March 28th, 2012
02:03 PM GMT
London (CNN) – Magic Johnson is back in LA, with a new sport to conquer.
The former LA Lakers legend - together with a group of investors calling themselves Guggenheim Baseball Management - has moved into Major League Baseball, spending $2 billion to buy the bankrupt Los Angeles Dodgers.
Magic's men won out over a list of suitors that read like some kind of financial fantasy baseball lineup. There were sports investors like Dallas Mavericks owner Mark Cuban and St. Louis Rams owner Stan Kroenke. America's 35th richest man, hedge fund manager Steven Cohen, was a frontrunner. Former team manager Joe Torre was interested. Even Walt Disney's family sniffed around.
The successful $2 billion offer – the most expensive purchase of an American sports franchise in history – was a far higher price than expected.
So why the level of interest? The team has struggled on the field, failing to make the playoffs in the past two seasons. The situation off the field is even worse - the team went into bankruptcy protection after a messy divorce between co-owners Frank and Jamie McCourt.
The real prize is TV money. Rights to live MLB games have become incredibly valuable, with media companies prepared to pay billions of dollars to broadcast even a struggling team's games.
A deal that Mr. McCourt tried to negotiate with Fox Sports would have been worth $3 billion to the Dodgers, but was rejected by MLB commissioner Bud Selig. Now McCourt has been forced to sell, the new ownership group will reap the benefits of a new TV deal, due to begin in 2014. The Dodgers can expect a massive windfall once this is negotiated.
Yet even with a clean slate, the Dodgers have serious problems to address. Most pressing is the worrying slide in attendance at Dodger Stadium. The average home attendance last season was just over 36,000 - that's only 64% capacity, and down from almost 44,000 fans per game in 2010.
For the first time since 2000, fewer than 3 million fans came to the ballpark over the course of the season, and with payroll increasing last season, the drop in gameday revenues only amplified the Dodgers' financial woes.
And the man most Dodgers fans blame for those woes - McCourt - isn't out of the picture yet. It's likely he'll still take money from parking revenues outside Dodger Stadium, by teaming up with some of Magic's investors to buy the nearby Chavez Ravine property. Coughing up money to McCourt each time they park at the stadium would be an unwelcome reminder of a miserable era for Dodgers fans.
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.