Kukla's Korner

Kukla's Korner Hockey

Anschutz Entertainment Group puts Kings, Staples Center up for sale

From the Los Angeles Times' Walter Hamilton:

The company that owns the Staples Center and the Los Angeles Kings announced late Tuesday it is being put up for sale, sparking a potential billion-dollar bidding war for some of the sports and entertainment world's glitziest properties.

The Anschutz Co., run by Denver billionaire Philip Anschutz, said it is seeking a buyer for its AEG subsidiary, which also has stakes in the L.A. Live entertainment venue in downtown Los Angeles, the Los Angeles Kings professional hockey team and the Los Angeles Galaxy pro soccer team.

It's unclear how far along the process is or whether any likely buyers have emerged.

If a deal goes through, it would mark the second blockbuster sports transaction in Southern California this year, following the $2.15-billion purchase of the Los Angeles Dodgers baseball team by Guggenheim Baseball Management. That was a world-record price for a sports franchise.

“Given the success of the management team and employees in establishing AEG as one of the premier real estate development, live sports and entertainment platforms in the world, as well as the value AEG has created with the strategic assets that comprise its platform, this is an appropriate time to transition AEG to a new qualified owner," said Cannon Y. Harvey, Anschutz Co. president.

The AEG unit is pursuing plans to build a professional football stadium next to the Staples Center in hopes that it would serve as the future home of an NFL team.

Filed in: | KK Hockey | Permalink
 

Comments

Avatar

Ah, the joys of being so wise and sage-like, eh JJ?

Why is Los Angeles’ ownership group so happy to own such a crappy franchise in that area?

Indeed.

Posted by HockeyinHD on 09/19/12 at 07:22 AM ET

J.J. from Kansas's avatar

Anschutz is getting out of the sports arena racket because he recognizes that it’s not going to continue to be a good model to rip off municipalities while hiding profits anymore.

Posted by J.J. from Kansas on 09/19/12 at 08:03 AM ET

J.J. from Kansas's avatar

It’s a bit dishonest to say that the Kings and Staples Center are up for sale.  The entirety of AEG is up for sale.

Sure, the roughly $240M Kings are part of that sale, but this is expected to be a multi-billion dollar sale. To classify it as though Anschutz is just getting out of the hockey business is to say that a guy put his closet up for sale in preparation for moving to a new house. Oh, and the rest of the current house is up for sale too, I guess.

Posted by J.J. from Kansas on 09/19/12 at 08:41 AM ET

Avatar

Anschutz is getting out of the sports arena racket because he recognizes that it’s not going to continue to be a good model to rip off municipalities while hiding profits anymore.

Of course.  That must be it.

Sure, the roughly $240M Kings are part of that sale, but this is expected to be a multi-billion dollar sale. To classify it as though Anschutz is just getting out of the hockey business is to say that a guy put his closet up for sale in preparation for moving to a new house.

And as everyone knows, if Anschultz had wanted to actually stay in the hockey business while still getting out of the sports venue business, why, such a financial maneuver is simply unthinkable.

Wait, it’s not unthinkable?  Huh.  Makes this almost seem like a move to get out of a few different less than desireable business ventures all at once then, no?

And the Kings are just now coming off a Cup win.  Odd timing, that.

Posted by HockeyinHD on 09/19/12 at 09:32 AM ET

J.J. from Kansas's avatar

And as everyone knows, if Anschultz had wanted to actually stay in the hockey business while still getting out of the sports venue business, why, such a financial maneuver is simply unthinkable.

If he were in such a hurry to get rid of the Kings, he would have simply directed AEG to sell them. Seems odd that he’d sell a multi-billion dollar corporation to wash his hands of a piece that makes up such a small portion of the total equity.

Posted by J.J. from Kansas on 09/19/12 at 09:52 AM ET

Avatar

It’s a probable likelyhood that Anschultz is selling off his assets so that he can be a major player in bringing a football team to LA and the corresponding stadium that’s slated to be constructed next to the Staples center. It makes sense now that the Kings are coming off a Stanley Cup. Their at their premium price.

Posted by Frosty on 09/19/12 at 09:55 AM ET

Baroque's avatar

It’s a probable likelyhood that Anschultz is selling off his assets so that he can be a major player in bringing a football team to LA and the corresponding stadium that’s slated to be constructed next to the Staples center. It makes sense now that the Kings are coming off a Stanley Cup. Their at their premium price.

Posted by Frosty on 09/19/12 at 10:55 AM ET

That’s what I wondered as well. A football team would be far more profitable than a hockey team, and he wouldn’t have to cope with the headache of frequent labor stoppages. Just watch the money roll in.

May as well get out while the hockey team is at its maximum value and the league is at a low point also. Selling the hockey team alone would probably not bring in much but selling it as a piece of the entire business enables a buyer to overlook the lockout because they are buying more than just a sports interest in a league that might not even play until next fall.

