Magic Johnson’s group wins Dodgers bidding for $2 billion, Frank McCourt profits
Dodgers fans rejoiced Tuesday night when it was revealed the ownership group fronted by Magic Johnson won the bidding to purchase the team. Their $2 billion winning bid blew away any previous amount paid for a North American sports franchise. Dolphins owner Stephen Ross paid $1.1 billion for his franchise in 2009 while the next highest amount for an MLB team was $845 million for the Cubs in 2009. The $2 billion figure is every bit as absurd as it seems, and it even calls into question the franchise’s ability to be big spenders.
With so much money spent on the purchase, what kind of payroll will the team have? That’s a legitimate question. The new owners are likely to negotiate a new TV deal for the 2014 season and will need a large up-front payment, but that money will likely go toward the purchasing debt. I honestly think $2 billion might be too much to pay for the franchise. This group will likely have to own the team for two decades to get into decent financial shape.
The real shame of the entire sale is that Frank McCourt makes out as possibly the biggest winner. His debt was estimated to be around $1 billion meaning he will have profited at minimum hundreds of millions. How can a guy who paid almost no money up front for the team in 2004 (he bought the team almost entirely off credit thanks to the value of parking lots he owned in Boston) walk away with such a hefty profit? It’s a great fault that this could occur. Oh, and if profiting possibly $1 billion off the sale wasn’t enough, McCourt will own half the $300 million parking lot.
The new ownership team gives fans plenty of reasons for excitement, both for who will now own the team and for who will not. But if ever there was a time a group spent too much to purchase a team — to the point they may be hamstrung — it was now.
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