Dodgers Sold, But Frank McCourt Saga Continues

Not so fast. As May comes to a close, there’s word that a federal grand jury is investigating the way former owner Frank McCourt used Dodger funds during his ownership. Bill Shaikin:

A federal grand jury is investigating possible criminal financial misconduct of the Dodgers and related entities during the ownership of Frank and Jamie McCourt, according to two people familiar with the matter.

Authorities have requested documents from representatives of each of the McCourts and from Major League Baseball, the people said, speaking on condition of anonymity because of the confidential nature of grand jury investigations.

The investigation started early last year and appears to be focused on tax issues and possible improprieties in the spending of team funds, one of the people said.We won’t know much of anything about this until and unless any indictments are handed down by the grand jury, because, as noted above, those investigations are supposed to be confidential.

That’s why the announcement at the first news conference by the Dodgers’ new ownership that parking fees would be reduced from $15 to $10 brought this reaction from our SB Nation Dodgers blog:

There’s truth to that, too, especially after the Frank McCourt ownership years turned many Dodger fans off to the team. New ownership knows it has to do things to bring fans back to the ballpark — new team president Stan Kasten also announced that the team would open gates earlier so fans could watch batting practice.

Frank McCourt and his wife Jamie bought the Dodgers in 2004; their messy divorce and bankruptcy that led to this sale is detailed throughout this StoryStream. Now, Dodger ownership goes to a group with money, Magic Johnson and local connections:

For more on the Dodgers, please visit True Blue LA and SB Nation Los Angeles.

The Los Angeles Times’ Bill Shaikin, who’s been draped over this story like a cheap suit from Day 1, has the latest on the sale of the Dodgers, which remains on track for the end of this month:

This really does seem like a lot of fun, with MLB arguing against the sale after devoting so much energy to getting a sale done. But that’s Frank McCourt, right? The gift who just keeps on giving.

From the Los Angeles Times:

The Dodgers have asked the U.S. Bankruptcy Court for permission to file those conditions under seal, citing the “sensitive non-public commercial information” within. Attorneys for The Times argued that the Dodgers have not provided any evidence to support that claim or shown why it should outweigh “the well-established presumption of public access to judicial records.”

Frank McCourt agreed last month to sell the Dodgers to Guggenheim Baseball Management in a $2.15-billion deal under which McCourt and Guggenheim will jointly own the parking lots that surround the stadium. The lots are owned by a McCourt entity that is not part of the bankruptcy filing, so Dodgers attorneys have said that details of the joint venture need not be disclosed in Bankruptcy Court.What sort of deal did the new Dodgers owners give to McCourt in order to share the parking lots? What plans do the Dodgers have for the land? That’s what the Los Angeles Times wants to find out. They’re arguing that the public has a right to know, and that they should get the opportunity to read about it in the Los Angeles Times.

Full disclosure: Dammit, Jim, I’m a baseball writer, not an economist. I’m pretty sure I don’t have a working definition of “dividends,” which I’m led to believe are important economic thingamabobs. But I’ll relay this the best I can.

So a lot was made of the fact that the new Dodgers owners were buying the team with cash. Sweet, sweet cash. Like, not stacks of bills in a duffel bag, but money that wasn’t leveraged or borrowed against something else. It was a welcome counterpoint to the McCourt purchase.

We were supposed to be reading about the auction process for the Los Angeles Dodgers sale right now. The three bidders were supposed to be approved by the other owners as something of a formality, then there was supposed to be an auction, and then we were supposed to know what happened by the end of the week.

But the group led by Magic Johnson and Stan Kasten got really motivated and took back a bunch of aluminum cans and glass bottles that they’ve been meaning to get to for a while, and, well, long story short, they completely overshot the bid that everyone was expecting. And now they’re talking to the Los Angeles Times. Are the Dodgers looking to spend a lot of money?

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Well, maybe the headline is a little too sensational. It’s not like Jon Heyman was embedded with the investment group, or doing some sort or Tom Wolfe-ish New Journalism feature. But he did talk to people, which is more than you or I have done. And he gives some of the details on the Los Angeles Dodgers/Magic Johnson/assorted billionaires deal:

The losing bidders surely were shocked a deal was done Tuesday night, before the auction. But even at auction, the others weren’t expected to get close to $2 billion, and Cohen has told folks since that he wouldn’t have gotten there. “No one was going near $2 billion,” one person familiar with the process said.The story explains one thing that was bugging me since last night, too. There was an auction scheduled for Wednesday, but the sale was announced on Tuesday. Where did the auction go? The Johnson/Kasten group offered so much money, McCourt and MLB didn’t even bother with one.

Magic Johnson is an exceptionally wealthy man.

He doesn’t have $2 billion sitting around.

And ESPN Los Angeles interviewed some economically minded people to see what they thought.

“It’s the craziest deal ever; it makes no sense. That’s why you saw so many groups drop out,” said Mark Rosentraub, a University of Michigan sports management professor. “I don’t get it. The numbers just don’t work.“Reading into the subtext of this vague quote, it appears as if Dr. Rosentraub is a little baffled by the deal.

Jon Weisman (via Variety):

Weisman goes on to identify the main players, but for most of that’s irrelevant. All that matters is this: The Dodgers might actually be worth $2 billion because their next TV deal is going to generate massive revenues, which should allow them to sport one of the sport’s largest payrolls for as many years as you care to think ahead.

It’s funny, how everybody’s talking about Magic Johnson while essentially ignoring the money (Guggenheim Partners) and the brains (Stan Kasten) behind the operation.

