Dodgers $1 Billion Loss [VIDEO]; Owners, Guggenheim Could Lose Big
The new owners of the Los Angeles Dodgers, Guggenheim Partners, are about to lose $1 billion in future earnings, The New York Post reported.
The large sum is the increase in the amount of money the team will have to share with Major League Baseball from its new $7 billion, 25-year television deal with Time Warner Cable, which begins next season. The deal includes the cable company and baseball team starting a new regional sports network.
The new deal could end up seeing the business unit, Guggenheim Baseball Management, give $130 million a year to Major League Baseball under its revenue-sharing agreement, 50 percent higher than the $85 million Guggenheim expected to pay.
GBM anticipated that MLB would continue a 2011 Dodgers revenue-sharing agreement rather than adopt the current deal.
The deal could cost Mark Walter, Guggenheim's CEO; Todd Boehly, its president; and Alan Schwartz, the New York company's executive chairman, more than $1 billion in lost revenue over the life of the deal.
The loss could also hamper GBM's from being able to recoup the debt on the record-setting 2012 $2.15 billion purchase of the Dodgers or maintain the team's $216.6 million payroll, which is the second-highest in MLB.
Major League Baseball objected to the Dodgers-Time Warner deal because much of the $7 billion was guaranteed despite whether or not regional sports networks performed badly.
Guggenheim Partners, a global financial firm, may come under pressure from New York insurance regulators. The company used cash from some of its insurance companies to help pay for the Dodgers purchase.
Watch a video of the Dodgers transaction below.