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SBD/March 15, 2013/FranchisesPrint All
AEG on Thursday announced that the company is being taken "off the market" by Chair Phil Anschutz after seeking a buyer for months, and is "parting ways" with longtime President & CEO Tim Leiweke, according to a front-page piece by Hamilton & Farmer of the L.A. TIMES. The moves leave a "parade of high-profile suitors empty-handed and damaging the prospect that professional football will return to Los Angeles any time soon." Leiweke's departure "stunned civic leaders and political figures." He had "orchestrated the complicated political agreements required to bring" an NFL franchise to the nation's second-largest market and was AEG's "point man for the stadium deal." Sources said that Leiweke apparently was "unaware that Anschutz was about to take the company off the market, and learned of the plan only at the last minute." Leiweke on Thursday said, "Right now I'm going to take a deep breath and enjoy life, and then I'll talk next week." Hamilton & Farmer note Anschutz was "circumspect about Leiweke's departure." He "vowed to take a more active role in managing his empire, though he did appoint longtime finance chief Dan Beckerman to be the new president and CEO." A source said that parties interested in buying AEG were "willing to pay" $6-7B, but Anschutz reportedly was seeking $8-10B (L.A. TIMES, 3/15). The WALL STREET JOURNAL's Matthew Futterman writes the move "marked a rare whiff for an industry that has gotten used to record sales over the past year." Anschutz said Leiweke's departure was by "mutual agreement." Sources said that the departure "played a role in the decision not to sell," and sources said that disagreements between Anschutz and Leiweke "helped cause the sales process to founder" (WALL STREET JOURNAL, 3/15).
SHORT BY A BILLION: BILLBOARD.com's Ray Waddell cited a source as saying that the bid by Qatar's Sovereign Fund in conjunction with Colony Capital "came closest" to Anschutz' desired sale price of $8B with a bid of $6B. They added that Guggenheim Partners' bid "came in" at around $5B. AEG's real estate assets are "where the most value and upside lies," as the company's arenas alone are "estimated to be worth more than" $5B in today's market. The motivation for selling AEG in the first place has "probably not disappeared" for Anschutz. The sales process would be "worth undertaking again even a year from now as AEG projects like axs ticketing, the development of Farmers Field in L.A. Live to bring the NFL back to that city, and the collaboration with MGM to build a new arena in Las Vegas all come to bear." Then Anschutz "might well get what he’s looking for" (BILLBOARD.com, 3/14). In N.Y., Claire Atkinson notes the sales process was "a way for Leiweke to cash out." Sources said that he "holds a sizable stake in the privately held venture." He was "willing to stay in his post under new management but quit when the sale was called off." A source said, "Phil made promises to Tim and then he pulled the rug out from under him" (N.Y. POST, 3/15). SportsCorp President Marc Ganis: "The combination of the financial markets getting better and the real estate markets getting a little stronger likely played a role in him pulling it off the market" (LATIMES.com, 3/14). Ganis added, "Anschutz is also reminding people, that oh, by the way, the 'A' in AEG stands for Anschutz, not Leiweke" (DENVER POST, 3/15). ESPN.com's Darren Rovell wrote in the end this sale was "for one man and one man only, and that was" Oracle Founder & CEO Larry Ellison. When Ellison "didn't bite, the market effectively wasn't there" (ESPN.com, 3/14). Inner Circle Sports partner Steve Horowitz "expressed surprise the deal was called off." He said, "You had real bidders at real numbers." But it was Leiweke's departure that "was more stunning." He "renewed his contract in August, extending it for another five years." Sources said that he also "had a profit sharing interest in AEG" (L.A. DAILY NEWS, 3/15).
