Optimistic despite the warning signs

Eight years ago, I placed myself firmly among a small group of skeptics concerned about the qualifications of Frank and Jamie McCourt to be owners of the Dodgers, and never left.

This week, despite the presence of a greater number of skeptics worried about whether the $2.15 billion outlay by the Dodgers’ new ownership group is sign of trouble, I find myself aligned with the optimists. Tonight, I wondered why this was.

  • It’s not because I’m a contrarian. For one thing, there are probably still more optimists than pessimists out there right now.
  • It’s not because of the greatness of Magic Johnson. I love Magic, but I know his role is too small to make all the difference. I also remember Magic’s coaching days with the Lakers and, yes, The Magic Hour. In fact, what pessimism I have comes in part from my recognition of his limitations – if anything, I’m not quite enjoying Magic’s ascension to the Dodger royal family as unabashedly as I’d like.
  • It’s not because I’m happy that McCourt still has a shelf in the Dodger pantry.
  • It’s not because I can’t see the possibility that the new owners went a little crazy and got a little fuzzy with their math, to an extent that even the TV rights windfall can’t save them.
  • It’s not because I’m not wondering whether a majority owner based in Chicago with no real connection to Los Angeles or the Dodgers truly has the franchise’s best interests at heart, regardless of what his minority partners desire.
  • It’s not, in short, that I don’t think the new owners have the same fallibility as so many other owners throughout the world of sports.

Those factors, and maybe a few others I can name, have bridled my enthusiasm for the new owners – but haven’t reversed it. Because …

  • OK, Magic. Magic. I’m really of two minds with him. I know his influence is small, but I know his determination is huge. It’s hard for that not to affect me. I’ve got Magic on my team.
  • McCourt reportedly does not have a controlling interest in any Dodger operations, on or off the field. This is the third-best-case scenario out of at least seven involving McCourt that I have in my head, including one where he rides a missile from space toward Dodger Stadium while waving a cowboy hat and yee-hawing at the top of his lungs.
  • The money. The McCourts should have had The Borrowers be the title of their memoirs – until other titles came to mind. Despite the stratospheric purchase price this time around for the new guys, the new guys are without a doubt better equipped financially to face the challenges of ownership. And the TV money coming in is still astronomical, in ways I think most people still don’t grasp.
  • The McCourts came in with no understanding of the Dodger community or the sports world. I’m not sure they came in with any understanding of human relations, to be honest. I believe Johnson, Stan Kasten and Peter Guber have it. They might not always do what we want, but the odds are much better.
  • The pessimists are saying that the new owners can’t make this work. With all the potential on the table, including the possibility that the Dodger debt was wiped out by money down, I can’t go that far.

And, admittedly, there’s one other thing. Maybe I’m tired of all the negativity. I’ve been locked into pessimism about Dodger ownership for so long now, maybe I’m just ready for that lifeboat. If these new owners were another set of McCourts, I think I’d still be able to recognize it, but I am liking giving the benefit of the doubt.

So it’s possible I’m committing the same sin of naivete that others were guilty of eight years ago. But I just feel I’ve got enough reason to feel light.

Anyway, it doesn’t matter what I feel now, or what any of us feel now. It just doesn’t matter. The future will tell us all we need to know.

  • http://www.facebook.com/profile.php?id=887280172 Jibin Daniel Park

    Will Ned Coletti have a future with the Dodgers?  How would Kasten evaluate Ned and would he want to bring in his baseball people?

    • Greg Hao

      Apparently, Kasten has an existing relationship w/ Colletti (a friendly one at that) and the two of them have chatted earlier in the week.

      I wept a little bit when I read that.  God, I despise Ned Colletti.

    • Anonymous

      Kastens will take one look at Juan Uribe and understand who he is dealing with.

  • Anonymous

    here is a link to an interesting piece that takes another view, Jon:
    http://6-4-2.blogspot.com/2012/03/do-you-believe-in-magic-thoughts-on-new.html 

  • Anonymous

    Kasten will evaluate and make his determination as the season goes on.  

  • Greg Hao

    I think so often people confuse realism with pessimism.  I’m realistic about what role Magic plays as the front man; yes, the great majority of the money didn’t come from him and he is being used, but it doesn’t mean he doesn’t have leverage.  Magic Johnson will be rolled out as the PR guy, not manager or coach or whatever else; so I don’t know how worthwhile it is to bring up his admittedly disastrous run on TV and as a coach.  

    I’m also quite weary about the holier than thou attitude that a lot of people hold towards Frank McCourt.  The guy is like so many of us out there, he is selfish.  That he is selfish to an outlandish extent is something to scoff at; it is also important to remember that McCourt isn’t out to spite any of us individually.

    Ultimately though, I was compelled to quickly drop in with a comment because I would feel lost if Jon bought into the pessimism.  I look to your positivity to balance my own cynicism.

