Did it seem too good to be true when news hit that Magic Johnson and a series of investors had $2 billion to pay for the Dodgers, to rescue the team from financial ruin? Yup. Two weeks later, it looks too good to be true.
Andrew Ross Sorkin reports in the New York Times this morning that the chief backers behind the Dodgers new ownership don't exactly have the money for the team. Instead, they anticipate that they will borrow money to purchase them … but they haven't exactly secured that money?
The lead man behind the sale, Guggenheim Partners CEO Mark Walter, apparently is expecting to use some money from his insurance group to pay.
As Sorkin reports: "Using insurance money—which is typically supposed to be invested in simple, safe assets—to buy a baseball team, the ultimate toy for the ultrarich, seems like a lawsuit waiting to happen."
Which, fine! Guggenheim Partners can deal with that. But Sorkin also reports that Walter may not have actually told his investors that he wanted to purchase the team and that he wants their money.
Maybe Walter can argue that this is a really smart investment? Sports teams do appreciate wildly in value. Frank McCourt spent less than $500 million (also leveraged) for the team, and he more than quadrupled that sale price. But Walter would have an easier time making that case if his group hadn't outspent the next closest competitor on the market by as much as a half billion dollars. Or if he hadn't already said he's not interested in getting a return on his investment—just a play thing for himself and Magic and Magic's grandkids.
Sorry, Dodgers fans. The Murdoch-McCourt era of drama isn't quite behind you after all. Enjoy the lawsuits.