BY Art Thiel 10:48PM 09/22/2013

Lincoln: Nintendo has no plans to sell Mariners

In the face of speculation that the death of Hiroshi Yamauchi may cause Nintendo of America to sell the Mariners, club CEO Howard Lincoln said Sunday there are no plans to sell the baseball club.

“There’s always speculation in times like this,”  Lincoln told the Puget Sound Business Journal Sunday afternoon.  “I think I can speak on behalf of Nintendo of America and say that Nintendo has no plans to sell its majority interest in the Mariners.”

Yamauchi, who died last week, held 55 percent of the Mariners, although for estate purposes Nintendo of America, headquartered in Redmond, is the owner of record since 2004. Lincoln, a member of the board of directors of NOA, was on vacation in Alaska with his son and did not hear the news until Thursday.

Another losing season in 2013, the eighth in the past 10, has renewed clamor among many fans for a change at the top, in part because change has occurred everywhere else with no good outcomes. The dismal finish to the season has increased speculation that manager Eric Wedge and general manager Jack Zduriencik won’t return, even though Lincoln and club president Chuck Armstrong hired both and presumably would hire their successors.

However, the fact that Lincoln said the club has no plans to sell doesn’t mean the club won’t be sold. A lawyer, Lincoln parses his public words carefully. There is no business reason for Lincoln to publicly suggest the club is for sale, when the team’s minority owners, which include wealthy members of the Seattle-area tech community, reportedly have the right of first refusal on a potential sale.

NOA in April had a change in leadership, when Satoru Iwata became CEO, replacing Tatsumi Kimishima, who returned to Nintendo headquarters in Kyoto to take a promotion. Kimishima has been NOA CEO since May 2006. Iwata is CEO of Nintendo of Japan and Nintendo of America.

“I can tell you I have spoken to Mr. Kimishima in Japan and there are no plans to sell (Nintendo of America’s) majority interest in the team,” Lincoln told PSBJ. “I can’t tell you what’s going to happen in the future, but now Nintendo feels very strongly that Nintendo wants to maintain its ownership interest in the Mariners.”

Yamauchi and his American minority partners bought the franchise in 1992 for $120 million from Jeff Smulyan. Since the opening of Safeco Field in 1999, the franchise has steadily appreciated in equity value and almost always turned an operational profit no matter how wretched the baseball and despite losing more average annual attendance than any major pro sports franchise in America over the last 10 years.

In 2011, a King County judge presiding over the divorce case of the largest minority owner, Chris Larson, pegged the value of the Mariners at $641 million. But that was before the sale of the Los Angeles Dodgers at $2.1 billion, and before the Mariners bought a majority share of Root Sports, the regional sports network owned by satellite operator DirecTV.

Both developments increased the value of Mariners, perhaps close to $1 billion. The likeliest member of the minority group owners to pursue a purchase, telecom billionaire John Stanton of Bellevue, already has a 10 percent share, acquired in 2002. But the value Nintendo assigns to its asset, and whether Stanton would pay it, are unknown.

Lincoln began doing work for Nintendo as outside counsel in 1982, and developed a strong personal friendship with Yamauchi and his family. By the 1992 Mariners purchase, Lincoln was senior vice president and general counsel of NOA, then promoted to chairman of NOA in 1994. He became Mariners CEO in 1999. Lincoln was the primary contact between Yamauchi and franchise operations, although Yamauchi admitted he was not a baseball fan and made the investment as a courtesy to Sen. Slade Gorton and Seattle.

“There’s a flood of recollections,” Lincoln told PSBJ. “I’ve known and worked for him (Yamauchi) for more than 30 years. More than 2,000 people came to his (memorial) in Japan on Saturday, I was told. He was a man of small stature and commanding presence. People liked him. I saw him in action in Japan and the United States, and he was always very warm. He was a visionary. We need to think about and never forget all he did for Seattle and for the Northwest.

“He was always very kind to me and I really appreciated the fact that he had confidence in me from 1982 when I first met him to now. I can still see him sitting in the conference room in Kyoto with that kind smile. It’s really a sad day.”


