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Thursday, March 29, 2012

The Economist: A long Los Angeles nightmare ends

The Economist argues that the high purchase price will come back to haunt the franchise long after Frank McCourt is gone.

At this price, everything would have to go right for the new owners to make a profit. They are required to make costly capital improvements to Dodger Stadium as part of the deal. They will need to spend heavily on new players to improve the club’s lacklustre on-field performance and revive fans’ interest—particularly now that their local competitors, the Angels, have signed Albert Pujols, baseball’s best player, to a mammoth ten-year, $254m contract. And although the deal has been described as a “100% cash offer”, it is doubtful that even Guggenheim has $2 billion of its own capital lying under the mattress and available to buy a baseball team. The far more likely outcome is that the acquisition will have to be financed with a heavy debt load, whose interest payments will probably siphon off much of the franchise’s revenues and limit the owners’ ability to invest in it.

David Concepcion de la Desviacion Estandar (Dan R) Posted: March 29, 2012 at 06:07 PM | 3 comment(s) Login to Bookmark
  Tags: general

Reader Comments and Retorts

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Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.

   1. MikeTorrez Posted: March 29, 2012 at 11:00 PM (#4092680)
The Dodgers owners might not make a profit, but the Steinbrenners certainly will...
   2. Cris E Posted: March 30, 2012 at 02:02 AM (#4092733)
You know how you can hide some revenue these days? Build a stadium. All the cool kids are doin' it. Just get a billion dollars from someone, throw in a couple hundred mil of your own to show you got skin in the game, then BAM! you count all your income as stadium payments and you're free to put $150m into payroll with no tax for the little guys. Sweeeeeet!

Wait, you don't have any more money? What's the matter with you? 2.15B + 200M + 150M is less than the GDP of Guam. It's just freaking Guam, sack up and write the check. Why'd you give that much money to parking lot boy if you can't sit at the grown up table when the game starts? Sheesh, these kids...
   3. Steve Parris, Je t'aime Posted: March 30, 2012 at 09:07 AM (#4092785)
A Guggenheim Stadium has some real possibilities.

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