Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: I'm David Weston. Welcome to Wall Street Week on Bloomberg Radio.
Speaker 2: Coming up on the program, we take a look at
Speaker 2: the growing investment opportunities in and around women's sports. Plus,
Speaker 2: we hear from Robbie Starbuck, who's made news for his
Speaker 2: anti DEI efforts, on his activism and his push to
Speaker 2: advocate for values based investing. First up, though, President Trump
Speaker 2: is in an escalating standoff with Harvard University after the
Speaker 2: government froze two point two billion dollars in federal grants
Speaker 2: for the school this week. The President went on to
Speaker 2: threaten Harvard's tax exempt status and on Wednesday accused the
Speaker 2: school of hiring radical left faculty and said it quote
Speaker 2: can no longer be considered even a decent place for learning.
Speaker 2: For more on this, we talked with former Harvard University
Speaker 2: president and Wall Street Week contributor Larry Summers, who applauded
Speaker 2: the university's effort to stand up to President Trump.
Speaker 3: David, I've been sharply critical of Harvard, and I continue
Speaker 3: to be critical on many dimensions. Anti Semitism is still
Speaker 3: not responded to strongly enough. There are still excesses of
Speaker 3: identity politics. There's still concerns about intellectual diversity. That's all right,
Speaker 3: But here's the thing. In America, you have to follow
Speaker 3: the law and the approach the Trump administration is taking.
Speaker 3: It is not at all consistent with the Civil Rights Act,
Speaker 3: it is probably not consistent with Harvard's First Amendment rights.
Speaker 4: And so the right thing.
Speaker 3: To do was surely for Harvard to respond vigorously and strongly.
Speaker 3: All the more because this is not an isolated thing
Speaker 3: what's being done to Harvard. This is not a manifestation
Speaker 3: of a particular concern about aspects of universities.
Speaker 4: This is a part of a broad.
Speaker 3: And sweeping effort to suppress institutions that challenge the presidential administration.
Speaker 3: It's part of what's being done to law firms. It's
Speaker 3: part of what's being done to countries. It's part of
Speaker 3: what's being done to judges. It's part of what's being
Speaker 3: done to legal residents.
Speaker 4: Of our country.
Speaker 3: And if an institution like Harvard cannot resist tyranny when
Speaker 3: applied to it, with Harvard's fifty billion dollar endowment, with
Speaker 3: all its network, with all its prestige.
Speaker 4: Then who can.
Speaker 3: So Harvard should not go interjecting itself into politics. But God,
Speaker 3: when it is the object of an extra legal set
Speaker 3: of orders and threats.
Speaker 4: I don't think it had any viable choice at all
Speaker 4: but to respond strongly.
Speaker 2: Let's talk about that extra legal part of what you're saying,
Speaker 2: at least defonic. The representative Republican from New York saying, listen,
Speaker 2: colleges like Harvard don't have a right to money from
Speaker 2: the government. They don't have a right to tax mayor money.
Speaker 2: And if they don't have a right to tax mayor money,
Speaker 2: can't the government put conditions on that money.
Speaker 3: First of all, the money is not going It's not
Speaker 3: like the government's funding.
Speaker 4: The DEI office at Harvard.
Speaker 3: Not like the government is funding the student discipline mechanism
Speaker 3: at Harvard. The government is funding researchers who are doing
Speaker 3: vitally important research on diseases like diabetes and cancer, and
Speaker 3: als show what sense does it make to cut their
Speaker 3: funding off off because somebody doesn't like what the associate
Speaker 3: Dean of students did in a student discipline case. And
Speaker 3: what remit does the government have to set as a
Speaker 3: condition the composition which beliefs are valued, in which beliefs
Speaker 3: are not valued in the Harvard Sociology department. That's not
Speaker 3: the way free speech works are in.
Speaker 4: A free society.
Speaker 3: And this is supposed to be done the power of
Speaker 3: the purse. Remember by Congress. It is not the prerogative
Speaker 3: of the executive branch with three days notice, with no hearing,
Speaker 3: no judicial review, no transparent notification to Congress is mandated
Speaker 3: by statute to simply indiscriminately start cutting off previously promised
Speaker 3: and committed funds because it has a disagreement over an
Speaker 3: issue with the university.
Speaker 2: So, Larry, give us a sense of what is a
Speaker 2: practical matter this will mean if it continues through You
Speaker 2: ran Harvard at one point. You know the budget, You
Speaker 2: know that fifty three billion dollars in down there. What
Speaker 2: will it do their operations?