AND THE NFL? Anschutz believes yesterday’s move made the NFL’s return to L.A. “more likely.” Anschutz: “We're ready to push dirt. ... I'm reengaged. And if there's a profitable investment to be made, I'm up for that." But he added, "The NFL is a player here, they're not just an observer. They've got to decide what they want to do. AEG has got to own all the venue. We're flexible. We're open for business to do a deal” (L.A. TIMES, 3/15). More Anschutz: “It’s time for the NFL to get serious and decide what they want to do. It doesn’t do any good to sit on the sidelines all the time. Clearly a deal can get done. And by the way, this isn’t a terribly complicated deal to get done” (L.A. DAILY NEWS, 3/15). In L.A., Smith & Bonsignore write Anschutz "challenged" the NFL to come to L.A. Sources added that there was "strained relations between AEG and the NFL," with one source stating that Leiweke "irked some at the NFL by overstating the status of the football team to politicians and to team representatives" (L.A. DAILY NEWS, 3/15). In L.A., Vincent Bonsignore writes losing Leiweke and "his passion for Farmers Field is a significant blow." But his loss is "not the end," as the proposed stadium "just got a major shot of energy." It is "hard to believe the NFL will walk away from someone it trusts and respects as much as Anschutz" (L.A. DAILY NEWS, 3/15). But in California, Scott Reid writes the Leiweke's exit "is a significant, if not insurmountable, setback to the NFL's return." L.A. City Council member Jan Perry, a leading proponent of Farmers Field, said, "We need to take a step back and talk and look at our options" (ORANGE COUNTY REGISTER, 3/15). A source said, "With Tim gone, and with Anschutz's proposal being unacceptable to the NFL, it would seem like the downtown stadium is dead" (L.A.. TIMES, 3/15). The L.A. TIMES' Sam Farmer writes without Leiweke as "a buffer," the NFL and Anschutz are "poised to bang heads again." Anschutz "gave no indication he's willing to soften his position" on his deal points. If anything, he "sounded more resolute about where he stands." Anschutz asked, "Why would I go to all the trouble, spend all the time, spend all the capital, tee all this up, and give someone all the upside?" Farmer writes that kind of thinking "doesn't play big with the NFL." If Anschutz "won't budge, neither will the NFL" (L.A. TIMES, 3/15). Meanwhile, L.A. Mayor Antonio Villaraigosa "issued a statement expressing skepticism" that AEG under Anschutz could "successfully negotiate" with the NFL to bring a team to L.A., a plan that included upgrading the Convention Center. He "directed staff workers to come up with an alternate plan." Villaraigosa: "The city will not wait for AEG, or any other party, to move ahead with the needed improvements to make our Convention Center" (LABUSINESSJOURNAL.com, 3/14).
CORPORATE SHAKEUP: ESPN L.A's Arash Markazi noted Beckerman was Leiweke's "right-hand man in the Farmers Field project." AEG Chief Legal & Development Officer Ted Fikre, who was Leiweke's "left-hand man," on Thursday was additionally named Vice Chair and will assume responsibility for AEG’s Governmental & Media Relations. The fact that both men "remain at AEG and are committed to the project leaves AEG in a good position moving forward even with Leiweke gone." The biggest question, however, is "how committed is Anschutz to the project?" Leiweke "became another in the list of dozens who hoped to bring the NFL back to Los Angeles but ultimately fell short" (ESPNLA.com, 3/14). SI.com's Grant Wahl asked will Beckerman "care as much as Leiweke did about soccer?" Anschutz "does remain in charge, however, and he does appear to have a special personal interest in the sport" (SI.com, 3/14).
AEG Chair Phil Anschutz yesterday discussed "his decision to pull" the company off the market, as well as President & CEO Tim Leiweke's departure from the company with select media. The L.A. TIMES' Dickerson & James run a full interview, and the following are excerpts from the Q&A:
Q: Tim Leiweke was the public face of AEG in Los Angeles. It's a surprise to see him leaving so abruptly. What happened?
Anschutz: I think he made his decision based on the fact that I had terminated the process for the sale, combined with the opportunities that he's looking at elsewhere as well. So he's done what he's set out to do, I think.
Q: Why did you terminate the sale of AEG? A number of big names had been rumored to be interested. Did you not like the prices you were getting?
