SBJ/May 7-13, 2012/Franchises

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  • Lawyers’ full-court press helps close L.A. sale

    Behind the pomp and circumstance of last week’s news conference introducing Guggenheim Baseball Management as the new owners of the Los Angeles Dodgers was a blitz of legal activity aimed at closing the record-setting $2.15 billion deal in a mere 18 days.

    Guggenheim’s Stan Kasten (left), Magic Johnson (center) and Mark Walter face the media.
    Photo by: ICON SMI
    Many sports team transfers require several weeks, if not several months, to complete amid myriad legal and league requirements. But after an April 13 approval of the Dodgers’ sale by the U.S. Bankruptcy Court for the District of Delaware, lawyers for Guggenheim, outgoing team owner Frank McCourt and MLB had just 17 days to complete all the needed documentation, driven in part by McCourt’s need to meet an April 30 deadline to pay former wife Jamie $131 million as part of their divorce settlement.

    The closing spilled over by one day, finishing up mid-morning May 1 in Los Angeles, but only after lawyers for all three camps pulled repeated all-nighters, catching brief power naps when they could on law office couches. In particular, the Guggenheim camp spent eight days in Los Angeles before the closing, working through issues including needed legal disclosures on their financial wherewithal to fund the massive purchase.

    “It was like nothing I’ve ever seen or been a part of before,” said Irwin Raij, partner for Foley & Lardner, legal counsel for Guggenheim. The law firm has now been part of three of the last four MLB team sales having worked on the Texas Rangers and Chicago Cubs transactions.

    “Closings are never easy,” Raij said. “But we had an extremely short runway to get everything done. And when you layer in all the other stuff, including the size and complexity of the deal itself, MLB’s regulatory process, and the history involved between the Dodgers and the league, it made for a very unique situation. There was not a margin for error.”

    During the April 13 bankruptcy court hearing to confirm the sale to Guggenheim, MLB outside counsel Thomas Lauria raised several objections, including the structure of the parking lot joint venture between McCourt and Guggenheim, and accused the Dodgers of “jamming” legal documents at them in order to meet the April 30 deadline for the Jamie McCourt payment. Lauria at several points further suggested that the deal was in violation of league rules.

    Much of the time between the confirmation hearing and the closing was spent satisfying many of those MLB concerns and having several remaining disputes, such as responsibility for the league’s legal fees in the case, resolved by Joseph Farnan Jr., the case’s court-appointed mediator. Industry sources said Farnan ruled that the Dodgers will be responsible for paying MLB’s legal fees in the case, amounting to roughly $10 million, in accordance with the league’s constitution. The sum adds to the nearly $22 million and counting that the club itself has incurred during the case, representing by far the most expensive U.S. sports team bankruptcy in terms of legal fees and expenses.

    But the league ultimately hailed the arrival of Guggenheim, and Rob Manfred, the league’s executive vice president for labor relations and human resources, was on hand last week for the Dodger Stadium news conference welcoming the new owners.

    “Despite going through bankruptcy court, this process required the same due diligence and analysis that any other sale would demand,” MLB Commissioner Bud Selig said in a statement. “Through all the challenges of this highly unique situation, our requirements were met.”

    Guggenheim pledged to put forward a more responsive, fan-focused image compared with the tumultuous McCourt era, even as McCourt is still tangentially involved as a partner in new development on the Dodger Stadium parking lot property should it ever occur. The new owners’ first move last week was to lower the price of Dodger Stadium general parking, raised five years ago by McCourt, from $15 to $10, and work to shorten notoriously long concession lines.

    “The rumors — we’re quashing them now,” said Guggenheim partner and former basketball star Magic Johnson. “Frank McCourt is not involved in any shape or fashion in the day-to-day operations of the club.”

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  • NBA honors Magic for top local promotion

    The Orlando Magic has won the NBA’s inaugural award for best local team promotion.

    Tijuana Flats, a restaurant chain shown in advertising on the Amway Center ribbon boards, says a food giveaway took its Magic sponsorship to a new level.
    ORLANDO MAGIC
    The team won the award at the NBA’s annual sponsorship meeting held last week in Toronto. It is the first time the NBA has ranked specific local sponsorship promotions among its 30 teams.

    Teams submitted what they considered their best local sponsorship promotions, and a panel of league executives narrowed the list to the top six. Those six efforts were from San Antonio, New Orleans, Sacramento, New York and the Magic, who had two sponsor activations among the top six.

    The finalists presented their promotions at the league’s sponsorship meeting.

    The Magic won the award based on its local deal with the Tijuana Flats restaurant chain, combining a free food giveaway activation promoted on all of the team’s assets that also featured strong data collection. The promotion allowed the Magic to track specific incremental sales for the company along with other buying habits of fans.

    “What made it stand out for us was the multiple platforms we used to bring relevancy to the activation,” said Chip Bowers, senior vice president of corporate marketing and partnerships for the Magic. “We were able to tie it into all of our social media and create consistency across the brand.”

    The team did not disclose how much business the promotion provided the restaurant over the course of the seasonlong effort. The company has been a team sponsor for two years.

    “Our guests were already fans of the Magic, and this activation brought it to a whole new level,” said Brian Wheeler, chief executive officer and founder of Tijuana Flats.

    While the NBA recognizes teams in a number of sales categories, including new full-season-ticket sales and total full-season-ticket sales during their annual marketing meeting in January, this year marks the first time the league has recognized individual teams for specific sponsorship activation.

    The strategy is to increase shared sponsorship strategies among NBA teams while creating a sense of competition to help develop the most effective local promotions.

    “Activation is so critical and our teams do so many programs that it is worth sharing and we wanted to do a peer award,” said Chris Granger, executive vice president of the NBA’s team marketing and business operations division.

    The NBA also brought in William Ury, a negotiating expert and author of “Getting to Yes,” to speak to the estimated 100 top team sponsorship executives during the two-day meeting.

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