LAFC Overhauls Cap Table, Sets Stage for New Investors at Record Price

LAFC is entering the new year with an MLS title to defend, a new lead managing owner and an overhauled cap table.

The club spent much of this past season simultaneously courting capital at MLS-record numbers and buying out some existing minority partners, many with very small stakes, according to multiple people familiar with the discussions. More than a half-dozen investors have sold out of their equity, which will get the team closer in line with league limits, said the people, who were granted anonymity because the specifics are private.

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That coincides with a reshuffle at the very top. Every four years, the team’s three managing owners rotate who serves as lead, acting as the club’s official governor in league matters and handling the day-to-day needs of the franchise. Bennett Rosenthal, co-founder of private equity firm Ares Management, took over that position from Larry Berg last week.

Rosenthal, who declined to comment on the cap table changes, said in an interview that the club is entering a new “growth phase.” LAFC’s roots date back to 2014, and the requirements of getting off the ground as an upstart in a growing league are different than the requirements of the current franchise. MLS valuations have soared in the past few years, and no franchise is more valuable than LAFC, which is now worth $900 million, according to Sportico’s most recent numbers.

“There was certainly a phase of getting our identity set, making sure we had our organization in shape, making sure we had our culture in shape, bringing the best talent together,” Rosenthal said. “Now, with the best talent we can pursue a bunch of new initiatives. And I think over time, you’re going to see us do things that are creative and business-building.”

The exiting investors include life coach Tony Robbins, Mandalay Entertainment vice chairman Paul Schaeffer, former Dick Clark Productions executive chairman Allen Shapiro, LA-based investor Jason Sugarman, Golden State Warriors executive Kirk Lacob and Universal Tennis chairman Mark Leschly, according to sources.

It’s unclear what valuation was paid for each of their exits, but the numbers could be larger than the valuation for incoming investors. Both Lacob and Leschly were removed from the team’s website last year, and both declined to comment. A representative for Robbins declined to comment. Attempts to reach Schaeffer, Shapiro and Sugarman weren’t immediately successful.

Shrinking the number of investors was seen by many around the league as a necessity should LAFC add new capital—the team had roughly 30 investors at the start of 2022, the largest cap table in MLS. LAFC is currently raising money at a valuation just under $900 million, according to sources, which would be a record for an MLS team in a transaction. That number was also mentioned by MLS commissioner Don Garber at a Sportico live event late last year. LAFC is one of just two MLS clubs (alongside Atlanta United) projected to pass $100 million in 2022 revenue, per Sportico’s numbers.

Rosenthal, who’s been an investor since the beginning, said his principal goal as the lead managing owner is to keep the franchise on its current trajectory, both on the field and in the front office. From a business standpoint, he said he plans to prioritize international opportunities. That coincides with the league’s new $2.5 billion deal with Apple, which will create a single platform for all MLS global rights.

“With the Apple deal, the growth of our profile within the league, and with the city behind us, we have an opportunity to make LAFC a global brand,” he said. “That’s something that we’re all focused on—you can see it in our social media following and the reaction from our championship.”

Rosenthal’s priority list also includes naming rights to the team’s stadium. The $350 million venue, once the most expensive soccer-specific stadium in the U.S., opened in 2018 with a 15-year naming deal with Banc of California. That deal fell apart in 2020, with the bank agreeing to pay $20.1 million to unwind the partnership 12 years early. The team has continued to refer to it as Banc of California Stadium as it negotiates with prospective partners.

Rosenthal said the group was “putting the finishing touches” on a new agreement, but wasn’t more specific.

LAFC joined MLS in 2018 after paying a $110 million expansion fee, an MLS record at the time. The ownership group was more than 25 people at the start, a mix of local executives, athletes and celebrities that is common today, but was less conventional at the time. LAFC’s minority owners included actor Will Ferrell, former Lakers star Magic Johnson, soccer’s Mia Hamm, baseball player Nomar Garciaparra and billionaire Vincent Tan.

The three managing owners are Rosenthal, Apollo Global senior partner Larry Berg and Riot Games co-founder Brandon Beck, who will take over for Rosenthal as lead owner in four years. Golden State Warriors co-owner Peter Guber is the executive chairman.

With reporting from Kurt Badenhausen and Eric Jackson.

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