Home Maury Brown From Debt to Parking Lots: How the Magic Johnson Group Impacts the Dodgers

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From Debt to Parking Lots: How the Magic Johnson Group Impacts the Dodgers PDF Print E-mail
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Written by Maury Brown   
Friday, 30 March 2012 12:12

Sale of the Dodgers

Unless there is a major snafu, Frank McCourt will pass the ownership of the Los Angeles Dodgers to a group led by Magic Johnson on April 30. While many now know that the deal (actually two. One side deal is for the land and parking lots around Dodger Stadium) totals $2.15 billion, the details around the sale are just now coming to light. Here’s the latest:

How Much Debt is in the Deal?
According to controlling owner Mark Walter, the answer is zero. The new owners will not be adding debt, just taking on $400 million that the Dodgers current have. That means the deal sees a staggering $1.6 billion in cash, or nearly twice what competing bidder Steven Cohen had on the table ($900 million).

Why Wasn’t There an Auction?
The Johnson’s group bid was reportedly so high above every other bidder that McCourt simply decided that there was no need, and selected their bid just after MLB’s owners approved all three finalists for the auction process.

How Much Does Magic Have Invested in the Deal?
Good question that has yet to be answered. Clearly, Johnson is not the majority owner. His net worth is believed to be about $500 million. Regardless, he’s a key part of the ownership team.

What Are the Roles for Each of the Key Owners?
Stan Kasten will be CEO and President of the Dodgers. Mark Walter will be the controlling owner, representing Gueggenheim Partners. Magic will be a community outreach partner and work to bring in free agents.

How Does Gueggenheim Partners Fit In?
This is one of the most important, and least talked about aspects of the sale. Walter is the CEO of Gueggenheim Partners, a privately held, diversified financial services firm. The firm is where the bulk of the money is coming from. With more than $125 billion under management, the Dodgers will become part corporate, part privately owned.

What Happens to Ned Coletti and Don Mattingly?
For now, nothing. With the season at hand, Kasten has no plans on shaking up the two responsible for making the 2012 season as successful as they can be. And, it may be that no changes are made after the 2012 season closes. Kasten has said it is his job to support the organization and get them what they need to be the most competitive.

With So Much Being Invested, Will There Be Any Money Left for Free Agency?
If the comments by Walter and Johson are any indication, the answer is emphatically, yes. As Walter said, you don’t make a $2 billion investment without wanting to make it a winner. Johnson said in the LA Times Q&A, "Other teams are doing it. It's not just the Yankees. The Angels invested a lot of money into Albert Pujols and C.J. Wilson. You see what the Tigers just did with Prince Fielder. Teams are investing. That's what you do when you put a winning team on the field. We're not going to be any different from those teams.”

So, it’s Going to All Be About Free Agency?
No so fast. This is Stan Kasten we’re talking about. A man that has been nearly as recogonizable for his “Stan’s Plan” as anything else. Kasten echoed what he has always said prior that the key will be developing talent. But, it seems certain that unlike his stints with the Braves and Nationals, he’s going to allow Coletti a fair amount coin to use in the free agency space.

“Nothing good happens without scouting and player development foundation. We understand that is Job 1 for any team — and particularly for us.

"But we also recognize it is Los Angeles. We recognize the history. We recognize the expectations. We recognize what our fans deserve. We don't plan to wait for 25 players to grow into our uniform."

What’s the Deal with the Parking Lots?
Much was made about how McCourt wanted to hold onto the parking lots. It was something that MLB didn’t want to see, and bidders would have adjusted downward for. Instead, McCourt becomes a partner with several members of the new Dodgers ownership, including Magic Johnson. The group will work collectively to develop the land and lots, and according to Bill Shaikin of the Los Angeles Times, Johnson has veto rights over any development plans.

So, McCourt is Getting the Parking Lot Revenues?
The answer is, no. The new owners control the parking revenues, a key stream that is critical to the Dodgers. McCourt will only reap the benefits of new development with his partners.

If There’s New Development on the Land, Does That Mean Parking Structures Will Be Built?
There’s not a firm answer on this, but based on the Q&A that the LA Times had with Johnson, Kasten, and Walter, the answer (for now) appears to be no.

What Changes Do the Owners Have for Dodger Stadium?
This too is a question not fully answered. Early on, Kasten, Walter, and Johnson have said that they are going to access every aspect, including the ballpark, and make a determination after getting full access to the club.

What Does Vin Scully Think?
The iconic Dodgers broadcaster was contacted very shortly after the deal was reached by McCourt, Kasten, and Magic Johnson. Scully said that he had never talked to either Kasten or Johnson prior, but was happy that the two took time to reach out given the cross-country flights that the new group had to make to close the deal. Scully said he had seen Kasten before, and the two had nodded at each other, but had never spoken. As he said, he doesn’t really rub elbows with club presidents very often. As Scully is so adapt at doing, he provided a timeless quote when he got the call from Johnson. “If it’s possible, I can hear your smile,” Scully said.


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He writes for Baseball Prospectus and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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