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.
- Madison Bumgarner delivers a shutout as Giants roll past Pirates in NL Wild Card Game 13
- Angels announce ALDS rotation: Jered Weaver in Game 1, Matt Shoemaker for Game 2 2
- The beauty of belief 50
- MLB to test new pace-of-play rules in the Arizona Fall League — including a pitch clock 44
- Playoff Reset: The National League Wild Card Game 15
- Video: Salvador Perez walks off Royals in Wild Card Game 3
- Small ball prevails … in a 9-8 game 25
- Royals complete thrilling comeback to defeat A’s in the American League Wild Card Game 75
- Hunter Pence dropped a bunch of F-bombs in his postgame speech. Good. (116)
- Barry Bonds discovered to be “glassing” — it’s just as bad as you think (90)
- And That Happened: Sunday’s scores and highlights (85)
- Ned Yost on the sixth inning and his bullpen usage: “its just one of those things” (81)
- Previewing the 2014 Playoffs (80)