SBD/November 2, 2011/Franchises

McCourt, MLB Reach Agreement To Put Dodgers Up For Auction

McCourt expects to sell franchise for at least $1B, which would be new MLB record
Dodgers Owner Frank McCourt late last night struck an agreement with MLB to sell the franchise, ending months of bitter fighting with the league that included a bankruptcy filing and an MLB attempt to strip McCourt of the team. The club and MLB issued a joint statement shortly after 1:00am ET today saying they have agreed to a "court supervised process to sell the team and its attendant media rights in a manner designed to realize maximum value for the Dodgers and their owner, Frank McCourt.” The Blackstone Group LP will lead the process. The deal marks a major surrender for McCourt, who had fervently fought to retain the Dodgers even as legal and financial woes mounted and opposition appeared to arise from nearly every corner. A purchase price of at least $1B is widely projected, which would set a new benchmark for the sport, and there will be no shortage of interested suitors. Dodger Stadium and related land will be included in the package. McCourt bought the assets in '04 for $421M. The agreement, the result of weeks of mediation efforts led by former U.S. District Court Judge Joseph Farnan, arrives four weeks before a scheduled showdown in court between McCourt and MLB Commissioner Bud Selig. Both were to testify at a key evidentiary hearing in which competing reorganization efforts were to be heard: MLB's push to have the club sold amid claims of McCourt mismanagement, and McCourt's attempt to have the Dodgers cable TV rights sold over the objections of the league and current rightsholder FSN (Eric Fisher, SportsBusiness Journal). In L.A., Bill Shaikin notes MLB "hopes a new Dodgers owner can be in place by opening day next year." A source said that McCourt "had considered whether to sell for several weeks, ultimately deciding that the interests, his businesses and the team would be best served with a sale rather than a Bankruptcy Court trial." Court documents indicate that McCourt may "need the Dodgers to fetch at least $1 billion at auction in order for him to break even after paying off debts," including taxes and a $130M divorce settlement to ex-wife Jamie (L.A. TIMES, 11/2).

WHAT HAPPENS NEXT? ESPN L.A.'s Tony Jackson reports there is "no immediate timetable for the sale of the team, but such things typically take several months to complete." It is "unclear how this will affect the Dodgers' offseason player moves" (ESPNLA.com, 11/2). ESPN's Buster Olney tweeted, "It's hard to imagine that the Dodgers' situation would be settled soon enough for them to pursue likes of [Albert] Pujols, [Prince] Fielder" (TWITTER.com, 11/2). YAHOO SPORTS' Tim Brown notes there is "no minimum sale price demanded by McCourt or, apparently, guaranteed by MLB." There also "would seem to be no lack of potential bidders" (SPORTS.YAHOO.com, 11/2). CNBC’s Darren Rovell tweeted, “Despite the damage McCourt did, I'm setting the early over/under on Dodgers sale at $875 million” (TWITTER.com, 11/2).

END OF AN ERA: In N.Y., Richard Sandomir notes the settlement "appears to satisfy both sides." Selig "gets McCourt out of baseball and can possibly steer the sale to a preferred buyer." For McCourt, the settlement "gives him a way out of his financial hole," and he "might even emerge with some profits" (N.Y. TIMES, 11/2).YAHOO SPORTS' Brown writes, "The end is shocking in its swiftness and equanimity." One source said that McCourt "had had enough." He decided that selling the club was in the "best interests of the franchise, the city, everyone involved." Brown writes, "There was no way back, not without killing more of it. Couldn’t he have done this two years ago, when everybody was telling him it was his only way out?" (SPORTS.YAHOO.com, 11/2). CBSSPORTS.com's Scott Miller writes McCourt's decision "amounts to a final surrender." It has "been clear to everyone but him for more than a year that he was fighting a losing battle" (CBSSPORTS.com, 11/2). ESPN's Jerry Crasnick said as “combative as Frank McCourt was, even he had to read the writing on the wall.” Crasnick noted McCourt is broke and said, “People in L.A. hate him at this point. He has no credibility there, they don’t want him there. I think he had to realize, ‘Look, let’s cut my losses.’” ESPN L.A.'s Jackson said, "Ultimately, Frank realized he had no place to go. He’s got so many debts and obligations that if he wanted to get enough money out of the sale to have anything leftover once he paid all those debts and obligations, he finally just realized now was the time” (“SportsCenter,” ESPN, 11/2).

