When Clayton Kershaw hung up the phone $215 million richer on that January day, it was nothing short of a fiscal miracle. The Dodgers hadn’t been to the World Series in twenty-five years, and, even worse, the club had spent most of the past decade owned by Frank McCourt, a man who forced the storied organization into bankruptcy. Though the Guggenheim Partners had paid $2.15 billion for the Dodgers twenty-two months earlier, what they got was a glorified fixer-upper.
Dodger Stadium may have been one of baseball’s crown jewels, but it was in desperate need of repair. The fifty-year-old ballpark was the third oldest in the major leagues after Boston’s Fenway Park and Chicago’s Wrigley Field and it showed. Cracks in its thirteen-story façade seemed to deepen with each passing season, and when the warm summer breeze blew through the concourses, its concrete bones rattled and sighed. During playoff games when fifty-five thousand fans screamed and stomped, it often felt like the old press box, wedged right into the stadium’s heart, would collapse on itself. Flickering bulbs on the video board made replays difficult to see. Overwhelmed concession stands not equipped with twenty-first-century technology meant that during sellouts hungry customers had to wait in line up to forty-five minutes for a Dodger dog. Even the players suffered along with the masses. The tiny home clubhouse smelled of dirty feet and rotten tobacco, and the air-conditioning often kicked during the dog days of July and August. Manager Don Mattingly’s office was the size of a broom closet. Even worse, the visiting team had no batting cage or weight room of its own, which meant rival players had to walk through the home clubhouse to share facilities with Dodger players before and after games. This led to awkward moments of subterfuge when anyone was working on anything he didn’t want the opposition to know. “It was just really, really weird,” Mattingly said.
After taking over, the new owners vowed to pour a hundred million dollars into stadium improvements right away as a show of good faith to fans. With that kind of cash in the hole, they thought they’d be able to dazzle patrons and players alike with state-of-the-art upgrades and fancy new fan attractions. (Or at the bare minimum, fix the cell phone towers behind center field so that it was possible to send a text message during a well-attended game.) But then they got reports back from the engineers who inspected the place. Their holy cathedral on the hill overlooking downtown Los Angeles had biblical sewage and electrical problems. “Dodger Stadium is historic—which is great—but when you use that word to refer to plumbing and wiring, historic is not a good word,” said team president Stan Kasten. “I wanted to do all these things and they told me, ‘Stan, if you plug in one more toaster the whole stadium will blow up.’ ” The Guggenheim group realized that despite its fancy high-tech ambitions the first round of renovations would have to go toward replacing lightbulbs and toilets.
But the new owners were in it to have fun. So after replacing the scoreboard and constructing bigger batting cages, weight rooms, and a centrally air-conditioned home clubhouse that was twice the size of the old one, they built themselves their own private bunker under the stadium and fortified it with liquor and flat-screen televisions. They planned to celebrate many championships there.
The town’s beloved Lakers had won five titles in the past twelve seasons under the twinkling eye of the benevolent Dr. Jerry Buss, a man whose penchant for trotting out championship team after championship team led many to argue he was the best professional sports team owner ever.
Just winning, however, wasn’t enough for Guggenheim. The Lakers had captured the attention of a city where actual movie stars roamed free in their natural habitat by showcasing the game’s biggest superstars year in and year out. The “Showtime” era of the eighties and early nineties featuring Kareem Abdul-Jabbar and Magic Johnson gave way to the Kobe Bryant and Shaquille O’Neal “Lake Show.” Supermodels, pop stars, and Oscar winners became courtside fixtures because nothing validates famous people more than being around other famous people.
Since the Lakers were already a global brand synonymous with the glitz and glamour of Hollywood, the new Dodger owners had the blueprint already laid out for them. To win over the citizens of the entertainment capital of the universe and surpass the Yankees as Major League Baseball’s premier franchise they would first have to field a team with enough star power to impress folks in Hollywood. In doing so, they hoped to captivate a nation obsessed with celebrity and attract millions of new fans with their winning ways. And if becoming the loathsome Big Bad Wolf to millions more was the tax they paid on the path to glory, then so be it. They wanted to become the Lakers on grass. Only three miles separated Dodger Stadium from Staples Center, the Lakers’ home court. Under McCourt, that gap would have taken light-years to cross. The Guggenheim group set out to bridge it immediately. But before the Dodgers had any prayer of competing with the Lakers, they had to dig themselves out of an even bigger hole.
• • •
When Walter O’Malley moved the Dodgers from Brooklyn to Los Angeles before the 1958 season, he was called a traitor in New York and a crazy person everywhere else. At the time O’Malley won the approval to relocate his team to L.A., the Dodgers’ closest opponent would have been the St. Louis Cardinals, some sixteen hundred miles away. O’Malley convinced the Dodgers’ archrival, the New York Giants, to move from upper Manhattan to California, too, and the two clubs launched Major League Baseball on the West Coast. Relocating the Dodgers three thousand miles away was a huge gamble, but O’Malley had long seen opportunity where others were tripped up by uncertainty. After all, he had been part of the group in 1945 that risked the franchise by signing Jackie Robinson. In addition to breaking the color barrier for generations of black baseball players to come, the iconic Robinson also went on to become a six-time all-star and National League MVP, and helped lead the Dodgers to their first-ever World Series title in 1955.
