It’s Not My Moneyball 2026: The Vulture of Private Equity

Perception problem versus the actual problems

There are two cancers slowly metastasizing into the sport: the emergence of private equity into MLB ownership and the embrace of gambling. Both of these cancers are fueling the rationale for a hardline position during the upcoming labor crisis. The perception problem baseball labors under is the bright, shiny object that is catching reporters like Jeff Passan’s attention. Reporters, like Mr. Passan, remain perplexed about how the sport that is riding all the momentum to regain the second spot in the American pantheon of sports is likely going to set it all ablaze in less than eight months’ time. Each of these final subjects will get its own essay. Today, we give a crash course on private equity in baseball, starting with an update to a story that drew my attention like a moth to a flame.

The San Diego Padres are selling for how much?!? How?!?!?

The San Diego Padres are expected to sell for just shy of $4 billion to Jose E. Feliciano, managing partner of Clearlake Capital, a private equity firm in Santa Monica, and his spouse, Kwanza Jones, ending the recent ownership turmoil caused by the untimely death of venerable owner Peter Seidler. That amount is also a record sale for an MLB franchise, eclipsing the $2.15 billion the Dodgers sold for in 2012 and the $2.42 billion Steven Cohen paid for the New York Mets in 2020. Talking about lighting a fire! In all seriousness, this sale shatters all expectations. Forbes valued the Padres at around $3.1 billion at the start of 2026, and potential sales in Anaheim and Minneapolis were thwarted, even if temporarily, because presumably the market was not there, fueling the owner’s argument going into the next round of labor talks. With no disrespect to the Padres, I have the following response to the sale: Really?!? The Padres have a lovely, if slightly overpriced and conceited, ballpark, and while the franchise is in a better position than the Dodgers were when emerging from bankruptcy, the ceiling for the Padres is inarguably lower than the Dodgers’ was when they exited bankruptcy. Even though we are now almost fifteen years later from the Guggenheim purchase of the Dodgers, you’re telling me that a team that is infinitely inferior in just about every facet is worth more than the Dodgers were back then? When the Padres actually meet baseball expectations exactly once, I’ll revisit and possibly retract the snark. Brittany Ghiroli of *The Athletic* has some excellent reporting on the expected sale, with quotes that are simply eye-popping (paywalled):

“The smaller markets are selling for twice what the large markets are,” said agent Scott Boras. “An outlier? I would say the truth is (the Padres valuation) outs the lies that baseball isn’t at the most prosperous point of its existence.”

Added another agent: “**These guys opened the books, saw everything and bought this for $3.9 billion as we go to a (potential) work stoppage?** These are smart, savvy business owners. They are in the process of buying undervalued assets.”

The Padres are in a position to benefit massively from the new CBA, should the league meet its goal for a national media rights deal that could pay each club hundreds of millions annually starting in 2029. The Padres rank among the smallest in the league in local media revenue.

“I hope they aren’t an (outlier),” said another industry executive. “I hope it’s an example of what small-market teams can do with the right ownership. **For years, there’s been people saying, ‘How can they keep spending?’ or ‘It’s going to massively crash on them,’ but kudos to them. They invested in the product and have been rewarded.”**

(Emphasis added.) In a rational universe, this sale would kickstart an honest negotiation that largely keeps the peace so that all parties can benefit from the new media deal likely to come in 2028. A larger pie feeds all comers, but instead, we will be led off the cliff by those who ignore this data point and focus on the hardline position like a rabid dog chasing a car, which usually ends badly for everyone involved. The Padres had at least $300 million of debt on their books per *The Athletic.* The amount is substantial, especially given that the Minnesota Twins had $500 million in debt on their books and could not secure a $1.7 billion sale price. The Twins added minority partners in 2025 to help erase the debt. Considering that these are the transactions we know about, if one were not paying attention to financial trends in baseball, one might be tempted to accept the owner’s claims of seemingly self-induced poverty. After all, it takes a certain type of anti-talent to bankrupt a casino, or in this case, a major league franchise. Make your own Frank McCourt joke here. However, it is difficult to accept the owners’ argument of poverty in the upcoming labor negotiations (especially when one examines the books of the Atlanta Braves) when the average franchise value has seen the biggest jump since 2021, with the average MLB franchise valuation now at $3.17 billion. The Dodgers franchise is somehow worth around $9 billion now, per Sportico. Again, without a public accounting, the figure feels more vibes-based than evidence-based. To be fair, this point is a feature rather than a bug of the market, and it applies to sectors other than baseball. Never forget that office space rental company WeWork was valued at $47 billion in its last funding round, before sanity returned and crashed the company’s value back to earth. How the world thought an office-shared-space rental company was a software company is something I still cannot understand. Hopefully, when we look back on this period in baseball, no one is asking similar questions about how we all looked bad for not seeing the trends coming. When the average franchise exceeds the record sale of marquee franchises just fifteen years later or five years later (if we are being generous to our cousins in Queens), alarm bells should be ringing. Either baseball as a whole is just killing it, or something else is going on. Maybe both. As if to give the game away, private equity firms have been more involved with buying stakes in MLB teams, more so than in other leagues, begging the obvious question to the average fan.

