Apr 10, 2012, 12:03 PM EDT
Over at the New York Times’ Deal Book blog, Andrew Ross Sorkin notes that the sale of the Dodgers to the group led by Magic Johnson — but really controlled by Guggenheim Partners’ Mark Walter — is being financed with insurance policy dough:
In addition to their own cash, Mr. Walter plans to use money from Guggenheim subsidiaries that are insurance companies — some state-regulated — to pay for a big chunk of his purchase of the Dodgers. Guggenheim controls Guggenheim Life, a life insurer, and Security Benefit, which manages some $30 billion, among others.
Using insurance money — which is typically supposed to be invested in simple, safe assets — to buy a baseball team, the ultimate toy for the ultrarich, seems like a lawsuit waiting to happen.
Sorkin explains that this is especially problematic given what seemed to be a significant overpay for the team and given that Walter has said that he’s not too concerned about immediate profitability. What of the fiduciary duties to the policy holders, he wonders.
While Sorkin seems pretty alarmed by this, he later makes mention of the fact that long-term holdings are not unheard of for insurance-backed investments. And this is where I think the alarm should stop. Remember: the Dodgers nearly quintupled in value during the McCourt years, despite historic mismanagement by Frank McCourt.
While I appreciate that there is a bubble element to elevating franchise values in any given short period of time, sports teams have proven to be a safer investment than just about anything over the past, well, forever. It’s like a license to print money.
- Mariners prospect Victor Sanchez has died 7
- 2015 Preview: Chicago White Sox 15
- Did David Ortiz admit to more than he realized with his Players’ Tribune editorial? 81
- 2015 Preview: Atlanta Braves 15
- David Ortiz: “Nobody in MLB history has been tested for PEDs more than me” 115
- 2015 Preview: Chicago Cubs 14
- Unsigned 2014 No. 1 overall pick Brady Aiken undergoes Tommy John surgery 61
- 2015 Preview: Seattle Mariners 15
- David Ortiz: “Nobody in MLB history has been tested for PEDs more than me” (117)
- Ex-Cardinals outfielder Curt Ford was assaulted in St. Louis and told to “go back to Ferguson” (116)
- College baseball player cut after making offensive tweet about Mo’ne Davis (115)
- Rob Manfred says it would be hard to reinstate Pete Rose in a limited way (89)
- Mo’ne Davis says college ballplayer who wrote an offensive tweet about her deserves a second chance (88)