O’Malley’s Los Angeles gamble paid off as well. Some seventy-eight thousand fans attended the Dodgers’ first game at the Los Angeles Memorial Coliseum, shattering all-time Major League Baseball attendance records. For his efforts, O’Malley was put on the cover of Time magazine and christened the unofficial commissioner of baseball. His enormous success further perpetuated the fairy tale that the West was full of endless promise and possibility. The Dodgers’ move to Los Angeles mirrored the flight of millions of displaced Americans who set out for California in search of better lives—or at least better weather. In 1950 the state’s population was just over ten million. By 1990 that number tripled to thirty million. Even the Dodgers’ traditional uniform colors now seemed to suggest the idea of the sky being the limit. Jaime Jarrin, the club’s legendary Spanish broadcaster, once paraphrased the poet Pablo Neruda when describing what a jubilant home game celebration looked like after a Dodger victory. “Blue is the most beautiful color,” he said. “It is the color of the infinite.”
Angelenos were ready. They had tasted quality baseball with the Pacific Coast League, and had been teased by the Cubs holding their annual spring-training camp on nearby Catalina Island, which was owned by William Wrigley Jr. himself. In 1958, Dodger games became a social event, with movie stars mixing with legendary athletes. Southern Californians no longer had to wait to read about yesterday’s games in the newspaper. For the first time, they got to breathe the same air as Willie Mays, Ernie Banks, and Stan Musial. It was heaven.
The O’Malley family ran the Dodgers for more than fifty years until Walter O’Malley’s children sold the team to Australian media mogul Rupert Murdoch’s Fox Entertainment Group in 1998. At that time, O’Malley’s son Peter was quoted as saying they had little choice but to unload the Dodgers because they felt that with player salaries skyrocketing, they would not be able to compete with the deep pockets of corporate ownership as the twenty-first century dawned. In Peter O’Malley’s mind, nine-figure contracts marked the end of the golden era of family-run ball clubs. (A heartbroken O’Malley wound up regretting letting the Dodgers go, however. Fourteen years later he gathered some investors in an unsuccessful attempt to buy the team back. When his efforts failed, he bought the San Diego Padres instead.)
The truth was Fox never wanted to own a baseball team. Its main reason for buying the Dodgers was so its local cable television network, Fox Sports West, could continue to show the club’s games. At that time, ESPN was rumored to be gearing up to build its own regional TV networks around the country. Compounding matters even more, Disney, ESPN’s parent company, had just purchased the California Angels, some thirty miles down Interstate 5. If ESPN did launch those regional TV networks, then Fox would lose the Angels, making the rights to broadcast Dodger games even more critical. After all, they had to fill their airwaves somehow. But the idea of entering a bidding war with the sports programming giant for the ability to show Dodger games terrified Fox. So in a move that foreshadowed the thinking that would come to define the franchise and stun the rest of the league fifteen years later, Fox bought the Dodgers not so much for the team itself but for its media rights.
But when ESPN’s regional television channels never materialized, Fox no longer cared about owning the Dodgers—not least because it had no idea how to run a baseball team, and the club was hemorrhaging tens of millions of dollars a year. When Fox sold the Dodgers to Frank McCourt in 2004, the team had been on the market for almost as long as Fox had owned it. Desperate to cut its losses, Fox created a bargain-basement clearance sale that allowed McCourt to buy the Dodgers without contributing one penny of his own money. In what would wind up becoming one of the most lucrative sports business deals of all time, McCourt financed his $430 million purchase of the Dodgers with nothing but borrowed cash. In fact, Fox wanted to get rid of the team so badly it lent McCourt a big chunk of the money.
Frank McCourt had also bought into the myth that to make his fame and fortune he needed to go west. A real estate developer from Boston, McCourt had tried, and failed, to buy his hometown Red Sox two years before he purchased the Dodgers. His local claim to fame was that he owned a large waterfront parking lot in South Boston, and his plan to buy the Red Sox hinged on tearing down hallowed Fenway Park and building a new stadium on his site. But he didn’t appear to have the money to buy a ball club, much less run one. The same year he bid on the Red Sox, his company’s chief operating officer, Jeff Ingram, sent an email to McCourt and his wife saying that they were in danger of running out of money in six to eight months. “Stock smelling salts in the office,” wrote Ingram. “At this rate, I’m going to need them.”
When McCourt announced his intention to purchase the famous franchise with no money down in 2001, he was laughed out of the city. Instead, financier John Henry bought the Sox. That transaction worked out well for Boston. Three years later under Henry’s direction, the Red Sox reversed the famous curse of the Bambino and won their first World Series title in eighty-six years. After enduring one of the most inglorious championship droughts in the history of sports, the resurgent Red Sox would go on to hoist three World Series banners in Henry’s first twelve seasons as owner.
McCourt’s parking lot was more than just a piece of vacant land, though: it was his biggest asset, seemingly the crux of his empire. When he strode into Los Angeles as the new owner of the Dodgers, he touted himself as a developer who knew how to build from the ground up. But in divorce filings five years later, his estranged wife described him as someone who sued people for a living. Despite countless assurances about plans to construct waterfront complexes with shops and condominiums, his parking lot sat vacant for the entire time he owned it. Before buying the Dodgers with other people’s money, McCourt’s previous business highlights included nearly being thrown out of a high-rise window by a rival developer who claimed he stole that parking lot out from under him. While the idea of standing in front of a judge in court might make the average person squirm, McCourt seemed to thrive in litigation when his livelihood hung in the balance. “He was more stubborn than an army of cockroaches,” said one Dodger executive who worked under him. But McCourt was as smart as he was obstinate. He put up his parking lot as collateral against the $145 million loan he got from Fox to complete the sale of the Dodgers. And when McCourt defaulted on that loan, Fox foreclosed on the lot and sold it to be done with him. In the end, McCourt traded a parking lot for one of Major League Baseball’s flagship franchises.