Anschutz: This became a very noisy process. Lots of people, lots of talking heads, lots of unnamed experts and lots of opinions. … It just got too noisy. I didn't like the process. Second thing: We were very clear from the start. Unless there was the right buyer, the right set of terms and the right price, we might not sell.
Q: You said you'll be taking a more active role in the company. Why?
Anschutz: All I've ever done in my life is work. I'm kind of excited about reengaging, to be perfectly clear with you.
Q: Does this make it more or less likely that L.A. will get a football team?
Anschutz: I think it makes it more likely. … The NFL is a player here, they're not just an observer. They've got to decide what they want to do. … We've spent $45 million. Written checks for $45 million, plus another $5 (million) to $10 million of indirects on this project. I'm not in the practice commonly of writing checks just for the fun of writing them. That's a lot of money to be spent on this project. You do that because you see a business opportunity. … Not only am I optimistic, but I'm willing to back it with considerable money to make it a reality (L.A. TIMES, 3/15).
Tim Leiweke's departure Thursday as AEG President & CEO “sent ripples through not only L.A.'s business community but also its civic and political circles,” according to Zahniser & Linthicum of the L.A. TIMES. In a city “reeling from earthquakes, riots and a deep recession," Leiweke emerged "as a powerful force" in L.A. He made his mark in '99 by opening Staples Center in a "moribund section of downtown.” That was followed by the L.A. Live complex, which “changed the downtown skyline for the first time in a decade.” A “boisterous, sometimes showboating salesman," Leiweke had a "flair for stagecraft and a track record of giving to charities and election campaigns” (L.A. TIMES, 3/15). L.A. developer Steve Soboroff, an early backer of Staples Center, said, “The minute Tim came out here the whole dynamic changed. It went from a stadium deal to the first step in a larger vision of reshaping the sports and hospitality business in downtown and the rest of Los Angeles. And he implemented it.” He added, “He created the company. He grew the company. He operated the company. And in order to do that he became a political and philanthropic force” (LATIMES.com, 3/14). L.A. County Federation of Labor Exec Dir Maria-Elena Durazo said, “Prior to Tim Leiweke coming to Los Angeles, downtown was pretty much a ghost town.” KB Homes Founder Eli Broad said, “Downtown Los Angeles today would not be the same without Tim" (LATIMES.com, 3/14).
REIGNING ACHIEVEMENT: In L.A., Helene Elliott writes Leiweke “gladly became the face” of AEG-owned teams the NHL Kings and MLS Galaxy. While he “was a fan at heart,” sometimes Leiweke's “passion pushed him too far.” Galaxy President Chris Klein said, "We're all going to miss Tim, everyone loved Tim, but the Galaxy will continue forward. Our commitment to this team is still there, the commitment from Phil is still there." Elliott writes with Leiweke in charge, it "was never dull” (L.A. TIMES, 3/15).
WHERE TO NEXT? BILLBOARD.com's Ray Waddell wrote, “Most would agree Leiweke’s specific skill set tilts toward venue development and professional sports franchises.” He would be a “likely candidate as an owner, GM, or developer of any pro sports teams or group of teams, and will probably find more than a few opportunities in this sector.” Waddell wrote Leiweke is “an executive of rare scope” (BILLBOARD.com, 3/14). Leiweke on Thursday said he plans to “resurface” in a few days (LATIMES.com, 3/14). Meanwhile, in L.A., Scott Wilson outlined AEG’s extensive deals under Leiweke’s leadership (LATIMES.com, 3/14).
