By Mike Pesca
Published: November 2, 2011
Los Angeles Dodgers owner Frank McCourt and Major League Baseball have reached an agreement to put the team up for sale. While McCourt’s ownership has been widely seen as a disaster for the club, it will still likely sell for nearly three times what he paid for it.
ROBERT SIEGEL, HOST: Now, to another intractable mess, this one with slightly lower stakes, that is unless you’re a Los Angeles Dodgers fan. All season, one of baseball’s marquee franchises has been in limbo. It’s been caught up in owner Frank McCourt’s nasty divorce, the team’s subsequent bankruptcy and a takeover by Major League Baseball.
Well, after a tepid season and plummeting ticket sales, McCourt and the league have agreed to a deal to put the team up for sale, pending approval of a judge. NPR’s Mike Pesca has our story.
MIKE PESCA, BYLINE: For the last month, the phrase unprecedented baseball collapse has attached itself to the Boston Red Sox, blowers of a nine-game lead in the race for the playoffs. The Red Sox also sucked attention from Atlanta, which blew an eight and a half game lead in the playoff standings.
But the real collapse, well beyond single year wins and losses, was happening a continent away. An acrimonious divorce between Frank McCourt and his wife laid bare the loose sand upon which the Dodgers rested. Baseball tried to take control from McCourt, who fought back, but as of last night, league and owner agreed one of the most coveted brands in sports would go up for bid.
John Moag, an investment banker specializing in sports deals, says the Dodgers brand is strong, but the bottom line was hurt by McCourt’s actions.
JOHN MOAG: He has taken streams of revenues, such as the parking lot, such as sponsorship, converted them to cash and then stripped them out of the franchise. And by doing so, he’s robbed the franchise of the streams of revenue that would normally be around for several years, five years, ten years.
PESCA: Frank McCourt bought the Los Angeles Dodgers for $9 million of his own and $440 million which were loaned. He increased revenue, but the cash often flowed into his own pockets or the balance sheets of McCourt-owned companies with names like Blue Land Co.
However, Michael Rapkoch, founder of Sports Value Consulting, LLC, says that any deals McCourt made with himself should not affect potential buyers.
MICHAEL RAPKOCH: Yeah. That’s the same thing that happened with Tom Hicks and with the Texas Rangers. Right? So any self-dealings, right hand to left hand, is going to be eliminated.
PESCA: A couple of years ago, the Texas Rangers, under owner Tom Hicks, were indeed in a similar situation to McCourt’s Dodgers, highly leveraged and unable to meet expenses. As embarrassing as the situation was for Hicks and baseball, the franchise was sold and the Rangers quickly established themselves as a great baseball team, appearing in the World Series the past two years.
The point is that Dodgers fans needn’t despair. Michael Rapkoch says baseball’s intervention also helped the team’s chances.
RAPKOCH: I need to say only good things to Commissioner Selig for stepping in and handling the Dodgers like he has to prevent a potential meltdown.
PESCA: That meltdown, in Rapkoch’s eyes, would have been if McCourt were allowed to sell TV rights, bolstering finances in the short term, but providing no long-term stability. Under that base path not traveled, the team’s sale price would have been much lower.
But the Dodger brand has taken hits. On opening day this year, a fan was brutally assaulted in the parking lot, and last week a lawyer for the Dodgers said that a jury might find that the fan bore partial responsibility for the serious brain injuries he suffered. As a legal argument, that’s rock solid. As a public relations declaration, it’s rock-headed.
But the Dodgers do have the likely most valuable player in Matt Kemp, the probable Cy Young Award winner in Clayton Kershaw, three Gold Glove winners, a magnificent stadium and the announcing voice of Vin Scully. Are those assets worth a billion dollars or more? That’s why they play the sales game. Mike Pesca, NPR News.
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