Speaker 1: Hey, let's get into what's happening with the Dodgers and
Speaker 1: their ownership group right now. Melody Gutierrez joining us on FT.
Speaker 1: She's an investigative sports reporter for The Athletic Melody, thank
Speaker 1: you for joining us, and we need help. We want
Speaker 1: to know more about what's going on here. I know
Speaker 1: you're doing a lot of investigating reportive investigative reporting on this,
Speaker 1: So what can you tell us about the situation Mark
Speaker 1: Walter is in right now?
Speaker 2: We know he sold the Lakers. What have you learned
Speaker 2: so far?
Speaker 3: Yeah, so this gets into insurance spreadsheets, which is not
Speaker 3: really where we spend our time, you know, in the
Speaker 3: sports world. So you know, new subject for me as
Speaker 3: well in terms of diving into those filings. But I
Speaker 3: think what it comes down to that is easiest to
Speaker 3: explain is that you know his companies. He has two
Speaker 3: insurance companies, Delaware Life and clear Spring Life. They have
Speaker 3: been making loans to other entities. And what the SEC
Speaker 3: and US Attorney's Office in New York have been looking
Speaker 3: at is you know whether or not he's standing on
Speaker 3: both sides that, But is he on the side of
Speaker 3: the person lending, the company lending and on the other
Speaker 3: side of the borrower, which when you're using insurance funds,
Speaker 3: you know, those are supposed to be pretty low risk.
Speaker 3: There's not a lot of visibility into what risk factors
Speaker 3: there are with these loans. But you know, there's a
Speaker 3: lot of questions on you know, how much was known
Speaker 3: why these were listed as companies that had nothing to
Speaker 3: do with his own company when clearly they've now kind
Speaker 3: of righted some of these filings to show a significant
Speaker 3: increase in the amount of affiliated debt.
Speaker 4: Melody. I watch games and I'm like, okay, I can
Speaker 4: talk about that. I read your article and I'm like,
Speaker 4: I need your help, Melody. And I think fans are
Speaker 4: also that way because I don't want to portray this
Speaker 4: and tell us maybe if I'm right or if I'm wrong,
Speaker 4: as Oh, the Dodgers, all this must be more nefarious
Speaker 4: stuff by the Dodgers when I don't feel like the
Speaker 4: Dodgers are a nefarious organization. Can you explain it to
Speaker 4: fans who are confused by this, how it affects the
Speaker 4: team that they either hate or the team that they love.
Speaker 3: Yeah, I mean the Dodgers have you know, had a
Speaker 3: lot of success under Mark Walter. You know they've enjoyed
Speaker 3: the deep pockets of this owner. But you know, I
Speaker 3: think that there's just a lot of questions still, like
Speaker 3: there's a lot left to be kind of answered. So
Speaker 3: I understand sort of the you know, speculation, but we
Speaker 3: don't have a lot of answers to this. You know
Speaker 3: it will there be criminal charges, no idea, and until
Speaker 3: you know that happens, you know, I think that it's
Speaker 3: all kind of speculative.
Speaker 2: Right now, I'll dive into more nitty gritty.
Speaker 1: So when you were explaining affiliated versus you know, unaffiliated,
Speaker 1: can you get into what that means?
Speaker 2: There are certain regulations.
Speaker 1: That a company in this position has where I guess
Speaker 1: you can loan a certain amount. This is where I'm
Speaker 1: going to start to lose it, so I won't go
Speaker 1: too long on the question.
Speaker 2: But how that affected things?
Speaker 1: And then is there some type of potential payback in
Speaker 1: the past when this happens where you do actually have
Speaker 1: to give money back?
Speaker 3: Yeah, So in an insurance company, your money that you're
Speaker 3: essentially loaning needs to be low risk because these are
Speaker 3: people's savings. This is people who are going to rely
Speaker 3: on this money in retirement or death benefits. You know,
Speaker 3: this money is pretty sacred in the world of finances.
