transaction

TWG Global — the holding company of Dodgers owner Mark Walter — rejected allegations of financial impropriety in the purchase and operation of the Dodgers and reiterated the team is not for sale.

At a time insurance regulators and federal investigators are looking into allegations that insurance companies under Walter’s umbrella did not properly disclose and conduct transactions between other companies he controls, and after Walter sold his controlling interest in the Lakers at a record $12.5 billion valuation, potential bidders have monitored whether the Dodgers might be sold as well.

In a statement Tuesday, TWG Global decried “multipronged attacks against TWG … by unnamed sources with self-serving interests” and said no insurance policyholder has been hurt as a result of the company’s financial transactions.

“There is no victim here,” the statement said. “No one has been harmed, and no one has claimed they were harmed.”

In 2012, when Walter and his partners bought the Dodgers for $2 billion, The Times reported the use of $1.2 million from Guggenheim Partners insurance funds into the deal. At the time, rival bidders expressed concern over the unusual financing, but state insurance regulators cleared the deal and Major League Baseball approved it.

“The transaction was subject to a full investigation conducted by an outside law firm on behalf of insurance regulators from multiple states,” the statement said, “which identified no irregularities and resulted in no further action.”

Even with the Dodgers issuing over a billion dollars in deferred contracts and amid whatever transactions might have been conducted between TWG-related insurance companies and the Dodgers’ affiliates — including ones that hold the team’s television rights and ticket revenues — the Dodgers’ ability to fund player contracts is not at risk, according to the statement.

“The Dodgers have the highest revenue in baseball, and it significantly exceeds the team’s obligations to its players,” the statement said.

The statement reiterated that, as Dodgers president Stan Kasten has said, “the team is not being sold and no sale process has been initiated.”

The Dodgers, if sold, could likely command a price in the range of $10 million to $13 million, industry analysts have told The Times.

The Lakers sold at a record price for a North American sports franchise, although industry analysts have said a competitive bidding process likely would have resulted in an even higher sale price.

Said the statement: “Mr. Walter was approached by Josh Kushner and his team about this transaction and the agreement represents a 25% premium to the price paid by Mr. Walter less than a year ago (and an even higher premium to the $5.0 billion valuation Mr. Walter paid in 2021) — hardly a ‘fire sale.’”

The statement added: “TWG is not looking to sell its sports assets at ‘fire sale’ prices to raise capital for its insurance operations.”

TWG said it is “working cooperatively and in partnership with the Delaware Department of Insurance” to resolve the regulatory issues and “is committed to working with the U.S. Department of Justice and the Securities and Exchange Commission to resolve their inquiries.”

“TWG stands firmly behind the integrity of its business,” the statement read. “Despite what has been reported, there has been no fraud.”

When LeBron James signed up to lead the Los Angeles Lakers to NBA glory with a $154 million contract in 2018, it wasn’t the biggest deal he did that year.

Just months before he joined, a limited liability company he controls borrowed almost $300 million from a pair of Midwestern life insurers advised by an arm of Guggenheim Partners, according to insurance industry records reviewed by Bloomberg.

The previously unreported bonds, which are due in 2049, were structured to provide immediate cash to James and backed by a stream of future revenue tied to his earnings outside basketball such as a lifetime Nike Inc. sponsorship, people with knowledge of the matter said.

The burst of lending began before Guggenheim leader Mark Walter started acquiring the storied basketball team. In an abrupt turn this month, the billionaire mogul agreed to sell the Lakers amid a federal probe into parts of his business empire. There’s no indication that the loans to James have anything to do with those inquiries.

Athletes and artists are increasingly using future earnings like royalties and licensing deals to structure deals that help them unlock immediate capital. David Bowie was famously the first recording artist to go to Wall Street to tap the future earnings of his music, paving the way for a thriving market for esoteric securities.

