I'm fully supportive of Guggenheim Baseball Management, as their stewardship of the Dodgers from the depths of Frank McCourt miasma to the powerhouse MLB team of today is absolutely remarkable, not to mention wonderful for Dodgers fans.
But I'm a little surprised that they're focused on branding for a non-consumer-facing entity. Maybe we'll see Guggenheim water at the Stadium soon?
He said regional sports networks also play a role when valuing teams. The Dodgers were sold in April 2012 for $2.15 billion to an affiliate of Guggenheim Partners LLC, a New York-based investment management firm with more than $190 billion in assets under management. Di Santi said the transaction price was influenced by the potential creation of a new cable TV network, and increased franchise values across MLB.
Ten teams are worth more than $1 billion. The Boston Red Sox and New York Mets each are valued at more than $2 billion, the data shows. [...]
The Dodgers’ $2.1 billion valuation is based on information provided by two individuals involved with the transaction who asked not to be identified because the details were private.
Guggenheim Baseball Management LP, a Los Angeles-based company led by financier Mark Walter, paid $2 billion for the team and Dodger Stadium, plus $150 million to form a real estate joint venture with Frank McCourt, the team’s previous owner. In exchange, McCourt transferred ownership of the 261 acres that surround the ballpark, most of which are parking lots, to the partnership.
The Guggenheim group includes basketball hall of famer Magic Johnson, who won five championships with the Los Angeles Lakers.
McCourt, who bought the Dodgers in January 2004, agreed to sell the franchise as part of a U.S. Bankruptcy Court settlement with MLB. He retains an option to buy back Guggenheim’s share of the land for its initial investment plus inflation, according to one of the people, contingent on construction of another sports stadium on the site.
NFL Commissioner Roger Goodell said in a June 2012 memorandum to professional football team owners that the league is considering sites in Los Angeles for a new stadium. Guggenheim will receive its $150 million investment back if the land is sold for any non-sports use.
Since the sale, the Dodgers’ annual revenue has risen by 38 percent to $450 million, according to a person with knowledge of team finances. Attendance also has gone up by 13 percent to about 3.7 million fans this season, the most in baseball, according to MLB.
During negotiations, McCourt’s representatives proposed starting a new regional sports network, which they referred to in presentations as YES West, that the new owners could create because the team’s deal with Fox was set to expire.
Guggenheim transformed YES West into SportsNet LA. The Dodgers will retain full ownership of the network through a subsidiary, American Media Productions LLC. Time Warner Cable Inc. has a 25-year agreement that allows the company to keep any profit made above guaranteed payments to Guggenheim, which will receive $200 million a year, after network costs and revenue sharing obligations to MLB.
The first payment from Time Warner is scheduled for January, and they would continue until 2038, stopping only in the event of a baseball labor dispute, according to the terms of the agreement.
Guggenheim believes the network is worth $2.75 billion, a discounted value of the guaranteed payments, one of the people said. SportsNet LA is scheduled to debut next spring. MLB has yet to approve the deal.
“That process is at a point where it’s pretty clear there will be approval of the Dodgers’ arrangement well before the 2014 season starts,” baseball’s Chief Operating Officer Rob Manfred said during an Oct. 15 interview at his office in New York.Major League Baseball is catching up to valuations of the National Football League,” Anthony Di Santi, the managing director of the sports finance advisory division of New York-based Citigroup Inc.’s private bank, said at the Bloomberg Sports Business Summit on Sept. 10. “It’s because they’ve been exploiting the media opportunities that are available to them on a national level.”
There's also a cool interactive infographic which dissects how they came up with the value by team. For the Dodgers, total franchise value is $2.1B (2nd), with $1.84B of that from the team value (2nd) and $153M from related businesses (1st). Other ingredients to the team valuation break down as follows:
One figures that with media rights set to skyrocket, there's a lot more value that can be unlocked with the Dodgers. Another interesting fact is that we lead the majors in parking revenue, but at a $10M revenue benefit it really is an insignificant figure relative to other team income streams--making Frank McCourt seem pretty short-sighted in his tenure's move to raise rates from $10 to $15 (a move which has since been rescinded by the Guggenheim Group).
Looking forward to us widening the gap between us and the third-most valuable MLB franchise, the Red Sox ($2.060B). (The Giants are 6th, with a $1.23B value.)
With the July 31 deadline less than a month away, here's how Buster Olney predicts the trade market will light up, for key NL West teams (link insider only):
No one doubts that Jake Arrieta is talented, and as the Orioles know from their experience with Chris Davis, sometimes it just takes longer for some players to blossom than others. Maybe that will happen with Arrieta now that he is with the Cubs, a team that continues to collect as much volume as possible, in the same way the Astros have.
