A New Blueprint

In 1997, eight months after the Autry family sold the Angels to Walt Disney Co., Peter O’Malley put the Dodgers up for sale. With player salaries escalating wildly and Fortune 500 corporations buying teams as strategic pieces of media empires, O’Malley said families no longer could afford to own a major league baseball team.

The Dodgers return to family ownership today, eight months after the Angels did. In an afternoon conference call, major league owners plan to approve the sale of the Dodgers from News Corp.’s Fox Group to Frank McCourt, a Boston real estate developer.

Corporate ownership of professional sports teams, regarded as the wave of the future not so long ago, is decidedly unfashionable now. Even a World Series championship did not sway Disney from selling the Angels, and under Fox the Dodgers alienated fans, assembled mediocre teams and reported losses of hundreds of millions of dollars.

“People thought -- as did I -- that it would work in both places,” Commissioner Bud Selig said Wednesday. “I like corporate ownership. But in the end it seems like individuals -- not so much one person, because there aren’t that many who can afford to do it by themselves, but groups -- have probably been more effective.”

Sal Galatioto, managing director of the sports finance group at Lehman Bros., said he no longer solicits corporations when brokering the sale of a team.

Fox sold the Dodgers. Disney sold the Angels and would like to sell the Mighty Ducks. Time Warner sold its NBA and NHL teams and would like to sell baseball’s Braves.

“Everybody’s exiting,” Galatioto said. “Ultimately, corporate ownership has not worked. In this business, individual ownership is a huge advantage.”

Two years ago, Selig testified before Congress -- and across the country -- about the money-losing operations that he said plague just about every major league team. Faceless corporate owners endured skepticism from the public about whether they inflated their losses with accounting tricks, alarm from stockholders about the reported depth of those losses and outrage from fans about billion-dollar conglomerates claiming an inability to afford million-dollar star players.

“If you spend money on the team, you make your shareholders unhappy,” Galatioto said. “If you don’t spend money on the team, you make your fans unhappy. It’s not a win-win situation.”

Said Selig: “Public companies don’t like to have subsidiaries that lose a lot of money. People didn’t want to hear that the Dodgers and Angels were losing a lot of money, but they were. People say it doesn’t matter, that they make the money back when they sell the team. Disney didn’t have that experience.”

Disney bought the Angels for $140 million, spent another $100 million on stadium renovations and claimed more than $100 million in operating losses in seven years of management. Arte Moreno, an Arizona advertising magnate, bought the Angels from Disney for $183.5 million.

Fox bought the Dodgers for $311 million, spent another $50 million on stadium renovations and claimed more than $100 million in operating losses in 2001 and 2002 alone. McCourt’s purchase agreement values the Dodgers at $430 million, although Fox remains a minority partner.

On a lesser scale, losses alone would not have driven Fox and Disney to sell. However, the synergies media corporations envisioned -- using the team as a platform to sell movies, shows, merchandise and other company products to loyal fans attending games in person, watching on television and listening on radio -- failed to materialize.

“The problem we found with corporations was that they really overestimated the synergy,” said Richard Brown, president of the Angels in the final years of Autry family ownership. “They thought it was a good business proposition. If a team was breaking even or losing a little money, it didn’t make a difference if they believed there was a synergy relative to their other holdings.”

“You’re not going to find $20 million or $30 million a year in synergy benefits,” former Disney Sports president Tony Tavares once said.

In addition to the financial losses and poor business plans, Fox and Disney withered in the face of intense daily public scrutiny almost unheard of elsewhere in the business world. After two turbulent seasons that included three managers, three general managers and the trade of popular catcher Mike Piazza, Fox sold controlling interest to Bob Daly and withdrew from daily operations. Disney removed its name from the subsidiary operating the Angels and Mighty Ducks, with Disney Sports renamed Anaheim Sports.

In 1997, after the Angels’ Tony Phillips was arrested and charged with felony cocaine possession, Disney addressed the matter in deliberate corporate fashion, forcing the team to play one man short in the heat of a pennant race and then suspending him in accordance with company policy. The suspension was promptly overturned, after a hearing in which Disney was reprimanded for trying to supersede the sport’s drug policy.

“Corporations are huge bureaucracies,” Galatioto said. “They’re not nimble enough. They’re not structured the right way to do this.”

As part of the Disney conglomerate, Angel executives liked to joke that the team was “a pimple on Dumbo’s butt,” with corporate headquarters indifferent at best and layers of management between Tavares and Chairman Michael Eisner. When an agent this month invited Moreno’s Angels to bid for superstar outfielder Vladimir Guerrero, the team submitted an offer the next day and agreed to terms on a $70-million contract the following day.

With revenue sharing and a luxury tax now in place, Selig believes this generation of family owners can better weather the sport’s financial storms. For that matter, he says, so can a corporation.

