1 00:00:00,760 --> 00:00:02,840 Speaker 1: This is the business of sports. 2 00:00:02,880 --> 00:00:06,320 Speaker 2: Sports are the greatest unscripted show owner. 3 00:00:06,200 --> 00:00:09,000 Speaker 3: The next generation of players who really grew up with tech. 4 00:00:08,840 --> 00:00:09,760 Speaker 4: And believe in tech. 5 00:00:09,880 --> 00:00:12,160 Speaker 5: Your face is your ticket, your face is your wallet, 6 00:00:12,240 --> 00:00:14,000 Speaker 5: your face is your access to a club. 7 00:00:14,120 --> 00:00:18,720 Speaker 6: These are such iconic and important buildings for businesses. For fans, 8 00:00:18,840 --> 00:00:21,160 Speaker 6: COVID was one of the best things that ever happened 9 00:00:21,160 --> 00:00:21,360 Speaker 6: to go. 10 00:00:21,640 --> 00:00:23,720 Speaker 2: The NFL is a bulletproof business. 11 00:00:23,840 --> 00:00:26,440 Speaker 7: Racing is unique because there is absolutely no reason why 12 00:00:26,520 --> 00:00:27,560 Speaker 7: we can't compete with the guys. 13 00:00:27,520 --> 00:00:28,600 Speaker 8: I'm well, it's pro pickleball. 14 00:00:28,640 --> 00:00:30,640 Speaker 2: Real, are people really going to tune into this? 15 00:00:30,840 --> 00:00:33,400 Speaker 4: If you're playing moneyball with a huge bag of money, 16 00:00:33,560 --> 00:00:34,960 Speaker 4: you're going to be really, really good. 17 00:00:35,040 --> 00:00:38,200 Speaker 1: Bloomberg Business of Sports from Bloomberg Radio. 18 00:00:39,440 --> 00:00:43,000 Speaker 8: Hello, this is the Bloomberg Business of Sports, where we 19 00:00:43,040 --> 00:00:45,599 Speaker 8: explore the big money issues in the world of sports. 20 00:00:45,680 --> 00:00:47,120 Speaker 2: I'm Michael Barr, I'm Damian s. 21 00:00:47,120 --> 00:00:48,440 Speaker 9: Aassaur, and I'm an Esperdemo. 22 00:00:48,600 --> 00:00:52,120 Speaker 8: Coming up today, we'll talk with vice president and general 23 00:00:52,159 --> 00:00:57,520 Speaker 8: manager of Futures and International for Robin Hood Markets about 24 00:00:57,520 --> 00:00:59,920 Speaker 8: his company pushing into prediction market. 25 00:01:00,360 --> 00:01:03,160 Speaker 3: The goal that I was brought in for was to 26 00:01:03,560 --> 00:01:07,600 Speaker 3: begin to offer not only our US based product internationally, 27 00:01:07,640 --> 00:01:10,920 Speaker 3: but also to develop a futures product here in the 28 00:01:11,040 --> 00:01:13,800 Speaker 3: US that we could offer out to our retail investors. 29 00:01:14,000 --> 00:01:17,120 Speaker 3: And in that pursuit to offer I will say the 30 00:01:17,160 --> 00:01:22,040 Speaker 3: futures product is where we developed an opportunity to offer 31 00:01:22,160 --> 00:01:25,320 Speaker 3: prediction markets out to our end clients. And so a 32 00:01:25,360 --> 00:01:28,360 Speaker 3: little over twelve months ago we launched prediction markets on 33 00:01:28,440 --> 00:01:32,440 Speaker 3: the presidential election, and then from there we've continued to 34 00:01:32,480 --> 00:01:34,480 Speaker 3: build that product out and. 35 00:01:34,400 --> 00:01:37,800 Speaker 7: We are looking into our crystal ball for twenty twenty six. 36 00:01:37,880 --> 00:01:40,839 Speaker 7: Our team of sports business reporters here at Bloomberg News 37 00:01:41,120 --> 00:01:42,960 Speaker 7: got together to share what they think is in store 38 00:01:43,000 --> 00:01:44,560 Speaker 7: for the sports world in the new year. 39 00:01:44,720 --> 00:01:46,800 Speaker 6: And you're going to want to hear it. HPS, we 40 00:01:46,920 --> 00:01:49,120 Speaker 6: know somebody we were pretty smart. 41 00:01:49,200 --> 00:01:52,920 Speaker 8: Yes, all that is straight ahead on the Bloomberg Business 42 00:01:52,960 --> 00:01:55,720 Speaker 8: of sports. But we start with a big story in 43 00:01:55,800 --> 00:01:57,880 Speaker 8: the world of sports investing. 44 00:01:57,600 --> 00:01:59,120 Speaker 2: And it is a big story in Michael Barer. 45 00:01:59,160 --> 00:02:01,760 Speaker 7: Private equity giant KKR is working on a deal to 46 00:02:01,800 --> 00:02:05,720 Speaker 7: acquire Arctos Partners, a deal that values the sports focused 47 00:02:05,800 --> 00:02:08,680 Speaker 7: private equity firm at about one billion dollars. 48 00:02:09,040 --> 00:02:11,640 Speaker 6: For more on the deal, we welcome Bloomberg News Private 49 00:02:11,639 --> 00:02:14,120 Speaker 6: equity reporter Alison McNeely in the studio. 50 00:02:14,280 --> 00:02:16,960 Speaker 9: Allison, Welcome to the Bloomberg Business of Sports. Thanks for 51 00:02:17,000 --> 00:02:18,400 Speaker 9: joining us, Thank you for having me. 52 00:02:18,880 --> 00:02:24,359 Speaker 8: Now, what happens when this deal is set upon the landscape? 53 00:02:24,400 --> 00:02:26,720 Speaker 8: Will it change everything in sports? 54 00:02:27,320 --> 00:02:31,960 Speaker 10: It's certainly a significant development in terms of the institutional 55 00:02:32,160 --> 00:02:38,679 Speaker 10: capital that is quickly swarming into seemingly all areas of sports. KKR, 56 00:02:39,040 --> 00:02:42,080 Speaker 10: you know, one of the oldest private equity firms in 57 00:02:42,120 --> 00:02:44,520 Speaker 10: the United States, really in the world, and kind of 58 00:02:44,720 --> 00:02:47,040 Speaker 10: the grand daddy of the acid class, if you will. 59 00:02:47,400 --> 00:02:51,200 Speaker 10: They have been investing for a few years now sort 60 00:02:51,240 --> 00:02:54,920 Speaker 10: of around the edges of sports and media and entertainment. 61 00:02:55,520 --> 00:02:59,840 Speaker 10: But this Arctose deal that is on the table with 62 00:03:00,120 --> 00:03:03,160 Speaker 10: the leagues, this would really move them in a meaningful 63 00:03:03,200 --> 00:03:07,280 Speaker 10: way into minority team ownership and you know, put put 64 00:03:07,280 --> 00:03:10,519 Speaker 10: another big money player in the business of owning sports teams. 65 00:03:10,840 --> 00:03:12,640 Speaker 6: That's exactly what I wanted to ask you, Alison, it 66 00:03:12,720 --> 00:03:16,200 Speaker 6: was has KKR been looking to get more into exactly that, 67 00:03:16,200 --> 00:03:18,919 Speaker 6: like you said, into team ownership? Is that exactly where 68 00:03:18,919 --> 00:03:20,920 Speaker 6: they looked at Arcto's Has it been something that because 69 00:03:20,919 --> 00:03:24,320 Speaker 6: you said they're invested in gaming and other things around. 70 00:03:24,480 --> 00:03:26,840 Speaker 11: But team ownership is completely different ballgame. 71 00:03:27,160 --> 00:03:30,359 Speaker 10: It is a totally different ballgame. So KKR is really, 72 00:03:30,440 --> 00:03:32,959 Speaker 10: as I've heard from sources that I've spoken with, they're 73 00:03:32,960 --> 00:03:35,920 Speaker 10: really kind of looking at all the opportunities. So obviously 74 00:03:36,040 --> 00:03:39,040 Speaker 10: Arctos deal would put them into team ownership, but you know, 75 00:03:39,040 --> 00:03:42,680 Speaker 10: they're looking at stadium financing, they're looking at media rights, 76 00:03:42,720 --> 00:03:45,480 Speaker 10: they're looking at you know, lending. You know, they have 77 00:03:45,600 --> 00:03:49,560 Speaker 10: been invested in some of these ancillary sort of services businesses, 78 00:03:49,840 --> 00:03:53,520 Speaker 10: so they're really kind of assessing the landscape. I think 79 00:03:53,640 --> 00:03:57,200 Speaker 10: the consensus view in the private equity industry is just 80 00:03:57,480 --> 00:04:00,280 Speaker 10: that sports is a huge opportunity and they're a lot 81 00:04:00,320 --> 00:04:02,880 Speaker 10: of money to be made in it, depending on kind 82 00:04:02,880 --> 00:04:04,240 Speaker 10: of which angle you tackle it. 83 00:04:04,280 --> 00:04:07,360 Speaker 7: From consolidation, right, I mean, we know that you know, 84 00:04:07,400 --> 00:04:11,200 Speaker 7: the NFL, you know, has basically limited the number of 85 00:04:11,240 --> 00:04:14,720 Speaker 7: teams or the stake sizes that private equity firms can take, 86 00:04:14,720 --> 00:04:17,799 Speaker 7: and you know, professional franchises, you know, do you foresee 87 00:04:17,880 --> 00:04:20,440 Speaker 7: that this type of a deal, consolidation in the industry 88 00:04:20,440 --> 00:04:24,720 Speaker 7: can create some issues there, can perhaps create some forced liquidation, 89 00:04:24,880 --> 00:04:25,400 Speaker 7: so to speak. 90 00:04:25,480 --> 00:04:26,440 Speaker 2: Is that is that a risk? 91 00:04:27,360 --> 00:04:29,559 Speaker 10: I'm not sure that that's a risk at this point 92 00:04:29,640 --> 00:04:32,200 Speaker 10: in time, but I would maybe not be the best 93 00:04:32,240 --> 00:04:35,400 Speaker 10: person to comment on that. What I think is happening 94 00:04:35,760 --> 00:04:39,640 Speaker 10: more than anything right now is folks in private equity 95 00:04:40,200 --> 00:04:43,120 Speaker 10: from the investing side are kind of looking. Everybody is 96 00:04:43,160 --> 00:04:45,920 Speaker 10: looking for their way in and how they sort of 97 00:04:45,960 --> 00:04:48,960 Speaker 10: tackle that and who might be willing to sell to 98 00:04:49,000 --> 00:04:51,400 Speaker 10: them or who might be willing to come into the 99 00:04:51,440 --> 00:04:54,279 Speaker 10: club is kind of what's most top of mind for 100 00:04:54,360 --> 00:04:55,480 Speaker 10: these managers. 