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The Business of Sports

Dodgers Sale: Moneyball, Part II

Columbia PicturesMoneyball was nominated for a handful of Academy Awards on Jan. 24. At Dodger Stadium in Los Angeles, across town from the studio where this box office hit about the Oakland A’s was filmed, an ongoing drama of a different kind is playing out.

Monday, Jan. 23, was the soft deadline to submit ownership bids for the Dodgers to Blackstone Advisory Partners, the global investment firm handling the sale for outgoing Dodgers owner Frank McCourt under the watchful eye of Major League Baseball and U.S. Bankruptcy Court. As reported by Bill Shaikin of the Los Angeles Times and others, by that date more than 10 opening bids had been submitted by some of the most high-profile figures in American business today—several of whom are billionaires who appear regularly on annual lists of the world’s wealthiest people, such as Oracle (ORCL) Chief Executive Larry Ellison and SAC Capital Advisors founder Steven Cohen. Indeed, the Dodgers are anticipated to sell for as much as $1.5 billion—a record for an American sports franchise.

McCourt was able to fund almost none of the team himself and, as a result, put the Dodgers into bankruptcy. This time around, however, funding the franchise won’t be an issue. Instead, two new economic hurdles will capture the interest of bankers handling the bids, Dodgers fans, and MLB Commissioner Bud Selig: the land surrounding Dodger Stadium (owned by McCourt and not automatically included in the sale) and the negotiation of a lucrative new TV rights deal for the team (or, more likely, the development of an exclusive regional sports network for the franchise).

While Dodgers fans might prefer that the new owner immediately turn his attention to the struggling product on the field, he will have plenty to worry about before signing massive player contracts or renegotiating the deals of current stars Matt Kemp and Clayton Kershaw (ranked No. 32 and No. 87, respectively, on the 2012 Power 100 list of powerful athletes).

The sales of the last few MLB franchises up for grabs have either been spearheaded by Commissioner Selig’s inner circle or led by such local heroes as pitching legend Nolan Ryan, who was brought aboard the Texas Rangers to revive his old team’s bragging rights. But in the case of the Dodgers, you can remove the mantles of “Friends of Bud” and “civic pride” from the sales equation and divide the majority of prospective owners into a few specialized categories:

• Developers: The new owner gets the team and the stadium but not the surrounding parking lots, which, as one astute Times letter writer put it, is like buying a house without the driveway included. With an estimated net worth of $850 million, L.A. real estate developer Rick Caruso leads this list, with former Dodgers manager Joe Torre serving as his front man. Also in this category: Lakers legend and entrepreneur Magic Johnson, he of the inner city movie theater and Starbucks (SBUX) empire (partnered with Guggenheim Partners CEO Mark Walter, along with former Atlanta Braves and Washington Nationals President Stan Kasten to include baseball pedigree); and Denver sports mogul Stan Kroenke (backed by Wal-Mart (WMT) money from his wife, the former Ann Walton), whose interest has signaled to some that his (NFL) St. Louis Rams might be headed back to L.A.

McCourt began the process of upgrading Dodgers Stadium with Dallas architects HKS, and a developer/owner could complete the work they started. “HKS has enjoyed the challenge of creating a master plan and comprehensive improvements for Dodger Stadium. We have guided the investment of over $120 million that has transformed the experience for fans and players while restoring baseball’s only midcentury masterpiece,” says HKS Sports & Entertainment Group principal Bryan Trubey, who envisions a new owner completing the transformation.

• TV people: Developing a Dodgers regional sports network is a surefire way to control TV rights revenue for the long term, and many of the bidders have significant television experience. Among them are (NBA) Dallas Mavericks owner Mark Cuban, who built his fortune on HDNet; the Disney (DIS) family (with money partner Stanley Gold); and potentially Time Warner Cable (TWC) or Fox Sports (buying the team could be cheaper than paying for broadcast rights).

• Other wealthy notables: Also entering the fray are SAC’s Steven Cohen, with an estimated personal net wealth of $8.3 billion; former Dodgers owner Peter O’Malley; Beverly Hills insurance agent Dennis Gilbert, partnered with Imperial Capital CEO Jason Rees; and possibly Oracle’s Larry Ellison, with an estimated net worth of more than $27 billion.

The deadline for selecting the new Dodgers owner is Apr. 1, and for completing the sale, Apr. 30. Let the vetting begin.

Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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