YourThoughts

  • Choska

    There are a lot of people with a lot of money in this town. It goes without saying that someone, or someones, could easily afford to buy the team. The billion dollar question isn’t who has the money, but who has the time and the dedication to turn around what has become a completely moribund company.

    • art thiel

      Stanton is likely first in line, and he has the money and dedication.

      • les

        What makes you think that Art? They have not shown any dedication for a winning product. What makes you think these deaf, dumb and blind owers care anything about the product they put on the field? I have ZERO confidence in any of those mindless, nutless owners. NO FAITH in what is left of my lifetime.

        • jafabian

          I feel that the M’s owners do want to win but how they go about it is questionable. They don’t follow the same forumla that the Yankees, Red Sox, Rangers or Rays do. They try to balance everything in their business operations instead of prioritizing and winning the World Series should be number one. All their other worries would solve themselves if they did that but they don’t seem to believe that.

          • art thiel

            There are no formulas that work all the time or most of the time, except hiring smart baseball people and let them do their work unhindered. And hope to get lucky as hell.

        • art thiel

          The owners are not of one mind. Yamauchi, Lincoln and Nintendo have majority control, and the minority owners have no say. They get to hang in the owners box, but 45 percent may as well be 0 percent in terms of control.

  • Elwood

    I like the fact that, as the season winds-down and important decisions have to be made in the off-season, the Mariners CEO was vacationing in Alaska. Not sure if this is the norm in MLB or any other sport, but it pretty much tells you all you need to know about how important the Mariners are to the CEO.

    • art thiel

      Then again, maybe there are no decisions to be made. Despite record low attendance in 2012, team still made an operating profit. Then they raised ticket prices and 1.6M still showed up. What’s not to like?

      • Effzee

        Dude. Why must you even say this? Soooo not funny. ;-p

      • Da Kid

        1.6M did NOT show up! Damn, I wish you’d stop padding the numbers with the pre-sales and no-shows the F.O. loves to haul out. Do some actual reporting and find out how many suckers — er, I mean, fans — actually came through the turnstiles. It won’t be anywhere close to 1.6M.

  • jafabian

    I’m certain Yamauchi left instructions on his desires for the Mariners direction after his passing. And he was well aware that Seattle loves their M’s, though at times that love can be tested. If his son-in-law was still the head of NOA I wouldn’t be very concerned about the M’s but it’s hard to say what direction they’ll go in now since he isn’t there anymore. I can see Nintendo wanting to maintain their relationship with the M’s and use them to further their brand recognition, much like how Disney used the Angels. But they could also follow Disney’s lead and sell the team. To anyone. There is a small amount of potential for a Clay Bennett type of person to swoop in and buy the M’s.

    • art thiel

      An outside purchase is unlikely, but if NOA cares nothing beyond cash for a sale, then anything is possible.

      • Will

        Perhaps we’re too old fashioned in how we perceive baseball. Maybe NOA will turn the Mariners into a virtual team and fans will have Wii controls, Google Glasses and there will be no need for real players or coaches. But the beer and bobbleheads will remain real (and expensive).

        • art thiel

          They still want you in the seats, otherwise they wasted $10M on a video scoreboad (which is $2M more than they wasted on Chone Figgins this year).

      • maqman

        His son in law is still on the Mariner’s board at age 67. According to Forbes magazine Stanton is worth about $1 billion, which is about what the team is worth. He might buy in to a purchasing group but probably can’t control it. Balmer could do it.

        • art thiel

          Stanton’s wealth has increased substantially with the sale of his latest company, Clearwire. And he already owns 10 percent. He and others can do it.