It took him eight years to bankrupt it.
• • •
Frank McCourt looked harmless enough. When he stepped up to the podium on the day he took over the Dodgers, he bore all the markings of a man who was thrilled with his lot in life. Clutching a custom-made Dodgers jersey with his name on the back, flanked by a wife who seemed proud to be standing next to him, McCourt told the crowd of assembled reporters and well-wishers that after the impersonal Fox era, the Dodgers were returning to their roots of family ownership. Trim in the waist for a man approaching middle age, McCourt wore his Irish heritage in his curly gray hair and rosy cheeks. He showed up in Los Angeles in a suit and tie, with a softness in his gait and a huge smile on his face. But the years in Hollywood hardened him, and by the end of his time as owner he hid behind aviator shades and pink collared shirts as stiff as he was. His reed-thin lips were usually pursed into a frown, and when he spoke, the vowels that left his tongue were stretched haaaaaahd by a lingering Boston accent that hung on like a nagging cough. His Dodgers were the Daahjuhs.
A few years into his reign he installed his lawyer wife, Jamie, as CEO of the team. In a lengthy profile written on the nuclear dissolution of their marriage, Vanity Fair magazine likened the diminutive Jamie to a tense, skinny chihuahua. College sweethearts since they met during their freshman year at Georgetown University when Jamie was seventeen and Frank was eighteen, they eloped and married in her New York apartment in 1979. Her parents were so unhappy with her choice that they boycotted the wedding. But Frank and Jamie seemed to be a good match—at least on the surface. By many accounts, the McCourts had been happy for most of their marriage, buoyed by their shared Clintonesque relentless professional ambition. But after they moved to Los Angeles their aspirations morphed into an insatiable obsession with status and material possessions. By 2009 the couple turned on each other, with Frank testing the limits of the amount of money he could borrow, and Jamie instructing a Dodger executive to draw up a battle plan for her eventual ascendance to the office of president of the United States. “They were equally delusional but Jamie was better at parties,” said another Dodger executive.
During the eight years McCourt owned the Dodgers, the club won the National League West division three times and advanced to the NLCS twice. McCourt clung to those statistics as he was thrown out for bankrupting the team, and even sent club employees a crystal clock with a list of his accomplishments as a holiday gift just months after the commissioner of baseball kicked him out for gross negligence. (“The best part is it arrived the day after Christmas,” said the executive. “Frank obviously got a cheaper rate from UPS for December twenty-sixth delivery.”) Though he liked to take credit, the Dodgers’ success during McCourt’s tenure was due to the strength of the club’s drafts before he owned the team, and taking the malcontented superstar left fielder Manny Ramirez off Boston’s hands for free during their 2008 playoff run. While the Dodgers’ homegrown, cheap young players like Matt Kemp, James Loney, and Russell Martin stabilized the team’s everyday lineup, McCourt cut funding for scouting in Latin America, choking off an international player development pipeline that had long been one of baseball’s strongest. It was especially puzzling because the Dodgers had been pioneers in looking beyond American borders for talented ballplayers, from Mexico’s Fernando Valenzuela to Japan’s Hideo Nomo to South Korea’s Chan Ho Park. In 1987 the club established the first American baseball academy in the Dominican Republic, the country that has since produced the most baseball stars in the world outside the United States despite being roughly the size of Vermont and New Hampshire combined. Even though the academy had nurtured future stars like Pedro Martinez, Raul Mondesi, and Adrián Beltré, McCourt decided it wasn’t worth the investment.
During McCourt’s time as owner, the Dodgers twice came to within three wins of making the World Series. But when the club’s general manager, Ned Colletti, had agreements in place to add ace starting pitchers Cliff Lee and C.C. Sabathia to the Dodgers’ rotation to push them over the top, McCourt cried poverty and nixed both deals. The organization’s front office had built a team just one or two arms away from a potential dynasty, but with their young players approaching free agency all at once, their championship window was closing fast. McCourt’s refusal to pay for the final pieces necessary to win it all dealt the franchise and its fans a devastating blow.
It wasn’t as if the Dodgers weren’t raking in the cash, either. The team played in the second-biggest media market in the country and led the National League in attendance during five of McCourt’s first six years as owner. During the season before the McCourts filed for divorce, the club sold the most tickets in all of baseball. When McCourt bought the Dodgers, the club was fourth in MLB in player payroll at $105 million. Despite promising fans that he would keep the team’s payroll in the top 25 percent of the league’s, he slashed the Dodgers’ dole to $92 million. He cut it even further the following year, to $83 million. Baseball, first and foremost, is a business. No one expected McCourt to put every last cent from ticket sales and advertising revenue back into the Dodgers and take nothing for himself. But when McCourt took the stand during his divorce trial, he admitted that the linchpin of his business plan as owner of the team was to significantly reduce player compensation. During the trial, a document submitted into evidence revealed McCourt’s plan to cut the team’s baseball operations budget by 21 percent by the third year of his regime. On McCourt’s last opening day as owner, the Dodgers ranked an embarrassing twelfth out of thirty teams in player payroll, lagging behind such small-market clubs as the Minnesota Twins and Milwaukee Brewers.
