Just three weeks after it was first reported that Los Angeles Clippers owner Steve Ballmer was considering buying the Forum from Madison Square Garden to clear away MSG’s legal objections to a new Clippers arena, Ballmer has pulled the trigger, paying $400 million in cash to buy the 53-year-old arena:
The deal is expected to close during the 2020 second quarter. The new ownership group has no plans to tear down the Forum, which was added to the National Register of Historic Places in 2014, and will keep it operating as a concert venue.
If $400 million sounds like an awful lot to pay for a half-century-old (albeit recently renovated) arena with no sports tenants, that’s because it is: MSG bought the Forum in 2012 for just $23.5 million, though they later spent another $100 million on renovations to convert it into a concert-only space. There are no public figures that I can find on how much money the Forum makes — it’s by far the busiest concert venue in the L.A. area, but as we’ve seen before, busy doesn’t always mean profitable — but it seems inconceivable that it’s really worth $400 million, especially in a world where it will soon face competition from a new arena two miles away. (Not to mention a world where no one knows when people will be allowed to go to concerts again.)
File this one, then, under “multibillionaire spends whatever he wants to get his new toy, because he can.” This is nothing new — Ballmer way overpaid to get the Clippers in the first place — and not necessarily a bad thing, unless you really care how the insanely rich decide how to shuffle their money around between them. But it is a reminder that when development deals are decided less by public oversight than by whether there’s some other billionaire willing to foot the legal bills to block them, it’s always possible for sports team owners to simply buy off the opposition.
You would think Ballmer would learn from Kroenke‘s Economic mistake of a Rams Stadium? Especially because the Clippers are basically the White Sox to the Lakers Cubs in LA: The other guys.
Yea, except the media market in LA is worth more than almost anywhere else so being second fiddle in LA is better than being first anywhere else.
Neil
Does the city of Inglewood profit off this? If MSG is paying property taxes based on $23 million or $125 million, will Ballmer have to pay property tax on the $400 million? Or, is he buying MSG’s LA operations, of which The Forum building is the main asset? If that’s the case, there would be no increase in property tax.
I’ll preface by saying that for all I know California has a different system I’m not aware of, but in general, no this wouldn’t affect property taxes either way. There is certainly the chance that later this year or next year when the appraisal is done that the purchase price would impact that number and thus lead to a higher tax bill, however appraisal boards take a lot of specific circumstances into account and the fact that the property is worth this amount to Ballmer to make a headache and series of lawsuits go away would be taken into account as opposed to just equating flatly to “somebody paid that much, so that’s what it’s valued at.” Furthermore, even in cases where the taxable appraised value should be higher, usually the better your lawyers are, the better you can argue that number down even before you get to a formal appeal process.
Property taxes in California are artificially low due to Prop 13. The building will be re-evalauted due to the sale, but my guess is that the total year fee won’t be that big of a difference, especially if they can convince the Inglewood that most of the sale price was goodwill and not for the building.
I do still wonder why Ballmer didn’t step forward when the Sonics were for sale.
He did, but it was way too late and mostly just appeared to be grandstanding. IIRC, his offer involved him joining with some other rich guys and offering Clay Bennett the amount he’d bought the team for a few years earlier, which isn’t a serious offer. But I agree, there was no blank check written to Bennett the way there was to Shelly Sterling or now James Dolan, and that seems odd given his attitude just a few years later. I’d imagine he just assumed it would be easy enough to get another team, only to realize through the cluster of a process that he went through with Chris Hansen how wrongheaded that idea was.
It was too late after the sale to Bennett took place but a lot of people are wondering why he didn’t buy the team when Schultz started looking for buyers.
The only answer I ever get is that Ballmer was too concentrated on doing what he had to do for Microsoft that he wouldn’t be able to focus on the Sonics. I don’t believe that. Lots of owners run multiple businesses at once and do perfectly fine, even win championships, with their sports team.
There goes JD & The Straight Shot’s west coast tour.
Dammit!