          • Trygvesture

            And since they can, surely they must want to: Who — from the land of A-Type moneymakers and in their right mind –could bear to sit and watch Lincoln in action for a minute longer than necessity would dictate? And I still believe that powered by percentage or not, the minority owneres with any measure or flicker of baseball or community sensibilites would be squawking like crazy at being required to follow at the back of the parade behind the ill-performing Lincoln-ponies — a la the endings of the Rocky and Bullwinkle Show. If the trust is distributed and each beneficiary has the option of selling or not, I’d guess Stanton et al would be breaking down their doors with offers to buy.
            Or, maybe I’m just discouraged to the point of irrational fantasies of better times. I felt the same in the Nixon years.
            Wait. That worked out exacty as I fantasized.

  • Effzee

    At this point, I don’t care who owns the team as long as 1) it stays in Seattle and 2) Howie and Chuckles are publicly tarred and feathered, and banned from participation in anything to do with the franchise for at least ten thousand years.

    • art thiel

      Boy, you’re strict. But after the ban is over, Ken Griffey Jr will be brought back.

  • les

    Great now i will not ever know what it will feel like to watch a world series winner. Thank you NINTENDO for all the great memories. Thank you so much to ruin Americas greatest past time. Thank you so much Nintendo!

    • art thiel

      Les, as I wrote, Lincoln saying they have no plans to sell is true the moment he said it, and may be untrue in the next five minutes. But if that’s what you think, you might want to express yourself to Nintendo. They do value their customer relations, although they are a very big company and Seattle baseball fans are an increasingly smaller constituency.

  • Long-Time Fan

    To steal a quote from the Breaking Bad: “Are we in the [baseball] business or are we in the money business?” Because they are two different entities. As Sir Arthur points out, the club turns an operational profit and has had its equity value increase significantly. That’s the money business. But on the field, even with one week left in the season, we cannot realize the most modest of goals – beat last year’s record of 75-87. That’s the baseball business.

    Where do the two intersect? When I buy my ticket for the center field bleachers (cheapest in the house) and tell the woman on the other side of the glass, “You know I’m going to sit wherever I want to,” she shakes her head as if to say, “This is the 1000th time today I’ve heard that very same thing.”

    • RadioGuy

      The fact that Yamauchi never attended a game and was as hands-off an owner as you’ll find in any sport is a clue as to what kind of “business” he viewed the Mariners as. That’s not necessarily a bad thing if you hire good baseball people to run your team and know enough to stay the hell out of their way…he could’ve been like George Argyros. Then again, Yamauchi DIDN’T hire good baseball people at the top of the team’s food chain in Seattle either and we’ve all seen the results.

      I always buy tix in the CF bleachers because $7 for some games to watch MLB in person is easily the best sports bargain in Seattle. I usually stay put because where I sit gives me a terrific view of the field, but I’ve never had a problem if I head down to lower seats after a few innings. Some of the concessions workers badly need a personality transplant, but the ushers have almost always been very cool.

      • art thiel

        It’s been a fact of baseball life forever, and changes only when there are sellouts. $7 is a fine deal, but you still have enjoy the visiting team, because the Mariners can be unwatchable.

    • art thiel

      Good point, fan. The terrible results on the field have had no discernible impact on either operations or equity value. Remember, this is a monopoly. Many rules of commerce do not apply.

  • Marcus

    Actions speak louder than words. Why would the Mariners cut payroll, bring in several 1-year deals, only commit long-term to Felix, spruce up Safeco Field as their big off season investment, and of course hem and haw on Jack Z and Wedge? All of those actions would seem to point toward staying the course until the change in ownership is done. And of course they also sped up resolution of the TV deal too and opposed the Sonics’ return to SODO (might muddy the franchise value). Looking at the Mariners’ actions Mr. Thiel, is there anything else they could do that they haven’t already to make the team attractive to a new majority owner (internal or external)?

    • art thiel

      Many telltales were evident a year ago, which prompted speculation that the club was ready for sale. Didn’t happen. While your points are valid, they are details that will only modestly affect price. The biggest parts of any asset sale are price and market.

      Nintendo will privately set a price, and it’s up to the market to meet it. I suspect Nintendo is happy to sit on a monopoly operation until its price is met.

