The sale of the Los Angeles Dodgers baseball franchise for over $2 billion serves as a precursor to even bigger sports money matters on the horizon. What was the key price driver behind the Dodgers deal and what does that tell us about the broader sports business? Certainly the record price was partially based on the uniqueness of the asset but also highly impactful were the future dollars to be earned from media rights deals. These new owners seem to be projecting more in future media rights revenues than most imagined.

The future dollars in other sports could be under-projected too. Why? Sport constitutes unique content and is becoming more so as the calendar moves forward. Many contracts related to rights in media incorporate "technologies not yet contemplated." So if the next eight track or mp3 player is invented during the term of a given deal those rights are covered too, even though those who entered into the original contracts never contemplated such technologies or how they would further monetize the content under agreement.

An interesting case examining the right to use a player’s name and number in the transition moment between sports league uniform licensees is moving forward in U.S. District Court in New York. Nike unveils the uniforms that will replace Reebok as the official uniform supplier for the NFL today.  The Reebok deal expired March 31 but before the transition of the NFL license from Reebok to Nike took place Reebok apparently manufactured the New York Jets jersey with the Tim Tebow’s name and number on them. In response, Nike filed the District Court action to halt their sale.

The deal for Frank McCourt to sell the Los Angeles Dodgers to the Magic Johnson-Stan Kasten led group is reportedly done for $2 billion. This is by far the most ever paid for a sports franchise. Once the details emerge the debate will rage about whether too much was paid for the team. But for all of the doubters as to the correlation between the sales price and the valuations, there are two very important factors to keep in mind. First, in the history of modern sports franchise purchases, anyone able to shell out the cash for a franchise and the required operating capital for the long haul has been positioned for a good if not great return on their investment if they sell deep into the future.

Sport provides a great portal for viewing the structure and enforcement of private association rules and regulations. The sanctions recently issued by NFL Commissioner Roger Goodell regarding the New Orleans Saints bounty program certainly are designed, first and foremost, to promote player safety. But they are also illustrative of organizational leadership and enforcement of enterprise economic controls.

The reasons for sports franchise ownership are complex. Making a good “investment” in the traditional return on investment sense, can be a much smaller piece of the decision tree than many might presume. My coauthor Scott Rosner and I write about this in our chapter on ownership in The Business of Sports.  Ego, access to an elite club, love of sports and civic pride are other major reasons for pursuing sports franchise ownership. 

“How do we come to our decisions?”  Omar Minaya asked, reflecting on his read of Moneyball.  Via the camouflage of baseball as the substance of discussion Moneyball unwittingly compels us to reflect on decision making and how we do it. In baseball, for example, the rationale for signing a player has “gotta be more than I like him” according to Minaya.  Minaya tells us that “whether we are talking about Wall Street or a law firm” that is where a careful reflective reading of Moneyball (or possibly even viewing of the film) takes us.  What can we do make better decisions?   

In the lawsuit led by former UCLA basketball star Ed O’Bannon including Bill Russell and Oscar Robertson, an important ruling was issued by U.S. Magistrate Judge Nathanael Judge Cousins.  Cousins denied the requests for the discovery of documents that would have revealed the details in multiple media related deals.

As we go into Super Bowl weekend we are also going through the Super Bowl of bidding for an American sports franchises. In an earlier blog I wrote about the "Ten Reasons Why the Dodgers should sell for a record figure." Since then I have also combed the public records to better understand (as best as one can with what is available publicly) the value of the asset, the team, absent the special circumstances I listed. The general theme in the press is that Frank McCourt did a bad job of running the team. One can certainly cast a lot of negative stones his way.  However, the neutral facts, absent the sensation of divorce and accompanying details, point to an asset that has become dramatically more valuable than it was when McCourt made his acquisition in 2004. 

With the Olympics now a little more than six months away, most businesses with operations in and around the UK are fine-tuning their contingency plans. Businesses large and small—whether based in Europe or simply having people pass through—need to be prepared. The Olympics will run from 27 July to 12 August with venues all over London, together with events like football and sailing outside of the capital. There are likely to be significant extra visitors to London, not only those visiting the events but also hospitality staff, security personnel, media, sponsors and hangers-on. The Olympics will be a spectacular event, and London will welcome visitors from around the world. For most organizations, however, planning is essential.

Read the Duane Morris Alert by partner Jonathan Armstrong for more.

There are multiple reasons why the Los Angeles Dodgers, scheduled to be sold in April, will go for a record number. With somewhere in the neighborhood of twenty parties stepping up to bid, extraordinary value could be received by Frank McCourt.     Here are ten reasons why this is a sale to watch, but there are many more. I am in the process of analyzing further the value of the unique media rights opportunity presented by this franchise.

In any major sports related deal the proper valuation of media rights is essential. From Duke’s Blue Devil Network, the media rights in the sale of the Los Angeles Dodgers to the Pac-12 deal, the understanding of the value of media rights is essential. 

Athletes at the pro and college levels are realizing that they will never play the game they love again. This time of year it is football but it happens in every sport, around the globe: baseball, cricket, soccer, tennis, soccer, rugby and more.