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Thursday, March 29, 2012
More Linkies On The Dodgers Sale
- ESPN's Buster Olney (behind the pay wall?) thinks the Dodgers should be treated as a work of art. I find his reasoning entirely unconvincing. Comparing the 2012 Dodgers sale to the 1973 Yankees sale is false in two vital dimensions:
- George Steinbrenner was one man, but the Magic/Kasten/Guggenheim buyers are a group. The difference is vital. One man can afford the luxury of not worrying too much about recouping the cost; a corporation — and let us not forget, that is what we are dealing with here — cannot. Their charge is to operate the business as a business.
- Steinbrenner bought low, while the Guggenheim group appears to have paid a premium. The Yankees spent most of the 60's and early 70's in the doldrums as a consequence of CBS ownership. The sale price was correspondingly depressed. Contrast that with the Dodgers, which had a very active and lengthy bidding process, with an outcome catalyzed by widely reported multi-billion-dollar TV revenue awaiting the winner. I have already made my case for why I think these numbers are vastly inflated and unsustainable. This avenue (and it is the main one) for recouping the sale price is therefore constrained, at least.
“It was the cost of owning one of baseball’s most storied franchises,” he said in a telephone interview and added: “I don’t want to realize a return on investment on buying the Dodgers. I want to have a multi-generational relationship that changes my life, Magic’s life, Magic’s grandchildren’s lives and all of our lives.”— I don't for one second believe that someone with that much money won't, ultimately, operate the business as a business. A frog does not turn into a camel just because it leaves the water.
- The Dodgers are once again the subject of a rumor for every agent hoping his client can get a silly deal. I guess it's a good thing — it means the team is flush, and people recognize this, or at least, so the perception goes.
- "You'll see the team invest money" says Magic. Well, of course, but this answers not at all the questions of (a) enough and (b) intelligence.
- Molly Knight thinks an eventual lawsuit over the parking lots is inevitable, as Frank will chafe if his majority partners show little interest in developing them.
- Andrew Zimbalist thinks the deal makes no sense:
"It was an extraordinary and surprising price," said Andrew Zimbalist, a professor of economics at Smith College. "I rarely admit to not anticipating these things but I did not anticipate a $2 billion price. Keep in mind, in addition to the price, the new ownership group will have to invest something in the neighborhood of $300 million to refurbishing Dodger Stadium and that price does not include $150 million for the surrounding real estate. At the end of the day, you have to question this deal."I am inclined — obviously — to agree. "[N]ow we're into buying art and I can't value art" says University of Michigan sports management professor Mark Rosentraub. Zimbalist also makes a point that has subsequently occurred to me:
"One of the things that commissioner Selig was trying to avoid when he did not authorize the contract between McCourt and Fox was he thought McCourt would take the money and pocket it instead of using it to build the Dodgers," Zimbalist said. "That indirectly will happen anyway because McCourt is going to get his money and the new ownership will have to use a good chunk of the television money to pay off their asset purchase."That is, Bud Selig (and the rest of MLB ownership) simply wanted rid of Frank McCourt; it wasn't his operation of the team so much, but his style that chafed.