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Speaker 1: Hello, this is the Bloomberg Business of Sports show. Will

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Speaker 1: we explore the big money issues in the world of sports.

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Speaker 2: I'm mike Lebarn, I'm Scarlett Foo, and I'm Demian Sas hour.

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Speaker 1: Coming up on the show, we look at private equity

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Speaker 1: and sports and we'll talk with David Abrams, founding partner

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Speaker 1: at Velocity Capital Management, about his firm and some of

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Speaker 1: its latest investments.

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Speaker 3: I never knew this before, but there actually is a

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Speaker 3: racing classification called the Sports Car Vintage Racing Association. And

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Speaker 3: this classification is if you own a classic car, you

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Speaker 3: will go get licensed to be a driver, and you

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Speaker 3: show up at one of our events and you go

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Speaker 3: on the track and you race the same course where

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Speaker 3: some of the most iconic races in the world are held,

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Speaker 3: Indianapolis Speedway, Lagoon, t seca circuit of the Americas, was

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Speaker 3: just hosted the Formula One and you make your racing

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Speaker 3: dreams come true.

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Speaker 4: We'll also check in on the ever changing regional sports

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Speaker 4: network landscape and how the Utah Jazz in particular are adapting.

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Speaker 1: That is all straight ahead on the Bloomberg Business of Sports.

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Speaker 1: But first we look at some of the latest sports headlines,

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Speaker 1: including NCAA president Charlie Baker's proposal that would allow D

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Speaker 1: one schools to pay their athletes directly. Do that with

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Speaker 1: Bloomberg or US sports reporter Randa Williams, you know him,

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Speaker 1: Randall Man. Welcome back to the Bloomberg Business of Sports.

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Speaker 5: Thank you for having me.

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Speaker 1: Well, I know we use the phrase all the time,

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Speaker 1: landmark Blockbuster, game changing, So but it's true. This is

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Speaker 1: something brand new directly to the students the school.

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Speaker 5: Yeah, Charlie Baker said that he would like to pay

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Speaker 5: athletes thirty thousand dollars a year, so we'll see if

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Speaker 5: it happens. It's the first time that he said anything

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Speaker 5: like that, and this is all in an effort to

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Speaker 5: keep college athletes not being employees of the schools and

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Speaker 5: conferences that they play for.

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Speaker 4: Wait, explain that thirty thousand dollars a year, but they

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Speaker 4: would not be employees. What does the thirty thousand.

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Speaker 5: Cover then they're playing. I mean it comes from a

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Speaker 5: trust fund. So wherever the money would come from, whether

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Speaker 5: that'd be the NCAA and it's media deals or the

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Speaker 5: conferences things like that, that is it would be going

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Speaker 5: straight to them.

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Speaker 4: And you would get thirty thousand if you were, you know,

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Speaker 4: a starting player versus someone who is to be to

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Speaker 4: be determined.

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Speaker 1: I don't think.

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Speaker 5: I don't think that everyone. I mean, the idea of

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Speaker 5: equality I think has changed so much because a lot

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Speaker 5: of these schools, whether it be schools and conferences, all

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Speaker 5: the money comes from football and basketball. That's the majority

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Speaker 5: of it. And so when you're talking about the gymnastics,

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Speaker 5: whether it be men's or women's, I'm not sure. I

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Speaker 5: don't think that Charlie Baker even though what that looks

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Speaker 5: like just yet, it's a lot of things that they

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Speaker 5: have to figure out, and I think they want to

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Speaker 5: get it done quickly before the election next year.

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Speaker 2: Well, Randall, I think one of the driving factors behind

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Speaker 2: Charlie Baker's decision to do this now was, you know,

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Speaker 2: gender equity, right, I mean Title nine, you know, allowing

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Speaker 2: female athletes to participate in some of the revenue that

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Speaker 2: we've seen, you know, go to the men. And you know,

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Speaker 2: my question, is this right? All else being equal? And

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Speaker 2: I'm just I was reading through it through the statement,

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Speaker 2: I'm trying to understand it is because different schools can

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Speaker 2: pay their student you know, student employees at different levels, right,

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Speaker 2: so you know, you have an RA at a dorm

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Speaker 2: or something like that, maybe at Alabama who's getting paid

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Speaker 2: more than the RA Georgia.

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Speaker 3: I don't know.

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Speaker 2: But the point I make to you is is that

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Speaker 2: kind of what you're proposing here, that these are just

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Speaker 2: other paid students, you know, and so different schools can

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Speaker 2: pay them more or less, because that opens up a

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Speaker 2: whole new realm of issues.

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Speaker 5: That's what it sounds like. I think that it really

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Speaker 5: ultimately depends on the sport, the conference, and the sport

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Speaker 5: the conference and the media money that's coming through. I

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Speaker 5: think when he's talking about this, it's supposed to ideally

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Speaker 5: level the playing for it because all these college coaches,

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Speaker 5: all these college colleges and conferences are complaining about collectives,

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Speaker 5: these entities that are basically alumni associations that are designed

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Speaker 5: to pay college athletes. The richer you have, the richer

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Speaker 5: collective you have, the more that an athlete can make.

