Hedge fund manager Steve Cohen has officially lost out on his bid to own the LA Dodgers according to CNN. While Cohen had been a frontrunner, former LA Lakers legend Magic Johnson, together with a group of investors spent $2 billion to acquire the bankrupt team. They call themselves Guggenheim Baseball Management and, according to the NY Daily News, includes Johnson, Mark R. Walter, Peter Guber, former baseball executive Stan Kasten, Bobby Patton and Todd Boehly.
CNN reports that price was “higher than expected” and constitutes “the most expensive purchase of an American sports franchise in history.” The previous top sales price for a US team had been $1.1 billion for the Miami Dolphins in 2009 while the top sales price in the world had been $1.4 billion for Manchester United. “This transaction underscores the Debtors’ objective to maximize the value of their estate and to emerge from Chapter 11 under a successful Plan of Reorganization, under which all creditors are paid in full,” said the Dodgers’ in a statement.
That may all be true but the LA Dodgers deal is doubly expensive given what the new owners have to deal with. Attendance at Dodger Stadium has declined sharply, going from an average of 44,000 fans in attendance per game in 2010 to just over 36,000 in 2011. Combine this with its increasing payroll and it is easy to see that the franchise will have to work hard to stay profitable.
The team may be bankrupt, and struggling in the field (it played to make the playoffs the last two seasons), but there is a small fortune to be made in the television rights. Specifically, media outlets will pay billions for the rights to broadcast its games – even if the team is struggling and especially for a team with a following like the Dodgers have. Its current broadcaster, News Corp (NWSA)’s Fox unit has already offered $3 billion for a 17-year extension.
Cohen will be missing out on this one, but losing out on this deal means he will be able to keep his limited share of the New York Mets. Cohen had been one of 12 investors to buy a $20 million stake in the franchise. Under the terms of ownership, Cohen would have had to sell his stake in the Mets if his bid for the Dodgers was approved.