May 2, 2014

Playing hardball with Magic and Mike

I think I finally figured out the strategy of Magic Johnson and Co.

The Los Angeles Clippers basketball franchise is a classic value investing play. Owner Donald T. Sterling long followed a worst-house-on-the-block strategy with them, same as with his real estate strategy: buy in Beverly Hills and Koreatown and hold on. Los Angeles isn't going to run out of nouveau riche Koreans, and it's not going to run out rich guys who want to own an NBA team.

So, Sterling was content to employ cheap but elderly and inept general manager Elgin Baylor for 22 long, terrible seasons. He was happy to benefit more from the inflation in the price of generic NBA franchises than from his own efforts to build a winning franchise.

Recently, however, several factors have conspired to drive the value of being the owner of the Clippers up. The Clippers actually have exciting players now, the rival Lakers' old stars (Kobe Bryant, Pau Gasol, and Steve Nash) aren't getting any younger, the stock market is high, and the cable companies are theorized to be increasingly desperate for live sports programming that can't be obtained more cheaply over the Internet.

However, Sterling has tax reasons for not wanting to sell during his lifetime. And he loves being the center of attention, and doesn't seem to care much whether people are acting obsequious or hostile toward him as long as they notice him. This has increased the demand for ways to force Sterling into selling, and the supply has apparently arisen to meet the demand. 

(A forced sale would likely work out to a lower price than an unforced sale because one of the main competitors in an unforced sale is the owner who might just call it off if he doesn't get a high enough price.)

From NBA supremo Adam Silver's news conference:
Magic Johnson knows he's always welcome as an owner in this league. He's been a part owner in the past of the Los Angeles Lakers, and he's always welcome and a close friend of the NBA family.

After all, the HIV-infected basketball legend is the "ultimate cleanser in sports."

Ironically, the Los Angeles Times reports today, but without naming any names because that would be awkward this week and off-Narrative:
Trapped into paying extra for cable TV sports 
The Dodgers charged $8 billion for broadcast rights to their games, knowing full well that pay-TV companies would have to pass along this sky-high cost to all customers.  
By David Lazarus 
May 1, 2014, 5:16 p.m. 
A troglodyte of a team owner got his comeuppance this week for making incredibly stupid comments about race. But let's be clear. 
Racism isn't widespread among sports team owners. 
Greed is. 
Exhibit A: The $8 billion charged by the Dodgers for broadcast rights to their games knowing full well that pay-TV companies would have to pass along this sky-high cost to all customers. 
Time Warner Cable is the Dodgers' partner in crime. It paid that whopping sum for exclusive rights to distribute the Dodgers channel to other pay-TV companies, assuming, like the team, that it would get away with sticking both fans and non-fans with an extra $4 to $5 fee every month.

That's an extra $48 to $60 per year from practically everybody in Southern California (not me, though, I don't have cable), whether they watch the Dodgers or not. And baseball is a pretty boring sport to watch on TV, at least until the games matter in October. When I was a kid, Dodger games were a pleasant thing to have Vin Scully on the radio while you were outside doing chores or whatever, but sitting in the dark watching seems ...
... This is why DirecTV, Dish, Verizon and AT&T have balked at adding $4 to $5 to people's bills for a Dodgers channel.

So, as I mentioned earlier in the week, 70% of Southern California Dodger fans who have cable TV haven't been able to see the first month of the Dodger's season. The local cable companies are worried that raising their fees will drive their fans who don't like sports to start cutting the cable and turn to Netflix-like alternatives for movies and shows. I don't have cable, but the only sports I feel like I really want to watch are the Olympics, the Masters, the U.S. Open, maybe the British Open if I get up early enough, a few baseball playoff games, and maybe some college football. Most of that's available on broadcast. The cable companies are worried about pushing more people to follow me.
Clippers owner Donald Sterling is paying the price for being a narrow-minded jerk. 
Why should the Dodgers' owners get a pass?

Of course, there's an irony here: the public face of the new Dodger ownership team that's stiffing its fans is that "ultimate cleanser in sports," Magic Johnson.

One reason the new Dodger ownership is stopping Dodger fans from seeing their team on TV in their game of chicken with the cable companies is because they overpaid so badly for the franchise in 2012. From the NYT in 2012:
PRIVATE EQUITY | DEALBOOK COLUMN 
A Costly Toy Subsidized by Others 
By ANDREW ROSS SORKIN  APRIL 9, 2012, 8:59 PM 76 Comments

When the numbers don’t seem to add up, it’s worth asking some questions. 
For the last two weeks, I’ve been puzzled by the announcement of a $2.15 billion deal to buy the Los Angeles Dodgers by Magic Johnson and a group of financiers. 
Of course, Johnson got most of the attention. But his celebrity has obscured a drumbeat of questions about the businessmen behind this headline-grabbing sale, which doubled the record for the price tag of an American professional sports team, set by the Miami Dolphins when it was sold for $1.1 billion in 2009.