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Speaker 5: And it some would say it's not fair because of

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Speaker 5: the fact that if you have a billionaire, he can

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Speaker 5: bankroll your entire team. It may not result in win,

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Speaker 5: but it's going to result in a lot of college

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Speaker 5: people who are very rich.

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Speaker 1: Right that's why you have Ohio State soopping this up

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Speaker 1: like gravy on a biscuit because they love this that Hey,

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Speaker 1: I'm sure other D one schools like it, but just

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Speaker 1: like you said, the schools down the line, they're not

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Speaker 1: loving it. Yeah.

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Speaker 5: I think for schools like Ohio State, Ohio State has

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Speaker 5: no issue generating money for the most part. I mean

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Speaker 5: they're collective. I think Ryan Day came out a couple

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Speaker 5: of years ago and he said, you know, we need

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Speaker 5: ten million dollars to keep our football roster, and they

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Speaker 5: generated it. I mean it's no surprise. But it's for

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Speaker 5: the smaller schools. I mean we're talking about mid level

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Speaker 5: schools who don't have the resources. In alumni Basi's probably

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Speaker 5: one of the top five in all of America. So

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Speaker 5: when you're talking about this, I think it has a

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Speaker 5: bigger impact for the middle schools. I mean, I would

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Speaker 5: say the ACC now, because the Big ten is as

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Speaker 5: big as it is, the SEC is as big as

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Speaker 5: it is. Even the Big twelve, for example, is kind

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Speaker 5: of a little bit smaller than those two conferences I

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Speaker 5: just mentioned in a Big T and the SEC, So

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Speaker 5: I think it has a bigger impact for those than

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Speaker 5: it does for some of everybody else.

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Speaker 4: This just sounds like it's going to be a big

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Speaker 4: mess for a while. How do they go about untangling

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Speaker 4: this or figuring it out, or you know, creating some

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Speaker 4: rules for the road here? Is it Charlie Baker and

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Speaker 4: I don't know, a team of handpicked associates? Is it?

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Speaker 4: The college presidents themselves?

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Speaker 2: Is it?

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Speaker 1: Well?

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Speaker 2: Remember I mean, like, you know, the nc double A

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Speaker 2: is kind of operating on borrowed time here, you know,

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Speaker 2: so like you know.

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Speaker 6: They explain that.

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Speaker 4: Why do you say that?

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Speaker 2: Well, I mean, look, there's been a lot of change.

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Speaker 2: You know, there's been a lot of calls for changes.

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Speaker 2: You know, quite frankly, the SEC and some of the

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Speaker 2: big divisions have talked about getting together and just cutting

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Speaker 2: the NCAA out entirely, right, So, I mean it really

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Speaker 2: comes down to, you know, I guess the existential question

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Speaker 2: of who Charlie Baker and who the NCAA really are

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Speaker 2: no ramp.

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Speaker 6: Whether whether they need to even be there?

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Speaker 5: Yeah, yeah, I think that the whether the conferences will

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Speaker 5: say it out loud or not they have the power

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Speaker 5: right now to go around the NCAA, however, or they

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Speaker 5: don't have the power of some of these media deals,

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Speaker 5: because marchin Madness is a media deal through the NCAA

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Speaker 5: the same way the College Football Playoff is, which means

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Speaker 5: they would have to let that expire. In reference to nil,

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Speaker 5: it's like you said, they are trying to get this

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Speaker 5: done as quickly as possible because I don't know if

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Speaker 5: you all have seen some of the things that are

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Speaker 5: going on to Texas A and M. But Texas A

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Speaker 5: and M had this collective and they raised a ton

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Speaker 5: of money, at least that's what they said, and so

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Speaker 5: they beat Nick Saban a couple of years ago as

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Speaker 5: far as the number one recruiting class. Well, now the

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Speaker 5: school fired a head coach to owe him a lot

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Speaker 5: of money. I want to say it's over thirty or

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Speaker 5: forty million dollars, if not more than that. And some

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Speaker 5: of the athletes there are now transferring out saying they

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Speaker 5: made it seem like we were getting these millions of

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Speaker 5: dollars and we didn't get anything. And so the NCAA

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Speaker 5: is looking at issues like that and saying, oh, well,

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Speaker 5: this is a perfect thing that we're trying to stop. However,

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Speaker 5: there are a dozen examples of athletes who are taking

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Speaker 5: advantage of the situation as well. I Mean, one of

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Speaker 5: the things that I'm fascinated by is Kayleb Williams. Caleb

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Speaker 5: Williams will likely declare for the NFL Draft, But what

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Speaker 5: if he decided to say, what was he yet? He's

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Speaker 5: at iUSC and he won the Heisman Trophy last season,

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Speaker 5: he was projected to win it this year. The season

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Speaker 5: didn't go planned, and so what if he decided to say,

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Speaker 5: I'm not going to go to the NFL Draft. I

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Speaker 5: don't want to play for the Bears, I don't want

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Speaker 5: to play for the Cardinals. I don't want to play

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Speaker 5: for the Patriots. So I'm going to transfer to Ohio State,

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Speaker 5: demand five million dollars in IL money, play there. And

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Speaker 5: that's just what he does. There's the power in the

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Speaker 5: athlete to do that. Now is he taking advantage of

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Speaker 5: the system. It depends on how you're looking at it.

