The Los Angeles Dodgers’ new owners plan to spend $100 million or more to modernize the baseball club’s 50-year-old stadium after paying a record $2.15 billion for the team.
The Guggenheim Partners-led investors, who took over in April, will start work on electrical, water and information systems when the season ends, team president Stan Kasten said in an interview in his office overlooking the field. Expanded visitor and home-team clubhouses, Wi-Fi areas and possibly a museum are on the list for the next three years, he said.
“I would like to do even more, add features like all modern stadium structures have,” said Kasten, 60, a member of the investor group, who says he wouldn’t be surprised if the cost exceeds “nine figures.” “It’s a sizable project.”
After spending the most ever for a professional sports team, the owners are working to revive a franchise that hasn’t won the World Series in 24 years. They have taken some first steps to shore up fan support, after the previous owner put the team in bankruptcy, by lowering parking prices and cutting wait times for hot dogs and beer with additional staff.
“We will be investing in players, we will be investing in infrastructure,” Kasten said. “We do believe the return on investment will be very respectable.”
Attendance is up 5.5 percent to an average 38,244 a game from last season, according to data from ESPN, as the team compiled the best record in baseball through June 1. The Dodgers drew a league-leading 46,000-plus as recently as 2009.
Updating the hidden infrastructure is a priority, Kasten said. The stadium, the largest in baseball by seating capacity, is the third-oldest in Major League Baseball after Fenway Park in Boston and Wrigley Field in Chicago. Kasten said some of the 56,000 seats could be removed in a makeover.
Further out, the owners are considering features found at newer buildings, including kids areas, bars and restaurants, Kasten said. None of the changes will interfere with the postcard view of the San Gabriel Mountains. The hillside location would involve some tunneling in a renovation, costly in quake-prone Los Angeles, he said.
Dodger Stadium, nestled in Chavez Ravine north of downtown, opened in 1962 and sits on more than 300 acres, mostly parking lots. Near-term development opportunities include retail and a larger entrance plaza, Kasten said. The previous owners also spoke of developing the area before running out of money.
To increase revenue, the Dodgers plan to solicit premium sponsorships that will let participating companies showcase products in unique ways, Kasten said.
The Dodgers would consider sponsorships similar to those Kasten negotiated in Atlanta as part of the two stadiums and one arena he built during his sports career. At Philips Arena, home of basketball’s Atlanta Hawks, Philips Electronics BV (PHIA) displays its consumer products for fans. At Turner Field, home of the Braves baseball team, Coca-Cola Co. (KO:US) built an 80-foot soda bottle and kids amusement park.
“Many times the best ideas don’t come from us, they come from the companies interested in a sponsorship ,” Kasten said.
For now, selling naming rights to Dodger Stadium, one of only 11 in Major League Baseball without such an agreement, isn’t part of the owners’ plans. It remains a possibility when renovations are done, Kasten said.
“When we complete the project, we will be in a different type of proposition,” Kasten said.
The team’s most valuable asset is television rights, which former CBS Sports President Neal Pilson said could be worth $4 billion over at least 15 years. The club’s existing contract with News Corp. (NWSA:US)’s Fox Sports expires after the 2013 season. Talks with a rival to Fox aren’t permitted until after November, according to bankruptcy court documents.
Among the team’s options are to re-sign with Fox, partner with another cable provider like Time Warner Cable Inc. (TWC:US) or, like the New York Yankees, establish their own regional sports network.
Competition for live sports programming is driving up the price companies are willing to pay for media rights. In the past two years, baseball’s Texas Rangers and Los Angeles Angels of Anaheim, who play 31 miles away, have each signed 20-year, $3 billion contracts with Fox. The Dodgers have more leverage because they’re in a bigger market, own a bigger brand and have a greater legacy than those clubs, former Rangers Chief Executive Chuck Greenberg has said.
The Dodgers maintain a link to former owner Frank McCourt, who kept a 50 percent interest in land surrounding the stadium as part of the sale. The team went into bankruptcy under McCourt, leading to the court-supervised auction that brought in the Guggenheim group.
A federal grand jury is investigating the finances of the Dodgers under McCourt, including the possibility of tax evasion, said a person familiar with the matter who declined to be identified because the probe isn’t public. The Los Angeles Times reported the probe last week.
In a bankruptcy filing, Major League Baseball alleged McCourt “looted” $189 million from the Dodgers for personal use, a claim his lawyers said couldn’t be supported.
“Frank McCourt is not the target or subject of any investigation, and neither he nor any of his businesses has received any subpoenas from the U.S. Attorney’s Office or anyone else,” his attorney, Ryan C. Kirkpatrick at Susman Godfrey LLP in Los Angeles, said in an e-mail.
Patient on Profit
The matter doesn’t involve the team’s new owners, Kasten said. He wouldn’t say whether the club has been asked to provide documents or testimony to the grand jury.
“It has nothing to do with the current Dodger ownership,” Kasten said. “We are not involved.”
Richard Robinson, head of the major fraud section at the U.S. Attorney’s office in Los Angeles, didn’t return a call to his office outside of business hours yesterday seeking comment.
Kasten said there’s little pressure to make the Dodgers profitable quickly. In addition to cutting general parking by a third to $10, they plan to keep lower ticket prices that took effect at the start of the season.
“I do not worry about this fiscal year or next fiscal year,” Kasten said. “We have a long-term horizon.”
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