News Corp. Strikes Deal to Sell Dodgers to Boston Developer
News Corp. has agreed in principle to sell the Dodgers to Boston real estate developer Frank H. McCourt, both parties announced Friday. Neither would reveal the sale price, but it is believed to be about $430 million.
The deal, reached after weeks of private negotiations, includes the team, plus Dodger Stadium and surrounding property, the club’s Vero Beach, Fla., spring training headquarters and its player development complex in the Dominican Republic. The sale isn’t official until it is approved by at least 16 of Major League Baseball’s 30 owners, but sources said that could happen as early as the middle of next month. News Corp. cannot vote.
The media giant bought the team from the O’Malley family in 1998 for a then-record sum of $311 million. After pouring in an additional $200 million trying to field a successful team and to renovate Dodger Stadium, the company asserts it never made a profit, losing about $40 million a year. As a result, News Corp. needed a sale of $500 million or more to break even on its investment.
Sources said the actual dollar value for the club and its property holdings would be between $325 million and $340 million once discounts and credits are factored into the accounting.
There has been plenty of turmoil -- and no playoff appearances -- at Chavez Ravine in the five years since News Corp. purchased the Dodgers, ending a stable and successful 50-year reign by the O’Malley family, which brought the team from Brooklyn to Los Angeles in 1958.
The team of Jackie Robinson in Brooklyn flourished out West, drawing at least 3 million fans for a record eight consecutive seasons and annually ranking in the top five in major league attendance.
Fans have bemoaned the international media conglomerate’s apparent disregard for the franchise’s rich history and expressed distrust about the corporate owners because of numerous controversial moves, front-office purges and lack of success on the field. The team has failed to make the playoffs since 1998, and hasn’t won a postseason game since winning the World Series in 1988.
If McCourt receives MLB approval as expected, there could be several personnel changes in the current Dodger staff.
Chairman Bob Daly, the former Warner Bros. Studios chief, who took over day-to-day control of the team in 1999, has said he would not stay under a new owner, and the status of General Manager Dan Evans and Manager Jim Tracy, among others, could be in doubt.
It is also expected that former San Francisco Giant and current MLB executive Corey Busch, an advisor to McCourt in his bid for the Dodgers, would take a front office position.
Although a final step still remains before the team can change hands, McCourt, in Los Angeles for the final negotiating sessions, in a statement expressed confidence and excitement about the “opportunity to lead the Dodgers to continued excellence. We anticipate a smooth completion of this transaction in the weeks ahead, and when approved, our most immediate goals are returning the Dodgers to the World Series and making each fan’s experience at Dodger Stadium the absolute best that it can be.”
McCourt has no plans to relocate the Dodgers to Boston.
He failed in attempts to acquire the Boston Red Sox in 2001 and the Angels this year, stirring questions in the industry about whether he has sufficient financial backing to close the deal. But baseball executives involved in the approval process expect the final phase of the sale to go smoothly.
That was not the case when News Corp. reached an agreement in principle in May with Malcolm Glazer, owner of the National Football League’s Tampa Bay Buccaneers. That deal, for about $360 million, collapsed because Glazer was unable to overcome complex financing regulations in the NFL and baseball.
The commissioner’s office has assured McCourt it will try to move the process along as fast as possible, and in a sign that there is momentum behind the deal, allowed News Corp. to release a three-page document outlining the agreement. There was no such detailed announcement when the Glazer deal was being studied by baseball.
Said a high-ranking baseball official of McCourt’s status: “My understanding is he’s still putting a group together, but I don’t foresee any problems in that regard.”
McCourt has significant Boston property holdings, which some baseball officials believe might be appraised as high as $400 million, and oversees a successful real estate development firm. His net worth is unknown.
There is at least one other major financial backer in McCourt’s ownership group. As long as the unidentified individual and the rest of the group hold up under baseball’s extensive background checks, officials said, McCourt will become the Dodgers’ next managing partner.
News Corp., which is baseball’s national television broadcast partner over its Fox network, is eager to have a prospective buyer approved, having decided the Dodgers no longer fit a strategic need.
The team was purchased in a bid to reinforce the dominance of News Corp.'s Fox Sports Net and to fend off an attempt by rival ESPN, owned by the Walt Disney Co., to launch a competing regional sports channel. To make the venture viable, ESPN would have needed Dodger games in addition to those of its own two teams at the time, baseball’s Anaheim Angels and the Anaheim Mighty Ducks of the National Hockey League.
After News Corp. bought the Dodgers, Disney scrapped its regional sports cable plans, reducing the strategic imperative. News Corp. has been looking for a buyer on and off for at least two years, but its urgency to sell became more acute last year as Murdoch sought money to finance his bid for satellite TV leader DirecTV.
After losing a bidding contest in 2001, Murdoch finally sealed a $6.6-billion deal in January that is expected to be completed by year end to take over DirecTV’s parent, Hughes Electronics Corp.
Protecting News Corp.'s regional sports networks was key to any sale of the Dodgers. In fact, one reason News Corp. took so long to find a buyer is its refusal to sell its two local sports channels in Los Angeles as part of the deal.
Owning cable rights is key to offsetting the lousy economics of owning a baseball team. The Boston Red Sox, with less than half the operating losses of the Dodgers, sold for $700 million last year. Nearly half the price was credited to the New England Sports Network, which carries many of the team’s games.
David Checketts, who formerly ran the New York Knicks basketball team and Madison Square Garden, earlier this year offered to pay News Corp. $600 million for the team and its stadium, but only if he also gained control of Fox Sports Net 2. The cable channel airs games of the Dodgers, the Mighty Ducks and the L.A. Clippers basketball team. News Corp.'s second Los Angeles-based regional sports network is Fox Sports Net, which airs games of the Lakers, the Kings hockey team and the Angels.
News Corp. has been unwilling to sell such key TV assets, which are now making money after years of losses.
In addition to Glazer, there were at least two other major bids made to buy the Dodgers.
Jeff Smulyan, the former Seattle Mariner owner who is chairman and chief executive of Emmis Communications Corp., was the popular choice among some baseball owners. Smulyan, though, backed away from the table because of News Corp.'s refusal to include six of its television stations in the deal.
Alan I. Casden, a Southern California developer, was believed to have made the highest bid for the team alone, about $400 million, but officials said Casden probably would not be approved because of a legal issue he faces. Casden discussed the idea of turning Chavez Ravine into a housing development and exploring building a new stadium in downtown Los Angeles.
McCourt’s intentions for Dodger Stadium remain unclear.
McCourt has deep roots in Boston, as his family has operated a heavy-construction company for four generations. He began his career in his family’s infrastructure business, McCourt Construction Co., before staking out on his own and founding the McCourt Co., a real estate development firm. His wife, Jamie, is vice president and general counsel.
“Frank and Jamie McCourt have a remarkable enthusiasm for baseball and a profound commitment to community,” News Corp. Chairman Peter Chernin stated in a news release Friday. “Their extraordinary business acumen and understanding of the complex issues facing the game today ensure success for the Dodgers organization for many years to come.”
McCourt is expected to relocate from Brookline, Mass., to run the storied franchise.
“He is a passionate fan,” said Boston Red Sox President Larry Lucchino, whose group outbid McCourt for the franchise. “He’s wanted this opportunity for a long time. I wish him well.”
Times staff writers Sallie Hofmeister and Bill Shaikin contributed to this report.