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AEG, owner of the Kings and Staples Center, is up for sale

Philip Anschutz puts his AEG sports and entertainment empire on the market in a potential blockbuster.

September 19, 2012|By Walter Hamilton and Roger Vincent, Los Angeles Times
  • Philip Anschutz is shown in 2007.
Philip Anschutz is shown in 2007. (Mel Melcon / Los Angeles…)

The entertainment Goliath behind Staples Center and the Los Angeles Kings has been put up for sale, a move that could reshape the face of sports ownership in Southern California.

The Anschutz Co., run by Denver billionaire Philip Anschutz, announced late Tuesday that it is seeking a buyer for its AEG subsidiary. The sprawling entity owns and manages a wide range of sports and entertainment properties, including the L.A. Live complex, the LA Galaxy professional soccer team, and a worldwide concert-promotion business.

AEG, which also has a minority stake in the Lakers, has been negotiating to build a football stadium in downtown Los Angeles in the hopes of luring a professional team from another city. Those plans are expected to proceed.

The company's financial jewels are its massive holdings of prime real estate and glitzy entertainment venues around the globe, including London's O2 arena and Berlin's O2 World arena. AEG also runs the a highly profitable concert promotion business, the world's second-largest after Live Nation Entertainment Inc.

A sale of AEG would mark one of the biggest sports and entertainment deals on record.

It would follow another recent blockbuster transaction in Southern California, the $2-billion purchase of the Los Angeles Dodgers baseball team by Guggenheim Baseball Management. The Dodgers sold for a world record price, a sum that would probably be eclipsed by AEG's Los Angeles properties alone.

"This will be a massive deal," said Marc Ganis of Sportscorp. Ltd., a Chicago sports consulting firm. "Arguably it'll be the biggest sport-based transaction in history."

The process is in an early stage and no bidders have been identified, said Anschutz Co. President Cannon Harvey. His company is being advised by the Blackstone Group, the New York investment bank that represented Frank McCourt in his sale of the Dodgers to Guggenheim.

"Nobody has been selected as a front-runner," Harvey said. "We're starting the process under Blackstone's leadership to identify potential buyers."

One potential bidder for some or all of AEG is billionaire Patrick Soon-Shiong, according to a person familiar with the situation who was not authorized to speak publicly. Soon-Shiong is a biotechnology entrepreneur who was part of an investment consortium that made a failed attempt to buy the Dodgers.

Soon-Shiong confirmed in a statement late Thursday that he is interested in pursuing a purchase of the company. His representative, Chuck Kenworthy, said: "Dr. Patrick Soon-Shiong is keenly aware that AEG is in play. We have the utmost respect for Phil [Anschutz] and Tim [Leiweke, AEG president and chief executive] and what they have accomplished in entertainment and sports and in revitalizing the downtown community.

"We clearly are interested in furthering this legacy for Los Angeles."

Soon-Shiong is the richest man in Los Angeles with a net worth estimated by Forbes magazine at $7.2 billion last year. The South African-raised doctor and philanthropist founded Abraxis BioScience Inc., a drug developer that he later sold.

Other bidders could include Madison Square Garden Co., which owns the iconic New York sports arena and the Knicks basketball team, sports consultant Ganis said.

The New York company has already pushed westward. This year it paid $23.5 million to buy the Inglewood-based Forum, and it has embarked on a $50-million renovation of the Lakers former home.

AEG also is expected to attract intense interest from private-equity firms, which could purchase the company intact and sell it off in pieces.

"It's a multibillion-dollar deal," said Craig Silvers, a real estate analyst at Bricks & Mortar Capital. "This is a group of trophy assets of the type that don't come along often. There should be quite a bit of interest."

AEG has drawn attention from international investors in the past, said Leiweke.

"Phil has been approached a lot," Leiweke said. "People from all over the world have knocked on his door, including some local folks."

From a business standpoint, the prospective sale comes at a time when interest in AEG properties is very high, analysts said.

The Kings are coming off an improbable Stanley Cup victory. The value of Staples has been helped as the Lakers added several high-profile players following a disappointing year. The eye-popping price tag fetched by the Dodgers lifted the value of prominent sports franchises. And landing a lucrative NFL franchise could significantly boost the value.

The deal would be a capstone of a remarkable business career for Anschutz.

The 72-year-old parlayed his father's oil and gas business into riches in railroads, telecommunications, sports, entertainment and more, turning him into one of America's richest entrepreneurs with a net worth estimated near $7 billion.

In the 1980s, he owned the Rio Grande railroad and later rival Southern Pacific. He also founded Qwest Communications, a Baby Bell telecommunications concern in which he made hundreds of millions of dollars in stock sales.

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