What is private equity?

A private equity firm is an investment partnership in which private investors buy struggling private companies and try to restructure and improve them so they both grow and operate more effectively, before the acquired company is either sold or transformed into a publicly traded company. In theory, that description is perfectly benign and acceptable. Capitalism must capitalism, and the money, like the sands of Arrakis, must flow. So why raise a stink, as the Padres’ news is entirely coincidental? In practice lately, the involvement of private equity amounts to the financial kiss of death for acquired companies. What generally ends up happening is that the acquired company is loaded with debt and hollowed out, with all the subtlety of someone being busted out by the mob, before the acquired company goes bankrupt, with all the employees losing their jobs. Remember when Red Lobster went bankrupt? Common wisdom said the company was felled by customers ordering too many shrimp during the Endless Shrimp promotion. Personally, guilty as charged, as I love shrimp, which actually explains a lot. The truth was far more predictable and had nothing to do with consumer behavior. When Red Lobster was acquired by a private equity firm, the company was directed to sell its locations and then lease the buildings back to keep operating, among other short-term moves that torpedoed the future of the seafood restaurant. It’s not just restaurants either. But if one has been to Jersey Mike’s lately, there’s a reason one’s Jersey Mike’s orders have gotten noticeably worse (higher prices, smaller portion sizes) since the company was acquired by private equity. Or put another way, if you are wondering why Toys R Us returned and then quickly disappeared again, thank private equity. Therefore, private equity firm involvement is generally a giant red flag because of its well-earned reputation for sundering struggling businesses in the name of short-term profits.

Private Equity in Baseball

In 2019, MLB opened its doors to investment by private equity firms. Brendan Coffey of *Sportico* reported on the initial rules established by the league:

…These days MLB doesn’t allow corporate ownership–current exceptions like the Blue Jays are grandfathered in—but the league’s comfort with institutions as owners could come from its long history of corporate ownership of franchises, with the Angels, Braves, Cardinals, Cubs, Mariners and Yankees among the teams that were mostly well-run under institutional oversight.

• Under current rules as reported by *Sportico*, **a private equity fund can own up to 15% of a franchise, with no limit to the number of clubs a fund can invest in**. • It’s not known if there is a minimum dollar investment or percentage ownership requirement for institutional investors. • **On the team side, no franchise can sell more than 30% of its equity to PE**.

(Emphasis added.) Other sports leagues have followed suit. Private equity firms have become involved with 18 out of the 30 teams, including the Dodgers. Arctos Sports Partners is believed to have invested in six teams, including the Dodgers: the Chicago Cubs, the San Francisco Giants, the San Diego Padres, the Houston Astros, and the Boston Red Sox. From Luisa Beltran of *Sportico*: A handful of private equity firms have taken stakes in MLB teams. This [involvement] includes Arctos, Sportsology Capital Partners and Sixth Street. RedBird Capital, the PE firm from Gerry Cardinale, backs Fenway Sports Group, which owns the Red Sox. **Silver Lake owns Diamond Baseball Holdings, which has amassed a collection of 48 minor league teams**. (Marc Lasry’s Avenue Capital is an investor in the Baltimore Orioles, but Avenue is a hedge fund and not private equity.)

(Emphasis added.) Why are these firms investing? Simply put: to make money. Bill Shaikin of the *Los Angeles Times* explains: Firms such as Arctos are not about civic involvement, or the joy of ownership. They evaluate opportunities on a “Can we make money?” basis. The data showed that Arctos and similar firms invested nearly $2 billion into stakes in pro sports teams last year.

