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Over the last six months I have written two articles Baseball and Delaware Law and Baseball and Delaware Law Part II regarding the unfortunate saga of the Los Angeles Dodgers and their owner Frank McCourt. Every baseball fan, including myself, was curious to see how this would play out as the Dodgers are one of the most historic teams in Major League Baseball and the franchise was expected to sell for somewhere between $800 Million and $1.2 Billion.
Well, if you were as curious as I was then you would have been just as shocked as I was when I heard just after midnight on March 28th that Earvin “Magic” Johnson and the Guggenheim Partners made the winning bid of $2 Billion of which $1,587,798,000 would be paid in cash and making Magic Johnson the first African-American to own a Major League Baseball team. This is the highest price any sports team has ever sold for – by a wide margin, according to Forbes Magazine.
Now, I want you to follow me on how well Frank McCourt made out on this deal. In 2004 Frank McCourt bought the Los Angeles Dodgers for $430 Million, by selling the team for $2 Billion that is an $860 Million profit. I guess losing six houses and $131 Million to his ex-wife Jaime McCourt in their divorce settlement is not so bad after all.
While I said on March 28th they announced the winning bid of $2 Billion you knew that someone was going to object to this sale from going through. On April 10th, 2012 both Fox and Major League Baseball objected to the proposed sale of the Dodgers in U.S. Bankruptcy Court here in Delaware.
Fox says the incoming ownership group that includes Magic Johnson has not disclosed whether Time Warner Cable is involved in the purchase. Fox spokesman Chris Bellitti said, “Our filing today was a routine administrative filing to ensure our rights are protected.” Fox is the Dodgers current broadcaster and has an exclusive 45-day period starting in October to try to negotiate a new contract with the team. The current contract also prohibits the Dodgers from talking to other potential buyers of the media rights before Nov. 30th and gives Fox a limited right of first refusal on competing offers received after that date.
Major League Baseball said not enough money had been set aside to satisfy what is owed by the Dodgers. While the Dodgers have put aside $322,065 for MLB’s claims, the league said it was owed at least $8 Million as of Feb. 22nd. Major League Baseball also had separate concerns about the financing of the deal. Guggenheim has not disclosed whether funds from insurance companies it controls are being used, an MLB is worried such funds have the potential to subject the team to state regulators.
While Guggenheim Baseball declined comment on both matters the hearing to confirm the sale agreement was scheduled for April 13th before U.S. Bankruptcy Judge Kevin Gross. In a two part morning and evening hearing the Judge called a “doubleheader” The bankruptcy court judge here in Delaware gave his approval to the Los Angeles Dodgers plan to sell the team for $2 Billion to Earvin “Magic” Johnson and the Guggenheim Partners.
To read the complete Forbes Magazine article click here: http://www.forbes.com/sites/briansolomon/2012/03/29/2-billion-dodgers-sale-tops-list-of-most-expensive-sports-team-purchases-ever/
To read the complete ESPN articles click here:
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.