Speaker 3: Look, they'll have to make some very important strategic choices.
Speaker 3: I hope that the university will find ways even if
Speaker 3: there is a cutoff for some interval of funds, to
Speaker 3: maintain vitally important programs, to not cut back research. But potentially,
Speaker 3: if the US government goes to war with our great universities,
Speaker 3: it means a sharp production in the kind of scientific
Speaker 3: progress that has caused the United States to be the
Speaker 3: envy of the world and pull so far ahead of
Speaker 3: Europe and Japan. It means the end of efforts at
Speaker 3: cures to diseases like cancer and diabetes. It means a
Speaker 3: substantial risk to our national security because one of our
Speaker 3: great national assets has been our capacity for innovation, which
Speaker 3: resides very heavily in our leading academic institutions. So a
Speaker 3: short run problem, I think that can be managed painfully
Speaker 3: until the judiciary steps in and does what's necessary. A
Speaker 3: long run war against the universities that is going at
Speaker 3: after what is our hugest asset. You know, if I
Speaker 3: think about all the different sectors of the economy, it's
Speaker 3: hard to think of one where we are as dominant
Speaker 3: as in higher education. All the students from all over
Speaker 3: the world, at least until this administration came, wanted to
Speaker 3: come to the United States. A vast fraction of the
Speaker 3: world's innovation takes place in American universities. If we put
Speaker 3: at this put that at risk, we are making, I believe,
Speaker 3: a very very grave mistake. And yes, these issues should
Speaker 3: be pursued, But destroying medical research grants because you don't
Speaker 3: think people have been disciplined severely enough.
Speaker 4: It really doesn't make any sense, Laria.
Speaker 2: I wonder if there's cautionary tail here that maybe the
Speaker 2: higher education system has become too intertwined with the government,
Speaker 2: that's why they're so dependent upon them.
Speaker 3: There may be questions that can be asked of that kind,
Speaker 3: But gosh, if the government is not prepared to fund
Speaker 3: basic research, the research which ultimately will make possible the
Speaker 3: development of new products, I think.
Speaker 4: We have a problem.
Speaker 3: If the government is not prepared to fund scholarships that
Speaker 3: promote opportunity for our poor students, who are very able
Speaker 3: and generate social mobility, I think we have a problem.
Speaker 3: I think what we need, frankly, is a more mature
Speaker 3: relationship between the government, the broader society, and the universities. Yes,
Speaker 3: the universities have made some very serious mistakes, and yes
Speaker 3: they should be pressured and pressured with escalating strength to
Speaker 3: change that. I didn't even have an objection to the
Speaker 3: way in which the Biden administration opened civil rights cases
Speaker 3: with respect to a variety of universities and anti semitism.
Speaker 3: But that's a very different thing than the kind of
Speaker 3: persecution that is involved here, and this escalated David in.
Speaker 4: A profoundly troubling way.
Speaker 3: When the President of the United States endeavored by social
Speaker 3: media to engage in an individual specific tax matter, namely
Speaker 3: Harvard's five oh one C three deduction, and to suggest
Speaker 3: that it be decided on the basis of a political ground.
Speaker 4: That's the kind of interference with the irash that.
Speaker 3: It's a sacred duty of the Treasure Secretary to resist.
Speaker 3: It is exactly what was alleged to have happened six
Speaker 3: levels down, and many people got very upset in connection
Speaker 3: with the so called Lois Learner case involving five O
Speaker 3: one C three deductions and conservative groups. If there was
Speaker 3: punishment of conservative groups, people were absolutely right to have
Speaker 3: been hugely outraged about it during the Biden administration. I
Speaker 3: don't know anything about the merits of the case, but
Speaker 3: for the President of the United States to be calling
Speaker 3: for changing the tax status of his adversaries, this is
Speaker 3: new and I believe authoritarian and a real question about
Speaker 3: our democracy.
Speaker 2: Larry, one last question, since we're on taxes and this
Speaker 2: is tax week, Basically, what do you make of the
Speaker 2: acts that the Trump adminstration is taking with respect to
Speaker 2: the IRS.
