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Dodger Pitch Has a Catch

Times Staff Writers

Former New York sports executive David Checketts has offered to pay $650 million for the Dodgers — but only if he can wrest control of the prized cable channel that airs the team's games, sources said.

Checketts, who ran the NBA's New York Knicks and NHL's New York Rangers, made his pitch Monday, sources said. News Corp., owner of the Dodgers, had no immediate comment, but Chairman Rupert Murdoch has said he would be willing to sell the team.

What remained unclear was whether he would be willing to part with one of his many regional sports channels, Fox Sports Net 2. Some News Corp. executives believe he would.

Reached Tuesday, Checketts, 47, would say only: "It would be premature for me to comment on anything at this time."

Talks of a possible sale of the storied but money-losing baseball franchise come at a time when News Corp. needs cash to fulfill its longtime goal of buying satellite TV provider DirecTV, which would cost more than $4.5 billion.

Rumors have been circulating for months that News Corp. might put the Dodgers on the block. In its most serious move in that direction, the company has retained New York investment bank Allen & Co. to seek possible suitors.

Sources said one of the biggest hurdles in any sale would be the media giant's reluctance to let go of any of its regional sports channels. The channels only recently have begun to make money for Murdoch, who cobbled the network together during the last decade.

Murdoch bought the Dodgers in 1997 as part of his effort to build those channels, successfully checkmating rival Walt Disney Co.'s efforts to launch its own regional sports network in Southern California.

So far, Checketts is the only potential buyer known to have provided a purchase figure — one that includes a value for the team, its 300-acre stadium site and the TV channel, which also broadcasts Mighty Duck games.

Another potential buyer for the Dodgers, sources said, is Los Angeles real estate tycoon Alan I. Casden. Sports industry sources say his interest is driven by the potential real estate value of Chavez Ravine, where Dodger Stadium has stood since 1962. Some speculate that he might have designs on moving the stadium downtown to put housing on the site.

Casden was in Europe on Tuesday and unavailable to comment.

Checketts, a native of Utah, started in professional sports with the NBA's Utah Jazz. He was appointed to run Madison Square Garden in 1994, overseeing the Knicks, Rangers and the New York Liberty of the WNBA.

But last year, amid disappointing results, Checketts was forced out by the Dolan family, which owns Madison Square Garden and built its fortune through Cablevision Systems Corp.

Wall Street brokerage Merrill Lynch & Co. said the $650-million figure seemed on target. The firm valued the cable channel at $200 million to $300 million, with the team worth about $400 million. Although Checketts' number may be in the ballpark, sources said, he has yet to put together his financing.

As high as it is, a $650-million deal for the Dodgers would be less than the record for a baseball team set last year by the Boston Red Sox, who were sold to an investment group that includes Los Angeles TV producer Tom Werner. They sold for $660 million and an additional $40 million in debt. But, most important, nearly half the price was for the regional sports channel that airs Red Sox games.

Obtaining cable rights is crucial for any buyer of a baseball franchise because it is considered about the only way to make a return on an investment. Few baseball teams make money as stand-alone businesses, in part because of soaring payroll costs and limited ways to boost revenue.

The Dodgers have lost money for nearly a decade. Last year, the team was in the red by $40 million.

Red Sox President Larry Lucchino, asked if he was surprised News Corp. would sell the Dodgers so soon after buying the team, said, "Given the industry's financial picture in recent years, I'm not surprised by anything."

In initial negotiations several months ago, Murdoch agreed to give up a piece of Fox Sports Net 2 to Checketts as part of the deal, News Corp. sources said. But Murdoch was unwilling to sell the entire channel because his regional sports strategy is beginning to gel.

Some News Corp. sources say Murdoch might agree to sell the sports channel because he has two in Los Angeles and would be keeping the stronger one, Fox Sports Net, which airs Laker, King and Angel games.

What's more, some cable sources say, Los Angeles isn't as lucrative a sports market as some smaller cities because of the low penetration of cable, meaning fewer subscribers to buy the service.

News Corp. bought the Dodgers when the heirs of Walter O'Malley, who moved the franchise from Brooklyn to Los Angeles before the 1958 season, were unable to absorb the club's continuing losses. Murdoch paid $311 million for the team, gave $14 million to an O'Malley family charitable foundation and agreed to assume $25 million in debt.

Asked if he would like to be part of a new ownership group, former owner Peter O'Malley said, "My heart tells me yes, but my head tells me that it doesn't make any economic sense."

He reiterated his long-standing position that the only way it would make sense is to build a football stadium next to Dodger Stadium, something he was unable to do as Dodger owner.

News Corp.'s tenure has been marked by several public relations fiascos, chief among them the trading away of popular catcher Mike Piazza to the Florida Marlins shortly after the team was bought.

The team also has been criticized for signing free-agent pitcher Kevin Brown to a seven-year, $105-million contract, especially because he has been plagued with injuries.

After losing badly on the field and taking its lumps in the press for its management of the team, News Corp. gave up day-to-day control in 1999 to former Warner Bros. chairman Robert Daly, who had been a Dodger fan since his childhood in Brooklyn. As part of the deal, Daly bought a 5% equity stake in the team, leaving News Corp. with 95% and the bulk of the losses.

News Corp. sources say there is no reason to own the team if the company can't control the management.

Daly, who said he was aware the team was being shopped, said it was doubtful he would stay if there were an ownership change or that he would try to put together his own ownership group.

Several teams, including the World Series champion Angels, have languished on the market with no takers because of the slumping economics of the game.

Still, said sports analyst John Mansell of Kagan World Media, "all else being equal, the Dodgers are a better buy than the Angels. They have a more storied franchise, more international potential and a stronger brand."

And that means the team could fetch a price that would help Murdoch obtain what he seems to want most these days: to buy DirecTV from General Motors Corp.

Buying out the automaker's 30% controlling stake in DirecTV's parent, Hughes Electronics Corp., would cost more than $4.5 billion. News Corp. and Liberty Media Corp. are talking about a 50-50 partnership to buy GM's stake.

On Tuesday, the Wall Street Journal reported that News Corp. and Liberty had held talks with DirecTV's competitor, EchoStar Communications Corp., which owns satellite TV provider Dish Network.

But analysts dismissed the talks as most likely aimed at increasing the pressure on GM. News Corp. has been frustrated by the slow pace of its negotiations with GM for DirecTV.

Moreover, some analysts doubt that EchoStar Chairman Charles Ergen would sell his controlling stake at a time when the stock is trading near its lows.

Times staff writers Helene Elliott and James Bates contributed to this report.

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