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MLB Club Sales
Written by Maury Brown   
Tuesday, 27 March 2012 23:15

Sale of the Los Angeles Dodgers


It took less than a day for Frank McCourt to make his decision in the sale of the Los Angeles Dodgers, going with what is likely the highest bid amount, but likely to have less cash. The Dodgers and McCourt announced an agreement under which Guggenheim Baseball Management LLC (“GBM”) will acquire the Los Angeles Dodgers for $2 billion upon completion of the closing process. If completed at the price agreed upon, it will smash the total amount ever paid for a North American sports franchise and become the highest amount ever paid for a sports franchise. That record currently belongs to the sale of the Miami Dolphins to Stephen Ross for $1.1 billion.

The purchasing group includes Mark R. Walter as its controlling partner, as well as Earvin “Magic” Johnson, Peter Guber, Stan Kasten, Bobby Patton and Todd Boehly. Mr. 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 Los Angeles Dodgers stated, “This transaction underscores the Debtors’ objective to maximize the value of their estate and to emerge from Chapter 11 under a successful Plan of Reorganization, under which all creditors are paid in full.”

Frank McCourt stated, “This agreement with Guggenheim reflects both the strength and future potential of the Los Angeles Dodgers, and assures that the Dodgers will have new ownership with deep local roots, which bodes well for the Dodgers, its fans and the Los Angeles community. We are delighted that this group will continue the important work we have started in the community, fulfilling our commitment to building 50 Dream Fields and helping with the effort to cure cancer.”

Earvin "Magic" Johnson stated, "I am thrilled to be part of the historic Dodger franchise and intend to build on the fantastic foundation laid by Frank McCourt as we drive the Dodgers back to the front page of the sports section in our wonderful community of Los Angeles."

The group that sees a strong LA presence also see Guggenheim Partners, of which Walters is the CEO, financing a large part of the deal. While we have been predicting that the deal would come down to Magic Johnson's group and the group led by hedge-fund magnate Steven Cohen, most believed Cohen would be selected due to the massive cash equity structure that saw $900 million in cash. The Johnson group will have to finance the majority of the deal.

Those watching the sale had wondered how Magic, with a smaller investment in the group, would factor in terms of controlling partner. If he had been made controlling partner, he would have become MLB's first African-American majority owner.

The deal is far from done, however. Depending on the structure, with the sale price being so high, MLB has the right to review the structure of the deal based on concerns of debt. As of publication, The Biz of Baseball had not heard whether the league would exercise that right. To add, McCourt must get a US Bankruptcy Court to approve the sales agreement by April 13. Also, Guggenheim Baseball Management has between now and just before April 30 to close the deal. McCourt is scheduled to make a $131 million payment to his former wife Jamie as part of their divorce.

In November of last year, we targeted the sale price of the Dodgers at $1.5 billion.



Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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