Frustrated fans wondered where all the money went. As divorce filings later revealed, while the Dodgers were slashing spending, McCourt and his family spent extravagantly on nine multimillion-dollar homes, a private jet on permanent standby, daily home salon sessions, and a Russian psychic back in Boston whom they paid six-figure bonuses to “think blue.” When the McCourts moved to L.A., they paid $21.25 million for a home on Charing Cross Road across the street from the Playboy Mansion—a move that must have been popular with the couple’s four sons, who were between ages thirteen and twenty-two at the time. They spent an additional $14 million renovating it, including hauling their old kitchen across the country from their family home in Brookline, Massachusetts. According to divorce court filings, they purchased the house next door after deciding their main spread wasn’t big enough for hosting guests or doing laundry. The McCourts also bought a Malibu mansion on Pacific Coast Highway from the actress Courteney Cox for $27.5 million. Then, when the family realized its beachfront backyard wasn’t large enough to accommodate the Olympic-size swimming pool Jamie required for her morning lap swims, they snapped up the home next door for $19 million as well. The cash continued to roll in. As the Dodgers’ chief executive officer, Jamie was the highest-ranking female in baseball. The McCourts were living the American dream, amassing their own personal real estate empire. It would have continued, if in the end the only thing they hadn’t loved more than money was hurting each other.
Their marriage fell apart at the worst possible time for the franchise. After Jamie filed for divorce on the night before the Dodgers took on the Phillies in Game 1 of the 2009 NLCS, she alleged what many critics had suspected: that her husband had mismanaged the Dodgers’ funds to within an inch of the club’s life. Just before their divorce trial began, Jamie recalled a traumatic incident back when the family lived in Massachusetts: she had answered a knock on the door to find a sheriff sent to collect their mortgage payment. After describing that ordeal, she was asked when her financial anxiety had eased. “I never stopped worrying,” she said. Jamie revealed that in spite of their family flaunting its lavish lifestyle, she lived in constant fear that one day the government would seize all their possessions. McCourt denied her allegations and countered with a press release firing Jamie as the Dodgers CEO and accusing her of destroying their marriage by having an affair with her driver, a man he had hired to squire her around town because her poor eyesight made it difficult for her to drive at night.
Since they had been married for decades, Jamie felt she was entitled to half the value of the Dodgers. Frank disagreed. Their divorce trial raged on. Because McCourt didn’t have the cash to buy Jamie out, he released a statement saying the Dodgers were his and his alone, and that he had a signed document from Jamie to prove it. The certificate in question was prepared when the couple moved to Los Angeles to buy the Dodgers after their estate attorney informed them that California was a community property state. McCourt insisted that it gave him sole ownership of the Dodgers, and his wife exclusive custody of the couple’s homes. In fact, he said, the division of assets was executed at Jamie’s insistence since she was worried her husband’s creditors would come after the family homes if his business deals soured, leaving her and their children with no place to live. Jamie, a former family law attorney, conceded she had signed the document, but said she hadn’t read it and had no idea what it meant. For reasons still unknown, Frank and Jamie each signed ten copies of the agreement. But when the lawyers unearthed all the duplicates from a safe they noticed something strange: five of the copies included the Dodgers on Frank McCourt’s list of separate properties, and five excluded the team. Jamie’s lawyers cried foul. Her case hinged on the enforceability of a contract that had different signed versions. In the end, the estranged couple spent more than $20 million in legal fees fighting over a document that cost less than $10,000 to prepare. “Frank and I practically raised each other and put everything we had into the Dodgers,” Jamie said. “The notion that I’d give that up is preposterous.”
In perhaps the most pivotal moment in Dodger history since Walter O’Malley moved the team to Los Angeles, the judge ruled that the contract was unenforceable, which entitled Jamie to half of whatever the team was worth.
Since the two could no longer stand each other, running the Dodgers together was not an option. The only way McCourt could split the franchise in half was to sell it. But even though he was broke, and their salacious divorce trial had dragged the Dodgers through a prolonged national embarrassment, McCourt made it clear that he had no intention of parting with the team. According to court filings, the Dodgers owed $573 million to creditors in January 2012. In 2009, the Miami Dolphins had sold for $1.1 billion—a record for an American sports franchise. Forbes valued the Dodgers at $900 million. If the team sold for near that price, most of that money would be wiped out by debts and taxes, leaving the couple with nothing. But McCourt had an ace up his sleeve. The Dodgers’ television deal with Fox was set to expire at the end of the 2013 season, and it was thought to be worth billions. If he could just hang on to the team for two more years, all of his financial problems would be solved, and then some.
Major League Baseball officials were not about to let that happen. Team finances are state secrets, but, much to the ire of MLB executives, the McCourt divorce trial had forced open the Dodgers’ books for public consumption, and tawdry tales of the McCourt family’s extravagant lifestyle had horrified the sport’s commissioner, Bud Selig. The Dodgers were one of the cornerstones on which his league was built, and McCourt’s driving the team into the ground threatened the livelihood of the game. Thousands of Dodger fans pledged to boycott as long as McCourt owned the team. From 2009 to 2011, attendance plummeted by 22 percent. The morale of club employees was in the gutter, too. “Every day going to that stadium was like showing up to a funeral and watching the congregation get smaller and smaller,” said one Dodger executive. McCourt didn’t care. Selig wanted him gone, but ousting him would be tricky. The league viewed owners like country club members who could be evicted if they offended the populace. McCourt saw the Dodgers as his private property that no one could legally repossess. Both sides dug in for a protracted fight.
Then, tragedy struck.