Speaker 3: But what's happening in these companies is they're loaning it
Speaker 3: out to companies that are affiliated with the Delaware Life
Speaker 3: and clear Spring Life. And so what the problem is
Speaker 3: is that when you're it's not that these are illegal,
Speaker 3: although there are some limits to how much you can
Speaker 3: loan out to affiliated companies. The problem is is that
Speaker 3: they didn't disclose them. So, like the easiest example I've
Speaker 3: found to kind of explain what's happening here is Delaware Life,
Speaker 3: which is controlled by Mark Walters, gave a loan and
Speaker 3: it's a small loan compared to what we're looking at
Speaker 3: in the billions at issue here, but it was a
Speaker 3: you know, four million dollar loan that was given to
Speaker 3: Dodger Tickets, and that's the entity with the Dodgers that
Speaker 3: deals with like season tickets and other business operations. In
Speaker 3: these documents that were filed at the end of twenty
Speaker 3: twenty five, Delaware Life, again owned by Mark Walters, controlled
Speaker 3: by Mark Walters, listed that loan as being unaffiliated. That
Speaker 3: is obviously a company that he has an interest in
Speaker 3: that his other stakes in the Dodgers has an interest
Speaker 3: in so by listing that as unaffiliated, you're essentially telling
Speaker 3: the regulators that you know, this is you know, debt
Speaker 3: that we we have fully vetted. We have you know,
Speaker 3: not an interest in whether or not they pay it back.
Speaker 3: Like you know, that part is pretty clear here that
Speaker 3: like they have an interest on both sides whether that
Speaker 3: loan gets paid back. And you know, how do you
Speaker 3: kind of vet that transaction if you have a stake
Speaker 3: on both sides? Does that make sense?
Speaker 1: Yeah, that makes as much sense as I can make
Speaker 1: out of it, of course.
Speaker 2: Yeah.
Speaker 1: This is definitely not our wheelhouse, but super interesting and
Speaker 1: ties into the baseball world here, right, It's not like
Speaker 1: you're not saying the word Dodgers as we talk about this.
Speaker 1: I'm going to go we can work our way backward,
Speaker 1: but I want to go to the end game here.
Speaker 1: Are there any indications, I know you don't have the
Speaker 1: answer to this, but just based on the research that
Speaker 1: you did that it could affect the Dodgers, even in
Speaker 1: terms of a potential sale or partially selling shares.
Speaker 2: It's a valid question.
Speaker 1: When Mark Walter has sold the Lakers, it sounds like
Speaker 1: there's something going on with Chelsea FC. I don't know
Speaker 1: if it's officially happened yet and and there were I
Speaker 1: don't know if this was reports, rumors, et cetera about
Speaker 1: how the TV contract maybe they could get you know,
Speaker 1: some money up front there. So can you explain the
Speaker 1: sports side and the selling off that has occurred in
Speaker 1: the last couple of weeks.
Speaker 3: Yeah, I mean to get into this. I mean Mark
Speaker 3: Walter is a sports mogul. Like it's a name that
Speaker 3: most people like might not know. You know, it's not
Speaker 3: you know, he's not a flashy owner, so he's not
Speaker 3: a somebody who kind of comes to the forefront when
Speaker 3: you're talking about owners. But he's got a stake in
Speaker 3: a in multiple leagues, you know, not just the NBA
Speaker 3: and you know, Major League Baseball, it's you know, women's
Speaker 3: hockey league. So what this has to do with the
Speaker 3: Dodgers is really everything and we don't know yet, Like
Speaker 3: it's like somewhere between there. You know, the Dodgers are
Speaker 3: in the finances here, like their finances are coming into
Speaker 3: play in this you know investigation. You can see that
Speaker 3: even with Dodger ticket again a small item in the
Speaker 3: millions of dollars at play here. But you know, whether
Speaker 3: or not it leads to a sale. I think, like
Speaker 3: that's too early to say, you know, but you know,
Speaker 3: it does mean that everyone is kind of looking and saying,
Speaker 3: you know, what's the impact on deferred contracts? What is
Speaker 3: the impact you know on their ability to spend big
Speaker 3: in the future. So I think that there's you know,
Speaker 3: without even the sale question coming up. This impacts the Dodgers.
