A new owner for the Royals brings many unanswered questions

Royals fans were stunned early last week at reports that David Glass, who had owned the Royals since 2000, and had effectively operated the club since 1993, was engaged in talks to sell the team to local businessman John Sherman. The Royals announced the sale of the club on Friday and Sherman will become the owner once other MLB owners approve the deal in November, which should be a formality.

The sale ushers in a new era of Royals baseball, which may very well be a good thing. But the sale also brings up many more questions.

Why is David Glass selling the team?

David Glass is 84 years old and there is one report that the sale was precipitated by health reasons. Some had thought the club may one day be owned by David’s son Dan Glass, who serves as Club President and has been involved with the club both on the business side and baseball side since the 1993. However according to Sam Mellinger, Dan was not perceived as “ownership material”. There may have been costly taxes involved with passing the team onto his son, and there is also the possibility that Dan Glass just wasn’t interested in being the owner of a Major League Baseball team.

David Glass was good friends with Ewing Kauffman, who orchestrated how the club would be operated following his death back in 1993. Kauffman had the club operated by a limited partnership headed by Glass, with the intention of selling the club to an owner that would keep the team in Kansas City. Glass may have felt a sense to continue that legacy and handpick his successor. In fact, Sam Mellinger reported Glass targeted John Sherman because of his roots and his experience in baseball and Jon Heyman suggested it was an “inside buy”.

So who is John Sherman?

John Sherman does not seem to be a headline-maker despite being a very wealthy man, but according to civic leaders in the community, he has been pretty instrumental all over Kansas City in civic and philanthropic work. Sherman is a Kansas City native who made his money as an entrepreneur starting two energy companies, one of which eventually merged with Dynegy. He is the founder of a propane firm and sits on the board of Crestwood Equity Partners. He is a trustee for the Ewing Marion Kauffman Foundation, UMKC, the National World War I Museum, and is a member of the Civic Council of Greater Kansas City.

He is a baseball fan, calling the game his “passion” and he is a season-ticket holder at Kauffman Stadium. Sam Mellinger did some great background work to discover that Sherman is a “baseball nerd” having read books like Big Data Baseball,

He is currently part of the ownership group of the Cleveland Indians, owning 30 percent of the club, a share he will have to sell. He will not own the Royals outright, instead fronting an ownership group of investors that will come up with the $1 billion sales price.

Wait, the Royals are worth $1 billion????

It turns out that despite owners crying poor throughout the years, sports franchises are extremely valuable assets! Baseball has been criticized as a sport in trouble, but they had record revenues as a $10 billion industry last year. Even troubled franchises, like the Miami Marlins, who don’t draw any fans and came with a mountain of debt, can sell for $1.2 billion.

While the Royals may be a disappointment in the standings, Forbes had estimated the Royals’ value at just over a billion dollars earlier this year, thanks to lucrative new national television deals in baseball, a renovated Kauffman Stadium that is producing more revenue, and new revenues from online streaming. In addition, the team could be close to a deal for a new local television contract that will more than double what they were getting from Fox Sports Kansas City. No one knows if this record growth in sports is sustainable, particularly as television and digital platform markets are evolving so rapidly, but for now, it still pays to be in the business of big time sports.

Could the Royals relocate from Kansas City?

Not anytime soon. The threat of relocation will always hang over the heads of fans of a small market club like the Royals, but the fact that the team is being sold to a Kansas Citian, a fan with season tickets, greatly diminishes the threat of relocation, despite what a Las Vegas bookie says. The Royals have a lease at Kauffman Stadium that runs through 2030, and unlike other leagues, MLB is pretty reluctant to allow teams to just up and move. Just one team has moved in the last 40 years, and even then it took years and years for the Expos to move from Montreal to Washington, D.C. The league has actually blocked a few owners from trying to move their team, as they did when the Giants tried to move to St. Petersburg in 1992.

The Royals could move someday, but it would only come after their lease expires and any negotations for renovations or a new stadium became contentious, or if John Sherman suddenly wanted to be a villain in Kansas City. Sherman has said he views professional sports teams as a “community asset”, so don’t expect that heel turn any time soon.

Are the Royals staying at Truman Sports Complex?

For now, but Sherman has seemed to signal a greater desire to move the team downtown than David Glass, who rejected overtures to move downtown in 2006 upon negative feedback from season ticket-holders. According to Mellinger, Sherman has talked about ideas like downtown baseball and a year-round sports bar at the stadium. Steve Vockrodt reports that Sherman “cares about downtown” and is warm to the idea of moving the team there.

There has been increasing chatter from city leaders about moving the Royals to a downtown stadium with City Manager Troy Schulte conducting a study of the possibility and potential sites have been discussed. New Kansas City Mayor Quinton Lucas seems less enthusiastic about the idea, saying “We need a new downtown baseball stadium like I need a new Maserati. It’d be cool to have, but I don’t have the money.” However, talks on a stadium could begin well after he is out of office, and the Royals are “exhilarated” about the idea of moving downtown, according to Mellinger.

What does the sale of the team mean for Dayton Moore?

Under David Glass, Dayton Moore probably could have stayed in Kansas City as long as he wanted, but his future is in a bit more doubt with a change of ownership. New owners frequently like to bring in new management. The new Marlins owners fired four executives their first week taking over. Astros owner Jim Crane cleaned house and fired GM Ed Wade the same week he took over in Houston.

Others take a bit more time. Tom Ricketts stuck with Cubs GM Jim Hendry for a full year and a half before letting him go and replacing him with Theo Epstein after the 2011 season. MLB.com reporter Jeffrey Flanagan writes that Sherman is “not the type of guy who will storm in and start gutting the front office.” Considering the goodwill that Moore has built up in the city, it seems likely that Sherman will observe the rebuild up close for awhile before making a lot of moves. With the club president title likely vacating soon with Dan Glass presumably leaving the club, Moore could be promoted to a club president role with a new director of baseball operations, although that would likely be someone promoted internally, like J.J. Piccolo.

Regardless of whether Moore stays or not, the Royals could be moving in a different direction philosophically. According to Sherman’s friend, Sporting Kansas City owner Cliff Illig:

“He’s expressed some pride to me that they were trying some things differently (in Cleveland)...I wouldn’t say the Royals, out of necessity, under the Glasses have done some of that stuff. I don’t think the Glass family is wired the way I’m describing.”

What does the sale of the team mean for Ned Yost?

That depends a lot on whether Dayton Moore stays. Ned seems to be here temporarily, ushering the team through the rebuild to hand over the keys once he is confident the team is in a position to win. That likely won’t change much unless Dayton Moore departs and a new GM wants to put someone else in the dugout. Even then, the new GM may wait until the team is closer to contention before pulling the trigger on a change. Don’t expect any big changes in the dugout any time soon.

Does this mean the Royals will spend more money on players?

Probably not a lot. The Royals will always be under the constraints of playing in one of the smallest markets in Major League Baseball. Sherman is a very wealthy man, but his net worth is unclear, and he doesn’t show up on a list of Forbes billionaires, so don’t expect him be profligate or subsidize a payroll the market can’t support the way Ewing Kauffman did in his later days. He comes from the Indians ownership group, where they have developed consistent winners, but have done so with a lean and mean payroll that is typically in the bottom third in baseball. Their organizational philosophy is to trade marquee players or allow them to depart in free agency rather than hold onto them past their prime years.

The Royals are close on a new local television deal, and the revenues from the national TV deals continue to rise, so the team should be spending more money on players in the next few seasons. But Sherman seems more likely to make his investments on the player development side than spending money on big free agents.