There are more deals to come from the Cubs in the days ahead, with Kevin Gregg and Matt Garza replacing Feldman on their front burner. When David DeJesus returns from the disabled list later this month, the Cubs probably will assess the interest for him and Nate Schierholtz and trade one, but not both.
Beyond the Cubs, here is how the trade market is shaping up for the rest of the teams in the National League.
Arizona Diamondbacks
Aaron Hill just came back, and they remain hopeful that Adam Eaton will return sometime soon to the everyday lineup. Their trade-market focus is pitching: They have been among the teams talking about Gregg for bullpen help, and about Yovani Gallardo and others for their rotation.
The perception among rival officials is that they are open to moving left-hander Tyler Skaggs in a significant deal, but not Archie Bradley.
J.J. Putz has not looked good since returning from the disabled list.
Colorado Rockies
They have hung in the Ricky Nolasco conversations, which may be resolved as soon as today, and rival executives say Colorado has been seeking relief help as well. No matter what they do, the Rockies’ moves figure to be measured: They won’t take on much money, and they won’t give up top prospects.
Los Angeles Dodgers
Even though a strong argument could be made that the first 14 months of the Guggenheim ownership might represent the most inefficient period of player personnel decisions in baseball history -- from the already outdated contract of Andre Ethier to the extraordinary overpayment in the trade with the Red Sox -- the Dodgers remain aggressive, prepared to make the biggest, boldest moves.
They’ll get another starting pitcher, whether it’s Nolasco later today or Cliff Lee if he becomes available, and if Carlos Marmol doesn’t work out, they’ll jump at somebody else. They’ll look for an infielder, perhaps someone like Michael Young. Yasiel Puig has helped to give them hope. The perception in some corners around baseball is that the Chicago Cubs fared well in their trade of Scott Feldman to the Baltimore Orioles Tuesday. "They turned a one-year rental into pieces that can help [going forward]," said an AL evaluator. "They signed him knowing that they could get something for him if he bounced back, and it paid off."
From "Frank McCourt could be sole landlord if NFL comes to Dodger Stadium site" by Bill Shaikin at the LA Times:
If the NFL wants to play at Dodger Stadium, Frank McCourt could be the sole landlord.
In any case, the value of the Dodgers sale could exceed $3 billion.
Those details were included in previously unreleased provisions of the sale agreement between McCourt and the Dodgers' new owners, Guggenheim Baseball Management. The Los Angeles Superior Court last week denied Guggenheim's request to keep those provisions secret; The Times obtained a financial summary of the deal Wednesday.
The key provision makes clear that McCourt retains a critical role in determining whether the NFL returns to Los Angeles. McCourt could win either way: by luring the NFL to the Dodger Stadium site, or by pocketing $150 million if he cannot.
It's been apparent for a while that Guggenheim couldn't completely sever McCourt's financial interests from the Dodgers; now we learn McCourt stands to make at least $150 million on top of his $1.278 billion in profit from selling the team. It's been a fatiguing season — we'll see if Dodger fans have the energy to muster outrage at this time.
When a deal goes down, however, expect plenty of bitching and moaning. I can just picture Magic Johnson tweeting about it:
Kershaw and Greinke and pray for...what the hell rhymes with Greinke? No matter, as the good news is that Guggenheim Baseball Management's $147 million investment in a true #2 (#1a?) pitcher is off to a promising start. Greinke allowed only two hits and struck out six over 92 pitches in 6 1/3 innings.
More good news? Kershaw is no longer alone as the Dodgers' home run leader, as Andre Ethier hit a solo homer off the lefty Jonathan Sanchez. Both Matt Kemp (finally!) and Adrian Gonzalez had RBI-doubles to account for the balance of the team's runs.
Messr. Kershaw goes next, so if we're going to take this series, tomorrow is the time to do it. 6PM start — be here!
According to Fortune magazine, the Dodgers' new ownership group is now being investigated by the SEC, for ties to Michael Milken:
Guggenheim Baseball used hundreds of millions of dollars of insurance company money controlled by Guggenheim Partners to buy the Dodgers. Indeed, the proceeds from Guggenheim Partners is what effectively enabled Walter’s group to outbid the $1.4-to-$1.5 billion bids by billionaires Stan Kroenke and Steve Cohen for the team.
