Potential Rays buyers should follow Jeff Vinik's Lightning model
As many investors look to get in and out of the Major League Baseball game, the market has been ripe for interested owners ahead of Oakland's re-location and upcoming expansion rumors. Newer MLB owners such Steve Cohen, who bought the New York Mets following the 2020 season, and Peter Seidler, who bought the San Diego Padres approximately ten years ago, are currently challenging the archaic spending models of some of the more seasoned MLB owners.
As even smaller ballclubs, such as the Royals and Marlins, have sold in the past five years, the Rays would presumably present a great opportunity should somebody buy it. The club is currently sitting atop all of MLB, loaded with superstar marketing potential with a team that plays a hard-nose style of exhilarating baseball and players that flash personality while they do it. The team is one of the biggest money-makers through annual television residuals in the league and have a reputation of being one of the most staunch-to-the-script teams in sports, yet that script wins them as many games as anybody else in a sport that is tedious to script out.
Ken Rosenthal of The Athletic reported on Sunday morning that the Rays have been in preliminary discussions over interest in the ballclub. Wallstreet's Stuart Sternberg, a former partner for Goldman-Sachs, has been the Rays principal owner since 2005. To put into perspective how long ago that was, that season Joey Gathright and David Hollins played center for a team with Lou Piniella at the helm. While the Rays have seen the entirety of their success under the guidance of Sternberg, Sternberg's received criticism in the past for being too conservative in his investments with the team, including allegations as to whether or not he pockets revenue-sharing money designed to be put back into the team.
Despite Sternberg crying poor and somehow spending less money when the team went to the 2020 World Series than they did when they went to the 2008 World Series in a market that's a lot more of a premium, the Rays have excelled beyond their payroll structure. A perennial playoff team, should new ownership move quickly, they wouldn't have to build a new product from scratch.
This past offseason, the Rays extended a number of their players just a year after inking star shortstop Wander Franco to the largest contract in franchise history. On top of this, they signed starting pitcher Zach Eflin to the club's biggest free agent guarantee. As many speculated whether or not the Rays were finally beginning to spend, a lot within the sport scratched their head about the timing of it. Should the Rays sell, the timing of these deals would begin to make more sense as keeping as much of the commodity of the product would the entity more appealing if the Rays opted to begin the process of a sale.
The Rays are locked into their current deal with Tropicana Field through the 2027 season, thus any potential buyer would have to stick in the Pinellas County area for the near-future. However, Rosenthal reports that one buyer would perhaps be interested in potential re-location down the road, though MLB is adamant about maintaining market capital in the Tampa Bay metropolitan area. Of course, the plan to re-locate would most likely be an anomaly among pursuant buyers, as the fee for re-location would be upward of $2B on top of the total monetary value of the sale, and the fee to re-locate is higher than the Rays overall market value.
The Rays have also recently announced preliminary plans for a new location in the same area, as St. Pete mayor Ken Welch is unwavering in his attempt to keep the club in the area. When asked about the engagements he's had with the club recently, he alluded that 'they're hoping to be married soon.'
It is worth noting that any talk of a sale at this juncture is, by inherent nature, speculative at best. In fact, despite reports, Sternberg has told TBTimes John Romano that he intends to maintain ownership stake with the Rays and keep them in St. Pete for 'generations to come.' Naturally, it remains to be seen just what Sternberg's plan is. Often, owners will downplay talk of sales as they're happening, or he could have absolutely zero intention of selling the Rays whatsoever. For the sake of this editorialization, we're going to assume that Rosenthal's reports are accurately vetted and concrete.
Beyond the desire of the city, one potential buyer that the Rays have spoken to is reported to be Dan Doyle of DEX Imagining, an office supply business located in St. Pete that already has an established rapport with the club as a crucial advertising partner. Doyle has refrained from commenting on the rumors.
However, if new ownership does come through before the Rays lease with the city expires, the team shouldn't re-locate. It's not a fiscally viable option for a new owner, nor is the city of Tampa an entirely tapped baseball market. The Rays have seen a massive uptick in attendance in 2023, partly due to the popularity of the new Randy Arozarena section, but they've never advertised the team. Between players such as Arozarena, Franco and South Florida alum Shane McClanahan, the Rays have one of the more talented young cores in the league and a team in win-now mode with young players.
It's a similar situation to the one the Tampa Bay Lightning were in when Boston hedgefund manager Jeff Vinik bought the hockey team from Len Barnie and Oren Koules amidst re-location rumors in 2010. With fresh talent Victor Hedman and Steven Stamkos on the two sides of the puck, the Lightning had the potential of a multi-Cup core and fast in a city where the team was struggling to find, no pun intended, lightning in a bottle when it came to exciting its base.
