Mark Walter buying a majority of the Buss family’s stake in the Los Angeles Lakers means the financial services billionaire and Dodgers co-owner is cementing his status as the most powerful person in southern California sports. For the handful of billionaires who own a sliver of the Lakers, his $10 billion offering price means something else: a huge payday they may never have a shot at again.
Los Angeles Times owner and health care billionaire Patrick Soon-Shiong, real estate developer Edward Roski Jr. and Walter’s business partner Todd Boehly collectively own only about 14% of the Lakers. But it’s enough that each one of them, already billionaires, will enjoy a payday in the hundreds of millions of dollars.
“It’s typical that a minority interest would sell in the vast majority of deals like this, because they typically have what are known as ‘tag-along rights,’ which enables them to tag-along on the same valuation, the same terms and conditions,” said Irwin Kishner, a partner and co-chair of the sports law group at Herrick, Feinstein LLP on a phone call. A sale in which control of the team is being transferred, as with the Lakers, “is generally what the minority interest waits for, because it’s going to be difficult to get full value otherwise.”
As sports teams become increasingly more valuable, minority ownership is a double-edged sword: A limited partner’s stake in the team gets more valuable on paper, but realizing that as cash is much more difficult because of a scarcity of buyers willing to pay so much for equity that offers little more than something to brag about. That means in almost all cases, minority equity in a sports franchise gets sold at a steep discount, often 35% or more below top-line valuation.
The one time limited partners can realize full price? When a control sale triggers tag-along rights—or even drag-along rights, where the buyer has the right to force minority owners to sell as well. Drag-along rights are typically present when there are tag along rights, according to Kishner.
The particulars of the Lakers ownership agreements aren’t publicly disclosed, but in a typical transaction, minority owners have 30 days after a deal is announced to say they wish to exercise their tag-along rights or hold their equity, if the new buyer can’t or won’t force them to sell.
Calls and emails to the offices of Soon-Shiong and Roski got no reply, while representatives for Boehly didn’t respond to an email seeking comment. A representative for Mark Walter said they have no information about the intentions or status of the limited partners.
So how much money are the trio of minority owners set to make? A lot.
Boehly, an executive at financial services firm Guggenheim Partners, which Walter co-founded, and also head of the ownership group of Chelsea FC, likely will collect $700 million. Boehly acquired 7% of the Lakers in 2021, teaming with Walter to buy Philip Anschutz’s 27% equity in the Lakers. That transaction valued the Lakers at $5 billion, meaning Boehly likely enjoys a 100% profit in just four years—assuming the Lakers’ valuation at the Anschutz deal wasn’t discounted.
Soon-Shiong does even better. The billionaire, a medical doctor who made his fortune through invention of a cancer treatment, bought his 4.5% stake from Magic Johnson in 2011. The price wasn’t disclosed but is widely reported as around $27 million, which roughly corresponds with the Lakers’ valuation that year. That 4.5% is worth $450 million under the agreed-upon sale price, close to what Soon-Shiong paid to acquire the LA Times in 2018.
Real estate developer Roski probably sees the best investment return. The head of Majestic Realty acquired his equity, probably 3% (though reported as low as 2.5%), in 1998 as a partner with Anschutz in buying a chunk of the franchise. Based on team valuations then, it’s possible Roski paid just $8 million for his sliver of the Lakers. Today, it’s worth $300 million, a 3,650% return.
The Buss family, meanwhile, will collect more than $5 billion in cash for selling 51% equity of the Lakers to Walter, who already owns 20% of the team. The family will retain 16% of the franchise. The sale is expected to close before the end of the year, perhaps as early as next quarter, according to Walter’s spokesperson.