Convoluted Insurance Plan Helped Dodgers Owners Buy Team In '12
A group of insurance companies associated with Guggenheim Partners provided at least $300M to "help the firm’s chief executive and co-investors buy" the Dodgers for a record $2.15B in '12, and CEO Mark Walter and a group of business associates have pledged more than $20B of their personal net worth to "backstop the insurers if they run into financial trouble," according to Baer, Patrick & Scism of the WALL STREET JOURNAL. Walter said that the agreement is designed to "protect policyholders and eliminate any potential conflicts of interest." If this "sounds convoluted, consider that the owners of the insurance companies" include Walter, Magic Johnson and Dodgers co-Owner Todd Boehly. Guggenheim’s outside lawyer, Dan Webb of Winston & Strawn, said that a fourth Dodgers co-owner, Texas-based businessman Robert Patton, as well as other individuals, have also "pledged assets." Webb said that the structure, known as Safe Harbor, "makes the Guggenheim-affiliated insurers 'likely among the safest insurance companies in the U.S.'” Webb's firm "created the structure." Guggenheim execs and Webb "won’t say when and where it was established or how its assets are valued." Safe Harbor "isn’t used as a selling point to attract new policyholders, and its existence isn’t disclosed in any marketing materials." Walter said that there "aren’t any tax benefits for the participating individuals." Among the assets "pledged to the insurers through Safe Harbor: stakes in the Dodgers, a company operating one of the nation’s biggest Wendy’s hamburger franchises and shares in online car dealer Carvana" (WSJ.com, 11/24).