The winning bid was led by Mark Walter and his firm, Guggenheim Partners, which most people in sports — and frankly, even on Wall Street — know very little about. (Peter Guber, the film producer behind “Rain Man” as well as Stan Kasten, the former president of the Atlanta Braves, are also involved.) 
A quick background check and some back-of-the-envelope math raises an obvious red flag: how on earth can this group of individuals afford to pay $2 billion in cash?
The answer is that they probably can’t — at least, not by themselves. 
Mr. Walter, along with his colleague Todd Boehly, Guggenheim’s president, appear to be living out a childhood fantasy using other people’s money, some of whom may not even realize it. 
In addition to their own cash, Mr. Walter plans to use money from Guggenheim subsidiaries that are insurance companies — some state-regulated — to pay for a big chunk of his purchase of the Dodgers. Guggenheim controls Guggenheim Life, a life insurer, and Security Benefit, which manages some $30 billion, among others. 
Using insurance money — which is typically supposed to be invested in simple, safe assets — to buy a baseball team, the ultimate toy for the ultrarich, seems like a lawsuit waiting to happen. ...
The transaction seems even more questionable when considering Mr. Walter’s own words to The New York Times two weeks ago: “I don’t want to realize a return on investment on buying the Dodgers. I want to have a multigenerational relationship that changes my life, Magic’s life, Magic’s grandchildren’s lives and all of our lives.” 
So let’s get this straight: Mr. Walter, who has a fiduciary duty to the firm’s policyholders, plans to pump their money into a baseball team, even though he says he’s not seeking to realize a return on the investment. And he is seemingly wildly overpaying by some $500 million more than the next highest bidder — he outbid Steven Cohen, the hedge fund manager, among others — so that he can be the league-designated owner of the Dodgers. 
“Paying $1.5 billion or $1.6 billion — I can get there. But anything after that is pure ego,” said a longtime sports banker who worked for a rival bidder for the Dodgers. “We’ve done the math. At that price, it just doesn’t make any sense unless you want to be the king of Los Angeles.” ...

On the other hand, if you can bully your way into adding $55 per year to the annual bill of every cable TV subscriber in the five-county area of 17 million people ...
Guggenheim Partners started relatively recently, in 2000, by a great-grandson of Meyer Guggenheim, the patriarch of the famously philanthropic family. It now manages some $125 billion for the very wealthy — including Michael Milken — and has proved itself to be a skilled risk manager. Under Mr. Walter, the firm has grown beyond money management into insurance and recently hired Alan D. Schwartz to run its advisory practice. Mr. Schwartz is the former C.E.O. of Bear Stearns, who sold it as it was collapsing to JPMorgan Chase.

The Bear Stearns collapse in early 2008 was the warm-up for the Lehman Brothers crash later that year that brought the world economy to its knees. So, the Bear Stearns guy, Michael Milken, Peter Guber, ... To be honest, I can't find anything all that bad about Stan Kasten, but still ... 

Magic has some of his ultimate cleansing to do all right.

Kurt Badenhausen writes in Forbes that the favorites of ten contenders to wind up owning the Clippers are:
Magic Johnson & Guggenheim Partners
Johnson has been a part of the Sterling story from the beginning. It was pictures of Sterling’s girlfriend with Johnson on Instagram that set Sterling off on his racist rant. Johnson and his financial backers, Guggenheim, are interested in buying the Clippers, according to Yahoo’s Adrian Wojnarowski. If interested, the Johnson group is the clear favorite. The NBA would love to bring Magic into the fold. He is royalty in NBA circles. The Johnson/Guggenheim group blew other bidders out of the water paying $2 billion for the Dodgers. Guggenheim would also love to get its hands on the Clippers for TV purposes. The Dodgers’ rich price tag was fueled by an expected local TV deal with Time Warner Cable, which eventually climbed to $8.5 billion. TWC is having trouble getting carriers to pick up the Dodgers’ new regional sports channel, but adding another team to the mix would make the channel more valuable.

So, here's where it all finally fits together: Magic, the Guggenheim Partners, and their unofficial and utterly unpaid advisor Michael Milken are on the hook for a lot of money for the Dodgers purchase. 

So, let's try to think about this like Milken would. He's banned for life for getting any compensation for his investment advice (he had to pay the government $47 million in 1998 for cheating on his lifetime ban), so I will stipulate that when he talks on the phone to Guggenheim's president Boehly several times per week it's just to check up on the $800 million he has invested with Guggenheim Partners and to offer free advice out of the goodness of Mike's heart.

The Dodgers will turn out to be a goldmine for them if they can wield enough market power to extract the money from the local cable companies. At present, it's unclear if the Dodgers alone provide Guggenheim with enough local monopoly power. But, the Dodgers and Clippers (whose contract is up after the 2015-16 season) together could make the recalcitrant cable companies cry uncle to whatever outrageous demands Magic and Mike come up with. 

This is Hollywood Econ 101: the way an agent gets ahead is by assembling a valuable stable of assets and then threatening to withhold all of them unless he gets his way over one of them.

In the huge Southern California media market, Magic et al don't have that many options for buying another major league sports franchise. They own the Dodgers, they probably wouldn't be allowed to buy the Angels baseball team, there are no NFL teams, the NHL teams aren't vastly popular with locals, you can't exactly buy USC football or UCLA basketball, and the Buss family turned them down when they asked about buying the Lakers. So that leaves the Clippers as the obvious second asset to use in their battles with the cable companies.

And that may explain a few things.
    

78 comments:

Dave Pinsen said...

Not sure if you saw that tweet I copied you on, but the Daily Mail claims that V. Stiviano may have worked for or had an affair with Jerry Buss.

Steve Sailer said...

Saint Jerry and Devil Donald weren't terribly different, except that Buss's team always won and Sterling's team always lost, so that makes all the moral difference.

Canadian Observer said...

Lost in all of this Clippers brouhaha are the amazing things another Staples Center tenant has done recently. The L.A. Kings are only the 4th team in NHL history to have come back from a 3-0 deficit after beating San Jose on Wednesday night. Their upcoming second round series with their local rival Anaheim Ducks could be splendid. Drew Doughty, Anze Kopitar and Jonathan Quick are some of the best hockey players in the world right now.

Will there really be little interest in L.A. for this series? The Kings crowd seems quite energetic on T.V. and notable celebrities do attend their games.

Anonymous said...

What's wrong with the PGA Chsmpionship Steve?

Dan in DC

Anonymous said...

