From L to R: Earvin "Magic" Johnson, Stan Kasten and Peter Guber, three of the four front men in Guggenheim Baseball Partners, the group that placed the winning bid for the L.A. Dodgers.
LABiz Observed's Mark Lacter talked with KPCC's Steve Julian this morning about some lingering questions regarding the sale of the Dodgers to Magic Johnson, Stan Kasten, Peter Guber, and Guggenheim Partners — a group now collectively known as "Guggenheim Baseball Management." The big question is about the financing of the deal. It's reportedly an "all cash" deal, meaning no debt is going in. But a purchase price of $2.15 billion makes me wonder about that. So do the vast ambitions of Guggenheim, which currently include a deal that dwarfs the Dodgers sale: the $500 billion purchase of Deutsche Bank's U.S. assets.
Still, Can the Magic team really be bringing that much cash to the table? Back when the price was speculated to be around $1.5 billion (that was two weeks ago), the guy with the largest checkbook was hedge-fund king Steven Cohen, who was thought to be bringing in personal net worth of $8 billion and nearly $1 billion is cash.
A couple of weeks ago, Guggenheim Partners was an under-the-radar funding source for Magic Johnson and Stan Kasten's successful marquee campaign to buy the L.A Dodgers. Just a $125-billion private firm in a world of much bigger fish. Goldman Sachs has almost a trillion in assets under management. Morgan Stanley has over $800 billion. Guggenheim hangs out in much lower reaches, with other broker-dealers in the realms below the exalted heights of major Wall Street investment banks.
Under CEO Mark Walter, however, Guggenheim is moving aggressively to break out of this mold and distance itself from shops like MF Global, the bankrupt broker-dealer that former Goldman CEO Jon Corzine was trying to bring into the big leagues — before a failed bet on European debt and some possibly illegal maneuvers with client money sent the firm into bankruptcy (and could send Corzine to jail).
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Dodger Stadium during a night game.
Mark Walter, the CEO of Guggenheim Partners and "controlling partner" of the Guggenheim Baseball Management team that includes Magic Johnson and is buying the Dodgers for $2 billion, has finally commented on the burning issue of the sale: What's going on with Frank McCourt and the parking lots?
Thanks to Mark Lacter at LA Biz Observed for digging this up:
ESPN is reporting that the Dodger sale includes a 50 percent stake in the parking lots, which are said to have a value of $300 million. Current owner Frank McCourt will keep the other half.[Controlling owner Mark] Walter said he understood the concerns, but insisted that McCourt will only have an "economic interest" in the land and not any control or influence over it. "Frank's not involved in the team, baseball, any of that," Walter said. "What Frank does have is an economic interest in land, but we control the parking and all the fan experience and that's of the utmost importance to us."
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The bleachers stand empty at Dodger Stadium in Los Angeles, California. You can see Frank McCourt's precious parking lots in the background.
Forget that Magic Johnson, Stan Kasten, Peter Guber, and Guggenheim Partners — as "Guggenheim Baseball Management" — are buying the L.A. Dodgers for $2 billion. Everyone really wants to know what's going on with Frank McCourt and the massive parking lots!
At L.A. Weekly, David Futch summarizes:
Though many wanted him gone for good, under the sales terms, McCourt will be co-owner of the surrounding lands. In essence, he purchased the Dodger acreage from himself along with his new partner, a still-unnamed affiliate of Guggenheim.
McCourt has dreamed of a major development that could substantially alter the deliberately scruffy, artsy Echo Park vibe. Locals fear that the tin-ear McCourt will champion something along the lines of The Grove in the Fairfax District, an upscale mall that’s anethema to Eastsiders — many of whom make a sport of dumping on cookie-cutter chain stores and Muzak drifting from outdoor speakers shaped like boulders.
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New Dodgers owner? Earvin "Magic" Johnson arrives at the Annual Harold Pump Foundation Gala Honoring Magic Johnson And Bill Russell at the Beverly Hilton Hotel, on August 13, 2009 in Beverly Hills, California.
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.