(From Forbes)
Show Me the Money
Monte Burke, 04.01.02

A Birmingham lawyer is bent on buying a Major League Baseball team. His mysterious finances may send him back to the dugout.

Donald Watkins is the kind of team owner you want to root for. The 53-year-old Birmingham, Ala. investor has submitted a $125 million bid to buy the Minnesota Twins franchise from Carl Pohlad, who has owned the team since 1984. If he wins, Watkins would break the color barrier in Major League Baseball's boardroom the way Jackie Robinson did on the diamond 55 years ago. Good news for Minnesota taxpayers: Watkins says he'll build the team a new stadium without asking for a single dollar of government funding. Despite potential bids from groups of investors who live in Minnesota, Watkins appears to be the front-runner in landing league approval.

If, that is, he can come up with the money. To buy a team, finance a stadium and field a competitive ball club, Watkins will need deep pockets. Does he have them? Reports in the New York Times and Fortune peg Watkins' net worth at $1.5 billion, a figure he does not dispute. "I don't expect anyone to contradict what's been published," Watkins says. But you won't find this man on the recent Forbes list of billionaires. We have reason to doubt the number.

Raised middle-class in Montgomery, Watkins attended the University of Alabama law school after receiving an NAACP scholarship. After graduation he worked for Fred D. Gray, the civil rights lawyer in Montgomery who was Rosa Parks' lawyer during the bus boycott. In 1979 Watkins established his own practice, making headlines in 1991 representing Auburn University football player Eric Ramsey, who had accused the school's coaches and alumni of paying him to play ball. Pat Dye, the coach and athletic director, resigned, and the school was placed on probation.

In 2000 Watkins founded Alamerica Bank. Based in Birmingham, the bank has $36 million in assets and a book value of $9.8 million, making Watkins' 60% stake worth $12 million at the two times book value that small banks typically are worth in an acquisition. While that will buy you a lot of caviar, it won't cover the signing bonuses needed to fill a locker room.

Watkins says the rest of his fortune lies in ethanol, a fuel additive usually made from corn. Watkins' one-person energy shop, Watkins Pencor, is a principal owner in Masada Oxynol, a Birmingham company that has devised a way to turn municipal solid waste into fuel-grade ethanol. Masada, also part-owned by cable pioneer Daryl Harms, has six patents and a contract to operate a plant in Middletown, N.Y. Plans are underway for many more, Watkins says, though no plant has yet been built.

The economics of these waste-to-energy plants hangs on two things. One is the huge federal subsidy for ethanol; since gasohol that is 10% ethanol gets a 5.3-cent-a-gallon fuel tax exemption, the ethanol is effectively good for 53 cents a gallon in federal handouts. That makes ethanol worth $1.30 a gallon. The budget in Middletown calls for producing 9.5 million gallons a year.

The other part of the revenue stream comes from money paid by municipalities to dispose of garbage. The Middletown plant is supposed to take care of 230,000 tons a year and collect $65 a ton in tipping fees. So there is another $15 million a year of revenue.

Is this like printing money? Not quite. This is going to be a complicated and expensive plant, capable of recycling or digesting 90% of the input stream. Watkins estimates that the plant will cost at least $200 million to build; he claims he has solved the financing problem by preselling stakes in 45-year revenue streams from this and other ethanol plants. Buyers? Watkins won't say who they are or what they are paying. He does note that the investors are covered by "efficacy insurance" from Hartford Steam Boiler Inspection & Insurance Co. Hartford Steam Boiler, a subsidiary of AIG, declines to comment on that. In any event, the bulk of the Watkins fortune, whatever it amounts to, seems to be based more on what's to come than in the here and now.

If his bid for the Twins isn't accepted, Watkins says, he will try to buy the Montreal Expos, a shell of a team currently owned by the league itself. But whether he winds up with the Twins or the Expos, Watkins remains confident he'll score. "I am going to have a baseball team," he says emphatically.

To do so, Watkins will have to have better luck than he did a few years ago when he sat on the board of Alabama State University. Watkins wanted to turn the school's sports into a big-time Division One program and thought that building a first-class stadium was the key. After making a big stink and gaining some momentum, he abandoned the plan in 2001.