101 00:04:56,040 --> 00:04:59,120 Speaker 8: I remember back in the day here, I go back 102 00:04:59,160 --> 00:05:03,080 Speaker 8: when you either Detroit Tigers for thirty six dollars and 103 00:05:03,120 --> 00:05:06,560 Speaker 8: if you had any sponsorship, you know what, if you 104 00:05:07,080 --> 00:05:10,560 Speaker 8: and if you had the sponsorship from Fred's Bait Shop, 105 00:05:10,640 --> 00:05:14,880 Speaker 8: you were good to go. Now, not only owning the 106 00:05:14,920 --> 00:05:18,039 Speaker 8: team means something, but you have to have the sponsorships 107 00:05:18,080 --> 00:05:20,640 Speaker 8: as well to make a whole bunch of money. 108 00:05:21,520 --> 00:05:24,719 Speaker 10: And the sponsorship thing is a really interesting question because 109 00:05:25,279 --> 00:05:28,320 Speaker 10: one thing that I've heard from speaking to people kind 110 00:05:28,360 --> 00:05:32,400 Speaker 10: of around sports investing is the potential for conflicts is 111 00:05:32,440 --> 00:05:37,120 Speaker 10: a really really big issue for them. And certainly that's 112 00:05:37,160 --> 00:05:40,159 Speaker 10: an issue I shouldn't say issue, but that's a question 113 00:05:40,360 --> 00:05:42,479 Speaker 10: for this deal. And right now we're you know, we're 114 00:05:42,480 --> 00:05:44,960 Speaker 10: hearing that this deal has gone to the leagues to 115 00:05:45,120 --> 00:05:48,800 Speaker 10: start to get their approval, and so they're kind of, 116 00:05:48,880 --> 00:05:52,760 Speaker 10: as I understand it, running checks to basically find out, like, 117 00:05:52,839 --> 00:05:55,960 Speaker 10: you know, is there some athletes somewhere who's you know, 118 00:05:56,000 --> 00:05:59,839 Speaker 10: a pitchman for a k care portfolio company that they're 119 00:05:59,880 --> 00:06:02,560 Speaker 10: not aware of that might take create some kind of 120 00:06:02,560 --> 00:06:05,680 Speaker 10: potential conflict. So yes, there's tons of money to be 121 00:06:05,760 --> 00:06:09,320 Speaker 10: had in sponsorship, and you know that obviously plays into 122 00:06:09,320 --> 00:06:11,320 Speaker 10: the valuations of these teams and these assets. 123 00:06:11,360 --> 00:06:13,680 Speaker 6: And we are speaking with Bloomberg News Private equity reporter 124 00:06:13,760 --> 00:06:17,000 Speaker 6: Alison McNeel. Like Alison, when you're just exactly on what 125 00:06:17,040 --> 00:06:19,760 Speaker 6: you're talking about when they're talking about how these leagues 126 00:06:19,800 --> 00:06:23,480 Speaker 6: have to run checks, I mean arctosis into the NHL, 127 00:06:23,600 --> 00:06:26,520 Speaker 6: the NFL, the NBA, all these different leagues. So with 128 00:06:26,560 --> 00:06:29,960 Speaker 6: a deal like this and they've you know, a agree 129 00:06:30,000 --> 00:06:33,000 Speaker 6: to acquire it, but all these leagues have to say yes. 130 00:06:33,040 --> 00:06:35,760 Speaker 11: And how long does something like that take to get 131 00:06:35,800 --> 00:06:37,400 Speaker 11: over the line, So. 132 00:06:38,400 --> 00:06:41,520 Speaker 10: That can just depend I've heard that it can take months. 133 00:06:41,680 --> 00:06:44,520 Speaker 10: So I don't know that we know or I certainly 134 00:06:44,600 --> 00:06:47,760 Speaker 10: don't have any reporting at this time that indicates exactly 135 00:06:47,800 --> 00:06:50,000 Speaker 10: how how long it might take, but you know, it 136 00:06:50,040 --> 00:06:52,440 Speaker 10: can take several months, it can be you know, a 137 00:06:52,520 --> 00:06:55,520 Speaker 10: very complex and certainly a thorough process. 138 00:06:55,880 --> 00:06:59,320 Speaker 11: Considering also KKR's vast portfolio. 139 00:06:59,560 --> 00:07:03,440 Speaker 10: Yeah, they have seven hundred and twenty three billion dollars 140 00:07:03,800 --> 00:07:05,919 Speaker 10: in assets under management as of the end of the 141 00:07:06,000 --> 00:07:09,720 Speaker 10: third quarter. They're one of the largest private equity firms 142 00:07:09,800 --> 00:07:13,320 Speaker 10: in the world. They're constantly getting involved in new areas 143 00:07:13,360 --> 00:07:16,440 Speaker 10: of investing, and you know, you got to run the 144 00:07:16,480 --> 00:07:20,000 Speaker 10: traps and see, you know, if there are any conflicts. 145 00:07:19,520 --> 00:07:20,440 Speaker 2: All right, so I get it. 146 00:07:20,480 --> 00:07:22,880 Speaker 7: So I mean, basically, the acquisition goes through, we have 147 00:07:22,920 --> 00:07:26,080 Speaker 7: a bigger, better Arctose with some better institutional capital behind it. 148 00:07:26,400 --> 00:07:29,800 Speaker 7: What comes next? I mean they own PSG, they own 149 00:07:29,920 --> 00:07:33,600 Speaker 7: the Devils, they own professional football teams. I mean where, 150 00:07:33,840 --> 00:07:36,119 Speaker 7: you know, do they go next? What do you think 151 00:07:36,280 --> 00:07:38,400 Speaker 7: comes next for firms such as Arctose. 152 00:07:39,280 --> 00:07:44,360 Speaker 10: So for a firm like Arctos, the value proposition that 153 00:07:44,440 --> 00:07:48,600 Speaker 10: they bring to KKR is essentially giving them an entry 154 00:07:48,640 --> 00:07:51,440 Speaker 10: point into all of these leagues. You know, as you 155 00:07:51,480 --> 00:07:54,560 Speaker 10: noted earlier, they're already invested with teams in the major 156 00:07:54,720 --> 00:07:56,400 Speaker 10: for a league, So they kind of have boots on 157 00:07:56,400 --> 00:07:59,760 Speaker 10: the ground, and that's a real competitive advantage because some 158 00:07:59,840 --> 00:08:03,320 Speaker 10: of the other private equity firms who are in sports 159 00:08:03,320 --> 00:08:05,840 Speaker 10: investing there are certain leagues that they can invest in 160 00:08:06,240 --> 00:08:09,600 Speaker 10: because of you know, there's one guy at the firm, 161 00:08:09,680 --> 00:08:11,600 Speaker 10: you know, the co president of the co founderor something 162 00:08:11,640 --> 00:08:15,200 Speaker 10: like that, who is an investor as a person, as 163 00:08:15,200 --> 00:08:17,600 Speaker 10: an individual and a sports team, and so therefore the 164 00:08:17,640 --> 00:08:20,280 Speaker 10: investment firm, it can be very tricky for them to 165 00:08:20,400 --> 00:08:23,680 Speaker 10: invest as an institutional investor in the sports team. And 166 00:08:23,760 --> 00:08:29,320 Speaker 10: so this deal potentially because Arctos doesn't have those issues, 167 00:08:29,320 --> 00:08:32,080 Speaker 10: and because KKR to my knowledge doesn't have those issues, 168 00:08:32,240 --> 00:08:35,200 Speaker 10: what this really means for Arctos is they now have big, 169 00:08:35,440 --> 00:08:38,440 Speaker 10: you know, money giant behind them. They kind of have 170 00:08:38,600 --> 00:08:41,679 Speaker 10: clearance in all the leagues already, and you know, they 171 00:08:41,720 --> 00:08:47,040 Speaker 10: have access to the really sophisticated operational and investing capacity 172 00:08:47,080 --> 00:08:49,480 Speaker 10: of KKR to kind of grow into all sorts of 173 00:08:49,480 --> 00:08:53,080 Speaker 10: other areas. Certainly, when I talk to people who invest 174 00:08:53,120 --> 00:08:55,679 Speaker 10: in sports, the two themes that come up over and 175 00:08:55,720 --> 00:08:59,520 Speaker 10: over again are college sports and women's sports. So you 176 00:08:59,600 --> 00:09:01,600 Speaker 10: have to want, like, are they going to start doing 177 00:09:01,880 --> 00:09:05,040 Speaker 10: deals in that space? I don't know, but that's certainly 178 00:09:05,120 --> 00:09:07,880 Speaker 10: like a question that would be a good one. 179 00:09:07,760 --> 00:09:10,319 Speaker 6: To ask to bring more money into women's sports and 180 00:09:10,400 --> 00:09:12,320 Speaker 6: all about it, right, you had just said something on 181 00:09:12,360 --> 00:09:15,000 Speaker 6: that is that not every you know, private equity is 182 00:09:15,000 --> 00:09:17,920 Speaker 6: allowed to invest in certain leagues in the NFL. There's 183 00:09:17,960 --> 00:09:20,280 Speaker 6: only about six or so that are allowed to invest 184 00:09:20,280 --> 00:09:23,439 Speaker 6: in Arts is one of them. But KKR technically wasn't 185 00:09:23,480 --> 00:09:25,680 Speaker 6: So is that something else that they have to check before? 186 00:09:26,200 --> 00:09:28,080 Speaker 6: Do they now have to be approved by as a 187 00:09:28,280 --> 00:09:30,079 Speaker 6: official partner? 188 00:09:30,320 --> 00:09:30,800 Speaker 10: Exactly? 189 00:09:30,880 --> 00:09:31,320 Speaker 9: Exactly. 190 00:09:31,400 --> 00:09:35,320 Speaker 10: Yeah, So by becoming the owner of Arctos and sort 191 00:09:35,360 --> 00:09:39,000 Speaker 10: of absorbing it into their their firm, Kkerr now has 192 00:09:39,080 --> 00:09:41,840 Speaker 10: to get all the approvals that that excuse me, that 193 00:09:41,960 --> 00:09:45,080 Speaker 10: Arcto Scott before. So that's exactly that's exactly what would 194 00:09:45,120 --> 00:09:47,200 Speaker 10: happen right now. 195 00:09:48,000 --> 00:09:50,920 Speaker 8: I want to compare two different types of owners at 196 00:09:50,960 --> 00:09:55,240 Speaker 8: the especially in the NFL. One you have Jerry Jones, 197 00:09:55,280 --> 00:09:58,840 Speaker 8: owner of the Dallas Cowboys, and he's going to do 198 00:09:58,880 --> 00:10:01,200 Speaker 8: it the way he's going to do it. Then you 199 00:10:01,280 --> 00:10:03,679 Speaker 8: have other teams where you have a lot of private 200 00:10:03,720 --> 00:10:09,200 Speaker 8: equity owners also involved. Can a guy like a Jerry 201 00:10:09,320 --> 00:10:12,600 Speaker 8: Jones compete with a team that has a lot of 202 00:10:12,640 --> 00:10:13,360 Speaker 8: money to it. 203 00:10:15,440 --> 00:10:20,320 Speaker 10: I have no idea that yeah. No, But that's actually 204 00:10:20,360 --> 00:10:23,800 Speaker 10: a really good question because it has the potential as 205 00:10:23,840 --> 00:10:27,680 Speaker 10: more and more of these huge money managers come into sports, 206 00:10:27,880 --> 00:10:32,360 Speaker 10: it has the potential to fundamentally change the landscape. They 207 00:10:32,400 --> 00:10:35,920 Speaker 10: are so deepocketed. You know, KKR and their peers are 208 00:10:35,960 --> 00:10:41,360 Speaker 10: bringing in fresh dollars constantly. We haven't even talked about wealth. 