Posted by Baroque from Michigan on 09/19/12 at 10:21 AM ET

SYF's avatar

I think it was Forbes that ranked NFL franchises as being the most valuable.  I recall that it was something like 15 of the top 20 most valuable sports franchises in the world were all NFL in spite of the fact that it’s only played in the U.S and despite the even larger popularity of soccer (football, futbol, etc.).  The top of the list are the Washington Redskins and they’ve accomplished squat since their last Super Bowl.  I think it was the Maple Leafs and the Rangers tied for most valuable NHL franchises, but they don’t show up till like late Twenties on the Forbes list.

Agree with Frosty on that point as well.

Posted by SYF from Alana Blanchard's Bikinis and Surfboards on 09/19/12 at 11:21 AM ET

Avatar

If he were in such a hurry to get rid of the Kings

Again, you seem to be struggling to properly interpret the written word.  Nobody said he was in a hurry to get rid of the Kings.  What you said was “Why is Los Angeles’ ownership group so happy to own such a crappy franchise in that area?” 

That comment appears to dovetail rather nicely with them, in fact, not being so happy to own the Kings.  As they are allegedly trying to sell them… and not sell the team by itself (which would likely be difficult to manage) but by rolling the Kings up in a multi-billion dollar deal to try and get them out the door ASAP.

Also, Anschultz paid 113 mil for the team back in 1995.  Forbes values the club at 232 million.  Even if he could get the 232 for the team on its own (highly doubtful), based on purchase price you’re looking at well less than a 5% yearly ROI on that initial investment… totally leaving out the issue of how much the team may or may not have run in the red every year.

Anschultz could have made more substantially more money by just buying 113 million dollars in T-bills, which sat at 6-7+ percent through 2007 or so.

 

Posted by HockeyinHD on 09/19/12 at 03:55 PM ET

Avatar

It makes sense now that the Kings are coming off a Stanley Cup. Their at their premium price.

I think the Kings are a throw in that’s wholly irrelevant to the larger deal at play, namely the Staples Center.  Heck, based on the numbers if the inclusion of the Kings has any net effect on the price of this AEG unit it’s a negative one.

Up until people started Qualitatively Easing the value out of the dollar you could get 4-5% sending your money to a stinking bank.

Posted by HockeyinHD on 09/19/12 at 03:59 PM ET

J.J. from Kansas's avatar

That comment appears to dovetail rather nicely with them, in fact, not being so happy to own the Kings.  As they are allegedly trying to sell them… and not sell the team by itself (which would likely be difficult to manage) but by rolling the Kings up in a multi-billion dollar deal to try and get them out the door ASAP.

Except the owner of the Kings isn’t selling the Kings. AEG is still going to own the Kings.  The owner of the owner is changing hands. 

Yes, gosh though, Anschutz’s investment hasn’t grown as much as it would have if he had devalued the T-Bills market 17 years ago and that hadn’t had an effect on it. Things used to be different in the 90s and they’re not now. It’s the Kings fault!

Posted by J.J. from Kansas on 09/19/12 at 04:20 PM ET

Avatar

Except the owner of the Kings isn’t selling the Kings. AEG is still going to own the Kings.  The owner of the owner is changing hands. 

You don’t appear to be very up to date on how these guys structure their business units, JJ.  What routinely happens is that assets are spun into or spun out of business groups, almost interchangeably as long as the assets are under the same general ownership umbrella.  There is some accounting fu that needs to be performed as far as leveraged debt or depreciation or other miscellaneous long term liabilities go, but asset re-organization is a whole big deal at the corporate level.

In short, yes, the owner of the Kings is selling the Kings.  The owner of the Staples center is selling that, and the owner of whatever that other team was is selling them to.  In real terms it’s the same party executing the sale, but instead of just selling one item he’s selling multiple assets all under one pre-organized business unit.

IMO, it’s to speed up the sale process.  If Anschultz were selling the Kings or that soccer club or whatnot individually from the Staples Center it would likely take much, much much longer to find a qualified buyer at anywhere near a doable price.

When he rolls them up with an incredibly lucrative Staples Center venue, however, he’s much more likely to be able to move those lesser assets sooner as side-panel throw ins.

Although what this kind of transaction almost certainly implies is that a very much non-hockey focused ownership group/individual will be assuming ownership of the Kings, which strikes me as an outcome that bodes less than well for that franchise.

Either the Kings will end up with an absentee owner, or one who will just flip the team around ASAP.

Yes, gosh though, Anschutz’s investment hasn’t grown as much as it would have if he had devalued the T-Bills market 17 years ago and that hadn’t had an effect on it. Things used to be different in the 90s and they’re not now. It’s the Kings fault!

Did you try to type that in Swedish and then run it through Google translator or something?  It’s hardly decipherable.

My point, since it seems to have escaped you, is that the NHL in this market that is both huge and has had an NHL team for 45 years was such a shoddy investment a guy with real money is better off buying paper than an NHL franchise.

Which, it should be obvious but I will explain anyway, ties back into the basic idea of market weakness in non-traditional hockey areas I’ve mentioned previous but which you’ve tried to pretend doesn’t exist.

