A good Bill Conlin article, About the phillies Options

[Cowboyhater]

Bill Conlin | They don't call 'em limited partners for nothing


I'M GOING TO WRITE this just once because the only thing more dull than business items in a tabloid sports section are sports items in the Wall Street Journal.

However, not a day passes without readers exhorting me to blow the whistle on the phantom Phillies owners, the ones I call The Teflonics. Many of you refer to the ballclub's four limited partnership entities in less endearing terms.

Out them, you command. Publish their photographs, preferably under a "Wanted: Dead or Alive" headline. Prominently list their addresses, both actual and e-mail.

Challenge them to speak up, either individually or as a group, condemning Phillies president Dave Montgomery and general manager Ed Wade for the baseball mess they have made.

All your well-intended outrage is as futile as spitting into the wind. The great engine of the American Free Enterprise system protects the Teflonics from your wrath - and mine. Their Guardian Angel is a corporate omerta guaranteeing that silent partners in limited partnerships from sea to shining sea will have their anonymity, liability and accountability protected by law. Not to mention their tax advantages.

Starting with the first group Bill Giles assembled in 1981 to purchase the Phillies from the Carpenter family for $30.125 million, the identity of the limited partners has been published in the media guide each season. The group has changed some over time, most notably after Taft Broadcasting sold its 47 percent to the other entities in 1986. In recent years, Bob Levy (whose share was in his wife's name) and former Sixers owner Fitz Dixon have cashed out. John Middleton bought in with fifth-generation Philadelphia old money, and when Montgomery replaced Bill Giles as general partner in 1997, The Bopper took his shares and became a limited partner.

Here they are once more in all their faceless, gray - no pictures please - cardboard cutout selves, and in the order of their holdings (none has as much as 50 percent):

• Claire S. Betz. She's a nice old lady who loves going to spring training for a few days and splits time between the Main Line and her digs in Key Largo, Fla.

• Tri-Play Associates. These are the Buck Brothers. And, trust me, a sign on Monty's desk should read, "The Buck REALLY Stops Here." Alexander K. Buck, J. Mahlon Buck Jr., and William C. Buck are venture capitalists (TDH Capital Corporation).

• Double Play, Inc. (John Middleton).

• Giles Limited Partnership (Giles family).

The way it works is this: The general partner (originally Giles) assembles the group, negotiates the sale and gets major league approval. In exchange for his efforts, the managing general partner gets a negotiated percentage interest as a finder's fee, plus a salary and performance bonuses that can be in the form of additional points.

Only in America. Giles' only investment when he formed the original group was less than $100,000 in proceeds from the settlement of his father's estate.

Only in America II. Dave Montgomery came aboard in 1971 to sell season- and group-ticket plans. As his responsibilities increased to CEO toward the end of the Giles era, Dave was rewarded with several points. And more shares accrued to him when he became general partner in '97.

So, OK, let's say I'm a limited partner and I bought in a few years ago. I've met all the cash calls, endorsed the big payroll bumps the past few seasons, but I'm very disappointed with the results. I'd like to see Montgomery replaced. I'm sick of the country-club snickers. I want a winner.

Well, guess what, podnah?

Limited partner means precisely that. You assigned all the power and the mule work to the general partner when you bought in. Unless you have some really naughty pictures of Monty or can prove misfeasance and worse, it would be hard to dislodge him. And you probably agreed in writing when you signed your deal that you would refrain from public criticism of the Phillies' leadership.

How tough is it to unseat a ballclub general partner who refuses to step down? Just ask the limited partners in Cincinnati who battled in court for years to force out Reds general partner Marge Schott. The old gal finally got tired of the hassle and took the money, but that is about the only sure way.

But why are the Teflonics so willing to just make themselves even more invisible while Montgomery and his front-office people are strafed by daily criticism?

Because they don't have a legal pot to hiss in, that's why. Limited partners can't participate in the daily operation of the business. They can't even vote to put brighter lights in the lavatories. And that's not necessarily a bad thing. The general partner is responsible for all debt, all lawsuits, and if he really screws up and becomes the first "owner" in baseball history forced to sell at a loss, an LP's loss is limited to the original investment. So, it's always in for a dime, out for a dollar.

Assume John Betz bought 30 percent in 1981. That's $9.3 million. Let's say his widow's holdings have expanded to 43 percent.

You hear a wide range of values put on sports franchises. But with the income generated by the move into the Money Pit, the Phillies' value has probably edged into the $350 million range. That's a potential $150.5 million golden parachute for old Claire Betz.

Bottom line: Don't look for the Teflonics to launch a Monty Must Go campaign anytime soon. When you have a license to print money, don't blow up the press.


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