Explaining Southern California's economy

AEG sale: Guggenheim Partners and Soon-Shiong form bidding group

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. They could be partners (sort of) if Soon-Shiong and Guggenheim Partners buy AEG.

Patrick Soon-Shiong — the richest man in Los Angeles, minority owner of the Lakers, and recently thwarted suitor for the Dodgers — has reportedly hooked up with none other than the investors who did the thwarting on his billion-plus bid for the Boys in Blue: Guggenheim Partners.

Or at least the adventurous investing subset of Guggenheim — a relatively staid Chicago-based manager of insurance-fund investments and other assets totaling around $180 billion — made up of CEO Mark Walter and executive Tim Boehly. They formed Guggenheim Baseball Management with Magic Johnson as a front man to snatch the Dodgers away from Soon-Shiong and hedge-funder Steven Cohen at the eleventh hour, with a bid more than $500 million above what anyone had expected.

It was the biggest deal in U.S. sports up to that point. But if Soon-Shiong, Walter, Boehly and whoever else they yank onboard manages to buy all of AEG, the deal would blow the Dodgers' $2 billion away. It could go for anywhere from $4 billion to even as high as $7 or $8 billion.

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Does the NFL think Phil Anschutz is a cheapskate?

Mercer 20333

AEG

The fate of a new NFL stadium in downtown L.A. — and the return of pro football to Los Angeles — has been called in doubt by AEG's decision to put itself up for sale.

That's the implication from today's L.A. Times' man-on-a-wire profile of AEG CEO Tim Leiweke, which depicts the executive as furiously trying to sustain support for an NFL stadium in downtown L.A. as the company he effectively built goes on the block. 

It's starting look as though Phil Anschutz — the Colorado billionaire who owns AEG — has been tangling with the NFL over just how much it would cost him to get the critical element of the stadium project in place: the team. This is from the LAT:

Anschutz, 72, risked billions of dollars backing AEG's Los Angeles developments starting with Staples Center in the late 1990s, and he insisted on being rewarded with a piece of a football team at below-market value, some observers said. Team owners have been clear, however, that they believe a discount sale would devalue all their franchises at a time when team prices have been dramatically rising.

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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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NBA game cancellations could show strength of LA's diversified entertainment economy

Staples Center

Eric Richardson/Blogdowntown

Vehicles pass by a darkened Staples Center on October 10, 2011.

As my new KPCC colleague Eric Richardson reported this morning, NBA commissioner David Stern has decided to cancel the first two weeks of the season, in the face of an ongoing labor impasse. This is going to cost money, in terms of lost ticket sales and the spending that people engage in when they attend games. If more games are cancelled, the costs are going to be significant.

Here's the math, for the sacrificed Lakers and Clippers games at the Staples Center, assuming the cancellation extends throughout the rest of 2011:

  • $30 million in ticket sales
  • $40 million for everything else
  • Grand total: $70 million

As Richardson points out, the $30 million is less relevant than the $40, because the latter is money that won't go to Downtown businesses (the $30 million represents "sunk" costs — money already expended that can't be recovered). The $40 million will get spent elsewhere in the city.

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