Explaining Southern California's economy

What are the chances that the Dodgers will create a regional sports network?

Dodgers New Owners

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The Dodgers' new ownership team paid $2 billion for the team and have a payroll over $200 million for 2013. They need a huge broadcast contract.

Better, it turns out, than they were a few weeks ago. The Dodgers — purchased by Guggenheim Baseball Management for $2 billion and with a 2013 payroll of almost $211 million — need to bring in a lot of revenue from a new broadcast contract. The team's current deal with Fox Sports, which concludes in 2013, is for $350 million. 

That's peanuts compared to the crackerjack (Sorry! Ballpark humor...) deal that Fox and the Dodgers concocted and presented to Major League Baseball a couple of weeks ago, says Forbes' redoubtable sports business correspondent, Mike Ozanian: $6.1 billion, to create a hybrid regional sports network/renewal deal with Fox.

The size of that jump in the numbers should surprise no one. Guggenheim Baseball Management — a sort of sports-oriented private equity sub-firm created by Mark Walter of Chicago-based Guggenheim partners, Stan Kasten, and Magic Johnson — paid $2 billion for the Dodgers on the assumption that the broadcast contract would be ginormous.

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Why LA should be glad Steven Cohen didn't buy the Dodgers

Hedge Fund Manager Charged In Major Insider Trading Case Appears In Court

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Former hedge fund portfolio manager Mathew Martoma exits a New York federal court after being charged in one of the biggest insider trading cases in history. He worked for CR Intrinsic Investors LLC, a firm that was associated with Steven Cohen's SAC Capital Advisors.

Speculation about the size of a potential deal for AEG — estimates range from $8-$10 billion — has quickly made Angelenos forget about the $2-billion-plus price that Guggenheim Baseball Management and Magic Johnson paid for the L.A. Dodgers earlier this year. Angelenos may have forgotten something else: Until Guggenheim Partners swept in from Chicago to add another half billion to the deal, the price for team was hovering around $1.6 billion and the leading bidder was Steven Cohen.

As I explained at the time, Cohen — one of Forbes' wealthiest Americans, with a net worth north of $8 billion — was one of the few bidders for the Dodgers who could basically write a check for the team. In fact, that seemed the likely outcome, until Mark Walter and Guggenheim emerged from the background. Cohen had even paired up with local L.A. billionaire Patrick Soon-Shiong, the richest guy in town. It wasn't enough in the end to trump Guggenheim's bid.

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AEG sale: Guggenheim Partners and Soon-Shiong form bidding group

Government And Business Leaders Speak At Urban Economic Forum In Los Angeles

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Magic Johnson greets Patrick Soon-Shiong during a Urban Economic Forum co-hosted by White House Business Council and U.S. Small Business Administration. They could be partners (sort of) if Soon-Shiong and Guggenheim Partners buy AEG.

Patrick Soon-Shiong — the richest man in Los Angeles, minority owner of the Lakers, and recently thwarted suitor for the Dodgers — has reportedly hooked up with none other than the investors who did the thwarting on his billion-plus bid for the Boys in Blue: Guggenheim Partners.

Or at least the adventurous investing subset of Guggenheim — a relatively staid Chicago-based manager of insurance-fund investments and other assets totaling around $180 billion — made up of CEO Mark Walter and executive Tim Boehly. They formed Guggenheim Baseball Management with Magic Johnson as a front man to snatch the Dodgers away from Soon-Shiong and hedge-funder Steven Cohen at the eleventh hour, with a bid more than $500 million above what anyone had expected.

It was the biggest deal in U.S. sports up to that point. But if Soon-Shiong, Walter, Boehly and whoever else they yank onboard manages to buy all of AEG, the deal would blow the Dodgers' $2 billion away. It could go for anywhere from $4 billion to even as high as $7 or $8 billion.

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Follow the AEG money: Patrick Soon-Shiong, Blackstone, and Guggenheim Partners

Government And Business Leaders Speak At Urban Economic Forum In Los Angeles

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Magic Johnson greets Patrick Soon-Shiong during a Urban Economic Forum co-hosted by White House Business Council and U.S. Small Business Administration at Loyola Marymount University. Soon-Shiong has been named as an potential bidder for AEG, the sports and entertainment giant.

Patrick Soon-Shiong — the richest man in L.A., with a net worth north of $7 billion — has been named as a bidder for AEG, the L.A.-based sports/entertainment giant that owns the Lakers, the Staples Center, and L.A. Live, among many other assets and properties worldwide.

AEG would be a pretty big bite — L.A. Live and Staples could fetch $1 billion apiece, and stakes in the sports franchises could add up to half a billion — so Soon-Shiong is reportedly not going it alone. He's joined with Guggenheim Partners' executives Mark Walter and Todd Boehly, who formed Guggenheim Baseball Management earlier this year to buy the Dodgers for more than $2 billion.

AEG has hired the Blackstone Group to manage its sale. Blackstone also handled the sale of the Dodgers, conducting the final auction at which Guggenheim swept in at the end with a winning bid that was half a billion more than the next closest buyer, hedge fund guy Steven Cohen, whose $1.6-billion offer had looked indomitable up to that point. Ironically, Soon-Shiong joined with Cohen late in the game, only to lose out.

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Frank McCourt: Businessman of the year?

LAPD Takes Over Security At Dodgers Games After Attack On Giants Fan

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Los Angeles Dodgers owner Frank McCourt. He sold the team, but kept the parking lots, to the tune of $14 million a year.

Now that the Los Angeles Dodgers have been officially sold, for the record-setting price of $2 billion, we can, without emotion, consider the accomplishment of former owner Frank McCourt.

You'd have to seriously consider him for the title of businessman of the year. Seriously.

Why? Because in 2004, McCourt bought the Dodgers for $430 million, using effectively none of his own money. After satisfying the various debts related to the team as it emerged from bankruptcy court into the arms of Magic Johnson's ownership group, Guggenheim Baseball Management (GMB), McCourt should clear something like $1 billion. He had to pay his ex-wife $131 million in their divorce settlement — but the side deal he did for the Dodger Stadium parking lots amounted to $3 billion, split between himself and what has been described as an "entity" associated with the new owners. At $150 million, his half wound up being worth close to $20 million more than Jamie's payout.

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