News Corp.’s Bid to Sell Dodgers Heats Up

News Corp. has taken its most serious step yet to sell the Los Angeles Dodgers, sources said, quietly retaining investment banker Allen & Co. to shop for a buyer.

The Dodgers and the ballclub’s stadium at Chavez Ravine are up for grabs for more than $400 million, according to sources familiar with the situation.

News Corp. declined to comment Monday on a possible sale. Earlier this month, the company denied any active plans to sell the Dodgers after speculation surfaced in Australia, where News Corp. is based. And Major League Baseball, which must be notified of any serious offers, said it has no knowledge of a possible sale.

Sources close to News Corp., however, said preliminary negotiations have taken place with several potential bidders.

The most promising candidate to buy the Dodgers is a group headed by Dave Checketts, the former chairman of New York’s Madison Square Garden, according to the sources.

Other names that have surfaced as potential bidders are Los Angeles real estate tycoon Alan Casden and former Commissioner of Baseball Peter Ueberroth.

Several sources said foreign investors could be involved as backers because of the vanity value of baseball in places such as Asia, which is supplying an increasing number of top major league players.

Neither Checketts nor Ueberroth returned calls Monday seeking comment. Casden, who was traveling in Europe, also could not be reached.

Whether a deal will come together is far from certain. The price tag that News Corp. has put on the money-losing Dodgers is steep, especially considering that the entertainment giant insists on keeping control of the team’s most valuable asset: local cable distribution. The company is demanding a long-term contract with any new owner to continue airing Dodgers games on its Fox Sports West regional sports network, sources close to the company said.

“The Dodgers are a great asset, but Fox owns the distribution, so there’s limited growth potential for any new buyer,” said Robert Gutkowski, a sports consultant and former TV industry executive. “The buyer would have to be a high-net-worth individual or another corporation, because financial backers probably wouldn’t be interested if they couldn’t control the distribution.”

In any case, the brutal economics of the game -- only five major league teams made money from operations in 2001 -- have failed to win over many investors of late. Several clubs, including the World Series champion Anaheim Angels, owned by Walt Disney Co., have been on the auction block for months without any takers.

Although persistent rumors about a potential sale have swirled around the Dodgers for years, News Corp. appears to be ratcheting up its efforts because the media conglomerate controlled by mogul Rupert Murdoch needs the money, sources said. Murdoch wants to buy DirecTV, the satellite TV leader owned by General Motors Corp. That purchase, which could cost about $5 billion, would fill a hole in News Corp.’s global satellite TV operation.

It remains to be seen whether any of the bidders who have expressed interest in the Dodgers can amass the funding needed to secure a deal.

Several sports executives questioned Checketts’ interest because he so frequently throws his name in the ring for major league sports franchises -- including the Anaheim Angels, the Mighty Ducks and the Orlando Magic -- without any result. Some with knowledge of the situation, however, say he has pulled together at least some financing for a Dodger bid, although his insistence on controlling cable distribution could be a deal breaker.

Sources close to News Corp. dismissed Casden because his recent legal problems could prevent him from winning support from Major League Baseball, which must approve all transactions. Casden, who owns 90,000 apartments, mostly in Southern California, was ordered by a jury last fall to pay $276 million to former investors who claim he defrauded them. Casden is appealing.

Some industry insiders also downplayed Ueberroth as a serious buyer because he already has passed on the Angels. That’s because he considered the $250-million price being sought by Disney as too high. That makes it unlikely, sources say, that Ueberroth would be willing to pay nearly twice that much for the Dodgers, which have not posted a profit in a decade. In fact, the Dodgers are among baseball’s biggest money-losing teams.

Representing News Corp. is Stanley S. Shuman, a managing director of New York-based Allen & Co. and a longtime News Corp. director.

If a sale does transpire, one casualty probably would be Robert Daly, the Dodgers’ chairman and general partner and a 5% owner of the club.

News Corp. bought the team from the O’Malley family in 1997 for a then-record sum of $310 million. It has poured in an additional $200 million trying to field a successful team and to renovate Dodger Stadium.

Attendance improved last season as the Dodgers finished third in the National League West. But the team has lost nearly $100 million over the last two years as its payroll became one of the league’s highest.

As a result, News Corp. would need to sell the team for more than $500 million just to break even on its investment.

In the end, the biggest sticking point could be News Corp.’s determination to hang on to the Dodgers’ cable rights.

News Corp. bought the Dodgers in a bid to reinforce the dominance of Fox Sports Net and block rival sports programming juggernaut ESPN from launching a competing local sports channel.

Disney-owned ESPN would have needed Dodgers games in addition to those of its own two teams -- the Angels and the Ducks -- to make such a venture viable. Once News Corp. bought the Dodgers, Disney backed off.

The Boston Red Sox, with less than half the operating losses of the Dodgers, sold for $700 million last year. But nearly half the purchase price was credited to the New England Sports Network, which carries many of the team’s games.

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Time staff writer James Bates contributed to this report.