209 00:10:41,480 --> 00:10:45,280 Speaker 10: You know, private equity firms are trying to reach individual 210 00:10:45,280 --> 00:10:48,000 Speaker 10: investors now, and they're creating all sorts sorts of investment 211 00:10:48,080 --> 00:10:51,720 Speaker 10: products to market to people in their brokerage account and 212 00:10:51,720 --> 00:10:54,559 Speaker 10: their for wing K account, and so you know, if 213 00:10:54,559 --> 00:10:57,360 Speaker 10: you have all that retail dollars coming in as well 214 00:10:57,400 --> 00:11:00,360 Speaker 10: as your pension funds and your traditional investors, just have 215 00:11:00,520 --> 00:11:03,040 Speaker 10: a ton of money coming in all the time that 216 00:11:03,080 --> 00:11:05,800 Speaker 10: they can put to work in uh, you know, potentially 217 00:11:05,800 --> 00:11:06,280 Speaker 10: in sports. 218 00:11:06,800 --> 00:11:08,880 Speaker 6: Alison, We've been talking a lot about how this is 219 00:11:08,920 --> 00:11:12,080 Speaker 6: a win for KKR and getting these getting into team ownership, 220 00:11:12,120 --> 00:11:14,040 Speaker 6: But how big of a win is this for ARCTOS 221 00:11:14,120 --> 00:11:17,040 Speaker 6: Is the valuation proposition that they got, and how big 222 00:11:17,040 --> 00:11:18,320 Speaker 6: of a win is it for them? 223 00:11:18,640 --> 00:11:21,560 Speaker 10: I mean I would say that you know, the the 224 00:11:21,760 --> 00:11:29,120 Speaker 10: individuals at arctose with equity are probably happy. 225 00:11:28,800 --> 00:11:31,400 Speaker 11: One billion or one point five billion dollar valuation that 226 00:11:31,440 --> 00:11:31,760 Speaker 11: they got. 227 00:11:32,000 --> 00:11:34,079 Speaker 9: So the valuations around a billion dollars. 228 00:11:34,120 --> 00:11:37,000 Speaker 10: But the way the deal, as I understand it from 229 00:11:37,040 --> 00:11:39,960 Speaker 10: speaking with people who are familiar with it, is that 230 00:11:40,240 --> 00:11:42,800 Speaker 10: there are sort of what they call earnouts or incentives, 231 00:11:42,800 --> 00:11:46,120 Speaker 10: and basically they bring over the senior team and then 232 00:11:46,200 --> 00:11:48,720 Speaker 10: depending on how the business performs, that can kind of 233 00:11:48,760 --> 00:11:53,640 Speaker 10: potentially boost the valuation. And so, yeah, like we're talking there's. 234 00:11:53,440 --> 00:11:55,040 Speaker 2: A kicker, I Charles, is what you mean? 235 00:11:55,120 --> 00:11:55,280 Speaker 5: Yeah? 236 00:11:55,320 --> 00:11:58,920 Speaker 7: No, I mean yes, well, I mean, let's be clear. 237 00:11:59,000 --> 00:12:01,280 Speaker 7: I mean it's going to be interesting. It's going to 238 00:12:01,320 --> 00:12:04,040 Speaker 7: be an interesting scenario, to say the least. Allison, thank 239 00:12:04,080 --> 00:12:06,840 Speaker 7: you so much for joining us here today on the 240 00:12:06,880 --> 00:12:11,239 Speaker 7: Bloomberg Business of Sports. Alison mcneelye, Bloomberg News Private Equity reporter. 241 00:12:11,000 --> 00:12:11,320 Speaker 2: Thank you. 242 00:12:11,679 --> 00:12:13,360 Speaker 10: Thank you for having me up. 243 00:12:13,360 --> 00:12:15,640 Speaker 9: Next Robin Hood's move into prediction markets. 244 00:12:15,760 --> 00:12:18,040 Speaker 8: Today, we got another old friend of the show. We're 245 00:12:18,080 --> 00:12:20,840 Speaker 8: just piling them on all this week for Damians as 246 00:12:21,000 --> 00:12:23,920 Speaker 8: Hour and Vanessa Rodomo. I'm Michael Barr. You are listening 247 00:12:24,000 --> 00:12:28,079 Speaker 8: to the Bloomberg Business of Sports from Bloomberg Radio around 248 00:12:28,120 --> 00:12:28,600 Speaker 8: the world. 249 00:12:43,040 --> 00:12:47,000 Speaker 1: This is Bloomberg Business of Sports from Bloomberg Radio. 250 00:12:48,320 --> 00:12:51,559 Speaker 8: This is the Bloomberg Business of Sports, which we explore 251 00:12:51,640 --> 00:12:54,319 Speaker 8: the big money issues in the world of sports. 252 00:12:54,360 --> 00:12:57,000 Speaker 9: I'm Michael laugh, I'm Damian Sasauer, and I'm bennessa prodemo. 253 00:12:57,320 --> 00:13:01,520 Speaker 8: Robin Hood is pushing its way into prediction markets, and 254 00:13:01,640 --> 00:13:05,160 Speaker 8: here to talk about the company's expansion and growth in 255 00:13:05,240 --> 00:13:09,480 Speaker 8: the space is JB. McKenzie. He's vice president and general 256 00:13:09,520 --> 00:13:13,800 Speaker 8: manager of Futures and International at robin Hood Markets. 257 00:13:14,040 --> 00:13:17,400 Speaker 2: JB. Welcome to the Bloomberg Business of Sports. 258 00:13:17,440 --> 00:13:21,439 Speaker 8: Thanks for having me. You are vice president, General manager 259 00:13:21,480 --> 00:13:25,880 Speaker 8: of Futures and International robin Hood Markets. Tell us about that. 260 00:13:26,160 --> 00:13:29,280 Speaker 3: Yeah, I joined almost three years ago to the day. 261 00:13:30,080 --> 00:13:32,880 Speaker 3: The goal that I was brought in for was to 262 00:13:33,240 --> 00:13:37,280 Speaker 3: begin to offer not only our US based product internationally, 263 00:13:37,360 --> 00:13:40,600 Speaker 3: but also to develop a futures product here in the 264 00:13:40,720 --> 00:13:43,479 Speaker 3: US that we could offer out to our retail investors. 265 00:13:43,679 --> 00:13:46,800 Speaker 3: And in that pursuit to offer I will say the 266 00:13:46,840 --> 00:13:51,720 Speaker 3: futures product is where we developed an opportunity to offer 267 00:13:51,840 --> 00:13:55,000 Speaker 3: prediction markets out to our end clients. And so a 268 00:13:55,040 --> 00:13:58,000 Speaker 3: little over twelve months ago we launched prediction Markets on 269 00:13:58,120 --> 00:14:02,000 Speaker 3: the presidential a lot, and then from there we've continued 270 00:14:02,040 --> 00:14:04,440 Speaker 3: to build that product out, but it was all with 271 00:14:04,480 --> 00:14:08,520 Speaker 3: this idea of creating the one stop shop for everybody 272 00:14:08,559 --> 00:14:10,920 Speaker 3: to be able to trade. That sort of financial super 273 00:14:10,960 --> 00:14:15,480 Speaker 3: app that our CEO, Vlad has been envisioning and pushing 274 00:14:15,520 --> 00:14:17,760 Speaker 3: us to develop is what we started to create. 275 00:14:18,440 --> 00:14:20,560 Speaker 6: And I mean, I mean, what a year it really was, 276 00:14:20,640 --> 00:14:23,720 Speaker 6: right in twenty twenty five for prediction markets. It feels like, 277 00:14:24,320 --> 00:14:26,640 Speaker 6: you know, back in twenty eighteen, the big new word 278 00:14:26,760 --> 00:14:28,800 Speaker 6: was sports betting and it was all this stuff and 279 00:14:28,840 --> 00:14:30,720 Speaker 6: we talk about it a lot on this show Sports Betting. 280 00:14:30,920 --> 00:14:33,240 Speaker 6: But now it feels like prediction markets is this new 281 00:14:33,280 --> 00:14:36,680 Speaker 6: hot thing and everyone's talking about it. Tell us about 282 00:14:36,720 --> 00:14:40,000 Speaker 6: how they differ from each other and why you think 283 00:14:40,080 --> 00:14:42,880 Speaker 6: that prediction markets are getting so popular as a medium 284 00:14:42,920 --> 00:14:43,200 Speaker 6: right now. 285 00:14:43,280 --> 00:14:45,520 Speaker 3: No, Vanessa, Absolutely, I think it's a great question, and 286 00:14:45,600 --> 00:14:47,160 Speaker 3: I think the first thing I would start off with 287 00:14:47,360 --> 00:14:50,920 Speaker 3: is is that prediction markets, even just overall, whether it's 288 00:14:50,920 --> 00:14:54,680 Speaker 3: sports or not sports, they actually use the identical structure 289 00:14:54,920 --> 00:14:57,440 Speaker 3: as equity options in future markets. And what that means 290 00:14:57,480 --> 00:14:59,960 Speaker 3: is it's a centralized order books where bids and off 291 00:15:00,120 --> 00:15:03,720 Speaker 3: first come in from other participants in the markets, unlike 292 00:15:03,800 --> 00:15:06,640 Speaker 3: let's say a sports book, where the sports book sets 293 00:15:06,680 --> 00:15:08,760 Speaker 3: the line and creates the market, and then you trade 294 00:15:08,760 --> 00:15:11,200 Speaker 3: against the sports book. So there's sort of this inherent 295 00:15:11,280 --> 00:15:14,640 Speaker 3: conflict right where the sports book is actually giving you 296 00:15:14,720 --> 00:15:17,080 Speaker 3: a price and in a product, and in some cases 297 00:15:17,800 --> 00:15:20,880 Speaker 3: it will reap a reward based upon you not being 298 00:15:20,920 --> 00:15:23,360 Speaker 3: successful in that trade that you make. So I think 299 00:15:23,360 --> 00:15:25,520 Speaker 3: that's the first thing. I think the second area that's 300 00:15:25,560 --> 00:15:28,480 Speaker 3: really important about it is with that centralized art book 301 00:15:28,560 --> 00:15:31,680 Speaker 3: comes transparency and consistency. And what I mean by that 302 00:15:31,800 --> 00:15:34,960 Speaker 3: is whether you're a customer in New York or a 303 00:15:34,960 --> 00:15:37,800 Speaker 3: customer in Illinois from where I'm from, you get the 304 00:15:37,880 --> 00:15:40,600 Speaker 3: identical price for the trade that you're making. You see 305 00:15:40,680 --> 00:15:42,800 Speaker 3: the same thing. The cost is the same, the price 306 00:15:42,880 --> 00:15:45,600 Speaker 3: is the same. It's transparent for all the participants that 307 00:15:45,640 --> 00:15:47,560 Speaker 3: are in the market, again, just like what we see 308 00:15:47,600 --> 00:15:51,600 Speaker 3: out of the traditional equities in futures and options markets. 