Economists: $1B for Dodgers is realistic

LOS ANGELES -- A record price tag of $1 billion can be expected for the Los Angeles Dodgers, Dodger Stadium and the surrounding real estate, according to several sports economists following the team's upcoming sale.

"If you're talking about the asset value of the Dodgers franchise, the stadium, the parking lots and the surrounding acreage, I think a number in neighborhood of $1 billion is reasonable," Andrew Zimbalist, a professor of economics at Smith College, said last week. "I believe the reasonable or final offer will be $900 million to $1 billion."

One of the biggest reasons for the Dodgers' value is all the undeveloped real estate surrounding Dodger Stadium, which sits on 275 acres of land that is largely used for parking.

Three years ago, Dodgers owner Frank McCourt outlined a $500 million project around the stadium that would include parking structures, a Dodgers museum and a plaza behind center field with year-round shops and restaurants. Such a sweeping project could add more revenue streams for the future owners and potentially raise the price of the team.

"As a comparison, the Chicago Cubs went for $845 million two years ago, and I think most people looking at the revenue streams between the Dodgers and Cubs would have them being pretty comparable," said Victor Matheson, a sports economist and an associate professor of economics at the College of the Holy Cross in Worcester, Mass.

"It's probably more in favor of the Dodgers because they have such a huge area that could also be redeveloped. The Cubs' deal includes Wrigley Field, but that's tied into the city grid there so there's only so much you can do. The Dodgers really do have space there for other projects."

Another factor is the broadcast deal between the Dodgers and Fox Sports that MLB rejected in June, which reportedly would have paid the Dodgers about $3 billion over 17 years. Time Warner also figures to be in the mix for a broadcast deal after the company signed a 20-year pact with the Los Angeles Lakers, valued at $3 billion, for two new regional sports channels, one in English and one in Spanish.

"Given the land and media deal possible, $1 billion is realistic," said Mark Rosentraub, a University of Michigan sports management professor who has consulted on stadium projects. "The big liability is the renovation cost of Dodger Stadium, but this is still one of the premier sports brands and I suspect that this is a good long term investment."

The remodeling of Dodgers Stadium, which opened in 1962, could cost anywhere from $100 million to $500 million, according to economists, depending on the extent of the renovation. The new owners could stand to make back much of those costs with the addition of more premium seating.

"What people don't understand is that the bids will be different based on what that ownership group believes they can do with the team," said David Carter, a sports marketing consultant and executive director of the USC Sports Business Institute. "Not everybody is in a position to capitalize on the upside.

"... There's an attractive media piece and there's upside to be had with renovation around the stadium and McCourt was never able to do that. Not just because he didn't have the money, but he didn't have the political capital in town. He didn't have the community relations in place and he didn't have any goodwill that would have allowed him to do that."

Simply having a new owner in place, Carter said, would go a long way toward improving the value of the franchise.

"After the team is sold," he said, "I think you're going to find a lot of Dodger fans pulling hamstrings getting back on the bandwagon."

Arash Markazi is a columnist and writer for ESPNLosAngeles.com. Follow him on Twitter.