$2.15 Billion Offer for Dodgers Reportedly All Cash; McCourt Asks For Small, Unmarked, Non-sequential Bills

Left: Todd Boehly, president of Guggenheim Partners. Center: another rich white guy! Right: Mark Walter, CEO.

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.

Nineteen Scattered Thoughts on New Dodger Ownership

Okay, let’s try to make sense of all this, because there is a LOT happening here; apologies in advance for the list format.

  1. YAY! Yay. Yay. Yay. We’ve been waiting for this day since… well, I wanted to say since we learned about the divorce in October 2009, but that’s not accurate. We all had our issues with McCourt for years prior to that. Finally seeing him on his way out, well… it’s like Christmas multiplied by your birthday times twelve Super Bowls, plus kittens.
  2. I didn’t think this needed explaining, but apparently it does. Everything you’re reading and hearing saying that “Magic Johnson bought the Dodgers” isn’t exactly accurate. Trust me, Magic does not have two billion dollars or anything close to it. Mark Walter, CEO of Guggenheim Partners, is the new controlling owner, and the group includes film producer Peter Guber, baseball Stan Kasten, and Bobby Patton & Todd Boehly of Guggenheim. Magic’s the public face, Kasten’s the baseball guy, and Walter is the controlling interest. It may not seem like an important distinction, but it is, though it’s fair to note that Walter is not expected to be a hands-on owner in the Steinbrenner or Cuban tradition.
  3. That said, Magic will be the first minority black owner in baseball history, and while that’s irrelevant to some, it’s a nice feather in the cap of Jackie Robinson’s club.
  4. No Tony LaRussa! HUGE win, that.
  5. I know a lot of people have issues with Stan Kasten, but I generally like his involvement. He’s got a ton of baseball experience with the Nationals and Braves, and few know the ins and outs of the MLB executive world as well as he does.
  6. Frank McCourt is going to walk away with about a BILLION dollars in profit, AND he doesn’t have to give up full control of the parking lots. God bless America.
  7. That last part, about the parking lots, is important, because it’s an unfortunate fact that we’re not completely free of the scumbag just yet. In addition to the $2b for the team, the group is spending an additional $150m to form “a joint venture” which will control the parking lots. That’s sort of ill-defined, I think, so we’ll need to learn a lot more about it, and we should probably hold off on judgement until then. Still, I can’t pretend there’s not significant disappointment that McCourt is still going to be involved in some way. (Update: and literally as I pressed publish, Bill Shaikin tweets that the lots will be controlled by the Magic group. Details to come, I assume. Hooray!)
  8. Man, T.J. Simers is going to have to trademark “The Boston Parking Lot Attendant” now, isn’t he?
  9. Ex-wife Jamie, who once claimed she owned 50% of the team, walks a way with a comparatively puny $131m. That kind of cash is hardly poverty level, of course. Still, nice negotiating job there, Jamie.
  10. You probably didn’t need me to tell you this, but two billion dollars is a lot a money. An absurdly ridiculous amount of money. A ludicrous amount of money, nearly tripling the previous high sale price for an MLB team. Not to rain on the parade here, but we’re going to need to learn where that cash is coming from. There’s no way this is two billion dollars in straight cash, homey, and I’m at least a little concerned about what kind of debt is included. I should clarify that no one – no one – was going to buy this club without at least some debt, similar to the needing a mortgage on your house analogy I’ve made before. But how much debt? It’s a concern, and the main hope here is that MLB learned enough from their past mistakes that what they’ve approved is within reason.
  11. Adding on to that last thought, a question I’m hearing a lot is, “what kind of money can they have left for payroll after spending all that?” The simple answer is, well, we don’t know. I’ll say this, though: no one’s spending two billion dollars on a baseball team to run it on a shoestring budget that struggles to compete. That’s especially so if you believe that one of the main driving factors in the purchase price is the idea of setting up a lucrative television network; it certainly doesn’t help ratings to have your cornerstone product going 72-90.
  12. I’ll admit that after writing those previous two thoughts, a small part of me preferred the Cohen/Soon-Shiong group. Not enough of me that I’m wishing this turned out any other way, of course, because this is a great day. Just trying to be pragmatic until we know more about the funding.
  13. And so we’re clear, this still has to be approved by the bankruptcy court, which will convene on April 13. It’d be a shock if they denied it, since the group has been vetted so thoroughly, but it’s not yet a done deal. So for the next few weeks at least, McCourt still owns this club.
  14. I don’t think we know yet if the Magic group put up the highest bid. While it’s hard to think that anyone was topping $2b for the team, the Cohen/Patrick Soon-Shiong group certainly could have gone higher if they chose. So it’s worth asking; did McCourt factor how happy this group would make the fans at all? Not that he’s ever cared about the fans, but this may soothe some of the terrible feelings about him on the way out. Not here, though.
  15. Speaking of Soon-Shiong, is it too late for him to get back with his friend Magic?
  16. Money issues aside, Magic alone makes this a huge public relations coup. You could argue that the Cohen group made more sense financially, but there’d also be a backlash against another New Englander with a past and who had never been to Dodger Stadium. Magic’s a local hero, and that’s huge for this organization.
  17. Can’t wait for people to start asking the new guys about Ned Colletti. I’ll you this, they’re not firing him on their first day in charge, which could be as late as May 1. My gut feeling is that he lasts the season, unless the on-field product is atrocious, which it won’t be; while Colletti has built a potentially boring, low-upside team of veterans, it’s also a team that should be respectable at worst.
  18. And for what it’s worth, I hope Don Mattingly stays.
  19. YAYYY!