ledecky has offered Marge Schott $55 million in cash for her 6.5 shares of the Cincinnati Reds, which include the team's two general-partnership shares, The Cincinnati Enquirer has learned.

        A source close to the deal said Mr. Ledecky has also asked the Reds' partners to join him in a deal that would place him in charge of a more democratic ownership structure than the limited partnership that has been in place since 1980.

        The bid is reportedly on the table until Jan. 15.

        Mr. Ledecky had no comment Tuesday. Mrs. Schott also declined to comment.

        The price may be too low for Mrs. Schott, who has been looking for an offer in the $78 million range for just 5.5 of her shares.

        Major League Baseball and other industry experts have valued the club at about $130 million, which puts the price for all of her shares between $50 million and $60 million, depending on how the two controlling interests — the general-partnership shares — are valued.

        Mrs. Schott's partners include Cincinnati businessmen Carl Lindner (1.77 shares) and George Strike (1.18), Cincinnati philanthropist Louise Nippert (2.36), Wall Street investor and Northern Kentucky native Bill Reik (1.18), Chicago businessman Carl Kroch (1.0) and the Gannett Co. (1.0), which owns the Enquirer.

        After two months of a stalemate, she agreed recently to extend her arrangement with Major League Baseball — which keeps Managing Execu tive John Allen in charge of the team until March 31 as she entertains offers.

        If Mrs. Schott hadn't extended the Oct. 23 agreement beyond Dec. 31, she probably would have been called before baseball Commissioner Bud Selig in a hearing to address General Motors' allegations that she had used the names of Reds employees to help defraud the automaker.

Marge Schott

        Major League Baseball also believes Mrs. Schott has incentive to sell since her controlling interests expire with the limited partnership on Dec. 31, 2000.

        The source close to the deal said Mr. Ledecky sent a five-point letter to the team's limited partners emphasizing his desire to run the team with them as partners in a deal that would erase the expiration date of the current limited partnership.

        Mrs. Schott has spent much of her 14 years running the team at odds with her partners, a relationship that has included lawsuits and complaints that she fails to keep them in the loop.

        Mr. Ledecky pledged “to work proactively with each limited partner and earn your trust and respect in the process.”

        Four of the partners — Mr. Lindner, Mr. Strike, Mrs. Nippert and Mr. Reik — rebuffed Mr. Ledecky's bid to join the group back in September, when they matched his $7 million bid on one share of the team formerly owned by Frisch's Restaurants.

        The partners also have the right to match this latest bid if Mrs. Schott accepts it. But in his letter to the limiteds, the source said, Mr. Ledecky is not only offering the partners the chance to join him financially in the purchase, he is also proposing he run the team at the direction of a board of directors comprising the limited partners, who would have a say in all affairs of the team.

        Also in the letter to the limiteds, Mr. Ledecky said he would be a hands-on owner committed to helping solve the crisis faced by baseball's small-market teams, and he pledged to move his home, business and charity foundation to Cincinnati.

        Mr. Ledecky's foundation has focused on the education of poor children, racial tolerance, and cultural affairs.

        The Harvard-educated Mr. Ledecky, 40, was unemployed four years ago when he developed the concept that became U.S. Office Products. It's a company designed to enable local office-supply stores to compete against national chains. His empire has since expanded to include interests in nine public companies.

        “I've literally spent the last four years of my life 85-90 percent on an airplane,” Mr. Ledecky told the Enquirer in August.

        “ ... And I feel blessed beyond belief. But I don't think you're totally blessed unless you have a family. ... I'm looking to put down roots somewhere. What I like about Cincinnati is you get a sense of community.”

        Indications are the limited partners like and respect Mr. Ledecky. But many of them are convinced Mrs. Schott isn't ready to sell the team she loves so much — and they aren't prepared to pay attention to an offer until she is.

       

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