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Speaker 5: Yeah. I think you kind of answered my question because
Speaker 5: it correctly. If we're wrong, he owns about twenty seven
Speaker 5: percent of the team, and if he has to sell,
Speaker 5: I was wondering who would probably step up if there's
Speaker 5: any indication of who would buy it, But you kind
Speaker 5: of answered that question. We haven't quite got to the
Speaker 5: point where he.
Speaker 2: Has to sell, right.
Speaker 3: He's a majority owner, so he has a large stake
Speaker 3: in the Dodgers. I mean that that's you know, he
Speaker 3: bought into this team. You know, he's owned it since
Speaker 3: twenty twelve, and you know, I think that that's. Yeah,
Speaker 3: there's a lot of money obviously with the Dodgers, and
Speaker 3: it makes money, so it's not something you know, people
Speaker 3: sports owners get into this business because this is a
Speaker 3: you know, an asset that grows. I mean, look at
Speaker 3: the Lakers. He bought it, you know, fourteen months ago.
Speaker 3: It made two point five billion dollars in that one
Speaker 3: year that he owned the team. I mean that's I mean,
Speaker 3: who wouldn't want that as a return on their investment?
Speaker 4: Yeah, for sure. I think I think a lot of
Speaker 4: people would would not complain about that. Is there did
Speaker 4: you reach out to Major League Baseball? Is there something
Speaker 4: that they're just sitting back and letting the federal investigation
Speaker 4: take and whatever happens with the federal investigation, then they'd
Speaker 4: make their decision or are they doing their own type
Speaker 4: of investigation and how that handles the future for the
Speaker 4: Dodgers and for Walters as one of the thirty majority owners.
Speaker 3: You know that we've reached out to the Dodgers who
Speaker 3: have said this has like the Lakers sale has nothing
Speaker 3: to do with them, you know clearly in the finances
Speaker 3: that part isn't a through line there. But you know,
Speaker 3: I think that there's a lot of in the industry
Speaker 3: that are kind of sitting back and waiting to see
Speaker 3: what happens, you know, with the both the federal investigation
Speaker 3: and the you know, SEC investigation. So I think there's
Speaker 3: a lot of weight and figure out what's going on here.
Speaker 1: I'll refer to a question and just a topic that
Speaker 1: pops up frequently with the Dodgers. Many of their deals
Speaker 1: and a lot of money is tied up in deferrals
Speaker 1: deferred contracts. Does any of that tie into what's going
Speaker 1: on here?
Speaker 2: You know, whether you know.
Speaker 1: It could be looked at as that was helpful during
Speaker 1: all of this going on, or it could affect things
Speaker 1: going forward, you know, even if again, like we're theorizing here,
Speaker 1: he does need to sell a portion of the team
Speaker 1: that factors into the portion of his shares because there
Speaker 1: is whatever you want to call it debt or money
Speaker 1: that's owed later on.
Speaker 3: Yeah, I mean, I don't don't get a sense that
Speaker 3: people are worried about that money not being there. But
Speaker 3: is you know, where is that money parked? I think
Speaker 3: is a good question, you know, and whether or not
Speaker 3: it's tied into you know, insurance companies and how policy
Speaker 3: holders feel about their money being tied to, you know,
Speaker 3: the Dodgers. I think a lot of people wouldn't realize that,
Speaker 3: you know, they have a stake in the outcome of
Speaker 3: the Dodgers with their you know, life annuity policies. And
Speaker 3: uh death policy, uh death insurance. So I think, you know,
Speaker 3: there's a lot to question on, you know, that element, And.
Speaker 1: I'll ask one that I know our guys are texting
Speaker 1: me about right now, and I'll bring it right to
Speaker 1: the forefront. That were like, doesn't show hey Otani have
Speaker 1: a key man clause and opt out in his contract?
Speaker 2: That is true.
Speaker 1: We spoke to your colleague Sam Blum the other day
Speaker 1: about it. He wrote a great article touching on the subject.
