Business, Economics and Jobs

Los Angeles Dodgers to be sold for record two billion dollars

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The Los Angeles Dodgers have played their home games at Dodger Stadium since 1962. This season will mark their 50th anniversary at Dodger Stadium. (Photo from Flickr user The West End.)

On Tuesday night, a group led by former Los Angeles Lakers star Earvin "Magic" Johnson agreed to purchase the LA Dodgers Major League Baseball franchise from owner Frank McCourt for $2 billion.

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The price sets a record for cost of a major sports franchise, vastly exceeding the estimated $1.5 billion sale of Manchester United in 2005. Many are wondering if the Dodgers are worth their purchase price. Mike Carlson, former Vice President of MLB International and now a sports broadcaster, believes they are — because of the market they play in.

"When you think that the record in America was when Steve Ross bought the Miami Dolphins for $1.1 billion, and, although the Dolphins have the advantage of getting that cut of the NFL's television revenue, the Dodgers have a far larger market, and a far bigger TV market, more importantly," Carlson said. "And they also have some incredibly valuable property in the Los Angeles area."

After purchasing the Dodgers from News Corp for $421 million in 2004 and subsequently filing for bankruptcy protection, Frank McCourt appears to have benefited greatly from the deal. The sale will help McCourt pay off his divorce settlement. Part of the deal also grants McCourt ownership of half of the parking lots. The Dodgers will lease the parking lots from McCourt.

"And that's hugely interesting because, when Fox sold the Dodgers, they looked at it, I think, as a bad investment for them, but when McCourt went to sell it last summer, it was Fox Prime Ticket that wanted to buy it," Carlson said. "And I think that shows you where the money is, and I think what the current partners are looking at is, when the TV deal expires, they've got a huge market in the southland of California that they can sell a subscription, or even a pay-per-view product, to the Dodgers games. And there's an awful lot of money in that."

Fans are hopeful the sale of the Dodgers will improve the team's on-field performance. The team has not reached the World Series since its 1988 victory over the Oakland Athletics. Carlson said the team will improve under new ownership because the uncertainty that has swirled around the team will have been removed.

"Part of the group is Stan Kasten, who is considered a very safe pair of hands by Major League Baseball. When they finally got the Washington Nationals franchise, which was incredibly important to their plans, and they let Montreal go under in order to do that, it was Kasten who they put in charge of that. And I think they look at that as being a positive thing, and, of course, Magic Johnson is there to sell it to, sort of, the population of Los Angeles, where he obviously is a local hero," Carlson said.

The sale of the Dodgers is subject to approval from U.S. Bankruptcy Court judge Kevin Gross, but Carlson does not foresee any obstacles in the approval of the deal.