Wednesday, April 21, 1999

Lindner group buys Reds

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Schott agrees to sell shares for $67 million

BY SCOTT MacGREGOR and JOHN FAY
The Cincinnati Enquirer

Carl Lindner

Marge Schott

        The Cincinnati Reds are under new ownership, pending approval by Major League Baseball owners at their June 9-10 meetings.

        Carl Lindner, an 80-year-old billionaire businessman and Cincinnati native, and two other Reds limited partners signed an agreement with Managing General Partner Marge Schott Tuesday to purchase 5.5 of her 6.5 shares — and control in the club — for $67 million.

        Baseball's other 29 team owners must sign off on the deal, but as Reds limited partners, Mr. Lindner and partners George Strike and Bill Reik have already been approved by owners in the past.

        “I would expect it will fly through,” said Reds Managing Executive John Allen.

        Mrs. Schott, who has been suspended twice for making in sensitive remarks, had agreed to sell the club under pressure from MLB.

THEY CONTROL REDS

These three limited partners bought controlling interest in the Reds:   Carl S. Lindner, chief of American Financial Corp., is one of America's great up-by-the-bootstraps stories. Two weeks shy of his 80th birthday, he is Cincinnati's most respected and richest corporate citizen. After dropping out of high school to work at his father's dairy, he became one of the nation's most famous billionaires.   William Reik, a Wall Street investor, is a Northern Kentucky native, graduating from Highland Heights High School and the University of Kentucky Law School. He is managing director of William D.Witter Inc. in New York. After growing up a Reds' fan in Fort Thomas, Ky., he worked for seven years to get into ownership when the call came from Marge Schott on July 8, 1985.   George Strike owns Cincinnati-based American Laundry Corp. In 1992, Strike called for Schottto be barred from baseball for life if she had made racist remarksattributed to her. Until recently, he served as chairman of the University of Cincinnati board of trustees.

        Reds fans can expect a very different management style.

        “Mrs. Schott and Mr. Lindner are the antithesis of one another,” said Reds radio play-by-play announcer Marty Brennaman. “Mrs. Schott loves the spotlight.”

        Exactly which of the three buyers owns the two general partnership shares that control the team was not disclosed, but sources involved in the negotiations said Mr. Lindner is the head of the new controlling group.

        The structure of the new controlling group remains unclear, however. Mr. Reik said details have not been worked out because of the emphasis on completing the transfer of ownership.

        “We are very pleased the ownership issue has been put to rest,” Mr. Reik said.

        Mr. Allen, who has run the Reds since Mrs. Schott's suspension and guided them back to financial solvency after she spent the club into debt, will continue to run the club until the sale is approved.

        “I don't see any major changes,” he said. “We'll operate under the same budget constraints we have.”

        Mr. Allen's future is one detail the new owners must address, but it is likely he will return. Mr. Allen was part of the talks leading up the sale.

        “All indications are I'll have a position,” he said.

        The limiteds are said to be appreciative of Mr. Allen's efforts to rein in the budget.

        Mr. Bowden, who has been general manager since 1993 and signed a five-year contract extension last October, likely will remain in charge of baseball operations.

        Mr. Lindner played a major role in Mr. Bowden signing a new contract.

        Mr. Bowden welcomed the change Tuesday.

Deal reached amicably
        “I think it's good for baseball, I think it's good for Cincinnati,” he said. “I think that all great organizations have great ownership and great leadership. Obviously, Mr. Lindner and the limited partners have first-class character. They run first-class organizations. I think it's a great thing for Cincinnati Reds baseball.”

        A statement released by Mr. Lindner's attorney, Jim Evans, said, “This agreement will resolve any dispute concerning Mrs. Schott disposition of her controlling interest in the Reds. Mrs. Schott and Mr. Lindner are pleased that this resolution was reached quickly and amicably.”

        The baseball owners' approval would end Mrs. Schott's tumultuous 15-year tenure in charge of the Reds and would be the final step in a protracted process that began with her second suspension by MLB in 1996 for making insensitive remarks. It is a move that Baseball, which first suspended her in 1993 for racially insensitive comments, has been working toward for nearly three years, when it stripped her of day-to-day control of the club.

