Explaining Southern California's economy

Los Angeles private-equity firm Colony Capital expected to bid for AEG

Colony-Capital

Colony Capital and its Chairman, Tom Barrack, are reportedly among the bidders for sports and entertainment giant AEG.

Anschutz Entertainment Group, lovingly referred by every sport and concert fan in the Southland as AEG, has put itself up for sale. This is potentially a true humdinger of a deal for Phil Anschutz, the reclusive Denver billionaire who started AEG a decade-and-a-half ago and has — with this considerable assistance of Tim Leiweke, who has run AEG day to day — build the enterprise up into a giant that could be worth anywhere from $4 to $8 billion, according to various reports, speculations, and back-of-the-envelope math on the privately held and somewhat secretive company.

The bidders are lining up, led by the richest man in L.A., Patrick Soon-Shiong, who took a shot at the Dodgers earlier this year and already owns a small stake in the Lakers (AEG owns a third of the team). His $7-billion-plus net worth wasn't enough to get to the finish line, however, even in partnership with $8-billion-plus-net-worth hedge funder Steve Cohen. 

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Follow the AEG money: Patrick Soon-Shiong, Blackstone, and Guggenheim Partners

Government And Business Leaders Speak At Urban Economic Forum In Los Angeles

Kevork Djansezian/Getty Images

Magic Johnson greets Patrick Soon-Shiong during a Urban Economic Forum co-hosted by White House Business Council and U.S. Small Business Administration at Loyola Marymount University. Soon-Shiong has been named as an potential bidder for AEG, the sports and entertainment giant.

Patrick Soon-Shiong — the richest man in L.A., with a net worth north of $7 billion — has been named as a bidder for AEG, the L.A.-based sports/entertainment giant that owns the Lakers, the Staples Center, and L.A. Live, among many other assets and properties worldwide.

AEG would be a pretty big bite — L.A. Live and Staples could fetch $1 billion apiece, and stakes in the sports franchises could add up to half a billion — so Soon-Shiong is reportedly not going it alone. He's joined with Guggenheim Partners' executives Mark Walter and Todd Boehly, who formed Guggenheim Baseball Management earlier this year to buy the Dodgers for more than $2 billion.

AEG has hired the Blackstone Group to manage its sale. Blackstone also handled the sale of the Dodgers, conducting the final auction at which Guggenheim swept in at the end with a winning bid that was half a billion more than the next closest buyer, hedge fund guy Steven Cohen, whose $1.6-billion offer had looked indomitable up to that point. Ironically, Soon-Shiong joined with Cohen late in the game, only to lose out.

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Q&A: What role is the Blackstone Group playing in AEG sale?

Blackstone Group CEO Stephen Schwarzman

AFP/AFP/Getty Images

Blackstone Group CEO Stephen Schwarzman at the World Economic Forum in Davos. Blackstone has been hired by AEG to explore a sale of the sports and entertainment giant.

Anschutz Entertainment Group (AEG) — the huge L.A.-based media, events, and sports company owned by reclusive Colorado billionaire Phil Anschutz — is looking at selling itself. In whole? In parts? What does this all mean for an AEG-backed Downtown L.A. NFL stadium? It's unclear. Buyers are already being talked about, with the richest man in L.A., biotech billionaire Patrick Soon-Shiong, already nominated as a bidder. Makes sense, as he was a late arrival to the bidding war for the L.A. Dodgers, losing out to the eventual new owners, Magic Johnson and Guggenheim Baseball Management.

He's worth around $7 billion. Phil Anschutz is worth around $8 billion. It would be a match of lucky $7 billionaire and the billionaire who has a billion more. 

But I'm getting ahead of myself. AEG has hired Blackstone, an investment bank that managed the Dodgers sale, to work on a potential AEG deal. This isn't as easy as selling the Dodgers, which both had to be sold (former owner Frank McCourt put the team in bankruptcy over a dispute with Major League Baseball and also had to contend with paying his divorce settlement to his ex-wife) and was more concentrated in its assets. AEG is a far-flung holding company that owns pieces of L.A. sports teams, international sports teams, entertainment venues, live events, theaters, and even hotels. 

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

AEG

In this rendering released by AEG, the proposed football stadium to house a NFL team in Los Angeles, California is seen. Today, AEG's parent company announced that it's seeking buyers for the entertainment and sports group, but L.A. Mayor Antonio Villaraigosa said that the stadium plan will move forward.

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.]

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NHL lockout? It wouldn't help the LA Kings' already iffy finances

2012 NHL Stanley Cup Final ? Game Six

Harry How/Getty Images

The Kings celebrate on ice on their way to a Stanley Cup. But they should get too excited. The team is losing money and the fourth NHL lockout since 1992 looms.

There's a very good chance that, unless NHL players and owners can come to some kind of miraculous eleventh hour resolution, the league will be dealing with its fourth lockout since 1992. As CBSSPorts.com points out, with each stoppage has come a bigger hit to the pro hockey schedule, culminating in the loss of the entire 2004-05 season. 

In Los Angeles, this means that the Stanley Cup-winning L.A. Kings may not enjoy the full fruits of their first season after a stirring victory. Some obvious question arise. If a lockout comes, how much will it cost the players? What will be the local ecoomic impact?

Those are relatively simple to answer. Some players, depending on where they are in their contracts (which pay out more in some years than in others), will feel some pain, although as Bleacher Report notes, a few players could head to the Kontinental Hockey League and garner reduced wages there.

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