View / What the LA Lakers ‘firesale’ says about sports investing

There’s always money in the banana stand sports team.

Mark Walter controls a vast financial empire and is under federal investigation for undisclosed related-party transactions between its interlocking parts. Unwinding those transactions will require him to raise billions of dollars.

Most people in that situation would look to sell their most digestible assets, things like loans that Wall Street buys and sells before lunch, and Walter is doing a bit of that.

But the first asset to trade was the Los Angeles Lakers, which Walter is selling to Bob Iger, the former Disney CEO and Los Angeles noble, and Josh Kushner, the venture capitalist who is seemingly everywhere these days. The deal came together in three days, Iger said, but if this is a firesale it sure doesn’t look like one: $12.5 billion for a team that Walter bought for less than a year ago for $10 billion.

That he found the cash he needs in an illiquid asset (a professional sports team) with a limited pool of buyers (billionaires), and not in his vast pile of loans and financial instruments that Wall Street firms would happily absorb, points to a bigger change unfolding in the financial frenzy around sports these days. Fred Wilpon clung to control of the New York Mets for a decade after the Bernie Madoff scandal gutted his finances, tap-dancing on the brink of insolvency until finally selling to Steve Cohen in 2020. Tom Hicks only gave up FC Liverpool and the Texas Rangers after boardroom coup and a bankruptcy court, respectively, forced his hand. Creditors had to pry these teams from their owners, who held emotional, not economic, ties to the teams. Walter found people with more emotional ties to the Lakers and charged them handsomely for it.

This is hardly the end of the billionaire’s troubles, and there’s real doubt in corners of his empire — which still includes Guggenheim, the Los Angeles Dodgers, various insurance companies and asset managers, and AI holding company TWG Global — about whether he’ll be able to keep his titles and control. But his practical play with the Lakers looks smart, and the $2.5 billion markup on the Lakers is 10,000 times what went up in smoke at the Bluths’ banana stand.