What is behind the Dodgers potential sale of minority shares?

What will the Dodgers do next?

The Los Angeles Dodgers are toying with the idea of selling a minority stake in the organization as reported by Bill Shaikin of the Los Angeles Times this week.

The team has hired investment banker Sal Galatioto. Galatioto was brought in by the Cubs last year to help organize and solicit bids in their sale of $300 million worth of shares.

The Dodgers were purchased from Frank McCourt in 2012 by Mark Walter and several investors in Guggenheim Baseball Management (Magic Johnson, Stan Kasten, Peter Guber, Bobby Patton, Todd Boehly).

Why are they considering selling a stake now?

One reason could be to help settle millions of dollars in debt they carry as part of the league’s debt-service rule.

According to Shaiken, the Dodgers have spent more than a billion dollars on player payroll in the first four seasons of the new ownership group.

The debt-service rule states that teams must “limit debt to no more that 12 times annual revenue, minus expenses.”

One way the Dodgers have tackled their debt is with their massive television rights agreement, reportedly worth $8.35B.

But that decision didn’t work out so well for Dodgers fans, as they have been deprived of televised Dodgers games for the past 4 years due to the high cost charged to cable and satellite providers.

So, while it is unclear as to the real purpose of finding new investors, Galatioto and team owners say it is a chance to bring international influence.

“This is a global brand,” Galatioto said, according to the LA Times, “people might be able to help internationally develop the brand.”

And while the Dodgers insist they are not under “mandate” by the league to reduce debt, this latest plan to generate cash may say otherwise.

What effect would a possible sale have on the team and Dodger fans?

From what I gather, not much.

It would not change the operational structure of the team, as Mark Walter would remain controlling owner with Stan Kasten as team president and CEO.

But an influx of cash would help ease their debt, assist with roster changes, as well as contribute to several revamps currently underway at Dodger Stadium.

We’ll have to just wait and see if a sale actually takes place and what the organization will with the funds if it happens.

In the meantime:

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The team has it’s first spring training match-up verses the Chicago White Sox on February 25^th in Glendale, Arizona.