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Owner To Reap Huge Reward From Dodgers Sale

March 28, 2012 by staff 

Owner To Reap Huge Reward From Dodgers Sale, If Frank McCourt’s sale of the Los Angeles Dodgers to a group with Magic Johnson as the front-man holds up, he will become the most financially successful owner of a team in Major League Baseball history. The sale must still be approved by a federal bankruptcy court.

McCourt bought the team, Dodger Stadium and about 260 acres of surrounding real estate from News Corp. for an enterprise value of $371 million in February, 2004. In that deal, McCourt paid $330 million for the team, Dodger Stadium and the land under the stadium. He also paid an additional $91 million for 260 acres of land around the stadium, but that purchase included $50 million of cash, so the net cost was $41 million.

Frank McCourt (Getty Images North America via @daylife)Johnson’s group is paying $2 billion for the Dodgers and the stadium a (compared to the $330 million McCourt paid News Corp.), yielding McCourt an annualized gain of 25%. Affiliates of Johnson’s group will also be forming a joint venture with McCourt for the 260 acres of real estate (Chavez Ravine). In this deal McCourt is kicking in the land and while the affiliates will pay $150 million, valuing the real estate at $300 million. The $2.3 billion valuation for the team, stadium and land (versus the $371 million he paid) gives McCourt a 26% annualized return.

No sale of a baseball team that I have reviewed comes close to yielding as high a return. Even recent deals, enhanced by the increase in value of baseball’s local television rights, have generated returns that are paltry compared with McCourt’s return.

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