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Old December 22nd, 2012, 10:37 AM   #2081
raymondleone
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Originally Posted by pesto View Post
This is probably the right answer. The definition of "worth" or "value" is normally what a willing seller and an willing buyer agree on so it's hard to argue with the amount actually agreed on in a recent purchase. You don't have to convince the world to pay 2.1B; one person is enough.

Forbes has the same problem as professional economist valuations: they look backwards, not forwards. Purchasers will typically have somewhat inflated senses of value either because of personal attachment ("vanity buyers") or because they see untapped sources of income. You see this at every auction and at most home sales.
If the blue book value of my car is $20,000 and some numbnut buys it for $40,000, the blue book value for the car is still $20,000. It does not change just because one numbnut over paid. And assuming there was no modifications or improvements & not much time had passed, if the car was resold the blue book value of that car would still be around $20,000.The same would apply in this situation. Forbes seems right on. To give you another example, I remember reading some Yankee sarcasm stating that if the Dodgers were worth 2 Billion than the Yankees were worth 4 Billion.

Last edited by raymondleone; December 22nd, 2012 at 10:57 AM.
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Old December 23rd, 2012, 08:00 AM   #2082
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Originally Posted by raymondleone View Post
If the blue book value of my car is $20,000 and some numbnut buys it for $40,000, the blue book value for the car is still $20,000. It does not change just because one numbnut over paid. And assuming there was no modifications or improvements & not much time had passed, if the car was resold the blue book value of that car would still be around $20,000.The same would apply in this situation. Forbes seems right on. To give you another example, I remember reading some Yankee sarcasm stating that if the Dodgers were worth 2 Billion than the Yankees were worth 4 Billion.
Not really valid. Blue Book "values" are just estimates of what one could expect to pay for the vehicle. Its true value is more abstract. A bottle of water may cost $0.07 to produce, but it's sold for $2.00. The customer is not "overpaying" in this instance. They've made a cost-benefit assessment and have determined that the $2.00 is acceptable. Now, a dehydrated person may be willing to pay $10.00 to get that same bottle of water. Or perhaps they are not dehydrated themselves but rather know that they can turn around and sell that same bottle to another person who might be willing to pay $18.00 for it. Their assessed value can be significantly different from what another person deems its worth to be.

The Dodgers being "worth" $2 billion is accurate. It's accurate because the purchaser has concluded that's what it will take to obtain possession of the good, in this case a baseball franchise. Someone else could value it much differently, but again, those people didn't get the team, so their valuation is irrelevant. The Yankees are worth whatever the market will bear at the time of sale. Circumstances could arise in which the Yankees are sold for less than the Dodgers. It doesn't mean that one party was right and the other was wrong. It means that both made independent valuations based on a wide range of factors. If it ends up being a sound investment, then that will be your confirmation it really was "worth" the initial valuation.
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Old December 28th, 2012, 08:05 AM   #2083
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Not really valid. Blue Book "values" are just estimates of what one could expect to pay for the vehicle. Its true value is more abstract. A bottle of water may cost $0.07 to produce, but it's sold for $2.00. The customer is not "overpaying" in this instance. They've made a cost-benefit assessment and have determined that the $2.00 is acceptable. Now, a dehydrated person may be willing to pay $10.00 to get that same bottle of water. Or perhaps they are not dehydrated themselves but rather know that they can turn around and sell that same bottle to another person who might be willing to pay $18.00 for it. Their assessed value can be significantly different from what another person deems its worth to be.

The Dodgers being "worth" $2 billion is accurate. It's accurate because the purchaser has concluded that's what it will take to obtain possession of the good, in this case a baseball franchise. Someone else could value it much differently, but again, those people didn't get the team, so their valuation is irrelevant. The Yankees are worth whatever the market will bear at the time of sale. Circumstances could arise in which the Yankees are sold for less than the Dodgers. It doesn't mean that one party was right and the other was wrong. It means that both made independent valuations based on a wide range of factors. If it ends up being a sound investment, then that will be your confirmation it really was "worth" the initial valuation.
I won't pretend to know all the intricacies involved in the Dodger sale (or any other sale of it's kind) however the post was meant as an expression of bewilderment along with a bunch of sarcasm in regards to the news about this 2+ billion transaction. Like many other folks I thought it was too much for this franchise but then I'm not guggenheim with it's 160+ billion reasons to make this deal happen.

