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”!
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.