How Iger Got the Lakers

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1:20Congratulations! You made the varsity. the podcast. My name is John O 'Ran and I'm Puck's sports correspondent and the host of this pod. ESPN's Ramona Shelburne joins a varsity today. Ramona broke the biggest sports business story of the year on Wednesday that Bob Iger and Josh Kushner are buying the Lakers from Mark Walter for an unbelievable amount of money,$12.5 billion. We're going to spend a lot of time talking about that today, Sunday, August 16th. Now, I wrote a story in my private email about that$12.5 billion price tag. The finance guys and the bankers that I talk to, they think team prices are going to keep going up, and that's because private equity and venture capitalists are getting more involved in buying teams.

2:01It's an exclusive club, and a lot of rich people want to get involved. But media executives are warning that these valuations are going too high, especially if they're based on future media revenue. The media business, after all, is challenged. It's contracting. It's different in LA, of course. The NBA is only one year into an 11-year media deal that pays out$76 billion. And sports in LA, it's going to pay the Lakers upwards of$200 million per year for the local media rights. As one media executive told me, it's going to be a great business for the next 10 years. After that, who knows? As for now, let's get to ESPN's Ramona Shelburne.

2:39Ramona, first of all, thank you for joining the pod. what a week you had you broke to me one of the most surprising stories i i've i was sitting in uh lax the los angeles airport and i i noticed on the puck slack channel somebody was like oh igra's buying the lakers and i i wish there was a video camera on me because i think my jaw might have hit the floor with that and so i want to go sort of you know i i grew up in newspapers i'm an reporter how did you get this story like how did it come about you know take us through sort of your reporting process before we we talk about sort of what it means for the lakers and and and for the nba and all of that um this was a a very interesting story in that i think for the past i don't know three four weeks i had been trying to understand what was going on in the federal case against Mark Walter, who's the, I guess, the now former chairman.

3:43Well, I guess he's still the chairman of the Lakers until the sale goes through. But I was trying to understand the DOJ case against him. I mean, it's hard as a sports reporter. We have to educate ourselves on tax law or medical issues or all sorts of things. I have this line. I'm like, I'm not a lawyer, but I play one on TV sometimes. So I was I was kind of digging into what was going on in the DOJ case. We had all finally come up for air a little bit from the season, and LeBron had finally made his decision, a little more bandwidth to start digging in on this. And as I was calling people in the industry and in and around basketball, but also just in the business community and things like that to try to understand what was going on with Mark, you know you just that that a lot of the people I was talking to are I you know help me to help me understand that I think that kind of put me in a more unique position to to break this right you're kind of looking under the right you're looking in the right areas and what I was trying to understand was essentially like what a what what were these charges against mark and and and where was this coming from uh and it's very complicated i still don't fully understand it right i was still in the process of calling lawyers and and legal people who can help me understand it but um i think uh the you know i i read headlines and what was interesting is you know clearly josh kushner and Bob Iger do too, because it created a unique set of circumstances where they felt it was worth a call to Mark Walter to see if he'd be interested in selling.

5:30I want to be clear. No one that I had called said Mark is going to need to sell. I never thought that was happening. We were just trying to understand how big a deal is this? What does this entail? Wrap your head around even where this was. But people in that world were, you know, helpful. But it took me a minute to even to make headway in that. And then what night was it? What day is it today? I don't even know. Okay, so Tuesday night, which is a funny night, because my oldest was going back to school in the morning. So we had gone to like orientation on Tuesday. And then we were getting him ready for school and get to bed early and stuff.

6:13So I happened to, I happened to get a call around 9 9 30 and somebody said you know are you sitting down and I go what do you mean like is it I think mark might have sold the Lakers I was like wait what I what mark what what selling the late I never no one ever thought that was on the table like we were just trying to understand what he was dealing with and it was I thought I was early on it I thought sold or was going to sell like it was something that I needed to follow up with it was late at night and I clearly when you get some kind of tip like that it's you follow up on it immediately that's a send out as many texts as you can but it's very late I mean a West Coast time it wasn't that late but and you know around the league and the world and the country and it's late.

7:09And so I went to bed that night not really knowing if I was right or where we were in this, but it was one of those sleep with your phone on your head nights. Like I might get a very early text or a call or whatever it is. And that was an early call. I actually missed the first text because it came at 430 and I kind of didn't see it or didn't hear it. Like, you know, even if you have your phone on, like it's not an alarm. You can just sleep through it. But I had set an alarm for six just to make sure I got up. And then I was kind of right to it. I did not realize it was that close or that it was already done the night before.

