The $2 billion sale of the Los Angeles Dodgers and Dodger Stadium to a group that includes Magic Johnson and Stan Kasten is causing shockwaves in the baseball community. Here’s a roundup of notable reactions.
The Dodgers, Dodger Stadium and the land surrounding the ballpark will be purchased from Frank McCourt by Guggenheim Baseball Management LLC, with Mark R. Walter as its controlling partner, as well as Earvin “Magic” Johnson, Peter Guber, Stan Kasten, Bobby Patton and Todd Boehly. McCourt and certain affiliates of the purchasers will also be forming a joint venture, which will acquire the Chavez Ravine property for an additional $150 million. The team is reporting the sale price as $2 billion, the most ever paid for a North American sports franchise and associated assets.
ESPN’s Buster Olney says the key to the sale is unlocking the potential revenue from a television deal:
The investment return for this new ownership group will come largely through its television revenue, and the way the Dodgers can make the team more watchable is by building a winner — the kind of winner that the O’Malleys fostered, as the Dodgers won championships in 1959 and 1963 and ’65 and ’81 and ’88, and also played in the World Series in ’66 and ’74 and ’77 and ’78. The Dodgers were in the playoffs constantly and led by recognizable stars, from Koufax to Drysdale to Steve Garvey.
Under the Guggenheim/Magic/Kasten group, there will never be an offseason in which their biggest Dodgers acquisitions are No. 4 starters and utilitymen, as we saw this last offseason. This team has very little payroll obligation going forward, beyond Matt Kemp’s new eight-year, $160 million deal, and they have enormous room to grow, and there will be money spent.
The real prize is TV money. Rights to live MLB games have become incredibly valuable, with media companies prepared to pay billions of dollars to broadcast even a struggling team’s games.
A deal that Mr. McCourt tried to negotiate with Fox Sports would have been worth $3 billion to the Dodgers, but was rejected by MLB commissioner Bud Selig. Now McCourt has been forced to sell, the new ownership group will reap the benefits of a new TV deal, due to begin in 2014. The Dodgers can expect a massive windfall once this is negotiated.
Yet even with a clean slate, the Dodgers have serious problems to address. Most pressing is the worrying slide in attendance at Dodger Stadium. The average home attendance last season was just over 36,000 – that’s only 64% capacity, and down from almost 44,000 fans per game in 2010.
Columnists for the hometown Los Angeles Times split on their evaluation of the deal. Noting that Magic Johnson’s employee, Lon Rosen, was involved in the McCourt debacle at the beginning, T.J. Simers worries that fans are just exchanging one bad operator for another:
The thing is, as good as Magic-for-McCourt looks right now, we just don’t know.
We know we love the guy as a basketball player, but not so much as a talk show host. We know almost nothing about the Guggen-whatever thing that will own the team….
Maybe it’s just me, but I would hope to greet the Guggen-whatever with tough questions.
Was this primarily a TV network buy? Is Guggen-whatever going to be any different than Fox owning the Dodgers? Why would you agree to allow McCourt anywhere near Dodger Stadium?
After successfully boycotting Dodger Stadium enough to convince MLB to run McCourt out of town, Dodgers fans are distrusting and disillusioned, and Johnson’s group is the only one with the credibility to quickly bring them back.
Johnson, whose business acumen equals his former Lakers court sense, will become a full-time team executive with an office in Dodger Stadium and a giant welcoming reach that will stretch to every corner of the disaffected Dodgers nation. Kasten, a traditional baseball guy who built the perennially contending Atlanta Braves from scratch and help shape the surging Washington Nationals, was interested in the Dodgers before McCourt bought the team in 2004 and has long held a dream of restoring them to greatness.
When I interviewed Johnson in December when The Times broke the news of his decision to pursue the team, he said, “The Dodgers are my next big thing. This is not just millions of my money, this is dear to my heart. This is bringing back the brand for the people of Los Angeles.”
USA Today’s Bob Nightengale explains the impact of the deal for every MLB owner and issues a cautionary note:
No wonder MLB executives are holding their breath and hoping there are no poison pills in the deal; once it goes through, everybody’s franchise value just went soaring.
The only guy happier than McCourt, who paid $430 million for his team in 2004, was Mets owner Fred Wilpon. His troubled franchise is now worth a whole lot more than a day ago. Now, with New York hedge fund king Steve Cohen losing out in his bid along with St. Louis Rams owner Stan Kroenke, Cohen could step in and offer a deal that Wilpon can’t resist….
Yet, before Dodger fans envision George Steinbrenner in their heads, buying every free agent in their land, this group likely will be financially responsible. Check out Kasten’s record. He used to be president of the Washington Nationals and Atlanta Braves. They never spent wildly on a free agent under his watch.
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