309 00:15:51,600 --> 00:15:53,320 Speaker 3: And then I think the third thing that's important about 310 00:15:53,320 --> 00:15:57,520 Speaker 3: to this is this is a CFTC or federally regulated product, 311 00:15:57,800 --> 00:16:00,520 Speaker 3: so we follow very strict rules that have been put 312 00:16:00,560 --> 00:16:06,840 Speaker 3: into place for whether that's opening accounts, kyc AML, money movement, oversight, 313 00:16:06,880 --> 00:16:09,480 Speaker 3: et cetera. So really those are kind of the three 314 00:16:09,560 --> 00:16:11,280 Speaker 3: key differences where you see on the other side of 315 00:16:11,280 --> 00:16:14,320 Speaker 3: the sports that's much more oriented towards state by state 316 00:16:14,400 --> 00:16:15,680 Speaker 3: regulation JB. 317 00:16:15,960 --> 00:16:17,280 Speaker 7: So you know you have to help me out here. 318 00:16:17,280 --> 00:16:21,000 Speaker 7: You're mentioning central Limit Order books CFTC regulated product, and 319 00:16:21,080 --> 00:16:23,720 Speaker 7: yet you know, we see, you know, some markets on 320 00:16:23,760 --> 00:16:25,720 Speaker 7: whether or not Maduro is going to be ousted last 321 00:16:25,800 --> 00:16:28,040 Speaker 7: year and paying out. You know, I think there was 322 00:16:28,040 --> 00:16:29,960 Speaker 7: a news article just the other day. I was reading 323 00:16:30,080 --> 00:16:32,280 Speaker 7: four hundred thousand dollars to someone who is, you know, 324 00:16:32,440 --> 00:16:35,600 Speaker 7: policing bets. You know, you know into you know what happened, 325 00:16:36,000 --> 00:16:38,800 Speaker 7: you know, you know, just just recently curious to hear 326 00:16:38,800 --> 00:16:41,000 Speaker 7: how you manage that risk? How do you manage that 327 00:16:41,040 --> 00:16:43,600 Speaker 7: two way exposure? Are there, you know, two sides to 328 00:16:43,640 --> 00:16:47,080 Speaker 7: the trade. Talk to us a little bit more about that, No, Daman, 329 00:16:47,120 --> 00:16:49,280 Speaker 7: I think that's a great question. And with all of 330 00:16:49,280 --> 00:16:51,840 Speaker 7: these markets, it is a two sided trade. So Robinhood 331 00:16:51,920 --> 00:16:54,520 Speaker 7: acts as an agency market, meaning what we do is 332 00:16:54,560 --> 00:16:58,520 Speaker 7: we allow our clients to access in exchange where the 333 00:16:58,600 --> 00:17:01,240 Speaker 7: in this case the buyers and come together, right, so 334 00:17:01,640 --> 00:17:04,639 Speaker 7: we don't participate in the market. We don't make markets, 335 00:17:04,680 --> 00:17:07,000 Speaker 7: we don't take positions, there's no risk on from a 336 00:17:07,040 --> 00:17:09,840 Speaker 7: Robin Hood standpoint. The way in which that trade occurs 337 00:17:10,000 --> 00:17:13,800 Speaker 7: is there's a person out there, whether that's a market maker, 338 00:17:13,960 --> 00:17:17,119 Speaker 7: whether that's an individual, we don't know what that is 339 00:17:17,320 --> 00:17:20,119 Speaker 7: who basically said, I believe there's X percentage chance that 340 00:17:20,119 --> 00:17:22,440 Speaker 7: this happens. And on the other side is another person 341 00:17:22,760 --> 00:17:25,240 Speaker 7: who says, I believe that I agree with that, and 342 00:17:25,280 --> 00:17:26,639 Speaker 7: I want to take the other side of that trade. 343 00:17:26,640 --> 00:17:29,159 Speaker 3: So it's actually interesting. It does work, just like if 344 00:17:29,200 --> 00:17:32,200 Speaker 3: you think about a traditional market that's out there where 345 00:17:32,359 --> 00:17:34,280 Speaker 3: it may feel a little bit awkward because of what 346 00:17:34,400 --> 00:17:36,840 Speaker 3: it is you're trading, but at the end of the day, 347 00:17:37,280 --> 00:17:40,200 Speaker 3: it's someone who believes that the probability of this occurring 348 00:17:40,440 --> 00:17:43,159 Speaker 3: is happening is let's say at fifty one percent, and 349 00:17:43,200 --> 00:17:45,399 Speaker 3: that opposite side is willing to say, I'll put that 350 00:17:45,440 --> 00:17:47,679 Speaker 3: price up there and I'll actually make a trade for it. 351 00:17:47,760 --> 00:17:51,720 Speaker 3: So it's really creating the efficiency of the overall markets 352 00:17:52,040 --> 00:17:55,959 Speaker 3: coming into this decision making process, but we're removing the 353 00:17:56,000 --> 00:17:58,679 Speaker 3: conflict that's in place, which is one side is actually 354 00:17:58,680 --> 00:18:01,520 Speaker 3: hoping that you are incorrect that trade. In this case, 355 00:18:01,600 --> 00:18:03,639 Speaker 3: we look at you as saying you can buy and 356 00:18:03,680 --> 00:18:05,119 Speaker 3: sell them, come in and out of that trade whenever 357 00:18:05,160 --> 00:18:08,080 Speaker 3: you want. It has no impact on our book or 358 00:18:08,080 --> 00:18:09,479 Speaker 3: how we do it because we don't take the opposite 359 00:18:09,480 --> 00:18:11,119 Speaker 3: side of that trade. All we're sitting there saying is 360 00:18:11,320 --> 00:18:13,320 Speaker 3: here's products that makes sense that traders want to trade, 361 00:18:13,320 --> 00:18:14,280 Speaker 3: and we give access to them. 362 00:18:14,359 --> 00:18:16,960 Speaker 2: Well, JP, how about those low probability outcomes. 363 00:18:17,000 --> 00:18:18,680 Speaker 7: I mean, we're talking about Maduro that was a fifty 364 00:18:18,720 --> 00:18:20,560 Speaker 7: to fifty, but you know there are some others, you know, 365 00:18:20,640 --> 00:18:22,600 Speaker 7: I mean, I don't know whether a UFO is going 366 00:18:22,680 --> 00:18:24,760 Speaker 7: to land on Earth next year, but talk to us 367 00:18:24,760 --> 00:18:27,160 Speaker 7: a little bit about how you guys manage risk around 368 00:18:27,320 --> 00:18:30,440 Speaker 7: like one to two percent or less probability type outcomes. 369 00:18:30,560 --> 00:18:32,879 Speaker 3: So, first off, these are fully collabterized products, and what 370 00:18:32,920 --> 00:18:34,840 Speaker 3: that means is is that you actually have to have 371 00:18:34,880 --> 00:18:37,280 Speaker 3: the money in your account to place the trade. So, 372 00:18:37,400 --> 00:18:40,159 Speaker 3: first off, the risk that comes into play here is 373 00:18:40,160 --> 00:18:42,520 Speaker 3: to the end user that does it right. So if 374 00:18:42,560 --> 00:18:45,119 Speaker 3: they decide to buy something at a two percent probabability, 375 00:18:45,440 --> 00:18:47,120 Speaker 3: you know that's just gonna be multiply by the money 376 00:18:47,119 --> 00:18:48,399 Speaker 3: they have in their account. If they have enough of 377 00:18:48,400 --> 00:18:50,080 Speaker 3: that money, they're gonna be able to place that trade. 378 00:18:50,320 --> 00:18:52,720 Speaker 3: That also being said is we don't offer every single 379 00:18:52,720 --> 00:18:54,280 Speaker 3: product this's out there. So some of the products you're 380 00:18:54,280 --> 00:18:56,320 Speaker 3: talking about, some of them we do and some of 381 00:18:56,320 --> 00:18:58,560 Speaker 3: them we don't offer. We actually look at those products 382 00:18:58,560 --> 00:19:01,080 Speaker 3: and say to ourselves, is there enough of liquidity and 383 00:19:01,200 --> 00:19:03,760 Speaker 3: or interest in that product. The vast majority of the 384 00:19:03,760 --> 00:19:06,119 Speaker 3: products that we look to offer out there are not 385 00:19:06,240 --> 00:19:09,600 Speaker 3: running at a ninety eight to two type of probability 386 00:19:10,240 --> 00:19:12,800 Speaker 3: until the event becomes closer and closer to occurring or 387 00:19:12,840 --> 00:19:15,119 Speaker 3: coming to resolution. For us, what we look for are 388 00:19:15,119 --> 00:19:17,280 Speaker 3: those products that are out there that have the opportunity 389 00:19:17,560 --> 00:19:21,159 Speaker 3: for the market to participate in them at a probability 390 00:19:21,160 --> 00:19:23,159 Speaker 3: that's greater than that. Now, some cases that works and 391 00:19:23,200 --> 00:19:25,479 Speaker 3: sometimes it doesn't. But what you do see is very 392 00:19:25,560 --> 00:19:29,160 Speaker 3: much like zero dated options. The probabilities come compress quite 393 00:19:29,160 --> 00:19:31,159 Speaker 3: a bit as you get closer to the end of 394 00:19:31,160 --> 00:19:33,400 Speaker 3: that day for the example of a zero dated option, 395 00:19:33,760 --> 00:19:35,280 Speaker 3: But in these events, as you get closer to the 396 00:19:35,280 --> 00:19:37,879 Speaker 3: event coming to fruition. So pick a sport, you know 397 00:19:38,160 --> 00:19:40,479 Speaker 3: the probability at the beginning of the game is going 398 00:19:40,520 --> 00:19:42,439 Speaker 3: to be much wider than it is going to It's 399 00:19:42,440 --> 00:19:44,680 Speaker 3: going to be much tighter, meaning sort of fifty to 400 00:19:44,720 --> 00:19:47,520 Speaker 3: fifty sixty forty seventy thirty. Then it will be at 401 00:19:47,560 --> 00:19:49,399 Speaker 3: the end of the game, when the outcome looks to 402 00:19:49,440 --> 00:19:52,800 Speaker 3: be coming to its finality, where the score is you 403 00:19:52,800 --> 00:19:55,240 Speaker 3: know Team A is beating Team B. Same thing holds 404 00:19:55,240 --> 00:19:57,280 Speaker 3: true with something like the fed Ray cut. The fed 405 00:19:57,359 --> 00:19:59,040 Speaker 3: Ray cut today is going to be much different on 406 00:19:59,080 --> 00:20:01,200 Speaker 3: a probability then when it will be. As you get 407 00:20:01,200 --> 00:20:03,840 Speaker 3: closer and closer to when they make that announcement. 