Apr 10, 2012, 12:03 PM EST
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.
- Francisco Rodriguez re-signs with the Brewers 8
- If addiction is an illness — and it is — Josh Hamilton shouldn’t be suspended 267
- Pirates open to massive extension for Andrew McCutchen 16
- Report: Josh Hamilton had a relapse this offseason that “involved at least cocaine” 85
- Yankees don’t plan on having to pay A-Rod’s $30 million in home run milestone bonuses 49
- San Francisco — and all of California — will consider a smokeless tobacco ban that includes MLB parks 131
- Rob Manfred says a return to a 154-game season could happen one day 66
- Report: The Yankees were “fuming” at how A-Rod handled his early arrival to spring training 114
- If addiction is an illness — and it is — Josh Hamilton shouldn’t be suspended (267)
- San Francisco — and all of California — will consider a smokeless tobacco ban that includes MLB parks (131)
- Report: The Yankees were “fuming” at how A-Rod handled his early arrival to spring training (114)
- Cuban prospect Yoan Moncada reportedly signs with the Red Sox for $31.5 million, plus $31.5 million in penalties (106)
- Gregg Zaun says young players should be physically abused and hazed by veterans. So they can learn respect. (105)