Buyer for AEG may be hard to findBy Reverb Staff | September 20th, 2012 | No Comments »
By Andy Vuong
The Denver Post
Nearly two decades since Phil Anschutz began compiling the pieces of Anschutz Entertainment Group, the Denver billionaire this week put a “for sale” sign on the now-mammoth company with a dizzying array of sports, entertainment and real estate assets.
The surprise move raised questions about timing and whether a single entity could absorb the entire operation, as Anschutz apparently desires.
Los Angeles-based AEG controls or is associated with more than 100 arenas and facilities that serve as home to the company’s sports franchises or as host to performances by its roster of musical acts. AEG also has retail, office and residential developments that pair with its sports-related holdings to form an entertainment hub, such as L.A. Live in Los Angeles.
Anschutz apparently believes, and some experts agree, that the timing for a sale is ideal. Many of the company’s assets are at or near their peak value, from the Stanley Cup champion Los Angeles Kings to the top-grossing music festival, Coachella, and the world’s second-largest concert promoter, AEG Live. AEG also owns major league soccer’s reigning champion Los Angeles Galaxy and a minority stake in pro basketball’s Los Angeles Lakers, one of the favorites to win the title this year after it landed star center Dwight Howard.
“The timing could not be better,” said Jeff Marks, managing director at Premier Partnerships, a sports business development and sales organization. “You’ve got the Lakers, the Kings and the Galaxy at the top of their game. And L.A. Live is now humming.”
But finding a suitable buyer could be challenging. Anschutz is not interested in breaking up the empire and wants the new owner to have the “financial resources, commitment and vision to support AEG’s management team as it continues to grow the businesses.”
“The sale involves the platform in its entirety, not pieces,” said Lyndsey Estin, a spokeswoman for AEG, a subsidiary of Anschutz Co.
The company doesn’t expect a sale to be completed before the end of this year.
Dan Steinberg, the founder of Square Peg Concerts in the Pacific Northwest who started his concert-promoting career in Denver, doubts the deal will close at all.
“The things that would have to happen for it to go through are insane,” Steinberg said. “The sports teams involved, each of the leagues would have to approve the sale and the new ownership. It would have to be cleared by antitrust, depending on who the buyer is.”
Anschutz may be hoping to use profits from AEG’s music and sports assets to offset losses from under-performing real estate holdings that were purchased before the market collapsed, said sports business consultant Marc Ganis.
While Los Angeles billionaire Patrick Soon-Shiong is reportedly interested, Ganis said there’s a better chance a consortium would purchase AEG and divvy it up.
“The real estate assets — the hotels and condominiums — are really a very different class of assets than the concert company, or the Staples Center, or even the L.A. Kings,” said Ganis, president of Chicago-based SportsCorp. “It’s much more likely that Anschutz sells the components to different parties, in groups, but to different parties.”
Madison Square Garden Co., owner of the Knicks and other properties, could eye a piece of AEG, such as the Staples Center, home of the Lakers. That would give the company dominant arenas in the nation’s two largest markets, Ganis said.
Potential suitors could also include fellow Denver-area billionaire John Malone.
“He has owned various sports properties, in part or in whole, for many years,” Ganis said of Malone. “And he’s also been heavily involved in sports broadcasting properties.”
Malone’s representatives didn’t respond to requests for comment.
Mark Cuban, owner of pro basketball’s Dallas Mavericks, and Live Nation, which merged with Ticketmaster in 2010, could be interested, though both deals would face complications, Steinberg said.
“It’s a little different than Live Nation and Ticketmaster, because Live Nation and Ticketmaster were two different industries that accommodated each other very well,” Steinberg said. “But if it were AEG and Live Nation, these are two competitors, and they’re the majority competitors in both industries.”
Early reports suggest AEG could fetch several billion dollars in a sale.
“There are no benchmarks out there,” said Marks of Premier Partnerships. “There are no other companies that are quite like AEG.”
Staff writer Ricardo Baca contributed to this report.
Andy Vuong is a business reporter at The Denver Post.