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Wednesday, March 28, 2012

Dodger Sale: A Set Up From the Start for Magic?




         By Ross Newhan

         Having spent a half century in major league baseball press boxes, I have developed a considerable amount of cynicism and skepticism.

         And the vision of Frank McCourt and his broker conducting an auction that wasn't an auction merely has underscored those traits.

         I am not saying that the whole process of selling the Dodgers through a convoluted bankruptcy process was a set up to see that a group fronted by Los Angeles icon Magic Johnson ended up with the team.

        There were probably too many hurdles in the form of the bankruptcy court and MLB requirements to be sure that, from  the start, anyone could be positive they could make that happen.

        Make no mistake, however: the events of the processes' final hours blindsided the other two bidders and literally left them without a chance to counter the $2 billion bid by the group fronted by Johnson, former baseball executive Stan Kasten and their principal money man, Mark Walter, of Chicago based Guggenheim Partners, a financial services company.

       Left wondering what hit them, according to three people familiar with the situation but not authorized to discuss it publicly, were St. Louis Rams owner Stan Kasten and a group led by hedge fund billionaire Steven Cohen and biotech billionaire Patrick Soon-Shiong, reputed to be the richest man in Los Angeles.

      The fact that Soon-Shiiong was on the outside looking in Wednesday had to be particularly disturbing to Soon-Shiong considering he had been romanced, from the start, by all of the bidders and finally--despite a close relationship with Magic--became convinced that by joining Cohen he had the best shot at being part of the winner.

     If Soon-Shiong has been left a little cynical and skeptical himself, he is welcome to apply for a card in the Baseball Writers Assn. of America.

    As card holder No. 3, which speaks to my numbing 50-plus years in the organization, this is my understanding of what happened during the final 48 hours, according to the three people familiar with the situation.

   First of all, major league owners met by conference call Tuesday afternoon, approved the three groups still bidding for the Dodgers and were informed by the federal mediator, Joseph Farnan, that an auction would be held in the offices of McCourt's New York law firm, Dewey Lebouf, on Wednesday.

  Final bids and negotiations would be conducted at that time.

  Yet, although not all members of the two groups competing with the Magic group had reached New York, the Dodgers announced they had reached a $2 billion sales agreement with the Magic group and even had reached a $150 million agreement with McCourt on the parking lot, giving Magic's group control when games are played and providing for the possibility of joint development. This is not the type agreement that could have been done in a matter of minutes.

   The explanation from McCourt's broker, Blackstone Advisory Partners,  according to the three people who provided an insight into the situation, is that they were not legally obligated to conduct an auction, that, for all intents and purposes, they had been conducting an auction since the process started months ago, that the three groups had been informed Monday night to prepare final bids and that the previous bids by Cohen and Kronke were so far below the Guggenheim bid that there was no sense in presenting the chance for a counter offer.

   Thus, the Wednesday auction was over Tuesday night, with the Dodgers having a news release ready almost immediately.

   This writer contacted members of the Cohen and Kronke groups Wednesday but all said they were still bound by provisions of the confidentiality agreement and refused to talk about the final process.

   None of this probably matters to dispirited Dodger fans celebrating on Wednesday that the Dodgers will now be under the partial direction of the charismatic Johnson and that McCourt's tumultuous tenure is almost     over, with the bankruptcy court still to approve the terms and final details to be completed by April 30, when McCourt must deliver a $131 million divorce settlement to Jamie McCourt.

   Kasten, the former president of the Atlanta Braves and Washington Nationals, will be president of the Dodger entity that will become Guggenheim Baseball Partners. It is not clear what will happen to general manager Ned Colletti or any of the other Dodger executives. It is presumed that Walter, given his record $2.15 million investment, is prepared to pump more money into the organization, improving the team and renovating the stadium, although neither of those important steps can be accomplished over night.

   He is banking, of course, on a potentially record TV deal with Fox Sports or Tiime-Warner Cable, with the Dodgers possibly at the heart of a very lucrative regional network.

   Given how McCourt took a flagship franchise and ran it into mediocrity and bankruptcy, turning it over to a group headed by Magic and Kasten has to be a good thing, and McCourt probably was banking on his own damaged image gaining a measure of improvement by the development, which was on his mind when he  met with community leaders over the last few weeks and came away convinced that Magic would have a positive impact on the organization and his own desire to stay in the city.

    In the end, I can not say for sure that the process was designed all along to get the club to Magic, but the  other two final bidders must be wondering what hit them.

 

              

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