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To Live and Buy in L.A.
Daniel Roberts
April 09, 2012
Examining the reasoning and ramifications of the Magic Johnson group's $2.15 billion deal
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April 09, 2012

To Live And Buy In L.a.

Examining the reasoning and ramifications of the Magic Johnson group's $2.15 billion deal

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Don't believe everything you hear about the $2.15 billion Dodgers sale. For starters, Magic Johnson and Guggenheim Partners did not overpay. Or at least probably not, though it's still too early to tell. "If you look at pretty much every sale that's been made of teams in professional sports, the equity continues to increase every year," points out Bob Dorfman of Baker Street Advertising. He says Magic's group was smart enough to foresee the lucrative TV opportunities. Los Angeles is the country's second-largest media market, and the fact that there's a battle shaping up there between Fox Sports and Time Warner was critical. Once Fox's contract expires after the 2013 season, the TV rights could go to the highest bidder, or the group could launch a regional sports and entertainment network, which could prove extremely lucrative. Sports marketing sources tell SI that as much as $1 billion of the new owners' investment could be explained by the potential TV money they envision reaping.

That being said, no, the Dodgers deal does not automatically make every other team more valuable. This was a unique case, due to the TV rights, and thanks to something more abstract: the franchise's storied past. "Very few sports teams are comparable to the Dodgers in terms of that beloved history," says Doug Shabelman of Burns Entertainment & Sports Marketing. "The Yankees, the Red Sox, to an extent the Cubs." Yes, this deal does mean that the Yankees could sell for perhaps as much as $4 billion. But the majority of ball clubs don't have that kind of brand-name equity.

The bottom-line winner in all this isn't other baseball owners or even Johnson (yet). It is the Dodgers' fan base, for whom, Shabelman says, this "has all the makings of a Hollywood story."

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