At Extreme Investor Network, we are always on the lookout for exciting business news that impacts the world of investing. Recently, private equity billionaire Tom Gores made headlines by agreeing to pay $750 million to buy 27% of the National Football League’s Los Angeles Chargers at an enterprise value of $4 billion.
What makes this deal intriguing is the discounted valuation of the team at $4 billion, which is more than a 30% discount to its actual value of $5.83 billion. This discount is attributed to the fact that Gores purchased such a significant stake in the team, just 3% shy of the required stake for a controlling owner. Despite this large purchase, Gores will be a limited partner with no control over how the team is managed.
One unique aspect of this deal is the inclusion of a “flip tax” of 10% on the sale amount, which will be shared among the other 31 teams in the league. This tax was part of an agreement made by the Chargers with the NFL in 2015, similar to the deal the Las Vegas Raiders made before moving from Oakland.
Gores’ acquisition includes the purchase of the entire 24% stake previously held by Dea Spanos Berberian and 1% each from Dean, Alexis, and Michael Spanos. Once the sale is completed, Dean, Alexis, and Michael Spanos will own 69% of the team, Gores and his wife will hold 27%, and two long-time limited partners will retain 4%.
This deal not only solidifies Gores’ position in the sports industry but also resolves all legal disputes between Berberian and her siblings as well as with the Chargers.
Gores, who also owns the NBA’s Detroit Pistons, has a history of successful investments in sports teams. His preference for being a renter rather than an operator of stadiums allows him to focus on the business of sports without the financial and operational burdens of owning a stadium.
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