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Friday, Sep 29, 2023


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Senior Reporter

The Los Angeles Dodgers may not make much money now, but experts say a new owner could supercharge revenues with the addition of luxury boxes, a boosted cable television contract and more aggressive onsite retailing.

The team was estimated to gross $70.9 million in 1995, but that figure could jump to as much as $128 million an 80 percent hike once income from television and luxury suites come on line, sports analysts say.

That doesn’t begin to count potential revenue from additional commercial development on the 300-acre stadium site in Chavez Ravine.

Dodgers owner Peter O’Malley stunned Los Angeles last week by announcing that he was putting the team up for sale citing onerous estate taxes and the fact that a family business could no longer compete in a professional sports world now dominated by big-league corporations.

“Dodger Stadium is one of the oldest stadiums, and does not have some of the revenue-enhancing features such as luxury boxes. There are enormous additional revenues to be gained,” said Alan Rothenberg of the law firm Latham & Watkins, and a veteran sports industry lawyer.

The team’s biggest value, however, may be to a corporation looking for an international brand name synonomous with the best in professional sports.

In the right hands, the team and stadium might literally become a permanent advertisement for a sporting goods maker, or programming for an entertainment giant such as Fox Television, a unit of Robert Murdoch’s News Corp.

Despite questionable profits, it is the tie-in value of the Dodgers to programmers and manufacturers that may boost their sale price into the hundreds of millions.

“You have broadcasters that may buy for the guaranteed high-interest programming, as the (Chicago) Cubs with the Tribune Co., or you might have sporting goods manufacturers buying in for the right to advertise in and re-name the facility (Dodger Stadium),” said Alan Friedman, editor of the annual book “Inside the Ownership of Professional Sports Teams,” by Chicago-based Team Marketing Report Inc.

Financial World magazine, in its annual report on sports franchise revenues and values published last May, pegged the Dodgers worth at $147 million last year.

Still, few expect the franchise to sell for less than $200 million, and it will probably go for more particularly given that the Baltimore Orioles sold for $173 million in 1993.

For example, what if Nike Inc., the sneaker-maker, took a hankering to the Dodgers?

“A half-minute of (television) time might sell for $150,000 to $175,000, nationwide, for the World Series. So what would be the value of signage, or the (Nike) swoosh on uniforms? It’s incalculable,” Friedman said.

In Japan, corporate sponsorship of professional baseball is widely practiced and accepted, said Dean Baim, professor of economics at Pepperdine University, and the trend is growing here.

He noted that at the seventh inning stretch at Busch Memorial Stadium in St. Louis, home of the St. Louis Cardinals, the fans do not sing “Take Me Out to the Ballgame,” but rather a tribute to Budweiser beer.

But even without a corporate tie-in, anyone buying the Dodgers and partnerships involving attorney Robert Shapiro, Lakers owner Jerry Buss, and Robert Daly, co-chair of the music and film divisions of Time-Warner Inc. are all being floated could make the team more profitable, experts say.

Though the Dodgers recently completed a cable deal that takes effect this coming season, many analysts believe that more aggressive use of cable could boost the team’s revenues.

“A lot of people point at the (New York) Yankees, who have a cable deal worth $50 million a year,” said Kurt Badenhausen, associate editor of Financial World and author of the annual sports study.

“I don’t know if the Dodgers could match that, but they haven’t been maximizing revenues there so far,” he said.

The Financial World analysis broke down the privately held Dodgers revenue as follows: $24.4 million from broadcast-cable, $26.6 million from tickets, $18 million from concessions and $1.9 million from licensing for a total of $70.9 million.

Experts interviewed by the Business Journal say the new owners could boost revenues to $128 million a year fairly easily by:

– Inking new cable-broadcast deals that would generate $50 million a year.

– Constructing luxury boxes and ticket price changes could boost ticket revenues to $50 million annually.

– Increasing retail space at the ballpark, hiking those annual revenues to $25 million.

– Expanding licensing to increase revenues from $1.9 million a year to $3 million annually.

The construction of luxury boxes at Dodger Stadium is taken as a virtual certainty by all experts who discussed the franchise’s outlook.

No one has fully assessed the number of boxes that could be added at Dodger Stadium, but assuming that 100 boxes are built, and leased at $125,000 a year, $12.5 million would be added to the team’s annual revenues.

Moreover, Dodger Stadium is probably under-utilized as a retail complex, said other experts.

“The thing about Gold’s Gym is that it is really a clothing store masquerading as a gym,” said Gary Post, chairman of Ambient Capital Group Inc., a Westside investment banking shop. “Stadiums are the same way. You have enormous potential to sell to a somewhat captive audience. They need more retail space at Dodger Stadium.”

In addition, the 300 acres owned by the O’Malley family in Chavez Ravine is big enough to allow for substantial development of a new facility like a pro football stadium.

O’Malley backed down from his proposal to build a stadium following pressure from L.A. City Hall to support a rejuvenated Coliseum instead. But a new owner paying top dollar for the Dodgers might not be so acquiescent.

And the new owners would have substantial leverage to get what they want, Pepperdine’s Baim noted.

“You know, the new owners in a few years could say to the city, ‘San Antonio is offering us a new stadium, with luxury boxes, rent free, and we really need Los Angeles to step up to the plate and do the same thing,’ ” Baim said. “I don’t think we want to lose our only baseball team.”

To be sure, whatever entity buys the Dodgers will almost surely be buying into red ink, at least for the short term, said experts.

It begins with player salaries. Just recently, Chicago White Sox owner Jerry Reinsdorf signed outfielder Alan Belle for $55 million, in a multi-year contract.

Dodgers first baseman Eric Karros was signed last week to a $20 million deal over four years, while catcher Mike Piazza wants $50 million to $65 million over five years.

Additional upfront costs would include the building of luxury boxes at Chavez Ravine, and constructing more retail space.

There also are upside limits on licensing and merchandising deals: The Dodgers must share licensing revenues with all other teams in the league, and would share in any overseas cable television deals as well, said Rich Levine, a Major League Baseball spokesman.

Moreover, Dodger Stadium itself would have to be reassessed following any sale of the franchise, something that hasn’t happened since 1979, and the passage of Proposition 13.

Nevertheless, no one expects a shortage of franchise buyers, and, in the final analysis, the Dodgers will be worth what someone is willing to pay not what a profit and loss statement may have on the bottom line, said Rothenberg, whose firm will likely represent the Dodgers in any sale.

“This is a marquee property,” he said. “The non-economic value of owning the team is enormous, for individuals who might want to form partnerships, or even for corporations.

“It’s going to sell for hundreds of millions.”

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