Not sure if you saw that tweet I copied you on, but the Daily Mail claims that V. Stiviano may have worked for or had an affair with Jerry Buss.

And "The Ultimate Cleanser" still couldn't obtain control of the Lakers?

Anonymous said...

""""'After all, the HIV-infected basketball legend is the "ultimate cleanser in sports." """"""


Now that's one of the best examples of Sailerian noticing things in the world of sports and how it effects the local economy of the year.

If only we all could learn to be that effective at looking outside the box.

Marcus Antonius Agrippa said...

There is a deep irony in the Roman sack of the Temple. The loot paid for the Flavian Amphitheatre. A theatre of dreams designed to fool the plebs: now you have Panem distracting white men and picking their pockets.

JI said...

Steve, if you're right that Sterling is viewing the Clippers as an investment, then that man must think he's going to live forever. Do billionaires live forever? Is there some new secret treatment that will do this? If so, maybe I'll put more effort into making money.

Handle said...

If they could just get a lawsuit started against Guggenheim et al, then Sterling's lawyers have got to be salivating at the chance for discovery. The path to them is through V. Stiviano, but I'm guessing they've already thought about a way to block that possibility.

Still, what does V. Stiviano know and when did she know it? Who could it harm if it leaked? How much is it worth to get out, or to keep quiet? How did she get put up to all this?

Keep your eye on the adventuress, her destiny will tell us a lot.

How surprised would you be to learn of her suicide or overdose in the near future?

Steve Sailer said...

LA billionaire David Murdock (Dole pineapple, etc.) intends to live to be 125. He build a giant laboratory campus in North Carolina for researchers to discover the secrets of extended lifespans.

Anonymous said...

http://www.ijreview.com/2014/05/134813-guy-written-hits-michael-jackson-madonna-combined-youve-never-heard/

Handle said...

"LA billionaire David Murdock (Dole pineapple, etc.) intends to live to be 125. He build a giant laboratory campus in North Carolina for researchers to discover the secrets of extended lifespans."

Those of us who'd like to live longer, healthier lives wish him all the best in his research!

Jason Roberts said...

Steve, there is one other sports team Magic & Co. could buy - Chivas USA of MLS.

Anonymous said...

Ha! Peter Gruber was the executive producer of the movie "Bonfire of the Vanities." You can't make this stuff up!

Anonymous said...

The reason you can't find much dirt on Kasten is because he's mostly a nuts and bolts sports guy, and has been for 30+ years - the people I know in baseball all speak highly of him.

That said, I do not think Magic/Guggenheim will beat out an Oprah/Geffen/Ellison ownership group. I believe the latter will win the bidding.

The Dodgers deal was ridiculously priced - good on the cable/sat carriers to not 'play ball' with the Dodgers/TimeWarner.

Anonymous said...

http://stuartschneiderman.blogspot.com/2014/04/feminine-beauty-and-public-health.html

Anonymous said...

Has any reporter asked Magic how many people he infected with Aids?

And how many of those people then died from the disease?

Harry Baldwin said...

How did Magic become the Ultimate Cleanser? As far as I can see, his elevation to mythic status involved four elements:

1. Is an African American, the race that arbitrates moral legitimacy in America today and has the power to offer redemption. Also, seems friendly and has a nice smile; not hostile and scary. Like Obama, the kind of black person white America embraces hoping other blacks will emulate their behavior.

2. Was an athletic superstar, blessed "with powers and abilities far beyond those of mortal men" like Superman. Validated as a national hero by President George H.W. Bush, who declared, "For me, Magic is a hero, a hero for anyone who loves sports."

3. Contracted HIV--but, incredibly, survived! Like Harry Potter, "the boy who lived," he was clearly singled out for some special purpose. Not only a member of the sacred race and a huge celebrity, but afflicted with a sanctifying illness. As Obama put it, the fact that Johnson lives with HIV, "doesn't just empower folks who are dealing with that illness, doesn't just help put research dollars in there, doesn't just educate the public. It moves the country and the world to think in an entirely new way that ends up changing the face of this country and our attitudes with the kind of grace and courage that only true leaders can display."

3. Became even more wealthy as an ex-athlete, further evidence of divine favor. As Obama put it, “Magic has become a prime example of somebody who was blessed with incredible fame and fortune from a sports career and understood his next step is to build institutions and businesses and employ people and go into communities that folks said weren’t worth anything and find that they’re worth a whole lot if somebody’s willing to invest in them.”

And not only invest in them, but pocket the increase in their cable bills! Nevertheless, we must kowtow to the superrich because they can do us favors, like Magic did when he hosted the Democratic Party fundraiser for at which Obama praised him. As Obama explained, “Obviously this city loves him, now the Dodgers love him, and he just continues to be the prince of this city.”

And don't let anyone suggest otherwise.

Anonymous said...

"there are no NFL teams"

The San Diego Chargers?

BurplesonAFB said...

"Do billionaires live forever? Is there some new secret treatment that will do this? If so, maybe I'll put more effort into making money."

I suppose you're already past the Zuckerburg window?

Ray Sawhill said...

If grown American males could lose 50% of their interest in and passion for sports, we'd all be a lot better off.

pat said...

There may be another direction for Basketball. One that would bring all these business empires crashing down.

I'm not going to actually predict that this will happen because I've read Popper - I know you can't really predict the future and also I don't know very much about the business side of sports.

But you do. So tell me, do you think all the basketball empires may implode from free basketball?

It's happened before. The porn industry I'm told has collapsed because you can't sell what people give away for free. I caught a documentary about some valley in LA that's reputedly the center of the porn industry. They interviewed this short, chubby, hairy guy named Ron Jeremy who is somehow a big porn star. He bemoaned what the Web had done to his industry. There is more porn now but less money for the pornsters.