Speaker 3: I think it's possible that the Treasury Secretary and his
Speaker 3: senior colleagues are being seriously delinquent in their duty. I
Speaker 3: look at tens of thousands of people being pushed out
Speaker 3: of the IRS, even as tax compliance is a massive problem,
Speaker 3: and hear so many stories have increased tax seeing as
Speaker 3: a consequence. I see the elevation of a person with
Speaker 3: no experience, no administrative or information technology experience, to be
Speaker 3: the contemporary commissioner of the IRS, chosen on the basis
Speaker 3: of political loyalty to the Trump enterprise. I look at
Speaker 3: what are probably the extra lawful agreements entered into without
Speaker 3: even speaking to people at the IRS, with respec to
Speaker 3: information sharing and immigration. I look at the president's involvement
Speaker 3: in specific cases, and I see the most important line
Speaker 3: that I thought I was supposed to defend when I
Speaker 3: was Treasury Secretary, a political tax enforcement, neutral, professional tax enforcement,
Speaker 3: not driven by politics. And I see that line being
Speaker 3: crossed with the Treasury Department cheering it on, and it
Speaker 3: makes me both very sad and very angry.
Speaker 2: That's former Treasury Secretary and former Harvard president Larry Summers
Speaker 2: coming up on Wall Street Week. Will the money follow
Speaker 2: the momentum of women's sports? I'm David Weston, and this
Speaker 2: is Bloomberg. This is a story about perseverance and the
Speaker 2: women who are laying the foundation for what looks to
Speaker 2: be a huge investment opportunity women's sports, where two of
Speaker 2: the fastest growing are the WNBA and the National Women's
Speaker 2: Soccer League.
Speaker 5: I think when you're looking at the women's sports space,
Speaker 5: specifically in the last five years, what you're seeing in
Speaker 5: the surge of growth really begins with consumers.
Speaker 6: It wasn't really until the last five years that women's
Speaker 6: sports has had as much ability to be broadcast than
Speaker 6: ever before.
Speaker 7: You're finally putting this product in the right spotlight, and
Speaker 7: it is exploding in popularity.
Speaker 2: From tennis to volleyball, to soccer to basketball. Women are
Speaker 2: bringing it both on and off the courts and the pitches,
Speaker 2: with women's sports sponsorships attracting over a billion dollars and
Speaker 2: total team valuations predicted to increase from two point six
Speaker 2: billion dollars in twenty twenty three to four point three
Speaker 2: billion dollars in the next three years.
Speaker 8: Number one limit.
Speaker 2: There is no question that women are fueling fandoms across stadiums,
Speaker 2: fields and arenas, but is it sustainable.
Speaker 6: Little by little we've been able to see huge increases
Speaker 6: in viewership and investment. With that comes the investment that
Speaker 6: we're now seeing today, where people are really seeing more viewership,
Speaker 6: their form, more attendance, their for more sponsorship, their formre
Speaker 6: merchandise being sold, and that all leads to more external
Speaker 6: dollars coming into the ecosystem saying, I believe that this
Speaker 6: is an economy that we can support and that also
Speaker 6: will have great returns.
Speaker 2: More fair Level is the executive vice president of Wasserman's
Speaker 2: The Collective, a women focused global advisory business whose mission
Speaker 2: is to drive investment in women's professional sports.
Speaker 6: The exciting part right now about women's sports is that
Speaker 6: we're seeing similar types of investors in women's sports, which
Speaker 6: means that women's sports has reached a point where true
Speaker 6: capital partners are coming in looking at how can they
Speaker 6: invest in this Nason economy.
Speaker 2: Women's sports might still be new on the scene, but
Speaker 2: they're growing fast. WNBA attendance almost doubled from twenty twenty
Speaker 2: three to twenty twenty four, and in women's soccer, the
Speaker 2: twenty twenty four final alone drew nearly a million viewers,
Speaker 2: nearly twice the audience as its men's counterpart, and the
Speaker 2: money is following the eyeballs, as media writes for the
Speaker 2: NWSL jumped from one point five million dollars to sixty
Speaker 2: million dollars in the most recent deal. What it's given
Speaker 2: the numbers, it's no surprise that investors are paying attention,
Speaker 2: leading Laval to work with RBC to produce a study
Speaker 2: on the investment opportunity these women's sport provide.
Speaker 6: We started this particular study with RBC, which is our
Speaker 6: second study with them earlier in twenty twenty four, really
Speaker 6: wanted to look at the trends that we were seeing
Speaker 6: about how much money was starting to come into From
Speaker 6: an investment perspective, we were seeing an enormous amount of
Speaker 6: private equity coming in different venture capital groups, individual family offices,
Speaker 6: driving some real dollars into women's teams and leagues, and
Speaker 6: so we wanted to stop and think about from an
Speaker 6: RBC wealth investor perspective, how these teams and leagues would
Speaker 6: prove to be really good investment for them. And so
Speaker 6: we set out to look at this specifically through NWSL
Speaker 6: and WNBA because they are the most mature leagues in
Speaker 6: the United States, and really looked at very specific variables,
Speaker 6: particularly the revenue drivers.
