With Anschutz Entertainment Group off the block and the subsequent resignation of president/CEO Tim Leiweke, the question now moves from “what’s it worth?” to “what’s next?”
 
Bidders did not reach owner Phillip Anschutz’s magic number of around $8 billion, although a group headed by the Qatar Sovereign Fund with Colony Capital came closest at $6 billion, according to a source, who also said that Billboard parent Guggenheim Partners’ bid came in at around $5 billion.
 
But the real shocker here is the exit of Leiweke, No. 8 on this year’s Billboard Power 100 list and widely recognized as the visionary behind the AEG model of combining real estate in theaters, arenas and stadiums with revenue-producing content in sports teams and live events, with added fringe businesses like ticketing, media deals, merchandising and sponsorships. Few pictured a future for AEG without Leiweke in it.
 
But that future starts now. AEG says Anschutz, as Chairman of AEG, will resume a more active role in the Company but, at 73, it’s likely much of that job will fall to Dan Beckerman, a 15-year AEG vet who was CFO/COO and now assumes the position of President and Chief Executive Officer of the AEG.
 
The promotion of Jay Marciano to COO is less surprising. The former Madison Square Garden Entertainment president who has served as president/CEO of AEG Europe for almost two years, seems a savvy move, given Marciano’s proven skills in the facilities, sports and talent/touring sectors. “Jay Marciano is the most qualified guy in terms business acumen and understanding of the entertainment world,” notes one observer familiar with many aspects of these developments.
 
But one wild card is Randy Phillips, who just re-upped as president of AEG Live, AEG’s touring/promotion division. That division has performed well and is on a record pace this year. Leiweke was an ardent supporter of Phillips, and several sources expect Phillips to continue at the helm of AEG Live, particularly in light of the record year expected at the division. Additionally, AEG’s festival division produces such events as Coachella (which grossed an industry-leading $47 million in 2012), Stagecoach and New Orleans' Jazzfest, is clicking on all cylinders.

So why didn’t AEG sell at the asking price? Billboard’s report in late January that the final three bidders on AEG were a group made up of Ron Burkle with Patrick Soon-Shiong and Goldman Sachs; Guggenheim Partners; and Colony Capital and Qatar Sovereign Fund, as well as resolution would come in March, ultimately is still believed to be correct. Still, the valuation benchmark that the industry was looking for by way of an AEG sale is still not realized.
 
Through conversations with various live entertainment stakeholders, some of them familiar with the AEG negotiations, it seems some saw different value in different sectors of AEG’s business. “The price is what someone’s willing to pay for it, so we’ll see what that may be,” Leiweke told Billboard early in the process. Now it seems it never got there.
 
Had they chosen to break the company up, which apparently was never on the table, the story would likely be different. Some investors were most interested in AEG Live, which is in its best year ever with tours by Bon Jovi, Taylor Swift, Kenny Chesney and others. But touring is cyclical based on who’s touring and tricky pricing, as opposed to the more consistent hard value of top-shelf arenas and the sports tenants that inhabit them.
 
AEG’s real estate assets drive the model that Leiweke steered, and that is where the most value and upside lies.  AEG arenas alone are estimated to be worth more than $5 billion in today's market, and AEG either owns these venues outright or has long-term operating leases in place in high-profile markets around the world. The entire venue portfolio of arenas, theaters, stadiums and clubs on five continents exceeds 100 buildings, with 42 million fans visiting annually, according to AEG.
 
Investors value steady revenues, which sports franchises churn in TV rights and season ticket sales, and venues, specifically arenas, can provide through concessions, parking, suites, sponsorships, various fees, and now AEG’s own ticketing company axs, which is projected to be operating in all its buildings by year’s end. These ancillaries hinge on bookings, and AEG’s O2 Arena in London was the highest-grossing arena in the world in 2012 at nearly $110 million in ticket sales, according to Boxscore; one source told Billboard last year that the Staples Center complex in L.A. had received offers of $1.2 billion in the past.

Live Nation Entertainment, the world’s largest promoter, venue operator and ticketing company in Ticketmaster, is trading at just $2.23 billion of 4.5 times 2013 EBITDA. But the relatively smaller Madison Square Garden Company which holds sports assets like the New York Knicks, is trading at $4.3 billion -- a whopping 14 times 2013 EBITDA.
 
In the end, the motivation for selling AEG in the first place has probably not disappeared. While the process is grueling for all parties, it would be worth undertaking again even a year from now as AEG projects like axs ticketing, the development of Farmers Field in L.A. Live to bring the NFL back to that city, and the collaboration with MGM to build a new arena in Las Vegas all come to bear. Then Anschutz might well get what he’s looking for.