Major League Baseball owners have unanimously approved the three remaining groups bidding to buy the Los Angeles Dodgers from Frank McCourt, setting up a final private auction for the bankrupt team.
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A person familiar with the talks, speaking on condition of anonymity because no announcement was made, said the vote took place during a teleconference Tuesday. McCourt and his advisers will now conduct negotiations and select the winning bidder in the coming days.
The groups are:
• Former Los Angeles Lakers star Magic Johnson; former Atlanta Braves and Washington Nationals President Stan Kasten; and Mark Walter, chief executive officer of the financial services firm Guggenheim Partners.
• Stan Kroenke, whose family properties own the NFL’s St. Louis Rams, the NBA’s Denver Nuggets, the NHL’s Colorado Avalanche and Major League Soccer’s Colorado Rapids, and who is majority shareholder of Arsenal in the English Premier League.
• Steven Cohen, founder of the hedge fund SAC Capital Advisors and a new limited partner of the New York Mets; biotechnology entrepreneur Patrick Soon-Shiong; and agent Arn Tellem of Wasserman Media Group.
”The obvious front-runner should be Steve Cohen. He’s using his own money rather than someone else’s money,” said Marc Ganis, president of the Chicago-based consulting firm Sportscorp, which is not involved. ”He does not have an issue like the cross-ownership prohibition in the NFL. Cohen has the wherewithal to simply write the check, especially with Soon as his partner. He’s addressed much of the LA-area concerns by bringing a significant partner in, and he is extraordinarily capitalized.”
McCourt’s financial adviser, Blackstone Group, will conduct the private auction with the finalists supervised by mediator Joseph Farnan Jr., a former federal judge appointed in October by U.S. Bankruptcy Judge Kevin Gross in Delaware. The auction is to start Wednesday in New York.
The person familiar with the call said McCourt tried to introduce at least one new bidder to the process Monday but was prevented from doing so by the mediator.
Under an agreement reached by MLB and McCourt in November, McCourt is to select the winner by Sunday. The sales agreement is to be submitted to the bankruptcy court by April 6 ahead of a hearing seven days later and the sale completed by April 30, the day McCourt is to make a $131 million divorce settlement payment to former wife, Jamie.
The current bids are all $1.4 billion to $1.6 billion and include the parking lots surrounding Dodger Stadium, which McCourt has said are not for sale. The sale price will be a record for a North American sports team.
If the final agreement differs significantly from the offers approved Tuesday, MLB has the right to review the deal again.
Kroenke’s bid could be complicated by an NFL rule against owning a team in a different sport.
”If he ultimately has the winning bid,” NFL Commissioner Roger Goodell said Monday, ”we’d immediately move with our committee, knowing it’s important to baseball.”
There was some concern among MLB officials about the financing of the Walter bid because some of the money was coming from insurance companies that are owned by Guggenheim. The person familiar with the call said several team owners voiced that during the teleconference.
”The problem there is a fundamental problem as you go into an auction, and that is the absolute reliance on other people’s money,” Ganis said. ”It means a lot of regulators. It means either shareholders or, depending on which insurance companies it’s coming from, the insured themselves.”
Already eliminated were five bids that initially had been submitted to MLB for consideration. They included:
• Alan Casden, chief executive officer of the Beverly Hills real estate company Casden Properties.
• Leo Hindery, managing partner of the private equity firm InterMedia Partners and former chief executive officer of the YES Network, and Marc Utay, managing partner of the private equity firm Clarion Capital Partners.
• Jared Kushner, publisher of The New York Observer and son-in-law of real estate developer Donald Trump.
• Stanley Gold, chief executive officer of Shamrock Holdings, the investment company of the family of the late Roy Disney.
• Memphis Grizzlies owner Michael Heisley and Tony Ressler of the assets firm Ares Management.
McCourt paid $430 million in 2004 to buy the team, Dodger Stadium and 250 acres of land that include the parking lots, from the FOX division of Rupert Murdoch’s News Corp. The team’s debt stood at $579 million as of January, according to a court filing, so even after the divorce payment, taxes and legal and banking fees, he stands to make several hundred million dollars.
The Dodgers filed for bankruptcy protection in late June, just days before the team was expected to miss payroll. The filing came after baseball Commissioner Bud Selig refused to approve a 17-year agreement between the Dodgers’ and Fox’s Prime Ticket subsidiary that would have been worth $2 billion or more. MLB feared McCourt would use about half of an intended $385 million cash advance to fund his divorce.
Los Angeles finished third in the NL West at 82-79, had just three sellouts and fell short of 3 million in home attendance in a full season for the first time since 1992.