When the Los Angeles Clippers went up for sale in May, Mayor Eric Garcetti insisted that any new owners should reflect the values of Los Angeles. Other city leaders suggested that local stewardship of this emerging franchise might be important in an era of national and even global ownership. But despite bids on the team from several Angelenos, it was a Washington state resident with Detroit roots, Steve Ballmer, who ultimately outspent the field and won control of the franchise.
It wasn’t the first time in recent years that outsiders have snapped up some of L.A.’s most visible assets. Though Ervin “Magic” Johnson is one of the public faces of the Los Angeles Dodgers, it is actually a Chicago-based group that bought a majority of the team from Bostonian Frank McCourt. And when the Chandlers, who had owned the Los Angeles Times for more than 100 years, put the newspaper up for sale in 2000, it was Chicago’s Tribune Co. that acquired the paper. Though several Angelenos have tried to buy the publication since, Tribune currently still controls the Times, although it announced last month that Austin Beutner, a staple of L.A.’s civic landscape, had become the new chief executive and publisher. The Los Angeles News Group, L.A.’s other major newspaper brand, also has nonlocal ownership.
So does a city see any benefit, at least economically if not emotionally, when some of its most well-known institutions are locally owned? Do big names like the Times and Dodgers, our local museums, even our key businesses – some of the main ingredients that contribute to L.A.’s reported status as the world’s top city brand – need to be controlled by men and women from Los Angeles?
It’s a difficult question to quantify, but in my opinion the answer seems to be: It sure doesn’t hurt. We want to believe that an L.A. owner is more likely to see his investment in an organization as an investment in Los Angeles itself – like an entrepreneur who fights for a startup business a bit harder than for the big corporation that buys it out. We want to think they’ll make sure these institutions succeed and understand how that success is linked to L.A.’s. We want to hope that an L.A. owner will value local employment, engage in partnerships with local charities and community groups, and encourage the recirculation of money in our regional economy.
A number of studies back up those instincts and show that local ownership can carry tangible economic and social benefits for cities. A 2009 study by decorated economist Jed Kolko and UC Irvine professor David Neumark found that having more locally owned businesses can help insulate cities from financial shocks, in part by making layoffs less likely. A local business is also more likely to spend more of its revenue in its community. And while there has been much debate about whether tax incentives to draw sports teams are worth the money, there is broad agreement that the teams themselves, like newspapers, museums and other cultural assets, have significant value for a city. These strong social institutions can lead to increased civic engagement, healthier communities and more resilient local economies.
Social surplus
Crucially, experts have also suggested that local ownership encourages the recirculation of social surplus – profit and other resources that return to cities where businesses are based. Locally owned businesses can help create a web of economic and social relationships, according to the Institute for Local Self-Reliance, a Washington-based think tank.
We constantly see the benefits of having a long bench of local philanthropists and business owners who are deeply involved and invested in Los Angeles as profits seem to find their way back into our communities and economy. Dodgers part-owner Magic Johnson has made prolific investments in South L.A. retail. Los Angeles Lakers part-owner (and L.A.’s richest man) Dr. Patrick Soon-Shiong has given away enormous sums, including a $100 million gift that helped reopen Martin Luther King Jr. Community Hospital. The generosity of another wealthy Angeleno, Eli Broad, has worked to make the city, in his words, a cultural capital of the world and a museum mecca. Broad has tried to buy the Times at least twice. He or another fellow Angeleno might have the best chance of curbing the layoffs and cuts Tribune has imposed on the paper’s newsroom.
Like our universities, the value of some of L.A.’s most well-known assets extends beyond the taxes they pay or the number of people they employ. These teams, newspapers, businesses and cultural institutions are deeply intertwined in our city’s social and economic prosperity. It’s critical that their leaders understand and value that connection.
Alan Whitman is a managing director for wealth management at Morgan Stanley in Pasadena.
