Frank McCourt is offered $1.2 billion for Dodgers
In an international twist in the Dodgers’ ownership saga, Frank McCourt has been offered $1.2 billion to sell the team to a group indirectly financed by the government of China.
The bid is headed by Los Angeles Marathon founder Bill Burke, according to a letter sent to McCourt on Tuesday. The letter was disclosed to The Times by two people familiar with its content but not authorized to discuss it publicly.
The proposed sale price would set a record for a Major League Baseball team. However, the bid was received with skepticism within MLB, where executives wondered whether the proposal might be used by McCourt to stir negotiations with other potential buyers or to persuade a Bankruptcy Court judge to keep McCourt in charge of the team.
“There are questions within the sports industry about whether this is a genuine offer,” said one industry consultant who works extensively with MLB and other professional sports leagues.
The offer was unsolicited, according to a person who had spoken with McCourt’s representatives but was not authorized to discuss the conversation.
It is uncertain whether the embattled Dodgers owner is receptive to the offer. McCourt has said that he had no interest in selling the Dodgers and that he intended to remain the owner after the team emerges from bankruptcy protection.
Steve Sugerman, a spokesman for McCourt, declined to comment on whether McCourt had received the letter and whether he would consider selling the team.
In a brief telephone interview, Burke declined to discuss the bid. “I have no comment at this time,” he said.
Forbes magazine estimates the Dodgers’ worth at $800 million. McCourt bought the Dodgers for $430 million in 2004, and the team and related entities carry debts of “over $550 million,” according to a June 20 letter sent to McCourt from MLB Commissioner Bud Selig.
The bid terms proposed by the Burke group call for an all-cash payment to buy the Dodgers, all real estate related to the team and the team’s media rights, according to the letter. Attorneys for McCourt have said he could try to keep Dodger Stadium and the surrounding parking lots even if he sold the team.
The offer would expire in 21 days, according to the letter, with the goal of closing a deal within 90 days, subject to the approvals of MLB and the Bankruptcy Court.
The letter did not say whether the bid would be subject to the approval of Jamie McCourt, the ex-wife of Frank McCourt, who claims half-ownership of the team. But Jamie McCourt probably would endorse a deal since she had asked the judge overseeing the couple’s divorce to order the Dodgers sold, a request that was then withdrawn in deference to the Bankruptcy Court.
The bid was presented on behalf of the Burke group by Signal Capital Management of New York. The firm has offices in Beijing, according to its website. Shane Rodgers, its chairman and chief executive officer, said in an email that the firm would not comment “on any potential or proposed transactions.”
The letter did not specify who would finance the Burke bid, other than to say the money would come from “certain state-owned investment institutions of the People’s Republic of China” and unidentified American investors. Foreign investment is not necessarily an obstacle to MLB ownership; the Seattle Mariners’ ownership group includes a significant Japanese presence.
McCourt has spoken with at least two other groups about a sale of some portion of the Dodgers and could use the $1.2 billion as a minimum value in those discussions, said a person familiar with them but not authorized to talk about them publicly.
McCourt also could cite the offer in Bankruptcy Court to counter MLB claims he has irreparably mismanaged the team.
It is uncertain whether sale discussions with any group might explain why McCourt’s attorneys have yet to pursue the cable television rights sale that they said would be the key to getting the Dodgers out of Bankruptcy Court.
Bruce Bennett, the Dodgers’ lead bankruptcy attorney, had promised to move forward on the issue at an Aug. 16 court hearing but did not do so. Fox Sports has threatened to sue for damages if the Dodgers void the two years remaining on the current cable contract to pursue a new one.
McCourt has discussed the sale of at least a partial share of the Dodgers with at least two other groups, said a person briefed on the matter but not authorized to comment publicly. It is unlikely Selig would sanction any deal that did not include an exit path for McCourt, but McCourt has signaled his intent to challenge Selig’s authority in court.
The record sale price for a major league franchise is $845 million, set two years ago when the Ricketts family bought the Chicago Cubs from Tribune Co., publisher of The Times.
That deal included the team, Wrigley Field and a 25% stake in a cable sports channel. The Burke group proposes paying almost half again as much for the Dodgers, their stadium and a chance to start a cable sports channel or negotiate a new cable television contact.
Despite the Forbes estimate, the team could be worth from $900 million to $1.1 billion, said Marc Ganis, president of Sportscorp Ltd, a Chicago-based sports industry consulting firm.
But with Fox at risk of losing the Dodgers to rival Time Warner’s fledgling Lakers channel, the bidding on the TV rights could be so robust that the team itself could fetch $1.2 billion or more in “a full-fledged auction” in Bankruptcy Court, said a prominent sports investment banker, who declined to be identified because he could represent potential bidders for the Dodgers.
Burke sold the Los Angeles Marathon in 2004, building the race into one of the largest in the United States but jousting with city officials in various financial skirmishes, including disputes over reimbursement for city services and ownership of the L.A. Marathon name. Burke is the husband of retired Los Angeles County Supervisor Yvonne Brathwaite Burke.
Burke sold the race to Devine Racing. In 2008, Devine sold the marathon to McCourt.
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