With Leiweke Out And AEG Off The Market, Sports Landscape Shifts In One Fell Swoop
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).