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The bleachers stand empty at Dodger Stadium in Los Angeles, California.
Just a quick update on the sale of the Los Angeles Dodgers. The bids were submitted last week and already a few potential buyers have dropped out. Most prominent among these is Dallas Mavericks owner Mark Cuban, who tried to buy both the Chicago Cubs and the Texas Rangers when they available were (he failed in both cases).
Magic Johnson, the Lakers superstar and successful regional businessman, is still in the running, however. As are two of the big money guys who've been discussed as prospective owners: East Coast hedge-fund king Steven Cohen; and LA-based private-equity duke Tom Barrack.
Additionally, St. Louis Ram's owners Stan Kroenke — a player whom I hadn't written about — made the cut, which was managed by Dodgers owners Frank McCourt in concert with the investment back that's advising him on the sale, Blackstone Advisory Partners. Given that the Rams could be the new LA NFL franchise, depending on how things go with the AEG Downtown stadium project (the project is still in search of a team, and it seems to be down to the Rams and Raiders), I'm not sure how Kroenke could own two sports teams in town. But that's for the NFL and Major League Baseball to sort out.
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There's been plenty of speculation about who might buy the Dodgers out of bankruptcy. But today's the day that the bids are going to start coming in. This is a "soft" deadline, meaning that yet another rich guy who wants to buy the team could still put in a bid. But at this point we have a fair idea of who the major players are likely to be.
The Dodgers could sell for anywhere from $800 billion to $2 billion, based on reported speculation. At the LATimes, Bill Shaikin does the math and concludes that Dodgers owners Frank McCourt is on the hook to various creditors and his impending ex-wife for just north of $1 billion. So a we're probably talking about a sale price of around $1.5 billion.
Here's how the sale process will work. McCourt and Blackstone Advisory Partners will take the initial bids. They expect 20, and Major League Baseball says it will consider 10. However, given that there's only a few months between now and April 1, when it's anticipated that McCourt will announce a winning buyers, there probably won't be that many.
Bill Shaikin of the LA Times is reporting that Tom Barrack, an LA-based billionaire real-estate investor, has joined the ever-expanding list of potential bidders for the Dodgers. The team was put into bankruptcy by embattled owner Frank McCourt and has to be sold to somebody by April 30.
Barrack ads some new local flavor to the action. I feel obligated, however, to explain how the various Very Rich Men who are interested in owning the team made their money — and what that could tell us about how they'd run the Dodgers.
I've already tackled how Steven Cohen amassed his hedge-fund billions. Now I'll take a look at Barrack.
At base, the guy does real estate. From the helm of his $34-billion private-equity shop, Colony Capital in Santa Monica, Barrack manages this most debt-intensive of investments. His mojo is to zero in on "distressed" assets — properties that could be worth a lot more than their apparent face value and, being real estate, provide an obvious form of collateral to use for leverage — and, to put it simply, fix them up. This is from a New York Magazine profile of Barrack, a 63-year-old USC grad, that appeared in late 2010:
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Clayton Kershaw and teammates of the Dodgers celebrate a two run homerun of Matt Kemp for a 2-1 win over the St Louis Cardinals at Dodger Stadium on April 17, 2011.
As KPCC's Corey Moore reported yesterday, billionaire hedge fund king Steven Cohen wants to buy the Los Angeles Dodgers. You'll recall that owner Frank McCourt, mired in an acrimonious divorce proceeding and dueling with Major League Baseball Commissioner Bud Selig, put the team into bankruptcy in June. That desperate gambit failed and McCourt has given up the fight. The team now has to find a new owner by April 2012.
Enter Cohen, with an estimated net worth of $8 billion, but more importantly, a reputation as Wall Street's most successful — and controversial — trader. In fact, few men more perfectly represent the ascent of the swashbuckling trader on the Street than Cohen, who started his hedge fund, SAC Capital Advisors, in 1992. It's now worth $12-$14 billion.
With coin like that, Cohen could easily afford to bid for the Dodgers, whose value has been pegged at around $1 billion.
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Frank McCourt has lost control of the Dodgers franchise as Bud Selig and the Major League Baseball association has seized ownership.
It's not clear to me that big-time sports is a business in any meaningful sense of the term. It seems based on economic principles drawn from the pre-capitalist era, when circuses roamed the landscape and people put their faith in shamans. But the way the Dodgers/McCourt psychodrama is playing out here in LA has led me to revise my view. Major League Baseball isn't even charming in some retro-feudal sense. It operates like a backwater banana republic, ruled by the iron hand of a Maximum Leader, Commissioner Bud Selig.
The sports media seem to have accepted this yucky paternalistic arrangement, which is worrisome. Here's Bill Plashcke in the LA Times:
Bud Selig owes us. The baseball commissioner who allowed a seriously underfunded McCourt to take the team from desperate Fox in 2004 owes us a strong and viable owner this time.
Selig will pick the person, believe me. No sports commissioner has a stronger influence over who is allowed entry in his league. Selig will pick this owner like he has picked other owners, but never before has his selection been more important, more mandated, and more tied to his legacy.
Selig owes us. He owes Los Angeles a well-funded, competitive-minded businessperson who understands that the Dodgers are about a family experience, Hollywood entertainment and, most important, winning.