From the moment news broke of the Lakers’ stunning sale on Wednesday, a giant elephant sat in the corner of the room.
Not even 10 full months since Mark Walter officially acquired the franchise, he sold it to Bob Iger and Josh Kushner on Wednesday. If Walter’s purchase of the team was shocking, it’s hard to find a word to describe this transaction.
The sale of the team, though, came at the same time as Walter is being investigated by the FBI for loan fraud. Beginning last year, the investigation looked
into Walter’s finances, the valuation of his investment group and whether loans he had taken out were properly disclosed. The Athletic more succintly explained the situation in a piece on Wednesday.
The government is reportedly investigating whether Mubadala Capital had been deceived about the valuations of Walter’s companies before the Abu Dhabi sovereign wealth fund invested $10 billion into Walter’s investment firm that purchased the Lakers a few months later.
I won’t pretend to be an expert in finance or loans, but the LA Times had a great analogy to help grasp the general concept.
Bruce Dubinsky, a forensic accountant who worked on the Enron and Madoff cases, says the issue comes down to the motivation of the parties and can be explained through an analogy.
Sell a car to a stranger and you both research its worth and come to an agreed “fair market value,” he said. Sell it to your brother, you might cut the price to “give him a deal,” and later even forgive the payments.
“That’s why, from an audit standpoint, there should be more scrutiny if you’re doing business with the left hand and the right hand, because it’s easier to manipulate things,” Dubinsky said. “Repayments can be delayed indefinitely. They are always more suspect to fraud.”
The article provides a lot more insight and detail, but you should be able to get the picture. Walter might have lied about the value of his company to convince more investors to give him money, basically. However you slice it or explain it, it’s not ideal that the owner of the Lakers has been under federal investigation for about as long as he has officially owned the team.
If things aren’t looking great for him, then perhaps selling the Lakers and using that money to fix some of the problems could be one route. And, according to Bloomberg, that may have been the rationale behind Walter selling.
A cool $2.5 billion after 10 months is a great investment, so it’s hard to fault Walter on that front. But whether or not he was actually looking to sell his share in the team isn’t entirely clear.
In speaking with Khobi Price of the California Post, Iger revealed that he and Kushner had caught wind that Walter might be interested in selling the team.
“We were involved in pursuing the new franchise in Vegas,” Iger said during an exclusive phone call with the California Post. “And while that happened, it was suggested to us that maybe Mark Walter would be interested in selling his stake in the Lakers. And we immediately decided that given the value of the franchise and the iconic nature of the team, that we would be really smart to pursue it. The deal came together in three days. It’s that simple.”
However, according to Dan Woike, Sam Amick and Mike Vorkunov in the same aforementioned The Athletic piece above, Walter wasn’t necessarily looking to sell the team, but was presented with an offer he couldn’t refuse.
The sale was a coup for Walter as an investor, with the Lakers’ valuation quickly turning from $10 billion to $12.5 billion in just 14 months. Walter, per the source, wasn’t necessarily looking to sell — the offer from Kushner and Iger was just too good to pass up.
At the end of the day, Walter is in the middle of a federal investigation, so his side probably isn’t going to leak much to the media right now. And if he did sell the team to help pay off those loans, he’s definitely not leaking that to the media.
But it doesn’t take a genius to put two and two together here. Whether Walter was looking to sell the team or not, he’s in a precarious situation and was presented with an offer he probably wasn’t ever going to get again. Iger and Kushner knew that as well and likely took advantage of that.
If you really want to put a conspiracy hat on, given the current administration in the White House, it probably wouldn’t hurt his case if he sold the team to someone tied as closely to Donald Trump as Kushner is. For those unaware, his brother is married to Trump’s daughter, Ivanka. That part is speculation, but it’s certainly not far-fetched.
Whatever the motivations and rationale, the end result is Walter having likely one of the shortest reigns in league history as owner — certainly in the modern era — and the Lakers going through a transition for the second straight year.
You can follow Jacob on Twitter at @JacobRude or on Bluesky at @jacobrude.bsky.social.
