Mark Walter and his investment firm have made a fortune buying beaten-down assets — and few as troubled as the Dodgers.
Walter, the presumptive new controlling owner of the Dodgers, runs Guggenheim Partners, a financial services firm known on Wall Street as low-key but aggressive.
Guggenheim capitalized in recent years on the travails of large investment banks, which were pounded during the 2008 financial crisis by bad investments and even worse public relations.
Launched a dozen years ago as an investment management firm, Guggenheim has gobbled up a range of properties, including insurance companies, a struggling model-train maker and even a stake in the venture that owns the Hollywood Reporter trade publication. It is also is a big player in commercial real estate debt. That sector was hammered hard in the 2008 meltdown.
Guggenheim’s biggest hire was the former chief executive of Bear Stearns, the disgraced investment bank that collapsed in early 2008 after ill-conceived bets on the housing market. Late last year, Guggenheim bought the political consulting division of MF Global, the failed commodities broker that was headed by former New Jersey Gov. Jon Corzine.
“Others were making some investment mistakes or the world hit them,” Walter said in a brief interview Wednesday. “We were able to grow at a time when some others stumbled.”
But at a record $2.15 billion — roughly $500 million more than the next highest bidder, and a price tag that surprised many observers — the Dodgers aren’t coming cheap.
“The market drove the price,” Walter said, adding that he doesn’t feel compelled to recoup the investment immediately. “It’s a multi-generational thing my daughters’ granddaughters will own.”
Walter sidestepped questions about the financial merits of the deal. There are no current plans to develop the land surrounding Dodger Stadium, he said, though he was coy about the prospects for launching a regional cable TV network, which many analysts expect at the end of the team’s current TV deal with Fox Sports, which runs through 2013.
“When that relationship ends, we’ll put in place whatever is the most appropriate next scenario,” Walter said.
“You’ve got to win and cut some really good media deals, because that’s how you make the money back,” said Dennis Santiago, chief executive of Institutional Risk Analytics, a Torrance-based research firm.
The steady expansion of Guggenheim Partners has come during a difficult period for the financial services industry.
“They have an extremely good reputation in New York City at a time when people are raising questions about the industry,” said Bob Profusek, a partner at the Jones Day law firm. “They’re sort of behind the scenes, not flashy but effective.”
Guggenheim is connected to the family of Meyer Guggenheim, who came to the U.S. in the 1840s and made a fortune in mining. Peter Lawson Johnston II, a great-grandson of the Guggenheim patriarch, launched the financial services company in 2000. Prominent museums in New York and Bilbao, Spain, are named after the family.
The firm, which has dual headquarters in New York and Chicago, has more than 1,700 employees. It manages more than $125 billion, primarily for institutional and high-net-worth investors.
In bidding for the Dodgers, Walter and his partners join a string of other financiers who have ventured into professional sports — often with mixed results. The principal owners of the baseball’s Boston Red Sox and the NBA’s Boston Celtics and Philadelphia 76ers also hail from the financial industry.
“This is financial engineering at its best,” said William D. Cohan, who has written books about Bear Stearns and Goldman Sachs, “private equity Wall Street wise guys buying themselves a major franchise.”