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Beginning to unravel the AEG / L.A. Galaxy news

Sep 19, 2012, 11:55 AM EDT

AEG

While the rest of the sporty world buzzes about high-profile properties up for sale in the Staples Center and L.A. Live, the soccer world has commenced to being curious (and quite possibly concerned) about what this news means for soccer.

Because Major League Soccer, the sport’s most visible domestic property, may not even exist today without the financial footing provided a few years back by the famously reclusive Phil Anschutz.

The Anschutz Co., run by the Denver-based billionaire, announced its intentions yesterday to offload AEG, which owns and operates the Staples Center, L.A. Live, a portion of the L.A. Kings as well as the Galaxy and Home Depot Center.

There is already speculation that L.A. billionaire Patrick Soon-Shiong could put together a bid for the properties.

It will take time to unravel all the potential implication for MLS – but implications surely there will be.

Anschutz once owned five MLS teams, so he and AEG clearly did their part in pushing the boulder up a very big hill –  at a time when few others were willing to put their shoulders into it.

Beyond its substantial financial stake, AEG and its well-heeled management group have always been out front in efforts to create more aggressive league growth. The so-called Beckham Rule (the league’s Designate Player mechanism) was an outgrowth of AEG’s efforts to lure David Beckham through the middle of the last decade.

Later, the Galaxy was first in line to exploit the league’s subsequent expansions of those DP guidelines, which now permit three salary-exempt marquee men.

So this has the potential to significantly reshape the board meetings that render the league’s major decisions and provide its essential directions.

Here’s what MLS commissioner Don Garber told SI.com’s Grant Wahl last November, just before the Galaxy won MLS Cup 2011 at the Home Depot Center:

Phil is our George Halas. Without a doubt MLS and sport of soccer in America is not what it is today without the neverending commitment and belief that Phil Anschutz has in us and the sport. …

It sort of warms my heart to have a weekend where he can in his own way cherish all that he has contributed. The Home Depot Center set the stage for soccer stadiums in our country. The L.A. Galaxy as a global brand came out of his and Tim Leiweke’s vision for creating a premier soccer team in America.

He doesn’t think about legacies, he doesn’t look for attention. He’s not doing any of this for a pat on the back. But every soccer fan in North America, if they ever happen to have the chance to meet him should walk over to him and say thank you.”

  1. wesbadia - Sep 19, 2012 at 1:51 PM

    I was a bit concerned when I originally heard about this, but the more I read about the offer and about Anschultz himself, the more I think that this is a decision not done in desperation or from a forced hand, but because it’s simply a business move.

    Phil Anschultz is a conglomerate. He does not own just sports and entertainment groups. He dabbles in a lot. The New Yorker ran a piece last year about the Anschultz dynasty. It’s long, but it’s rather revealing of the man himself and the empire he’s built.

    http://www.newyorker.com/reporting/2012/01/16/120116fa_fact_bruck

    Anything from energy and oil to entertainment to infrastructure to museums to newspapers to artwork. The man is an investor and entrepreneur. He sees the potential of things to be great, and so he gets involved and makes them great. When he’s accomplished that, he cashes in on his expenditures by selling them for millions or (in this case) billions of dollars. That’s his nature.

    The other thing that calmed my concern is the fact that he’s selling ALL of AEG, not pieces of it. AEG has become a huge success over the last few years. And this is apparent in the last year with its two MLS teams in the Cup Final, and the LA Kings winning the Stanley Cup. Add to that the perennial success of the Lakers (part owner) and the fact that the Staples Center (where the Kings play) is the second largest concert promoter in the country. LiveNation could also be touted as a successful venture.

    The way I see it, AEG (ie, the entertainment wing of the Anschultz Empire) has run its course and Anschultz is looking to reap what he’s sowed. There is absolutely no reason for a business man and investor to grow long in the tooth by remaining involved in an organization that is stable enough to exist on its own. He has built something worthy of selling and is now content with his mark forever being known in those circles.