  • Anonymous

    I will take a wait and see stance.  I hope Magic does not want to bring showtime to Dodger Stadium.  If the Dodgers return to the tradition that had so much to do with why I became a Dodger fan in the 1960′s, I’ll return to being a Dodger fan.  I doubt that any ownership group that has paid that kind of money though will be interested in returning Dodger Stadium to the family oriented atmosphere that prevailed there during the O’Malley years.     

  • Anonymous

    Jon,
    Indicators of an owner’s likelihood for business success frequently include relevant past business successes, owner capitalization, knowledge of the new business, marketing/sales/pr savvy.  The McCourts would rate F’s on all these, while Guber/Kasten/Johnson would rate A’s.  So I think the confidence and enthusiasm about the new owners is warranted.  The ironic outcome is that the F-rated McCourts have turned ownership of a Boston parking lot into $2 billion in cash plus consumed hundreds of millions of business cash flow for their personal/legal activities.  It seems unlikely the new owners will so successfully create the same +15x gain that the McCourts achieved in less than 10 years.  Us fans hope the new owners put at least a portion of their gain into the product on the field.

  • Anonymous

    Jon, I tried to tackle the numbers a bit as promised here: 
    http://www.rogo.net/weblogs/?p=26

    It’s impossible for me to see how the team doesn’t turn a profit even with a top-tier payroll.

    Even if all the numbers prove optimistic, the team will still be above water because the cable money is a locked-in promise. It’s quite frankly a myth that large numbers of people are canceling cable even though I do agree that 20 years from now 90% cable/satellite penetration will be a thing of the past. And, besides, all the other local sports rights deals are getting done as 20-25 year deals. The cable guys fear paying more down the road, not less.

    You know, I’m neither a fan nor a foe of the Dodgers, but from a purely business perspective, this deal was sound. Would it be more sound at $1.5 billion? If you borrowed to do it, yes. Since they didn’t, who cares?

  • Anonymous

    Haleluiah!!

  • Anonymous

    Which scenario has McCourt riding a missle while wearing a cowboy hat?

    • http://www.dodgerthoughts.com/ Jon Weisman

       Scenario #7.

      • http://www.facebook.com/people/William-Bland-Whitley/1336480710 William Bland Whitley

        How dare you desecrate the memory of Slim Pickens! Otherwise, great post.

  • http://www.dodgerthoughts.com/ Jon Weisman

    NPUT

  • Anonymous

    I’m going to join Jon on the optimistic side.  That said, a statement from an earlier piece by Jon really struck a chord with me:  “I’m still much more worried about which star players the new management thinks are worthwhile to begin with.”  This really sums it up.  Just because there’s cash, doesn’t mean correct decisions will be made.  The cash however, provides greater opportunity to move past mistakes.  For what he’s had to work with, I still feel Colletti has done an adequate job.  Provide him some support staff and boost the Latin American division and there is a solid base to build a long term success story here.
     
    So why optimism?  I don’t think any group would lay out over $2 Billion to sit by idly and accept mediocrity.

    • Greg Hao

      Not to mention, mediocrity = low ratings = less cash flow.  It’s in everybody’s best interest for the Dodgers to be competitive.

  • Anonymous

    I see the point you are making, Jon and am equally divided…

    However, what I really like about this group is the seemingly equal division between roles of the partners. There’s money, baseball brains and two shakes of Hollywoody PR in the mix. It feels as if they’ve all come to a fairly concrete understanding of what it takes to run a team, what roles each is going to play and how to succeed. 

    As a Bay Area person, I have watched the Giants a bit too closely (even worked on the magazine there for a bit) and it’s been interesting to compare their ownership group with the new Dodgers’ ownership group. Not that SF and LA are direct social comparisons, but there are no (to my knowledge) strong baseball brains in that organization ala Kasten, and certainly not a major personality like Magic (and even, to some extent, Gruber).

    One thing that I’m curious about, and not really sure how it all works, is the Guggenheim connection and the money available to the team from that organization. If I’m a shareholder, does that mean my money is invested now in the Dodgers? Obviously, I am not a financial wunderkid, but I find that curious. I appreciated Strike4′s comment that past success is an indicator of future performance. 

    Finally. My concern is that the fan base believes that this new ownership group equals a WS appearance THIS season. I believe we are at least a season away from seeing major changes across the board. Now, if the sale had happened in December/January …. There must be a tax reason for waiting.

    That’s all.

    • http://underdog.typepad.com/ underdog

      I’m in SF, too, and can’t resist comparing the two ownership groups. I’ll say that given changes in SF and now in LA, I feel a lot better about the rivalry than I did two years ago (between the SFG WS win and the McCourt mess, I just wanted to hide my head like an ostrich.)   ANyway, I agree the team won’t see massive overhaul right away, it will take them time to evaluate personnel both off and on the field. But I am optimistic about the future, and this week starting out with the Dodgers actually paying good money for Latin American talent was a good start (even if not officially done by the new ownership, it’s a sign of things to come methinks.)

