KPCC's business analyst Mark Lacter talks about how businesses in Los Angeles County are holding up; he also talks about what the latest word is on local bidders to buy the Dodgers.
Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, we often talk about money – often those who don’t have it – but in LA, some companies are doing well…
Mark Lacter: Just goes to show that the economy does not move in lockstep. The L.A. Business Journal has published its list of fastest growing companies in Los Angeles County, and it’s an interesting insight into the types of businesses that have done well, despite the recession and a weak recovery. This year the fastest grower is a Pasadena advertising and marketing company called Ratespecial Interactive; its growth rate from 2008 to 2010 (remember that’s during the throes of the recession) was more than seven thousand two hundred percent. Now keep in mind that one reason for the high percentage is that the actual revenues remain very low – from $200,000 in 2008 to $13 million in 2010.
Julian: So this is still very much a small business.
Lacter: Yeah, but it’s still pretty impressive – the company provides online advertising services to financial companies (the credit agency Experian is a client, as an example). Next on the list, with a growth rate of more than sixteen hundred percent, is an L.A. company called IT Source Corporation – they do computer support work. And number three is a website in Torrance called Swagbucks, which pays its users to watch videos and play games that are sponsored by advertisers. The users receive virtual dollars; advertisers then pay the company for the exposure (and those advertisers include Target, Gap and Wal-Mart). Its two-year growth rate was almost nine hundred percent.
Julian: They’re all tech related companies.
Lacter: That’s right – actually seven of the 10 fastest growing companies have some connection with the Internet or with computers. One other thing: They are primarily companies that provide a service, as opposed to making some sort of widget. It’s another indication of how these new business models are being created with very little fanfare. And Steve, don’t be surprised is many of them either will be taken over by the Googles or the Facebooks over the next few years.
Julian: Another local firm, the Los Angeles Dodgers… any word on local bidders to buy the team?
Lacter: Mayor Villaraigosa has made a big pitch to the Commissioner of Baseball, Bud Selig, that the new owner be from L.A. – obviously a reaction to the not-so-successful outgoing owner Frank McCourt. But Selig will have less of a say than usual in determining a winning bidder because the league agreed to allow McCourt’s bankers to coordinate the auction, and because the Dodgers have filed Chapter 11 bankruptcy protection. So a bankruptcy court judge will also have a say in who gets the team. Of course, McCourt will be mostly interested in is who offers the highest price – and that person could be located in L.A. or Timbuktu.
Julian: Who’s on the list of potential bidders now?
Lacter: Well, the Wall Street Journal reported that Steven Cohen, a very prominent hedge fund manager and a billionaire several times over, is preparing a bid that’s likely to be competitive. Cohen is a somewhat controversial guy – his firm has come up repeatedly in the federal government’s investigation into insider trading. Now, there’s been no accusation of wrongdoing against Cohen or his firm, but ordinarily even a peripheral connection to a case like this would get Selig nervous. But again, it’s not really his call.
Julian: Ron Burkle’s name keeps popping up –
Lacter: - right, he’s the billionaire investor – and just last week came word that Rick Caruso, the L.A. real estate developer, was also considering a bid. There’s also Peter O’Malley, whose family ran the Dodgers for almost half a century, and Fred Claire, formerly the team’s general manager, though their efforts are considered longshots. You also hear rumblings about Joe Torre being approached by the possible bidders – not as an investor but some sort of front man.
Lacter: At least several months. The interested parties are first receiving financial information about the team, and the first round of bidding isn’t even expected until the first of the year. That will lead to final offers, and they hope to have a decision by April, start of the new season. Maybe, maybe not.
Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.