The Titans since NFL free agency began on Tuesday "have been one of the more aggressive teams in the league, signing five players to contracts" totaling $88.5M, according to Jim Wyatt of the Nashville TENNESSEAN. That figure jumps to $92.5M when factoring in the deal S George Wilson signed after being cut by the Bills last month. Titans Exec VP & GM Ruston Webster was cleared by Owner Bud Adams "to spend on players who would significantly improve the team." Paying a "little more, in some cases, would be OK." Adams said, "We want the right players, that’s the main thing. We have to get the players we know can perform and make us look like we’re a tough team to play against again." Wyatt reports the Titans "still want to sign more free agents," and they have $5M in salary cap room to do so. The "all-in approach was a big change for the Titans, who had a reputation for being slow movers in free agency." But an "aging owner and a 6-10 season sparked the new mind-set." Adams is "banking on getting back to the playoffs -- soon." He said, "I just had my 90th birthday and somebody asked me, 'Adams, how long are you going to stay at this thing?' I said 'I've made it to 90, so I might as well go to 100.' And I'd like to get in the playoffs and see some winning football over that stretch, too" (Nashville TENNESSEAN, 3/15).
The Seahawks have signed DEs Cliff Avril and Michael Bennett this week in addition to the trade for WR Percy Harvin, and in Seattle, Danny O'Neil writes the "lesson to be drawn" from the Seahawks' additions is that the organization has "established itself as a destination in today's NFL." Everyone "always talks about the difficulty of luring a free agent to Seattle, citing everything from the weather to the geography of the league's most isolated outpost." But Seahawks coach Pete Carroll said, "We're trying to really go places with our club and we're getting better and we're a young team that's on the rise" (SEATTLE TIMES, 3/15). In Tacoma, Dave Boling wrote Seahawks GM John Schneider "is a shark looking for his next meal." The moves are "another example of Schneider’s aggressive guidance of this franchise." Boling: "The message is unmistakable to fans and everybody in the locker room: The Seahawks are making their big push right now. The competitive window is open and Schneider intends to capitalize now" (Tacoma NEWS JOURNAL, 3/14).
LIVE TO REGRET IT? SportsNet N.Y.’s Adam Schein called new Dolphins WR Mike Wallace a "knucklehead" and said there is a "reason why the classy Pittsburgh Steelers did not want to bring him back." Wallace's deal with the Dolphins makes him the third-highest paid WR in the NFL, but Schein said, "In no universe is he the third-best receiver in the NFL. He’ll be a cap casualty in two or three years. They overpaid for him.” Schein added the move is the latest example of Dolphins Owner Stephen Ross “being clueless as per usual” (“Loud Mouths,” SNY, 3/14). Pro Football Talk's Mike Florio said if Dolphins GM Jeff Ireland “gets fired after this year, his successor is going to be cursing him every day of 2014." The contracts of free agent signees Wallace and LB Dannell Ellerbe "have low cap numbers for 2013,” but those numbers "go up” in '14 (“PFT,” NBC Sports Network, 3/14).
THE AUTUMN WIND: In S.F., Ann Killion writes if there was "deep skepticism last season about the new direction of the Raiders, it has only amplified since." GM Reggie McKenzie seems "intent on tearing the team down to the studs, ripping up the floorboards and punching out any remaining sheetrock." The Raiders this week "let some big names go" but only signed "three second-tier free agents." The signings were a "far cry from the blockbuster free-agent moves the fans became accustomed to" when late Owner Al Davis was in charge. McKenzie is with an organization that "doesn't have much salary cap wiggle room" and his hands are "tied to a certain extent, by circumstance and his own proclivity." But that "doesn't satisfy the team's frustrated fans" (S.F. CHRONICLE, 3/15).
HOLD THAT THOUGHT: In Jacksonville, Gene Frenette wrote Jaguars GM Dave Caldwell is doing "exactly what owner Shad Khan entrusted him to do: making decisive moves to alter the direction of a franchise that bottomed out in 2012." Frenette: "The Jaguars are in a different place. You don't start reconstruction, especially with an unresolved quarterback situation, by throwing big money at every roster hole." That is "not going to make this team a playoff contender in 2013." There will be "plenty of time to second-guess, criticize and stress over what the new gatekeepers are doing." Just "don't let the lack of a big splash in their first free agency period be that time" (JACKSONVILLE.com, 3/15).
