As most sports fans are now aware, an agreement has been reached for the sale of the Los Angeles Dodgers to a group that includes Earvin "Magic" Johnson, Stan Kasten, Mark Walter, Peter Guber, Todd Boehly and Bobby Patton.
Dodgers fans everywhere are celebrating, and for good reason. Not only will Frank McCourt finally be out of the picture (mostly), but one of the most beloved Los Angeles sports figures of all time is now the front of the new ownership group. What could be better than one of your childhood heroes buying a sports team that you love? This has been the initial reaction from Dodgers fans, and has also been the focus of media, whose overwhelming highlight of the story has been something along the lines of "Magic Johnson is buying the Dodgers." However, I think its important to realize that Magic is more of a figurehead of this group, so lets take a look at the rest of the partners and the few details we know about the ownership structure.
First off, lets discuss a little of what we know about this new ownership group, Guggenheim Baseball Management LLC. We know from reports that Mark Walter is the controlling partner of this group and that "Mr. Walter is making a significant personal contribution to the purchase price, with Guggenheim Partners, of which he is chief executive, playing a substantial role in financial contribution." Also, although it was reported that the bid is a "100% cash offer", it has also been reported that, "there was some concern among MLB officials about the financing of the Walter bid because some of the money was coming from insurance companies that are owned by Guggenheim."
Emphasis mine. What this likely means is that although Mr. Walters and the other noted partners are contributing some capital into the deal, it seems likely that at least 75% of the equity is coming from either Guggenheim Partners' balance sheet or as an investment through its insurance arms. These are active investments from which they will be expecting yearly returns on their equity and it is likely it is structured as Preferred Equity (which is basically a form of debt). What this says to me is that although I'm sure they will still spend more freely, this is not simply a purchase by a group of 5 wealthy guys who want to own a sports team and will spend money to win at all costs.
Fortunately, the new TV deal should provide the revenue they need to make good on these investments, and they could even use an upfront lump-sum payout to pay down some of the insurance companies' contributions which would free up more revenue for team operations.
Now lets take a brief look at the guys (other than Magic, who we all know and love) who put together this deal and will be running the team for the foreseeable future:
Mark Walter will be the controlling partner of the ownership group. He lives in Chicago and is the CEO of Guggenheim Partners, a privately held (thank god), diversified financial services firm that provides asset management, investment banking and capital markets services, insurance, institutional finance and investment advisory solutions to institutions, governments and agencies, corporations, investment advisors, family offices and individuals. They have more than $125 Billion in assets under management (although the majority of that is simply client's money). They are headquartered in New York and Chicago and have over 1,700 employees worldwide.
Below is Mr. Walter's bio from the Guggenheim Partners website:
Mr. Walter is Chief Executive Officer and a member of the Board and Executive Committee of Guggenheim Capital, LLC. Mr. Walter is also one of the founders of the Liberty Hampshire Company, LLC. Mr. Walter serves as a trustee or director of several organizations including the Solomon R. Guggenheim Foundation and Security Benefit Corporation. Mr. Walter grew up in Iowa and received a B.S. from Creighton University and a J.D. from Northwestern University.
Kasten is likely a small partner, but will also be Team President and will run the day-to-day operations of the Dodgers. Along with whoever becomes the GM, he will be the guy to either embrace or chastise with respect to personnel decisions. Many of you reading this probably already know all about Stan Kasten, but here is a brief bio for those that are not as familiar.
In 1979 at age 27, he became the General Manager of the Atlanta Hawks and held that position until 1990. In 1986, he was also appointed Team President of both the Hawks and the Atlanta Braves. From 1987 - 2003 the Braves won more games than any other team in baseball. He also later became the president of the Atlanta Thrashers (NHL) in 1999. He stepped down from all of these positions in 2003. He then became President of the Washington Nationals in 2006 and held that role until the end of the 2010 baseball season.
Mr. Guber will be a minority investor and there are reports that he will work to help the team in marketing, fan experience and community affairs. Mr. Guber is a long-time movie producer and is currently Chairman and CEO of Mandalay Entertainment which includes Mandalay Sports Entertainment which owns and operates numerous minor league baseball teams. Mr. Guber and Magic Johnson are actually both partners in the ownership of the Dayton Dragons. Guber is also a minority owner of the Golden State Warriors.
Although details at this point are limited, my guess is that Mr. Boehly is a minority investor, who will also work alongside Mark Walter in overseeing the team's financial position. This would be similar to his current role as President of Guggenheim Partners.
Below is his bio from Guggenheim Partners website:
Mr. Boehly joined Guggenheim Partners in 2001 to establish and lead the corporate credit business for the firm which has become a globally leading credit investing operation. Prior to joining Guggenheim, Mr. Boehly focused on special situations and high yield investments as a vice president at Whitney & Co. where he also initiated the firm’s bank loan investing business. Prior to his tenure at Whitney, Mr. Boehly concentrated on leveraged finance at Credit Suisse First Boston. Mr. Boehly received his BBA from the College of William & Mary and spent a year studying at the London School of Economics.
I don't really know much about Mr. Patton other than that it has been reported that he operates oil and gas properties among his various investments. My guess is that he invests a lot of capital with Guggenheim and got involved in this process through them.