7:48But it was kind of mind-blowing. Like, I still – we're on Friday now. I still can't believe that this is actually real, that it happened, that it's going to keep happening, and this is the new reality in L.A. You have the Knicks. You have the Lakers. Maybe you put the Celtics in there. But it's a very few teams. It would be as though we end this pod and we find out that Jerry Jones has sold everything to Elon Musk or something like that. He sold the Cowboys. What I find, there's so many aspects of this story that just really are surprising. And the first is, it wasn't for sale. It was almost like a cold call.

8:39It was almost like a cold call. And he took it. How much more would they have gotten in an open bidding process? I mean, why wouldn't he take this, Mark Walter take this, and say, oh, well, I have you on the hook for 12. Let's see if I can gin up something even more than that. There was no clear. It just seemed very rushed to me. This is not how team sales often go. Yeah, and I don't think it was – well, first of all, it was an expiring offer because they made the call. It was literally – it was a cold call. Like it wasn't – it was just a let's check, and they had read headlines, right? So there's a savvy businessman.

9:21They understand he might be in a bit of a financial situation where it would make sense for him to have some liquidity. I think they were kind of guessing at it. And the journal has done a lot of good reporting on this. I think they, was it Wednesday that they had a story? So it was the same day of the sale, or the same day that went through, or the reporting came out on the sale. They had a story saying that he had been calling people. I think I want to make sure I say it right because it's their reporting. There was a story about that he was trying to raise money. Clearly, that means you need liquidity, right?

10:03It'll take loans to get liquidity. So maybe that had been out in the business community. I hadn't gotten that far in my reporting yet. I mean, it's hard as a sports reporter because you're not you don't have those financial sources that that somebody from the journal does or Bloomberg. They've done a great job reporting on the whole story with Mark. But again, nobody had ever thought he was going to unload the Lakers, right? Like taking loans or getting money, that's a whole different thing than selling the crown jewel of the NBA that you just bought 10 months ago. But I do think it was like an expiring offer because they were, Iger and Kushner were deeply enmeshed in the expansion process.

10:50I don't know exactly where they were in position to buy the Vegas team, but they were clearly in a strong position. I've had other people tell me they might have been the leader there. And there's a lot of other groups there still. Bill Lowry's group and Foley's group. There's a Magic Johnson group. There's a lot of other people who are bidding on Vegas right now. We all thought that would come in about$6 to$8 billion, but I heard it had gotten up north of that closer to the 10 billion that that mark had valued the lakers at when he bought them last year and i and it just it it it you know if you're going to pay 10 billion you got to think about why you're doing that for an expansion team and this fund they have which is thrive eternal this is something that was started in um in may of last think of this year and then thrive obviously has been around for a long time but this their their brand which is eiger's eiger has taken a big role in that their brand is is restoring iconic franchises and this and that so an expansion team is not exactly on brand now thrive eternal is also the one that had been involved with the fifa with trying to privatize fifa um there was clearly a lot of cash that had been raised to try to do that i'm trying to remember the reporting on that it was it$4.5 billion or something?

12:11I've been raised to do that. So they had financing lined up. You know, I mean, that's the analogy I keep using is it's like you're buying a house. You've already got your loans in order. You've already got your financing in order. You got your down payment. You're ready to go. And you like one house and maybe you're even in escrow or you're thinking about making an offer and then you drive by another open house and prefer that one. it's a quick pivot and they had to know pretty quickly I think the first call was on Sunday initially my reporting is that Mark said no, it seems not for sale but the seed had been planted and when they called back a few hours later he had been thinking about it I don't think it was something he had thought about before and then he'd been thinking about it they raised their offer and he took it I don't think it was as emotional of a decision as one might think.

13:08Mark is a businessman. He looked at the return, and people, we all do the math like, oh, it's a$2.5 billion profit. That's just a$2.5 billion difference in valuation. His profit is actually going to be closer to$4 billion because he owned 26 % of the team at a$5 billion valuation. So if you look at when he bought his first shares, than when he purchased the larger chunk that gave him the controlling share from the bus family at$10 billion. The accumulation of those shares was done at two different values. And so it's a hell of a return, right? I don't think that was the intention. It clearly wasn't in terms of their actions and how they had been dodgerizing the Lakers.

