), which owns the Angels, that could use a little monkey magic. Three years after putting the team on the market, Disney is still waiting for its first serious offer.
Disney isn't alone. Fast fleeting are the days when major-league franchise owners could cash out after years of losing millions and still realize substantial rewards. As many as 20 teams from the big four sports are now on the block, creating the biggest glut in decades.
Why? In the old days, fat cats used to plunk down bags of money for a chance to pal around with a Gretzky or a Jordan, and companies saw synergies everywhere. Now, Wall Street's dog days have turned billionaires into mere millionaires, and corporations are selling noncore businesses. And money from TV contracts, after climbing for years, is looking less robust. "Sports teams are today's Internet stocks," says Peter V. Ueberroth. The former baseball commissioner says he's interested in buying the Angels, "but I'm not going to get into an auction."
Legendary clubs like Boston's Red Sox and Celtics, both sold in the past year, can still command top dollar. But for teams without marquee names, reality is setting in. Disney, which lost an estimated $14 million on the Angels while winning the Series, is likely to get closer to $225 million than the $300 million it had sought two years back, say investment bankers. One reason is that potential buyers can also shop for the Minnesota Twins, Montreal Expos, Atlanta Braves, or even the Los Angeles Dodgers. On Jan. 21, Rupert Murdoch, who has a history of backing losing investments if they help his News Corp. (NWS
) empire, hired investment bankers Allen & Co. to sell the Dodgers.
The situation is worse in pro hockey, where investment bankers say as many as 10 of the NHL's 30 teams are up for sale. Without salary caps, player costs have skyrocketed, sending the Buffalo Sabres and Ottawa Senators to bankruptcy court. The hockey glut includes Disney's Mighty Ducks of Anaheim, being peddled by Lehman Brothers, and the Atlanta Thrashers, one of three teams AOL Time Warner Inc. (AOL
) has indicated it would be willing to unload as it struggles to slash debt.
The problem is, there don't seem to be many buyers. Owners of the NBA's Cleveland Cavaliers and Orlando Magic took their teams off the market last year when offers were too low. Even a team in the NFL, the most profitable league, can go begging. Minnesota owner Billy Joe "Red" McCombs, who has been unable to get the state to help pay for a new stadium, is said to have hired J.P. Morgan Securities to shop the Vikings but has found no offers worth pursuing. McCombs did not return calls. "Owners out there used to look at sports teams like art that appreciated over time," says Jeffrey S. Phillips of investment banker Houlihan, Lokey, Howard & Zukin. "Now they want to see the financials."
That has already driven down multiples. Carl H. Lindner paid $67 million in 1999 for Marge Schott's controlling stake in the Cincinnati Reds--3.8 times that year's revenues, says investment banker John Moag of Moag & Co. Prices are now closer to twice revenues and for hockey, probably lower, he says. "We used to get seven or eight [buyers]," adds Moag. "Now we're getting two or three."
That's hardly good news for Murdoch. He bought the Dodgers in 1997 for a then-record $310 million, lost nearly $200 million by hiring high-priced players who didn't perform, and probably won't get more than $400 million--a $100 million loss. In need of cash to buy the DirecTV satellite service, he may have to throw in his local Fox Sports cable outlet to close any deal. Surely, Murdoch can be forgiven for thinking that nearly 45 years after Da Bums moved to L.A. from Brooklyn, they're still living up to their nickname. By Ronald Grover in Los Angeles