(Photo by Harry How/Getty Images)
Leave it to the Los Angeles Lakers to make noise in the NBA playoffs despite sitting on the sidelines for three rounds. The team’s long-time owners, the Buss family, announced Wednesday, in the middle of the NBA Finals, that they’ve agreed to sell a majority stake to Mark Walter, who already owns another L.A. sporting institution, MLB’s Dodgers.
Make no mistake though. The decision to sell control of the team after 46 years, as reported by ESPN, will position the Lakers to compete in a fast-changing environment that affects both the teams and the media companies carrying their games.
The eye-popping valuation far outstrips even that of last year’s big sale, of the Boston Celtics for $6.1 billion. That deal was announced almost immediately after that team won its record 18th championship.
The Lakers’ sale price makes it the world’s most valuable sports franchise, at least for now, though that could change as private equity continues to move into sports ownership. Even the NFL now allows private equity to take minority stakes. Other major sports leagues have long allowed even majority ownership by private equity, which has helped drive up the value of franchises, and increase turnover in ownership.
For the generation of family owners now selling to private equity, especially in bigger markets, the returns on their long-ago investments are proving massive. Jerry Buss bought the Lakers from Jack Kent Cooke in 1979, for just $67.5 million, a price that also included the Los Angeles Kings NHL team and the Inglewood, Calif., venue where both teams then played, the Los Angeles Forum.
The Lakers and Celtics are the league’s two winningest franchises, winning 35 of the NBA’s 79 championships. Now the two marquee teams are in the hands of prominent private-equity investors backed by tens of billions of dollars, or more.
Walter is CEO of Guggenheim Partners, which had $349 billion in assets under management and assets under supervision, according to filings. Beyond the Dodgers, Walter already has a stake in the Los Angeles Sparks WNBA team, Cadillac’s Formula 1 team, the Billie Jean Cup, and the Professional Women’s Hockey League.
Such deep pockets may be necessary for powerhouse teams to continue to occupy their customary positions at the top of the NBA food chain ,while featuring the big-name stars who attract fans, national TV interest, luxury box sales, corporate sponsorships, and more.
They’ll need the deeper pockets because of the league’s two-year-old collective bargaining agreement, which is designed to make it harder to keep teams of superstars together, while opening opportunities for smaller-market franchises.
The CBA includes punitive provisions that make it massively expensive and constraining to maintain a veteran roster of top players, as the Celtics and Lakers have had for years. Meanwhile, the two teams in this year’s Finals – Indianapolis and Oklahoma City – are from small markets, and feature phalanxes of low-cost younger players and emerging stars. The young, deep, and largely unknown Pacers and Thunder are considered blueprints for teams built to succeed profitably under the new CBA.
Before announcing the Celtics’ sale to a consortium led by Symphony Technology Group’s Bill Chisholm, previous owner Wyc Grousbeck renewed contracts with many of the Celtics’s core stars, at prices well above the CBA’s so-called “second apron.”
Even under new ownership, however, that expensive lineup may not survive the second apron, especially after the team’s best player, Jayson Tatum, ruptured an Achilles tendon during the playoffs.
The NBA signed a lucrative new set of TV contracts last year that sidelined long-term partner TNT (owned by Warner Bros. Discovery), for deals with NBC and Amazon. Disney-owned ESPN and ABC continue to control the largest chunk of the national rights.
That should give all the league’s franchises a big infusion of new cash, at a time when one of their other traditional big checks, local rights deals with regional sports networks, are collapsing amid cord-cutting.
The question before the new Celtics and Laker owners will be whether they’re willing to keep paying as much as $50 million a year to, say, 40-year-old LeBron James or a recovering Tatum, who’ll miss most of next season in rehab.
Their fans will expect to see notable talent surrounding the Lakers’ younger superstar, Luka Doncic, or the Celts’ Jalen Brown. Now, those resources will be available, should Walter and Chisholm decide to spend some of their ample cash. And the national fans of pro basketball will likely expect old standbys to continue to matter, no matter the cost.
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