Business Update with Mark Lacter

The Dodgers: what's next?

KPCC's business analyst Mark Lacter talks about what lies ahead for the Dodgers now that Major League Baseball has taken over the team.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, let's talk about the goings-on at Chavez Ravine. Does Bud Selig have an exit strategy for the Dodgers?

Mark Lacter: Well if he does, he’s keeping it to himself. Right now, the team is in limbo land - Frank McCourt still being the owner, but Major League Baseball being the overseer - and it could drag out that way for quite a while, easily into next season. Matter of fact, the guy selected by Commissioner Bud Selig to run the Dodgers, Tom Schieffer, says there is no timetable for when he'll be finished. But he did say that the team could be operated by Major League Baseball without impacting the play on the field, so there's nothing to stop the Dodgers from going into the playoffs or even the World Series (they should be so lucky).

Julian: What will the fight boil down to?

Lacter: McCourt believes that Selig has no right to take over his private business, especially since he says his huge television deal with Fox (it’s worth $3 billion) will clear up his financial problems - and he seems willing to do whatever it takes to hold on, which means litigation, which means appeals, which probably means a long, long time. Of course, we’ve been reminded Steve that baseball is not a typical business, it's basically a business association that's made up of franchises that are controlled by a single person and that person is the commissioner of baseball.

Julian: Selig is more powerful than your typical CEO, isn’t he?

Lacter: He is. A CEO has to report to a board of directors. Not so with baseball. The commissioner has very broad policing powers, and he could do almost anything that he deems to be in the best interest of baseball. This goes back to Judge Landis in the 1920s (he wanted to be called "High Commissioner"). And the courts have kept that arrangement in tact - one ruling said that a baseball commissioner had the same attributes as an absolute despot. So Selig is likely to have his way - eventually - but in the meantime, it’s hard to believe that there won’t be any impact from having an outsider make business decisions, and having McCourt struggle to pay the bills. Not to state the obvious, but this is a real mess.

Julian: So who on earth would want to buy this team?

Lacter: Lots of names have been thrown around - Mark Cuban, who owns the Dallas Mavericks, Larry Ellison, he's the billionaire founder of Oracle Corporation, Ron Burkle, he's the Beverly Hills billionaire who has his hands in all kinds of dealmaking, Magic Johnson, the Disney Company (that's a real wild one) - and there's even a movement under way for public ownership of the Dodgers --

Julian: Like the Green Bay Packers--

Lacter: Right, but I doubt that Selig would want to experiment with that. Of course, nobody has the first clue about who would really be interested. Certainly, the fundamentals are great - the Dodgers have a huge fan base in the second-biggest media market, which gives it an extremely high value.

Julian: It's a legacy ball club, though: what problems would you foresee in someone buying the Dodgers?

Lacter: The most obvious is that the new owner is buying into a troubled organization that could be entangled in all kinds of legal and financial battles for years down the road. We saw that a few years ago when the parent company of the Los Angeles Times was for sale. Once you dig into the particulars, it tends to look a lot less attractive. Also, what do you do with Dodger Stadium, which lacks the amenities you find in the newer parks? And let’s not forget having a boss to deal with - the Commissioner of Baseball - and if there's one thing that rich guys don't like it's having to take orders. So if and when the Dodgers do end up on the market, the search for a buyer could turn out to be a lot harder than it seems.

Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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