NOT A MOMENT TOO SOON: In L.A., Bill Plaschke writes the settlement agreement marks the ending of "the saddest chapter in Dodger history." McCourt will "sell the team that his financial mismanagement allowed to become the saddest of baseball jokes." He will "sell a stadium that his unpopularity turned into a ghost town." McCourt is "realizing he's out of money and out of options," and he is "giving it up so quickly that the league hopes the Dodgers will have a new owner by opening day." Plaschke writes, "Bud Selig owes us. The baseball commissioner who allowed a seriously underfunded McCourt to take the team from desperate Fox in 2004 owes us a strong and viable owner this time" (L.A. TIMES, 11/2). ESPN L.A.'s Ramona Shelburne writes the franchise "wasn't diminished by Frank McCourt's ownership, it was renewed." The Dodgers "meant more to Los Angeles once McCourt cast them into purgatory." Shelburne: "Every new indignity he inflicted on the team, every sacred law he broke, made these proud fans realize all that they had lost" (ESPNLA.com, 11/2). Syndicated radio host Jim Rome wrote on Twitter, “Frank McCourt finally decides to sell the Dodgers. About two years too late. Should have tapped out long ago. Don't let the door hit you." NBC News' Chuck Todd wrote, “Attn: MLB: Like Frank McCourt, I, too, can put very little money down, can I buy the Dodgers now?” (TWITTER.com, 11/1).

INTERESTED PARTIES
: Mavericks Owner Mark Cuban said that he "offered to buy the Dodgers several months ago but declined to enter negotiations" after McCourt indicated that the "price would be in the range of $1 billion to $1.2 billion." Cuban said that he "remains interested" in purchasing the team. McCourt spokesperson Steve Sugerman said that the Dodgers owner "denied ever discussing a possible sale with Cuban." Cuban later said that he "had not spoken directly with McCourt but said he had discussions with an employee that worked with the McCourts" (L.A. TIMES, 11/2). ESPN's Crasnick said, “I’ve always thought baseball was a little bit wary of Mark Cuban. He’s not sort of the old-boy network type. And after the mess of the McCourt situation, they want to do this thing right so they’re going to look at every possibility” (“SportsCenter,” ESPN, 11/2). Syndicated radio host Dan Patrick said, "Mark’s on record as saying the Dodgers aren’t worth a billion dollars. The Dodgers will be worth close to that to somebody who wants to say, ‘I’m the owner of the Dodgers.’” Patrick: "The Dodgers are a brand. How much is that brand worth? Who’s willing to pony up?" The L.A. Times' Shaikin said, "A lot of the people who are seriously interested don’t say anything until it’s actually time to bid. So I would venture that some of the strongest candidates are people that we have not heard about. ... There’ll be no shortage of interest from private business people” ("The Dan Patrick Show," 11/2). ESPN The Magazine's Molly Knight wrote on her Twitter account, "Potential Dodgers' bidders include: Dennis Gilbert, Burt Sugarman, Garvey/Hershiser, Mark Cuban, and more. People will come out of woodwork" (TWITTER.com, 11/2).

TV TALK: DAILY VARIETY's Jon Weisman noted new ownership "could bring happy tidings to Fox Sports, which according to its contract with the Dodgers has an exclusive negotiating window through November 2012 for the post-2013 local TV rights." Given that Fox earlier this year lost the Lakers to Time Warner Cable, the Dodgers are the "centerpiece to Fox Sports' Southern California sports endeavors, even more so in probability with McCourt no longer complicating their future" (VARIETY.com, 11/1).
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