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Group Led by Magic Johnson Wins Auction to Buy Dodgers for $2.15 Billion
By RICHARD SANDOMIR
Published: March 27, 2012
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.
In rejecting the deal with Fox Sports, Selig said that too much of the upfront payment would go to McCourt personally in part to fund his divorce.
Now, the Johnson group is poised to make a new TV deal that could be one of the most lucrative in baseball. The group can extend the team’s deal with Fox Sports-owned Prime Ticket during exclusive negotiations later this year, or can field offers from a bevy of possible suitors, including Time Warner Cable, which created two regional sports networks for the Lakers.
Such a deal could result in the creation of a regional channel dedicated to the Dodgers and guarantee rights fees that dwarf what Prime currently pays.
By RICHARD SANDOMIR
Published: March 27, 2012
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.
In rejecting the deal with Fox Sports, Selig said that too much of the upfront payment would go to McCourt personally in part to fund his divorce.
Now, the Johnson group is poised to make a new TV deal that could be one of the most lucrative in baseball. The group can extend the team’s deal with Fox Sports-owned Prime Ticket during exclusive negotiations later this year, or can field offers from a bevy of possible suitors, including Time Warner Cable, which created two regional sports networks for the Lakers.
Such a deal could result in the creation of a regional channel dedicated to the Dodgers and guarantee rights fees that dwarf what Prime currently pays.
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