June 28 (Bloomberg) -- The Los Angeles Dodgers, who filed for bankruptcy protection yesterday, would command a Major League Baseball-record $1 billion in a sale, sports bankers said.
The team filed for protection from creditors after baseball Commissioner Bud Selig rejected what Dodgers owner Frank McCourt says is a $3 billion television contract with News Corp.’s Fox Sports that would’ve allowed the club to satisfy existing claims, pay debts as they become due and generate a substantial return.
The value of the proposed TV contract, the number of bidders that would be attracted to a sale of a trophy property and the club’s status as an iconic franchise are among the factors that might make the Dodgers the first baseball team to sell for that much.
“I wouldn’t be surprised if it was $1 billion,” said Gordon Saint-Denis, president of Katonah, New York-based Major League Sports Consulting LLC, adding that a sale probably would attract six to eight serious bidders. “It is the Dodgers. It is L.A., where they could put together some serious consortiums of wealthy people in the entertainment industry.”
Forbes magazine values the team at $800 million, third-highest in baseball after the New York Yankees and Boston Red Sox.
Charles Baker, a partner with DLA Piper’s Global Sports Media and Entertainment Practice, said he’s been approached by two parties interested in buying the Dodgers. He declined further comment. Former Dodgers All-Star Orel Hershiser and his ex-teammate Steve Garvey said they would be interested in forming an investment group if the team were for sale; Dallas Mavericks owner Mark Cuban, who bid on the Chicago Cubs and Texas Rangers, told TMZ.com that he might not be interested because it may take too long to untangle the franchise’s finances.
Selig said he rejected the proposed 17-year television contract because provisions in the agreement allowed McCourt to divert funds from the team for his personal use, including his high-profile divorce, harming the franchise in the long term.
The bankruptcy is the most recent development in the saga of McCourt and the Dodgers, who, while based in Brooklyn, New York, became the first major league team with a black player when Jackie Robinson took the field in 1947.
The team listed assets of as much as $1 billion and debt of as much as $500 million in a Chapter 11 petition filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
Manny Ramirez, who last played for the Dodgers in 2010, is listed as the largest unsecured creditor with a claim of about $21 million in deferred compensation. Others creditors include Andruw Jones, who plays for the Yankees and is owed about $11 million and longtime Dodgers announcer Vin Scully, who is owed about $152,000.
Under terms of McCourt’s ownership agreement, Selig could seize control of the team and order its sale.
Even with the legal entanglements, former Madison Square Garden President Bob Gutkowski said the Dodgers would attract the interest of anyone wishing to own a professional sports franchise.
“It’s beachfront property,” said Gutkowski, a partner in the New York-based sports consulting firm Innovative Strategic Management.
Fans May Return
David Carter, executive director of the Sports Business Institute at the University of Southern California’s Marshall School of Business, said sports fans in the U.S.’s second-biggest media market would re-engage with the Dodgers if McCourt didn’t own the club.
“Folks aren’t interested in spending their money,” Carter said, declining to offer a valuation on the club. “They don’t know if it’s going to payroll or a divorce attorney.”
Selig issued a statement after the bankruptcy filing that said the Dodgers are in bankruptcy because of McCourt’s “excessive debt and his diversion of club assets for his own personal needs.”
As for the franchise’s financial future, Carter said a change in ownership would invigorate fans and sponsors.
‘Room for Growth’
“There’s room for growth at the turnstile, TV, sponsorship, merchandise,” he said. “The valuation of this team is not going to be based on the compromised revenue streams of today. No one is going to buy this team at a bargain-basement price.”
The Dodgers’ bankruptcy follows the Chapter 11 filing last year of the Texas Rangers, who were sold at auction to a group that included Hall of Fame pitcher Nolan Ryan.
The Dodgers have won six World Series, tied for fifth most in baseball. Five of them came in Los Angeles, where Duke Snider, Sandy Koufax, Fernando Valenzuela and Kirk Gibson played key roles on title teams.
The Dodgers were a model of stability under the stewardship of the O’Malley family from 1950-98, fielding just two managers -- Walter Alston and Tommy Lasorda from 1950-1996.
They had the same infield, Garvey at first, Davey Lopes at second, Ron Cey at third and Bill Russell at shortstop, for a baseball-record eight-plus seasons.
The Dodgers entered last night’s game against Minnesota with a 35-44 record, 9 1/2 games behind the defending World Series champion San Francisco Giants in the National League West.
“It’s a turnaround,” said Rob Tilliss, founder of Inner Circle Sports, a sports financial advisory firm. “But there’s lots of upside.”
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