BTW in the many Sci-Fi books and movies I've seen I don't remember anyone predicting a future with free porn. Starships-yes and monorails-yes but universal free access at all hours to porn - no. That must mean something.

But even more amazing is the explosion of free opera on YouTube. When I was a teenager I began my opera record collection. 'Tosca' was on two LPs and 'Lucia' was on three. I couldn't afford Wagner. Gotterdammerung was on six.

I still have hundreds of pounds of LPs in my living room and many more CDs. I tried to get every 'Lucia' recording made at one time. They were all on CD. I think I bought five.

But I can't play LPs anymore and I don't play CDs. When I first started posting videos on YouTube there was a ten minute limit. Today there are dozens of full length 'Lucia's' in full color and HD for free. That was never predicted in Sci-Fi either.

Finally there is boxing. When I was a kid I saw Cassius Clay (Muhammad Ali) on pay-for-view. This was movie theater pay-for-view. After a big fight they used to show fight excerpts in movie theaters. I saw the Ali-Chuvalo fight that way. I don't remember what the movie was that was also on the bill.

I attended live fights (Foreman) but also closed circuit broadcasts (Ernie Terrell). Everything I saw, I paid for.

Today there is pay for view cable but they are having trouble I hear because there is so much great boxing for free with any of the cable services. And you can always watch hundreds of hours of recorded fights for free on YouTube.

I can't imagine paying to watch any kind of prize fight today. Showtime has a whole series of fights on its subscription service every week. I'm seeing more fights than ever before and paying less.

Is there free basketball in our future? Maybe we will never again have billionaires like Sterling in the news. Mostly free boxing seems to have killed off the big players like Don King.

With 500 channels there is a basketball game on every night. When there are 5,000 channels what will it be like?

Patrick Boyle

Portlander said...

If I can think of it, it's already been done, so anyone seen a Craigslist or Ebay post for an NBA team for sale in LA?

$1,000,000,000 Firm. Cash only, no trades. No tire-kickers wanting a tour of the box suites.

Black Death said...

Steve -

You said - I feel like I really want to watch are the Olympics, the Masters, the U.S. Open, maybe the British Open...

And you think baseball on TV is boring?

peterike said...

Granted I'm a cynical old coot. But this kind of thing:

"I don’t want to realize a return on investment on buying the Dodgers. I want to have a multigenerational relationship that changes my life, Magic’s life, Magic’s grandchildren’s lives and all of our lives.”

This kind of thing makes me absolutely sick to my stomach.

sunbeam said...

"and the cable companies are theorized to be increasingly desperate for live sports programming that can't be obtained more cheaply over the Internet."

"The local cable companies are worried that raising their fees will drive their fans who don't like sports to start cutting the cable and turn to Netflix-like alternatives for movies and shows. I don't have cable, but the only sports I feel like I really want to watch are the Olympics, the Masters, the U.S. Open, maybe the British Open if I get up early enough, a few baseball playoff games, and maybe some college football. Most of that's available on broadcast. The cable companies are worried about pushing more people to follow me."

Okay, this is a fairly large scale issue I think. It is no secret that sports teams are selling for a lot, and it has been increasingly rapidly over the past few decades.

The pro teams that directly sell, the huge tv contracts that some of the college conferences get for broadcast rights (SEC for example).

But to me it seems like a bubble. There is no way they have enough vendor sales or ticket proceeds to pay for the huge amounts players get, and the incredible valuations of these teams.

Merchandise is a big deal, but only certain teams in each sport really reap the benefits of this. Realistically how much money do the Lions or even Dolphins make from gear sales, compared to marquee teams?

So to me the answer is the money is coming from broadcast rights, and that pretty much is the cable networks and OTA broadcasters.

Now they have offloaded costs onto municipalities and whoever is dumb enough to be coerced into paying, but that isn't going to support a 500-1 billion dollar pricetag for teams like the Clippers, regardless of being in LA.

Sports teams, even NFL ones didn't use to sell for these amounts.

I'm not sure that pro sports teams are any more popular than they used to be, have lots more people attending games, or even watching it on TV.

But the price of these teams and the payroll has gone way up.

Just seems like a bubble to me. And what happens one day if the cable companies start really shrinking or decide they aren't getting sufficient returns on these investments? What happens if one year they auction broadcast rights and no one is interested in paying anywhere near the previous values?

Hard to time these things, but if I owned a sports team, any team even a family one like the NY Giants and Mara family, I think I'd get out. Guaranteed ridiculous money I can see now, is worth more than possibly even more ridiculous money a bit later. I just don't like counting on the bigger fool, because sometimes you wind up with the bag.

Plus if this idea ever did take hold with sports team owners, it is one of those herd things. Better to be first out of the gates before anyone ever starts to think of these things.

Anonymous said...

The girlfriend did NOT leak the tapes:


https://www.google.com/url?q=http://www.huffingtonpost.com/2014/05/01/sterling-tape-leaked-third_n_5250370.html

Anonymous said...

Why doesn't LA have an NFL team? I know they had the Rams and Raiders for a while, but why haven't they had a team for such a long time? It's a huge market after all.

Sequester Grundleplith said...

Handle is on the right track. They're not going to kill Ms. Stiviano (does anybody know her first name?); it's hard to get away with that kind of thing nowadays, and in any event the dots are too easy to connect. I'm not a lawyer but here's my guess: Stirling's wife is suing the youngish lady for $1.8 million, correct? Let's say Stiviano loses in court. She pays what she can on the judgment - I hear she's got a few nice cars - and then declares bankruptcy. After her chapter 7 goes through, Guggenheim hires her into a well-paid and very low-profile sinecure. "Personal assistant to Mr. Johnson" has a nice ring to it although they may want to come up with something farther away from the limelight.