• • •
On opening day in 2011, a San Francisco Giants fan named Bryan Stow was leaving Dodger Stadium when he was assaulted by two men wearing Dodger gear. He was taken to a hospital with massive brain injuries and remained in a coma for months. Writers and columnists were quick to suggest that despite escalating acts of violence between the rival fan bases over the years, McCourt had been too cheap to pay for an increased security presence around the ballpark. The incident took place after dark and Dodger Stadium’s massive parking lot lacked sufficient lighting. Off-duty police officers in uniform cost fifty dollars an hour, while undercover cops in polo shirts ran about half that. In 2009, the Dodgers started relying on the less expensive option. Their head of security resigned in protest.
As Stow clung to life and the hunt for his assailants intensified, the drumbeat for McCourt’s ouster grew louder. Major League Baseball seized the opportunity to pounce. While Selig didn’t exercise his power to toss McCourt out right then, by the end of the month he appointed an outside monitor to oversee all of the Dodgers’ monetary expenditures. It proved to be a fatal blow to his ownership. McCourt protested, even going so far as to call the commissioner un-American. It also became evident how leveraged the team was—McCourt had been forced to take out a multimillion-dollar loan against future season ticket sales and charge the Dodgers $14 million a year to rent their own stadium. McCourt also raised eyebrows when it was revealed that the Dodgers Dream Foundation, a charity established to build ball fields for children in underserved areas of Los Angeles, had paid its top executive and main McCourt henchman, Howard Sunkin, more than $400,000 of its $1.6 million budget one year.
With the team’s cash reserves dwindling, McCourt turned to Fox to try to extend the club’s television deal in return for cash up front to float him. The Dodgers were earning about $40 million a year for their TV rights when Selig sent in the monitor. But when it expired in two years, McCourt was free to entertain offers from multiple networks and select the highest bidder. The Dodgers’ next TV contract figured to bring in more than five times what the current deal was worth—maybe more. McCourt’s desperation to hold on to the club was understandable: a mountain of cash lay just around the bend.
So McCourt had an idea. Why not borrow money from Fox against that future TV deal? Fox was more than willing to take the rights to broadcast Dodger games off the market to avoid a bidding war later, and the two sides agreed in principle to a twenty-year television deal worth $3 billion that would begin in 2014. Under the terms of the agreement, McCourt would receive $385 million up front. Of that money, $200 million would go into the team, while the rest would go to the McCourts and their divorce attorneys. Major League Baseball balked. With its monitor in place overseeing all financial transactions, there was no way it was going to let Fox toss McCourt a lifeline. Later that year, the league would allege in court filings that McCourt took $189.16 million out of the team for his own personal use, an activity Selig described as “looting.” Without that loan from Fox, rumors swirled that McCourt would not have enough cash to pay his players when checks were to be handed out that Friday. MLB didn’t care. It rejected Fox’s loan to smoke him out. McCourt had one card left to play, and he didn’t hesitate. On the morning of Monday, June 27, 2011, he plunged the Los Angeles Dodgers into bankruptcy.
That afternoon, televisions in the Dodgers’ clubhouse played the grim news on a loop. Players called their agents to make sure their checks wouldn’t bounce.
Though it ensured the end of his run as owner, filing for bankruptcy protection wound up being a brilliant move for McCourt. When an MLB team is sold, the commissioner’s office is involved in vetting and choosing the new owner. Because the league operates somewhat like an old boys’ fraternity, the winning bid isn’t always the highest one. The league covets candidates it believes will toe the line, a sentiment that intensified after McCourt thumbed his nose at Selig at every turn. But since McCourt owed hundreds of millions of dollars to creditors—and the Internal Revenue Service wanted its cut—the authority of the bankruptcy court trumped MLB’s typical selection process by ruling that McCourt was entitled to collect the most money possible in order to pay off his debts. The judge emphasized that creditors took precedence over the league’s preferences for a new owner. And in a testament to how badly Major League Baseball wanted McCourt gone, it didn’t fight his unusual, unilateral power to choose his successor. The league’s acquiescence on this point was significant because it offered a way in for colorful outsiders like Mark Cuban, the outspoken tech billionaire owner of the NBA’s Dallas Mavericks. (Cuban had tried to buy the Cubs a few years earlier but felt he had been blackballed because Selig didn’t want him to own a team.) The Dodgers’ sale offered an unprecedented opportunity for a Gatsbyesque character without connections to the commissioner’s office to buy his way in.
Bids for the Dodgers poured in from across the globe. One investor who announced his interest in buying the team was Laker icon Magic Johnson, the man who, following in the footsteps of Dodger great Sandy Koufax, had made the number 32 synonymous with sporting glory in Los Angeles. After his playing days ended prematurely when he announced he had contracted the HIV virus, Johnson had proven himself to be somewhat of a business savant, coming to own stakes in, among other things, movie theaters, Starbucks coffee shops, and his beloved Lakers.
Johnson was rich by the average American’s standards, but he had nowhere near the cash needed to buy the Dodgers. What people didn’t yet know, however, was that Johnson had formed an alliance with Stan Kasten, the man who had served as president of Ted Turner’s Atlanta Braves during their nineties dynasty. Kasten and Johnson had become acquainted when Kasten ran the city’s NBA franchise, the Hawks, for Turner during that same time period. With fifteen-man rosters and a limited minor league, the NBA, Kasten explains, is a small world where everyone knows everyone else. Kasten and Johnson had almost joined forces back in the mid-nineties when the former flew to Los Angeles to try to convince the latter to coach the Atlanta Hawks. “But he turned me down, that son of a bitch,” Kasten said with a laugh. “The truth is he didn’t want to coach.” Though the two remained friends, they could not have imagined the impact their relationship would have in shattering the economics of sports franchises some twenty years later.