408 00:20:04,520 --> 00:20:07,720 Speaker 8: We are talking with JB. McKenzie, vice President and general 409 00:20:07,760 --> 00:20:12,920 Speaker 8: manager of Futures and International Robinhood Markets. You guys, as 410 00:20:12,960 --> 00:20:15,960 Speaker 8: we are now in the NFL playoffs, you guys rolled 411 00:20:15,960 --> 00:20:18,080 Speaker 8: out the custom combos. 412 00:20:18,160 --> 00:20:21,280 Speaker 3: What isn't so basically what they are is the ability 413 00:20:21,320 --> 00:20:25,920 Speaker 3: for the customer to be able to select specific components 414 00:20:26,920 --> 00:20:29,520 Speaker 3: and create their own trade, similar to what in the 415 00:20:29,560 --> 00:20:31,760 Speaker 3: sports world is at parlay. And what that means is 416 00:20:32,240 --> 00:20:35,080 Speaker 3: I can go and select Let's say I grew up 417 00:20:35,119 --> 00:20:36,399 Speaker 3: near Buffalo, so I'm going to be a little bit 418 00:20:36,400 --> 00:20:38,960 Speaker 3: of a homer here, so I'm going to take the 419 00:20:39,040 --> 00:20:43,119 Speaker 3: Buffalo Bills, and I want to also pick Josh Allen. 420 00:20:43,200 --> 00:20:46,159 Speaker 3: I'll have two touchdowns, I can go and create that 421 00:20:46,359 --> 00:20:49,680 Speaker 3: combo together where it'll price into the market and provide 422 00:20:49,720 --> 00:20:52,359 Speaker 3: me back a probability of that outcome, and I can 423 00:20:52,400 --> 00:20:54,000 Speaker 3: then make the decision of whether or not to place 424 00:20:54,040 --> 00:20:57,160 Speaker 3: that trade. So we just just started rolling this out 425 00:20:57,160 --> 00:21:00,199 Speaker 3: this week for the first week of playoffs. Playoffs you 426 00:21:00,240 --> 00:21:02,840 Speaker 3: mentioned there, Michael, and we really think that this is 427 00:21:02,960 --> 00:21:05,280 Speaker 3: very an interesting product because we're seeing more and more 428 00:21:05,280 --> 00:21:07,880 Speaker 3: of our customers wanting to go build this as part 429 00:21:07,920 --> 00:21:10,800 Speaker 3: of their overall portfolios. While we're starting in the NFL, 430 00:21:11,200 --> 00:21:12,840 Speaker 3: we think that this will be a product that will 431 00:21:12,880 --> 00:21:16,120 Speaker 3: roll out to all asset classes longer term, but right now, 432 00:21:16,160 --> 00:21:19,240 Speaker 3: what we're doing is starting off specifically with the NFL 433 00:21:19,280 --> 00:21:21,160 Speaker 3: playoff games that start this weekend. 434 00:21:21,440 --> 00:21:22,879 Speaker 9: You know, JB you mentioned there. 435 00:21:22,880 --> 00:21:25,480 Speaker 6: Obviously we were talking about the combos and you guys 436 00:21:25,600 --> 00:21:26,439 Speaker 6: just introducing that. 437 00:21:26,480 --> 00:21:28,680 Speaker 9: One of the other things you guys just introduced. 438 00:21:28,680 --> 00:21:32,680 Speaker 6: Was Cortex, this AI chatbot that gives you advice, right, 439 00:21:32,760 --> 00:21:36,480 Speaker 6: And I'm curious what your thoughts are on these tools 440 00:21:36,520 --> 00:21:39,600 Speaker 6: that are used for financial advice and things like that, 441 00:21:39,720 --> 00:21:42,160 Speaker 6: other things that you guys offer, and how they're converging 442 00:21:42,160 --> 00:21:43,000 Speaker 6: with the sports market. 443 00:21:43,240 --> 00:21:45,320 Speaker 3: So I think that's a really interesting question and the 444 00:21:45,359 --> 00:21:47,119 Speaker 3: way I like to think about THO benesss. When I 445 00:21:47,160 --> 00:21:51,480 Speaker 3: started in the markets twenty plus years ago, the only 446 00:21:51,520 --> 00:21:54,000 Speaker 3: thing we had was the ability to phone call into 447 00:21:54,040 --> 00:21:56,960 Speaker 3: a broker to figure out what maybe one of like 448 00:21:56,960 --> 00:21:59,159 Speaker 3: Bloomberg showed on the television ticker and say, oh, I 449 00:21:59,160 --> 00:22:01,240 Speaker 3: want to go buy something. You had very limited access 450 00:22:01,280 --> 00:22:04,840 Speaker 3: to tools. And what's happened since then is this dramatic 451 00:22:04,920 --> 00:22:08,720 Speaker 3: revolution where we've been able to get both data as 452 00:22:08,760 --> 00:22:11,919 Speaker 3: well as charting and capabilities onto our mobile devices. And 453 00:22:12,000 --> 00:22:14,960 Speaker 3: I think the natural progression with that has come into 454 00:22:15,040 --> 00:22:18,440 Speaker 3: the AI world, where what we're able to now do 455 00:22:18,520 --> 00:22:21,480 Speaker 3: is utilize AI or cortex in our in this instance, 456 00:22:21,680 --> 00:22:26,000 Speaker 3: to accumulate information from a variety of sources and provide 457 00:22:26,080 --> 00:22:29,119 Speaker 3: alerts to our end customers to tell them that something 458 00:22:29,160 --> 00:22:31,479 Speaker 3: is moving that of interest to them. So while our 459 00:22:31,520 --> 00:22:34,360 Speaker 3: cortex product that we offer today is much more focused 460 00:22:34,400 --> 00:22:37,800 Speaker 3: on just providing them generic information of hey, this product 461 00:22:37,840 --> 00:22:40,640 Speaker 3: is moving up or down. You see that happening already 462 00:22:40,680 --> 00:22:43,920 Speaker 3: today in the overall sports world in many different ways, 463 00:22:43,920 --> 00:22:46,199 Speaker 3: where there's notifications or you even see it when you 464 00:22:46,280 --> 00:22:49,960 Speaker 3: watch games with you'll see AWS is powering a lot 465 00:22:50,000 --> 00:22:52,200 Speaker 3: of the NFL statistics out there, and they're talking about 466 00:22:52,280 --> 00:22:55,679 Speaker 3: the probability of a team scoring a touchdown inside the 467 00:22:55,800 --> 00:22:58,080 Speaker 3: twenty yard line of the red zone, or the ability 468 00:22:58,080 --> 00:23:00,840 Speaker 3: to get third down and less and five, and that 469 00:23:00,920 --> 00:23:03,800 Speaker 3: information now is so handy at the fingertips of traders. 470 00:23:04,040 --> 00:23:07,240 Speaker 3: I think AI now is making it even more accessible 471 00:23:07,480 --> 00:23:09,600 Speaker 3: so that you can then make great decisions. I think 472 00:23:09,640 --> 00:23:12,040 Speaker 3: as you've already seen AI take over I think all 473 00:23:12,119 --> 00:23:14,280 Speaker 3: parts of the world in many ways. I think it 474 00:23:14,359 --> 00:23:16,440 Speaker 3: is going to continue to play an important role when 475 00:23:16,440 --> 00:23:18,879 Speaker 3: it comes into the sports world because it can actually 476 00:23:18,920 --> 00:23:22,600 Speaker 3: consume and analyze data so quickly and provide it back 477 00:23:22,640 --> 00:23:24,639 Speaker 3: to you that it allows you, as a trader to 478 00:23:24,680 --> 00:23:26,560 Speaker 3: make a really good decision, very very quickly. 479 00:23:26,960 --> 00:23:29,560 Speaker 7: Jabi, you talk about KYC and knowing your client, but 480 00:23:29,600 --> 00:23:32,480 Speaker 7: doesn't that become really really difficult when you move outside 481 00:23:32,480 --> 00:23:35,400 Speaker 7: of sports into some of these other prediction markets like elections, 482 00:23:35,400 --> 00:23:37,600 Speaker 7: economic events, where it's a different set of players who 483 00:23:37,600 --> 00:23:42,159 Speaker 7: have quote unquote inside information. What's your KYC process and 484 00:23:42,200 --> 00:23:45,200 Speaker 7: how do you protect, you know, Robinhood from those events 485 00:23:45,280 --> 00:23:46,560 Speaker 7: working against you? 486 00:23:46,600 --> 00:23:48,639 Speaker 3: No, And it's a great question because obviously it's been 487 00:23:48,640 --> 00:23:50,679 Speaker 3: in the news as of late, is how do we 488 00:23:50,840 --> 00:23:53,639 Speaker 3: control or have access to make sure that the people 489 00:23:53,800 --> 00:23:56,639 Speaker 3: are who access these markets don't have insider knowledge. And 490 00:23:56,640 --> 00:23:58,000 Speaker 3: I think one of the first things I would say 491 00:23:58,080 --> 00:24:00,919 Speaker 3: is is that the Financial services mark has been doing 492 00:24:00,960 --> 00:24:04,200 Speaker 3: this for decades and does a really really good job 493 00:24:04,200 --> 00:24:06,840 Speaker 3: when you look at the overall size of participation, right, 494 00:24:06,880 --> 00:24:09,119 Speaker 3: so if you look at the financial services market in 495 00:24:09,119 --> 00:24:13,440 Speaker 3: the United States, I mean it dwarfs the participation of 496 00:24:13,480 --> 00:24:15,760 Speaker 3: that of what you see in the sports world. Now 497 00:24:15,800 --> 00:24:17,160 Speaker 3: I get to your point of how do you make 498 00:24:17,200 --> 00:24:20,920 Speaker 3: sure that someone that's working in I'll make it up 499 00:24:21,359 --> 00:24:25,800 Speaker 3: in an election campaign isn't also placing a trade because 500 00:24:25,840 --> 00:24:28,000 Speaker 3: they have some piece of information for it. So for 501 00:24:28,080 --> 00:24:30,359 Speaker 3: that what it is we've been implementing of RODIA tools 502 00:24:30,400 --> 00:24:32,280 Speaker 3: that we can utilize for it. So part of our 503 00:24:32,359 --> 00:24:35,919 Speaker 3: KYC and AML process is we collect information about you 504 00:24:36,000 --> 00:24:38,840 Speaker 3: as a person where we know your job, your employment, 505 00:24:38,960 --> 00:24:41,920 Speaker 3: we know where you're located. All that information is required 506 00:24:41,920 --> 00:24:44,760 Speaker 3: for us to develop and pull through and collect for 507 00:24:44,840 --> 00:24:46,920 Speaker 3: us to be able to open up an account from there. 