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Sports economists react to Dodgers $2-billion price tag

March 28, 2012|By David Wharton
  • Some sports economists didn't expect the Dodgers to sell for so much.
Some sports economists didn't expect the Dodgers to sell for so much.

People who study the business of sports are, at the very least, mildly surprised by the price the Dodgers fetched on the auction block.

The experts had predicted something in the range of $1.3 billion to $1.6 billion. They were taken aback to read the headlines Wednesday morning announcing that a group led by Magic Johnson had paid $2 billion.

"It's a lot more than I expected," said Andrew Zimbalist, a Smith College economics professor and author of "Baseball and Billions." "The new ownership group might look back and say 'We overpaid.'"

With regional sports networks such as those operated by Time Warner and Fox paying more for television rights over the last decade, the value of all professional sports franchises has risen. Pro sports teams are also looking down the road at generating revenue through new media, selling subscriptions for fans to stream games on mobile devices.

"The sports industry is not recession-proof, but it certainly is recession-resistant," said J.C. Bradbury, author of "The Baseball Economist: The Real Game Exposed." "It's still cheap to watch on television or go to one game."

But even the most optimistic onlookers wondered if the Johnson group, in paying such a hefty price, will have enough money left over to improve the lineup and renovate an aging Dodger Stadium.

"My guess is these guys have done their planning," said Ray "Skip" Sauer, chairman of Clemson University's economics department. "You never know."

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Sports economists react to Dodgers $2-billion price tag

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