Speaker 7: It's amazing to me that we've reached a point where
Speaker 7: this younger generation, this is their normal. They're normal is
Speaker 7: that female athletes are able to play in a stadium
Speaker 7: like this, sold out with incredible amount of fans.
Speaker 2: Chris and Angie Long are among those who have become investors,
Speaker 2: leading the group that bought the NWSLS Kansas City Current give.
Speaker 9: A full panoramic view. As more and more opportunities to
Speaker 9: watch women's sports have arisen, You've naturally now seen this
Speaker 9: massive growth and popularity because at the end of the day,
Speaker 9: it's all about the product.
Speaker 4: On the field. When you have a product that's.
Speaker 9: As fantastic as women's sports, there's no doubt it's going
Speaker 9: to be successful.
Speaker 7: We have been big sports fans. We actually were season
Speaker 7: ticket holders to a bi professional women's team that was
Speaker 7: in Kansas City, and I think our experience in twenty
Speaker 7: nineteen being in Paris that the Women's World Cup really
Speaker 7: was enlightening to see the opportunity from an investment side,
Speaker 7: especially in light of the tremendous amount of global growth
Speaker 7: in the women's game.
Speaker 2: In building their friends in Kansas City, the Lungs are
Speaker 2: focused on their brand.
Speaker 9: One of the leading jerseys sales.
Speaker 2: And one of the things that has limited the growth
Speaker 2: of women's professional sports franchises a dedicated place to practice
Speaker 2: and play.
Speaker 7: This whole space is the Can't State Current. I think
Speaker 7: that alone is a big differentiator because most other women's
Speaker 7: teams are playing in someone else's stadium, so they're relegated
Speaker 7: to a smaller space that might be more akin to
Speaker 7: a visitor's locker room.
Speaker 10: I mean.
Speaker 7: One of the things that is harder to put a
Speaker 7: value on, but incredibly important is brand recognition. The first
Speaker 7: year that we had a team, it was a little
Speaker 7: bit like, oh, did you know there's a women's professional
Speaker 7: team in Kansas City.
Speaker 8: Now to the point.
Speaker 7: Where we are now where if we go somewhere and
Speaker 7: travel outside the country, people say, oh, Kansas City, isn't
Speaker 7: that the place that built the stadium for the women's team,
Speaker 7: And the first thing you see when you drive into
Speaker 7: this city is this stadium. There's not a person in
Speaker 7: Kansas City, the Midwest and a lot of the country
Speaker 7: that doesn't know about the Kansas City Current and the
Speaker 7: state and they play.
Speaker 9: I think from a revenue perspective, I'm unaware of another
Speaker 9: women's professional sports team globally that's done as much revenue
Speaker 9: as we did this past year, which by the way,
Speaker 9: is only our fourth season in operation. So from a
Speaker 9: financial success standpoint, I think that speaks volumes.
Speaker 7: From a revenue growth perspective, we're doing fantastic. I think
Speaker 7: it is north of a twenty million dollars swing in revenue.
Speaker 8: Being in your own facilities.
Speaker 7: From a asset appreciation perspective, we're doing fantastic.
Speaker 9: You look at what you can do in women's sports
Speaker 9: today and the multiple invested capital versus the risk taken,
Speaker 9: it's out of lack. It's absolutely in the investor's favor,
Speaker 9: and I think that's part of the reason you're seeing
Speaker 9: a lot more capital pour in, including private equity firms
Speaker 9: and these new sports funds and all the things that
Speaker 9: are happening, I think are due to the fact people
Speaker 9: are realizing, Wow, if I'm going to take an ill
Speaker 9: liquid asset investment like a sports team, I should get
Speaker 9: compensated for it. And there's no better game in town
Speaker 9: than what we're seeing on women's side.
Speaker 2: But there is another league taking women's sports to the
Speaker 2: next level, the WNBA. Since Caitlin Clark emerged as a
Speaker 2: budding superstar at the University of Iowa, Women's basketball has skyrocketed,
Speaker 2: garnering the league more fans and opening up new markets.
Speaker 5: We are the first expansion team since two thousand and eight.
Speaker 5: The last was Atlanta and then following us, we have
Speaker 5: Portland in Toronto next year. So growth of WNBA has
Speaker 5: been a long time coming and it's taken many years
Speaker 5: to get here. This building has actually always been here
Speaker 5: for the State Warriors, and now it's our Valkyrie's Performance Center.
