Parking lots? Yes, parking lots. The Dream Team of bidders for the bankrupt Los Angeles Dodgers, developer Rick Caruso and former Dodgers manager Joe Torre, has dropped out of the final rounds of bidding because current owner Frank McCourt insists on keeping the parking lots that surround Dodger Stadium.
The Los Angeles Times has obtained a copy of the letter that Caruso and Torre sent to Major League Baseball on Feb. 17. In it, they leave open the possibility of re-entering the fray. But in retrospect, we should have seen this coming. The parking lots aren't part of the bankruptcy proceeding. But it was widely assumed that McCourt would let them go to sweeten the deal.
Of course, McCourt is, down deep, a parking lot guy. This is where he made his money, back in Boston before he came west to try his hand an running a storied MLB franchise. Caruso is also a parking lot guy, in a manner of speaking. If he and Torre had been able to buy the Dodgers, he would have let Joe run the team while he set about remaking Chavez Ravine in the manner of the Grove and the Americana at Brand, his beloved, Vegasized shopping meccas in L.A.
To do that, he needs parking lots. Or more accurately, he needs to turn the existing parking lots into something...well, rather more than vast tarmacs of asphalt with lines painted on them. Parking structures, perhaps. With Apple Stores and musical fountains and J. Crews and high-end condos attached. I mean, look at the picture above. McCourt sees an ongoing revenue stream. Caruso saw...potential.
The Caruso-Torre dropout leaves nine bidders in the race, according the LAT's Bill Shaikin. My handicapping had two money guys, hedge fund king Steven Cohen and private equity lord Tom Barrack, facing off against Caruso-Torre for the final ownership rights. McCourt reserves the right to control the ultimate auction for the team, but you can tell that he's already exerting some influence over the finals.
Pull the parking lots and you take a strong bidder like Caruso who might not have quite as much cold, hard cash as Cohen or Barrack out of the running. Cohen is worth $8 billion all by himself, while Barrack's Colony Capital controls around $30 billion. But Caruso perhaps had the most convincing overall plan, while Torre, with his World Series wins as manager of the New York Yankees and playoff years with the Dodgers, is a baseball icon.
There are plenty of other bidders still in the game, including the Disney family and Lakers great Magic Johnson. There's even a youthful wildcard, Jared Kushner, who's Donald Trump's son-in-law. But you have to wonder if McCourt's clinging to the parking lots is going to lower the team's ultimate sale value. We were seeing the price tick steadily up from $1 billion to $1.5 billion. It could have theoretically gone to $2 billion.
Those valuations were tied to a combination of lucrative TV rights and the untapped potential of the Dodger Stadium environs. So in an odd turn of events, if McCourt plans to seek future revenue by being the parking-lot partner, any kind of bidding war could cool off. This could mean that bidders with smaller piles of money than Cohen or Barrack could come back into the game.
It could also mean that the really big money, which was probably prepared to overpay if it could get everything associated with the Dodgers, will now fade away. If Barrack, for example, wants to sell some of all of the team at a later date, in a typical private-equity exit strategy, he probably doesn't want to have to sell McCourt and the lots as part of the deal.
We're getting into crunch time now. The initial bidding process has to wrapped up in time for McCourt to conduct the final auction and choose a buyer by the first week in April, with the team changing hands by April 30.