The coronavirus pandemic and its effect on MLB are "providing the biggest test yet of the unusual structure" used by Guggenheim Partners to buy the Dodgers, according to Patrick, Baer & Scism of the WALL STREET JOURNAL. A club spokesperson said that the Dodgers, like "so many other professional-sports teams this year, are losing money." And while those losses "aren’t enough to dent the wealth" of Guggenheim Partners, they do "return the spotlight to an unorthodox strategy the group used eight years ago to buy the franchise" for a then-record $2.15B. Insurance regulators "urged Guggenheim, which managed money for insurers, to acquire a struggling company there, Security Benefit." That led to "purchases of other life insurers," as Guggenheim CEO Mark Walter and other company execs "spotted what they considered bargains" in the post-financial crisis world. Insurers "typically invest customers’ premiums in high-quality bonds until the money is needed to pay claims," but these companies did something "more complex." They "sought to improve their returns by helping to finance the Dodgers." In the Dodgers deal, the insurers provided $100M in "equity and hundreds of millions of dollars in loans." All told, the five insurers "prided more than" $10B in "such funding." And a source said that the "assets rose" to $100B as of Sept. 30. Walter and Guggenheim lawyer Dan K. Webb said that the investments have "made the insurers stronger." Patrick, Baer & Scism write so far, even amid the pandemic, the structure used by Guggenheim has "held firm" (WALL STREET JOURNAL, 10/29).