13:53They had been investing a lot of money in building out the team and changing all their operations. And so people there are still kind of wrapping their heads around, wow, it's like they just changed contractors mid-build, right? Yeah, dodgerizing the Lakers. I happened to be on Tuesday, as you were knee-deep in this story, I was at Dodger Stadium. And I did take notice. We had a conversation about this. You walked through Dodger Stadium, and you saw Lakers pictures and Lakers logos. and you could see that they were sister companies, basically. They had the same owner. No Rams logos anywhere to be seen, no Chargers logos, any of the other L.A.

14:39teams. But it certainly was the lake arising of Dodger Stadium or they were being combined. I know that everybody has come out and said that the Dodgers are not for sale. One week ago, we would have said that the Lakers are not for sale. How serious? Are the Dodgers for sale? What do you think? Are the Dodgers for sale? What do you think? I don't think the Dodgers are for sale. But I don't think this will stop anybody from calling. I mean, if I'm a billionaire, which, I mean, that would be a nice life, okay? But I see that he unexpectedly sold the Lakers, and they weren't for sale either. I'm sure he's getting a lot of interesting calls.

15:28But again, I want to say they're not for sale. That wasn't the intention. Again, in my reporting, the last three, four weeks, no one had said Mark has to sell. I don't think he's in that position where he has to sell. But when you do it once, people are going to call. It's really interesting to think about what the Dodgers would be valued at because I've been in LA my whole life, and especially career-wise. Mark really started this expansion of franchise values, this exponential growth in franchise values when he bought the Dodgers in 2012 for$2.15 billion. Do you remember this? He bought Dodger Stadium and the Dodgers for$2.15 billion from Frank McCourt.

16:17And everyone thought he was crazy. And Mark, I've talked to him many times about this, and he said, I thought they were totally undervalued. I thought I got to steal. I mean, this is a great investment. And one of the guys who had worked on that, David Blitzer, was really smart guys in the Philly ownership now. He had hammered home about how valuable those broadcast rights were because the local broadcast rights were opening up. The Dodgers and Lakers obviously have that giant deal. Here it's called Spectrum. I think they're owned by Charter now. At the time, it was Time Warner. I mean, it's changed hands many times over.

16:56I don't think there are really local TV deals like that around anymore or going forward. But those deals were absolutely massive revenue streams for the franchises that proved Mark 100 % right in saying that$2.15 billion was undervalue for the Dodgers. but let's do the math. Look at the bell curve. 2012 Dodgers sell for 2.15 and remember that's also Dodger Stadium which is really important. Frank McCord still owns the parking lots of course. It's so funny. It's a joke everyone makes in LA but it's also true and it's funny. The parking lots that nobody can get out of right? It takes hours to exit the parking lots.

17:43Yeah, I know. But Dodger Stadium is very valuable. And for a lot of years, Mark also bought a lot of the land around Dodger Stadium that came with the sale. And if you think about that land, I mean, you've been to L.A., John. That's incredibly valuable land. And there's always been talk of, you know, I think Frank's involved in trying to do the gondola up to Dodger Stadium. I don't know where that stands in terms of getting approved, but it's a big project here in L.A. But that land, if you developed the Chavez Ravine area, it's, I mean, it's a developer's dream, but it's hard to get anything done here in Los Angeles.

18:22And it's a big project. But I think for years, Mark was trying to develop that land and build this giant complex kind of similar to what you've seen been done at SoFi Stadium and Intuit Dome and all that area around there. There's just, but this is prime real estate near downtown LA. It's 10 minutes from downtown. and uh that was just an incredible buy okay but that's 2012 2014 the la clippers go for two billion dollars to see balmer makes everyone's head explode wow how could the clippers be i wrote i wrote a ton of stories talking about what a moron balmer is how could he like what a terrible deal that is and i think they're now valued yeah i remember reporting on this yeah so donald sterling thought balmer was an idiot because who keeps two billion dollars in cash right like you're right who keeps that much money just in cash instead of investing it or having it work for you um that was a hell of a buy think about that just for the clippers then the sons are sold sort of under duress right starver has to sell to matt ishbia four billion dollars just a few years later.

19:30And then two years ago, the Celtics go for six. So now look at this bell curve two, four, six, 10 when the Lakers sell. And now we're at 12 and a half billion dollar valuation. This bell curve is like that. And it started with Mark Walter. Right. And, and I, I think it's, um i don't know where it stops i really don't it's uh you know when the seahawks you know broke all the records just a couple of months ago what was that 9.6 is that right um you know we we thought oh an nfl team okay if the seahawks are not what are the cowboys i mean i don't think jerry's selling but every owner in every professional sports has to be looking at these values going, I wonder what I could get for my team because this bell curve is amazing.