Speaker 1: At the time, when you look at that deal and show, hey,
Speaker 1: o Tani signing for seven hundred million deferred, so net
Speaker 1: present value more in the mid four hundreds, you don't
Speaker 1: really think, oh, let's keep an eye on the key
Speaker 1: man clause. Just in case Andrew Friedman or Mark Walter
Speaker 1: end up jumping ship, there is at least some semblance
Speaker 1: of a percentage of a possibility that he does have
Speaker 1: that option. Now he's made it clear, at least as
Speaker 1: Camp did. It seemed like in that article that he
Speaker 1: wouldn't necessarily jump ship. But what it does in the
Speaker 1: mainstream world is create people going, hey, maybe showey ops
Speaker 1: out and he signs with my team. So just thoughts
Speaker 1: on how I guess the percentage chance of this at
Speaker 1: least could increase given his financial issues right now or
Speaker 1: his financial turmoil that he's got to figure out, that
Speaker 1: he could end up not being the majority owner, and
Speaker 1: that could trigger a clause for the best player in
Speaker 1: the sport over the last five years to have his
Speaker 1: say on where he goes, not just where he goes,
Speaker 1: but also to rip up a contract and sign a
Speaker 1: new one that could be worth even more.
Speaker 3: I mean that really plays in to to like the
Speaker 3: Dodgers saying this has nothing to do with us, right, Like,
Speaker 3: that's definitely the line that they would want to take
Speaker 3: in this because you know, that is a key player,
Speaker 3: a key man agreement that you know, I would love
Speaker 3: you know, insight on you know why that was important
Speaker 3: to a tani like you know, but I think we
Speaker 3: we don't know. But I mean they're saying that he's
Speaker 3: not going to exercise it, you know. I think that's
Speaker 3: all we kind of know at this point. But you know,
Speaker 3: are other teams going, hey, there's an out here and
Speaker 3: we'd love to have you. I think that that's the
Speaker 3: fun part of baseball.
Speaker 2: What and yes, I'm with you. Yeah, it's a storyline.
Speaker 1: One one last question for you as you continue to
Speaker 1: cover this, is there one big question that you have
Speaker 1: or piece that you think unravels that really helps to
Speaker 1: tell the story here? For example, for me, from my perspective,
Speaker 1: that's much less dug in to.
Speaker 2: The story than you are.
Speaker 1: I'm like, I want to know how much is do
Speaker 1: and when and how that gets accomplished because and of
Speaker 1: course we're not going to find out all of this finances.
Speaker 1: But if he's in a situation where it's like, hey,
Speaker 1: I got to come up with two, three, four, five
Speaker 1: billion dollars more, it's not like you can. Some billionaires
Speaker 1: can find that in their pocket. Others might have to
Speaker 1: sell off assets. So that to me is the baseball
Speaker 1: fan in me trying to figure out what's next.
Speaker 3: Yeah, I think the liquidity issue is is fascinating. I mean,
Speaker 3: I can't tell you like what it was like to
Speaker 3: like pour over some of these insurance filings, you know,
Speaker 3: starting at six am, when I started noticing that they
Speaker 3: the second quarter filings were in there. You know. The
Speaker 3: issue that like I'm seeing in there and like am
Speaker 3: most interested in is the timeline of when these things
Speaker 3: need to be paid back. I don't think that that
Speaker 3: answers the question for like the federal investigation, because you know,
Speaker 3: what was done was done, but there is obviously a timeline.
Speaker 3: There's a restructuring plan that is in place with the
Speaker 3: two insurance companies trying to write the ship. I think
Speaker 3: the number that really stands out to a lot of
Speaker 3: people that kind of tells you exactly how big of
Speaker 3: an issue when we're talking about unaffiliated affiliated companies, you know,
Speaker 3: is that on their balance sheet, Like they were saying
Speaker 3: that three percent of their assets were from these affiliated companies,
Speaker 3: and that made credit raiders go like, oh, that's that's good, Like,
Speaker 3: let's give you a good rating. You know, on these
Speaker 3: revised ones, it you know, jumped over forty percent and
Speaker 3: that impacts their rating, which you know has a big
Speaker 3: impact on their business. And so it becomes this kind
Speaker 3: of cyclical issue when you're talking about this affiliated unaffiliated businesses.