508 00:24:47,000 --> 00:24:49,520 Speaker 3: What we also then do is we do analysis of 509 00:24:50,600 --> 00:24:53,520 Speaker 3: sort of of where you may fit in various types 510 00:24:53,560 --> 00:24:56,760 Speaker 3: of credit bureaus and overall sort of Lexus and Nexus 511 00:24:56,760 --> 00:24:59,000 Speaker 3: and third party platforms that we get an understanding of 512 00:24:59,040 --> 00:25:01,640 Speaker 3: the information you provided us is correct and accurate, because 513 00:25:01,680 --> 00:25:02,840 Speaker 3: that's one of the things that we have to do 514 00:25:02,880 --> 00:25:05,440 Speaker 3: as part of that know your customer requirements. 515 00:25:05,720 --> 00:25:09,399 Speaker 8: JB. McKenzie, Vice President and General Manager of Futures and 516 00:25:09,480 --> 00:25:12,720 Speaker 8: International robin Hood Markets. AHA, you're an old friend of 517 00:25:12,760 --> 00:25:15,840 Speaker 8: the show. Now, thank you, my friend, for joining us 518 00:25:15,840 --> 00:25:18,600 Speaker 8: on the Bloomberg Business of Sports. We really do appreciate it. 519 00:25:18,760 --> 00:25:20,639 Speaker 3: Thanks for having me. Looking forward to coming back again. 520 00:25:21,359 --> 00:25:25,200 Speaker 8: Up next, we look at the future. What Bloomberg's top 521 00:25:25,240 --> 00:25:28,439 Speaker 8: sports reporters see coming next in the world of sports 522 00:25:28,440 --> 00:25:32,359 Speaker 8: in twenty twenty six. For Damian Sasaur and Vanessa Perdomo. 523 00:25:32,440 --> 00:25:36,320 Speaker 8: I'm Michael Barr. You are listening to the Bloomberg Business 524 00:25:36,320 --> 00:25:39,399 Speaker 8: of Sports. It's a Bloomberg Radio around the world. 525 00:25:42,320 --> 00:25:45,000 Speaker 5: This is the Bloomberg Business of Entertainment Report, brought to 526 00:25:45,000 --> 00:25:48,800 Speaker 5: you by Fisherinvestments dot Com. Disney reached a box office 527 00:25:48,800 --> 00:25:52,359 Speaker 5: milestone in twenty twenty five, surpassing six billion dollars in 528 00:25:52,440 --> 00:25:55,800 Speaker 5: global ticket sales. It's fifth time crossing the benchmark and 529 00:25:55,920 --> 00:25:59,080 Speaker 5: first since the pandemic in twenty nineteen. A big part 530 00:25:59,080 --> 00:26:02,480 Speaker 5: of it to million dollar blockbusters Lee, Lo and Stitch 531 00:26:02,640 --> 00:26:03,760 Speaker 5: and Zutopia two. 532 00:26:03,920 --> 00:26:06,879 Speaker 3: This is a make or break assignment failure and I 533 00:26:07,040 --> 00:26:07,920 Speaker 3: will split to you. 534 00:26:08,359 --> 00:26:11,320 Speaker 5: Add to that James Cameron's Avatar, Fire and Ash and 535 00:26:11,440 --> 00:26:14,840 Speaker 5: three Marvel sequels, but not everything that Disney released in 536 00:26:14,880 --> 00:26:18,280 Speaker 5: twenty twenty five turned a theatrical profit, including the live 537 00:26:18,320 --> 00:26:20,600 Speaker 5: action Snow White and Pixar's Ilio. 538 00:26:20,880 --> 00:26:23,199 Speaker 2: All I ever wanted was to find a place to 539 00:26:23,200 --> 00:26:23,720 Speaker 2: fit in. 540 00:26:23,920 --> 00:26:27,200 Speaker 5: But the Missus still outperformed most of their rivals biggest 541 00:26:27,240 --> 00:26:29,840 Speaker 5: wins in terms of box office dollars and with the 542 00:26:29,880 --> 00:26:34,280 Speaker 5: Powerhouse lineup ahead including Avengers, Doomsday, Toy Story five, the 543 00:26:34,320 --> 00:26:37,960 Speaker 5: live action Mowana, and The Devil Wears Prada two. Twenty 544 00:26:38,000 --> 00:26:41,679 Speaker 5: twenty six, Folks Promising Lisa Matteo Bloomberg Radio. 545 00:26:43,000 --> 00:26:47,640 Speaker 1: This is Bloomberg Business of Sports from Bloomberg Radio. 546 00:26:48,880 --> 00:26:52,000 Speaker 8: Thank you for joining us on the Bloomberg Business of Sports. 547 00:26:52,040 --> 00:26:54,840 Speaker 8: We explored the big money issues in the world of sports. 548 00:26:55,080 --> 00:26:57,920 Speaker 9: Michael Barr, I'm Damien Sasawer and I'm Vanessa Perdmo. 549 00:26:57,840 --> 00:27:01,680 Speaker 7: Our top sports reporters. I think Vanessa Padmo put out 550 00:27:01,720 --> 00:27:05,200 Speaker 7: a special edition of the Business of Sports newsletter looking 551 00:27:05,200 --> 00:27:07,880 Speaker 7: into their crystal ball as to what might very well 552 00:27:07,920 --> 00:27:10,119 Speaker 7: happen in the world of sports as we look ahead 553 00:27:10,200 --> 00:27:11,120 Speaker 7: to twenty twenty six. 554 00:27:11,920 --> 00:27:14,400 Speaker 6: So the fun thing we did was we we did 555 00:27:14,480 --> 00:27:17,919 Speaker 6: our rap on twenty twenty five. We gave out some awards, 556 00:27:18,000 --> 00:27:19,920 Speaker 6: you know, Asia Wilson Athlete of the Year. 557 00:27:20,119 --> 00:27:21,000 Speaker 9: That was the best one. 558 00:27:21,640 --> 00:27:26,680 Speaker 12: Great gets it, e Willson on the time take deal, 559 00:27:26,840 --> 00:27:32,600 Speaker 12: bad deal Bad Asia Wilson with point one to go. 560 00:27:35,119 --> 00:27:38,119 Speaker 6: And then we did a twenty twenty six look ahead 561 00:27:38,200 --> 00:27:41,000 Speaker 6: as in she might have gotten you know, Player of 562 00:27:41,080 --> 00:27:44,000 Speaker 6: the Year. But the WNBA and women's sports are in 563 00:27:44,040 --> 00:27:46,720 Speaker 6: a crisis. And that was my prediction for this year. 564 00:27:46,880 --> 00:27:49,760 Speaker 6: Women's sports need to kind of pay their players. My 565 00:27:49,880 --> 00:27:53,920 Speaker 6: other colleague, Ira, he predicted that private equity is not 566 00:27:54,000 --> 00:27:55,960 Speaker 6: going to make as big of a splash in college 567 00:27:55,960 --> 00:27:57,440 Speaker 6: sports as we think. 568 00:27:58,080 --> 00:28:00,080 Speaker 8: And here to give us the secret tip on who 569 00:28:00,200 --> 00:28:01,920 Speaker 8: going to win the Super Bowl because I got to 570 00:28:01,960 --> 00:28:06,320 Speaker 8: put some money on it. Joining us now biggest sports 571 00:28:06,320 --> 00:28:09,920 Speaker 8: predictions for the new year. Bloomberg News Global Sports Business 572 00:28:10,000 --> 00:28:14,000 Speaker 8: reporter Ira Budway. Ira, Welcome back to the Bloomberg Business 573 00:28:14,000 --> 00:28:17,800 Speaker 8: of sports always a pleasure, biggest prediction that you hit 574 00:28:17,840 --> 00:28:18,399 Speaker 8: the money on. 575 00:28:18,840 --> 00:28:22,960 Speaker 4: So I'm anticipating that this big private equity push into 576 00:28:22,960 --> 00:28:26,000 Speaker 4: college sports is going to maybe stall out, and I 577 00:28:26,000 --> 00:28:28,800 Speaker 4: think everyone expects that once the first deals get done, 578 00:28:28,880 --> 00:28:32,440 Speaker 4: it's going to be floodgates. But we've seen a couple 579 00:28:32,600 --> 00:28:36,160 Speaker 4: deals and get almost to the finish line now won 580 00:28:36,200 --> 00:28:40,200 Speaker 4: a school deal between Utah and this outfit called Outro Capital, 581 00:28:40,200 --> 00:28:43,720 Speaker 4: and the other more recently a conference wide deal between 582 00:28:43,800 --> 00:28:48,000 Speaker 4: the Big Twelve and Redbird and Weatherford who put together 583 00:28:48,160 --> 00:28:52,120 Speaker 4: a thing called Collegiate Athletics Solutions CAS. And both of 584 00:28:52,120 --> 00:28:54,040 Speaker 4: those deals have been said to be kind of the 585 00:28:54,080 --> 00:28:58,560 Speaker 4: beginning of a flood. But I think one those aren't done, 586 00:28:58,720 --> 00:29:01,160 Speaker 4: and two we don't really know the terms yet, and 587 00:29:01,200 --> 00:29:03,920 Speaker 4: I think, really the devil's in the details here, and 588 00:29:03,960 --> 00:29:06,240 Speaker 4: I think by the time these get done, they may 589 00:29:06,240 --> 00:29:09,320 Speaker 4: not be as exciting for everyone involved as everyone has said. 590 00:29:10,480 --> 00:29:12,920 Speaker 6: I think the thing that's interesting is that you mentioned 591 00:29:13,040 --> 00:29:16,320 Speaker 6: they're not done, and everyone thinks, oh, they're all of 592 00:29:16,320 --> 00:29:19,000 Speaker 6: these things have been written, they're coming, it's coming, and 593 00:29:19,040 --> 00:29:21,640 Speaker 6: then these deals get close, they don't get finished. In 594 00:29:21,680 --> 00:29:24,360 Speaker 6: your story from this year, in our predictions. You kind 595 00:29:24,360 --> 00:29:27,040 Speaker 6: of mapped out exactly why they get close and don't 596 00:29:27,040 --> 00:29:27,560 Speaker 6: get finished. 