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Magic Johnson, Stan Kasten, Guggenheim Partners Purchase Dodgers For Record $2B

The Dodgers bid group led by Basketball HOFer Magic Johnson and former Nationals and Braves President Stan Kasten overnight emerged as the winner for the iconic MLB franchise, as the group struck a deal with outgoing Owner Frank McCourt for $2B. The sum is nearly double the prior record paid for any North American sports franchise, and nearly two-and-a-half times the Ricketts family's $845M purchase of the Cubs in '09, MLB's prior high mark. The Johnson-Kasten group, called Guggenheim Baseball Management, is backed by Chicago-based financial services firm Guggenheim Partners. The group also includes Warriors co-Owner and Mandalay Entertainment Group Chair & CEO Peter Guber, and Guggenheim CEO Mark Walter, President Todd Boehly and exec Bobby Patton. Shortly after MLB approved the three final bidders, McCourt and financial advisor Blackstone Group struck the deal with the Guggenheim group, ending the need for an auction that was set to begin today in N.Y. As part of the deal, McCourt will form a joint venture with "certain affiliates" of the Guggenheim group, which will purchase the Dodger Stadium parking lots and related property for an additional $150M. The fate of the parking lots had not been included in the original assets offered for sale, and had been a particular sticking point in the sale process. But in the new structure, the Guggenheim group will control the lots, while still allowing McCourt to have an interest in the property and any forthcoming development on it (Eric Fisher, SportsBusiness Journal). In L.A., Shaikin & Wharton report Walter will be the Dodgers' "controlling owner," and Kasten will "run the team." Walter and McCourt met privately yesterday in N.Y., and came to an agreement "only hours after" MLB owners approved the Dodgers' final three bidders. McCourt chose Johnson's group over one led by Rams Owner Stan Kroenke, and a partnership between SAC Capital Advisors Founder and Mets investor Steven Cohen and Lakers investor Dr. Patrick Soon-Shiong. The Guggenheim group will become the Dodgers' third owner since the O'Malley family sold the team in '98. The sale "must be confirmed" by U.S. Bankruptcy Court in a hearing April 13. The transaction is "set to close by April 30, the same day McCourt must pay his ex-wife $131 million in a divorce settlement" (L.A. TIMES, 3/28). 

FORTUNE'S FAVOR: The WALL STREET JOURNAL's Matthew Futterman cites a source as saying that 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." The Guggenheim bid was described as a "100% cash offer" (WALL STREET JOURNAL, 3/28). In L.A., J.P. Hoornstra notes the "previous record sales price" for a North American sports franchise was a reported $1.1B for the Dolphins in '09. The transfer in ownership "represents a reversal of the team's financial fortunes and is certain to inspire optimism from a beleaguered fan base" (L.A. DAILY NEWS, 3/28). Also in L.A., Jim McConnell writes under the header, "A Magical Time For Dodgers Fans." Former Dodgers Exec VP & GM Fred Claire said, "When you're willing to put that kind of money on the table, fans have to know that you're willing to do whatever else it takes to maintain and upgrade the franchise. ... This group represents a new era in L.A. sports history and a new start for the Dodgers. It's hard to see it as anything but a positive development" (L.A. DAILY NEWS, 3/28). ESPN’s Buster Olney said Johnson’s group winning the bidding for the Dodgers “must be a dream come true” for both MLB and Dodgers fans. Olney: “Johnson’s reputation within Los Angeles is badly needed for this beleaguered franchise, which saw attendance plummet in 2011. ... Next fall, after the free agency period starts, one minute after he can make a phone call at 12:01am, he’s going to be on the phone talking to prospective free agents. There’s already talk within the Dodgers front office about adding players to the team this summer” (“SportsCenter,” ESPN, 3/28).

WHAT THE FUTURE HOLDS: FORBES' Patrick Rishe notes the announcement likely will "infuse new hope and expectation among fans about the direction of the Dodgers franchise, and this will surely boost profits and raise attendances back towards recent trends." From '05-10, the Dodgers' attendance "did not drop below 78% of capacity for any given year." It "fell below 65%" last year (FORBES.com, 3/28). In a special to ESPN L.A., Jon Weisman wrote the Dodgers need to "target their new purse strings ... to the effective acquisition and development of players." The post-'13 cable rights deal that is the "secret to the Dodgers' exploding franchise value will have to be negotiated." Additionally, the "long-awaited renovations to Dodger Stadium are not something you can fix with a midseason waiver deal -- you want to nail them at first crack." Ownership of the Dodgers requires an "ability to focus on the biggest of pictures and the smallest of details." And if the past few years "showed anything, it's that Dodgers fans are sticklers for all of the above" (ESPNLA.com, 3/27).