The one problem is that Stiviano seems to enjoy the attention she's been getting, and she may decide to keep it going by spilling the beans.

Dave Pinsen said...

The Google billionaires are taking on death too.

OT, I ask a Bloomberg senior economist if it would make sense to limit immigration in the face of high unemployment. He disagrees.

Anonymous said...

Guber launched his career as an independent film producer with The Deep, which became the second highest-grossing film of the year.[1]:p.86 (Though he hadn't liked the Peter Benchley book upon which the film was based, Guber later commented that the wet T-shirt clinging to curvaceous star Jacqueline Bisset "made me a rich man."

http://en.wikipedia.org/wiki/Peter_Guber

What a mensch!!!!

Can't wait to see the new Clippers Chearleaders' outfits.

http://www.nbaarena.com/en/cheerleaders/249/los-angeles-clippers-cheerleaders

Keep it classy Pete!!!

Anonymous said...

That...and it's getting almost impossible for Mark Davis, son of the late Al Davis, to get an agreement with Oakland, which has all kinds of troubles, to build a new stadium. Long story, but the only site that seems to work is the present site of the stadium (people get right off BART and can walk to the entrance). Raze this one and build on its site.

However, the owner of the Oakland A's, who wants to move to San Jose but has been blocked by the SF Giants from doing so (their territory, so they say), also wants a new baseball part. However, as those plans are in limbo, he is thinking about extending his Oakland Coliseum tenure there by signing a 10 year lease. If he does so, the Raiders can't get their new football stadium on that site (as you know, the decrepit Oakland-Alameda County Coliseum serves as a venue for both teams.

To add to Oakland's woes, the new owners of the basketball WArriors are taking the new to San Francisco.

As local writers have pointed out, that means Oakland might be left with one team, and their best choice is to lure the A's to stay by working with them to build a new part since a baseball team occupies the venue for 81 games, far more than the 10 (8 regular games, 2 exhibition) of a football team.

On top of it all, when Carol Davis, wife of the late Al, dies, there'll likely be huge tax consequences for son Mark. Speculation has it that he'll need a lot of $$$$$$$$$$. No, he doesn't want to lose the team his father made famous, but right now, he (as well as all sports owners in Oakland's market) is in a bind.

He was looking for land in Contra Costa County (which is where I do believe he should look), but something tells us that LA vultures are looking to swoop in and that's where a Magic and Co. might be looking--to the Raiders.

Whitehall said...

In "Wuthering Heights" alpha bad boy Heathcliff was asked how he made his sudden fortune.

He replied "Off the stupidity and greed of other men."

Professional sports is a huge vice and waste of time IMHO. My question to those who ask my favorite team - "Which corporation am I to root for?"

Anonymous said...

During his time as Lakers owner, Buss was widely known as a playboy and had a string of young girlfriends.[9] In 1990, he reached a settlement out of court in a palimony suit filed by Puppi Buss, who said that she had an on-and-off relationship with Buss for 15 years, and also alleged that he fathered her son;[10][11] details of the settlement were not revealed.[10]

On May 29, 2007, Buss was issued a citation for driving under the influence after two California Highway Patrol officers saw him driving his gold Mercedes-Benz on the wrong side of the road in the coastal community of Carlsbad in northern San Diego County, with a 23-year-old woman passenger. After failing a field sobriety test, Buss was taken into custody, given a blood test and booked on suspicion of driving while intoxicated with a blood-alcohol level over 0.08.[12]


http://en.wikipedia.org/wiki/Jerry_Buss

At 75 getting arrested for driving drunk while possibly getting fellatio from a young hottie. Sounds like Buss and Sperling were blood brothers. Want to bet any day now we will hear about them participating in an orgy in Hef's grotto?

e said...

"so I will stipulate that when he talks on the phone to Guggenheim's president Boehly several times per week it's just to check up on the $800 million he has invested with Guggenheim Partners and to offer free advice out of the goodness of Mike's heart."

I would love for these conversations to be taped & leaked.

i am the walrus said...

You need to work the invalidated Chris/Cliff Paul trade to the Lakers into your conspiracy. I'm not sure how. Be creative.

Anonymous said...

Dave Pinsen said...
Not sure if you saw that tweet I copied you on, but the Daily Mail claims that V. Stiviano may have worked for or had an affair with Jerry Buss.


Maybe TMZ should look into who the 23-year female was who with Buss when he was arrested by CHP in May 2007. This was 7 years ago and, coincidentally, V. Stiviano is now 31.

Grey Enlightenment said...

The problem with attempts at life extension is we don't know why some people die, besides the obvious causes like,say, heart disease or cancer. We can possibly prevent and cure these problems but what about aged people that simply pass in their sleep with no obvious cause?

Anonymous said...

Now that's one of the best examples of Sailerian noticing things in the world of sports and how it effects the local economy of the year.

Is there anyone besides me who still knows/cares about the difference between "affect" and "effect"?

Anonymous said...

He should sell the team to his wife for $0.99.

Aristippus said...

Guggenheim Partners also bought the WNBA's LA Sparks back in February. From poking around the net, it seems that the Sparks have lost millions the past few years, but for a potential sports network they would have some value as additional filler content. The Sparks don't move the needle on their own, but are a nice supplement to the stable of teams even if only for PR because people are supportive of the WNBA in theory even if they won't watch it in practice.

Anonymous said...

http://www.foxcarolina.com/story/25373283/spartanburg-waffle-house-shooting-video-released-sparks-new-debate

Young black male robs a Waffle House at gunpoint and then someone dares to shoot him who has conceal carry permit. Of course the family is saying he should not have been shot just bc he was pointing gun at people! They are going to sue the man and claim he needs more training. The comment section is pretty funny - the people aren't exactly buying that nonsense

Whiskey said...