  • Anonymous

    Having lived in the shadows of the Braves for 22 years, I’m optimistic about the presence of Kasten.  He won’t be perfect but he’s a good day-to-day baseball man who values metrics and pitching.  If the money is there as well, and it seems to be, we won’t lose out on the next Fielder.

  • Gil Domingo

    I am still utterly confused about the parking lot.  I know McCourt gets no Dodger parking fee, I know that McCourt needs to run anything by Magic to build anything on that lot with the Magic group being able to veto.  

    I have read that Magic is in partnership with McCourt regarding future development of the lot.  I have also read that their is a secret person from Guggenheim who is also involved.  There is way to much fuzzy info out there I’m having a hard time discerning fact from fiction.   

    • Greg Hao

      It’s not really secret, just that nothing has to be revealed that’s not relevant to the pending bankruptcy of the Dodgers (which makes certain things public record).  The corporate entity which owned the parking lots was never a part of the entity which filed for bankruptcy so any transactions involving it (the parking lots) doesn’t have to be revealed.

      I think people are simply jumping at shadows and it’s very simple.  McCourt and certain people from GBP (Guggenheim Baseball Partners) or possibly Guggenheim Partners itself, formed a new holding company.  McCourt provided the real estate while GP or GBP provided $150MM in cash.  And in this new holding company, GP/GBP is the majority shareholder while McCourt is a minority shareholder.  As has been revealed, cash income from parking fees flows to the majority shareholder.  So, McCourt, for his contribution of the land, will only see any profit when the land is actually developed.  And frankly, given the history of not only Frank McCourt but the much more significant history of how Chavez Ravine ended up in private hands means that any plans to develop the land for profit is going to be met with very high level of scrutiny. (And probably not going to happen.)

  • Anonymous

    I think its called Guggenheim Baseball Management.

    Will Frank be on their Board?

    What is the Parking lot company called.  Will Frank be on that Board?

    Why would he sell and relinquish all control the non-bankrupt entity for a paltry 150 million (after getting 2 billion)?

    • Greg Hao

      Right you are, GBM, not GBP.  

      As far as I’m aware, Frank McCourt is not in any way associated with GBM, after all, that’s the whole point of selling the Dodgers.

      I don’t believe the name of the parking lot holding company has been announced.  That will probably be a part of the document that the court will release once it’s reviewed and approved the deal.  All indications seems to be that McCourt is simply going to be an LP in it, so my guess would be no.

      Remember, McCourt has a $150MM debtor-in-possession loan that he has to repay MLB.  And if you approach it from the perspective of what I wrote above, $150MM represents at a maximum 51% of what the parking lot holding company is worth (since that’s the money part and McCourt’s made a contribution in kind of the property).  Forbes, as I recall, valued the chavez ravine property at around $300MM to $400MM, so it’s somewhat within lines.

      My speculation, and it’s only a speculation, is, Frank McCourt knew that holding onto the land is pointless because he will never get approval to develop the land on his own, so why not get some money out of it, enough to pay back the MLB DIP loan as well as hang onto a minority stake to enjoy an upside, if it ever gets developed in the future.  

  • Anonymous

    I agree with your assessment except I think, given the cost, that 1) the land will be developed as soon as possible first as year round retail/dining/tourist destination and with an ultimate goal of an NFL team and 2) McCourt will be more active in it than you think.

    These were McCourt’s plans in the first place and he never could have done it the way he was going.  Now he has deep pocket partners and locally influential partners and his own personal wealth.

    Remember what Magic said:

    “I am thrilled to be part of the historic Dodger franchise and intend to
    build on the fantastic foundation laid by Frank McCourt…”

    • Greg Hao

      development of chavez ravine is IMO a pipe dream; whether it’s frank mccourt or magic johnson.  There is still a lot of animosity towards the way the citizens of chavez ravine by the city when the dodgers moved out west.  The land right now is specifically zoned for dodgers stadium and parking lot.  Any development would require the city’s permission and I am doubtful about any owner’s ability to convince the city council to approve the new zoning.

      as far as frank mccourt’s involvement, I don’t honestly care.  I don’t want to say that i’m a defender of mccourt and his action but i just don’t think he’s the devil incarnate which a lot of dodgers fans seems to.

  • http://twitter.com/peyton161816 Mike Baker Jr

    I once saw Magic speak. All he talked about was money and his enterprise. Please do not think these guys are out to be there for the fans. They will have to prove they are not money grabbers also! I would say watch out!

    One way they can prove they are here for the fans would be to lower price of parking.

    Too many people with purple and gold glasses on.