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How private equity is involved in baseball's juiciest conspiracy theory

Adam Lewis

This story is featured in the 3Q issue of the PitchBook Private Market PlayBook.

Major League Baseball's All-Star Week is a three-day exhibition intended to showcase the best that America's pastime has to offer. And that was true again in July, with young sluggers Vladimir Guerrero Jr. and Pete Alonso starring in a wildly entertaining Home Run Derby before the American League held on to beat the National League, 4-3, for its seventh consecutive All-Star Game victory.

But it was a pitcher, Houston Astros ace Justin Verlander, who might've drawn the most attention. A day before the star-studded game, he ripped into MLB for its perceived role in manufacturing a baseball that many say is behind the league's unprecedented home-run barrage. Back in 2017, Boston Red Sox lefty David Price, then-Tampa Bay Rays standout Chris Archer and a host of others began speaking out on differences in the baseball—when batters leaguewide combined to set a single-season home run record—but Verlander, a future Hall of Famer, publicly touted a full-blown conspiracy theory in an expletive-laden tirade.

"It's a f---ing joke," Verlander told ESPN. "Major League Baseball's turning this game into a joke. They own Rawlings, and you've got [MLB commissioner Rob] Manfred up here saying it might be the way they center the pill." (The pill is the rubber ball located in the center of the baseball.)

"They own the f---ing company," he continued. "If any other $40 billion company bought out a $400 million company and the product changed dramatically, it's not a guess as to what happened. We all know what happened. Manfred the first time he came in, what'd he say? He said we want more offense. All of a sudden he comes in, the balls are juiced? It's not coincidence. We're not idiots."

Why the outrage? In 2019, the league has already shattered the combined single-season home run record. And with 289 home runs entering Wednesday, the Minnesota Twins have already eclipsed the team single-season home run record (267) set by the New York Yankees last year. The 2019 Yankees are close behind, with 287 home runs as well.
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"If any other $40 billion company bought out a $400 million company and the product changed dramatically, it's not a guess as to what happened. We all know what happened. [...] We're not idiots."


Yet Manfred, who succeeded Bud Selig as commissioner in 2015, has denied knowingly changing the baseballs.

"If we make a decision to change the baseball, you're going to know about it before we change the baseball," he said in a press conference the day after Verlander's comments.

"[MLB] has done nothing, given no direction for an alteration in the baseball," he added. "As a matter of fact, we commissioned an independent study to make clear that there has been no intentional alteration in the manufacturing process. The biggest flaw in that logic is that baseball somehow wants more home runs.

"If you sat in owners' meetings and listened to people talk about the way our game is being played, that is not the sentiment among the owners for whom I work. There is no desire on part of ownership to increase the number of home runs in the game. To the contrary, they're concerned about how many we have."

So how is private equity involved in this controversy? Let's take a step back.

In June 2018, Seidler Equity Partners (SEP) teamed up with MLB to buy Rawlings Sporting Goods from Newell Brands in a deal worth $395 million. For Rawlings, the deal seemed a perfect partnership; the sports equipment maker could now consult with MLB when it makes the league's baseballs at its manufacturing plants in Costa Rica.

In a press release announcing the deal, MLB executive Chris Marinak said the league was "particularly interested in providing even more input and direction on the production of the official ball of MLB, one of the most important on-field products to the play of our great game."

That relationship seems especially interesting, given that Manfred pointed to the baseball's pill as a potential contributing factor in the increased number of homers, a determination likely supported by ongoing MLB-commissioned research at Washington State University's Sports Science Laboratory.

A separate study by analytics site FiveThirtyEight found baseballs in 2016 and 2017 had their core density changed, creating less drag when the ball is in the air and helping it travel farther. Dr. Meredith Wills more recently released an explainer for The Athletic, pointing out that the 2019 baseball has become rounder, the leather smoother and the seams lower, while the 2016 and 2017 baseballs actually had thicker laces that made the ball more spherical. 

"They [Rawlings] haven't changed their process in any meaningful way. They haven't changed their materials," Manfred told reporters in June. "There's two points that I would make, even in the report last year: The scientists identified the pill in the baseball—not what it was actually composed of, but the centering of the pill in the baseball—as something that could be a drag issue. To the extent that the pill is not perfectly centered, the ball wobbles when it's hit, creates more drag. We think one of the things that may be happening is they're getting better at centering the pill. It creates less drag."

A change in approach by hitters could also be contributing to the home run phenomenon. Many are now looking to "elevate and celebrate," knowing that getting the ball in the air will likely lead to more long balls. Plus, that strategy is a way to avoid meticulous defensive shifts that have made recording a successful base hit as difficult as ever. Both factors have led to teams largely ignoring "small-ball" tactics, such as stealing and and hit-and-runs, that were in vogue before the analytics revolution.

Regardless of the reason, the home run boom has put an increased spotlight on SEP, a largely anonymous middle-market PE firm based in Marina del Rey, CA. The firm has made investments across a range of industries including fitness, retail, healthcare and business services. SEP hit a milestone in November 2017 when it closed its sixth flagship fund on $600 million, marking its largest fundraise ever. But it's not much of a high-volume dealmaker, never eclipsing more than a handful of investments per year since its founding in 1992, according to PitchBook data.

Now, it finds itself entangled in one of baseball's great controversies. How did the firm get to the table with MLB and its baseball manufacturer in the first place? For one, SEP co-founder and partner Peter Seidler co-leads the San Diego Padres' ownership group, which means he was already closely connected to the league (and would be unlikely to undercut his business partner by pointing out any changes or structural flaws with the design of the baseball). The firm didn't respond to a request for comment for this story.

Seidler is also the nephew of former Los Angeles Dodgers owner Peter O'Malley, perhaps explaining how a firm with no current baseball-specific investments came to partner with MLB.

Rawlings' agreement to make the official MLB baseball and helmet reportedly runs out in 2021, which is about the time SEP might start looking to exit its investment if it follows the typical five-year PE holding period. In the meantime, expect SEP to try and avoid the limelight while MLB continues to deal with what exactly is going on with their most important product.

The answers are coming soon, according to USA Today, as Manfred could be ready to reveal the Sports Science Lab's findings at some point this season.

Editor's note: The web version of this story has been updated to reflect the new home run totals.