Vinik bought the Bolts on a whim, waking up one day and wanting to invest in the NHL. As the Lightning struggled in the dweller, Vinik immediately turned the team into a money machine. The current team is armed with at least six surefire Hall of Famers in Hedman, Stamkos, 2019 Hart Trophy recipient Nikita Kucherov, Brayden Point, Corey Perry and Andrei Vasilevskiy, however the turn around wasn't just about building a product on the ice. Even when the Lightning won their first Stanley Cup with future Hall of Famers Martin St. Louis and Dave Andreychuk,, they were middle of the pack in attendance.
The team had been operating in the red, with fewer than 2,000 season ticket holders going to games in a downtown Tampa that felt eerily desolate at the time. Vinik decided not to just invest in the team, but also the city, transforming the river walk area around the Lightning culturally. It's almost impossible to walk down a street in Tampa's business district without seeing the face of a Mikhail Sergachev or Alex Killorn, and the Lightning themselves are everywhere. But perhaps the biggest investment is right outside of Amalie Arena itself, as Thunder Alley has essentially become the heart of downtown, with local businesses wanting to be as near to Thunder Alley as possible. With constant events and a very particular Lightning-esq feel, Thunder Alley has essentially become a sign of affluent nightlife in the Tampa Bay area, something that when Vinik took over was not booming. He paid over $40M out of pocket into the city after he already paid out of pocket to acquire the team and then he partnered with Bill Gates to put a significantly larger chunk of money into the city. He's seen ample return on his investment, and as the city of St. Pete finds itself in a similar situation, perhaps a new owner, especially one who locally noticed Vinik's projects first-hand, could follow suit.
As the Lightning were a dead town for hockey and now have by far the best attendance in the league year-over-year, the Rays have long-since been considered such by outsiders for baseball. However, the Tampa Bay market has been yearning for more baseball, not less, for some time now. With scrutiny regarding the location of the venue and the venue itself, Tropicana Field hasn't exactly been the most welcomed of environments for a baseball team. However, the Rays are consistently among the top teams in terms of television market and ratings. When the team competes and the front office makes an effort, there's regularly a boost in attendance and the city locally is very prideful in the club, despite how difficult it is to get to St. Pete during the work week.
The bigger issue with St. Pete, however, isn't necessarily how hard it is to get there, though with 6:40 start times you run the risk of missing a chunk of the game when you get off work, rather the average age of St. Pete residents. Per the most recent census, the median age in downtown St. Petersburg is closer to 50 than it is 40, showing a community primarily in the retirement range. While the Tampa Bay market may be strong for baseball, the local vicinity within the immediate community doesn't exactly encourage high-attendance volume.
Baseball is grounded in tradition, a pure-ism of beauty passed on from generation-to-generation, creating a lifetime of myth and legend. The older generations are the generations that hold onto Willie Mays, Tom Seaver and Johnny Bench, sharing stories of those that left them in awe. Yet, they all became interested and attended games growing up. Baseball's struggled to expand the sport to reach the younger demographics, though the league has seemed to improve substantially on that front in recent memory. You cannot adequately run a business long-term without reaching the younger demographics, especially as the older demographics either die out or pinch pennies on social security checks.
One of the biggest things that the Lightning do is $20 tickets for students. If you're enrolled at the University of South Florida, you get $18 standing room only tickets to every single Lightning home game, whereas high school students and college students that attend any other university are eligible for the same tickets at $20 for every Lightning home game, while supplies last. The tickets become available day of and can only be bought with an active school email, and it's called the Student Rush. This gives college students a raucous atmosphere for a night out with friends that doesn't break the bank and sells more tickets at the same time, improving short-term monetary gain for the club but also theoretically cultivating lifelong hockey fans and extending the game to the next generation.
As the USF St. Pete campus continues to see growth, the city hopes to become younger as time passes. Welch, sworn in last year, has been firm in his approach to build a better community for St. Pete's youth. As city policy changes, the city hopes that the census should as well, creating a perfect storm of opportunity to transcend the St. Pete area the same way that Vinik changed downtown Tampa and build it around the Tampa Bay Rays.
Much like the Lightning, the Rays are built for constant success in their sport. That doesn't always translate to a better market, however, the Rays could have a unique opportunity to be the authors of their own destiny, contingent on whoever the buyer would end up being. No more should the Rays be a tax write-off for a New York financial investor who's a season ticket holder for another ballclub, attending more Mets games than Rays games. The old adage is that grass is always greener. It remains to be seen if the Rays will sell and it also remains to be seen if that ultimately be as beneficial for the club as many fans hope it would be, but there's an opportunity for sustained success in St. Pete that the Rays have not and likely never will tap into under the ownership of Stuart Sternberg.