The Walters Investigation

[Centerfield]

I don’t know what to make of it. I’ve read everything from it’s the end of the Dodgers and Ohtani will opt out, to it’s nothing and everything will stay the same. 
 

What do you guys think?

[smg58]

My impression is that Walter is in a fair amount of trouble, but it's too early to speculate on what it means for the Dodgers.  I don't get the sense that the team's finances are on anything less than a solid footing.  Ohtani actually has the ability to opt out if Walter is no longer affiliated with the Dodgers -- which is a really odd thing to put in a contract -- but I'm not sure what would stop the Dodgers from simply negotiating a new deal that pays him more money if it comes to that.

[Edgy MD]

The X Factor in all investigations of terrifically rich Americans is the president and his bad-faith pardon regime.

[seawolf17]

What? A billionaire is an abject shitbag? Didn't see that coming.

[Centerfield]

A good summary here.  

The Dodgers are Mark Walter's crown jewel. Can he hold on to it amid federal probe? - Los Angeles Times

The article concludes that we don't know what effect, if any, this will have on the Dodgers.

[Johnny Lunchbucket]

Walters already sold the Lakers, also owns Chelsea FC, Cadillac F1, the LA Sparks and the entire Pro Women's Hockey League. I agree his buddy Trump will get him off

[Centerfield]

I didn't really think Walters would ever face any real consequences.  I mean, the most that happens in shit like this is that the big wealthy guy ends up having to pay a hefty fine, but not hefty enough to offset the illicit gains, or deter anyone else from engaging in the illegal acts.

I guess I was wondering what this would mean for the Dodgers, the lockout, etc.  I figured that the Dodgers had a day of reckoning coming in the future anyway.  All the deferred contracts have to be paid eventually.  I just figured eventually the current owners would sell for a big profit to a new group, who comes in and assumes that debt.    

[smg58]

One thing that never seems to get addressed when the CBA expires is that the public has no real idea what the books look like for the individual teams.  Which teams are genuinely treading water, and which teams could spend a lot more than they are doing?  I've always worked under the assumption that the Dodgers were spending sustainably, but do we really know that?

[Gwreck]

3 hours ago, Centerfield said:

I figured that the Dodgers had a day of reckoning coming in the future anyway.  All the deferred contracts have to be paid eventually.  I just figured eventually the current owners would sell for a big profit to a new group, who comes in and assumes that debt.    

You think they’re not saving/investing money to pay the deferral obligations?   (And not in a Ponzi scheme?)

They are making plenty of cash, well above and beyond expenses.  I seriously doubt a “day of reckoning” is coming re: those obligations.

[Edgy MD]

Well, it may feel like a day of reckoning when payroll is issuing large checks to players who are no longer assets or perhaps even active.

But I imagine 14 division titles in 15 years, along with three championships (and likely more to come) has allowed them to rake in some crazy money, a large chunk of which they have squirreled away — or more likely put into semiconductor and AI portfolios, that will have ballooned into massive accounts that will dwarf their deferred payroll obligations by the time they are forced to cough the remainder of those salaries up.

[Frayed Knot]

What this has cost Walter so far is his stake in the Lakers. Purchased just 14 months ago from the children of Jerry Buss, he reached an agreement to sell it just last week (at a profit btw). Speculation is that he wanted to get more liquid with the idea that he'd need to be so in order to fight whatever legal battles are coming up. The sale and the speed at which it happened caught many off guard as transactions like these rarely stay quiet as they're happening but this one pretty much did until suddenly it was a fact.  

There's been nothing to suggest thus far that he'd do the same with the Dodgers. But it may come to a point where he has to designate a point person to run the team (a la Steinbrenner years ago) while whatever needs to get settled gets settled.

[Centerfield]

Maybe you guys are right and guys like that never run out of money.

It just seems logical that eventually when a big portion of your payroll is going to guys that played for your 15 years ago, you won't be able to outspend your competition the way they have.  

And I understand present value and salaries rising etc., but that's not a small amount of money they owe Shohei Ohtani.  

[Frayed Knot]

The Ohtani deal is the Bobby Bonilla deal writ large. 

As GWreck points out, it's not like the Dodgers are paying Shohei his $2 mil/yr and plan to figure out the rest later. They're investing some version of what they would pay him under a normal contract and will pay his post-career money off of that. The Wilpons did the same with Bonilla, which would have been a good deal for them -- put a small amount aside in the 20-aughts and pay him off the compound interest from that in the coming decades when what seemed like big numbers in the GWB era would later look puny by comparison -- had they not been investing with a crook whose stated growth via interest rates they were seeing on paper were as real as Sidd Finch's fastball.

[metirish]

Walter and another asshole Todd Boehly are apparently having to sell their stake in Chelsea FC too

[Frayed Knot]

Yeah, that seems a matter of when, not if.

He's also got his paws in a ton of other sports properties: LA Sparks (WNBA), women's pro soccer and hockey leagues, various motor sports, minority shares in the LA Kings hockey and in the arena where the Lakers/Kings play, Ligue 1 team Strasbourg, and, why not?, a pro Squash league.

[Gwreck]

2 hours ago, Frayed Knot said:

Speculation is that he wanted to get more liquid with the idea that he'd need to be so in order to fight whatever legal battles are coming up. The sale and the speed at which it happened caught many off guard as transactions like these rarely stay quiet as they're happening but this one pretty much did until suddenly it was a fact.  

Unless he’s really mismanaging his money, he shouldn’t need to suddenly get billions of liquidity just to pay the lawyers.  

If he was going to negotiate some huge financial settlement in order to resolve the investigations?  Maybe, but 10+ figure settlements are extremely rare.

