Maybe I can’t get past the fact that current Dodgers owner Frank McCourt, the guy whose inept management and systematic looting drove the team into bankruptcy, is about to set some kind of record for the largest amount of money ever pocketed in the sale of a sports franchise. It’s as if McCourt tried to shoot himself in the foot, missed, and struck oil instead. It could have happened to a nicer guy.
Last year I wrote that McCourt had to go, and he is finally going to go. But he’ll be a lot richer than he was when he arrived, and that’s not necessarily the way I wanted to see him go. As Smith College’s Andrew Zimbalist put it, McCourt took a $430-million asset and turned it into a $2.15-billion asset by despoiling it over a period of eight years. McCourt is proof that you can make it in America by being so obnoxiously incompetent that someone will pay you a billion dollars just to leave town.
But let’s forget McCourt and think instead about what it means to pay $2.15 billion for a baseball team. $2.15 billion is about 5 times what McCourt paid for the Dodgers less than 10 years ago, it’s more than twice what anyone has ever paid before for a baseball team, hell, it’s 50% more than the value Forbes assigned to the team just a week ago. It’s more than the Yankees are thought to be worth.
Yes, I know the story about how the Dodgers are worth $2.15 billion because the right to broadcast Dodger games locally is such a valuable asset. I hate to mention it, but the Dodgers’ TV ratings last year were the worst in baseball – tied for worst, I might point out, with the Angels of Anaheim. Overall, more households were watching the Rays in Tampa Bay than the Dodgers in Los Angeles. True, last year was an historically depressing year to be a Dodgers fan, and true, it’s worth a lot of money to hear Vin Scully call a baseball game, but my guess is that I could sign Vin Scully to replace John Sterling and it would cost me considerably less than $2.15 billion.
Normally, I would imagine that someone would pay $2.15 billion for an asset because they expect that asset to pay off to the tune of, say, $2.15 billion. That would require the Dodgers to gross a lot more revenue than they’re currently grossing, which might require Angelinos like me to shell out a lot more money to see Dodger games. But the folks buying the Dodgers assure us this isn’t so. Mark Walter, chief executive of Guggenheim Partners, the financial-services firm that is providing most of the money for Johnson’s group, says that he doesn’t want “a return on investment on buying the Dodgers.” Instead, he wants “to have a multi-generational relationship that changes my life, Magic’s life, Magic’s grandchildren’s lives and all of our lives.” I should take this as good news. In fact, I should hope that this becomes a trend in American business, because I own a little software business that’s not so good at generating revenue but that has a great potential ability to produce multi-generational relationships.
Oh well. I suppose I shouldn’t worry. If I were smarter I’d probably be richer, and if I was as smart as Mark Walter I’d probably be rich enough to buy the Dodgers. Then again there’s Frank McCourt, who makes me wonder why he’s so rich when he’s not all that smart.
UPDATE: for those who want to know more about the sale of the Dodgers, read today’s terrific piece from Maury Brown at BizOfBaseball.com.