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21:06Whether I'm reminiscing on the trials and tribulations of working in the corporate world to recapping today's latest reality TV show, you're going to want to pull up a chair and stick around. It's a good time and always 100 % unfiltered. Follow and listen to Sophia with an F wherever you get your podcasts. Yeah, I will tell you, I just did a story in my email on Thursday where, you know, the bankers and the owners are so excited. I mean, of course, why wouldn't you be? Look at this. Of course. The media company executives I talked to were like, you know, if they're basing these valuations over media revenues continuing to rise like they are, it might be an unsafe bet to make right now because, as we all know, cord cutting is happening.

21:55I know the NBA is unique because it's one year into a$76 billion deal, and the Lakers are unique because Spectrum is paying them upwards of$200 million a year for the local rights, It's unheard of for a basketball team and for their local rights. So they're doing okay. I want to ask you, you know, you mentioned you're from L.A. You're in L.A. through and through. Almost every time I've gone to a Lakers game at Crypto.com or at Staples Center, I've run across Bob Iger. Like, he's a fan. He's sort of part of the fabric there. Yeah. What kind of owner do you expect him to be? Do you expect him to be somebody who is really influential and powerful at the league level?

22:47Do you expect him to be more like a Mark Cuban person? He is coming from a media background. Do you expect him to be sort of like in the background? Nobody expects Bob Iger to be in the background. But you've spoken to him, and you know what his thoughts are about the team. How do you expect him to be as an owner? to the dsr um uh bob was a clipper season ticket holder for many years i think that ended before last year okay and he's it's really funny that's how i that's how i first introduced myself to mom first of all bob eiger was my boss ever since i've been at espn okay but disney owns espn um and i remember you know as a reporter sometimes like our job is literally to just go up to everybody and say hello like you have you can't be shy so I would just I just went up to him one day I mean I've I've tried to I've tried to you know I go up to him respectfully right and you don't ask for an autograph or anything but you just you just say hello he's a sports fan he he was courtside for all that Lob City era that's how he got to be really good friends with Chris Paul Chris has reached out to, you know, at that point they were, Chris kind of wanted him to mentor him.

24:05And Bob obviously gets a lot of people who want him to mentor them, but, uh, he, he liked Chris pretty, pretty quickly. And then I think he, they've kept a real genuine friendship. Like it's not, it's not just, uh, it's, it's evolved over the years, right? He wasn't just cheering for him as a player. They became very good friends. They went on socially distant walks during the pandemic. And that's a big reason why we had the bubble, why it was at Disney World. And then they obviously worked very closely with Adam Silver to make that happen. But let's also go back to when Bob was a part of the ownership group or the whole group that was trying to bring the NFL to Los Angeles.

24:44He was involved with the group in Carson that was trying to bring the Raiders and the Chargers to LA. And then Jerry Jones kind of outmaneuvered everybody. He kind of flipped sides and swung the balance of power. And the stadium got built down there at SoFi with Stan Kroenke. And the Chargers owners kind of partnered up and did that one. You know, there was a, yeah, I think they played their cards well with Jerry and legends. And it's a very interesting business this story, there's been talk of Bob as an NFL commissioner. So he's, he's very deeply, uh, involved in the sports world. I think there was, there was even, I heard his name a lot, uh, with the LA Olympics last year as the situation with Casey Wasserman was unfolding.

25:33And there was a question of Casey continue it. It's part of LA 28. Uh, so he's, he's a sports guy, man. He's, he's really interested in sports, but he's also retired and retired twice. Like Like this is very Michael Jordan-ish, right? He retired a couple times. But he really was that legendary of an executive. And I expect he will be the same kind of owner that he was as an executive, which I think he'll be a CEO, a chairman type. I don't think he's going to be Mark Cuban cheering. I saw him at Clipper Games. He was not loud. You know, he clapped, but there's no comparison with him and Steve Ballmer as fans sitting courtside.

