Philip Anschutz
Philip Anschutz is shown in 2007. (Mel Melcon / Los Angeles Times)
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By Walter Hamilton and Roger Vincent, Los Angeles Times
September 19, 2012, 12:04 a.m.
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.
He turned his interest to sports and entertainment in the 1990s. His developments in Los Angeles helped reinvigorate an area of downtown at a time when few others would gamble on a dilapidated corner of the city.
"He built a colossus out of nothing," Ganis said. "He changed the landscape of Los Angeles sports and entertainment for generations to come."
Selling AEG, which is now 15 years old, would be consistent with Anschutz's style. The billionaire's approach to business calls for starting or acquiring a company, building it up and then selling it, said Anschutz executive Harvey.
"We have thought about this for a long time and discussed it with current management," he said. "They agreed this is our long-term goal."
AEG's current leaders said they would have to be part of any deal. Leiweke said he and his management team recently renewed their contracts, which would require any new owner to keep them on or buy them out.
The politically connected Leiweke is considered the driving force behind AEG's success.
Leiweke said he intends to remain part of the company after the sale.
AEG's most prominent current deal revolves around its plan to create Farmers Field, a cutting-edge football stadium intended to draw a team to permanently replace the Rams, and later the Raiders, both of which fled to other cities.
Leiweke said he is "extremely confident" that Farmers Field will be approved by the city and that AEG will survive any legal challenges intended to thwart its construction.
The City Council is due to vote Sept. 28 on a set of financial agreements for the 72,000-seat stadium and a related $315-million renovation of the adjacent convention center.
"We want to be in a position to be ready to go" when NFL owners gather for their annual meeting next March, he said.
Harvey declined to speculate on whether Phil Anschutz might end up in an ownership position of a Los Angeles football team.
"Our intention is to sell all of the stock of AEG," Harvey said. "Questions of who might or might not be involved in football in some way in the future should wait."