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.
Meet the Dodgers' new ownership team. Who do you think that tall guy in the XXXL jersey in the middle bearing number 12 is?
The new Dodgers owners are in the middle of a Vin Scully-emceed press conference on a gray and rainy day at Dodger Stadium (let's hope the old wedding adage about bad weather is proven true in this new betrothal). Magic Johnson provided the rousing message about making the team back into winners, living up to the legacy of the great players of the past.
Mayor Antonio Villaraigosa said the usual politician things.
Interestingly, Major League Baseball Commissioner Bud Selig didn't make it to centerfield.
Stan Kasten, the veteran baseball pro who'll be running Dodger operations, quipped that "he'd been under a gag order" for six months, then highlighted the "TLC" that Dodger Stadium, turning 50 this year, needs. He spoke of "enhancements," of bringing the experience "into the 21st century." Given the fan exodus that the Dodgers saw over the past few years, and given that the stadium is no longer thought of as a safe place to see a game, Kasten pressed home a message about serving the team's loyalists. He even rolled out an email suggestion box: firstname.lastname@example.org. And if that sounds kind of old school, he also nodded toward social media.
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Magic Johnson sits with Frank McCourt during a game between the Los Angeles Dodgers and the San Diego Padres. The Dodgers are finally sold. Now we can move on to the Padres!
Well, our long local nightmare has finally drawn to an anticlimactic close. After a briefly alarming delay last night, the Los Angeles Dodgers are now no longer the property or Frank McCourt but belong instead to Guggenheim Baseball Management, a group made up chiefly of Magic Johnson, Stan Kasten, and Mark Walter, the CEO of Guggenheim Partners. The purchase price was a whopping, record-setting $2.15 billion.
The thorn in the side of Angelenos who grew to...well, let's just say dislike McCourt over the years will be the former owner's 50-percent stake in the parking lots around Dodger Stadium. GBM will get to collect the parking fees for games, but McCourt will be able to propose development plans — although they'll have to be approved by the new owners.
The press conference is tomorrow. Don't know where it is yet, nor what time, but rumor has it that Walter will be in attendance.
Is this whole thing just a toy for some rich men playing with other people's money?
I'm glad that some really big questions about the Dodgers deal are finally being asked by one of the biggest names in financial journalism. Andrew Ross Sorkin, in his DealBook column at the New York Times, admits that for the past few weeks, he's been "puzzled" by the terms of the sale, with Guggenheim Baseball Partners — Magic Johnson, Stan Kasten, Peter Guber, and Guggenheim Partners — shelling out $2.15 billion for the team, a record price.
The winning bid was led by Mark Walter and his firm, Guggenheim Partners, which most people in sports — and frankly, even on Wall Street — know very little about. (Peter Guber, the film producer behind “Rain Man” as well as Stan Kasten, the former president of the Atlanta Braves, are also involved.)
A quick background check and some back-of-the-envelope math raises an obvious red flag: how on earth can this group of individuals afford to pay $2 billion in cash?
The answer is that they probably can’t — at least, not by themselves.
Mr. Walter, along with his colleague Todd Boehly, Guggenheim’s president, appear to be living out a childhood fantasy using other people’s money, some of whom may not even realize it.
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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.