Speaker 5: So this is the area that you know the championships
Speaker 5: were won before Chase Center was Bill Steph Curry is
Speaker 5: in Steph Curry. Yeah, small name, right, and now we've
Speaker 5: had an opportunity to make it our own.
Speaker 2: Jess Smith was the head of revenue for the NWSL's
Speaker 2: Angels City Football Club, where she introduced new sponsorship models
Speaker 2: and broke records in attendance. She is now the president
Speaker 2: of the WNBA's Golden State Valkyries, the first expansion team
Speaker 2: in seventeen years.
Speaker 5: When you look back during COVID, the WNBA actually got
Speaker 5: together and played. They were the first league to do this.
Speaker 5: It was also a really key moment to where consumers
Speaker 5: were sitting at home on their couch looking for entertainment
Speaker 5: and tuning in and really taking note of these incredible athletes,
Speaker 5: really taking note of what they were standing for when
Speaker 5: it came to social justice.
Speaker 8: And there was an.
Speaker 5: Unlock that began to happen with consumers and women's sports.
Speaker 8: So as consumers.
Speaker 5: Began to unlock giving, those ratings began to unlock by merchandise,
Speaker 5: buying tickets and understanding that their dollars in time and
Speaker 5: interest was driving the growth of the w media listened, right,
Speaker 5: teams listened, leagues listened, and more investment began to come in.
Speaker 5: And those consumers have really really rewarded everyone in that circle.
Speaker 8: That is equated to the growth.
Speaker 2: When we talk about growth, how do you measure it?
Speaker 2: What are the metrics you pay attention to?
Speaker 5: There's two things. One is money and revenue, right, are
Speaker 5: your revenue lines growing? Are you investing in the right
Speaker 5: way to make sure that those are growing exponentially? And
Speaker 5: two is fandom? How many people are coming into your
Speaker 5: ecosystem through purchases but also followship on social media or
Speaker 5: TV ratings, and so if you're looking at both of those,
Speaker 5: the growth is very significant. But we have a close
Speaker 5: eye on both every single day.
Speaker 2: As fast as women's professional sports are growing, they still
Speaker 2: lag behind their male counterparts, at least for the most part.
Speaker 2: Where the NBA Playoffs averaged four point five million TV
Speaker 2: viewers last year, the WNBA had one point one million.
Speaker 2: Twenty two point five million fans attended NBA games in person,
Speaker 2: where the WNBA had two point four million, But the
Speaker 2: gap is closing. Viewership numbers were up one hundred and
Speaker 2: thirty nine percent for the women last year, but down
Speaker 2: twelve percent for the men. You have a foundation in
Speaker 2: both men's and women's sports from your experience, what's different
Speaker 2: about the two.
Speaker 5: That's a really good question. I don't know if I've
Speaker 5: been asked that way before. I would say the assumptions
Speaker 5: of things in women's sports, It's been assumed that when
Speaker 5: you create a product, well, you better not lose any money.
Speaker 5: And it's just interesting the standard that has existed there.
Speaker 5: Before I joined the Angel City, I was in certain
Speaker 5: rooms where organizations would think about should we get a
Speaker 5: women's team, should we explore this? And what was really
Speaker 5: interesting about the mindset there was that it was the
Speaker 5: conversation always came back to, while if we sold four
Speaker 5: thousand tickets, maybe we wouldn't lose money instead of what
Speaker 5: would it take to sell this out? That advantageous opportunity
Speaker 5: to build a product and build a business and seek
Speaker 5: revenue and be relentless about it seemed to be lacking
Speaker 5: from my personal experience when having the ability to kind
Speaker 5: of compare it to and think of the rooms that
Speaker 5: I was in at Angel City. What was beautiful about
Speaker 5: that experience was we had so many people from outside
Speaker 5: of sport really using sport as an opportunity to create
Speaker 5: a better tomorrow, but wanted to build a sports product
Speaker 5: because it.
Speaker 8: Was an untapped opportunity.
Speaker 5: How do we create the most robust partnership, portfolio and assets,
Speaker 5: how do we have the best content? And then you
Speaker 5: saw the market respond. And now you've seen that effect
Speaker 5: globally and certainly within the different leagues and teams. But
Speaker 5: that's only just getting started.
