Magic Johnson Team Wins L.A. Dodgers with $2 Billion Bid
Former Los Angeles Lakers superstar Magic Johnson and partners have won the bankruptcy court auction for the Los Angeles Dodgers, the team and owner Frank McCourt announced Tuesday night. Johnson's group has agreed to buy the franchise from its beleaguered owner for a record $2 billion, the highest price ever paid for a U.S. professional sports team.
The deal still must be approved by U.S. Bankruptcy Court in Delaware; a hearing is scheduled for April 13. McCourt threw the team into Chapter 11 bankruptcy last June while he fought through a contentious divorce with his then-wife Jamie McCourt that brought to light the Dodger organization's financial problems.
Johnson's ownership group largely is funded by Chicago-based financial-services firm Guggenheim Partners, and the company's CEO, Mark Walter, would be the controlling owner. The group also includes former Atlanta Braves and Washington Nationals president Stan Kasten and Mandalay Entertainment CEO Peter Guber. (Guggenheim Partners is an owner of New York-based Prometheus Global Media, parent company of The Hollywood Reporter.)
"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," Johnson said in a statement.
The ownership group, called Guggenheim Baseball Management Llc., also includes businessmen Bobby Patton and Todd Boehly, according to a statement from the Dodgers.
The $2 billion price would shatter the previous record for the sale of a U.S. sports team, set in 2008 with the $1.1 billion purchase of the NFL's Miami Dolphins by Stephen Ross, CEO of Related Cos. In the lead-up to the sale of the Dodgers, analysts had predicted the team, winner of six World Series titles and one of Major League Baseball's most storied franchises, could fetch as much as $1.6 billion.
McCourt and "certain affiliates of the purchasers" would acquire the Chavez Ravine property on which Dodger Stadium is situated for an additional $150 million, according to a statement from the team. Johnson's group would have control of the parking lots that surround the stadium, according to the Los Angeles Times. Transfer of the team is expected to take place by the end of April so that McCourt can satisfy terms of his divorce settlement that require him to pay his ex-wife $131 million, which is due April 30. The baseball season begins April 4.
The deal was announced just hours after Major League Baseball approved three finalists in the bidding for the team. Blackstone Group Lp., a New York-based asset management and financial-services firm, handled the sale process. The two other bidders in the running included a group led by New York hedge fund billionaire Steve Cohen of SAC Capital Advisors and L.A. biotechnology entrepreneur Patrick Soon-Shiong, and Stan Kroenke, owner of the NBA's Denver Nuggets and the NFL's St. Louis Rams.
Last April, Major League Baseball took over control of the Dodgers from McCourt and appointed a trustee to handle the team's business and day-to-day operations. McCourt had required a $30 million personal loan from Fox, the team's broadcaster, to meet the Dodgers' payroll. He had been in a messy fight with Jamie McCourt over ownership of the team; their divorce was finalized in January.
"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," McCourt said in a statement.
Once the deal is completed, attention quickly will turn to the team's broadcast rights, which are owned by Fox through 2013. Last year, Fox offered the Dodgers a new 20-year deal worth about $3 billion, but it was rejected by MLB in June. Some observers expect the new owners to spurn another offer from Fox and instead start a Dodgers network.
Guber, a minority investor in the winning group, has a strong sports business background. He has been co-owner of the NBA’s Golden State Warriors since July 2010, and Mandalay Entertainment owns and/or manages several minor-league baseball teams. And Johnson and Guber are already business partners. The Basketball Hall of Famer is an investor in Mandalay’s Dayton Dragons, a Class A team that has sold out a record 844 consecutive games at its 7,230-seat ballpark. And when Guber was CEO of Sony Pictures Entertainment from 1989 to 1995, he helped Johnson launch his chain of movie theaters.
Last year, a slew of other sports and business luminaries announced their intentions to bid on the Dodgers. Among the first-round bidders were Dallas Mavericks owner Mark Cuban; former Dodgers owner Peter O'Malley; former Dodgers and New York Yankees manager Joe Torre in a joint bid with real estate developer Rick Caruso; and investor Stanley Gold in a bid with the family of the late Roy Disney and former sports agent Dennis Gilbert.