Everyone seems to have a favorite horse in the Dodger ownership race: Magic Johnson seems to be the favorite, followed by Stan Kroenke and Michael Heisley/Tony Ressler. It seems that no one wants Steve Cohen as owner and that puzzles me. I think Cohen is the best choice and here’s why:
- The cost of the Dodgers might only be 15% to 20% of his net worth, which means that less revenue will have to allocated to re-pay debt. The deal is more than the net worth of Johnson and Kasten combined and the deal is probably around 50% of the net worth of the others. Cohen is offering the most cash, which means less debt and more club revenue can be spent on the team.
- Any potential legal issues that Cohen has with the SEC (and it looks like there aren’t any) would not impact the Dodgers especially with the amount of equity Cohen would have in the team.
- Magic Johnson may be the sexy choice for LA Fans, but he would likely be pushing the threshold of debt required. I think he’s a bad choice choice. He’s have to re-pay debt from the new TV deal.
- Cohen is worth nearly $9 Billion – $1.6 or even $2 Billion is not nearly as significant to him as it is to the other bidders.
- The less debt the owner has, the more likely he is to be successful. More debt means that more bad things can happen (does anyone remember a guy named Frank McCourt?)
That’s my story and I’m sticking to it.