• • •
Magic Johnson’s smile had mesmerized Los Angeles from the moment the Lakers drafted him out of Michigan State in 1979. Thirty-two years later, that smile started a war. Despite the fact that he knew very little about baseball, six different prospective ownership groups courted Johnson, each desperate to add his credibility with Los Angeles sports fans to its roster of moneymen. “It was like Earvin was going through the college recruitment process all over again,” said his former agent and closest confidant, Lon Rosen, who would later become the Dodgers’ chief marketing officer. “Groups were coming to him and making presentations.” After his tenure in Atlanta ended, Kasten had moved to Washington, D.C., to take a job as the president of the Nationals the year after they relocated from Montreal. He stayed in that position for four years, and in 2010 he stepped down and planned to open his own consulting practice. Then Guggenheim contacted him. Would he be interested in joining their group to buy the Houston Astros? they asked. Kasten had heard the name Guggenheim before, but he had no idea who this group out of Chicago was. And when he went to search for information about the company’s president, Mark Walter, on the Internet, he couldn’t find anything. Walter seemed to be a ghost. Kasten was dubious. Sports franchise sales attracted so many hucksters and grifters pretending to be rich that the mystery surrounding Walter and Guggenheim did not help their cause. “There’s a lot of bullshit in putting deals together for hundreds of millions of dollars, let alone billions,” said Kasten. “There’s a lot of groups that claim to have money and just don’t.”
But after a series of conversations, Kasten decided the group’s money was real. And he became sold on Walter after Walter blew him off. A lifelong Cubs fan, Walter had kept his season tickets even though Chicago had been playing abysmal ball for years. On the day the first-ever phone call between Kasten and Walter was scheduled, Walter went to watch the Cubs play. “He sent me an email that said, ‘Hey guys, I have to put the call off for a little while because we’re in extra innings here at Wrigley,’ ” said Kasten. Walter stayed to the end and kept Kasten waiting for half an hour. “So that was great. I was like, ‘I’m gonna do something with Guggenheim.’ ”
In the end, Walter decided not to bid on the Astros. But while the Houston sale was being processed, Kasten mentioned to Walter that because of the messy McCourt divorce, the Dodgers might be on the market soon. Walter had wanted to buy the Astros, but he was even more interested in the Dodgers. After McCourt filed for bankruptcy and it became clear Major League Baseball was going to force him to sell the team, Kasten called Rosen. He had someone he wanted Magic Johnson to meet, but the famously secretive Kasten wouldn’t tell him who. Rosen and Johnson agreed to the meeting because they trusted Kasten. “We thought if Stan’s bringing someone he must be legit,” said Rosen. And so in November 2011, Mark Walter and Guggenheim president Todd Boehly flew to Los Angeles to meet with Johnson. When Kasten, Walter, and Boehly set off in a car from Guggenheim’s Santa Monica office to Johnson’s Beverly Hills office, Kasten realized he still hadn’t told Johnson whom he was meeting with. “So I called [Rosen] and said, ‘We’re coming in a second, and here’s who they are,’ ” said Kasten.
The drive from Guggenheim’s L.A. headquarters to Johnson’s office is just over five miles. It took the men two hours. Protesters had taken to the streets in support of the anti–Wall Street Occupy movement, grinding traffic to a halt. “We were like an hour late to the meeting, which couldn’t be filling Lon with confidence,” said Kasten. “It was horrible.”
Johnson had already met with four prospective groups, but Walter and Boehly made a striking impression on him that day. The Dodgers were unique in that the team’s stadium sat on three hundred acres of undeveloped land owned by the club that overlooked downtown L.A. The Raiders and Rams of the NFL had left the city twenty years earlier, but there had long been talk of luring one or both teams back with a fancy new stadium. Some thought the area surrounding Dodger Stadium would be the perfect location for such a structure. Each of the previous groups that met with Johnson had laid out its ideas for using the Dodgers as a foundation to build a larger sports and real estate empire. Johnson had grown skeptical of the motives of these rich men. So he looked at Walter and asked: “Are you doing this for the investment or are you doing this to win?” Walter didn’t hesitate: “I’m doing this to win,” he said, adding that he hoped to leave the team to his daughter one day. The meeting lasted an hour. As he walked out of the building, Kasten thought it went well. Johnson had one more group to sit down with, but he’d made up his mind. “I felt like I’d just met a guy who was just like Jerry Buss,” Johnson said later, referring to the legendary Lakers’ owner. “He’s so into his family. He has a great passion for winning and doesn’t care if people knew who he was.” Kasten, Walter, and Boehly were just sitting down to dinner at the SoHo House on Sunset Boulevard when Rosen texted Kasten. Magic was in.
• • •
Days before the 2012 season kicked off, McCourt submitted his list of potential buyers to Major League Baseball. Selig’s office then whittled it down to three finalists, who would be allowed to bid on the Dodgers at an auction held by McCourt. The first was Stan Kroenke, a real estate entrepreneur out of St. Louis worth an estimated $5 billion who owned the Rams, the Denver Nuggets, the Colorado Avalanche, and the English soccer club Arsenal. Observers joked that all Kroenke needed was a baseball team to complete the set. His interest in owning a ball club made sense for another reason, too: he had been named for Cardinals legend Stan Musial. Kroenke also held the distinction of being the only billionaire in the world married to another billionaire. His wife, Ann Walton Kroenke, was the daughter of one of the founders of Wal-Mart, Sam Walton’s brother James. Forbes estimated she was worth even more money than her husband. The second finalist was Steve Cohen, a hedge fund deity from New York City worth an estimated $11 billion, much of it liquid. Cohen owned a small stake in the Mets, which he promised to sell if he won the auction for the Dodgers. The third finalist was Walter’s secretive Guggenheim group.