Speaker 6: Only in the last five years have we been able
Speaker 6: to see more games online, more clanging of the drum
Speaker 6: for more viewership of all of these sports through both
Speaker 6: social media and through these athletes just having a bigger
Speaker 6: platform to say hey, come and watch us.
Speaker 8: Hey, if you you fans, it's Caitlyn Clark. I can't
Speaker 8: wait to get to Indianapolis. I know you guys are excited.
Speaker 2: I am so go fever.
Speaker 5: There's often been so many misconceptions about audience in women's sports.
Speaker 3: So long.
Speaker 5: People have said an MBA fan is a WNBA fan,
Speaker 5: And what we know about our consumers is that it
Speaker 5: really is for everyone. I don't know if you've seen
Speaker 5: the T shirts that say everyone watches women's sports, and
Speaker 5: that statement is so powerful because it's true. The audience
Speaker 5: is actually pretty much fifty percent men and women. It's
Speaker 5: not a women's product for women. This is an incredible
Speaker 5: product for everybody.
Speaker 2: Coming up sports as an investment class. It's driven in
Speaker 2: part by the rapid growth of women's professional soccer and basketball.
Speaker 2: That's what we turn next on Wall Street Week. If
Speaker 2: the story of women's sports is one of dramatic growth,
Speaker 2: it comes against the backdrop of sports overall growing into
Speaker 2: a major asset class that has become an important alternative
Speaker 2: investment for many portfolios.
Speaker 8: The rate of change has been pretty incredible.
Speaker 2: Nicole Pullen Ross lead Sports and Entertainment Solutions in Private
Speaker 2: Wealth for Golden Sachs.
Speaker 11: Whether it is the growth in women's basketball starting from
Speaker 11: college through the WNBA, or whether it's the valuations that
Speaker 11: we're seeing across various leagues, or whether there's the viewership
Speaker 11: that we're seeing, all of those things have converged in
Speaker 11: a way that has led our clients to think, I
Speaker 11: want to have exposure. I want to participate in this growth,
Speaker 11: both from a passion perspective but also from a profitability perspective.
Speaker 2: As big as investing in sports is today, it wasn't
Speaker 2: always that way. It grew out of agents representing athletes
Speaker 2: and the related businesses that grew around them. George Pine
Speaker 2: was one of those at the iconic IMG and watch
Speaker 2: the private equity business grow around it.
Speaker 1: When you kind of take a step back and you
Speaker 1: look at sports, it's primarily been run by governing body
Speaker 1: and families, and they were very conservative in the application
Speaker 1: of capital and the use of capital, and so therefore
Speaker 1: outside sources of the capital didn't see this as a
Speaker 1: viable entry point. But as time has gone by and
Speaker 1: the meteorites have increased in sports and the audience and
Speaker 1: the abidity of sports of increase, so has the value
Speaker 1: of the teams. So is the value of the industry,
Speaker 1: and so has the opportunities within the sport.
Speaker 12: Early in my career I was involved in one of
Speaker 12: the sort of archetypal sports businesses, IMG Worldwide, my mentor
Speaker 12: Ted Forceman, acquired in the early part of the art.
Speaker 2: Josh Empson is another IMG alone. He is now the
Speaker 2: new co head of Sports at investment and advisory firm
Speaker 2: Sixth Street, owner and investor in sports teams such as
Speaker 2: FC Barcelona, Real Madrid and the San Antonio Spurs.
Speaker 12: And the fascinating thing about the history of IMG is
Speaker 12: that the founder, Mark McCormick, was effectively the financial advisor
Speaker 12: for Arnold Palmer and then Jack Nicholas, and as he
Speaker 12: looked at this, he realized that Palmer and Nicholas were
Speaker 12: the value, not the league, not the tour that was
Speaker 12: organizing them. And McCormick realized and built that entire business,
Speaker 12: which became a multi billion dollar business, on the idea
Speaker 12: that they could be their own brand, they could bring
Speaker 12: the unique value to events, and I think that actually
Speaker 12: allowed in some ways gender parity at an earlier stage.
Speaker 12: And I think a lot of that is about the
Speaker 12: sponsorship ecosystem, right that they didn't have to win just
Speaker 12: on the court for the purse, you could find someone
Speaker 12: whoever was the charismatic number one in the world in
Speaker 12: either sport, could command a global audience for the period
Speaker 12: of their ascendancy and monetize it.
Speaker 2: Sports and investing in sports have come a long way
Speaker 2: from the days of representing Arnold Palmer and Jack Nicholas
Speaker 2: in their size and scope geographic scope. Yield Street estimates
Speaker 2: the sports universe to be a five hundred billion dollar
Speaker 2: market worldwide, with revenue coming from media rights, ticket sales, licensing,
Speaker 2: and sponsorships.