597 00:29:27,600 --> 00:29:29,040 Speaker 11: Can you explain that a little more? 598 00:29:29,200 --> 00:29:30,720 Speaker 4: Yeah, I think a lot of the time these deals 599 00:29:30,760 --> 00:29:35,720 Speaker 4: are negotiated first between athletic directors, maybe conference heads, and 600 00:29:35,960 --> 00:29:40,280 Speaker 4: the private investment shops, and then they bring it to 601 00:29:40,320 --> 00:29:42,440 Speaker 4: the board of regents, they bring it to the trustees, 602 00:29:42,480 --> 00:29:44,640 Speaker 4: they bring it to the broader leadership of the school. 603 00:29:44,880 --> 00:29:47,840 Speaker 4: And though that's where it stops, or at least where 604 00:29:47,880 --> 00:29:50,560 Speaker 4: there's hiccups, because these schools look at it and go, well, 605 00:29:50,600 --> 00:29:54,560 Speaker 4: wait a minute, can't we borrow money more cheaply somewhere else, 606 00:29:54,880 --> 00:29:57,239 Speaker 4: maybe in the bond markets. Why are we doing this? 607 00:29:57,320 --> 00:29:59,680 Speaker 4: Are we losing governance? And there's just a lot of 608 00:29:59,760 --> 00:30:02,920 Speaker 4: question and snags at that point, so they keep taking 609 00:30:03,040 --> 00:30:05,200 Speaker 4: different hacks at it. You look at the Big twelve, 610 00:30:05,800 --> 00:30:07,520 Speaker 4: you know, I think a year or so ago they 611 00:30:07,520 --> 00:30:08,880 Speaker 4: were saying we're going to do We're going to sell 612 00:30:08,920 --> 00:30:11,120 Speaker 4: fifteen to twenty percent of the entire conference to a 613 00:30:11,160 --> 00:30:13,680 Speaker 4: private equity firm, and then that didn't happen, And now 614 00:30:13,720 --> 00:30:15,680 Speaker 4: they're saying, oh, no, no, we're going to put a 615 00:30:15,720 --> 00:30:19,640 Speaker 4: pot of money that each school if they want to 616 00:30:19,840 --> 00:30:22,320 Speaker 4: can borrow from, right, So they keep reshaping these deals 617 00:30:22,360 --> 00:30:24,520 Speaker 4: to try to get them over the finish line. And 618 00:30:24,600 --> 00:30:26,880 Speaker 4: I think by the time you do that, they become 619 00:30:26,960 --> 00:30:29,120 Speaker 4: maybe less attractive than everyone's imagining. 620 00:30:29,400 --> 00:30:30,640 Speaker 2: So I right, here's my question. 621 00:30:30,720 --> 00:30:33,520 Speaker 7: Right. I mean we keep saying private equity, private equity investment. 622 00:30:33,600 --> 00:30:35,920 Speaker 7: It's really institutional capital, right, and that can mean a 623 00:30:35,960 --> 00:30:38,560 Speaker 7: lot of different things. It's not necessarily private equity. So 624 00:30:38,600 --> 00:30:42,760 Speaker 7: my question is, are there any rules preventing let's call 625 00:30:42,800 --> 00:30:46,160 Speaker 7: it foreign players, foreign investors from taking a stake in 626 00:30:46,200 --> 00:30:47,920 Speaker 7: an American university? 627 00:30:48,000 --> 00:30:50,040 Speaker 4: You know what these deals are shaping up to be. 628 00:30:50,360 --> 00:30:53,680 Speaker 4: You're right, they're not stakes in anything except for in 629 00:30:53,720 --> 00:30:55,920 Speaker 4: the case of Utah, it's like they create a separate 630 00:30:55,920 --> 00:30:59,360 Speaker 4: holding company for the business interests. 631 00:30:58,920 --> 00:31:00,720 Speaker 2: Of their athletical see what you're saying. 632 00:31:00,800 --> 00:31:04,360 Speaker 7: So it's like the media non for profit right, right, 633 00:31:04,760 --> 00:31:05,000 Speaker 7: I got. 634 00:31:05,040 --> 00:31:08,040 Speaker 4: So they say the athletic department will continue to exist, 635 00:31:08,280 --> 00:31:12,920 Speaker 4: it will continue to make all decisions around personnel, players, coaches, 636 00:31:13,120 --> 00:31:15,920 Speaker 4: everything like that, schedules. There's going to be a separate 637 00:31:15,920 --> 00:31:19,480 Speaker 4: company over here where the money for media rights, tickets, 638 00:31:19,760 --> 00:31:23,160 Speaker 4: sponsorships goes. And this private equity firm or is going 639 00:31:23,200 --> 00:31:25,000 Speaker 4: to help fund that company, and it's going to have 640 00:31:25,640 --> 00:31:28,640 Speaker 4: a claim on some of that future revenue. And so 641 00:31:28,720 --> 00:31:31,920 Speaker 4: these deals are not equity deals, and they're not even 642 00:31:31,920 --> 00:31:35,400 Speaker 4: necessarily straight debt deals either. There are deals where the 643 00:31:35,440 --> 00:31:39,080 Speaker 4: private equity fund says, here's some money, the institutional money says, 644 00:31:39,080 --> 00:31:43,560 Speaker 4: here's some money, and we expect if you hit certain 645 00:31:43,880 --> 00:31:47,280 Speaker 4: revenue marks, we're going to get a pre negotiated share. 646 00:31:47,880 --> 00:31:50,440 Speaker 4: So if you don't hit those revenue marks, there's money 647 00:31:50,440 --> 00:31:52,760 Speaker 4: at risk for the institutional money. They might not get 648 00:31:52,800 --> 00:31:53,280 Speaker 4: paid back. 649 00:31:53,480 --> 00:31:55,400 Speaker 7: So I right, I understand how that model works for 650 00:31:55,480 --> 00:31:58,080 Speaker 7: public university like University of but there's a lot of 651 00:31:58,080 --> 00:32:01,640 Speaker 7: private universities out there, so a different model might very 652 00:32:01,640 --> 00:32:03,480 Speaker 7: well work for them. I'm just thinking out loud, and 653 00:32:03,760 --> 00:32:05,400 Speaker 7: you know where I'm going here. I think of Live 654 00:32:05,480 --> 00:32:07,960 Speaker 7: and how the Saudiast came in and disrupted, you know, 655 00:32:08,000 --> 00:32:10,680 Speaker 7: the sport of golf. You know what's to stop, you know, 656 00:32:10,840 --> 00:32:13,480 Speaker 7: some player from coming in taking a stake, not in 657 00:32:13,560 --> 00:32:16,440 Speaker 7: a hold code that controls the ticketing and the gate receipts, 658 00:32:16,520 --> 00:32:19,000 Speaker 7: but controls the actual university itself. 659 00:32:18,960 --> 00:32:20,680 Speaker 4: Or at least it's athletic department, or. 660 00:32:20,720 --> 00:32:23,280 Speaker 7: At least it's an athletic department, right, which obviously is funding 661 00:32:23,400 --> 00:32:26,200 Speaker 7: you know, many respects all of academia there, right, So 662 00:32:26,600 --> 00:32:27,960 Speaker 7: I just want to you know, not all of it. 663 00:32:28,000 --> 00:32:30,760 Speaker 2: Obviously tuition didn't always help too, but believe. 664 00:32:30,520 --> 00:32:32,520 Speaker 7: Me, I can speak from experience, but that is exactly 665 00:32:32,640 --> 00:32:35,000 Speaker 7: where I'm going with this, Like, is there any you know, 666 00:32:35,080 --> 00:32:37,800 Speaker 7: kind of guardrails in place to prevent, you know, a 667 00:32:37,880 --> 00:32:40,960 Speaker 7: disruption of the American university system. 668 00:32:41,440 --> 00:32:43,680 Speaker 4: I mean, I think it's you know, private universities. They 669 00:32:43,720 --> 00:32:46,560 Speaker 4: pretty much govern themselves, right, so they could if they wanted. 670 00:32:46,640 --> 00:32:49,440 Speaker 4: I mean, I think the reality is they are facing 671 00:32:50,160 --> 00:32:54,320 Speaker 4: a budget crunch, So these athletic departments are not contributing 672 00:32:54,760 --> 00:32:57,000 Speaker 4: to the bottom line at the schools. They are spending 673 00:32:57,000 --> 00:32:59,760 Speaker 4: more than they're bringing in. Interesting and that's happening because 674 00:33:00,320 --> 00:33:03,680 Speaker 4: of essentially player costs. Right now that there's a new 675 00:33:03,720 --> 00:33:06,120 Speaker 4: rule that says they can spend twenty million a year 676 00:33:06,520 --> 00:33:12,080 Speaker 4: on rosters, and they are foregoing revenue from other sources 677 00:33:12,120 --> 00:33:14,720 Speaker 4: in order to funnel it toward players, and so that 678 00:33:14,920 --> 00:33:17,560 Speaker 4: is hitting the budgets to the tune of maybe thirty 679 00:33:17,600 --> 00:33:20,000 Speaker 4: million dollars a year, and in many cases they're already 680 00:33:20,200 --> 00:33:22,720 Speaker 4: spending all their money as it comes in. So that's 681 00:33:22,800 --> 00:33:25,560 Speaker 4: why you're seeing institutional money come in here. They're saying, look, 682 00:33:25,960 --> 00:33:28,360 Speaker 4: we'll give you some money up front. We know you 683 00:33:28,400 --> 00:33:31,200 Speaker 4: have a budget crunch. We're going to show you how 684 00:33:31,200 --> 00:33:33,400 Speaker 4: to make more We're going to show you how to 685 00:33:33,440 --> 00:33:35,479 Speaker 4: sell more suites. We're going to show you how to 686 00:33:35,480 --> 00:33:38,200 Speaker 4: do a better job with sponsorships. We're going to professionalize 687 00:33:38,640 --> 00:33:41,320 Speaker 4: your operation. And when we do that, you're going to 688 00:33:41,400 --> 00:33:44,080 Speaker 4: give us some of your revenue in the future, which. 689 00:33:43,840 --> 00:33:46,680 Speaker 8: Brings me to the next question. A prediction you guys 690 00:33:46,760 --> 00:33:49,920 Speaker 8: made in the article Major League Baseball. They're going to 691 00:33:50,040 --> 00:33:53,800 Speaker 8: spend money, a lot of money. And yes, even mister 692 00:33:53,880 --> 00:33:56,600 Speaker 8: Steve Cohen is going to spend a lot of money 693 00:33:57,400 --> 00:33:59,640 Speaker 8: because now, if you want to get to the playoffs, 694 00:33:59,680 --> 00:34:00,880 Speaker 8: you got to have a fat waller. 