SLEEPING GIANT? In Newark, Jenny Vrentas notes Giants WR Victor Cruz this week switched representation to CAA’s Tom Condon, which the Giants "hope could help progress toward a deal." Giants Chair & Exec VP Steve Tisch sees Cruz' hiring of Condon "as a positive." Tisch noted Condon represents QB Eli Manning and said, "We've had a great experience with Tom in terms of negotiating Eli’s deals. Tom is very familiar with our ownership, with the team, with (general manager) Jerry Reese, and I think it’s a win-win" (Newark STAR-LEDGER, 3/15).
BEST PRACTICES: Dallas Morning News columnist Tim Cowlishaw noted in the first 48 hours of free agency, guys were "flying all over the place." He asked, "Why can’t baseball be like this? Why when baseball free agency starts do GMs sit around and talk to agents behind closed doors and it takes months.” Cowlishaw said fans "lose interest, they lose focus on the game." But everybody is "focused right now on the NFL and what’s going on with all these teams." Cowlishaw: "That’s the way to handle free agency. It’s one of the things the NFL gets right” (“Around The Horn,” ESPN, 3/14).
The WNBA Mercury have "started a Twitter promotion using the hashtags #ManUp and #CureTheCooties, in which they are offering free tickets to disbelieving men with the simple challenge to come see what they've been missing," according to Melissa Isaacson of ESPNW.com. More than 100 men "have taken them up on the offer" in less than two weeks. Mercury VP Ann Meyers Drysdale said, "It's not even about basketball. It's 'Don't be critical about something you know nothing about.'" Meyers Drysdale added that she has "not grown weary of trying to sell women's basketball to nonbelievers." Mercury Digital Content Coordinator Ben York said, "We have a lot of men who just kind of dismiss women's basketball but have never seen a game or been to a game. For us, it's not a ploy to fill seats. We're doing fantastic with sales. It's more of a 'Don't bash it till you try it.'" Isaacson noted the team has won two WNBA titles in the past five seasons and features G Diana Taurasi, so the Mercury "would not appear to be a tough sell." Mercury President & COO Amber Cox said the team has seen a "shift" in its fan base. Cox added that the base is an "estimated 25 to 30 percent male and more of a dad-and-daughter presence." Cox: "I talk to our sales staff and tell them 'Don't ever discount bringing out boys' teams (to games) because, when they're 7 and 8 years old watching us play, hopefully they won't think twice about turning on the TV and watching a WNBA game when they're older.' It's that continued growth and exposure that legitimizes us to men" (ESPNW.com, 3/14).
The Astros enter the '13 season coming off a 56-106 record last year, and the team is “treating this season as a form of spring training -- a time to evaluate young players,” according to Brian Costa of the WALL STREET JOURNAL. Operating a team with "such little regard for the current season is something other baseball executives likely fantasize about." If it "weren't for the annoying chore of appeasing fans in the interim, many teams could build a championship core within five years." But few clubs have the "gall to take the Astros' approach.” The team is to some degree a "reflection of the sport's new economics, which have made it more attractive for teams that aren't competitive to invest the bare minimum in the present.” Meanwhile, the Astros last year “added 100 new front-office employees, replacing 70 that left and adding 30 new roles” (WALL STREET JOURNAL, 3/14). In Houston, Chip Bailey notes most onlookers "would agree they are generally charting the right course.” The PR part “where they effort to endear themselves to those fans who may ultimately want to watch and support, however, leaves a little to be desired.” It will “only confirm to some” that Astros Owner Jim Crane is “in it for the money.” It will “undoubtedly support the idea that Crane will continue to strip the organization, never spend money and be content with a Royals or Pirates approach.” It seems “clear the Astros aren’t interested in wooing fans at this point.” Bailey: “Does Crane want you at the park this year? Of course, he does. But he’s willing to bite the bullet for the long haul if you aren’t. And he apparently doesn’t mind letting you know” (CHRON.com, 3/15).