But James’ deal offers another look at how Walter and fellow Wall Street money managers have tectonically shifted the once-boring business of life insurance, steering policyholder premiums into more unusual investments. Guggenheim has moved insurers’ money deeper into private credit, sports franchises and — with James — financing for a star player. That’s far outside the industry’s traditional focus on plain-vanilla assets to reliably pay out future claims.

The two insurers — North American Company for Life and Health Insurance and Midland National Life Insurance Co. — are both owned by Sammons Financial Group. During a call with investors this week, Sammons said Guggenheim was the sole manager in charge of picking assets for the firm’s portfolios until 2021, according to people who heard the remarks and, like others in this story, asked not to be identified describing confidential dealings.

Sammons has been distancing itself from Guggenheim recently. Walter’s firm had long counted Sammons’ parent company among its biggest investors. During the call, though, Sammons’ representatives said it has been selling down that stake, the people said.

The “transactions were a securitization done by Mr. James with his personal, non-NBA salary, assets and income which is a very common financial structure for an individual with this level of earnings and assets,” a spokesperson for James said.

Spokespeople for Sammons and Guggenheim declined to comment.

The scrutiny of Walter’s empire by the Justice Department and Securities and Exchange Commission has turned up the spotlight on the intermingling of asset managers and insurers.

Wall Street power players have used insurance balance sheets to pursue their quest for higher returns, steering the savings of everyday Americans into more opaque and complex investments. The approach lets asset managers originate and structure deals, and then find uncomplaining buyers by parking such investments on the balance sheets of insurers they influence.

King James Funding

James’ borrowing from the two Midwestern insurers — structured as sales of asset-backed bonds — began when he was at the Cleveland Cavaliers and his career was poised for new heights.

The two companies bought almost $300 million bonds issued by an LLC he controlled called King James Funding, the records show. Within a few years, the LLC paid down some of that debt, then sold more bonds to the insurers, leaving them with about $245 million on their books by the end of last year, the records show.

The initial bonds from 2018 had a 4.8% interest rate and aren’t due until late 2049, the industry filings show. Terms are otherwise scant in the records reviewed by Bloomberg.

A few months after the deal, James started looking for another team as a free agent, ultimately picking the Lakers. In an oft-retold moment, he received a visit at home from Walter’s longtime business partner Magic Johnson, then a top executive for the Lakers. James ultimately signed a four-year contract.

Then in mid-August 2022, James signed a $97 million contract extension with the Lakers. Around that same time, the same Midwestern insurers provided his LLC with more cash, buying almost $60 million of 34-year bonds with a 5.75% interest rate, the insurers’ records show.

“Both transactions were independently credit rated by a third party and the 2022 transaction was fully approved by NBA,” James’ spokesperson said, noting the athlete had no affiliation with Guggenheim, Sammons, North American Co. or Midland National beyond their participation in the transactions.

Guggenheim also got involved in some of James’ other personal ventures. As the Covid pandemic took hold in 2020, he and his childhood friend and business partner, Maverick Carter, announced that they had raised $100 million for their media venture called SpringHill Co. Guggenheim was listed among investors in that company.

Leaving the Lakers

For more than a decade, Walter has mixed money from insurers with investments in sports. His 2012 acquisition of the Los Angeles Dodgers with business partners including Johnson relied heavily on the insurance industry.

Afterward, the new team’s owners ramped up spending on players to turn the franchise into a jewel of professional baseball, appearing in five of the past nine World Series. But that playbook isn’t as feasible in the NBA, which has stricter caps on team salaries.

Walter’s acquisition of the Lakers began in 2021 when he purchased a minority stake, granting him rights that paved the way for him to take a majority stake last year.

The sale of the team came as Walter has been reshaping his empire to unwind more than $20 billion of loans on his insurers’ books that should have been marked as funding affiliated businesses, but weren’t. While regulations allow insurers to lend money to such parties, they require that the dealings be disclosed.

James, meanwhile, announced that he’s leaving the Lakers and he signed a two-year deal with the Philadelphia 76ers. His new team is co-owned by Josh Harris, whose 26North Partners invests across middle-market private equity, credit and insurance.