26:17But he'll be, I think he'll be a relationship guy. I think he'll have great relationships with the star players, with the business community. I think he'll be a great CEO type as an owner, chairman. I think, I don't know Josh. I've heard people describe him to me. He's 41. He's from, I think he lives in Los Angeles. No, he's not from here, but he lives here. I think he's energetic. I think he'll be more involved. this. I think, you know, clearly you're spending a lot of money to be a part of this. You know, you're a sports fan. I think he'll be more involved that way. I think he'll be the chairman of the controlling owner here.

26:58And it's interesting because we just went from family ownership for decades to this nicely choreographed transition to Mark Walter and you pointed out all the synergy between the Lakers and the Dodgers and just very abruptly two completely new people coming into town. And I know Bob gave a quote to the California Post that Jeannie will stay in her role, but there was a hedge in that quote, you know, if things change, they'll change. I don't see them changing right away. I think he's, you know, he does have a relationship with Jeannie Buss. I think he values the connective tissue of having someone from the previous ownership who really knows the Laker brand.

27:43But will she be the controlling owner? I doubt that. I doubt, I mean, Josh is going to be the controlling owner eventually. It's just a question of when and how does that look. I do think Jeannie will still be involved with the Lakers in a very forward-facing capacity, though. So it'll be interesting to see how this plays out and what the timeline of this is. Because we're at the beginning. We have to prove them still. I expect that'll happen. They already have their financing lined up, but it'll be a wild couple of months here. Another Los Angeles surprise to me, Lakers surprise to me. I had just assumed that LeBron was going to be ending his career in L.A.

28:28with the Lakers. And I was reading all the reports that he was looking to go elsewhere, but until he finally actually left the Lakers, I thought he was going to return to the Lakers. Why didn't he stay in Los Angeles?

28:48We all were like that, too, John. I'm on L.A. radio all the time. I host a lot of shows on the ESPN affiliate here. I guest host and all year long we were like you know what he seems like he's staying he's accepted the third the third banana role and then when they needed him he stepped into the lead dog role and he his son's on the team so I think we all connected those dots and thought you know whatever awkwardness there is he's gotten over it he's he's played through it they've all figured things out but after reporting on this and after looking at it in the rearview mirror I think I would go as far as to say he knew the last game that he played at crypto.com that it was his last game as a Laker and I know he said in his quote that he thought he was going to retire after that game or he he felt like he might retire I don't know if I believe he felt like he would retire I think you always feel like that at the end of a long season because you know how much it takes to go in there but because he's felt like that before right there was a couple years ago when they lost to the Nuggets, he had a quote like that.

29:54And everybody was like, Oh my God, what if he just retires? Um, I think that's just more of the fatigue of the end of the season, but I think he absolutely knew he was done as a Laker that night. And it was, I remember I was there in their building. I was there in the locker room. There were two people there that I was, that, that tipped me off that something big was, that was not as we had assumed. And that was Lynn Merritt as the former president of Nike, who was one of the LeBron's biggest mentors. Um, he's retired. I think he still kind of consults for them, but he's an absolute legend in the shoe industry and especially as an important figure in LeBron's career.

30:31Lynn lives in Portland on a winery, okay, or just outside of Portland. He doesn't leave very often, right? He doesn't go to games anymore. He doesn't leave this nice retired life he has. And he was there for that game. And I thought, hmm, would he come if there wasn't a chance that LeBron was going to retire or that he was out in LA. And then Adam Mendelsohn, who has been his longtime strategist, his communication strategist, Adam was there. And LeBron doesn't, I mean, Adam's there sometimes, but the night he was very forward-facing. I saw him before the game. I saw him after the game, before LeBron did his press conferences.

31:08And then LeBron gave hugs to everybody in the locker room, and it was the way he said goodbye to Austin Reeves. I was like, huh. huh, like this isn't just I'm hugging you in case you leave or I leave. This was like a real we were probably done as teammates. And people around the LeBron camp have kind of subsequently said they realized that night too that his time in L.A. was probably over because I just think while he put on a good face and he bought into the role eventually, the third banana roll next to Luca and Austin. I just don't think that's who he is. He's not a secondary player. He's a leading man.

31:52And they have a new superstar. They just do. It's not his team anymore. It's not being built around him. He's not a complimentary piece, really, even to Luca. They figured out how to play together because they respect each other, but this is just not how that team should be built. And somebody with the Lakers used a phrase with me, and I think that was really a good read. They said, look, there's a curse of incumbency here. If the Lakers offered him a pay cut or a lesser contract, even if it was like$25 million a year, he would still see it as a giant pay cut. He would see it as, wow, you don't value me like you did before.