Monday, January 23, 2012

Plausible Equity: Only a Few Dodger Bidders Will Have It

    By Ross Newhan

    So, maybe a dozen or more investors responded to Monday's opportunity to file initial bids to Blackstone Advisory Partners as the first step in buying the Dodgers.

    The best advice I can offer in regard to the inevitable winner is this: Think plausible.

    How many of these groups have the vast equity needed to eventually make a winning bid of $1.5 billion?

    "From a plausible standpoint, I think there are maybe three or four at the most with the type equity that is going to be needed," said a member of one of the investment groups, all having signed confidentiality agreements required by Blackstone. "In this case, any group is going to need 2X times the amount of equity that was necessary to buy the (Chicago) Cubs. So plausibly, the number of likely groups is very, very low."

     The Cubs sold for a record $885 million to Tom Ricketts and familly. Ricketts is chief executive officer of Incapital LLC, a Chicago investment bank that packages corporate bonds for retail investments. He is also a director of TD Ameritrade Holding Corporation and the son of Armeritrade founder J. Joseph Ricketts. Forbes estimates the Ricketts family wealth at $1 billion.

     If that is accurate it would seem to fall short of the type equity needed to buy the Dodgers.

    "Think of it in terms of the Republican primary," continued the member of one of the investment groups. "There were eight candidates standing on the stage at one point, and now the plausible number seems to be two. We'll know more next week when the second round of bids are due. I think the process will move very quickly, and I think there is a realistic possibility that two or three of the initial groups will have to merge to consolidate equity if they want to retain a realistic chance."

      There has already been talk, for instance, of Stanley Gold, president and CEO of Shamrock Holdings, Roy E. Disney's private investment firm, joining forces with former Dodger owner Peter O'Malley.

       Part of this process rests with Blackstone, part with Major League Baseball and the final say with Dodger owner Frank McCourt, who is committed to accepting the "highest and best bid."

      Predicting the winner is an implausible task, but a study of viable equity among the investors should narrow the plausible field in a hurry.

      X    X   X

     I see where T.J. Simers, my former colleague at the L.A. Times, has picked up on my blog of a week or two ago, recommending that McCourt finds someway to sign Prince Fielder, enhancing the value of the Dodgers and making them an instant contender in the National League West.

    Whether the bankruptcy court would approve an expenditure of that cost is uncertain, but with the 27 year old Prince still out there and available, it remains an idea worth pursuing. 

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