Rubenstein and his “Why”

[geschinger]

12 hours ago, Malike said:

He's right, it is a good investment. I don't think any baseball team has ever lost money in a sale, even if it happened to be a terrible org.

No idea if accurate or not but on podcast I listened to recently David Samon (former Marlins Presiden) and John Skipper (former ESPN President) were arguing buying the O's was a bad investment for Angelos.  They were discussing if there should be concern about the low sale price and that Angelos would have done significantly better financially if he had put the purchase price into the S&P 500 instead of buying the Orioles.

[Aristotelian]

3 hours ago, Frobby said:

I find it interesting that Rubenstein tweeted this out with an @Orioles hashtag so all the people who follow the team on X would see it.  I think he’s itching to talk more about this but can’t really do it until the sale goes through.   That initial press conference is going to be a doozy.   

Agreed, just a much different vibe than what we've gotten from Peter and John. He's comfortable being public and answering questions, straightforward in his answers, and intelligent. I really couldn't be more excited.

[geschinger]

36 minutes ago, Aristotelian said:

Agreed, just a much different vibe than what we've gotten from Peter and John. He's comfortable being public and answering questions, straightforward in his answers, and intelligent. I really couldn't be more excited.

As long as he keeps hosting his show on Bloomberg, there will be plenty of opportunities for him to be asked about the Orioles.  I can't think of many owners who have as public a profile as he does outside of Mark Cuban.

[jabba72]

18 hours ago, Philip said:

In one of the articles I read, it was stressed that Rubenstein had never in his life, drunk alcohol or coffee, and that indicates a latter-day Saints background. Is he Mormon? I’m not suggesting it matters much, but I don’t think he’d be the kind of guy who’d lie to your face and sneak the team out of town in the wee hours either…so it might matter a little.

The career path he’s taken, of buying rundown companies, fixing them up and selling them again, makes a lot of money for the boss, but there is a downside as well.

”I enjoy sports” is also less appealing than “ I love the Orioles.”

But so far, he sure gets an A.

No coffee? Wow, I'd have to say my life would be pretty mundane and boring without coffee. He's missing out.

[Frobby]

1 hour ago, jabba72 said:

No coffee? Wow, I'd have to say my life would be pretty mundane and boring without coffee. He's missing out.

Meh.  I’ve never liked coffee.  I’ve choked down a few cups in my life in social situations where it seemed absolutely necessary to do it.  I don’t feel my life has a gaping hole.  

[Say O!]

3 hours ago, geschinger said:

No idea if accurate or not but on podcast I listened to recently David Samon (former Marlins Presiden) and John Skipper (former ESPN President) were arguing buying the O's was a bad investment for Angelos.  They were discussing if there should be concern about the low sale price and that Angelos would have done significantly better financially if he had put the purchase price into the S&P 500 instead of buying the Orioles.

Let’s unpack from pure investment perspective:

1.  S&P 500 (or equivalent) investment has CAGR of 10% since 1994.  If took full purchase $173M price of O’s over 30yrs that would be $3.0B.  But Angelos/investment group did not put up the full $173M, they financed a sizeable portion (WashPost said $100M was financed) and then had to pay interest on the debt service.  So the net cash investment amount was $75M…now that compounded for 30yrs lowers to $1.3B.  

Compare that $1.3B to the $1.7B sale price in 2024.  And that I would say the $1.7B amount is conservative because the annual operating cash flow likely exceeded the debt servicing cost of initial purchase.  So would be looking at $1.7B + excess cash above debt service * reinvestment return on that.  

2.  Rubenstein and other principal investors are already heavily indexed to public and private company markets.  Putting capital into a completely different investment vehicle that throws off annual cash (think of more like a dividend), has favorable tax factors, intangible brand/legacy value…well that’s pretty smart diversification on top of the ROI delineated in #1.

3.  For smart business people like Rubenstein, there is further potential upside from better management and business practices than what seen during Angelos timeframe (where OP@CY was already installed, MASN launched but dysfunctional, and on-field product was mostly poor). 

 

[jabba72]

18 minutes ago, Frobby said:

Meh.  I’ve never liked coffee.  I’ve choked down a few cups in my life in social situations where it seemed absolutely necessary to do it.  I don’t feel my life has a gaping hole.  

For me there's nothing funner than waking up and taking those first few sips of coffee. Without it I definitely wouldnt enjoy mornings. Though I try not to drink any after 11am.

[Frobby]

2 hours ago, jabba72 said:

For me there's nothing funner than waking up and taking those first few sips of coffee. Without it I definitely wouldnt enjoy mornings. Though I try not to drink any after 11am.

Maybe your handle should be javva72.

I’m a tea drinker and have that almost every morning.  However, I’ve also gone on a caffeine break 5 or 6 times where I’ve had no caffeinated beverages for 3-6 months.  Vicious headaches for two weeks but fine after that. 

[Philip]

2 hours ago, Frobby said:

Meh.  I’ve never liked coffee.  I’ve choked down a few cups in my life in social situations where it seemed absolutely necessary to do it.  I don’t feel my life has a gaping hole.  

It makes me sad, my friend, that all this time you have never known what I get to experience several cups per day.

[Warehouse]

3 hours ago, Say O! said:

Let’s unpack from pure investment perspective:

1.  S&P 500 (or equivalent) investment has CAGR of 10% since 1994.  If took full purchase $173M price of O’s over 30yrs that would be $3.0B.  But Angelos/investment group did not put up the full $173M, they financed a sizeable portion (WashPost said $100M was financed) and then had to pay interest on the debt service.  So the net cash investment amount was $75M…now that compounded for 30yrs lowers to $1.3B.  

Compare that $1.3B to the $1.7B sale price in 2024.  And that I would say the $1.7B amount is conservative because the annual operating cash flow likely exceeded the debt servicing cost of initial purchase.  So would be looking at $1.7B + excess cash above debt service * reinvestment return on that.  

2.  Rubenstein and other principal investors are already heavily indexed to public and private company markets.  Putting capital into a completely different investment vehicle that throws off annual cash (think of more like a dividend), has favorable tax factors, intangible brand/legacy value…well that’s pretty smart diversification on top of the ROI delineated in #1.

3.  For smart business people like Rubenstein, there is further potential upside from better management and business practices than what seen during Angelos timeframe (where OP@CY was already installed, MASN launched but dysfunctional, and on-field product was mostly poor). 

 

Agree on this - the “bad investment” hot take doesn’t really hold up.

The original equity investment was reported to be $86 million in various sources. Angelos initially took a stake of slightly over 50% so ~$43MM (over time he’d acquire another 20% share).

Forbes estimates that current Orioles debt is ~$223MM.  Sales proceeds to equity holders after paying off debt would be ~$1.5 BN.  A 50% share would receive $750MM.

An initial $43MM investment that appreciates to $750 in 30.5 years is equal to a 9.8% return.  However, his later share buybacks likely had higher rates of return (e.g., Dewitt sold at his original buy-in price).  Additionally, owning a team likely provides some tax advantages vs investing  in the market.  Finally, there’s likely been some meaningful value extraction over the last 20 years beyond the appreciation in franchise value.

Angelos also earned this return despite a large portion of his market being taken away, relatively low club competitiveness over the last 20 years, and extreme uncertainty regarding the future of local television revenue (including uncertainty about the near-term deal with our largest cable partner and about how much we’ll need to pay the Nats in rights fees).