The Clippers are held in a trust by Sterling, his wife, and two kids. So genetically he plans to live forever.

Steve, what do you think of the likelihood of people just abandoning TV as it gets more and more "diverse?" Putnam holds that the more diverse an area gets, the more people withdraw. And become distrustful. Would this not include TV, and be consistent with the extreme fracturing in popular culture seen since, oh I dunno the late 1970's when diversity really picked up?

I am seriously looking into Roku for streaming the few stuff I watch on cable: Pawn Stars, River Monsters, Survivorman, Outrageous Acts of Science, F1 and Sports Car racing. I can't even get motorcycle racing FIM and Superbike (because they're on Al Jazeera Sports beIN). All the rest I can get for free off OTA broadcasts.

I mean even if Magic and Mike get their way and combine the Clippers and Dodgers, and say Direct TV pays to carry them, won't that just make the cost so high that people cut the cord? Heck Amazon has "cut the cord" stuff on EVERY page showing digital OTA TV accessories like antennas, recorders/analog-digital decoders, etc.

Aren't we seeing a cable bubble like the fiber bubble in the late 1990s when Cable and Wireless briefly was the most valued company in the market?

Mark Caplan said...

An expert on Bloomberg.com said the other NBA club owners can vote to take ownership of the Clippers away from Donald Sterling WITHOUT OWING STERLING A DIME. The other owners can then sell the franchise. It's not as most people assume, that the owners are going to order Sterling himself to sell the club.

RAZ said...

Not sure this has been addressed elsewhere, but what happens if the NBA forces the Clippers up for sale and there are two offers: One from a cable TV/movie company consortium for $1B. The other from a Magic Johnson fronted group that also prominently features Oprah, but for only say $600M, and the NBA chooses to approve the lesser bid due to its wanting the Black visibility. Does Sterling, assuming he has lived long enough, have recourse?

Anonymous said...

Re: David Murdock, one of the chief ways to extend one's personal lifespan is to naturally consume more and more pineapple products per day.

countenance said...

Steve Sailer wrote:

Recently, however, several factors have conspired to drive the value of being the owner of the Clippers up. The Clippers actually have exciting players now

I respond:

The latest collective bargaining agreement with the NBA players union forces teams to have a salary floor, that is, a minimum yearly amount that all teams must spend on players. Sterling had no choice but to pay players, and the ones his people drafted turned out to be good. That, and the league last year or the year before vetoed trading Chris Paul to the Lakers, and instead he went to the other L.A. team. Sure, the Clippers have gotten good, but they have done so in spite of Sterling.

jody said...

they could buy MLS teams if they want to get a jump on the future. they're cheap and offer a small but steady revenue stream. there are 2 in LA.

larry ellison bought himself an ATP event, maybe they could consider something like that but moving it to LA.

"LA billionaire David Murdock (Dole pineapple, etc.) intends to live to be 125. He build a giant laboratory campus in North Carolina for researchers to discover the secrets of extended lifespans."

yet billionaire steve jobs went down fast to pancreas cancer. until anthony atala or somebody gets organ regeneration in a lab down to a science, you'll still be taken out pretty easily by stuff like that. or car crashes.

an interesting thing to consider in the future, when the very rich are living to 150, 200 years old, is how they will become like hermits, afraid to do anything for the risk they could die.

an actuary could explain to you that if you were a vampire and never aged, what would actually end up killing you on a long enough time line. 100 years until a fatal car crash, 200 years until a fatal fall off your roof, 300 years until fatal food poisoning, so on and so forth. it's an area ripe for science fiction exploration.

of course, that REALLY brings the estate tax to the forefront. 150 years of compound interest is...a lot. stuff like dune, with generational hegemonic households controlling the entire known human world, does not seem so far fetched.

Anonymous said...

Help, is there a thread were Sterling's most damaging quotes can be found?

So far I'm reading about a guy who doesn't want his Mistress to be with a sexually active HIV dude, thinks Koreans are better tenants, and talks about he relative treatment of blacks in US and Israel.

His Scots name is just a bonus.

Goatweed

Semi-employed White Guy said...

It's funny how the NBA drools all over Earvin "Magic" Johnson, noted HIV-carrier, and probably spreader who slept with hundreds or thousands of women pre-AIDS announcement. I still don't believe it was all heterosexual sex. It's very difficult for a hetero-only man to get HIV from intercourse with females, even an uber-promiscuous one like Magic. I don't know of any of my hetero-male friends or even friends of friends from the 80s who got AIDS. I do know a couple of homosexual ones that did though!

Steve from Detroit said...

"...you can't exactly buy USC football or UCLA basketball..."

Great line and point well made, except Sam Gilbert might disagree.

On another note, the rumor around here is that Magic is stingy with his donations to Michigan State. He is, notwithstanding his lack of largess, always noticeable if they reach the Final Four.

Maxwell Power said...

Great book about Guber (and his ilk)
http://articles.latimes.com/1996-06-16/books/bk-15424_1_jon-peters

Anonymous said...

Rival Dodgers bidder Steve Cohen is also a gem of a guy.

Truly, we are blessed to have our ruling class.

albert magnus said...

For the record, the Houston Astros and Houston Rockets have a similar arrangement with Comcast in Houston that has similar problems. The Astros and the Rockets have ownership stakes in CSN Houston, but CSN Houston is trying to declare bankruptcy because it can't see its cable package. This has been going on for over a year now.

It's in the courts with Jim Crane, the current owner of the Astros, suing the previous owner of the Astros, Drayton McLane, who actually put the deal together.

