Bloomberg News

Showtime Returns to L.A. With Magic’s $2.3 Billion Dodgers Deal

March 29, 2012

For Los Angeles Dodgers fans, it’s not the record $2.3 billion bid that matters, it’s who made it.

The investors behind the winning offer for the bankrupt Major League Baseball franchise include Earvin “Magic” Johnson Jr., the hall-of-fame Los Angeles Lakers guard, and Peter Guber, chief executive officer of Mandalay Entertainment Group and the producer of movies including “Rain Man.”

They are “big names in Los Angeles,” said Steven Travers, the author of two books about the team, including 2009’s “Dodgers Past & Present,” and a fan himself. “They have panache. They present what the city of L.A. is: sports, entertainment, Hollywood style.”

A sports franchise can boost a city’s image, and a high- profile part-owner may even attract new businesses, according to Kevin Starr, a historian at the University of Southern California in Los Angeles. He said local ownership matters when it comes to the storied baseball team, owned since 2004 by Boston real-estate developer Frank McCourt.

“You lose the Dodgers,” Starr said before the sale announcement was made March 27, “you lose Los Angeles.”

Enthusiasts appeared to agree, celebrating online with comments on the Dodgers’ Facebook page (“When I heard the news last night it felt like Christmas Eve,” wrote one) and blogs devoted to the team that moved to the nation’s second-largest city from Brooklyn in 1958.

“As far as Magic being owner, I just want him to be Magic,” wrote a blogger named Robert Timm, who runs dodgerdugout.com. “I want L.A. to be cool again.”

‘A New Chapter’

The investor group, Guggenheim Baseball Management LCC, isn’t all homegrown. It includes Chicago-based Mark Walter, CEO of Guggenheim Partners LLC, and Stan Kasten, a former president of the Atlanta Braves and Washington Nationals, who will move to Los Angeles to run the Dodgers. Guber is co-owner of the National Basketball Association’s Golden State Warriors.

While Walter is the controlling partner, Johnson’s name has star power. Mayor Antonio Villaraigosa called him “a great community leader” and said his group’s purchase of the team would be “an opportunity to write a new chapter.” Dodgers outfielder Matt Kemp said on ESPN Radio that he was encouraged because “Magic knows the team, and he knows L.A.”

The 52-year-old, who owns Beverly Hills-based Magic Johnson Enterprises Inc., won five NBA championships with the Lakers in the 1980s during what’s known as the “Showtime” era, for the style of play on the court and the celebrities in the stands. He quit playing in 1991 after disclosing he had HIV, returning for 32 games in 1996.

Paying Creditors

Johnson sold his minority stake in the Lakers two years ago to billionaire Patrick Soon-Shiong, the richest man in Los Angeles, according to the Los Angeles Business Journal, and a member of a group that made a competing bid for the Dodgers.

The Dodgers sale must be completed by April 30, the day McCourt is required under a settlement to pay his ex-wife, Jamie McCourt. He put the team into bankruptcy last June, and the McCourts split up. They fought over the Dodgers and their six homes, among other things, during divorce proceedings that revealed they retained a $120,000-a-year hairstylist. The settlement gave him the team, and she got $131 million.

He may collect more than $1 billion from the sale after paying off Dodgers’ creditors and his ex-wife.

Under McCourt, who paid $430 million for the team, fans complained management didn’t spend enough on free agents, scouting and the farm system that develops talent. On opening day last year, a San Francisco Giants fan suffered severe brain injuries when he was beaten in the Dodger Stadium parking lot. The Dodgers finished the season with the 13th-best winning percentage out of the 30 Major League teams.

Six World Series

The Dodgers have won six World Series, the last in 1988. Five of them came in Los Angeles, where Duke Snider, Sandy Koufax, Steve Garvey, Fernando Valenzuela and Kirk Gibson led them to championships.

The Johnson group’s bid price topped the previous record amount for a major U.S. professional sports franchise: the $1.1 billion real estate developer Stephen Ross paid for the NFL’s Miami Dolphins.

“I’m thrilled,” said Bert Fields, an attorney in Los Angeles who represented Jamie McCourt in the divorce before withdrawing last year. “I’m just happy there is someone there who can put some money into the team.”

Time will tell whether the Dodgers with Johnson as part- owner will sell more tickets, or bring more prestige to L.A. sports, according to David Carter, a principal with the Sports Business Group consulting firm in Los Angeles.

“After the honeymoon,” Carter said, “they have to deliver.”

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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