As everyone who cares (i.e, the entire city of Los Angeles) now knows, Magic Johnson, Stan Kasten, Peter Guber and financing cohort Guggenheim Partners are buying the L.A. Dodgers for a whopping $2 billion, the highest price ever paid for a pro sports franchise (it blows away the $1.1 billion that the Miami Dolphins went for in 2009).
Somehow, between last week and last night, Magic Johnson and his partners went from reportedly scrambling to raise more cash on their $1.6-billion bid to bringing another $400 million to the table ($550 million, if you count the parking lot deal being done on the side with Dodgers owner Frank McCourt).
The bankruptcy court still needs to review this bid, but what about Major League Baseball? The owners who voted to allow the three bidding groups — Steven Cohen and Stan Kroenke were the other two — to advance to a final auction, conducted by McCourt, have now learned that McCourt and Guggenheim CEO Mark Walter apparently cut a deal with no auction, for substantially more than anticipated.
The upshot is that while L.A. gets a local sports legend in the front office (but financing coming from Chicago), McCourt — not exactly a beloved figure — gets a much fatter payday.
MLB may or may not revisit this. The advantage of the Cohen deal was that it took the Dodgers out of bankruptcy with limited debt (or maybe no debt — it's unclear how big a check Cohen, with a net worth of $8 billion, was willing to write). Early analysis suggests that Guggenheim, Magic, Guber, and Kasten figure they can sell the broadcast rights for the Dodgers in 2014 for somthing like $3-4 billion, rapidly paying off whatever leverage they took on to effectively blow the invidually deep-pocketed bidders out of the water.
But a bankrupt team with more than half a billion in debt being bought with a lot more debt? This may force some hard questions before the Dodgers officially change hands by April 30.
UPDATE: The Wall Street Journal describe the non-auction auction, and indicates that there might not be any debt on the deal, which kinda sorta defies belief at this sale price, but we'll see what happens as more details emerge:
The bid was described as a "100% cash offer." [Mark] Walter is making a significant personal contribution to the purchase price, with Guggenheim Partners, of which he is chief executive, playing a substantial role in financial contribution.