Which isn’t to suggest that Magic’s not a sharp guy. He is. But he’s never run a major professional sports franchise, while Kasten’s run a bunch of them, generally quite well. From Ken Rosenthal:

People are excited about Magic Johnson taking over the Dodgers. Magic Johnson isn’t really taking over the Dodgers, but he’s partnered with good people who seem committed to putting money in the team and re-establishing the franchise as one of the best in baseball. Many of the problems are going away. The payroll is going up.

It’s really easy to see. Of course, Hamels going to the Dodgers is really easy to see, too, but then, why choose one when you can afford both? The Dodgers were sold for the highest franchise price in sports history. What we’ve learned from this is that Magic Johnson earned his nickname for a reason, seeing as he can create a pile of money from nothing whenever and wherever he wants.

Jon Paul Morosi tried to capture the spirit of Dodgertown with his article on the sale of the Los Angeles Dodgers:

Yeah, absolutely. Dodgers fans didn’t deserve Frank McCourt. That guy was a travesty, and Major League Baseball should be ashamed that he was ever an owner.

The mood across the Dodgers-loving world: elated. Ecstatic. It’s a mixture of disbelief and pure joy. The man who ruined the Dodgers is gone. A group of extraordinarily rich people -- the kind that spend the extra $1 for avocado on their sandwiches and don’t even care -- rode up on white horses, and now the Dodgers are fixed.

The excitement is understandable. But Craig Calcaterra of Hardball Talk says that we should just hollllld on there for a second:

On Wednesday morning, Ken Gurnick of MLB.com posted the official news on the official Dodgers website, confirming that Johnson’s group had indeed purchased the team for the $2 billion dollar figure, which included the Dodgers franchise and Dodger Stadium.

Including money for extra land around the stadium and the parking lots, the total sale price for the entire transaction comes to $2.3 billion.

The Dodgers were put up for sale after Major League Baseball assumed fiscal control over the franchise following financial skullduggery on the part of Frank McCourt, who was allegedly using the team as something of an ATM. Previous estimates had the Dodgers pegged at about $1.5 billion, including one recent one from Forbes.

The big name is Magic Johnson, Los Angeles basketball legend, but he was a part of a group that had the support of Guggenheim Partners and Stan Kasten, among others. That doesn’t mean anything to me. I stopped to marvel at Magic Johnson’s name. The recruitment of other investors was probably why Johnson was a part of this.

Major league owners are expected to approve the three remaining Dodgers bidders on Tuesday, enabling Frank McCourt to start an auction for the team on Wednesday.

By the time the auction is over -- late Wednesday, perhaps, or later this week -- the Dodgers are expected to be sold for a record price for a North American sports franchise.The final three bidders are groups led by Steven Cohen and Patrick Soon-Shiong (never heard of ‘em), Stan Kroenke (who?), and Magic Johnson (MAGIC JOHNSON!).

The auction is likely to start on Wednesday, and while it probably wont be a scenario with a guy talking really fast and holding a gavel while the three bidders hold a stick with a number attached to the end, it’s a lot funnier if you pretend that’s what it will be like.

Check that, horrific Dodger Stadium renovation plans.

Oh, it’s easy to be a traditionalist or someone resistant to change. Takes all of the thinking out of it. It doesn’t take a lot of brainpower to hate anything and everything that’s different. Makes things easier.

It seems like years since the process of selling the Los Angeles Dodgers began. (In fact, it doesn’t just seem so, it is so.)

By next week, the winning bidder in the court-ordered process will be identified. As of Friday, the list was reduced to three. Bill Shaikin:

People mostly remember Joe Torre as an outstanding player, or as an outstanding manager (or as manager of outstanding teams). Once Torre stopped managing, though, he took a job with Major League Baseball, serving as the Executive Vice President for Baseball Operations. He held that position in 2011, then resigned on January 4, 2012 to pursue an ownership opportunity with the Los Angeles Dodgers. That didn’t work out, and MLB never hired anybody in Torre’s place, so maybe this was inevitable:

If a consortium of the ultra-wealthy and super-ultra-mega-wealthy drop $1.5 billion for a professional sports team, they aren’t doing it for the free t-shirts. They’re going to want to recoup their investment, and the best way for a quick cash grab would be to sell the naming rights to their stadium.

Not news. Unless the stadium in question is the venerable Dodger Stadium. From the Los Angeles Times:

A person familiar with the meetings held today between the seven groups remaining in the bidding for Frank McCourt’s Dodgers and Major League Baseball said the league’s owners were impressed with offers from the following parties: billionaire hedge fund titan Steve Cohen and agent Art Tellem; Magic Johnson and Stan Kasten; billionaire St. Louis Rams owner Stan Kroenke; Memphis Grizzlies billionaire owner Michael Heisley and investor Tony Ressler and Stanley Gold, chief executive officer of Shamrock Holdings, the investment company of the family of the late Roy Disney.

Outgoing owner Frank McCourt has agreed to identify a winning bidder by April 1 and close the sale by April 30.Now, also according to the article, the 11 groups or individuals that remain interested in the team must give the company handling the sale new information:

Blackstone Advisory Partners, which is handling the sale, has asked the remaining groups to identify their investors, detail their financing and outline five-year business plans for the club, the Times reported.

Blackstone whittled the original field of prospective owners to 11 last month, based on its assessment of which bidders could put up at least $1.5 billion for the storied National League franchise.The $1.5 billion price, which would be the largest sale price for a franchise in the history of major league baseball, would presumably include the valuable broadcast rights now held by the team. According to the article, some of the groups include one headed by former Dodgers owner Peter O’Malley, another fronted by former LA manager Joe Torre, another including former Los Angeles Lakers star Magic Johnson and one that’s backed by the family of the late Roy Disney, nephew of Disney founder Walt Disney.