The smart money was on Cohen. He seemed to have the deepest pockets, and the feeling was that Major League Baseball preferred him as the choice since they were already familiar with him as a minority owner of the Mets. So when McCourt issued a press release telling the world that Guggenheim Partners had bought the Dodgers for $2.15 billion the night before the auction was supposed to take place, the industry gasped. No baseball team had ever sold for a billion dollars, let alone two. When John Henry purchased the Red Sox in 2002, he forked over just $660 million. After McCourt paid off his creditors and the IRS, it was estimated that he would walk away with close to a billion dollars in profit—not bad for someone who had put none of his own money into the purchase of the team eight years earlier. Underscoring just how wrong everyone was in their estimate of the Dodgers’ worth, Jamie McCourt had struck an agreement with her estranged husband before he sold the team that netted her $131 million tax-free, plus ownership of the couple’s homes. That settlement turned out to be a raw deal for her. After paying off his ex-wife, McCourt wound up with close to seven times what she got, a result she handled by suing him for $770 million on the grounds that he misled her in court about the Dodgers’ real value. The judge denied her appeal to throw out the divorce settlement, saying that she chose the security of the $131 million and the homes over the risk of the Dodgers’ sale. But what happened eighteen months after McCourt sold the team probably still keeps them both up at night.
After it was reported that the Guggenheim group outbid the next-highest bidder for the Dodgers by some $500 million, the gasps turned to snickering. But it wasn’t true. When Mark Walter sat down alone with Frank McCourt in a Manhattan hotel conference room the night before the auction, McCourt slid a piece of paper across the table toward Walter. It was a signed offer from Cohen to buy the Dodgers for $2 billion. Walter told McCourt he’d give him $2.15 billion, plus an interest in the land surrounding Dodger Stadium should he and his partners ever decide to develop it. There was one caveat, however: Walter told McCourt it was take-it-or-leave-it. If McCourt left the room, the deal was off. McCourt agreed to the terms, and the two men shook hands. But members of the Guggenheim group worried McCourt would violate the handshake agreement and return to Cohen with Walter’s bid to see if he could squeeze more money out of him. “You know Frank went back to Stevie Cohen and said beat this,” said one insider familiar with the deal. If McCourt did in fact return to Cohen to give him a chance to best the Guggenheim offer, Cohen didn’t bite. “It was unbelievable,” said the insider. “The guy’s got nine billion liquid and he wouldn’t cough up another three hundred million to buy the Dodgers. And he’s a baseball fan!” Had the team gone to auction the following day as planned, Kasten suspects the Guggenheim group would have been outbid. “We might not have won,” said Kasten. “Both of the other groups were prepared—and we know this for sure for other reasons—that they were prepared to go a lot higher.”
Cohen was not without regret. The day the Dodgers deal closed in Los Angeles, he flew in from New York and hung around the hotel where the contracts were being signed, just in case the sale fell through. It didn’t. And it was a good thing for the city of Los Angeles that Cohen didn’t end up owning the Dodgers on the heels of the McCourt debacle. The Securities and Exchange Commission had been investigating Cohen for insider trading for seven years before filing lesser charges against him for failing to prevent his employees from committing fraud, just four months after the Dodgers sale was finalized. The U.S. attorney for the Southern District of New York said that Cohen’s firm had created a “culture of corporate corruption,” something Dodger fans felt they were already acquainted with. Cohen pled guilty and agreed to stop managing other people’s money. He was fined $1.2 billion.
The public never knew about Cohen’s offer. Walter says he declined to set the record straight because he didn’t care that people thought he had overpaid. He was content in his conviction that he had made a good deal. When a group led by Houston businessman Jim Crane had bought the Astros for $680 million in May 2011, an alarmed Kasten had called Walter. “I have some bad news,” Kasten said. “The Astros just sold for seven hundred million. We might have to pay a billion to get the Dodgers.” Walter laughed. Getting the Dodgers for a billion would be a steal, he told Kasten.
Walter knew that experts were wildly undervaluing the ball club because they failed to anticipate the tidal wave of cash that would pour into Chavez Ravine when the Dodgers signed their new television deal. Financial observers didn’t grasp that baseball’s TV revenue was surging toward heights that would dramatically alter the worth of franchises. Walter understood the salient point that fiscal gurus seemed to miss. And that was that no one watched television live anymore—except when they watched sports. The invention of TiVo, DVR, premium on-demand channels, and Internet streaming sites like Netflix and Hulu meant that time-strapped consumers never had to sit through another commercial again if they didn’t want to. But people still wanted to watch sports in real time. Advertisers understood this, which is why they paid a premium for spots during high-rated games and matches they thought were least likely to be fast-forwarded through.
When first determining the baseline value of the Dodgers in his head, Walter didn’t count how many tickets the team was selling each year or how their jerseys and caps were faring on the open market. He set the starting point on simple population arithmetic. Walter knew the real money was in the television deal, so he compared the L.A. and Houston markets. Houston had 2.1 million households. The Los Angeles metro area had almost three times that amount. The Astros had sold for $680 million. In Walter’s mind, that meant the Dodgers were worth at least three times that amount on their media rights deal alone. The three hundred acres of land surrounding Dodger Stadium and the fact that the club often led the majors in attendance were perhaps worth another billion or two. The world thought he was overpaying. Walter believed he was getting a bargain. “Here was this baseball team, a global brand, a little bit tarnished recently, in the second-biggest city in America, in the entertainment capital of the world when its TV contract was up in two years at a time when rights fees were exploding,” said Kasten. “All of those things at once and we thought, Wow. That has some potential that we’ve never seen in baseball.”