Speaker 3: But that's the question I think moving forward is like
Speaker 3: what they're going to do. They've already moved six point
Speaker 3: five billion dollars in a swap between companies to try
Speaker 3: to take some of that affiliated debt off the books
Speaker 3: for Delaware Life and clear Spring Life. So you know
Speaker 3: that's what I'm looking at moving forward, is you know what,
Speaker 3: what's their next play? What are they next going to
Speaker 3: try to you know, liquefy like like interm of these assets.
Speaker 1: Yeah, and we'll be following, We'll be waiting for the
Speaker 1: next story as it sounds like this is just getting
Speaker 1: going here. So Melodie, thank you so much for joining
Speaker 1: us and helping us to figure some of this out.
Speaker 1: And we appreciate the time and encourage everyone to check
Speaker 1: out her article for much more Inside the Athletic.
Speaker 2: Thank you appreciate it.
Speaker 3: Yeah, thanks for having me.
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Speaker 2: All right, staying on for a few minutes.
Speaker 1: First of all, I hope that was helpful the segment
Speaker 1: we did there on what's going on with the Dodgers,
Speaker 1: because I got lost in a few different wormholes over
Speaker 1: the past twenty four hours reading things on social media,
Speaker 1: most of it helpful, and I try to keep to
Speaker 1: the business analysts. I think those are actually the best
Speaker 1: ones to explain some of this right now, and some
Speaker 1: of them are making a name for themselves in the
Speaker 1: sports world where they're saying, hey, this is what this
Speaker 1: looks like. When Melody was on with us earlier and
Speaker 1: she's explaining the three percent versus the over forty percent
Speaker 1: change and how that doesn't just affect the way that
Speaker 1: you're judged legally as a company. And again stay with
Speaker 1: me here I'm paraphrasing, but it also can affect the
Speaker 1: status of the company, right and the way creditors rate it,
Speaker 1: and it could really hurt the company, which then could
Speaker 1: hurt the people who own the company and the money
Speaker 1: that they borrowed. That's where the domino effect occurs. And
Speaker 1: the percentage chance of Mark Walter selling his shares or
Speaker 1: at least partial shares of the Dodgers has gone up
Speaker 1: since a few months ago. Right like a few months ago,
Speaker 1: someone said they'd be like, no way, there's been no
Speaker 1: indication of that. This team's on fire. Why would you
Speaker 1: sell right now?
Speaker 2: Right?
Speaker 4: Obviously, I mean other than you would make money if
Speaker 4: you sell. But they've built this for the long term.
Speaker 4: But to me, I just wanted I want to be
Speaker 4: more educated on it because I think there's too many,
Speaker 4: too many times or people here Dodgers' owner something not
Speaker 4: maybe all above board, and they just jump right to
Speaker 4: the yep, see deferred money. See I knew these guys
Speaker 4: were I knew these guys were not illegal stuff Like
Speaker 4: I knew I knew it, you know, just just another
Speaker 4: thing that Major League Baseball turns its eye to.
Speaker 2: No.
Speaker 4: I wanted, like, I want to know what it does,
Speaker 4: What does it mean? What is how is this gonna
Speaker 4: affect they're spending from here on out or the effect
Speaker 4: of Okay, maybe they have to cut back down to
Speaker 4: three hundred and ninety million dollars payroll. Who, Like, I
Speaker 4: want to know and not just jump to the conclusion
Speaker 4: that I'm pretty sure probably most of Twitter and Instagram
Speaker 4: have jumped to.
Speaker 5: Yeah, I couldn't agree with you more. I'm not super
Speaker 5: educated on it. And and these two things could be
Speaker 5: very unrelated to all these other things that we're talking about,
Speaker 5: could be very unrelated to actual Dodger payroll and Dodgers
Speaker 5: deferred money. Once again, it's going to sound like we're
Speaker 5: defending them. I just don't really know. This is out
Speaker 5: of my comfort zone. I feel like I got very
Speaker 5: educated when I'm on this flight tonight. I'm actually gonna
Speaker 5: go through the entire article, try to educate myself a
Speaker 5: little bit more. But eventually the truth is gonna come out,
Speaker 5: and we're going to find out