AEG, which owns the global No.2 concert promoter in AEG Live, has been put on the block and is expected to bring in around $7 billion to $8 billion. The Los Angeles-based firm is likely to attract a bid from a local consortium, according to people familiar with the matter.
Anschutz Company, which is controlled by Denver billionaire Phillip Anschutz, made the announcement on Tuesday, sparking industry speculation as to who could take over the powerful sports and live-entertainment giant.
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The assets includes a variety of top-name live-event venues such as the Staples Center in L.A. and the O2 Arena in London, a 34% stake in the Los Angeles Lakers basketball team, David Beckham's LA Galaxy soccer team, the Coachella Festival (produced by AEG Live subsidiary Goldenvoice) and an interest in the New Orleans Jazz Heritage Festival.
Such big brands are bound to attract interest from the usual-suspect investor names from home and abroad. While foreign investors and/or media companies are possible, those close to the situation believe an L.A.-based consortium is likely for at least partial ownership, along with financial institutions.
The Wall Street Journal, citing people familiar with the matter, said real estate group Colony Capital LLC and investment firm Guggenheim Partners LLC are among interested parties in considering bids. (Guggenheim owns Billboard parent company Prometheus Global Media. Guggenheim was part of a group that recently bought Dick Clark Productions.)
A single owner such as Anschutz is a long shot, and an insider tells Billboard.biz that Anschutz is not interested in breaking up the company. "Mr. Anschutz wants to find a buyer that will keep it whole," the source says.
One name not likely to be in the mix for the whole company is Live Nation Entertainment, which went through a torrid 11 months convincing regulators its merger with Ticketmaster/Front Line Management would not bring it excessive market power in the live-entertainment business, to the disadvantage of artists and consumers.
From a music-industry investor perspective, AEG Live is a pretty safe bet in the narrow-margin touring business, owning, operating and/or exclusively booking 35 venues, producing some of the highest-grossing tours of the last decade, and solid in its role as the world's second largest promoter for its 12 years of existence
But the AEG portfolio extends far beyond an event promoter or producer. Its 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 including Los Angeles, London, Berlin, Kansas City, Portland (Ore.), Australia, China and elsewhere.
London's O2 Arena alone, a "category-killer" in the city because of limited real estate, generates $120 million annually in profits, according to a source, and is likely worth between $1.5 and $2 billion U.S. Another source tells Billboard.biz that Staples Center has received offers of $1.2 billion in the past.
The entire venue portfolio of arenas, theaters, stadiums and clubs on five continents exceeds 100, with 42 million fans visiting annually, they say. This isn't just about real estate and physical value, though, but includes a wide array of revenue streams from concessions, parking, suites, sponsorships, various fees, etc.