Posted by HockeyinHD on 09/19/12 at 05:33 PM ET

J.J. from Kansas's avatar

You don’t appear to be very up to date on how these guys structure their business units

That’s an odd charge to assume based on what I said. Anschutz group is selling AEG, who owns the Kings. You seem to have difficulty thinking of the big picture.

My point, since it seems to have escaped you, is that the NHL in this market that is both huge and has had an NHL team for 45 years was such a shoddy investment a guy with real money is better off buying paper than an NHL franchise.

Shoddy does not mean that; please go back to the traditional means of insulting my intelligence; it’s much less-dumb of you.

Which, it should be obvious but I will explain anyway, ties back into the basic idea of market weakness in non-traditional hockey areas I’ve mentioned previous but which you’ve tried to pretend doesn’t exist.

That was a long time to wait to get to the strawman, but you finally made it. Congrats.

Posted by J.J. from Kansas on 09/19/12 at 05:53 PM ET

Avatar

That’s an odd charge to assume based on what I said. Anschutz group is selling AEG, who owns the Kings. You seem to have difficulty thinking of the big picture.

Right.  So if Anschultz doesn’t own AEG, who does?

That’s the point.  AEG is a collection of various assets grouped together into a business unit.  The owner of said unit, Anshultz, is selling it.

IMO he’s rolling up the Hockey team and the Soccer team with the Staples Center because if he tried to sell those pieces individually he’d be holding the sports teams for months and months longer than he would if he just sold them all off as a unit.

Which is likely why those assets were rolled up together years ago in the first place.

Shoddy does not mean that; please go back to the traditional means of insulting my intelligence; it’s much less-dumb of you.

Good lord.  You’ve now fallen to not only trying to nit-pick the usage of words, but to then fail to even do that correctly?

Yikes.  ‘Hastily or poorly done’ is a definition of shoddy when used as an adjective.  So my sentence could have read ‘My point, since it seems to have escaped you, is that the NHL in this market that is both huge and has had an NHL team for 45 years was such a poorly done investment a guy with real money is better off buying paper than an NHL franchise.’

And, oh look, that definition fits perfectly well there.

That was a long time to wait to get to the strawman, but you finally made it. Congrats.

What strawman, exactly?  Your position is that a team should be in a non-traditional hockey market for well longer than 15-20 years before financial success should be expected.  I’ve demonstrated the Kings, having been in a humongous but still non-traditional market for 45 years now, are such a shoddy (!!!) investment that basic T-Bills are substantially better.  The sale of the team coming off a Cup supports that assessment.

Did you have something substantive to say to address any of these points, or are you just going to refer to your list of internet messageboard mad-libs for advice on future posts?  If you don’t have anything serious to say though, there’s nothing wrong with that.  IMO the issue has been fairly definitively settled.

Posted by HockeyinHD on 09/20/12 at 02:25 PM ET

J.J. from Kansas's avatar

IMO he’s rolling up the Hockey team and the Soccer team with the Staples Center because if he tried to sell those pieces individually he’d be holding the sports teams for months and months longer than he would if he just sold them all off as a unit.

It’s not just a hockey team and a soccer team and the Staples Center.  AEG owns minority share in the Lakers. Is he tired of a crappy basketball market in LA too? Is everything that’s good about AEG just window dressing to make up for what you’re saying is such a horrible hockey team to own? Considering how small a percentage of AEG the Kings make up, I think it’s dishonest to place so much importance on them in this discussion.

And, oh look, that definition fits perfectly well there.

I stand corrected. It’s not that you have a problem with synonyms, it’s that you have a problem overstating things and sucking all the logic out in the process.

It’s also a little funny that you stopped talking about what T-Bills were doing before the housing market crashed and interest rates corrected themselves. Running the hypothetical, that $113M in T-Bills if sold at the end of August would have been worth about $233M.

Unfortunately, since 1995, neither T-Bills nor the Kings have grown as much as owners of both of those things wish they would have. They’ve both outgrown inflation and both would have created nice income streams to be used as reinvestment vehicles for their owners.

But you seem to be categorizing it as a complete market failure and that the Kings have become so antithetical to success that Anschutz is packaging a whole slew of great assets just to make sure he can be free and clear of them.

I never said the Kings are a great market. Hell, I never denied they were a weak market. The disconnect is that I don’t say “weak market” and suggest running for the hills as an answer. Pittsburgh was a weak market for a long time. Detroit spent a long time as a weak market. 2/3rds of teams in the New York Metropolitan area are suffering from symptoms of a weak market. 

 

Posted by J.J. from Kansas on 09/20/12 at 02:52 PM ET

Add a Comment

Please limit embedded image or media size to 575 pixels wide.

Add your own avatar by joining Kukla's Korner, or logging in and uploading one in your member control panel.

Captchas bug you? Join KK or log in and you won't have to bother.

Smileys

Notify me of follow-up comments?

Feed

Most Recent Blog Posts

About Kukla's Korner Hockey

Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

Email Paul anytime at pk@kuklaskorner.com