Milken has been a longtime client of the firm and at times has had as much as $800 million invested with Guggenheim, some of it in a hedge fund run by the firm’s president Boehly. His lifetime ban prohibits him from profiting from offering investment advice. The SEC is looking at whether Milken is violating that ban by effectively acting as a manager of Guggenheim investments beyond his own. Walter told Fortune: “Mike (Milken) doesn’t have an ownership or managerial role of any kind at Guggenheim. ”The owners of the Los Angeles Dodgers are embroiled in an investigation by the Securities and Exchange Commission into whether Michael Milken has violated the terms of his lifetime ban on securities trading, according to an article in Fortune. The Dodgers were bought for $2 billion by Guggenheim Baseball Management last May. The winning bid was led by Mark Walter, CEO of Guggenheim Partners, and included the president of the money management company, Todd Boehly, as well as movie producer and Golden State Warriors owner Peter Guber, Stan Kasten, the former president of the Atlanta Braves, and former Los Angeles Lakers great Magic Johnson.
Fresh off of the ebullience of striking it rich on a television deal, the Dodgers came into Monday getting hammered by critics on multiple fronts.
First off came news that MLB will be negotiating with the Dodgers exactly how much gets put into revenue-sharing buckets:
Although terms were not disclosed, the SportsBusiness Journal calls it a 25-year deal worth $7 billion.
"We concluded last year that the best way to give our fans what they want -- more content and more Dodger baseball -- was to launch our own network," Dodgers chairman Mark Walter said in a statement. "The creation of AMP will provide substantial financial resources over the coming years for the Dodgers to build on their storied legacy and bring a world championship home to Los Angeles."
The deal is subject to approval by Major League Baseball, and one baseball source privy to the negotiations told ESPN.com the team and the league could very well butt heads regarding exactly how much of the deal will be shared with other teams.
TV rights are subject to revenue sharing, and high-revenue teams, including the Dodgers, have to share approximately one-third of their rights fees with low-revenue teams.
As part of the negotiations with the bankruptcy court, MLB agreed that the Dodgers' fair-market value would be set at $84 million a year with 4 percent increases each season.
The Dodgers could keep anything above that assuming the club took significant risk in starting its own network, as stated in the league's current revenue sharing rules.
But the team readily admits in its announcement that it is not taking the risk.
Time Warner Cable "has assumed most of the risk around the channel and promised to cover affiliate fees from distributors who refuse to carry it," the news release said.
Time Warner will also be responsible for other programming and will be the exclusive advertising and affiliate sales network of the channel.
In essence, the network will serve as a partner making guaranteed payments to the team.The new ownership group, which bought the team out of bankruptcy court in April 2012 for a record $2.1 billion, said it has created a company called American Media Productions that will start broadcasting Dodgers games in 2014 on a channel called SportsNet LA. Time Warner Cable, the largest carrier in the area, will be the network's first distributor.
Magic, time to lay on the charm and work us out of this one! But even if we get past the evil Minions of Selig, there's other issues: the "hangover" of all of our big-time contracts, says Dan Szymborski (link insider only):
A chunk of that money will head back to MLB in the form of revenue sharing -- the haggling with MLB on just how much hasn't yet been completed -- but even after MLB and the Dodgers agree on just how much of that revenue will be subject to the 34 percent cut that heads to the revenue-sharing pot, that's a lot of green raining in Chavez Ravine. On the trajectory that they're on, the Dodgers will need quite a bit of it.
For the 2013 season, depending on how you count things, they currently have between $210 million and $220 million committed to players on the roster. That figure doesn't include the 2013 bills the team owes to Hyun-Jin Ryu ($3.3 million), Yasiel Puig ($3.7 million), Andruw Jones ($3.2 million), Tony Gwynn Jr. ($1 million) and an additional million from various contract buyouts. Throw in an extra $20 million or so for luxury tax and a half-million or so for each of the pre-arbitration players who play the year on the roster, and we're talking one-quarter of a billion dollars in payroll this upcoming season.
Just how much do the Dodgers owe in guaranteed salary? Through the end of the decade, more than $900 million. In fact, $100 million is already on the books every season through 2018, when the Dodgers will owe Matt Kemp, Zack Greinke, Adrian Gonzalez, Andre Ethier (buyout), Ryu and Puig $105 million.
[...]
The Dodgers project to be the best team in the NL West, north of 91 wins. But given our error bars at predicting the future no matter the method, a playoff spot, let alone the divisional title or a trip to the World Series, is far from certain. ZiPS gives the Dodgers a 62 percent shot at a playoff spot, not a number high enough that you want to start ordering the Cristal in bulk quite yet. Guggenheim Partners didn't invest massive sums of money not to get a solid financial return on its investment. A disappointing year or two, and it wouldn't be shocking if the biggest member of the consortium started to find the guaranteed cash from the TV contract a lot more appealing than playing high-stakes fantasy baseball.
