Sunday, March 07, 1999
Reds sale depends on 'limiteds'
Lindner looms as key player
BY GEOFF HOBSON
The Cincinnati Enquirer
The only thing known about Monday's meeting of the Reds' partners is no one knows what's going to happen.
Sources close to the deal say the session won't yield a resolution of Marge Schott's non-binding letter-of-intent to sell her 5.5 shares and controlling interest to Larry Dolan for $65 million.
Because the Reds' limited partners have the right to match Dolan's offer, they hold the key to any sale ending the reign of Schott, the general partner with whom they have been at odds since she took over 14 years ago.
Beginning Monday, the limited partners have 30 days to decide if they will match Dolan's offer.
But because the limiteds aren't talking, no one knows:
Whether the partners want to match, forming a new partnership headed by a majority owner who owns more than 50 percent of the team's 15 shares.
Whether the partners will form a partnership with Dolan in which the 68-year-old Cleveland attorney is the majority owner, convincing at least eight of the 15 shares that his group is the way to go.
Whether the four major limiteds step up to match, and turn to their youngest partner in Wall Street investor William Reik to be CEO.
Whether some other scenario will emerge.
Making the picture murkier are reports that Cincinnati businessman William O. DeWitt Jr., has cooled his interest in buying the club. It doesn't make economic sense to leave his position as principal owner of the revenue-rich St. Louis Cardinals and take over a financially-strapped Reds' franchise that doesn't get into a new stadium for four more years.
Sources have suggested DeWitt, son of the man who helped build Cincinnati's 1961 National League champions, is tradition's solution for an aging limited partnership. The limiteds want to be rid of Schott, yet sources believe they also don't want to be the main players in a new century fraught with supersonic economics.
The focus is on the group of limited partners who last year matched Washington, D.C., businessman Jon Ledecky's bid to buy a share of the team from Frisch's Restaurants.
The most influential of the four is American Financial Corp. chief Carl S. Lindner, who has a little less than two shares of the club. Cincinnati philanthropist Louise Nippert owns a little more than two shares. Cincinnati businessman George Strike and Reik, a Northern Kentucky native, each own a little more than a share.
Other Cincinnatians who might join with the limited partners if they match Dolan's offer are expressing interest. There could be the possibility that people from DeWitt's group, such as the Williams brothers, would be young and hungry enough to run the team. But it all comes down to the partners and, as always, they are avoiding the media.
Ahh, shut up, said Carl Kroch (who owns a share) when contacted by the Enquirer.
But the partners haven't been quiet behind the scenes, where some of them have met with DeWitt and the Dolan family, sources say.
Sources say the limiteds aren't happy they were kept out of the loop until a deal was struck with Schott. And, some may balk at the generous perks given to Schott in Dolan's letter-of-intent, ranging from a stadium office to choice seats to field privileges.
The key man is Lindner, the closest of all the partners to Schott. Sources say he wants to be kingmaker, not king. If he buys all but a quarter of Schott's 6.5 shares, he would have a majority of the team's 15 shares.
The limiteds first have to make individual decisions and then a decision as a group, said one source.
Majority is the key word because of the Dec. 31, 2000, expiration of the partnership agreement. If no one owns a majority of shares by then, the agreement ends in chaos with all partners being equal.
The Dolan family presumably doesn't want controlling interest until merely the end of 2000, so they must work a deal with the limited partners.
In fact, sources close to the deal say a formal sale agreement won't be reached between Dolan and Schott until Dolan forges an agreement with the partners.
Dolan must set a price for the shares, likely sparking debate over the price of Schott's two general partner shares. Although Dolan and his son, Paul, won't be at the meeting, sources say negotiations could begin Monday, but wouldn't be completed for about a month.
Sources say the meeting is informational. Schott is expected to pass out the letter of intent she signed with Dolan, a document some of the limiteds already have seen.
We'll have a better feel for what's going on after Monday, said one limited.
If Dolan can't agree with the limiteds, sources say, the offer can't be matched because the Dolans probably will pull the deal off the table, putting Schott back to square one.
I have no idea what's happening right now, said Carter Randolph, Nippert's representative. That's because this is Mrs. Schott's deal. We have to wait to see what she says. I'm not going to tell her how to run her business. The meeting could go on for six seconds or six weeks.
A key player could be Gannett Co., which owns The Enquirer as well as a share of the Reds. Gannett could sell its share, perhaps deciding who gets the majority of shares.
Although Kroch lives in Chicago, he has indicated he would like to keep a share after Schott no longer is the general partner.
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