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Originally published December 22, 2011 at 3:37 PM | Page modified December 22, 2011 at 7:30 PM

Judge in divorce trial of Mariners owner puts value of team at $641 million

The Mariners were valued at $641 million by the King County Superior Court judge who ruled in the divorce trial of Chris Larson, who owns 30.6 percent of the team.

Seattle Times staff reporter

quotes Funny how it took a judge in a divorce proceeding to shine a light on a group of owners... Read more
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A judge in the divorce trial of Mariners minority owner Chris Larson has placed a $641 million value on the franchise in issuing his final ruling.

King Count Superior Court Judge William Downing wrote in the ruling — based on testimony at trial by two sports team valuation experts — that the Mariners compare favorably to the Texas Rangers and Houston Astros, which sold for $593 million and $610 million, respectively, during the past year.

"The Court would find the May 2011 Astros transaction and the December 2010 Rangers transaction to be the best comparables due to their recency, similar attendance and other factors," Downing wrote in the ruling, issued Thursday morning. "The Seattle Mariners' on-field performance probably slides in between the two but, from a business point of view, they enjoy a superior demographic."

Two appraisals submitted to the court had estimated the team's franchise value at $551 million and $750 million, dwarfing a $449 million estimate by Forbes magazine in March.

In arriving at his final figure, Downing noted that the Mariners enjoyed revenues of $190 million last season and had "nonoperating assets" that include excess working capital of $20 million, receivables of $21.25 million and vacant land worth $3.75 million.

He also subtracted $12 million in deferred tax payments the Mariners owe.

Downing's ruling comes at a critical time for the Mariners, who have seen attendance declines the past several years while losing 95 games in 2011 and 101 games in 2010. Sources say the Mariners recorded an operating loss of $6 million this past season, which won't be made public until next spring.

The loss would be only the second one in the Safeco Field era, though it would be absorbed by the numerous annual surpluses piled up by the team over the years. The Mariners are currently locked in negotiations to land prized free agent Prince Fielder, reported to be seeking a total package of $150 million or higher.

That pursuit of Fielder has led to much debate in Seattle and around baseball about the team's ability to afford the slugger. The negotiations are happening amid a changing baseball landscape with teams capitalizing on new regional television contracts, something that has the Mariners in line for a potential windfall.

The team began a 10-year, $450 million contract with ROOT Sports this past season, but is poised to capitalize on an opt-out clause in 2015 that could lead to substantially improved broadcast revenues.

Larson's ongoing financial struggles were exposed in the trial and his ability to hold on to his 30.6 percent stake in the team will be put to the test. He remains the largest minority owner in the Mariners, exceeded only by majority owner Hiroshi Yamauchi, 84, who has suffered huge financial losses of his own in recent years. Yamauchi owns 55 percent of the team.

The court ruling did give Larson a victory in declaring that a substantial part of his joint estate was his alone and not subject to sharing with his wife, Julia Calhoun.

The court ruled that Larson enjoys sole control of Mudville Nine Inc., the company he used to purchase his stake in the Mariners starting in 1992. Downing declared that the stake — Larson's largest single asset — has a value of $196 million and a discounted market value of $176 million if sold on its own as a minority share in the team.

Calhoun was awarded just more than $180 million in assets by the ruling, with Larson having to pay $27 million of that in cash during the next two years. That's substantially less than the approximate $300 million Calhoun had sought in a 50-50 split of their estate, with $105 million of that in cash.

Larson had countered with a $104 million total settlement offer, with $25 million paid in cash, saying he'd be unlikely to hold on to his Mariners stake if Calhoun received the cash award she was looking for.

This ruling gives him much of what he was asking for in terms of the cash he'll have to pay out. But his ownership stake in the Mariners will still face challenges, because the ruling requires that he absorb all of the couple's outstanding debt — in excess of $150 million on two accounts — as well as charity liabilities and costs on his lavish home estate in The Highlands.

Geoff Baker: 206-464-8286 or gbaker@seattletimes.com. On Twitter @gbakermariners. Read his daily blog at www.seattletimes.com/Mariners.

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