Li, Sridhar Natarajan and Rajbhandari write for Bloomberg.

David Ellison’s Paramount Skydance has asked a judge to force California Atty. Gen. Rob Bonta and his coalition of 11 other states to prepare to set aside as much as $1.9 billion as the Warner Bros. Discovery merger challenge heads into overtime.

In Monday’s court filing, Paramount requested the plaintiff states, including New York, Colorado, Oregon and Nevada, as well as the Writers Guild of America, post a bond that would cover the “ticking fees” Paramount promised to pay Warner shareholders should the deal stretch beyond its anticipated September close.

Ellison was confident his proposed Warner takeover would sail through its regulatory clearances. President Trump’s Justice Department approved the merger in June, as have dozens of other countries.

The states would not be required to pay the full $1.9 billion upfront. Instead, they would have to come up with a portion of that amount by Sept. 30. Should the Democrat state attorneys general and WGA lose their lawsuits, they would ultimately have to pay the full amount.

Monday’s court filing highlights Ellison’s frustrations and the financial pressures that deal delays will bring the media company. The filing also continues Paramount’s full-court political pressure campaign to get Bonta and the other states to abandon their antitrust lawsuit.

Paramount did not expect such a spirited challenge from Bonta and the 11 other Democratic state attorneys general who banded together with the WGA to try to block the $111-billion merger of two historic Hollywood studios.

Paramount’s 23-page filing, signed by former high profiile federal prosecutor Danielle Sassoon, was intended to rattle the states.

Paramount is trying to create divisions among the plaintiff states by prompting them to question their resolve in fighting a protracted and potentially expensive legal battle, according to a person familiar with Paramount’s strategy who was not authorized to speak publicly.

Because WGA has separately sued to unravel the deal, Paramount has asked the judge to have the union post a bond to cover some of the costs, too.

In its motion, Paramount cited the Clayton Antitrust Act, which is the foundation for Bonta’s lawsuit. The law carries a provision to require plaintiffs to post a bond to cover the potential financial harms of halting a transaction.

The bond gives a defendant, in this case Paramount, a way to recover lost funds should they ultimately prevail in court.

U.S. District Judge Araceli Martínez-Olguín will be asked to rule on the request during a Wednesday court hearing.

“We have satisfied all closing conditions under our merger agreement, having received regulatory clearances from 68 jurisdictions,” Paramount said in a statement. “These two lawsuits are the only barrier to closing this transaction.”

Paramount is incurring considerable legal fees and deal-related costs.

The company cited a potential eight-month merger delay because Martínez-Olguín scheduled the trial for March 2. If the case goes to trial, it might not be decided until next May.

At issue are the “ticking fees” that Paramount in February agreed pay to Warner investors should the merger be delayed . Paramount agreed to pay $.25 a share for every quarter until the acquisition finalizes.

The fees add up to $7 million a day, or $650 million per quarter.

Paramount is facing a June 4 deadline to close the deal. That’s when Warner Bros. Discovery can demand a $7-billion break-up fee.

Paramount wants to get the deal done as soon as possible, and with the approval of Mexican regulators last week, only Bonta and the states’ lawsuit stands in their way.

Paramount also is cognizant of shifting winds in Washington should Democrats regain control of Congress in November, which could bring fresh scrutiny to the merger .

Ticking fees weren’t the only costs of the extended timeline.

“There will be no integration and no ramped-up investment in content, production, and creative talent by the combined company,” Paramount said . “Employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay.”

Last week, the Directors Guild of America and the International Alliance of Theatrical Stage Employees — which represent a combined 200,000 union members — waded into the clash over the merger, which continues to carve deep divisions throughout the industry.

“We remain confident that plaintiffs’ case is without merit and will defend our pro-competitive transaction in court,” Paramount said. “We look forward to closing this transaction and delivering its benefits to consumers and entertainment industry workers in California, the United States and around the world.”