Matthew Futterman (tee hee) of the Wall Street Journal has details on Magic Johnson‘s group’s winning bid on the Los Angeles Dodgers.
With a bid of $2.15 billion, including the surrounding land, Mr. Johnson, controlling partner Mark Walter and partners Peter Guber, Stan Kasten, Bobby Patton and Todd Boehly beat out a group of some of the wealthiest businessmen in the country to land a team that is one of Major League Baseball’s flagship franchises. The sales figure shatters the previous record sales price for a U.S. sports franchise, Steve Ross’s purchase of the Miami Dolphins for $1.1 billion three years ago.
But buying the Dodgers now comes with a unique opportunity to launch a potentially lucrative regional sports network in the country’s second-largest market, or sign a new local broadcast deal with the current broadcaster, News Corp.’s Fox unit, which has already offered the team a 17-year extension valued at nearly $3 billion. (News Corp. also owns The Wall Street Journal).
$3 billion is a ton, but David Wharton of the Los Angeles Times speculates that the price could be even higher, as much as $4 billion.
With Time Warner, Fox and others expected to show interest, estimates for the total value of the deal have risen as high as $4 billion.
“None of this is lost on the new owners of the Dodgers,” said Neal Pilson, former president of CBS Sports. “They have an opportunity to create a bidding war.”
So along with that surprisingly high $2 billion bid that had some people concerned are individuals who apparently knew what they were doing … unsurprisingly.
The story of how Magic Johnson’s group won is rather amusing, as it basically amounts to making it rain cash on Frank McCourt.
According to a person involved with the process, the auction had been expected to take place Wednesday. Blackstone had asked the parties to submit sale contracts last week and deliver their initial offers by Tuesday morning, since approval of the bidders from Major League Baseball was expected to come easily on Tuesday afternoon. When the offers arrived, the bid from the Johnson-Walter group was so much higher than the competing offers, it essentially took the franchise off the block almost instantly.
The person said 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, and the deal was wrapped up by Tuesday evening.
The bid was described as a “100% cash offer.” Mr. Walter is making a significant personal contribution to the purchase price, with Guggenheim Partners, of which he is chief executive, playing a substantial role in financial contribution.
The deal is preliminary and still has to go through a complicated closing process and receive approval from the U.S. Bankruptcy Court in Delaware. However, Mr. McCourt is under pressure to complete the deal by April 30, one day before he owes his ex-wife a $131 million payment as part of their divorce settlement.
Bill Shaikin of the Los Angeles Times confirms that it was indeed a 100% cash bid and adds that it should not run into any difficulty, specifically because of the cash nature of the bid.
In my mind, I’m going to imagine that the group walked up to Frank McCourt and said, “Straight cash, homie.”
“What’s two billion dollars? To me?“