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Stupid Deal of the Decade? Magic Johnson Group Buys LA Dodgers for $2 billion…

There are good investments…and bad.  Paying out $2 billion for a Sports Franchise in a sport which is on the way down – is definitely one of those “bad” investment ideas. Seems to me $2 b could be better spent buying a NFL Franchise (Several of which are actually worth $2 B or more) or investing in Mixed Martial Arts (MMA), which is about the fastest growing professional sport out there right now. The list of the Top 50 Professional Sports Franchises in the World looks like this.

So… Why but the Dodgers?

I hope Magic hasn’t lost his business “magic”!

Group Led by Magic Johnson Wins Auction to Buy Dodgers for $2.15 Billion

In a quick, dramatic end to the year-long financial crisis of the Los Angeles Dodgers, the team’s owner, Frank McCourt, agreed to sell the team Tuesday night for $2.15 billion to a group headed by Magic Johnson, the Lakers’ Hall of Famer.

The Johnson group’s deal, financed largely by Guggenheim Partners, a Chicago-based financial services firm, includes $2 billion for the team (minus $412 million in debt) and $150 million to create a joint venture with McCourt on the parking lots and land surrounding Dodger Stadium. The deal is valued at $2.3 billion.

If the all-cash deal is approved by the judge overseeing the Dodgers’ bankruptcy, the price will be the most ever paid for a professional sports team.

The most ever paid for a franchise is at least $1.4 billion for Manchester United. The Miami Dolphins were sold for $1.15 billion and the Chicago Cubs were acquired for $845 million. McCourt, who bought the team in 2004 for $421 million, had resisted selling the real estate, preferring to rent the lots for $14 million a year to the team’s new owner. But the Johnson group suggested the joint venture on the land, said a person briefed on the sale but not authorized to speak publicly.

The deal will let McCourt repay a $150 million loan made to the team last year by Major League Baseball and his $130 million divorce settlement to his ex-wife, Jamie.

The winning bid defeated one by Stan Kroenke, the billionaire owner of the St. Louis Rams, Colorado Avalanche and Denver Nuggets, and a second from two other billionaires: Steven A. Cohen, the hedge-fund manager who recently bought a small share of the Mets, and Patrick Soon-Shiong, who made his money in pharmaceuticals.

The final steps in the process came rapidly. McCourt’s investment banker, Blackstone, asked each bidder to raise their offers Monday night.

Baseball owners approved all three bidders Tuesday afternoon and later in the evening McCourt selected on the Johnson group. An announcement was made shortly after 11 p.m. eastern.

In addition to Johnson and Guggenheim Partners, the winning group includes Stan Kasten, the former president of the Atlanta Braves and Washington Nationals, and Peter Guber, the film producer and head of Mandalay Entertainment.

The agreement to sell the Dodgers to Johnson’s group appears to end an extraordinary year for the team. It filed for bankruptcy last June after Selig blocked a new, long-term billion-dollar cable TV deal between the Dodgers and Fox Sports. Selig had sharply criticized McCourt’s management of the team — in particular his use of team money for his and his ex-wife’s personal use — and installed a monitor to oversee the team’s operations. McCourt called that a hostile takeover.

 
 

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Another Bubble?

 

Dotcom Bubble 2.0

Remember that crazy dotcom bubble in the late 1990s and the huge bust that followed? It looks like we’re about to sit through the same movie all over again.

That’s what Fred Wilson, a well-known venture capitalist, has been saying lately. Wilson, who runs Union Square Ventures, a New York–based VC firm, says he sees “storm clouds” on the horizon, and he worries that we might be headed toward another disaster. “When I look at where we are right now, it reminds me so much of 1999 and frankly it scares me,” Wilson wrote recently on his blog. The 49-year-old venture capitalist’s fear is understandable. In 1996 he cofounded a New York venture fund called Flatiron Partners, which did booming business investing in Internet companies—until the bubble collapsed, wiping out a bunch of its portfolio companies. Wilson and his partner pretty much shut down Flatiron in 2001, while still helping to manage some of its portfolio companies that had survived.

Undaunted, Wilson and a different partner launched Union Square Ventures in 2005, and he’s riding high once more, with smart investments in some of the hottest new companies on the Web, including Twitter, Foursquare, and Zynga. Nonetheless, Wilson has grown nervous in recent months. He says too many investors are pouring money into Web-based startups, driving valuations to ridiculous heights. In days gone by, the rule of thumb was that a company with two or three employees would be valuedat $5 million or less. But “today in the early-stage market we’re seeing two- and three-person teams that are getting $30 million, $40 million, $50 million valuations, and I think that’s not right,” Wilson said onstage at a Web 2.0 conference in San Francisco last month…

I beleive that the VCs have gone waaaay off the edge in productivity improvement applications, and in the valuation of the WWW social networking utilities, whose revenue model is at best – tenuous and highly volatile.

Yeah – I tend to agree there will be another meltdown – but we are talking about a really small bubble relative to the dot com meltdown which resulted in 3 million lost jobs, and the fall of dozens of major companies from which we have never recovered.

The only real question is – in an already devastated economy, would this be the straw which broke the camel’s back?

And I am not disagreeing with the Capitalist Maxim the “Greed is good”… It’s just that other old Maxim – “Pigs get fed, hogs get slaughtered” that tends to ring so true at times like this.

 

 

 

 

 

 
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Posted by on December 3, 2010 in American Greed

 

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Getting Hot! Brazils New Emerging Venture-Tech Capital

Something that seems sadly missing in the US of late, Brazil is on it’s way to becoming a tech destination.

Amazing what a little investment capital will do.

Seems to me we’ve lost our way – focusing entirely on productivity improvements, and almost noting on core product which creates industries.

Walter Silva, Marcelo Marzola and Phillip Klein of Predicta.net

Brazil’s Start-Up Generation

Marcelo Marzola, the 33-year-old co-founder of Predicta.net, is a perfect example of how hot Brazil’s $1.6 trillion economy has become — and why its entrepreneurs are now getting their phone calls returned by venture capitalists after a decade of “You’re from where?”

Marzola was invited to present his company’s free online behavioral-targeting tool, BTBuckets, at the Google I/O Web-developer conference in San Francisco in May. To get ogled at the Google conference is the goal of any Web developer. Marzola earned rave reviews for creating what has become a de facto standard, used on more than 2,000 websites in 90 countries by such corporate titans as Pfizer, Motorola and Unilever. The product fills an overlooked niche in the industry by allowing websites to segment their users according to their online habits and then direct targeted content and advertising to them in real time. “It has turned the industry on its head, and it’s gaining mass recognition,” says Daniel Waisberg, an industry consultant and a former chair of marketing of the Web Analytics Association.

The spotlight has attracted about 10 VC firms to Marzola over the past six months. His track record will impress them: the company has been growing at a compound rate of 40% annually since 2005 and has a profit margin of more than 20% on $12 million in revenue. Now he is in the midst of closing a deal with DFJ FIR Capital, a local venture firm with $160 million under management, to raise $15 million to $20 million in exchange for a 35% equity stake to fund his company’s expansion efforts. BTBuckets plans to open offices in major markets in Latin America and the U.S. Read the rest of this entry »

 
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Posted by on August 23, 2010 in News

 

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