The Rockets are an exciting playoff team with name players and the Astros are putrid, but they haven't had success in the Houston market with a lower cable fee, so I don't see the Clippers changing the game either.

Remember a lot of the high-profile games in the season are owned by ESPN, TNT and other sports networks and not the local broadcaters.

Anonymous said...

"Mr. Walter plans to use money from Guggenheim subsidiaries that are insurance companies — some state-regulated — to pay for a big chunk of his purchase of the Dodgers."

For what it's worth, a 'rule of thumb' for regulated insurance companies (where the assets of an insurance company are equal to the liabilities and capital, basic accounting identity), is that the insurance companies invest the amount of assets equivalent to liabilities (mostly future payments for insureds) in bonds, and the assets equal to capital with more discretion. Some buy bonds, others common stocks, and other stuff.

So, the regulated insurers have minimum capital requirements, and if investments eat into capital sufficiently, it has to be replenished by the owners -- either through direct capital infusion or from earnings, which could be dividended to the owners.

In the financial crisis, the only insurers that had serious problems were ones with products that had imbedded derivatives. Generally the higher of minimum returns or some index.

It isn't that I disagree with your basic premise -- it is just the technical details about insurance company investment regulation.


Anonymous said...

Anything wildly improbably is possible. After all, Magic Johnson caught aids through heterosexual activity.

Anonymous said...

As far as selling, auctions tend to generate the highest prices. The publicity has whipped up interest and awareness of the team.

It wouldn't be impossible for Sterling to get both time and concessions in an agreement not to litigate. Something like name one with impeccable credentials to run the team for a few months and more important, to allow the team to be sold with less restrictions.

Move it anywhere (Seattle), whatever. Sell to people that may be sketchy, but aren't Sterling, &c. Not that he needs to sell to sell to someone sketchy, just get bids from them.

This is based on the premise that Sterling knows how to make money on a deal. Being the most hated man in American sports is a problem. But also potential leverage.



Anonymous said...

Maybe after they come up with immortality for humans, they can invent a car that runs forever and needs no replacement parts.

Anonymous said...

I never really thought of Magic being gay. But it makes so much sense. I guess my gaydar wasn't very good.

As far as making the love glove semi mandatory for heterosexuals, there are some unintended benefits. There are some pretty awful STD's that aren't fatal.

In evolutionary history, sex and the subsequent and inevitable childbirth used to be highly risky and often fatal for females.

Now we have bareback. If interrogated, most heaters (as well as gays) will confess to the occasional lapse. It is both a new and the last taboo regarding sex.

Anonymous said...

Following on from that car analogy comment, I suppose I should remove the "replacement parts" stipulation. Both humans and cars can get parts swapped out, except the brain in humans. But there is nothing to really stop every part being swapped out of a car, except cost of course. So we arrive at the Theseus ship paradox and the car analogy breaks down.

Immortality of the organism as opposed to the DNA is a rich man's game. We already have the ability to swap quite a few broken parts out and working parts in, whether new or salvage. Or fix/replace parts from larger assemblies. So life is already extended quite a bit from what it used to be. But that is not enough for rich men they want as much time as possible on earth. They want the ability to think, move about and manipulate objects, at a minimum. To have their own testes function is also desirable - everything else need not be original parts.

So what are the big show stoppers still around? Cancer, heart disease, alzheimers. If you could swap out most of the other parts but the core essentials with a preventative maintenance plan before they get cancer, perhaps life could really be extended. I suspect we'll have to wait quite a while for that, but who knows. Perhaps 3d printed organs are closer than we think.

Angelo said...

I don't like to post off-topic subjects, but this is very important. There is a very sad story on the front page of MSN about a child who was killed trying to protect his sister from a rapist. The two victims were black as was the attacker. The attacker threatened the girl into saying it was an older white man who committed the crime or he would hurt her family but she later revealed the truth to the authorities. This story is recounted by MSN by saying that a "white male" was accused, but that turned out to be false and now they are on the lookout for a teenage "male". They didn't reveal the race of the real perpetrator sentences after saying the race of the fictional character. Does the real killer/rapist mysteriously have no race? This is the most blatant case I've ever seen of the media covering up the race of black suspects while announcing the race when there is a white suspect. I had to do a Google search for the full information and I'm thankful that UPI and numerous local newspapers are revealing the true race of the attacker. Some in the media seriously do not care about the damage they are doing with an inflammatory subject like this. Some of them really want the worst things to happen, as long as it doesn't happen to them. Here are the two reports :
First the biased one-
http://www.nbcnews.com/news/crime-courts/boy-8-killed-defending-sister-rapist-cops-n95571

Now the one that tells the full truth-http://www.upi.com/Top_News/US/2014/05/02/8-year-old-boy-beaten-to-death-defending-his-12-year-old-sister-from-rapist/7741399056227/

This will not end until conservatives with some voice in the media start openly criticizing these news outlets that purposely cover up the whole truth.

Anonymous said...

OT on evolutionary success:

[Oklahoma City Thunder center Steve Adams'] father, Sid Adams, was an Englishman who settled in New Zealand after serving in the Royal Navy. Steven is the youngest of Sid's 18 children with five different women; his mother is Tongan. Steven's siblings and half-siblings are notable for their unusual size and athletic prowess. Adams' brothers average 6'9" (2.06 m), and his sisters average 6' (1.83 m).[3]

One of Adams' sisters is Olympic gold medal shot-putter, Valerie Adams.[3] One of Adams' brothers is NBL player, Sid Adams, Jr.[4][5]

Anonymous said...

