Mark Walter's Dodgers charade might've been revealed and their future is in peril

Los Angeles Dodgers owner Mark Walter has been in some trouble as of late. Last week, he sold the Los Angeles Lakers to former Disney CEO Bob Iger and venture capitalist Joshua Kushner at a $12.5 million valuation, after just one year of ownership. Days later, he was also in talks to sell his shares in the Premier League's Chelsea FC.

The Lakers sale immediately raised red flags for Dodgers fans, but team president Stan Kasten reassured fans that "this is a Lakers story. It's not really a Dodgers story."

However, Walter's clearly frenzied asset dump started months after two investigations into multiple Walter-owned holdings by the US Attorney's Office for the Southern District of New York and the Securities and Exchange Commission. Delaware Life Insurance Company and affiliate Clear Spring Life and Annuity were subpoenaed.

Per The Athletic, "Investigators are looking at whether billions of dollars in investments by the companies involving businesses with ties to the insurers were improperly reported as being unaffiliated."

Court filings show that American Media Productions, owned by Walter's Guggenheim Group and parent company to SportsNet LA, owed around $1.45 billion to five life insurance companies — all owned or otherwise tied to Walter.

The Mark Walter situation is getting messier and messier despite promises of no Dodgers sale

Let's break this down in (hopefully) simpler terms. In effect, Walter has been borrowing and lending from himself. Summed up neatly by Twitter user EconomPic, "The Dodgers get a sweetheart deal on their TV rights from a media company their owners co-own, financed by insurance companies those same owners control. Because ownership sits on both sides, as borrower and lender, the setup functions as a closed loop."

The federal investigations ask if Walter committed fraud by failing to disclose this closed loop and by borrowing money from his own companies. For example, Dodgers Tickets LLC was listed by Delaware Life as an "unaffiliated business" despite the fact that Walter owns both companies.

In terms of MLB revenue sharing, AMP's $1.45 billion in debt decreases the Dodgers' required revenue share. Tie that in with the Dodgers' existing revenue sharing/TV rights loophole that dates back to Frank McCourt's ownership and Walter's eventual sale of Time Warner Cable's rights, and the team is being accused of keeping control of hundreds of millions of dollars that would otherwise be distributed to smaller-market teams under MLB's rules.

These findings cast a pall over the Dodgers' success under Walter's ownership since 2012, and may make it impossible for LA to spend at their current level in the future if things continue to trend in the wrong direction.

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