Originally written on Fangraphs  |  Last updated 3/28/12

This isn’t one of those articles where the headline is written as a question and then I attempt to answer the question in the post. This time, I really am asking a question that I don’t think I know the answer to, and I’d love to see a good discussion in the comments about the $2.15 billion price that Magic Johnson’s group just paid for the Dodgers.

Here’s what we know.

In 2009, Tom Ricketts bought the Chicago Cubs and Wrigley Field for $845 million. They got the team, the stadium, and a 25 percent stake in Comcast Sportsnet Chicago.

In 2010, Nolan Ryan and Chuck Greenberg’s group purchased the Rangers out of bankruptcy for about $575 million. The stadium was not included in the sale, but the Rangers had a new TV rights contract due, and were to negotiate a deal reportedly worth $3 billion over the next twenty years. I’ve seen that figure disputed, with estimates that it could be as low as $1.6 billion instead, but it was clearly a large contract for a lot of money.

Last year, the Houston Astros were purchased for $615 million, a reduced price negotiated to include their agreement to move to the American League as part of the deal. The Astros deal, as far as I can tell, did not include ownership of the stadium or a stake in any television station. However, the Astros and Rockets agreed to join Comcast Sportsnet Houston and have their games telecast on that network beginning in 2013, and the price reflected an opportunity for the team to increase their TV contract revenues in the short term.

Today, the Dodgers were purchased for $2.15 billion, which includes the team, the stadium (including the parking lots!), and the opportunity to negotiate a massive new TV rights deal beginning in 2013.

There’s a lot we don’t know, of course, but here’s my fundamental question – how did we get from three teams being sold for between $600 and $900 million over the last three years to one being sold today for three to four times those prices?

Yes, the Dodgers have a huge new revenue stream coming in with their TV contract, though I’m not sure I buy into the $300 million per year estimates that are being floated around as as a possible price point. Those numbers are based on what the Lakers got in their TV contract, and I haven’t seen much evidence that we can just take per-game payouts from one sport to another and apply them evenly, even within the same market. The Dodgers are going to get a lot of money from their next TV deal, but will it be enough to justify the massive premium that was paid for the franchise in comparison to what other teams have been selling for?

I honestly have no idea. I’m not in a position to say that this bid is too high, or that Magic’s group definitively overpaid. They obviously saw the books and had more access to the team’s financials than any of us do, and they’re not extremely rich businessmen because they lack the understanding of how to make sound investments. I’d just love to know what factors specifically allow the Dodgers to go for a 250% premium over what the Cubs were purchased for.

Explanations? Theories? Links to good, sound pieces on the fundamentals of the Dodgers finances? I’d love to see them in the comments.


GET THE YARDBARKER APP:
Ios_download En_app_rgb_wo_45
MORE FROM YARDBARKER

49ers OC: Kaepernick didn’t regress as much as believed

John Calipari may coach Kentucky until he is 73

Eric Berry cleared to practice with Chiefs

WATCH: Pedro Martinez's number retired in ceremony

Mets reliever Jenrry Mejia suspended 162 games for PEDs

LIKE WHAT YOU SEE?
GET THE DAILY NEWSLETTER:

Brady told staff to hand copy of game ball rules to officials

Phillies agree to send Jonathan Papelbon to Nationals

Report: Russell Wilson to end contract negotiations Friday

Report: Brady authorizes NFLPA to appeal his case in court

NFL, NFLPA reduce Le'Veon Bell suspension

Tim Brown: Cardinals new coach Jen Welter is 'tough as nails'

Luther Campbell jabs FSU coach over decommitment

WATCH: Royals infielders combine for incredible play

Cowboys DE Jeremy Mincey to hold out of training camp

Terry Bollea's self-destruction: Hulkamania as social construct

Lou Holtz: ND has 'legitimate chance' to make playoff

Golfer Billy Hurley III asks for help finding missing father

Dismissed Clemson DE tweets he hates cops after arrest

Smith to report to camp, no charges filed for child abuse

Angels stockpile outfielders, acquire Murphy and DeJesus

Penguins trade Brandon Sutter to the Canucks

Ronda Rousey willing to fight Miesha Tate a third time

Mexico fires coach for alleged brawl after Gold Cup win

MLB News
Delivered to your inbox
You'll also receive Yardbarker's daily Top 10, featuring the best sports stories from around the web. Customize your newsletter to get articles on your favorite sports and teams. And the best part? It's free!

By clicking "Sign Me Up", you have read and agreed to the Fox Sports Digital Privacy Policy and Terms of Use. You can opt out at any time. For more information, please see our Privacy Policy.
the YARDBARKER app
Get it now!
Ios_download En_app_rgb_wo_45

NFL upholds Tom Brady's suspension, legal battle likely

Cardinals hire first female NFL coach

Larry Bird: Michael Jordan would kill me in 1-on-1 now

Seau family: HOF broke their word

Kobe to see time at power forward next year

Mike Pettine not ruling out Manziel

Galette appears to unload on Payton

Dez Bryant in 'financial distress' before signing new deal

Top 10 CFB coaches on the hot seat

Was Popovich close to retiring last year?

Kyle Busch continues historic run with Brickyard win

WATCH: Mike Trout HR lands in 'Trout Net'

Today's Best Stuff
For Publishers
Company Info
Help
Follow Yardbarker