A group of investors that includes NBA Hall of Famer Magic Johnson has agreed to buy the Los Angeles Dodgers for $2.15 billion, the highest price ever paid for a professional sports franchise. The sale ends an ugly and protracted legal battle that saw current owner Frank McCourt take the team into bankruptcy and Major League Baseball attempt to forcibly remove him from control of the franchise.
The new ownership group is lead by Mark Walter, the CEO of private equity firm Guggenheim Partners (who will also contribute to the purchase), and includes Johnson, film producer Peter Gruber, and Stan Kasten, the former president of the Atlanta Braves and the Washington Nationals. They beat out other bids from some of the wealthiest businessmen in the country including hedge-fund billionaire Steven Cohen and Stan Kroenke, who already owns NBA, NFL, NHL, and Premier League soccer teams. There was expected to be an auction for the team on Wednesday, but the bid from Walter's group was so much higher than the rest (as much as 25% higher according to The Wall Street Journal), that the no more discussion was needed.
Much of the value of the Dodgers' deal comes not from the baseball team, but from the land surrounding the team's stadium and from the potential TV revenue that comes from broadcasting their games. The team has previously considered starting its own regional sports network in Southern California, but has also been offered a TV contract with Fox Sports that could be worth as much as $3 billion. While he is not the lead investor, Johnson, who spent his entire professional basketball career with the Lakers, will likely become the new face of a second L.A. sports franchise, cheering beleaguered fans who had become fed up with McCourt's mismanagement and several years of lackluster performances. Although McCourt may still be in the picture as a developer of the surrounding property.