When paying for team, cash isn't way to go Experts cite tax breaks, low interest rates Expansion notebook


The revelation last week that Malcolm Glazer did not propose to pay cash for an NFL team shouldn't have come as a surprise to anyone familiar with the economics of sports.

"Whoever would write a check and pay cash would be an idiot," said Michael Megna, a sports finance consultant with Megna Valuations in Milwaukee.

There are a number of reasons to finance the $140 million franchise fee and start-up costs, he said. For one, with interest rates low, an investor can do better borrowing to pay for a team and seeking other uses for available capital.

And carrying debt payments on the books of the team allows it to record greater paper losses during the start-up years, losses that can be claimed as deductions against the profits of other companies the owner operates.

Glazer, a Florida-based financier with holdings in real estate, banking, oil and manufacturing, boasted when he first became involved in the race for an expansion franchise that he could "write a check" for the team.

Bryan Glazer, one of his sons, said his father still could write the check but recognized the advantages of financing the deal. The league was more comfortable with a financed deal, he said. But, if need be, his father would pay by check, he said.

"If that's what it comes down to, we're willing to do it," he said.

The league has set payment schedule on the franchise fee that incorporates about $16 million in interest. With restrictions on television revenue, the entire deal amounts to about $170 million current dollars spread over several years.

Glazer never publicly has estimated his net worth, but sources within the NFL who have seen his financial statements confirm his wealth is substantial.

Clothing retailer Leonard "Boogie" Weinglass is the other investor seeking a team for Baltimore. He has a partnership that will use a combination of equity and borrowing -- chiefly from NationsBank -- to pay for the team.

Landow out in St. Louis

St. Louis still is looking for investors for its expansion bid, but Jerry Clinton, head of the investment group, says that Bethesda-based developer Nathan Landow is no longer in the running.

Landow, who once led a group seeking a team for Baltimore, said Clinton had approached him about becoming a minority investor. Landow was not available for comment late last week, but Clinton was quoted in the St. Louis Post-Dispatch Friday as saying the developer is no longer in the picture.

Memphis doings

When the investment group seeking a team for Memphis announced its team name -- Hound Dogs -- last week, it also named the team's head coach and general manager.

Pepper Rodgers, 62, who last coached the Memphis Showboats of the defunct United States Football League until the team's demise in 1985, would coach the Hound Dogs.

In recent years, Rodgers has been the chief spokesman for the Memphis bid. He also has coached at Kansas, UCLA and Georgia Tech.

Dunavant also said that Steve Ehrhart, one-time Showboats president and general manager, will hold the same jobs with the Hound Dogs.

A dated edge

The final lap of the expansion race might be called the silly season, with rumors flying wildly.

Case in point: WHBQ-TV in Memphis aired Thursday night a videotaped interview with San Diego Chargers owner and expansion committee member Alex Spanos.

In the interview, Spanos said: "I'm in favor of St. Louis, and it's a toss of the coin as far as between Baltimore and Charlotte, but I've got to think that Charlotte has a bit of an edge."

That was bad news for Memphis, a city WHBQ sports anchor Ron Savage said Spanos would not talk about because it is one he was not endorsing. Savage said the interview was conducted Thursday morning at the team's San Diego offices.

Actually, says Chargers public relations director Bill Johnston, the interview was conducted Sept. 5 by a San Diego station for a weekly Chargers show. The clip never was aired but was provided to WHBQ news, Memphis' third-rated newscast, which claimed it as its own.

"That was an interview that took place six weeks ago, and a lot has happened since then and a lot of information has come forward. I can't tell you what Mr. Spanos' position is on this," Johnston said.

Since Sept. 5, the St. Louis NFL partnership has lost its primary investor, throwing it into turmoil, and Charlotte has been asked to rewrite its financing plan -- events that widely have been perceived to benefit Baltimore. The interview also preceded the presentation by finalists to Spanos' committee and a subsequent report to owners on the financial standings of the cities.

But the interview did confirm the prevailing notions of six weeks ago.

Savage apologized to viewers Friday.

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