      • Marcus

        Thanks for the response! I think the for sale sign has been up since last year, but they haven’t found someone to pay for what Nintendo is asking. Still, you’d think that there would be someone out there who really wants to own a team in the area. If Jack Z and Wedge are replaced and the team hasn’t sold, it could be NOA is serious about hanging on.

  • Jeff

    The Mariners, despite their putrid on field performance, are one of the few assets that are increasing in value for Nintendo, who are kind of going the way of the dodo bird thanks to tablets and smartphones. The stock chart don’t lie:

    http://www.bloomberg.com/quote/7974:JP/chart

    • NintendoGal

      Wow, going the way of the dodo? That’s rich!!! You need to learn about the gaming industry if you think Nintendo is going ANYWHERE simply because of a few more devices on the market. Many have speculated that “Nintendo is DOOOMED!” for years and oh look, they’re still around. How about that!

      • Marcus

        How is that Wii U doing for you NintendoGal? You guys shot a remarkable Hail Mary with the Wii, full credit given. But you’ve gone backwards on the Wii U. The new Xbox and PS are coming and that will firmly close your console window for the next several years. You’ll be fine in the handheld market I suspect, but without a second Hail Mary, you’ll be going the route of SEGA.

    • art thiel

      Stock price is indicative of some things, not everything. the Mariners mean nothing to Nintendo except as an asset that might fetch up to $1B. When they choose to collect it is likely not dependent on anything going on with their video game business.

  • SUDS

    Your quotes from Howard the Evil tells me all I need to hear. I’ll continue to withold my dollars from this POS of a franchise until there are some changes made at the top (and I don’t mean Jack Z). I’m not to the point of apathy yet — I’ve been a Mariner fan too long. I’m still in raging anger mode towards the idiots that have run the magic bus into the ground, then off the cliff. It takes a special type of talent to ruin a franchise so completely. I always though Argyros was the Master, but Chuck and Howie are doing their best to take that title from him.

    “By the 1992 Mariners purchase, Lincoln was senior vice president and general counsel of NOA, then promoted to chairman of NOA in 1994. He became Mariners CEO in 1999…”

    Bringing in a lawyer with ZERO baseball experience to run a major league franchise tells us all we need to know about “what business” they’re in.

    Burn in Hell, Howard. And take Chuck with you.

  • Trygvesture

    Oh, my. Lincoln said:

    “In all those years since 1992, either under (now Mariners chairman emeritus) John Ellis or myself, we have had monthly ownership meetings. In all those meetings, we have never really had serious disagreement, never had a split in the ownership group. That in itself is a clear indication of how strongly the ownership group is committed to Seattle and the Northwest.”

    Could this be true? NEVER a serious disagreement? NEVER? And this is therefore an indication of a strong committment to Seattle and the NW?

    How is solidarity about and in their oversight role an indication of some kind of pro-community zealotry? Just because they haven’t moved as a bloc to sell out to another Bennett?
    Have I fallen down the rabbit hole or does any of this gibberish make sense to anybody?
    Before reading this I didn’t think I couyld like or respect him less. I was wrong.

  • Matt

    I’m not concerned by the announcement that they do not intend to sell. I would have been shocked if Nintendo had said, yep, the club is for sale. I’m awaiting an imagined shocker…the unveiling of the Mariners as a sizeable, yet minority NHL investor for the SoDo arena.

    Perhaps it’s a bit Machiavellian, but if the organization determines that the arena is a go (not at this point, obviously), maybe they decide they should try to benefit from it financially (beyond renting out their parking garage) rather than continuing to fight it. Among the ways to benefit would be to provide some of the funds to help lure the NHL here, assure the new team’s games are on ROOT and watch the whole value of the neighborhood escalate as the Stadium District plan (http://www.stadiumdistrict.org/) is implemented. Pffff….

  • Ian Jacob

    Do you know how depressing this is? Can we trade the Mariners for the Sonics? (obviously no but. . .) At least we know that the management would care about the fans. I know the mariners are making a s**t pile of money even when no one is watching or going to the games but this is getting painful. It’s embarrassing. Seriously can we get someone with a heartbeat and some passion in upper management, meaning above the GM and manager.