The Los Angeles Dodgers late Tuesday said that owner Frank McCourt has reached an agreement with a group lead by Earvin “Magic” Johnson to sell the troubled Major League Baseball franchise, in a deal valued at $2.15 billion.
The purchasing group winning the bankruptcy auction, Guggenheim Baseball Management LLC, has as its controlling partner Mark R. Walter, chief executive of Chicago investment firm Guggenheim Partners. The group includes entrepreneur and former Lakers star Johnson, Guggenheim Partners President Todd Boehly, former Atlanta Braves president Stan Kasten, Mandalay Entertainment Chief Executive Peter Guber and oil and gas investor Bobby Patton. Kasten is expected to run the team.
“I am thrilled to be part of the historic Dodger franchise and intend to build on the fantastic foundation laid by Frank McCourt as we drive the Dodgers back to the front page of the sports section in our wonderful community of Los Angeles,” said Johnson in a statement.
In addition to Guggenheim Baseball paying $2 billion for the team, the agreement calls for McCourt and certain affiliates of the purchasers to form a separate joint venture. The joint venture will acquire the Chavez Ravine property on which Dodgers Stadium and the parking lots are located for an additional $150 million.
“This transaction underscores the debtors’ objective to maximize the value of their estate and to emerge from Chapter 11 under a successful plan of reorganization, under which all creditors are paid in full,” the team said in a statement. Wall Street Journal sources described the winning bid as a “100-percent cash offer."
The purchase price far surpasses the previous record sales price for a U.S. sports franchise, set three years ago when Steve Ross bought the NFL’s Miami Dolphins for $1.1 billion.
In 2004, McCourt paid about $430 million to buy the team, Dodger Stadium and 250 acres of surrounding land from the Fox division of News Corp.
The Dodgers filed for Chapter 11 reorganization in June after the team was unable to meet player payroll or pay other bills. The action came after MLB Commissioner Bud Selig refused to approve a $3 billion deal between the Dodgers and Fox to extend a television broadcast rights contract. Bankruptcy filings estimated the team's debt at $579 million as of January.
The purchase agreement must still be approved by the U.S. Bankruptcy Court in Delaware. McCourt is under pressure to close the deal by April 30, when he must pay former wife Jamie McCourt a $131 million divorce settlement. Even subtracting the divorce settlement, creditor payments and other legal costs, McCourt could net several hundred million dollars from the sale.
"This agreement with Guggenheim reflects both the strength and future potential of the Los Angeles Dodgers, and assures that the Dodgers will have new ownership with deep local roots, which bodes well for the Dodgers, its fans and the Los Angeles community," McCourt said in a statement.
The auction was held Tuesday evening by New York investment advisory firm Blackstone LP after Major League Baseball approved three finalists in the bidding. One finalist was partnership between hedge-fund billionaire Steven Cohen and L.A. biotech billionaire Patrick Soon-Shiong. The third finalist was Stan Kroenke, a billionaire developer whose family owns or has stakes in several sports franchises, including the NFL’s St. Louis Rams, NBA’s Denver Nuggets, and NHL’s Colorado Avalanche.