 

Some writers argue Johnson's group has the credibility to quickly bring Dodgers fans back
THE MAGIC MAN: In L.A., Bill Plaschke writes under the header, "Magic Johnson Is Perfect Fit For Dodgers." Plaschke: "After two years in hell your city's most enduring sports team has just been placed in the giant hands of its most enduring sports star." After successfully "boycotting Dodger Stadium enough to convince MLB to run McCourt out of town, Dodgers fans are distrusting and disillusioned, and Johnson's group is the only one with the credibility to quickly bring them back." Little is known "about Walter and the Guggenheim folks, who will fund their majority contribution from out-of-state insurance companies, but we know that they have convinced Johnson and Kasten that it's not about real estate or television, but baseball" (L.A. TIMES, 3/28). Also in L.A., Vincent Bonsignore writes, "I don't know what it all means, where it's all headed, but I know enough to know it's going to be a wild ride. And with Magic at the helm probably a winning ride too" (L.A. DAILY NEWS, 3/28). ESPN L.A.'s Ramona Shelburne wrote what matters is that McCourt "sold his franchise to the one man who would immediately make Dodger fans feel good." In the end, that "act, that choice, might go a long way toward rehabilitating McCourt's legacy." If Johnson and his partners "do the right things, the lean years, the ugliness of the past two years, will fade fast" (ESPNLA.com, 3/27). In L.A., Steve Dilbeck noted with the purchase, one L.A. "icon merges with another." Dilbeck wrote, "Really, it's so terrific that right now I can't even be bothered that Frank McCourt is miraculously going to walk away from this with a cool billion. We have someone who knows, understands and appreciates Los Angeles. Someone worthy of being the face of local cultural treasure." Johnson will "energize the entire organization." He will "return a belief that ownership is out to win and cares about the fans" (LATIMES.com, 3/27). ESPN's Mike Golic said, "This can’t be better for a situation that was so bad. You want to talk about a complete 180 that they’ve done." ESPN's Mike Greenberg: "This is one of the great trades ... to trade from Frank McCourt to Magic Johnson” ("Mike & Mike in the Morning," ESPN Radio, 3/28). In Sacramento, Ailene Voisin wrote Johnson has become "a major player again in L.A." He has "sought this type of involvement with a pro franchise" since he initially retired from the NBA in '91 (SACBEE.com, 3/27). YAHOO SPORTS' Tim Brown writes, "The best news is McCourt is gone. The second-best is Magic will one day sit in the field boxes near the third-base dugout" (SPORTS.YAHOO.com, 3/28).

FILLING A NEED: FOXSPORTS.com's Jon Paul Morosi writes MLB "needs" Johnson. Baseball does "not have enough minority owners -- and no black majority owners." The game has "lost popularity among African-Americans." MLB has tried to "expand its outreach, with the Reviving Baseball in Inner Cities (RBI) program and Urban Youth Academy." Morosi: "With all due respect to those efforts, the smile of Earvin Johnson is now the best marketing tool in baseball’s arsenal" (FOXSPORTS.com, 3/28).

CAN'T PLEASE EVERYBODY
: In L.A., T.J. Simers writes as "good as Magic-for-McCourt looks right now, we just don't know." There had been "talk before the final process that the other two groups insisted that the parking lots be included in the final sale, but Magic was not so insistent." Simers: "Strike one. Magic's smile doesn't do a thing for me as Dodgers owner if I have to see McCourt's face again. ... I can't imagine doing business with McCourt. Guggen-whatever, it would seem, will be doing so again if McCourt is free to mess with land that skirts the parking lots. Strike two." Simers asks, "Was this primarily a TV network buy? Is Guggen-whatever going to be any different than Fox owning the Dodgers? Why would you agree to allow McCourt anywhere near Dodger Stadium?" (L.A. TIMES, 3/28). YAHOO SPORTS' David Brown writes, "Just because you're a great former NBA player, it doesn't make you a great team owner -- just ask Michael Jordan" (SPORTS.YAHOO.com, 3/28).

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