Without knowing all the details, it’s hard to say but it wouldn’t be a surprise if the sudden need for free cash is to be able to restructure what his insurance companies are investing in — specifically, to move investments from being in related/affiliated companies (which is apparently the key issue in the investigations — whether those investments were proper/properly disclosed) into something not at all linked to Guggenheim/Walter. 

[Gwreck]

2 hours ago, Centerfield said:

Maybe you guys are right and guys like that never run out of money.

It just seems logical that eventually when a big portion of your payroll is going to guys that played for your 15 years ago, you won't be able to outspend your competition the way they have.  

And I understand present value and salaries rising etc., but that's not a small amount of money they owe Shohei Ohtani.  

1. Even if the Dodgers hadn’t saved/invested one penny towards those future obligations, and even with his potential legal troubles and other financial issues, Walter could cut still easily a personal check today that would cover the nominal value of all future obligations (without any discount for present value).   Yes, he is that rich.

2. Where I disagree with your comment (“when a big portion of your payroll is going to guys that played for your 15 years ago, you won't be able to outspend your competition”) is that you are thinking of those future obligations as part of the 2036 or 2045 or whatever year’s payroll.   They’re not.  

Unless the Dodgers are run by complete morons, they’ll have long since allocated money and invested it so that (as Edgy noted above) it will have already covered those future obligations and then some.  The then-current payroll will be a totally different pot of money.

[Centerfield]

Quote

1. Even if the Dodgers hadn’t saved/invested one penny towards those future obligations, and even with his potential legal troubles and other financial issues, Walter could cut still easily a personal check today that would cover the nominal value of all future obligations (without any discount for present value).   Yes, he is that rich.

While Walters is rich, that doesn't necessarily mean he's liquid for that debt.  And even if he is, they generally don't come out of pocket from other ventures to pay off MLB debt (though it seems that's what he's getting in trouble for now).  And while I agree with you that Walters definitely could, I'm guessing the LA Dodgers debt will ultimately be handled by the LA Dodgers.  

Quote

2. Where I disagree with your comment (“when a big portion of your payroll is going to guys that played for your 15 years ago, you won't be able to outspend your competition”) is that you are thinking of those future obligations as part of the 2036 or 2045 or whatever year’s payroll.   They’re not.

I guess this makes sense.  So the Dodgers sign Ohtani to a $70MM AAV.  They defer the money so the luxury tax hit is much smaller.  Then they take the $70 they owe Ohtani, pay him $2M now, then take the other $68M and invest it in ways rich people invest money, which means the gains will outweigh the interest that accrues on the payments.  So that when the money is due, they'll have more than enough to not only pay Ohtani, but also pocket some extra cash.

Is this the idea? 

 

[seawolf17]

I mean, it's more or less what the Wilpons tried to do with Bonilla, no? Just larger. If Madoff hadn't madoffed, and/or if we got a World Series win or two out of it, nobody would make fun of the Bonilla thing.

[Frayed Knot]

There are also rules in sports leagues as to how much debt an owner can take on. So at some point a theoretical numbskull of an owner wouldn't be able to borrow here to pay there, or owe X million $$ a decade from now without a certain portion of that invested/set aside to cover it, etc.

[MFS62]

avi

[Edgy MD]

What law is that?

I'm familiar with Congress and the IRS placing increasing scrutiny on wealthy owners using losses in the sports industry as deductions, but I'm unfamiliar with this four-year law.

[MFS62]

I read about it in the papers when the Wrigleys sold the Cubs. I can't cite exact IRS regs or the exact number of years (it may have been five), which is why I deleted my post.

 

Later

[Benjamin Grimm]

Deleting posts just leads to confusion, especially if someone has responded to the post that's no longer there. Better to follow it up with an "oops" post that clarifies the original one.

[Gwreck]

4 hours ago, Centerfield said:

So the Dodgers sign Ohtani to a $70MM AAV.  They defer the money so the luxury tax hit is much smaller.  Then they take the $70 they owe Ohtani, pay him $2M now, then take the other $68M and invest it in ways rich people invest money, which means the gains will outweigh the interest that accrues on the payments.  So that when the money is due, they'll have more than enough to not only pay Ohtani, but also pocket some extra cash.

Is this the idea? 

Yes.  But the key is that they don’t need to set aside anywhere near $70M a year now.  They only have to set aside ~$30-40M a year now since they don’t have to start paying the first $68M installment until 2036.

And no interest accrues on the payments, either. Ohtani isn’t getting $68M+interest in 2036; he’s just getting $68M. 

[ashie62]

I wonder what Sandy Koufax thinks of all this

[Centerfield]

3 hours ago, Gwreck said:

And no interest accrues on the payments, either. Ohtani isn’t getting $68M+interest in 2036; he’s just getting $68M. 

Thats crazy. If there’s no interest then Ohtani is not getting $70M per year. 

[Gwreck]

13 minutes ago, Centerfield said:

Thats crazy. If there’s no interest then Ohtani is not getting $70M per year. 

Well, exactly.  The players association calculated the true value of the deal as $437.8M (and not $700M).  For luxury tax purposes the value is calculated as $46M/year.

 

 

[Frayed Knot]

So fresh off his story lifting the lid on the cap circumventing by the Clippers, Pablo Torre is looking into none other than Mark Walter and his financing of the Dodgers.  

https://nypost.com/2026/09/04/sports/pablo-torre-takes-aim-mark-walter-dodgers-350-million-magic-johnson-gift/

So ... maybe something?

[Edgy MD]

Pablo Torre sure fishes in deep waters.