Wednesday, February 24, 1999
Cleveland attorney set to buy Reds
Unless limited partners match $65M offer for Schott's shares
BY TIM SULLIVAN
The Cincinnati Enquirer
Larry Dolan
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Marge Schott
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Marge Schott, who bought the Cincinnati Reds in 1984 as a “Christmas present to the City of Cincinnati,” is close to selling controlling interest in the team to a group from Cleveland for $65 million.
Attorney Larry Dolan, 68, recently rebuffed in an effort to buy the National Football League's expansion Cleveland Browns, heads an investment group that has already executed a purchase agreement with Mrs. Schott, sources indicated.
The agreement would pay Mrs. Schott $65 million for 5.5 of her 6.5 shares. She had been asking for $78 million for the 5.5 shares. Jon Ledecky, a Washington, D.C., entrepreneur, offered $55 million in December for Mrs. Schott's entire stake.
Mrs. Schott, who bought controlling interest in the club for an estimated $25 million on Dec. 21, 1984, owns 6.5 of the 15 shares in the ballclub. In previous negotiations, she has sought to keep one of her shares, and to retain a public role in the franchise.
According to one source familiar with the negotiations, Mrs. Schott would be permitted to retain her Cinergy Field office, her private box and her front-row seats. But her role in the team's operations would be strictly ceremonial.
Mr. Dolan would become the Reds' first out-of-town owner since Indianapolis clothing store magnate John T. Brush at the turn of the last century.
RUNNING THE REDS
![[pie chart]](http://reds.enquirer.com/img/photos/1999/02/redshares_174x238.gif)
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Because the Reds partnership agreement expires on Dec. 31, 2000, Larry Dolan would want assurances that he would control the team under a new ownership structure.
Though Mrs. Schott is technically a minority shareholder — she owns 42 percent of the club — owning the general partner shares has made hers the only vote that counts.
The are three scenarios:
• The new owners form a new partnership with the old owners and erase the document ending Dec. 31, 2000.
• The limiteds match Mr. Dolan's offer, but the process probably wouldn't go as far as a sale if that happened.
• The limiteds can do nothing and let Mr. Dolan run the club until Dec. 31, 2000, but Mr. Dolan probably wouldn't want to enter into such a short-term deal.
Should Mr. Dolan reach an understanding with the limiteds, he would then be subject to the scrutiny of major-league baseball, a process that typically takes between three and six months once a sale has been finalized. All indications are that MLB has no problems with the Dolan group.
The transaction could be completed by mid-season.
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“I'd like to tell you what I know,” said Paul Dolan, Larry Dolan's 41-year-old son, “but I think at this point, I'll just say, "No comment.'”
Under mounting pressure from Major League Baseball to sell, Mrs. Schott faces a March 31 deadline to find a buyer, having already been granted a three-month reprieve by baseball Commissioner Bud Selig.
“Bud is telling folks around Major League Baseball that he is firmly resolved that March 31 is it for Marge,” a source close to the negotiations said. “That word is finally sinking in on her.”
Mrs. Schott could not be reached for comment Tuesday.
“I cannot comment on any of that,” said John Allen, the Reds managing executive. “I've not been involved.”
Also not involved, according to several sources, is Charles Dolan, the Cablevision Systems chairman who has sought to buy the New York Yankees from George Steinbrenner and whose personal wealth ranks No. 312 on the Forbes 500 list.
Yet Mr. Dolan's lower-profile brother would seem to have sufficient resources to make the deal. At the time of the 1997 Cablevision proxy statement, Larry Dolan owned 15 percent of the company. Today, that stake would be worth more than $1 billion.
Assets notwithstanding, Larry Dolan's acquisition of baseball's oldest club is by no means assured.
Mrs. Schott's limited partners — Carl Kroch, Carl Lindner, Louise Nippert, Bill Reik, George Strike and the Gannett Co. — have about a month to decide if they want to match the offer and take control of the club after 14 years as sometimes frustrated silent partners. Last year, four of the limiteds banded together to match Mr. Ledecky's offer for the one share of stock held by Frisch's Restaurants.
“Under Ohio law,” one limited partner said, “she can't transfer the general partnership unless every limited agrees to it.”
“Deep pockets, huh?” said Reds first baseman Hal Morris when told of the possible deal. “Maybe we'd have more money to spend (on players) at the All-Star break.”
Geoff Hobson contributed to this report.
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