Watkins’ Finances Still in Question

A day after the Minnesota Twins declared that Donald Watkins had not demonstrated the financial capacity to purchase their team, a highly placed baseball official said Thursday that the Alabama businessman has not proved that he can afford the Angels either, or any other team.

“We still don’t know what Donald Watkins has [financially] and what he doesn’t have,” the official said.

Watkins met with Disney officials in March and subsequently made a preliminary offer of $250 million for the Angels. He previously had made a preliminary offer for the Twins of $125 million to $150 million, pending review of the team’s finances. The Twins’ assessment of Watkins’ finances, however, casts doubt on his ability to pay perhaps twice as much for the Angels.

In a letter to Minnesota legislators debating a funding proposal for a new stadium, Twin President Jerry Bell said Wednesday that no party “with adequate resources to consummate a transaction” has emerged as a potential buyer for the team, which is for sale.

“If Mr. Watkins were to reliably demonstrate his ability to secure $150 million in funds that are fully committed and readily accessible for the acquisition of the Minnesota Twins, I can unequivocally assure you that he would have every opportunity to become the owner of the team,” Bell wrote.

Watkins, in a response to the legislators, wrote Thursday that he submitted an offer to Bell on Feb. 11, including a financial disclosure form that listed his net worth. The Twins have not asked questions about the form, entered into negotiations or otherwise responded to the offer, Watkins added.

Regarding the Angels, he continued, he has “letters from two respected investment banking firms arranging the first $200 million needed for the acquisition of this team.”

Bell, in his letter, wrote that if Watkins released the Twins from their mutual confidentiality agreement, the team would disclose the financial data he provided “to put to rest any lingering concerns” about how the Twins treated Watkins.

Watkins’ attorney dismissed that suggestion Thursday. Watkins “is perfectly prepared” to detail and defend his financial statements to an owner selling a team and to the other owners who would approve any deal, as required by baseball rules, Jonathan Rose said.

“The notion that he has to prove something to anybody anywhere else is not something he feels he has to do,” Rose said. “That will be proven when he buys a team, and that is what he plans to do.”

Watkins turned his attention to the Angels when his efforts to buy the Twins stalled. Disney executives told Watkins that several other parties also had expressed interest in buying the team, Rose said.

Disney has revealed the Angels’ confidential financial data to Watkins and other parties but has not granted exclusive negotiating rights to any party, and no deal is imminent. Paul Pressler, the executive who runs the Angels and Mighty Ducks for Disney, is believed to have met recently with a group of Los Angeles businessmen interested in buying the Angels. The financial capacity of that group is not believed to be in question.

Pressler, citing a confidentiality agreement with Watkins, would not say whether Disney believed he had shown he has the financial resources to buy the Angels.

“People have come through and kicked the tires,” Pressler said. “If somebody made us an offer that was right for our shareholders, we would give it consideration. In the meantime, we’re running the clubs for success.”

Watkins privately lists his net worth at $1.5 billion. In his letter, he says that “various privately held partnerships ... hold the vast majority of my wealth” and says he can convert sufficient assets into cash “expeditiously.”

Said the major league official: “We received a net worth statement from him, but it’s all in privately owned companies and it’s hard to determine their value. We have seen very little in the way of cash. We don’t know how to monetize his [assets]. Everyone has had a tough time getting a handle on it.”

The official said baseball’s so-called 60-40 rule could be a factor in considering any application from Watkins, should he reach a purchase agreement with Disney. The rule limits the debt of an owner to 40% of the team value, defined under the rule as twice the annual revenue of a team.

The Angels reported revenues of $92 million last season, which would place their “60-40” value at $184 million. The rule counts operating losses and long-term player contracts as debt, so if even some of the promised $200 million financing adds to the debt burden, the road to approval could be tenuous for Watkins, who wants to be a sole owner.

“He is going to comply fully with all the rules of baseball in any proposal we make,” Rose said.