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Old December 28th, 2012, 08:20 AM   #2084
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Quote:
Originally Posted by raymondleone View Post
I won't pretend to know all the intricacies involved in the Dodger sale (or any other sale of it's kind) however the post was meant as an expression of bewilderment along with a bunch of sarcasm when I heard the news about this 2+ billion transaction. Like many other folks I thought it was too much for this franchise but then I'm not guggenheim with it's 160+ billion reasons to make this deal happen.
Let's put it this way. Suppose you buy an item which is worth $5 "now", but you know that something in the near future will make that item worth $15. Doesn't it make sense to be willing to pay $10 for that $5 item with that knowledge?

That's pretty much what happened with the Dodgers sale. The pending $6 Billion TV deal all but guarantees that the team will be worth in real value what, if not more, than the Guggenheim group paid.
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Old December 28th, 2012, 09:33 AM   #2085
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Let's put it this way. Suppose you buy an item which is worth $5 "now", but you know that something in the near future will make that item worth $15. Doesn't it make sense to be willing to pay $10 for that $5 item with that knowledge?

That's pretty much what happened with the Dodgers sale. The pending $6 Billion TV deal all but guarantees that the team will be worth in real value what, if not more, than the Guggenheim group paid.
Gotcha, Short term gamble with Long term investment in mind. They overpayed knowing they could get that money back + much more in the long run.

Risk Vs. Reward

“The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing" - Leo F. Buscaglia

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Old December 29th, 2012, 09:39 PM   #2086
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If the blue book value of my car is $20,000 and some numbnut buys it for $40,000, the blue book value for the car is still $20,000. It does not change just because one numbnut over paid. And assuming there was no modifications or improvements & not much time had passed, if the car was resold the blue book value of that car would still be around $20,000.The same would apply in this situation. Forbes seems right on. To give you another example, I remember reading some Yankee sarcasm stating that if the Dodgers were worth 2 Billion than the Yankees were worth 4 Billion.
First of all, the Yankees could be worth 3-4B; it depends on how much flexibility they have on renegotiating their deals or finding new revenues.

A couple of comments. Franchises are unique, not fungible, like wheat or corn. Second, blue book is just a guide; factors like mileage, condition, accidents can affect the value. Damaged cars can sell for 1/2 blue book. Third, you are confusing a mass market item, with many thousands of transactions per day, with the sale of a unique item, which is negotiated carefully with economic, financial and industry specialists developing a complete picture of the asset and its potential. They may be wrong, but they are not "numbnuts". Also, a car is a consumer item, normally with no flow of income associated with it; a business has a complex of flows, both positive and negative associated with it, which are the determinants of its value.

Generally, the car market is stable because everyone has the same uses in mind (that is, driving it around) and there are many other choices. Businesses are not stable because some people can see value where others can't. This allows them to bid enough so that the current owner admits to himself "I can't make this much money running this business" and agrees to sell. The buyer takes the risk that he may have been wrong.

Interestingly, the Dodger purchase is now being called a "steal" in light of the 6 to 8B that is the estimated value of a broadcast or local sports network deal. (As a side note, this limits the broadcast rights to LA, LV, Fresno, Bakersfield, Honolulu and foreign locations. If SD, Phoenix and the Bay Area (where the Dodgers have large followings) could be added, it could go significanttly higher. But MLB rules prohibit this.)

As for Forbes, the usual reason that their analysis misses badly is that it is backward looking (the "academic" approach) and is based on past sales. The actual market value is calculated looking forward, that is, on what the expected revenue in-flows and out-flows are in the future.
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Old December 29th, 2012, 09:48 PM   #2087
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Originally Posted by raymondleone View Post
If the blue book value of my car is $20,000 and some numbnut buys it for $40,000, the blue book value for the car is still $20,000. It does not change just because one numbnut over paid. And assuming there was no modifications or improvements & not much time had passed, if the car was resold the blue book value of that car would still be around $20,000.The same would apply in this situation. Forbes seems right on. To give you another example, I remember reading some Yankee sarcasm stating that if the Dodgers were worth 2 Billion than the Yankees were worth 4 Billion.
First of all, the Yankees could be worth 3-4B; it depends on how much flexibility they have on renegotiating their deals or finding new revenues.