The Dodgers certainly have a good chance at playing games until the end of October this season. If they do win the World Series in 2013, which would be the franchise's first since 1988, there will be one sweet celebration party. But as most can attest, the best parties frequently lead to the worst hangovers.The Los Angeles Dodgers have finally signed their gigantic TV contract, landing a deal with Time Warner that would yield the Dodgers between $7 billion and $8 billion over the next 20 years.
So basically, right when Guggs and Co. are trying to make it rain, everyone else is raining on our parade.
Jerks.
With all the changes the Guggenheim group is making, maybe the question should actually be "When are they going to get around to it?" What do you think, SoSG readers? Would you go for a Dodger Stadium rewards card?
First Sandy, now this. From "Time Warner wins Dodgers TV deal" (AP/ESPN):
Time Warner Cable Inc. has won a contract to carry Los Angeles Dodgers games for at least the next two decades starting in 2014, snatching the games away from Fox Sports after this year's baseball season ends, according to a person familiar with the matter.
The deal has not yet been finalized, although it is to be announced within days, said the person, who was not authorized to speak publicly and spoke to The Associated Press on Tuesday on condition of anonymity.
The Los Angeles Times earlier reported the nation's second-largest cable operator will pay around to carry the games.
A second person familiar with the situation said that Fox Sports, a division of News Corp., had been prepared to pay more than $6 billion for a 25-year deal to keep the Dodgers on its Prime Ticket regional sports network. But it lost the bidding war after its exclusive bargaining period ended in November. The second person was also not authorized to speak publicly.
(Blinking ours.) Zack Greinke is rich, Frank McCourt is richer, and Guggenheim Baseball Management is about to become the richest. A five billion-dollar profit? Hell, they'll be able to rehire Vladimir Shpunt!
From "Dodgers to be joined by Koufax at Spring Training" by Ken Gurnick at Dodgers.com:
The Dodgers, who will take eight starting pitchers to Spring Training next month, will also take the greatest pitcher in franchise history.
Hall of Famer Sandy Koufax has returned to the club as special advisor to chairman Mark Walter. Koufax will spend a portion of Spring Training working with the club's pitchers at Camelback Ranch-Glendale and consult during the season.
"I'm delighted to be back with the Dodgers," Koufax said. "I'm looking forward to spending time with the team during Spring Training and to contributing in any way I can to help make the team a success for the fans of Los Angeles. Some of my most cherished memories came at Dodger Stadium."
Koufax's return is another in a string of fan-friendly decisions by new ownership.
"The Dodgers are thrilled to have Sandy back with the organization," president and CEO Stan Kasten said. "Sandy's experience and perspective will be invaluable as we endeavor to do everything in our power to bring the city of Los Angeles a World Series champion."
Chalk up another victory for the Guggenbros. Welcome back, Sandy!
photo: @TommyLasorda
It seems strangely logical that the highest-priced sports team in the world is about to score the richest TV deal ever in pro sports history. Insiders tell me that Fox Sports is close to clinching the exclusive TV rights for the Los Angeles Dodgers by paying between $6 billion and $7 billion over 25 years to put the team on its regional sports network in Southern California and of course its national Fox Broadcasting Company. Fox already shows the games on its Prime Ticket local cable channel but also has Fox Sports West here.If the Dodgers' TV rights do indeed sell for north of $6 billion — versus the team's $2.15 billion purchase price — then I want to borrow whatever crystal ball they're using at Guggenheim Baseball Management. I mean, they'll be richer than...Frank McCourt!
The previous agreement expires at the end of next season, and saw Fox Sports paying only about $40 million per season for the Dodgers TV rights. There was speculation the final price would just go north tof $150 million per season. This new deal soars to $280 million per season (the average for the life of the contract). The huge outlay by News Corp demonstrates the increasing value of sports to its bottom line, while the huge payday for Guggenheim offsets the record-setting $2.15 billion price paid for the Dodgers.
Once again, when they needed a win the most, the Dodgers came up empty. With ten games left in the season, this puts them half a game behind the Brewers and three games behind the Cardinals for the final wild card spot — and likely ensures Clayton Kershaw will not pitch tomorrow's game, as only a sweep of the Reds would have given the Dodgers any real hope to make the PLAYOFFS!
