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SAN DIEGO, CA - APRIL 5 : Magic Johnson (L) sits with Frank McCourt during the game between the Los Angeles Dodgers and the San Diego Padres in the home opener at Petco Park on April 5, 2012 in San Diego, California. (Photo by Denis Poroy/Getty Images)
The Dodgers and the organization's creditors began filing documents with the bankruptcy court in Delaware that's overseeing the team's sale. We didn't learn a whole lot beyond the known value of the deal: $2.15 billion, consisting of a cash offer, the assumption of the team's existing debt, and a side deal with outgoing owner Frank McCourt for the real estate around the stadium, currently blanketed with parking lots.
What we want to know is where the money that Guggenheim Baseball Management (GBM) — the entity that consists of Magic Johnson, Stan Kasten, Peter Guber, and financier Mark Walter of Guggenheim Partners — has brought to the deal is coming from. Remember, the final sale was conducted preemptively, without the anticipated auction that McCourt was going to conduct among the three final bidders. And the final sale price came in over half a billion higher than the initial bid than Major League Baseball approved from Guggenheim.
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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Laker great Earvin "Magic" Johnson has won the auction for the L.A. Dodgers. Price? $2 billion.
The Wall Street Journal is reporting that Magic Johnson and his group, including Stan Kasten and Peter Guber, have won an auction for the Los Angeles Dodgers. Johnson was among three bidders approved by Major League Baseball today.
Price? $2 billion, the largest ever paid for a pro sports franchise.
The losers were hedge-fund billionaire Steven Cohen, who had joined with L.A. billionaire Patrick Soon-Shiong in a bid that many — myself included — thought had too much financial firepower. The other defeated bidder was Stan Kroenke, owner of the St. Louis Rams. This clearly ups the chances that the Rams may become the L.A. Rams relatively soon, to provide the Downtown AEG stadium project with an NFL team.
Magic was the local favorite, so L.A. ultimately got what it (probably) wanted here: a hometown favorite running the show, even if the bulk of the financing came from Guggenheim Partners in Chicago. $2 billion, if the figure is correct, isn't chump change, either. Dodgers owner Frank McCourt stands to make twice what everyone thought he might make, when the bids were in the $1.5-billion ballpark.