Can Magic Johnson possibly justify the jaw-dropping price he's about to pay for the Los Angeles Dodgers? There's a price tag of $2.15 billion on the MLB franchise, which is two-and-a-half times more than what the Chicago Cubs sold for just a few years ago and over 50% more than the soccer giant Manchester United recently sold for. Guggenheim Baseball Management, an aggressive boutique group that includes former Los Angeles Lakers star Magic Johnson and longtime baseball executive Stan Kasten, placed a bid that is $700 million higher than the next highest bidder, Steven Cohen, the American hedge fund manager who founded SAC Capital Advisors.
Where is $2.15 billion coming from? The former CEO of Bear Sterns, Alan Schwartz, is currently the executive chairman of the investment banking firm Guggenheim Partners. He says the firm and its clients, partners, and investors are a source for "a lot of the money for this purchase." It's still pretty unclear as to where these dollars are coming from, but they certainly amount to a figure that the Dodgers couldn't turn down.
Today, the Dodgers said they are on track to exit bankruptcy as planned on April 30. The April 30 date is part of a settlement between the Dodgers and Major League Baseball; It coincides with the deadline for current owner Frank McCourt to pay $131 million to his ex-wife, Jamie, as part of their divorce settlement. Although sports teams are often perceived as vanity purchases, at some point, Magic Johnson and company will want a return on their investment. The question now is: will they even get one?