I have to admit, I was somewhat surprised by the infusion of negativity into the final thread of the ownership news last night, with people making outlandish claims like “the new owners are coming in with a BILLION DOLLARS in debt” and that Clayton Kershaw, Chad Billingsley, and Andre Ethier were as good as gone, because the underfunded ownership group would make the Dodgers “Houston Astro level bad”, with a healthy share of unhappiness that Frank McCourt would still be a player in the parking lots.
That’s all understandable to a point, I suppose, because information was flying around fast and furious last night. A healthy dose of skepticism isn’t entirely unhealthy, and I certainly shared some of it.
First, the Wall Street Journal on debt…
The person said the other offers, which were perceived as opening bids, were in the range of $1.5 billion, some 25% less than the Johnson-Walter bid. As a result, the other bidders were never given a chance to match, and the deal was wrapped up by Tuesday evening.
The bid was described as a “100% cash offer.” Mr. Walter is making a significant personal contribution to the purchase price, with Guggenheim Partners, of which he is chief executive, playing a substantial role in financial contribution.
One. Hundred. Percent. Cash. I’m quite honestly floored by that, simply considering the sheer magnitude of the $2.15b purchase price. (Which is what we’re going to be referring to it as from now on, because let’s not pretend the additional $150m for the parking lot partnership doesn’t count.) If true, then there’s no concern about debt service at all, which was in the end what brought McCourt down. While the obvious next question may be, “how can they possibly still have money left to invest in the team if they just spent so much on the purchase,” remember how different of a situation this is from when McCourt bought in. His purchase was almost entirely on debt, with his personal outlay being either extremely small or by some reports, nothing at all. The Guggenheim group is not only well-funded, but has multiple partners, including Hollywood producer Peter Guger and other Guggenheim members (including Todd Boehly, seen in the picture.) Most importantly, unlike McCourt, no one is buying into this as their primary source of income, as he was, and you don’t make this kind of investment to finish in fifth place (and be a poor primary anchor for the inevitable television network).
But there’s more! While we’re regrettably not 100% rid of McCourt, nor is Dodger Stadium surrounded by parking lots that only he controls. According to several tweets from Bill Shaikin, the joint venture which will control the lots makes McCourt a minority partner at best. The “deal allows Magic group to control parking lots for games, Magic and McCourt to jointly pursue any development of lots,” Shaikin wrote, and he later added that the Magic group would have the ability to veto any development plans. So while we’ll need to learn a bit more about that, it does initially seem that McCourt could be potentially frozen out if the Magic group decides not to build on the land, since all game-day traffic is controlled by incoming ownership.
There’s a whole lot to do – Jon Weisman runs down the list at ESPN/LA – and still some questions that need to be answered, but even just in the 12 hours or so in the news has broken, things are looking better by the minute. It’s a good day, friends, with hopefully a lot more to come.