Speaker 1: So sports aggregates millions of people in a way that
Speaker 1: nothing else does.
Speaker 10: As a Super Bowl at one hundred and twenty.
Speaker 1: Six million viewers, it's very few things in America that
Speaker 1: bring one hundred and twenty six million people together. And
Speaker 1: then you have people that are passionate like Philadelphia Eagles fan.
Speaker 1: Though you have big audiences in a world that's fragmenting,
Speaker 1: that zero in around something that they love and have
Speaker 1: a passion for. That's what makes sports unique. And then
Speaker 1: being more global. So for all of those reasons, sports
Speaker 1: is becoming more and more attractive. And it wasn't that
Speaker 1: complex or sophisticated twenty years ago.
Speaker 10: In terms of capital markets.
Speaker 2: It's bigger and broader. But what is it that investors
Speaker 2: are looking for when they seek to own a piece
Speaker 2: of the sports pie ranges?
Speaker 11: I would say some of our clients who are long
Speaker 11: term investors in the space have been investing as a
Speaker 11: private family for generations, and those families have really leaned
Speaker 11: in mostly around passion, and we're seeing them look not
Speaker 11: only to the sport that they may have started with,
Speaker 11: but look at multiple sports, potentially in the same city
Speaker 11: or potentially across the world.
Speaker 8: And we see new investors.
Speaker 11: Who are trying to put a toe in the water,
Speaker 11: and they're doing that through some of the many growing
Speaker 11: number of private equity and institutional investors who have exposure
Speaker 11: to the space, or they're doing it through a minority interest.
Speaker 2: It seems to me that owning a team might be
Speaker 2: a very different investment from having a minority interest in
Speaker 2: a team. Are they really different investment propositions?
Speaker 8: They cost a lot more, that's for sure.
Speaker 11: The average NFL team, for example, when the CBA was signed,
Speaker 11: was worth one point three billion or something like that. Today,
Speaker 11: the average team is worth more than nearly one and
Speaker 11: a half times that value. And so although there's been
Speaker 11: a lot of growth of billionaires.
Speaker 8: That's a much smaller list.
Speaker 11: Today than it was twenty years ago, and so when
Speaker 11: individuals are coming together to invest in this space, they're
Speaker 11: very much doing it in partnership. What they get for
Speaker 11: that investment very significantly. It could be great seats, good parking,
Speaker 11: really increased engagement with the team. But in many cases
Speaker 11: it's not control, it's not the ability to direct where
Speaker 11: the team is going. So there's a very big difference
Speaker 11: between majority shares and minority shares.
Speaker 2: And it's not just team ownership in whole or in
Speaker 2: part that provides sports businesses to invest in. A host
Speaker 2: of ancillary businesses have grown up around teams that can
Speaker 2: provide attractive investment opportunities, which is at the center of
Speaker 2: Pine's private equity business.
Speaker 1: There are different ways you can look at sports today.
Speaker 1: So the traditional has been investing in teams or leagues,
Speaker 1: which are very safe investments, typically ill liquid and the
Speaker 1: longer holds, but have a certain return threshold. So we've
Speaker 1: invested in data companies. We've invested in webs apps and streamings.
Speaker 1: I own a company in Amsterdam that lights the pitch
Speaker 1: and creates a software so we can predict on the
Speaker 1: pitch or the field, whether the moss is going to grow,
Speaker 1: what the conditions are, and you know, as the media
Speaker 1: rights go up and the team valuations the pitch is
Speaker 1: the quality.
Speaker 10: Of your product and the safety of product.
Speaker 11: I think the revenue landscape and the diversity of revenue
Speaker 11: has certainly grown over the past several years. You talk
Speaker 11: to team owners about having the best experience for their
Speaker 11: clients and their players, and then there's everything around the
Speaker 11: stadium or the arena. The ability for vesters to participate
Speaker 11: in the revenue in the surrounding area has certainly been important.
Speaker 8: We have seen a community impact.
Speaker 11: A lot of the owners with whom we work talk
Speaker 11: about their investment and their team as a community investment,
Speaker 11: a civic investment because they are prominent players in the community.
Speaker 2: But given the dramatic expansion and diversification in the sports business,
Speaker 2: is there a danger of dilution? Typically when I think
Speaker 2: about value, I think about supply and demand. But it
Speaker 2: seems like there is an unending new supply of sports.