695 00:34:01,520 --> 00:34:01,840 Speaker 2: Yeah. 696 00:34:01,920 --> 00:34:03,440 Speaker 4: I mean every year I feel like we have the 697 00:34:03,440 --> 00:34:06,320 Speaker 4: playoffs and there's either there's one of two discourses. There's 698 00:34:06,360 --> 00:34:08,640 Speaker 4: some team that's snuck in there without spending a lot 699 00:34:08,680 --> 00:34:10,560 Speaker 4: and we all talk about how you can still do that, 700 00:34:11,239 --> 00:34:13,560 Speaker 4: or the big money teams dominate and we all talk 701 00:34:13,600 --> 00:34:18,439 Speaker 4: about how money rules all. But I think obviously it's 702 00:34:18,440 --> 00:34:20,399 Speaker 4: a little bit of both. And but we've seen these 703 00:34:20,400 --> 00:34:25,040 Speaker 4: teams like the Dodgers, who are smart, well resourced, have 704 00:34:25,080 --> 00:34:27,240 Speaker 4: a good farm system, like they do all the things, 705 00:34:27,719 --> 00:34:30,320 Speaker 4: and then they spend really big and that is proving 706 00:34:30,360 --> 00:34:33,319 Speaker 4: to be, you know, not surprisingly, a winning formula, and 707 00:34:33,320 --> 00:34:35,279 Speaker 4: I think you're going to see more teams try to 708 00:34:35,360 --> 00:34:37,759 Speaker 4: do that. I think that's what Steve Cohen wants to 709 00:34:37,800 --> 00:34:38,960 Speaker 4: do with the Mets, and. 710 00:34:39,040 --> 00:34:44,480 Speaker 6: He has been unsuccessful in his spending quite quite unsuccessful. 711 00:34:44,480 --> 00:34:46,640 Speaker 9: But the Yankees need to get back to spending money. 712 00:34:46,920 --> 00:34:49,640 Speaker 6: In my personal opinion on your other prediction though, Ira, 713 00:34:49,719 --> 00:34:51,359 Speaker 6: when we're still talking about college. 714 00:34:51,520 --> 00:34:54,319 Speaker 11: Football, because it is the college football playoff. 715 00:34:54,400 --> 00:34:57,600 Speaker 6: When we're looking at the prediction that you made and 716 00:34:57,640 --> 00:34:59,919 Speaker 6: looking at, like you said, how colleges are spending money. 717 00:35:00,040 --> 00:35:02,520 Speaker 6: Also did this report on trying to figure out how 718 00:35:02,600 --> 00:35:05,080 Speaker 6: they were spending this twenty million dollars and no one 719 00:35:05,160 --> 00:35:09,080 Speaker 6: really was giving you information. But from what you've known, 720 00:35:09,160 --> 00:35:12,120 Speaker 6: what you've done reporting on, what are what are the 721 00:35:12,160 --> 00:35:15,000 Speaker 6: app like, what are the feelings from these institutions now 722 00:35:15,000 --> 00:35:17,359 Speaker 6: that they have to do that, and how and who 723 00:35:17,360 --> 00:35:18,400 Speaker 6: are they spending the money on? 724 00:35:18,560 --> 00:35:21,520 Speaker 4: I mean, probably not surprisingly, they're spending the money on 725 00:35:21,560 --> 00:35:24,920 Speaker 4: football players, you know, they get to spend twenty million 726 00:35:24,920 --> 00:35:28,239 Speaker 4: of this revenue sharing pot on their players. But that's 727 00:35:28,280 --> 00:35:29,400 Speaker 4: across all teams. 728 00:35:29,600 --> 00:35:32,000 Speaker 9: It doesn't say, it doesn't say they need to. 729 00:35:32,080 --> 00:35:34,200 Speaker 4: Right, right, and it doesn't demand that they do any 730 00:35:34,719 --> 00:35:37,440 Speaker 4: But the market for a top quarterback now is approaching 731 00:35:37,480 --> 00:35:39,880 Speaker 4: five million dollars. So that's like a quarter of your 732 00:35:40,440 --> 00:35:44,520 Speaker 4: money right there. So but yeah, so there, it looks like, 733 00:35:44,560 --> 00:35:47,319 Speaker 4: at least at schools where they care about football, you're 734 00:35:47,360 --> 00:35:49,560 Speaker 4: spending about fifteen million of that twenty million on your 735 00:35:49,560 --> 00:35:50,160 Speaker 4: football team. 736 00:35:50,200 --> 00:35:52,000 Speaker 2: Well, right, let's stick with football here, but let's go 737 00:35:52,080 --> 00:35:52,560 Speaker 2: pro right. 738 00:35:52,600 --> 00:35:54,200 Speaker 7: I mean, one of your predictions here is that we're 739 00:35:54,200 --> 00:35:55,440 Speaker 7: going to see a couple of sales in the year 740 00:35:55,480 --> 00:35:57,239 Speaker 7: head right. I mean I'm not just talking you know, 741 00:35:57,480 --> 00:36:00,399 Speaker 7: private equity or some institutional capital taking stakes and teams. 742 00:36:00,440 --> 00:36:02,880 Speaker 7: I'm talking about outright sales. And the two teams that 743 00:36:02,920 --> 00:36:07,680 Speaker 7: you've flagged here, the New Orleans Staints and the Seattle Seahawks, 744 00:36:07,680 --> 00:36:09,720 Speaker 7: who are right now the best team in the NFL 745 00:36:10,040 --> 00:36:12,520 Speaker 7: heading into the playoffs. Just want to ask your opinion here, 746 00:36:13,080 --> 00:36:15,799 Speaker 7: I mean, I mean, you know we've talked about this 747 00:36:15,840 --> 00:36:20,120 Speaker 7: in the past offline Ira the NFL it's they're eating 748 00:36:20,120 --> 00:36:22,279 Speaker 7: the cake too, to speak, right with the new media 749 00:36:22,280 --> 00:36:24,080 Speaker 7: deals they're doing, and with twenty twenty eight coming up 750 00:36:24,080 --> 00:36:26,040 Speaker 7: and they're going to be able to renegotiate out talk 751 00:36:26,080 --> 00:36:29,080 Speaker 7: to us a little bit about these valuations. I think 752 00:36:29,120 --> 00:36:31,160 Speaker 7: the Cowboys, if you just look at where they are 753 00:36:31,200 --> 00:36:33,840 Speaker 7: now based on some of these recent deals, fourteen point 754 00:36:33,880 --> 00:36:34,960 Speaker 7: four billion dollars. 755 00:36:35,200 --> 00:36:37,320 Speaker 4: Yeah, I'm pretty bullish. In the case of the NFL, 756 00:36:37,400 --> 00:36:40,719 Speaker 4: I think they are distinct among all sports in the 757 00:36:40,800 --> 00:36:44,120 Speaker 4: US anyway, because one, the audience size is just bigger 758 00:36:44,160 --> 00:36:47,120 Speaker 4: than everybody else by a lot. And two, the way 759 00:36:47,120 --> 00:36:50,480 Speaker 4: they've set it up with their players and the collective 760 00:36:50,480 --> 00:36:53,320 Speaker 4: bargain agreement and the way they share revenue between teams. 761 00:36:54,080 --> 00:36:56,759 Speaker 4: These clubs, they don't lose money in the meantime. So 762 00:36:56,840 --> 00:36:59,160 Speaker 4: you get an asset that's probably going to grow in value, 763 00:36:59,360 --> 00:37:02,360 Speaker 4: and while you're holding it, you're not bleeding money. And 764 00:37:02,400 --> 00:37:05,160 Speaker 4: I think that's not always the case in professional supports. 765 00:37:05,200 --> 00:37:08,840 Speaker 4: So I expect these teams to keep setting records with 766 00:37:08,960 --> 00:37:09,960 Speaker 4: these control sales. 767 00:37:10,280 --> 00:37:12,080 Speaker 8: Well, I'm going to add this to I know we're 768 00:37:12,120 --> 00:37:14,120 Speaker 8: running out of time, but it seems to me like 769 00:37:14,280 --> 00:37:18,360 Speaker 8: private equity now is the key to all this ownership. 770 00:37:18,920 --> 00:37:21,080 Speaker 4: Yeah, I mean you're looking the NFL, the all the leagues. 771 00:37:21,120 --> 00:37:23,120 Speaker 4: They may have to keep changing their rules to allow 772 00:37:23,160 --> 00:37:25,680 Speaker 4: more institutional money, and simply for the reason that it's 773 00:37:25,719 --> 00:37:29,520 Speaker 4: hard to find people with cash sitting around. You know, 774 00:37:30,040 --> 00:37:32,879 Speaker 4: the list gets shorter and shorter, and so they might 775 00:37:32,960 --> 00:37:36,320 Speaker 4: need more institutional money just to keep the market moving. 776 00:37:37,040 --> 00:37:41,400 Speaker 8: Well, sir, we love you, man aw we thanks to 777 00:37:41,520 --> 00:37:44,680 Speaker 8: Bloomberg News Global Sports Business reporter Hi right, good way 778 00:37:44,920 --> 00:37:45,759 Speaker 8: for joining us. 779 00:37:46,040 --> 00:37:48,200 Speaker 6: We'll be diving into more of our big predictions for 780 00:37:48,200 --> 00:37:50,080 Speaker 6: twenty twenty six and next week's show. 781 00:37:50,239 --> 00:37:52,319 Speaker 8: What Happened at the time. This is what happens when 782 00:37:52,360 --> 00:37:55,479 Speaker 8: you get good conversation that does it. For this edition 783 00:37:55,600 --> 00:37:58,480 Speaker 8: of The Bloomberg Business of Sports for Dandy and Sasur 784 00:37:58,520 --> 00:38:01,399 Speaker 8: and Vanessa Ridomo, I'm Michael a. Tune in again next 785 00:38:01,400 --> 00:38:03,960 Speaker 8: week where the latest on the stories moving big old 786 00:38:04,000 --> 00:38:05,360 Speaker 8: money in the world of sports. 787 00:38:05,560 --> 00:38:07,520 Speaker 6: And don't forget to subscribe to our podcast so you 788 00:38:07,600 --> 00:38:10,200 Speaker 6: never miss an episode. Find it on Apples, Spotify, the 789 00:38:10,200 --> 00:38:13,000 Speaker 6: Bloomberg Business app and your favorite podcast platforms. 790 00:38:13,239 --> 00:38:16,520 Speaker 8: You are listening now, even the con cratch. You are 791 00:38:16,800 --> 00:38:20,760 Speaker 8: listening to the Bloomberg business of sports from Bloomberg Radio 792 00:38:20,920 --> 00:38:21,880 Speaker 8: around the world