“These are strong, recurring revenue businesses,” [Jordan] Solomon, [co-founder of Arctos] said.

The owners get a guaranteed share of growing league revenue, including national broadcast revenue — and not just from television networks, as Wednesday’s deal between Apple and MLB shows. The average annual value of the MLB national broadcast deals, according to Forbes: just shy of $2 billion, or about $66 million per team. That is guaranteed revenue, without even accounting for local cable rights or selling a single ticket or T-shirt. And what are these firms’ money being used on? Ancillary measures per available reporting from last year by Lillian Rizzo of CNBC: Private equity’s capital and influence often goes toward expenses surrounding teams, such as stadium and hospitality improvements and digital enhancements. This [capital] frees up more room for payroll spending, too.

“It is also interesting to watch as baseball works to introduce new rules, products and in-stadium experiences to connect with a younger audience,” said [Michelle McKenna, a senior advisor in Evercore’s strategic advisory practice], noting private equity’s expertise in a lot of those areas. “PE investment in sports isn’t your grandfather’s PE. These are longer-term partners with well-honed strategic advice in addition to capital.” Whether teams are actually spending money on players is an open question, but if one proceeds as if the teams were assets trying to control costs and profits, the slow winters of the past few years both make sense and develop new meaning. Accordingly, a majority of teams have let in outside capital, with a deserved reputation of torpedoing long-term stability for a quick buck, but with safeguards to keep them from sinking teams like Red Lobster or Toys R Us. What is the actual problem?

They were invited, and they are unlikely to leave.

The problem, or why we are here today, is that there is now an outside force, ancillary to ownership, that will be pushing for a hard salary cap, emboldening the more radical voices that threaten to stand atop the sport and drive it into a ditch. Why? I have long maintained that baseball is smack in the middle of a valuation bubble. Owning a team has value, but that value largely rests on factors that cannot be objectively verified unless one is talking about the Atlanta Braves. It would not be entirely incorrect to say that vibes are a component of what a team is worth, and honestly, when one looks at the numbers over the past couple of years, they no longer make sense. Private equity firms have concluded that MLB teams are undervalued in part because there is no hard salary cap. Once again, Ms. Beltran from *Sportico*:

When it comes to valuing a club, many professional sports teams operate with negative cash flows, so traditional valuations metrics like EBITDA are useless, according to the Corporate Finance Institute. This [reason] is why MLB teams are often valued as a multiple of revenue. Using a revenue multiple allows clubs to capture revenue from local media and the intrinsic value of each team.

Valuing teams with an EBITDA multiple also doesn’t allow teams to include their scarcity value. “Sports team ownership, for an individual, in many ways is more analogous to the ownership of a valuable piece of art than it is to cold economic rationality,” said Stephen Amdur, a partner with law firm Fried Frank, who has advised on sports transactions such as the sale of Chelsea FC and the San Francisco Giants’ partnership with Sixth Street. **“I don’t know how a person ultimately decides exactly what a Picasso should be worth, just as I don’t know how a person decides exactly what the Chicago Bears should be worth. It all depends on the team, the situation and your own personal enjoyment of the sport.”**

The average MLB team is worth $3.17 billion…[This value] translates to an average multiple of about 7.2x revenue. **This low valuation is mainly due to the league’s looming labor issues**. The current collective bargaining agreement between MLB and the MLB Players Association is set to expire on Dec. 1, and many expect a work stoppage.

A major point of contention is the salary cap….“Leagues that have salary caps like NFL have more predicable costs, which is helpful for investors in long-term planning,” [Aaron Mulvihill, global alternatives strategist at J.P. Morgan Asset Management] said.

(Emphasis added.) Once you realize people are largely just guessing at what an MLB team is worth, you should realize that you have heard a version of this argument before: the 2008 financial crash. The system in place works, assuming franchise values continue to increase. If the music were to slow or, God forbid, stop…heaven help everyone. Unlike the financial crisis, if you know where to look, you could see the storm coming. Here, all the books but one are closed. Before anyone thinks that this conclusion is benign need only continue to wait for representatives to say the quiet part out loud. For a final time, Ms. Beltran of *Sportico*: Broken player economics, including the lack of a salary cap, is suppressing MLB multiples, according to one private equity executive, who declined to speak on the record.