A couple of comments. Franchises are unique, not fungible, like wheat or corn. Second, blue book is just a guide; factors like mileage, condition, accidents can affect the value. Damaged cars can sell for 1/2 blue book. Third, you are confusing a mass market item, with many thousands of transactions per day, with the sale of a unique item, which is negotiated carefully with economic, financial and industry specialists developing a complete picture of the asset and its potential. They may be wrong, but they are not "numbnuts". Also, a car is a consumer item, normally with no flow of income associated with it; a business has a complex of flows, both positive and negative associated with it, which are the determinants of its value.

Generally, the car market is stable because everyone has the same uses in mind (that is, driving it around) and there are many other choices. Businesses are not stable because some people can see value where others can't. This allows them to bid enough so that the current owner admits to himself "I can't make this much money running this business" and agrees to sell. The buyer takes the risk that he may have been wrong.

Interestingly, the Dodger purchase is now being called a "steal" in light of the 6 to 8B that is the estimated value of a broadcast or local sports network deal. (As a side note, this limits the broadcast rights to LA, LV, Fresno, Bakersfield, Honolulu and foreign locations. If SD, Phoenix and the Bay Area (where the Dodgers have large followings) could be added, it could go significanttly higher. But MLB rules prohibit this.

As for Forbes, the usual reason that their analysis misses badly is that it is backward looking (the "academic" approach) and is based on past sales. The actual market value is calculated looking forward, that is, on what the expected revenue in-flows and out-flows are in the future.
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Old December 30th, 2012, 01:39 AM   #2088
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Get this thing built! The Los Angeles Chargers are waiting.
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Old December 30th, 2012, 03:12 AM   #2089
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Get this thing built! The Los Angeles Chargers are waiting.
Interestingly, Peter King at SI says that per an NFL official no team is close to meeting the requirements for a move (basically, you have to be failing economically and have a stadium and temporary location in place) and none has expressed any interest in a move. SD doesn't seem to be "failing" but it all depends on what you mean by that term and how you do the accounting.
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Old December 30th, 2012, 04:53 AM   #2090
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Should we then temper our hopes of LA getting a team anytime soon ?
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Old December 30th, 2012, 05:37 AM   #2091
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Interestingly, Peter King at SI says that per an NFL official no team is close to meeting the requirements for a move (basically, you have to be failing economically and have a stadium and temporary location in place) and none has expressed any interest in a move. SD doesn't seem to be "failing" but it all depends on what you mean by that term and how you do the accounting.
I would say that having 4 out of 8 home games blacked out would normally qualify as failing.

Of course, the poor ticket sales are really just the result of a poor on-field product. A lot of Charger fans think the Spanos family is purposely tanking in order to justify relocation. Given the ownership's willingness to stick with a coaching/management combo that has driven the team into the ground, I certainly understand that opinion.
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Old December 30th, 2012, 05:51 PM   #2092
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I would say that having 4 out of 8 home games blacked out would normally qualify as failing.

Of course, the poor ticket sales are really just the result of a poor on-field product. A lot of Charger fans think the Spanos family is purposely tanking in order to justify relocation. Given the ownership's willingness to stick with a coaching/management combo that has driven the team into the ground, I certainly understand that opinion.
San Diego Union Tribune is reporting that the coaching staff was not fired in mid-season ...

http://www.utsandiego.com/news/2012/...s-norv-turner/

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Though his mind was made up weeks ago, Spanos allowed Turner to finish out the year. He didn’t see warrant in parting before Monday, known as “Black Monday” around the league.
Probably thinking the season is lost..so why hire a interim head coach..

By the way the Spanos are not about to sell the Chargers to anyone..unless their last name is Spanos.
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Old December 30th, 2012, 07:11 PM   #2093
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Should we then temper our hopes of LA getting a team anytime soon ?
Hard to say. The NFL seems to want a dynamic owner, strong franchise and strong brand in LA to avoid further NFL embarrassment (the Dodgers, Angels, Lakers and Clips making bundles and among the most valuable teams in the country). But there is also the problem of moving a successful team away from its loyal fans; this is bad PR and can even attract government antitrust scrutiny.