Speaker 2: How can it be that the value keeps going up
Speaker 2: when there's more and more supply.
Speaker 1: People are thirsting for great storylines, right, and of course
Speaker 1: there are sports Formula One think about UFC didn't exist
Speaker 1: almost twenty years ago.
Speaker 10: Look how popular that is today.
Speaker 1: So there are sports that can break in in ways
Speaker 1: that nobody have an envisioned.
Speaker 10: And of course women's sports.
Speaker 1: As attraction today that it's never had before.
Speaker 2: Is expansion your enemy as an investor?
Speaker 12: I think expansion is your enemy as an investor, but
Speaker 12: it's really more your opportunity. And that's because every time
Speaker 12: you expand, you light up fandom in a new market.
Speaker 12: Was Las Vegas a big hockey market before the Golden Knights?
Speaker 4: Probably not.
Speaker 12: Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 10: Yeah.
Speaker 4: If you look at the historical.
Speaker 12: Returns in sports, they've been surprisingly good, and some of
Speaker 12: that's been driven by scarcity, but not necessarily scarcity of
Speaker 12: franchises because all the leagues have expanded through this, but
Speaker 12: just a scarcity of other forms of content that are
Speaker 12: as engaging and energizing to such large fan bases.
Speaker 2: Sports competes with every other investment opportunity, and its status
Speaker 2: as an alternative investment doesn't stop it from keeping up
Speaker 2: with the main asset classes. Sports franchise valuations have outpaced
Speaker 2: the s and P five hundreds returns, especially in the
Speaker 2: past decade. But sport is a very different beast in
Speaker 2: a very different jungle. As we look at sports as
Speaker 2: an asset class, how does it differ from other alternative
Speaker 2: asset investing.
Speaker 5: Nobody's ever asked me that.
Speaker 10: It's a great question.
Speaker 12: I think one thing that's really different about sports as
Speaker 12: an asset class versus other forms of alternatives is the
Speaker 12: multiple layers of partnership. So when you invest in a
Speaker 12: sports franchise in the US, you have a partner who's
Speaker 12: going to be the control owner, and that's a person
Speaker 12: who has needs and ambitions that you're trying to support.
Speaker 12: You also exist within the framework of a league that
Speaker 12: has very particular rules and has its objectives and its goals.
Speaker 12: And then beyond that, and most importantly, you have this
Speaker 12: universe of fans and they care passionately about their team,
Speaker 12: and they are stakeholders in that equation, just the way
Speaker 12: the league and the owner is. And there is that
Speaker 12: implicit compact that if you're coming in, you're going to
Speaker 12: make this better for them as well as for the league.
Speaker 2: And the owners.
Speaker 12: And it's interesting to be in a dynamic where you
Speaker 12: have those multiple layers of stakeholders and you're trying to
Speaker 12: deliver value as an investor for all levels of that,
Speaker 12: and that feels pretty different from other forms of alternative investment.
Speaker 12: It's pretty satisfying when you get it right. But there's
Speaker 12: something special about investing in something that you can watch
Speaker 12: every Sunday, that you can come together with your family
Speaker 12: and sort of share what you're trying to do.
Speaker 2: Alternative investing may be different when it's not your sports team.
Speaker 2: To what extent are your investors who are looking for
Speaker 2: psychic benefits in addition to monetary benefits.
Speaker 11: Yeah, it's an interesting part of the equation, right, So
Speaker 11: there is a joy element to the return that you
Speaker 11: can't necessarily quantify, and what we ask our clients to
Speaker 11: do is not just focus on the joy part of
Speaker 11: the return, but to think about the overall picture. And
Speaker 11: for some clients that joy component is going to be
Speaker 11: at a higher on the list of things that are
Speaker 11: important in the return and for others. For institutional investors,
Speaker 11: it's lower on the list. And so making sure that
Speaker 11: we're helping our clients think through how to set return
Speaker 11: expectations for themselves in terms of liquidity, etc. Is something
Speaker 11: that we feel is our opportunity to do to help
Speaker 11: them navigate the space. Alternatives in general are an area
Speaker 11: of significant interest for our clients, and the type of
Speaker 11: exposure that they're interested in is quite broad, and so
Speaker 11: this is only a piece of that for most of
Speaker 11: our clients. For some they really want to live and
Speaker 11: look at this as a primer investment that.
Speaker 2: Does it for us. Here at Wall Street Week, I'm
Speaker 2: David Weston. This is Bloomberg. See you next week for
Speaker 2: more stories of capitalism.