Prospective Los Angeles Dodgers owner Frank McCourt would borrow the entire $430 million purchase price for the storied franchise through a mix of team and private loans under a proposal MLB owners are expected to review, and perhaps approve, this week, several banking sources said. He would pay back within the first several years almost half of the amount after selling some of his real estate assets in Boston.
McCourt, the sources said, plans to borrow $150 million from Bank of America, $75 million from the MLB credit facility and around $205 million from current Dodgers owner News Corp. An unidentified concessionaire would supply some collateral for part of the News Corp. loan.
The Bank of America loan would be secured by the team and the property around Dodger Stadium; the News Corp. money, broken up into two loans, would be backed by McCourt's waterfront property in Boston. News Corp., parent of Fox, is extending the loans to expedite the process because of the amount of time McCourt apparently needs to sell the real estate. He is expected to pay back the loan with the proceeds from that sale.
The $205 million (a figure some sources described as still somewhat in flux) would count as his equity contribution, but borrowing the complete amount has raised eyebrows inside and outside MLB. One banking source said if it were not for the fact that baseball broadcaster News Corp. was the seller, a deal of this kind would have at most a 5 percent chance of passing.
A McCourt spokesman declined to comment, and Bank of America referred questions to its client. News Corp. declined to comment.
While borrowing the entire purchase price in one fashion or another is pushing the envelope, taking out loans to finance mandated equity stakes is hardly new. When Daniel Snyder bought the Washington Redskins in 1999, he and his family borrowed nearly $200 million to finance some of their share.
The fact that the seller is providing the loan is not itself unprecedented. A similar structure was used when brewer Molson sold the Montreal Canadiens to U.S. businessman George Gillett.
MLB confirmed that the deal is on the agenda for this week's owners meeting. Sources said the league would not have placed the proposal on the agenda unless it was confident the plan would be approved.
No one would identify the concessionaire that pledged cash as collateral for part of the News Corp. loan. The Dodger Stadium concessionaire is Aramark, but its contract ends after this season. It declined to comment.
