May 16, 1997
Murdoch Bids for Dodgers Simply to Bolster a Lineup
By RICHARD SANDOMIR
If Rupert Murdoch's Fox Group is able to acquire the Los Angeles Dodgers, the team would move from the hands of the O'Malley family, whose only business has been baseball, into the embrace of an aggressive conglomerate that wants to use the team to enhance its domestic and global media interests.
Fox is now in exclusive negotiations with Peter O'Malley, the Dodgers' owner, and Murdoch said in Tokyo on Wednesday that he hoped to complete a deal in a month for a $350 million purchase price.
"I think of this as network-building and empire-building," said Andrew Zimbalist, a sports finance expert and a professor of economics at Smith College, "because at the price being quoted, it's not understandable as an investment in a baseball franchise."
Financial World has placed a value of $178 million on the team and stadium, but did not calculate the value of the land beneath and around the stadium, some of the most valuable in Los Angeles, or the team's training facilities in Florida and the Dominican Republic.
Still, Michael Ozanian, the magazine's deputy editor, said that ownership by Fox would be a huge coup. "It's not such a crazy price," he said. "The Dodgers already make a ton of money, but it's an old stadium."
Dodger Stadium, which opened in 1962, was built for $18 million.
Fox is the antithesis of the O'Malley-run Dodgers. Murdoch loves to ski and sail, and accumulate media properties like The New York Post, sometimes for profit, sometimes for political power. Murdoch's bid for the Dodgers shows more his lust for acquiring content for his empire than his love for American sports. And it is cheaper than the $395 million yearly fee Fox is paying for National Football League television rights.
The Dodgers, and nothing else, comprise the entire business realm of the low-key O'Malley, last of the baseball scions. Forty-seven years ago, Peter O'Malley's father, Walter, paid $1.4 million to take control of the Dodgers; at $350 million, Murdoch would be paying 250 times more.
It is a very different world now, where only the richest people or corporations can afford the indulgence of a sports franchise, and where multinational companies like Murdoch's or Time Warner see a baseball team as software, not a public trust.
"The Dodgers always kept their prices low and their business simple," said Peter Bavasi, a former executive with the Dodgers and other clubs. "They were just in the baseball business. But when you pay $350 million, you have $35 million in cash flow to generate, so you have to maximize your returns by maximizing your revenues."
Dodger Stadium, now in its 36th season, would likely be Fox's first outpost of change, with the first-time construction of luxury suites and club seats and the possible expansion of signs beyond two Coca-Cola signs atop the Mitsubishi electronic scoreboards. Ticket prices, which average $11.16 this year, below the $11.98 major league average, are usually among the lowest in baseball. They could increase in time under Fox.
"The family has jealously guarded the look of Dodger Stadium since the day it opened," said Tom Villante, a former head of broadcasting for Major League Baseball, and now a consultant. "But Murdoch would be foolish not to test some new ideas."
More than anything else, Fox's bid for the Dodgers is a television play, one that would create the kind of vertical integration enjoyed by Time Warner and the Tribune Company. Time Warner owns the Atlanta Braves and TBS, the cable superstation that carries 125 Braves games. Tribune owns the Chicago Cubs and WGN, another cable superstation, which telecasts 140 Cubs games.
Fox already televises major league games through the Fox Network, one of baseball's national broadcast partners, and through FX and the Fox Sports Net, its national cable outlets.
Traditionally, the Dodgers have avoided selling the TV rights to the majority of their games, reasoning that they should not sacrifice attendance, usually among baseball's highest, for viewership. This season, only 48 games are available on KTLA-TV, a broadcast station, and 40 on Fox Sports West 2, Fox's regional cable sports network.
That would certainly change with Fox as the owner. "No question, there would be more games," said Marc Ganis, the president of SportsCorp Ltd., a Chicago-based consulting firm. "It would be more Tribune-like, with virtually every game on TV. More programming -- and that's what the games are -- means more commercial inventory. The more it makes from advertising, the more valuable the cable network becomes."
Murdoch undoubtedly has designs for his potential acquisition beyond Southern California, where he could market the Dodgers, with Asian stars like Hideo Nomo and Chan Ho Park, and Hispanic stars like Raul Mondesi, to his growing international satellite sports television holdings in Japan, Asia, Latin America, Australia and Europe.
Murdoch would not enter baseball without some corporate enemies. Ted Turner, the Time Warner vice chairman, has likened the Australian-born Murdoch to Adolf Hitler because of his business practices and once promised to squash Murdoch "like a bug."
And Murdoch is at legal odds with the Walt Disney Co., which owns 25 percent of the Anaheim Angels with an option to buy the rest. Several months ago, Disney sued Fox to stop the movement of games of Disney's hockey team, the Mighty Ducks, from Fox Sports West, an established regional sports channel, to a new offshoot with fewer subscribers, Fox Sports West 2. Fox countered with a lawsuit alleging that Disney had conspired with cable systems to keep Fox Sports West 2 from being carried.