**A second PE exec, who also asked not to be named, thinks there will be a delay to the 2027 season with games likely starting in June.**

Some bankers and PE executives believe all this volatility makes MLB a great place for private equity to invest right now. They say there are some longtime owners with majority stakes who are economically exposed to baseball’s volatility and would welcome taking money off the table.

Once MLB fixes its problems, including clinching a new CBA, team valuations are expected to jump….

(Emphasis added.) In the least charitable light, you potentially have a cadre of owners and private equity firms essentially incentivized to hold a hard line to keep this bubble going. After all, “stable labor costs” (known to others as depressed wages, regardless of what pundits like Brodie Brazil say) likely means more private equity investment, from the same types of people who drove Red Lobster et al. into the ground, more acquisition of commercial land by using the franchise value as collateral, and on and on the cycle goes. Or put another way: If you give a mouse a cookie, he’s going to ask for milk. And then demand it. Teams like the Dodgers are likely able to resist any turbulence, but smaller teams (especially ones that seemed to rack up mountains of debt — looking at the Twins here) seem likely to bear the brunt of whatever is coming. Or if you want a joke to tweak our northern cousins: Why did the San Francisco Giants need to buy the Curran Theater? Because the money had to go somewhere other than the team. Remember, about 10 owners contributed more to the “we’re going to lock out the players’ fund” than to free-agent acquisitions this year. What could possibly go wrong in this scenario, especially if the owners get what they want and get a protracted lockout? In fact, we have a current example of a large market team that started operating as if governed by the Excel spreadsheet rather than as a competent franchise.

Cautionary tale: From darling to dud

If one were to ask what team was the model baseball franchise of the 21st century, and they asked before 2020, one would be hard-pressed not to say the Boston Red Sox. Four titles in 20 years after almost 90 years of futility, an owner beloved by the fanbase, a fanbase basking in glory, most recently with the Mookie Betts-led 2018 championship squad. As Joon Lee from *More Perfect Union* demonstrates, the arc from darling to dud can often be swift, tragic, and ultimately foreseeable in hindsight. The main villain? Going too far. Owner John Henry brought a new philosophy to the club, combining scouting and analytics with financial muscle. In a sport where you can be rich, smart, or good, the Sox were flirting with being all three, leading to gutsy moves to fund this system, like trading Nomar Garciaparra. But if this era started with a gutsy trade that made baseball sense, it ended when the Red Sox traded Mookie Betts…to the Dodgers. And looking back, that one move is the rock on which this dynasty’s foundation was laid. Rather than a move to make the Red Sox better, the move was financial. There was no legitimate baseball reason to make that deal, especially by dumping Betts and David Price for salary relief and prospects Alex Verdugo, Connor Wong, and Jeter Downs. Six years later, only Wong is still with the Red Sox in a regular role. Verdugo is now on his third team since leaving Boston. Downs has been out of baseball since 2024. From this point on, the Red Sox underwent a slow march and went from the centerpiece of Fenway Sports Group to just another cog, along with Premier League football club Liverpool, the NHL’s Pittsburgh Penguins, and RFK Racing. And if you are starting to realize that the Dodgers’ current ownership group, Guggenheim, owns the Dodgers, has a majority ownership of the Los Angeles Lakers, the Los Angeles Sparks, and is a part owner of the Chelsea Football Club…the realization I might be throwing a rock from a glass house hits like a brick. It’s best to view the Red Sox now as a financial asset masquerading as a baseball team, rather than as a baseball team that happens to be a financial asset. That distinction might seem minor, but once that line is crossed, all sorts of terrible moves make a lot more “sense,” like doing nothing in San Francisco, especially after forcing the Athletics out, like banking on the severity of a self-imposed lockout with a warchest of $2 billion. If private equity has accelerated a trend catering to the 1% of bank accounts, trying to monetize every last dollar (be it paying for FanFest, a $70ish dollar souvenir cup, increased parking, etc., etc.), the Red Sox might have just gotten to the destination first, after having a head start. In a sport where you can be rich, smart, or good, the Dodgers are ultimately and inescapably all three. Enjoy the current campaign, everybody. I predicted we would lose at least half of 2027, largely based on initial research that informed this report. I would truly, desperately love to be wrong. In the end, it’s not my Money(ball).