Magic Johnson Rescues Los Angeles Dodgers
April 2, 2012
Ending the Frank and Jamie McCourt era of Dodgers ownership, the investment group headed by Ervin “Magic” Johnson made Frank an offer he couldn’t refuse: $2.15 billion for the Los Angeles Dodgers and surrounding properties. McCourt’s 2004 $430 million investment purchased from Rupert Murdoch’s NewsCorp quintupled its size, calculated at a 45% annual return since buying the club from Fox. Prior to Magic’s historic purchase, the highest price paid for a Major League Baseball franchise was Thomas S.Ricketts July 6, 2009 purchase of the Chicago Cubs for around $900 million. Paying over twice as much for the Dodgers, Johnson’s group must get final approval from MLB. Johnson’s partner, experienced baseball executive Stan Kasten, former president of the Atlanta Braves, expects to put a championship team on the field, sparing no expenses.
Frank’s bitter divorce from his ex-wife Jamie gave the public more than they could stomach, looking up-close at an extravagant lifestyle and benign neglect of one of baseball’s most storied franchises. No one, especially Jamie, could have imagined when she signed off on her 2011 divorce for $130 million that Frank would make such a killing on the Dodgers. After all, Forbes magazine just estimated in 2010 the worth of the Dodgers at around $727 million, mushrooming to its whopping price tag that should net Frank over a billion dollars. When the deal was iced March 27, no one knew for sure how much Magic kicked in to Chicago-based Guggenheim Partners. CEO Mark Walter named Kasten as President of the Dodgers. No one knows either whether or not Kasten will retain current Dodger General Manager Ned Colletti or takeover front office operations himself.
Paying $2.15 billion for the Dodgers breaks all records for professional sports franchises. Some question whether Johnson can make the Dodgers profitable paying top-dollar for the team. Recent reports in Forbes Magazine indicate that hedge and private equity funds are making bigger investments into professional sports. When the Ricketts family paid a record $900 million for the Cubs in 2009, it was no accident that Rickettes was CEO of TD Ameritrade, crossing the line between Wall Street and ownership in professional sports. Equity-rich Guggenheim Partners was able to up the ante and bid the Dodgers into the stratosphere. All big-market sports franchises with lucrative TV contracts have driven up in market value since the Dodgers’ purchase. Magic promised at a March 28 New York news conference that the team plans to spend whatever it takes to win championships.
While Magic becomes the face of the franchise, his personal financial commitment remains uncertain, nor does it really matter. Magic’s name alone is synonymous with winning, having five Laker championship rings. “You’ll see this team invest money. But Stan will have his plan and Mark and I will support that plan,” said Magic, stating for the record that he will spare nothing to get the right personnel in place. McCourt’s legacy with the Dodgers, rightfully or wrongfully, was spending extravagantly on himself, not the team. Before all is said and done, Johnson envisions the Dodgers looking more like the Yankees, Baseball’s model for ponying up and winning big. “Other teams are doing it. It’s not just the Yankees. The Angels invested a lot of money into Pujols and C.J. Wilson. You see what the Tigers just did with Prince Fielder. Teams are investing . . .” said Johnson.
Since signing the deal March 27, Dodgers season ticket sales have skyrocketed, signaling fan support for new ownership. “That’s what you do when you put a winning team on the field. We’re not going to be any different for these teams,” said Johnson, explaining how he intends to make the Dodgers more competitive. Together with Kasten’s baseball expertise, Walter’s deep pockets should help put a quality product on the field. “Nothing good happens without scouting and player development foundation. We understan that is Job 1 for any team—and particularly for us,” said Kasten, emphasizing he expects to grow the franchise from the inside out. While Guggenheim doesn’t take over until May 1, Kasten recognizes the need to go into the free agent market to augment the team. As the Angels found out getting Pujols, teams have to pony up to get top talent.
Baseball fans in Los Angeles and elsewhere know that the Dodgers are finally back in business. Magic gives a winning face to the franchise, raising the bar to championship form. “But also recognize it is Los Angeles. We recognize the history. We recognized the expectations. We recognize what our fans deserve. We don’t plan to wait for 25 players to grow into our uniform,” said Kasten, putting fans on notice that he plans is to stack the team quickly with free agents. Unlike the last Dodger President Jamie McCourt, Kasten understands the game and plans to pull out all stops for a championship team. Questioning Guggenheim’s extravagant purchase, Walter saw the opportunity of owning the Dodgers. “I’m going to be out in the community selling the plan. When Stan sets the plan, were going to execute on it. Mark and I will make sure the business of the Dodgers gets handled,” said Johnson.
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