The Breakdown

Explaining Southern California's economy

How much could LA sports and entertainment giant AEG be worth in a sale?

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36187 full

Earlier today, the Anschutz Corporation announced that it's "exploring" or "planning" a sale of the Anschutz Entertainment Group (AEG) — various media outlets reported the announcement differently — and has hired the the mergers-and-acquistions arm of the Blackstone Group to manage the bids. From the company's statement, however, the objective seems to be to transition "AEG to a new qualified owner," which sounds very much like this is the real deal.

A substantial minority stake in AEG — 49 percent — was nearly sold to Ticketmaster and Cablevision in 2008. The transaction didn't ultimately happen, but it was thought to be worth $200 million, making AEG at the time worth around $400 million in total. [UPDATE: I misread the NYTimes DealBook report from 2008 — AEG wasn't thought to be worth $1 billion at the time.]

Apart from its live events and real estate, including the Staples Center and L.A. Live in Downtown Los Angeles, AEG has stakes in the L.A. Kings, the Lakers, and owns the Galaxy. Last year, the New York Post reported that AEG was interested in selling its half of the Kings — and this was before the team captured the Stanley Cup. The team is now ranked by Forbes as the NHL's tenth most valuable, at $232 million. Forbes ranks the Lakers considerably higher: the franchise is the NBA's most valuable, at $900 million, and AEG owns a third. The Galaxy was estimated to be worth $100 million in 2008 — the highest valuation in MLS

That's more than half a billion, just on the sports-team side of the business. (Although the Kings are carrying a heavy debt load, about two thirds of the team's value.)

Phil Anschutz may very well be surveying the landscape of big-times deals in professional sports, particularly in Southern California, and deciding that he's ready to enter the market. The Dodgers sold for more than $2 billion (Blackstone handled that sale, too) and the San Diego Padres went for $800 million. That's close to $3 billion in SoCal deals this year, and that's on baseball alone. 

The obvious question being asked right now is, "What does the mean for the football stadium that AEG has been furiously lobbying to build in Downtown L.A.?" Mayor Villaraigosa, immediately after the news of the potential AEG sale broke today, issued a statement in which he said he had known about this plan for a while and that an AEG sale wouldn't affect the return of pro football to Los Angeles. Approvals for that project, which could cost $1.2 billion, are moving along, with City Council now slated to vote on the plan.

In order to make it happen, however, AEG needs at bring a team to Los Angeles. In April, the L.A. Times reported that Anschutz was prepared to shell out big bucks for both a team and to cover the cost of the new stadium. How much would that cost him? Forbes currently values the St. Louis Rams, a candidate for relocation to L.A., at nearly $800 million. That prices the entire package of team and stadium at roughly $2 billion. 

Anschutz may have had a change of heart since spring. He could also be looking at the lockouts that have beset both the NBA and now the NHL over the past two years as value-killers and deciding that this is an excellent time to unload the financially troubled Kings while selling the Galaxy and the Lakers stake at peak prices. Or he could be selling AEG as a means to an end — that end being Farmer's Field and the acquisition of a potentially more lucrative football franchise (the Dallas Cowboys, the NFL's priciest team, weigh in at $2.1 billion).

That said, AEG is in all likelihood worth more today that it was in 2008. Anschutz's goal could be to let new owners deal with the difficulty of getting the NFL back to L.A.

We'll certainly know more as we follow yet another potential blockbuster sports deal in SoCal.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

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