The Wall Street Journal is reporting that Magic Johnson and his group, including Stan Kasten and Peter Guber, have won an auction for the Los Angeles Dodgers. Johnson was among three bidders approved by Major League Baseball today.
Price? $2 billion, the largest ever paid for a pro sports franchise.
The losers were hedge-fund billionaire Steven Cohen, who had joined with L.A. billionaire Patrick Soon-Shiong in a bid that many — myself included — thought had too much financial firepower. The other defeated bidder was Stan Kroenke, owner of the St. Louis Rams. This clearly ups the chances that the Rams may become the L.A. Rams relatively soon, to provide the Downtown AEG stadium project with an NFL team.
Magic was the local favorite, so L.A. ultimately got what it (probably) wanted here: a hometown favorite running the show, even if the bulk of the financing came from Guggenheim Partners in Chicago. $2 billion, if the figure is correct, isn't chump change, either. Dodgers owner Frank McCourt stands to make twice what everyone thought he might make, when the bids were in the $1.5-billion ballpark.
Cohen can now turn his full attention to the woeful New York Mets.
See? It worked out exactly as everyone hoped and planned!
UPDATE: That $2 billion price tag is being confirmed all over the place. I'm going to be very busy tomorrow figuring out how Magic got that much money together. It's almost two-thirds of Stan Kroenke's entire net worth.
UPDATE 2: It's becoming clear that Magic's stake in all this is fairly small. Guggenheim Partners and, presumably, Guber, will own the bulk of the team. I suppose you could say that this means Alan Schwartz, who built Guggenheim into a Wall Street player, kinda sorta beat out his Greenwich, Conn. neighbor, Cohen. And staged a serious comeback from the death of Bear Stearns.
UPDATE 3: The Los Angeles Dodgers are now owned largely by a big investment fund based in Chicago. And remarkably, it appears that Frank McCourt is keeping the parking lots around Dodger Stadium. Note that he will be sharing this prize with "certain affiliates," which could mean anything. From AP:
Mark Walter, chief executive officer of the financial services firm Guggenheim Partners would become the controlling owner. The price would be easily a record for a North American sports franchise.As part of the agreement, the Dodgers said McCourt and "certain affiliates of the purchasers" would acquire the land surrounding Dodger Stadium for $150 million.
UPDATE 4: AP (via Sports Illustrated) raises the debt specter. Guggenheim will presumably use debt to buy the team now and pay it off when the TV rights, which could reach $3 billion by some estimates, are sold. Contrast this with the all-cash deals that Cohen and (maybe) Kroenke were offering.
UPDATE 5: By the way, the bankruptcy court has to approve this whole thing, but it's unlikely it will have a problem with $2 billion.
UPDATE 6: Bill Shaikin of the L.A. Times is reporting — via Twitter — that McCourt cut a deal with Guggenheim's CEO, Mark Walter, as soon as Major League Baseball OK'ed the bids. No auction. It remains to be seen whether there's a way for Cohen or Kroenke to protest legally, given that the bankruptcy court has to approve the bid.
UPDATE 7: We should note that MLB did reserve the right to re-evaluate the winning bid if it came in substantiually higher than the approved bids. We'll see if the $2B triggers that.
UPDATE 8: Shaikin (via Twitter) clarifies the lots deal: Magic & Co. can veto a deal. Defines parking lots $150-million side deal as a "joint venture" for McCourt, suggesting that Frank may not OWN the lots in the end after all.
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