Saturday, April 4, 1997
Don't count on Indians for retirement

BY TIM SULLIVAN
The Cincinnati Enquirer

Under the heading of A Sucker Born Every Minute belongs the news that the Cleveland Indians intend to sell stock to the public.

Indians owner Richard Jacobs ended weeks of speculation Friday by formally asking the Securities and Exchange Commission for permission to initiate trading in the Tribe.

Jacobs is reportedly trying to raise cash in order to acquire controlling interest in the Cleveland Browns. Makes perfect sense from his standpoint. Why anyone would want to help him out is the question.

Consider: Here's a team that has sold out 211 straight games; one that has been to two of the past three World Series following a 40-year drought; one that just traded its top hitting prospect for the dubious brilliance of Dave Burba.

If these are not signs that business is about as good as it's likely to get, why would Jacobs be so eager to sell?

The answer is that nobody cares; that there are plenty of people who would buy a piece of a baseball team merely for the sake of framing the stock certificate. These people are not serious investors. They are smitten fans.

They are the same kind of people who bid up shares in the Boston Celtics to $28.75 May 6, the day Rick Pitino was hired as head coach. Celtics stock has not been that high since then and currently languishes at $21.

The National Hockey League Florida Panthers, the other publicly traded sports franchise, have lost 11.11 percent for investors during the past 12 months, this during a 38.69 percent rise in the Dow Jones Industrial Average.

''I can understand why people buy stocks in these teams for emotional reasons,'' one investor said Friday. ''But it seems kind of like a fleece job. You don't get voting rights. You don't really own anything. It's like a land deal in the desert.''

In demand

The Indians' SEC documents indicate that Jacobs plans to sell up to 4.6 million shares at between $14 and $16 apiece; that he will relinquish none of his control of the ball club and distribute no dividends. After exhaustive market research lasting almost half an hour, I'm guessing his price goes higher.

Friday afternoon, I sent out an e-mail in the office that asked how many Indians fans would spend $16 for a piece of a team that offered no voting rights, no dividends and, so far as I can tell, no pitching. Five people answered in the affirmative.

If they are approved as the first major-league baseball team to sell shares on the open market, the Indians are bound to find strong demand for their limited supply. Given the capacity of Cleveland fans to overindulge, this initial public offering might ultimately rival the Dutch tulip mania of the 1630s.

Bud Selig, baseball's acting commissioner, commended Jacobs Friday on being ''ahead of the curve.'' What he is, really, is the first baseball owner to cash in on what figures to be an industrywide bonanza.

Numbers game

The owners first approved public stock offerings in September in Atlanta, in the quarterly meetings that were supposed to resolve realignment. It was, for baseball, an astonishing development. ''Won't this mean you'll have to publish your real numbers?'' one cynic asked Paul Beeston, baseball's chief operating officer. Beeston laughed. ''You mean we don't already?''

You make the call. The Indians reported making $22.6 million in profit last season, $10.2 million the year before, and show a net tangible book value deficit of $13.6 million.

None of this matters to Norty Perry. The Cleveland native, whose brother Michael covers Xavier for the Enquirer, does not need a prospectus to tell him that the Tribe is a buy.

''I already gave my stockbroker orders to dump the Celtics and buy the Indians when they become available,'' he said. ''Just to be able to be part owner of a professional team is kind of neat.''

SULLIVAN ARCHIVE