“Our focus has always been on what we believe is best for the Lakers, the fans who have supported this franchise for generations and the greater Los Angeles community.” - The Buss Children not named Jeanie, who are so mad she sold the team to a snake that they want to make sure he sells the team again.
🎙️ Leading Off
If you’re wondering why Jeanie Buss suing her entire family to ensure she gets to pretend to be the Lakers owner for another 4 years matters to Mark Walter, it’s because Bob Iger really wants to be the one pretending to be owner. And if Iger doesn’t get to wear that hat to the party, then he and Josh Kushner might be way less interested in closing their sale at $12.5b. If you’re wondering why the sale needs to close, and close fast, then keep reading below.
⚾️ Hard In The Paint
(MLB.com)
I spent the weekend noodling on whether Mark Walter is a fraud, a conman, a financial engineer, some combination of everything or a three-time World Series champ. I asked myself, “if policy holders at his life insurers weren’t harmed by his investments, then how illegal could his activities actually be?” It’s painfully obvious now that Walter ran afoul of every rational insurance regulation in order to buy the Dodgers and Lakers. It’s equally obvious that everything is about to get much, much worse.
Walter’s time as owner has been marked by his relative absence from the spotlight. For the head man of a team as successful as the Dodgers, you’d expect a more public presence. If sports teams are trophies, and billionaires chase them, then winning titles is supposed to be the ultimate reward. A reward you parade in front of the fellas at the yacht club. All of Walter’s privacy shattered over the weekend and the forensic accounting has run his boat ashore. Perhaps the reclusiveness was always about keeping the books hidden.
The tidal wave of his problems hasn’t even hit yet. Nick Nemeth, of Mispriced Assets, is one of a handful of reporters that exposed Walter’s issues over the weekend. We’re all acutely familiar with the loan portfolio of related assets that Walter saddled his life insurers with. Nemeth exposed that Walter’s companies collectively loaned more than a billion dollars to the Dodger’s shell company, American Media Productions. As discussed in our last issue, AMP handles the media rights for the Dodgers. What the collective financial community is missing though isn’t that the Dodgers rigged their finances to potentially evade taxes and revenue sharing amongst MLB clubs, it’s that a shell company with over a $1b in liabilities stands to see CASHFLOW SHRINK TO ABSOLUTELY NOTHING IN THE EVENT OF A BASEBALL LOCKOUT.
Do the policy holders at Delaware Life and Clear Spring understand the debt service capabilities of a shell company that collects media payments if and only if baseball games are actually broadcast on TV? I don’t believe they do. In the event of a prolonged labor stoppage, it’s unlikely Charter Communications has to pay the Dodgers for games that aren’t happening. Don’t deliver the games, and Charter doesn’t deliver the check. Don’t deliver the check, and the Dodgers don’t make payments on the loans. The house of cards collapses if baseball isn’t on TV.
The Reds or Twins or Pirates don’t actually need a salary cap to level the playing field. They simply need to holdout long enough for Walter to default on his loans (that he gave himself). Therein lies the problem with related party assets. Walter promised regulators that he’d shore up his insurance company books by the end of the year. The MLB’s current collective bargaining agreement expires December 1st. At this point, Walter has to sell the Dodgers who have over a billion dollars in deferred contracts, and a billion dollars in debt on their media company’s books, or face potential criminal insurance fraud charges. NOT A GREAT CHRISTMAS AT THE WALTER HOUSE.
There is no “sell the insurance company with a book of trash loans to save the Dodgers.” And there is no “keep the Dodgers by offloading the bad loans.” No one wants those. It’s been whispered that Apollo or another Esteemed Private Equity firm will step in with a rescue package, but who cares. It’s the bottom of the ninth and Walter is blowing the save.
📻 Over The Air
📡 JumboTron: Wednesday’s Must Watch
All times PST
Yankees vs Orioles, 3:35pm Prime
Colorado Rapids vs LAFC, 6:30pm Apple TV
Vancouver vs Houston, 7:30pm Apple TV
☎️ The Phone Line
Best thing on the timeline today:
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Walkup Song
Walkup Song
Clay Walker
For what Mark Walter tried to do:
Spotify