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Originally published December 17, 2011 at 8:04 PM | Page modified December 17, 2011 at 9:04 PM

Value of Mariners much higher than previously thought

Chris Larson's appraiser estimates the Mariners' value at $551 million; an appraisal done on behalf of Larson's wife, Julia Calhoun, puts the value of the team at $750 million.

Seattle Times staff reporter

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Two court-ordered financial appraisals of the Mariners have concluded the team is worth far more than previously believed.

For the past three weeks, the divorce trial of Mariners minority owner Chris Larson has played out in King County Superior Court. At issue is dividing a vast estate of homes, stock, commercial real estate, artwork, luxury cars and other assets, which has put the value of Larson's 30.6 percent ownership of the team front and center.

An expert put forth by Larson concludes the total value of the Mariners franchise is $551 million, while an appraisal done on behalf of his wife, Julia Calhoun, states the team is worth $750 million. Both figures dwarf a $449 million estimate published in March by Forbes magazine — which did not have access to inside financial details — and are far greater than the $212 million invested by Mariners owners to buy the team in 1992 and help build Safeco Field.

Word of the appraisals comes as debate rages throughout Seattle about whether the Mariners can afford to compete for free agent Prince Fielder, seeking a multiyear contract well beyond $100 million. It also comes at a critical time for Mariners ownership, with Larson uncertain of maintaining his team stake while 55 percent majority owner Hiroshi Yamauchi has seen declines to his vast fortune.

A pretrial brief submitted last month by Larson's lawyer, Thomas Hamerlinck, stated that the retired Microsoft executive hopes the court won't "order a property award that essentially requires him to sell all or part of his interest in the Mariners."

Larson has proposed a $104 million property assets settlement with Calhoun that would include a $25 million in cash payouts over the next year and clear her of roughly $232 million in remaining estate debt. He estimates the estate's net worth at $463 million, but argues that $357 million of that — including the Mariners stake — was created by him alone and should not be shared in any settlement.

Calhoun counters that the net worth of their entire estate is $572 million and should be split down the middle. She also wants $105 million of that in cash paid out over four years and her name cleared from all debt.

Larson argued in court that he can't pay that much cash and would have to sell his stake in the team.

Final arguments were heard Thursday, and a decision by Judge William Downing is expected later this week.

Some of the most interesting testimony in the court battle that will formally end a 25-year marriage involved the Mariners, who were granted a court order sealing their specific financial details from public view. Calhoun hired Don Erickson, founder of Texas-based Erickson Partners Ltd. and a specialist in sports-team valuations, to appraise Larson's stake in the ballclub. He testified that he arrived at an overall $750 million value for the Mariners because they are on an "up trend" business-wise with the same potential to maximize franchise worth as the Texas Rangers and Houston Astros.

Erickson added that the team reaches "one of the largest markets in all of baseball" including Washington, Oregon, Montana, Alaska, Hawaii, Alberta, British Columbia and Asia. He cited the team's 10-year, $450 million regional television contract with ROOT Sports and said there is potential for greater revenue down the road.

In closing arguments, Calhoun's lawyer, Janet George, said of the Mariners: "We care if they win or lose. But in terms of the balance sheets, they have one of the best balance sheets."

But in his closing, Hamerlinck countered that Erickson's appraisal was "pie in the sky" and that the Mariners are closer to a fit between the larger Rangers and the smaller San Diego Padres.

Larson's appraiser, Mary Ann Travers of Crowe Horwath LLP, painted a more modest picture of a $551 million team from a medium-sized Seattle-Tacoma-Bellevue market rather than a multistate territory plus Canada and Asia. She mentioned upcoming capital expenditures, attendance and revenue declines of recent seasons and the team's lack of on-field success as reasons the value isn't higher.

Travers testified that the actual market value of Larson's share of the team is $136 million, having applied a 20 percent price reduction because of a "lack of marketability" and the fact Larson's share represents only a minority stake in the team if sold by itself.

But Erickson placed the value of Larson's share of the team at $230 million, saying the team is worth far more overall and that no discount should be applied.

Larson has paid $65.8 million for his stake in the team and his part of Safeco Field construction costs. In 1992 he formed a company called Mudville Nine Inc. to acquire a 20 percent share of the team, then added the remaining share by 1999.

Besides debate over the value of his piece of the team, Larson's sole ownership of the 30.6 percent stake is being challenged by Calhoun. She stated in court that Larson made her an initial shareholder of Mudville Nine and that lines of credit and funds used to purchase the share of the team were secured from the couple's joint holdings.

Calhoun has stated that she does not want ownership in the Mariners, but expects to be compensated.

The team's majority owner, longtime Nintendo patriarch Yamauchi, ceded his Mariners stake to Nintendo of America for estate-planning purposes in 2004, but retained control of the ballclub. His personal fortune is said by Forbes to have declined from $7.8 billion in 2008 to $4.6 billion earlier this year — even before he lost a reported $300 million in one day in July on falling Nintendo stock prices.

Rumors have persisted for years that Yamauchi, who turned 84 last month, might get out of baseball and Larson would spearhead a transition to local ownership.

The two court-ordered Mariners appraisals come during an interesting period for Major League Baseball when the value of regional sports television network deals are rising.

On the heels of signing Albert Pujols to a 10-year, $254 million contract this month, the Los Angeles Angels unveiled a 20-year, $3 billion television deal with FOX Sports West.

Some of the most lucrative TV deals involve teams that form their own regional network, or gain ownership points in an existing one. The Astros recently sold for $610 million after partnering with the Houston Rockets for a near 80 percent ownership of a new network called Comcast SportsNet Houston. Teams have also threatened to form their own network, then leveraged a better deal with existing ones, as the Rangers did in 2010 for 20 years, $1.6 billion with FOX Sports Southwest.

Erickson testified at the trial that baseball teams are entering a "golden age" of TV revenue and that the Mariners, with their broad market base of fans, improved farm system and limited long-term contracts, are well positioned. He testified that when he worked on the sale of the Angels from Disney Corp. to Arte Moreno in 2003, the team had tens of millions of dollars in bad contracts on the books that hampered the sale price.

In contrast, he said, the Mariners have no comparatively "bad" contracts — adding that the $18 million owed Chone Figgins through 2013 is still not serious enough to impact the team's value. But Larson's lawyer, Hamerlinck, said dwindling fan attendance, declining revenues and a lack of on-field success had to be factored in. He said the team's current TV deal is worth far less than newer ones like the Rangers' and does not include an Astros-style ownership stake.

Hamerlinck also noted that an agreement between Mariners owners makes it tougher for Larson to quickly sell his minority interest because he'd first have to offer his share to fellow owners, then to any willing Seattle-area buyer.

Geoff Baker: 206-464-8286 or gbaker@seattletimes.com.

On Twitter @gbakermariners

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