The Cleveland Indians know how to pummel the competition on the baseball field, but the team is still looking for its first home run on Wall Street.

This month, team officials travel to New York and other major cities, not in search of a No. 1 starter, but to try to convince institutional investors that buying the team’s stock is a better investment than a few packs of baseball cards.

“I think we got painted with a broad brush by the national media as a souvenir stock — the kind of stock you bought to show off to your friends but you really don’t take seriously,” says Dennis Lehman, executive vice president of business development for the Indians. “We’ve got to do a better job selling this company as a long-term investment for value investors.”

Better, indeed. After opening at about $15 a share last June, the stock was languishing around $9 a share last week.

It could sink even lower without the committed efforts of the “official investment firm” of the Cleveland Indians, McDonald Investments Inc. McDonald, which took the Indians public in 1998 and uses Indians general manager John Hart as its commercial spokesman, owns nearly 14% of the company’s common stock, valued at about $5 million.

Even though McDonald has a “buy” recommendation on the stock, William B. Summers Jr.,the KeyCorp unit’s chairman and chief executive, made it clear the firm doesn’t view its holdings as a long-term investment. Rather, McDonald has bought hundreds of thousands of shares in an effort to protect its client.

“Our instruction was to be a market maker in this stock, and not to hold on to this as an investment,” Mr. Summers says.

When the Cleveland Indians Baseball Co. Inc.’s stock dipped to a 52-week low of $5.38 a share last summer, McDonald began buying large blocks — eventually owning 19% of the company, according to a Dec. 8 filing with the Securities and Exchange Commission.

“Our inventory of (Indians) stock is clearly heading downward,” says Mr. Summers, who is a member of the Indians board and personally owned 25,000 shares of Tribe stock, according to an April 6 SEC filing by the Indians that also reported McDonald’s 14% stake in the ball club.

Added Mr. Summers: “Clearly our goal is to own as little of this stock as possible and to put more into the hands of investors.”

Andy Zimbalist, a professor of sports economics at Smith College in Northampton, Mass., and the author of several books on sports franchises, says he believes the Indians management “emphasized the wrong things” when the team went public.

“Obviously it’s important that the team will remain competitive, and it clearly will,” he says. “But whether or not the Indians make it to the World Series has little bearing on the long-term value of this company’s stock.”

Instead of emphasizing wins and losses, the team should be marketing its franchise value, Mr. Zimbalist says. When one considers that the Texas Rangers were sold last year for $250 million, and the Indians’ market capitalization is hovering at around $55 million, then “this stock looks very, very cheap,” he says.

“There is no way the Indians should be valued less than the Rangers,” Mr. Zimbalist says. “I mean, we’re talking about the team that holds the record for consecutive sellouts.” He says the Indians’ stock should be valued around $19 a share.

That is precisely the message that Indians executives are trying to send to investors.

Ray Park, chairman of Park Corp. in Brook Park, Ohio, and a member of the Indians board, compared the franchise to a piece of prime real estate, which may not generate short-term earnings but still will appreciate in value over time.

It’s a message that “just might work” with institutional investors, says Morton Cohen, a self-described sports enthusiast and chairman of Clarion Capital Corp., a Cleveland venture capital firm.

“If the game of baseball remains attractive, and if corporations continue to pay these ridiculous prices for sports teams, then selling this just might fly” on Wall Street, Mr. Cohen says.

Still, Mr. Cohen has no plans to buy Indians shares of his own.

“Why would I own this stock? Just so I can wait for the team to be sold while the owner flies around in a jet?”

Crain News Service