Anyway, if Sterling decides to fight termination of his franchise, it's going to be interesting. I've read the NBA "Constitution" and an owner can only be terminated for a limited number of reasons, none of which reasonably apply here. The NBA lawyers are going to try to get around this by pointing to the waiver of recourse provisions in the Constitution and those asserting any decisions made by the league with regards to termination are arbitration decisions (and thus not effectively reviewable in court) but those are likely unenforceable.

Anonymous said...

HIV/AIDS

1. Needle sharing.
2. Transfusion.
3. Catching/being a bottom/anal receptive.

Off topic(?): telishment is a word that really deserves more currency.

Anonymous said...

Steroid injections could explain it but I think Magic is a bisexual.

Anonymous said...

Steve, will you write about Toyota moving their US HQ from Torrance to Plano, TX?

Anonymous said...

Saint Jerry and Devil Donald weren't terribly different, except that Buss's team always won and Sterling's team always lost, so that makes all the moral difference.




Right as you said some dude wants a NBA team and a donald is Expendabible.

Anonymous said...

The Forbes column you include in the blog characterizes Sterling's conversation as a 'rant'. So did an editorial in my local newspaper. I keep seeing his comments characterized as a rant.

And yet, I listened to the audio and what I heard sounded like a whine not a rant. The two things are wildly different. What accounts for the media distortion here? I know it seems a small thing but why keep making statements that are so far off base with regard to this simple little detail?

Anonymous said...

Once upon a time Silvio Berlusonni became Italain Prime Minister and he got a bid of €1 billion for some state company. The guy PM before him only got €500 million.

a friend of the PM getting €500 000 000 from the taxpayers for free : NBA commisioner is conspiring to get Ervin Johnson a franchise on the cheap?

Anonymous said...

Ms. Stiviano (does anybody know her first name?)

I think it's Veejayjay

David said...

>He should sell the team to his wife for $0.99.<

People's heads would explode if he did that. Can he?

Anonymous said...

Not sure if I posted about this on your site a couple days ago:

I lived/worked in L.A. a few times-including 5 or so years from '89 to '94. In late '91 when news came down about Magic's HIV, I was driving home from work, stuck in traffic due to road work, listening to music on the car radio-they broke into the song "We have breaking news" like it was 9/11 or JFK in Dallas--I didn't know what the hell was happening-- and went to the live press conference where magic announced he had "attained" HIV.

Fast forward a year or so-I was in a restaurant/bar where I hung out-lot of celebs, and regular folks-good place. I got to talking w/ 2 black guys, fairly well-to-do. One owned several fast food franchises--not kidding-fried chicken.

Anyway, they were pretty connected. They knew Magic a little, and knew a lot of folks who knew him well. They insinuated that he was gay or bisexual, and said basically: look these athletes all pass around the same groupies in all the cities, in LA the local skanks might also moonlight as hookers, do porn, and /or get busy w/ a sugar daddy or several--these guys might get into hot water with that--the clap, a lot have herpes, maybe an unwanted pregnancy, or a scam/blackmail/shakedown--and that's been going on for a long time.

But none of those guys have HIV--just Magic-why is that?

I never forgot that.

Anonymous said...

Jeremy Clarkson today called for the resignation of Labour's Equality Spokesperson Harriet Harman as Harman has not called for her insurance premium to go up to take into account the fact that she has had a 12 month driving ban for picking up 12 penalty points which would have happened if she were male.

Naturally The Guardian has allied itself patrician politician who comes from the same private school background as the UK's New York Times.

jody said...

"Why doesn't LA have an NFL team?"

so the league can bully teams. it is their bargaining chip. do what we say, or we'll take your team and move it to LA.

most recently this threat was used to force tom benson to keep the saints in new orleans.

this wasn't the reason all teams left LA back when they did, but it IS the reason no new teams show up there now. if the league ever does agree to a team in LA, which they might at some point, it would only be on their terms, with a dynamite deal slanted totally either in their favor or in favor of whatever owner they preferred. it wouldn't be a fair market, whatever is the going rate kind of scenario. the construction, licensing, ticketing, and television deals would all be preposterous.

Anonymous said...

I second the opinion on Stan Kasten. A well-known and respected baseball, during his tenure as GM the Braves won more games than any other team. He also ran NBA and NHL franchises.

Highest bidder in sports franchise auctions don't always bid. John Henry's group wasn't the highest bidder for the Red Sox, but his was the group that the baseball lords wanted.

All the talk about Sterling and a sale of the Clippers ignores the wide latitude that the owners and commissioners have to do as they please.

Anonymous said...

The Forbes column you include in the blog characterizes Sterling's conversation as a 'rant'. So did an editorial in my local newspaper. I keep seeing his comments characterized as a rant.

And yet, I listened to the audio and what I heard sounded like a whine not a rant. The two things are wildly different. What accounts for the media distortion here? I know it seems a small thing but why keep making statements that are so far off base with regard to this simple little detail?


Don't be silly. The "Racial Justice" modifier means everything means whatever "they" want it to mean. Because Justice. By any means necessary, right?

So, "bigotry" now means being a total leftist bigot in pursuit of Racial Justice; so a howling mob out for blood is now the textbook definition of the "fight against bigotry."

And any "racist" dialogue that goes on for longer than a Tweet is a "rant."

Starting to get it?

Svi

Anonymous said...

Why doesn't LA have an NFL team?"

Doesn't LA also refuse the NFL's Aid to Billionaires Program by insisting taxpayer money will not be used to build a stadium suitable for the NFL?

Evil Sandmich said...

The Bear Stearns collapse in early 2008 was the warm-up for the Lehman Brothers crash later that year that brought the world economy to its knees.
---
Just a quibble, it wasn't the Lehman crash itself, but why it crashed that has caused our economic issues as of late. No one trusted anyone else's collateral; and they still don't but they know that the Fed will print up bales of funny-money (as they have been) to cover up for that fact.