GM and the Dodgers: A case study

government_motors.jpgWhile writing the filibuster the other day, I got to thinking.  What’s so bad about MLB taking over the Dodgers?  It’s not something they want to do and ideally they’d like to get rid of the franchise as quickly as possible.  Both MLB and the Dodgers hope to emerge from this more healthy.  The weird thing is that as I considered all the aspects of this move, it began to feel a little like deja vu.  I had the distinct feeling that I had read this story before.  Then it hit me.  This same story happened just recently with a little company called General Motors, and the US Government played the role in which MLB now finds itself.

Just like today’s Dodgers, GM found itself in trouble because of profligate spending, terrible management and an inability to provide the consumer what they demanded.  As it became clear that GM could no longer support its obligations and refused to make the changes needed to resolve its issues, the government stepped in. 

Just like with MLB’s decision to take over the Dodgers, the government’s decision with GM had its share of detractors.  Although I don’t think anyone outside of San Francisco truly wants to see the Dodgers fail as a franchise, a fair amount of the fringe right and left wing in the US were more than happy to watch GM collapse.  While refusing to see what impact GM’s dissolution would have on an already fragile economy, these people decided that the moral obligation was to let GM collapse as an example to other firms.  Obviously this was not an option for the government, just like McCourt’s continued ineptitude with one of baseball’s storied franchises was not an option for MLB and the commissioner.

The real moral of this story comes in the aftermath.  GM quickly emerged from its bankruptcy and government receivership.  More importantly, not only did it emerge more streamlined and healthy after government managers got rid of deadweight makes and models, it also set a record with its IPO.  MLB is hoping for a similar outcome and looks to be using an important tool that the government also utilized with GM: get rid of the management who got you into this problem in the first place.

Since GM rose phoenix-like from its own ashes, those who criticized the initial move have become much more subdued in their comments.  Although the level of criticism hasn’t been quite as great with MLB and the Dodgers, I have a feeling that even those who have decried Selig’s actions will end up eating their words once the Dodgers are resold.  Takeovers are always painful but they aren’t always bad.

-A 

7 Comments

Of course, in the middle of it’s Phoenix like rebirth, GM burned all of it’s previous stock holders. I mean 1,000 shares might buy you a cup of coffee after trading fees assuming you can still pennystock it, burned their previous stock holders. Of course, stockholders can always start from scratch and buy the shiny new stock that’s trading at over $30 per share, assuming their wallets can still hack it. While I still think that the government takeover of GM and MLB’s takeover of the Dodgers were/are both good moves in the long run, I would hope the comparison would end long before you get to this point, LOL. In many ways, it’s more like the government’s takeover of IndyMac Bank…not that I’d know anything about that. *whistles*
- Kristen
http://blithescribe.mlblogs.com/

The Dodgers are a proud franchise and with the MLB taking over it would be a good thing.
—Mark Gauthier
http://cubden.mlblogs.com/

Selig took a major gamble with the all-encompassing power of the “best interests of the game” clause; presumably the MLB lawyers assume that McCourt would rather give in than sue and drain his finances further, but it was still a risk.
In the cosmic scheme, it was probably the right thing to do, but a risky decision nonetheless.
http://paullebowitz.com.previewyoursite.com/blog/

Let ‘em burn! This would never have happened if they would have stayed in Brooklyn! Let em burn!
: O
Mike
http://thebrooklyntrolleyblogger.mlblogs.com/

I for one, would like to welcome the Montreal Dodgers to the National League. **duck**
~Rob
http://robsanto.mlblogs.com/

Why didn’t Bud and MLB take over the Padres a couple of years ago when something similar happened to them? Just curious. I know the situations aren’t exactly the same, but similar enough to make a comparison.

Ron

http://strictlycubsbaseball.mlblogs.com/

I would not be surprised if Selig has to do something similar to the Mets in a year or two.
Catherine
http://chisoxblog.mlblogs.com/

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