Ravens owner Art Modell has notified potential investors that he wants at least $150 million for a stake in the team.
Modell is seeking one or more partners to buy a minority share of the debt-laden team so he can pay off loans and strengthen its finances. The team has made all required loan payments but lapsed into technical default on some promissory notes this year, prompting the league to hastily arrange a one-year loan of up to $85 million.
The loan comes due in July, but the league has asked the Ravens to have a new partner on board by early next year. If one is not, the NFL would, under this timeline, have time to find a buyer for the entire franchise.
Modell declined yesterday to reveal any of the terms of the offer he is preparing but said the documents are in the final stages of preparation.
Three sources familiar with the situation, who spoke on the condition of anonymity, said a letter sent recently to interested investors specifies a price of at least $150 million and leaves it up to bidders to negotiate what they would receive in return.
The result could be a reverse auction in which bidders will agree to pay $150 million and compete with one another to accept the smallest share or least favorable terms.
The value of a minority investment is determined by its terms, chiefly the percentage of the franchise being acquired and whether the deal comes with a provision for eventually obtaining a controlling share.
Modell is hoping to retain control of the team and eventually will it to his sons -- objectives that experts say will be difficult, but not impossible, to reconcile with a $150 million price tag.
"The response has been very good," said Modell, who in 1961 paid $3.9 million for the franchise. He said he hopes to have the deal completed by March.
A buyer is likely to demand at least a right of first refusal if more shares in the team are sold, if not the absolute right to buy a controlling share at some specified date, said Michael Megna, president of Megna Valuations of Milwaukee, a firm that evaluates acquisitions, including those of sports teams.
"To my way of thinking, someone who puts up that kind of money is going to want to have something else," Megna said.
The team also could offer a "put" or provision for the buyer to sell his shares back to the team for a profit at a later date, he said.
"In today's market, given what expansion franchises are going for, and the strong likelihood that there will be no more than 32 franchises out there for the foreseeable future, that price seems about right," he said.
Martin Klepper, with the law firm of Skadden, Arps, Slate, Meagher & Flom in Washington, who is active in sports financing, said an investor putting up $150 million is likely to demand at least some control over operations.
"I would think $150 million would give an investor some ability to have input over major decisions," Klepper said.
The Ravens, playing in a publicly financed stadium packed with skyboxes and other money-making extras, are among the top five revenue-generating teams in the NFL.
The correspondence with investors values the franchise "for the purposes of this transaction" at $450 million to $550 million. The figure, which would appear low relative to recent sales and expansion fees, may reflect a discount for the team's debt.