I suspect that "failing" means "any team not doing great which can move without breaking a lease and has a colorable argument that it wasn't treated right locally". SD, STL and the Raiders can be squeezed into this if necessary. The Rams big problem is that the arbitrator may give the city a "yes-able" proposition and the NFL won't let them leave. The Raiders are a problematic brand with new leadership which is not impressing anyone so far. SD has effectively committed to working for a local stadium for one more year, but could have a decent argument if that fails.

Getting a local stadium is a problem because this is LA, it's you're one chance and you want to get THE right stadium in THE right place to make you iconic. The NFL is rightly unimpressed with Farmer's, given it's cramped location. But Dodger Stadium and Industry have problems as well.
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Old December 31st, 2012, 07:28 PM   #2094
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Interesting: I have heard that Todd Boehly (Dodger and Guggenheim investor and exec), has claimed that the Dodgers are now worth 3B with plenty of upside. Boehly has been spearheading the efforts to go after the Latin and Asian markets and is on the front-lines of their deals.

Some time ago Boehly had been approached about building a stadium for Chivas USA next to Dodger Stadium. That certainly would have been a coup for Chivas, but the Dodgers clearly have bigger fish to fry at the moment.

Last edited by pesto; December 31st, 2012 at 07:34 PM.
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Old December 31st, 2012, 08:28 PM   #2095
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From LA.Curbed.com

its about time!
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Old January 1st, 2013, 01:57 AM   #2096
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Well it's up to a former Colorado judge, a Chicago labor lawyer and a former Iowa judge to decide what the CVC needs to do to keep the Rams. Discussions start Jan 15 and are expected to last two months. The CVC then has some time to decide whether to accept the proposal or not, but I would expect the handwriting will be on the wall by mid-March.

Some of Kroenke's demands seem way over the top, but it will be interesting to see what sticks.

It would be interesting to see what other deals are cooking between Kroenke, Guggenheim and the other players for AEG.
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Old January 1st, 2013, 10:36 AM   #2097
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When do they expect to break ground on this?
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Old January 1st, 2013, 08:15 PM   #2098
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Interesting: I have heard that Todd Boehly (Dodger and Guggenheim investor and exec), has claimed that the Dodgers are now worth 3B with plenty of upside. Boehly has been spearheading the efforts to go after the Latin and Asian markets and is on the front-lines of their deals.

Some time ago Boehly had been approached about building a stadium for Chivas USA next to Dodger Stadium. That certainly would have been a coup for Chivas, but the Dodgers clearly have bigger fish to fry at the moment.
So how long until they decide that the team and stadium are lowering the value of the land?
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Old January 1st, 2013, 09:54 PM   #2099
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Happy New Year, everyone!

Leiweke verifying what everyone assumed.

http://www.mercurynews.com/news/ci_2...idding-la-move

Report: No NFL teams seriously bidding for LA move

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No NFL team has expressed serious interest in moving to Southern California, according to a top executive with the company proposing to build a football stadium in downtown Los Angeles.

AEG President Tim Leiweke told The Los Angeles Daily News in an interview Monday that he hasn't heard from any team that plans to apply to move to Los Angeles for the 2013 season. The NFL opened the application period on Jan. 1. Franchises have until Feb. 15 to apply.

"I haven't been made aware of any team that is going to file for a move in 2013," Leiweke said.

The impending sale of Anschutz Entertainment Group, a $6 billion conglomerate of sports and entertainment enterprises, may be a concern for team owners, the executive said.

"What I would guess ... is that there is no club currently that's going to file for a transfer simply because they are waiting to see what happens with our ownership situation," Leiweke told the Daily News.
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Old January 2nd, 2013, 08:20 PM   #2100
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So how long until they decide that the team and stadium are lowering the value of the land?
No way of saying but I understand that it is still an open issue as to whether the value of Chavez Ravine can be best exploited with NO stadiums there. The problem with this is that when one of the bidders for the Dodgers asked about the possibility of replacing DS, the public reaction was so bad that they quickly claimed that it was a hypothetical question and never mentioned it again. If Magic and Walter don't want to be mentioned in the same breath as McCourt, then they had better not bring that possibility up. A quick way to squander 1B or so of goodwill.

There's also the problem that you need TWO stadium sites that make sense and so far many people think there aren't any.

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