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A bombshell.
That was the reaction to the report from Ken Rosenthal and Jayson Stark at The Athletic late Tuesday that David Glass was in discussions to sell the Royals to businessman John Sherman.
When something like this drops, it triggers a million questions. In this case there is one that overrides all the others.
Who is John Sherman?
For starters, he’s a Royals season ticket holder and minority owner of the Cleveland Indians. Cleveland owner Paul Dolan had been looking for an investor in his franchise for a few years. After making a fortune in building two energy companies from the ground up, Sherman was looking for a new challenge. The process of buying into the Cleveland Indians took almost a year, but was consummated on August 19, 2016. Sherman may be a “minority investor,” but according to a profile at Cleveland.com written in 2018, to Dolan he’s more than that. Dolan calls Sherman a “partner” in the operation of the franchise.
As he’s already a member of the club of franchise owners, Sherman’s path to owning the Royals should be relatively straightforward. You would have to think the vetting process for ownership has already been completed. It will help that Sherman has deep ties to the area.
Sherman was added to the board of trustees of the Kauffman Foundation in April of 2015. The Kauffman Foundation. That is, in a word… perfection. That year, he was named one of the 100 Most Powerful people in KC business by the Kansas City Business Journal. From his Business Journal write-up:
“John Sherman can deliver two of the things entrepreneurs covet most: money and expertise. Having built up Inergy LP through numerous mergers and guiding its merger with Crestwood Holdings, Sherman is a master entrepreneur.”
Money and expertise. A master entrepreneur. You’ll take that profile if you’re looking for an owner of your franchise.
According to his bio at the Kauffman Foundation, Sherman serves as the Chair of the Board of Directors for The Truman Presidential Library Institute. The Truman Library is currently undergoing extensive renovations that will cost in the neighborhood of $25 million. Sherman and his wife Marny were singled out as providing a “lead gift” in the fundraising efforts that had raised $23 million by June.
He’s also on the board of UMKC and, according to his Kauffman Foundation bio, his philanthropic work has been mostly in education, “focussing on narrowing the educational opportunity gap for the underserved.” Sherman is a leader in the Kansas City business and philanthropic communities.
Local ownership is important, especially in a smaller market like Kansas City, because these teams are a massive part of civic pride. They matter to the region. That’s something Sherman seems to understand. From his interview at Cleveland.com:
“He (Paul Edgerly, part owner of the Boston Celtics) helped me think about professional sports, how it’s a long-term investment,” said Sherman. “It’s really a community asset. You always have to remember that.”
In a rarity, Sherman would bring experience to the role of majority owner. He’s seen how a major league team operates. He knows what works, what doesn’t. Sherman will most assuredly want to put his imprint on the team immediately. Patience is not a trait successful entrepreneurs possess. Should this sale go through, this marks the beginning of a massive season of change at The K. It’s fair to speculate that Dayton Moore will move out of the general manager’s office. Ned Yost could likely depart as well. Between ownership, the front office and the field manager, the Royals have been a paragon of stability for the last 10 years. No other franchise has had this kind of continuity over the last decade.
Make no mistake, should this sale happen, it will mark an era of change for the franchise we haven’t witnessed since the passing of Ewing Kauffman.
In many ways, Sherman seems like the anti-Glass. Glass, with his retail fortune and Arkansas roots, was never really embraced in Kansas City. And Glass never seemed to care that much about that. First impressions are difficult to shake and Glass’s early attempt to run the Royals like his retail outfit was a horrendous opening. Yes, he evolved as an owner, opening the pocketbook and largely getting out of the way of his General Manager. He should get credit for that. But for as long as he owns the franchise, he will always be a lightening rod for a large segment of the fanbase who have a difficult time moving beyond that first impression. Even if it’s not necessarily accurate, there’s a reason “Glass iz cheep” is a meme in the Royals universe.
With the value of the franchise increasing ten-fold since he made the purchase and with the TV rights for the club settling into place, now is the perfect time for a sale to go forward. And with Glass turning 84 next week, and any potential succession plan in regards to ownership still murky, maybe this is the endgame. Maybe Dan Glass will be happier away from baseball. He’ll have plenty of money. There is no better investment than in a professional sports franchise in a major league.
The Royals released a statement early Tuesday evening.
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You would think that if the club weren’t for sale, they would issue a statement saying the club wasn’t for sale, right?
Hearing about this from Jayson Stark and Ken Rosenthal, with names attached, means that this process has already progressed a fair distance. The story doesn’t come out and those two don’t put their names to it if there’s not some serious traction. If I had to guess, I’d say the sale is in the final stages.
The Royals were valued at just over $1 billion by Forbes at the start of the season, ranking 28th among franchises. With the new TV deal coming into focus, the sale price will definitely be north of that valuation. Think somewhere in the neighborhood of $1.25 billion. The Marlins sold in 2017 for $1 billion and while they have a shiny stadium, they lack any kind of local support or fanbase. The Royals will clear that amount, easily.
That’s a lot of cheddar.
The Glass family will net a substantial sum in any transaction. It’s a complicated legacy (and a story for another day) but with a rebuild getting under way, the timing of any sale just feels right. For everyone.
With the TV contract almost wrapped, the most pressing piece of business will be the stadium issue. The Royals’ lease with Jackson County runs through the 2031 season. At that point, The K will be almost 60 years old. If Ewing Kauffman’s legacy is securing major league baseball in Kansas City and the successes of the late ‘70s and early ‘80s, and Glass’s legacy is reversing course into a pair of AL pennants, the new owner’s legacy will most certainly be the stadium.
From what I’ve read, Sherman doesn’t seem like the kind of owner who would hold up a municipality for public financing. If a stadium is to be built downtown, the hope remains that it can somehow be privately financed. Any kind of majority public funding has to be a non-starter. It just doesn’t work for a city. Glass never had any interest in moving away from The K. It will be interesting to see where Sherman leans on the issue.
If a transfer of ownership is to take place now, that gives the new group plenty of time to perform the due diligence necessary in picking a location and figuring out how to fund a stadium. Depending on your perspective, exciting stadium times could lie ahead.
The good news is, this isn’t like the last time when the Kauffman Foundation was selling the team. There are no carpetbaggers bidding. The owner of the local NFL team isn’t low-balling the league by 60 percent. There are no messy legalities dealing with a trust. There is no reluctant owner, taking advantage of a depressed market. Sherman is the real deal. A Kansas City guy who loves baseball and the Royals.
“It’s an interesting business,” Sherman told Cleveland.com. “There are other ways to make money if you just want to make money, but I love baseball.”
The future in Kansas City looks considerably brighter today.