        “This has been a difficult time for Mrs. Schott,” said her attorney, former Michigan attorney general Frank Kelley. “To own a major-league team and not be able to run it has been heart-rending. She did not want to sell her interest, which has been such an important part of her life.”

        Final approval also would mark the beginning of a new era in Reds histo ry: A new owner with deeper pockets — though how willing he is to open them remains unclear; a young, talented nucleus developing on the field, and a new stadium and its likely infusion of cash.

Reds won't leave town
        Perhaps most important, it assures the Reds will stay in Cincinnati as long as the Lindner group owns the club, as outlined by a stipulation in the agreement that the new owners may not move the team.

        Tuesday's agreement settled the court action filed last week by Messrs. Lindner, Strike and Reik against Mrs. Schott to keep her from shopping the team to other bidders.

        The three limited partners had matched a $65 million offer from Cleveland attorney Larry Dolan for 5.5 of Mrs. Schott's 6.5 shares, but Mrs. Schott had also agreed to a deal with Steve Schott, a cousin by marriage, for $67 million for the 5.5 shares.

        The final agreement did not stick to the strict details of either offer but was instead a negotiated settlement that gives the Lindner group control of the team but allowed some concessions to Mrs. Schott, such as allowing her to participate in the Findlay Market Parade on Opening Day. She will keep her luxury box at Cinergy Field and the new stadium and 21 blue-level seats, and will be allowed to keep an office, if Baseball approves.

        But she will not be allowed to buy naming rights for the new Reds museum and hall of fame, as she had negotiated in the Steve Schott offer.

        Mrs. Schott also will keep one limited-partnership share. If she chooses to sell that share to the Lindner group in the future, she can receive only $8 million, as outlined in the Dolan offer, not the $15 million Mr. Schott had offered, a source said.

        Major League Baseball must also approve the terms of the perks offered to Mrs. Schott, and a Baseball source said the league may not allow her to keep her office. Another source said even if Baseball strikes down Mrs. Schott's perks, the sale will remain valid.

"Good baseball people'
        “We'll have to look at it. We just received it,” said Katy Feeney, National League vice president.

        But Ms. Feeney said the new controlling group should pass Baseball's ownership criteria.

        “They've already had” the background check, she said.

        Mr. Lindner is a Norwood native who owns holdings estimated at as much as $1 billion. He is chairman of Cincinnati-based American Financial Group and Chiquita International, and he, AFG and his family are the major stockholders in Cincinnati's Provident Bank.

        Mr. Strike is chairman of Cincinnati-based American Laundry Machinery Corp. Mr. Reik is a Northern Kentucky native and Wall Street executive.

        “They're all good baseball people,” Mr. Allen said. “They have the best interests of Reds fans at heart.”

        Mrs. Schott became a limited partner in the Reds in 1981 and general partner in 1984, gaining control of the club. She is often credited with helping bring Pete Rose back to Cincinnati in 1985; and the Reds won the World Series in 1990.

        But in 1992, she came under fire for alleged racial marks and in February 1993, she was suspended for one year and fined $25,000.

        In 1996, Mrs. Schott said in an ESPN interview that Adolph Hitler “was good at the beginning but he just went too far.” That led to another controversy, leading to another suspension. In June 1996, she agreed to give up control of the Reds for two years, a term that was later extended by MLB, and in December 1998, she agreed to sell controlling interest in the club.

        Mrs. Schott claimed she wanted to bring Cincinnati a winning team and spent the Reds into debt doing so. She allowed Mr. Bowden to make deals that brought in good players, like pitcher David Wells, but also hurt the team's long-term ability to stay competitive financially. She has also been criticized for ignoring the Reds' farm system.

        Under terms of her suspension, Mrs. Schott is prohibited from speaking with the media. When contacted by The Enquirer Tuesday, she declined comment.

        But Mr. Kelley said, “Mrs. Schott and the Cincinnati Reds have shared many happy times and a few sad times, but through it all she never wavered in her commitment to the team.... Mrs. Schott has loved her 15 years with the Reds, especially the support the fans have given her when she brought glory years to the Reds. She wants the city of Cincinnati and baseball fans everywhere to know that she's grateful and still loves them one and all.

        “She hopes to still have the time to encourage children to appreciate baseball. She will always be a fan. She wishes Mr. Carl Lindner all good things in his new ownership.”

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