Walter’s instincts proved correct eighteen months later when Time Warner agreed to pay the Dodgers $8.35 billion for the rights to broadcast their games for the next twenty-five years. McCourt may have cleared a cool eight hundred million, but he’d been ousted a year and a half before he could have collected a signed contract for ten times that amount—a bitter pill to swallow for someone who could never stockpile enough cash to be satisfied. Had the McCourts buried their differences awhile longer, they could have split that windfall.
• • •
In many ways, Mark Walter was Frank McCourt’s opposite. While McCourt hid from media behind PR lieutenants, in Walter’s first season owning the Dodgers he greeted journalists like old pals and often divulged too much, to the point where Kasten begged him to begin his informal chats with members of the press by telling them that what he said was off-the-record. While McCourt never helped himself by appearing uncomfortable in his own skin, Walter was fully present, and hopped around the field during batting practice like a giddy child. He hugged stadium employees he hadn’t seen in a while, and greeted most of them by name. Walter grew up in Cedar Rapids, Iowa, not far from the Field of Dreams, and radiated warmth, so much gosh darn Midwest salt-of-the-earth nice that it was difficult to imagine how he had the instincts necessary to run a company that managed $210 billion worth of assets. In considering this question, he smiled and shook his head. “I’m nothing special,” said Walter. “Just the king of common sense.”
Perhaps common sense isn’t that common. After all, it was boring logic that led Walter to value the Dodgers at three times what Forbes did. Because the NFL is the most popular sport in America, many financial laymen believe that football franchises are worth the most money. But Walter didn’t think that was true. The NFL broadcasts its games on national networks each week and splits that revenue equally among its thirty-two teams. Forbes estimated that the Dallas Cowboys were the most valuable franchise in the United States in the spring of 2012. But the Cowboys don’t have the option of broadcasting their games on their own television network and reaping the benefits of the advertising dollars that would go along with that. In baseball there are no such limitations. When Walter took over in Los Angeles, MLB was as fiscally unregulated as the Wall Street financial institutions that caused the economy to collapse in 2008. While the NBA, the NFL, and the NHL relied on pooled profits and hard salary caps, Major League Baseball’s evolution mirrored the staggering wealth disparity in postrecession America. The new Dodgers television deal would give the team an average of $334 million a year. The St. Louis Cardinals, on the other hand, made only about $25 million annually in media revenue. And the Pittsburgh Pirates pulled in just $18 million. For the Cowboys to be worth as much as the Dodgers during this TV revenue boom, Walter estimated the team would have to rake in one hundred dollars in beer and T-shirt sales per fan per game. To his credit, Frank McCourt saw this windfall coming a decade earlier. But Walter did, too. “We didn’t have the dough to buy the team back then,” said Walter. “No one did.”
While his predecessor wore silk and linen to ball games, Walter, fifty-three, favored sneakers, blue Dodgers pullovers, and dad jeans with his cell phone clipped to his belt buckle. He and his wife, Kimbra, had met as undergrads at Northwestern University. They had one daughter, Samantha, who was twelve when her father bought the Dodgers. When Samantha expressed an interest in becoming a veterinarian, Walter bought a zoo in Tampa, Florida. After Walter purchased the Dodgers and she got a behind-the-scenes look at how professional sports organizations were run, she told her dad that she might want to be general manager of a team someday. So Walter bought the Los Angeles WNBA team, the Sparks, with the idea that she might run it when she was old enough.
Walter knew that Dodger fans had hated McCourt. He understood their wariness about another rich out-of-towner buying the Dodgers as a business opportunity, and not because he had deep roots in the community. So he went to work to win them back.
After his group took over, the first significant player contract to come up for renewal was Andre Ethier’s. A right fielder who had been in the Dodgers organization since he was twenty-three years old, Ethier was a fan favorite, particularly among the women who whistled when his rakish mug was shown on the scoreboard. He had led the team with thirty-one home runs in 2009, the last year the Dodgers made the playoffs. But in the past two seasons his power had almost evaporated. In 2011, at age twenty-nine, he hit just eleven dingers—a lackluster number for a corner outfielder. On the plus side: Ethier was a career .300 hitter against right-handed pitching. Unfortunately, pitchers also threw left-handed. He hit only .230 against southpaws, leading commentators to point out he was best used as a platoon player. The Dodgers’ front office was well aware of his limitations but decided that buying the goodwill of their fan base made more financial sense than paying Ethier what he would have been worth on the open market. Even though he was on the decline, and arguably the club’s tenth-best player at that point, the Dodgers re-signed him to a five-year, $85 million extension that raised eyebrows around the league for its generosity. But the new owners weren’t overpaying an aging outfielder as much as they were purchasing a citywide public service announcement letting fans know the bad times were over.
A few weeks later, the club made headlines again for another head-scratching investment by offering an unknown, out-of-shape, hotheaded Cuban kid a seven-year, $42 million contract after watching him take a few rounds of batting practice. Though other bids for Yasiel Puig’s services were never made public, gossip around the league was that the dumb new Dodger owners had overpaid once again, offering the twenty-one-year-old outfielder more than double what the next-highest bid was. To outsiders, it seemed like the Dodgers had gone from bankrupt to bloated in a matter of months, and had found more expensive ways to lose.