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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National League All-Star Huston Street of the San Diego Padres looks on during the Gatorade All-Star Workout Day at Kauffman Stadium. Why is it taking so long to sell his team?
The simple answer is: It's complicated.
You can't just sell a Major League Baseball franchise for $800 million (the widely reported sale price, about $400 million more than what Forbes says the team is worth) and expect negotiations to go off seamlessly. So reports that the Padres were going to be sold by the All-Star break have now turned out to be exaggerated, even though the O'Malley family and their investors have been in an "exclusive" negotiating period with John Moores, the Padres' current majority owner.
That negotiating period has been extended by what the Chicago Tribune said on July 8 would be another 10 days. The O'Malley Group is still the only bidder, and based on his recent public comments, it sounds like MLB Commissioner Bud Selig has given the deal his blessing.
"Bud Selig doesn't take that kind of position if he hasn't already counted the votes," said David Carter, a professor of sports business at the USC Marshall School of Business and the Executive Director of the USC Sport Business Institute.
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Starting pitcher Anthony Bass of the San Diego Padres. The team could be nearing a sale for $800 million.
That's what being reported, anyway. CBS Sports says that current owner John Moores has entered an "exclusive negotiating window" to sell the team for about twice its current (depressed) value of $406 million — and a lot more than Moores paid to buy the team in 1994, and to start selling it in 2009.
The sticker price is rumored to be $800 million. If the sale — to a group led by the family of former Dodgers owner Peter O'Malley, brewing tycoon Ron Fowler, and other investors including pro golfer and San Diego native Phil Mickelson — goes through, it would make the Padres the third costliest Major League Baseball team acquisition, behind the Chicago Cubs $845 and of course the recent Dodgers sale of more than $2 billion.
It would also mean that the two other potential owners — communications mogul Gary Jabara; and private-equity titan Steve Kaplan of Los Angeles' Oaktree Capital — are out of the running.
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Starting pitcher Anthony Bass #45 of the San Diego Padres delivers against the Colorado Rockies at Coors Field on April 17, 2012 in Denver, Colorado.
Guggenheim Baseball Management (GBM), fronted by Magic Johnson and financed by the $125-billion Guggenheim Partners investment firm, is buying the Los Angeles Dodgers for a record $2.15 billion. But there's another Southern California professional baseball franchise for sale. Maybe not as storied. But still worth some potentially very big bucks. Will the San Diego Padres see their price rise now that Dodgers have hit a grand slam for their sale?
Quite possibly. But you have to take a few factors into account, as well as assess the probable structure of a future deal. First, let's look at how much of a premium the Dodgers' new owners paid on the team's current revenues. It's steep: in 2010, the team did $246 million, so GBM is paying almost 9 times revenue. That figure will drop somewhat when you factor in a potential $5-billion broadcast deal, to be negotiated in about a year.