In addition to the Braves, two teams remain under corporate ownership: the Toronto Blue Jays, owned by Rogers Cable, and the Chicago Cubs, owned by Tribune Co., publisher of the Los Angeles Times.

For Disney and Fox, corporate ownership did serve some purpose. By renovating the Angels’ stadium and binding the team with a long-term lease, Disney secured the team’s future in Anaheim at a time the company built a second theme park to accompany Disneyland and planned a third.

Fox secured its hold on the local cable sports business, using the Dodgers to start a second channel -- Fox Sports Net 2 -- and forcing Disney to abandon plans for a rival outlet for the Angels and Ducks.

“Corporate ownership worked brilliantly for Fox,” said sports business analyst David Carter. “They established a billion-dollar enterprise in Fox Sports Net.

“It turned out to be an adequate investment for Fox. It served its purpose. But, with respect to the emotional investment and the branding element, it was an abject failure.”

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BASEBALL OWNERS

Major League Baseball owners and how the teams were purchased:

* ANGELS

Arte Moreno. Businessman. Bought for $183.5 million in May 2003.

* ARIZONA DIAMONDBACKS

Jerry Colangelo/Dale Jensen. AZDB Limited Partnership. Bought for $130-million expansion fee in 1995.

* ATLANTA BRAVES

Time Warner. Purchase price $12 million in 1976; part of $7.6-billion merger with TBS in 1996.

* BALTIMORE ORIOLES

Peter G. Angelos. Peter Angelos News Corp. Bought for $173 million in 1993.

* BOSTON RED SOX

John Henry. Bought for $700 million (team, ballpark and sports network) in 2002.

* CHICAGO CUBS

Tribune Co. Bought for $20.5 million in 1981.

* CHICAGO WHITE SOX

Jerry Reinsdorf (real estate developer). Bought for $20 million in 1981.

* CINCINNATI REDS

Carl H. Lindner. Limited partnership. Bought for $67 million (37%) in 1999.

* CLEVELAND INDIANS

Lawrence Dolan. Indians Baseball Co. LP. Bought for $323 million in 2000.

* COLORADO ROCKIES

Jerry McMorris. Ten-member partnership group, limited partnership. Bought for $95-million expansion fee in 1991.

* DETROIT TIGERS

Michael Ilitch. Ilitch Holdings. Bought for $82 million in 1992.

* FLORIDA MARLINS

Jeffrey Loria. Bought for $158.5 million in 2002.

* HOUSTON ASTROS

Drayton McLane Jr. Bought for $115 million in 1992.

* KANSAS CITY ROYALS

David Glass (former Wal-Mart CEO). Bought for $96 million in 2000.

* DODGERS

News Corp. Bought for $311 million (team, stadium, land) in 1998.

* MILWAUKEE BREWERS

Allan Selig Trust. Limited partnership. Bought for $10.8 million in 1970.

* MINNESOTA TWINS

Carl R. Pohlad. Limited partnership. Bought for $36 million in 1984.

* MONTREAL EXPOS

Major League Baseball. Bought from Jeffrey Loria in 2002.

* NEW YORK METS

Fred Wilpon. New York Metropolitan Baseball Team. Bought by Wilpon and Nelson Doubleday for $80.75 million in 1986. Wilpon took complete control in 2002.

* NEW YORK YANKEES

George Steinbrenner. YankeesNets LLC. Bought for $10 million in 1973.

* OAKLAND ATHLETICS

Steve Schott, Ken Hofman. Athletics Investment Group. Bought for $85 million in 1995.

* PHILADELPHIA PHILLIES

Bill Giles, David Montgomery. Limited partnership. Bought for $30.18 million in 1981.

* PITTSBURGH PIRATES

Kevin McClatchy, newspaper executive. Pittsburgh Pirates Acquisition Inc. Bought for $90 million in 1996.

* SAN DIEGO PADRES

John Moores. Limited partnership. Bought for $80 million (80% share) in 1994.

* SAN FRANCISCO GIANTS

Peter A. Magowan. San Francisco Associates L.P. Bought for $100 million in 1992.

* SEATTLE MARINERS

Hiroshi Yamauchi (president of Nintendo). Baseball Club of Seattle L.P. Bought for $106 million in 1992.

* ST. LOUIS CARDINALS

William O. DeWitt Jr. St. Louis Cardinals L.P. Bought for $150 million (team, stadium and parking facilities) in 1995.

* TAMPA BAY DEVIL RAYS

Vincent Naimoli. Limited partnership. Bought for $130-million expansion fee in 1995.

* TEXAS RANGERS

Thomas O. Hicks. General partnership. Bought for $250 million (team, lease and land options) in 1998.

* TORONTO BLUE JAYS

Rogers Communications. Bought for $112 million (U.S.; 80% share) in 2000.

Sources: Inside the Ownership of Pro Sports; Forbes.com; Fortune. Researched by Times graphics reporter Joel Greenberg