    What should concern fans more than the selling is the buying. Tim Leiweke is the reason these teams have done well. If the new owner realizes this, then Galaxy fans need not worry, nor the MLS fans at large. But if someone is going to come in and think they’re going to remake the company, then look out. Like I said, AEG is a solid company. It doesn’t need an overhaul, it needs consistent support to allow it to operate properly. Leaving Leiweke at the helm would be a good start. But I can’t see a new owner supply as much cash to keep high caliber players like Beckham and Keene in the HDC locker room. A bit more spartan of a budget may be in the works.

    • CaliforniaRedskins - Sep 19, 2012 at 3:03 PM

      LOoking at this from a buyer’s perspective. Why would you want to own AEG in its entirety? Wouldn’t it make sense to buy it, keep what you want, and get rid of what you don’t. In that scenario, I would think that the Galaxy are the odd man out here..going only by proximity. That being said, if I were a foreign investor looking to buy into MLS the Galaxy would have to be on the top of your list without question.

      • wesbadia - Sep 19, 2012 at 3:33 PM

        The way I see it as a buyer, if I were a committed LA entrepreneur looking to get into an industry (American soccer) that is on the rise but is also loyal to the city in which I live, the Houston Dynamo are the odd ones out. If the initial rumors of Patrick Soon-Shiong are true, then I would consider my perspective to be somewhat accurate. Soon-Shiong would be looking at building an LA sports empire, considering he’s apparently looking at buying the San Diego Chargers and potentially moving them to LA. If he’s as committed to LA as I see everyone making him out to be, then I can’t see how Houston Dynamo figure into his plans.

        Houston’s been the black sheep of the AEG soccer family for a few years now. Look over their portfolio right now and you’ll see that there are plenty of non-LA entities that could be sold off. But it’s apparent that LA was a hub for Anschultz in the venture.

        http://en.wikipedia.org/wiki/Anschutz_Entertainment_Group

        If I were Soong-Shiong (or any other LA mogle) I’d sell off everything else and keep what was geographically viable near LA. Hell, I could afford to put that extra cash into the LA entities I was sticking with if I sold the rest. This might result in an equally-run LA Galaxy team if it turns out that way. Again, the retention of Leiweke is key.

        Another question: if this were to happen, how would Houston fair with just having built a brand new stadium? Is there an investor willing to take on that financial burden?

  2. Steve Davis - Sep 19, 2012 at 2:37 PM

    Lots of great thoughts there … but you banged the nail here … “But if someone is going to come in and think they’re going to remake the company, then look out. …”

    That’s the concern. You are absolutely correct, it’s not so much that AEG is getting out, it’s the question of WHO is buying in. AEG isn’t the be-all in ownership, but it would be impossible to argue that Anschutz’s reign has done more harm than good.

    There can and have been ownership groups come through that HAVE done more harm than good to MLS, so we know it can happen.

    • wesbadia - Sep 19, 2012 at 3:21 PM

      Agreed, Steve. I’d like to think that Anschultz is smart enough to find a proper owner for AEG and its subsidiaries, but, as we all know, money is not necessarily derived from intelligence. There’s considerable opportunity here for a non-soccer imbecile to come in and wreck one of the biggest names in American soccer. I’ll hope that Phil puts this company in the right hands.

  3. joeyt360 - Sep 19, 2012 at 2:44 PM

    Agree that Tim L is the one to watch. He’s been the effective CEO for some time.

  4. futbolhistorian - Sep 19, 2012 at 6:47 PM

    AEG is in the process of selling their 50% stake in the Dynamo to the owner of the Houston Rockets …

  5. CaliforniaRedskins - Sep 19, 2012 at 7:53 PM

    I’ve also heard that Houston was getting a local owner. The article seems to suggest that AEG will be sold as a single unit, which would make since, but it would be interesting to see what the numbers look like when you break the company up.

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