When Mark Walter, founder of investment firm Guggenheim Partners, bought the bankrupt Los Angeles Dodgers in 2012, many thought he overpaid. The $2.1 billion was nearly double what anyone had ever spent for a sports team, and he had to out-bid billionaire hedge funder Steve Cohen to get it.
Few would object to the price now. Since then, that amount has been surpassed nine times in sports franchise deals, including the $2.4 billion Cohen paid for the New York Mets in 2020, while the Dodgers became the most competitive team in Major League Baseball.
Mark Janis, co-founder of consulting firm Sportscorp, said the Dodgers purchase was “a precedent for financial engineering and institutional money being put into ownership of sports teams.”
Of the deals that have since been completed at a price higher than the Dodgers’, six were managed by individuals with a background in finance as sports teams became one of the most important investments of all time.
The resulting increase in values — the Dodgers are now worth $6.3 billion, according to a Sportico assessment — has helped boost Walter’s personal fortune of $12.1 billion, according to the Bloomberg Billionaires Index. The 64-year-old’s sports portfolio includes stakes in the English Premier League’s Chelsea Football Club, the Los Angeles Lakers and Los Angeles Sparks basketball teams, auto racing groups and the women’s professional hockey league, totaling more than $3.7 billion, according to Index.
A representative for Walter confirmed that his fortune is no less than $12 billion.
Biggest asset
Its largest asset remains Guggenheim Partners, the $335 billion investment adviser that pioneered raising permanent capital through insurance relationships. Walter founded the company in 1999 with partners including Peter Lawson Johnston II, a descendant of mining magnate Meyer Guggenheim.
Walter, who is Guggenheim’s CEO, also controls nine insurance companies with a total adjusted capitalization of more than $4.7 billion at the end of 2023. His economic stake in them is worth about $900 million, according to the Bloomberg Wealth Index.
His finances have put the New York Yankees — who will face the Dodgers in the World Series starting Friday — in the unfamiliar position of underdogs. This is the Dodgers’ fourth appearance in the Series since Walter bought the team, while it is the Yankees’ first appearance in that span.
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The Yankees are certainly no longer the same dominant team that made the playoffs 13 straight years in the 1990s and 2000s and won five championships. With their willingness to pay for talent straight from the Yankees’ playbook, the Dodgers have supplanted them as the league’s most resourced club, with the Mets also making the case for that title.
The Yankees had the highest payrolls in the major league for more than a decade before the Dodgers changed hands in 2012. Since 2013, they haven’t been in first place once, while the Dodgers have led baseball eight times, according to Sports Research. Spotrac and baseball cube set.
“The Dodgers were arguably the best-managed team in baseball under Mark Walter’s ownership,” Ganis said. “They were doing almost everything right.”
The Dodgers’ recent success may seem familiar to longtime Yankees fans. The late George Steinbrenner, who bought the American League team in 1973 for nearly $10 million, was seen as a pioneer of big spending in free agency when he signed stars like Reggie Jackson and James “Catfish” Hunter. They helped lead the Yankees to two championships shortly after Steinbrenner took control.
George’s son, Hal, has controlled the team since 2008. As salaries have ballooned around the league, fueled by the Dodgers’ and, more recently, desire to open their checkbooks, he has sounded a note of caution.
“Payroll at the levels we are at now is not sustainable for us financially,” Steinbrenner said at an owners meeting in May. “It would not be sustainable for the vast majority of ownership, given the luxury tax we have to pay.”
Financial chemistry
The Dodgers’ active roster payroll this year is $172 million, according to Spotrac, which is significantly less than the Yankees’ $260 million. But this includes a healthy dose of financial chemistry.
When the Dodgers signed this year’s most valuable player Shohei Ohtani to a $700 million contract, the contract was structured so that the Japanese star would get just $2 million per year until the end of 2034, then $68 million per year for 10 years.
It’s just the latest example of creative front-office accounting by the Dodgers, demonstrated shortly after Walter took the reins.
In 2013, the team secured a 25-year television rights deal worth $7 billion, which helped the ownership group quickly pay off debts associated with the team’s purchase, including insurance companies that Guggenheim controlled.
“What Walter did was a very innovative and unprecedented capital structure, using the institutional capital that they controlled, to outbid everyone for the Dodgers,” Janis said.