Major league sports teams are playthings for rich guys, so one way to measure how rich the rich are in 2012 is by the going rate for sports teams. And, judging by the amazing price that Frank McCourt got for the Los Angeles Dodgers from a consortium of rich guys fronted by retired NBA star Magic Johnson, the rich are very rich these days. Economist Andrew Zimbalist told ESPN:
"Here's a guy [McCourt] who borrowed practically all the money to buy the team for $430 million [in 2004] and now he's selling it for $2.15 billion and he's coming out with a healthy capital gain -- it's repulsive. This is someone who doesn't deserve to walk away with a healthy profit after eight years of running the Dodgers in the most egregious, the most inefficient, the most self-interested, and the most vainglorious, idiotic way possible. It really is repulsive that he will still be making a profit in some way."
C'mon, Andy, don't hold back. Tell us what you really feel.
Prior to the sale, many economists believed the price tag of the Dodgers would surpass the $845 million the Chicago Cubs sold for in 2009, which was the most ever for an MLB team. Most figured it would be around the $1.1 billion figure the Miami Dolphins fetched three years ago, which was a record price for a professional sports team in North America. In the end, the sale of the Dodgers shattered both marks and set a world record, surpassing even the $1.47 billion Manchester United went for in 2005.
"It's the craziest deal ever; it makes no sense. That's why you saw so many groups drop out," said Mark Rosentraub, a University of Michigan sports management professor. "I don't get it. The numbers just don't work. It doesn't make business sense. Nobody came up with this number. Under the most favorable circumstance you broke $1.1 billion with $1.4 billion getting crazy. Now you're up in the $2 billion range, which is over $800 million more than what pencils out for a profitable investment for a baseball team. If making money doesn't count, this is a great move. But now we're into buying art and I can't value art. I can just run the model numbers and this doesn't make sense."
The theory is that the Internet will deliver most pre-recorded entertainment cheaply, so cable TV needs live entertainment to keep charging huge monthly fees, so that means sports. But, baseball is a great game for the age of radio (the Dodgers' announcer Vin Scully, has been with them since 1950 in Brooklyn).Is baseball really the Televised Sport of the Future?
Dodger Stadium, which opened fifty years ago at the peak of Southern California's arc in 1962, is a rare Modernist structure that's beloved by the public. It was designed for a more egalitarian age, with a big seating capacity (56,000) but not a lot of luxury. The trend in recent years has been toward smaller ballparks catering toward the corporate entertainment crowd.
The neighborhoods around Dodger Stadium are gentrifying as interest in urban living continues to grow, so the new buyers might have some kind of plan for home construction on the surrounding parking lots or undeveloped land. But, still, the stadium is on a small mountaintop, so it's hard to see how they could pull that off.
So, either the winners badly overpaid (but even the runners-up in the auction offered more than for Manchester United), or rich guys have a lot of money in 2012.