The biggest deal in the history of professional sports took place Wednesday when the MLB baseball club, the Los Angeles Dodgers, was sold to Guggenheim Partners Financial Group for $2 billion.
Prior to that, the biggest deal in the history of North American sports has been the sale of the NFL club Miami Dolphins to Steve Ross for $ 1.1 billion in 2009. At the same time in 2005, U.S. businessman Malcolm Glaser bought the soccer club Manchester United for $ 1.47 billion.
The previous owner of the Dodgers, Frank McCourt, began bankruptcy proceedings last June to avoid the team going under the control of MLB commissioner Bud Selig. By then, the Dodgers had about $600 million in debts. When a federal district court ruled in December 2011 that McCourt, who two months earlier had entered into a costly divorce settlement with his wife, could not sell the team's future media rights, the owner had to find ways to sell the club.
In the end, a special auction was held under court supervision, where the Guggenheim Partners group, co-owned by famed former basketball player Magic Johnson, outbid two other bidders. The first was a tie-up of billionaires Steve Cohen and Patrick Soon-Shiong and agent Art Tellem. The second was another billionaire Stan Kronke, owner of the NFL club St. Louis Rams, the NBA club Denver Nuggets, the NHL club Colorado and the soccer club Arsenal.
The final price markedly exceeded the mark of $ 1.4 billion, which valued the Dodgers along with their stadium, as well as profits from the sale of parking spaces and television rights.
McCourt himself, however, remained in the black as a result of the sale. He bought the Dodgers from Rupert Murdoch in 2004 for $330 million, paying another $100 million for the stadium and 260 acres of surrounding property. The divorce proceedings took away $131 million, and another $573 million was the club's debts. In addition, under the terms of the deal, McCourt, along with a group of affiliates, would pay $150 million to retain control of the property near Dodger Stadium.
McCourt is not the only one who benefited from the Dodgers sale. We can identify five stakeholders, including the former owner, who may be happy with the deal.
1- Los Angeles fans.
Lakers basketball fans have repeatedly praised Magic Johnson for his key role in the club's NBA victories. Now that Johnson has come to the Dodgers as part of the Guggenheim Partners financial group, baseball fans can look forward to him bringing the club back to its former glory. The new owners have everything at their disposal: deep pockets, local roots, shrewd management and a true champion.
2. MLB.
Major League Baseball America may also be pleased with the deal. The news of the Dodgers' record-setting sale will not only inspire new hope in fans, but it will surely increase attendance profits over the previous year. The five-year trend (2005-2010) shows that during that time, Dodgers home game attendance has never fallen below 78% of stadium capacity. Whereas last year it fell below 65%. The arrival of new investors and a big name like Magic Johnson will bring back stability and restore the club's undermined brand, which will benefit the league as a whole.
3. The owners of the other 29 MLB teams
The laws of the market tell us that such a big deal can't help but affect the value of the rest of the clubs. A high bar will inevitably lead to an increase in club franchise values in future sales, unless another financial crisis occurs. In 2011, the average MLB club cost about $430 million. A record-setting Dodgers deal could increase that number by 25-50%.
4. Frank McCourt.
As mentioned, the former Dodgers owner would remain on the plus side after the biggest deal in professional sports history. Even if the Dodgers were sold for a starting price of $1.4 million, McCourt's profit would be about $400 million. In addition, he still owns some of the land near the stadium.
5. Television
Last summer, MLB commissioner Bud Selig rejected a $3 billion offer from Fox to sell the Dodgers television rights for the next 20 years to force McCourt to give up ownership of the club. Considering that another MLB club from Los Angeles, the Angels, had a $3 billion television deal with Fox after signing famed baseball player Albert Pujols, the amount of a future deal between the Dodgers and one of the cable giants, whether Fox or Time Warner Cable, would be no less, perhaps more. The arrival of new owners to the club, and with them the increased stability and competitiveness, will only contribute to that.
This will not only benefit the Dodgers, but also other, smaller teams who will get a piece of the pie from the overall profits. And any broadcaster that manages to get the TV rights to the Dodgers will almost certainly benefit as well, because it will be showing a recognizable and premium brand on the rise.