It's time to rest Kemp and Kershaw, and to hope Adrian Gonzalez has been playing injured as well. Twenty-four years without a World Series appearance. Your turn, Guggenbros.
Are you afraid the Guggenheim milestones will become millstones?
Especially after games like last night's, Dodger fans might be worried about the Guggenheim boys' potentially profligate ways. But here's why it's a good thing:
1. Win for Vin. We could end the list right here. We're lucky enough to get Vin back for next year. Who knows what happens beyond that? More than any player past or present, Vin Scully represents the Dodger Way. Who doesn't want to hear Vin call a World Series game at Dodger Stadium?
2. Matt Kemp. Number 27 is just 27 years old. He's in his prime, and locked up for what turns out to be a relative bargain at $160 million over eight years. This is the best homegrown bat we've seen in years. Pair him with...
3. Clayton Kershaw. The best left-handed pitcher the Dodgers have seen since...well, a long time. He wants to stick around. We want him to stick around. These are the kind of players you want to build a team around.
4. A relatively weak division. The Giants, still flush from their 2010 championship, have the best pitching in the division and should contend for years to come. The Diamondbacks are always dangerous, even with their recent front-office upheaval. But the Padres and Rockies figure to occupy the NL West cellar for years to come. The time is ripe.
5. There's more money coming down that pipeline. Cable-rights talks haven't officially begun yet, and already a figure of $4 billion is being thrown around. Think the Guggenheim boys didn't know their payday was coming?
Still not sure? Here are the two best articles about the Guggenheim acquisitions I've read so far:
Josh Beckett burst out in his Dodger debut with a resounding...meh. After allowing a leadoff home run to Tyler Colvin, he settled down, allowing additional runs in the fourth and sixth. Final line: 5.2 IP, 3 ER, 3 BB, 6 K.
Unfortunately, the Dodger offense didn't make the trip, as soft-tossing Jeff Francis (he of the 5.79 ERA) kept them off-balance for the first five innings. The bats barely put up a murmur of protest (four hits); the Rockies bullpen did the rest.
Oh, and Kenley Jansen made an appearance. Gave up four earned. New call-up Josh Wall gave up another three.
Rockies get their first home shutout of the season. Guggenheim boys are in "win now" mode. Too bad the players didn't get the memo.
photo by Justin Edmonds/Getty Images
Blockbuster: red Sox, Dodgers working on deal that would send AGon, Crawford, Beckett and Punto to LA. Hurdles remain, but closing in
— Gordon Edes (@GordonEdes) August 24, 2012
Sweet Tweetsus! I have to admit getting swept by the Giants made me think beyond this season and when Yasiel Puig would be able to join Kemp & Ethier, but I'm glad the Guggenheim boys aren't thinking this way.
Carl Crawford comes with an albatross of a $100 million-plus contract, but you would hope he would find Dodger Stadium a lot more to his liking than Fenway.
Are we Adrian Gonzalez fans? Yes we are. But the hidden gem here could be Josh Beckett. Freed from the bullshit of the Boston market — as well as having to be a top-of-the-rotation guy — he could unburden himself in L.A. as well.
Will he get a chance to? Here's hoping we find out.
Dodgers: Kirby Lee/US Presswire; Lakers: @ArashMarkazi; Kings: Robert Gauthier/LA Times; USC: SCPlaybook
You know, I think I like these new owners. BUT CAN HE PLAY FIRST BASE?
UPDATE: From "Deal with Cuban Yasiel Puig shows Dodgers are operating like a big-market franchise again" by Tim Brown at Yahoo! Sports:
After years of marginal involvement in the Latin American market, the Dodgers were aggressive in their pursuit of Puig. Assistant general manager Logan White spent several days in Mexico City, where he not only scouted Puig, but took him to dinner. In reviewing videos of Puig and watching his recent batting practice, the Dodgers see him as a player with five tools, all of which could translate in the major leagues.The agent, Torres, said of Puig, "He's a very nice kid. Very friendly. Very smart. Great smile. He told me, 'I don't care about the money. I want to play.' "
To that end, Torres said, Puig chose the Dodgers in spite of at least one better offer.
Dodger players are welcoming fans at the gates this morning! Here's @JavyGuerra54 and Aaron Harang signing autographs! twitter.com/Dodgers/status…
— Los Angeles Dodgers (@Dodgers) May 13, 2012
The Cy Young Award Winner @ClaytonKersh22 is out here too. #ThinkBlue twitter.com/Dodgers/status…
— Los Angeles Dodgers (@Dodgers) May 13, 2012
