Tuesday, March 27, 2012

It's Official. Magic Shoots and Scores!


The news is out! The group headed by Magic Johnson has been chosen as the winner of the Dodgers sweepstakes.

Below is the press release with some of my brief comments:
LOS ANGELES, March 27, 2012 - The Los Angeles Dodgers and Frank McCourt today 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. 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.
What a price. $2Billion was mentioned as a possible price several weeks ago, but appeared out of reach as numerous reports over the past week pegged the actual sales value at about $1.5Billion. Now, seeing that number in print has me astonished, but not wholly unprepared.

The other key point here is that a Mark R. Walter is the Controlling Partner. Who is he? Walter is the CEO of Guggenheim Partners who are headquartered in Chicago and New York. They are a financial services firm involved in over $100Billion in investments. As controlling partner he has final say in the partnership. Essentially, he is the boss, and probably fulfills the investment management part of the job. I would consider the other names mentioned as investors who hold a certain percentage of shares in the investment group.

There's another kicker here worth mentioning. The price is actually more than $2Billion. It is $2Billion for the team and stadium plus a future joint venture between McCourt and the new ownership group. Assuming it will be a 50/50 split means that the true value is at $2.3Billion with McCourt owning a very small piece related to just the parking lots.
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.”
Based on Ken Gurnick's report the deal must close by April 30th.
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."
I'm not entirely thrilled with the idea that McCourt will still benefit from the Dodgers. He is a stain on the organization and his continued association with the franchise is disconcerting. I guess the devil's in the details, though. I would be very interested in knowing what the joint venture is all about.

UPDATE:

Bill Shakin reports on twitter that the joint venture for ownership of the parking lots will be controlled by Magic's group.
UPDATE II:

For further clarification from Bill Shaikin.
This news goes from good to worse. All the first tweet told us was that McCourt couldn't interfere with the parking lots for games, but is likely to have some control when it comes to redevelopment of the land. This could mean a sizable ownership stake if a Dodgers entertainment complex is built there, or a grand conspiracy to move the Dodgers to downtown by using McCourt as a future scapegoat. I know... I know. My conspiratorial mind is taking over.

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