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Speaker 5: So there's a lot of things that the NCAA is

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Speaker 5: trying to fix.

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Speaker 2: You know, this is kids in schools ramble. I mean,

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Speaker 2: you think about.

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Speaker 4: It, that's a good question. Does he go to class?

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Speaker 4: Does he need to go to college?

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Speaker 6: Ask him as I does he need at this point?

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Speaker 5: I mean there's a guy and this is this is

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Speaker 5: I don't know if you all have seen this online,

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Speaker 5: but there's a guy I went to a basketball camp

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Speaker 5: with many years ago. His named Seth Towns. He has

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Speaker 5: gone from from Harvard to Ohio State and now to

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Speaker 5: Howard and he's played eight years of college basketball. He's

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Speaker 5: the same age as me, at like twenty five or

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Speaker 5: twenty six years old, and each one of these has

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Speaker 5: been a scholarship. However, could you say he's taking advantage

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Speaker 5: of the system if he's getting his his his bachelor's,

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Speaker 5: his masters, his graduates all while playing college Well, I

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Speaker 5: don't know.

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Speaker 4: Well, he's getting a graduate degree out of this as well.

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Speaker 5: He probably has more degrees than all of us.

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Speaker 1: Interesting, well, you know what the smaller schools need to

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Speaker 1: go to like Juan Soto and say, listen, you've got

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Speaker 1: a lot of bank roll. You can handle this. My goodness, man,

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Speaker 1: is I'd be remiss if we didn't mention one Soto

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Speaker 1: the Yankees. If you're a Yankees fan, you are clapping

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Speaker 1: your hands right now.

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Speaker 7: Soto hits itto the air to Lakefield, sending bets back.

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Speaker 7: You got the wall, that bulls gone. Soto with a

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Speaker 7: three run home run puts a podres on top ten

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Speaker 7: to seven on batflip for the Ages. They come all

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Speaker 7: the way back from a five run deficit to take

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Speaker 7: a three run lead in the top of the line.

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Speaker 1: I just wonder what Steve Cohen isnaing right now.

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Speaker 2: You know, we resigned judge this year. When I say we,

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Speaker 2: I say the New York Yankee sorry about that, but

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Speaker 2: I think you know it's gonna be interesting. I mean,

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Speaker 2: this is one year, thirty million dollar. I guess rental

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Speaker 2: is what the Yankees are doing here, and they gave up,

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Speaker 2: you know, some some pictures for it to give up

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Speaker 2: King and some other pictures. So you know, we'll see

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Speaker 2: if it works out.

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Speaker 1: There's no weed in Tigers. I'm sorry, we're people too.

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Speaker 1: Come on, man, we need to get somebody. Come on, Tigers.

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Speaker 1: It's like, you know, between this and the Pistons on

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Speaker 1: a nice losing streak, I don't even want to get weird.

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Speaker 2: Yoshinobo Yamamoto, that is the next He is the big Domino.

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Speaker 2: I mean, good luck getting him.

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Speaker 1: Randa Williams, man, you are the man. Thank you, thank

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Speaker 1: you so much, man for crying in my shoulders.

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Speaker 5: He interviewed Barry Sanders a couple of weeks ago and

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Speaker 5: the Lions won. I mean they lost some Thanksgiving, but

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Speaker 5: they won last week.

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Speaker 7: I play action, He's flushed, he's hit pick, got rid

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Speaker 7: of it for a first time to go for the

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Speaker 7: play of the Day finding Jess Riddles.

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Speaker 1: I think as of this right now, so I'm feeling

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Speaker 1: it up. Next on the show, we speak with Bloomberg

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Speaker 1: Global Business reporter Ira Buodwey about how the Utah Jazz

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Speaker 1: they're experimenting with a new way of broadcasting games that

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Speaker 1: of the old cable TV news way.

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Speaker 6: It's basically kind of back to the future. For the

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Speaker 6: last thirty forty years, cable and the regional sports network

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Speaker 6: in particular, which is how baseball, hockey, and basketball teams

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Speaker 6: have distributed their games in their markets. They've made a

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Speaker 6: lot of money with this regional sports network model, but

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Speaker 6: it seems to be dying, and in the case of

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Speaker 6: the Utah Jazz, their network actually died, and so they're

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Speaker 6: having to figure out what's next.

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Speaker 1: That's straight ahead on Bloomberg Business of Sports from Bloomberg

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Speaker 1: Radio around the world. Welcome back to the Bloomberg Business

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Speaker 1: of Sports show will be explored the big money issues

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Speaker 1: in the world of sports on Michael Barr, along with

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Speaker 1: Scarlett fou and Damian sasaur Ira Boodweh has an excellent

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Speaker 1: article that is in Bloomberg Business Week and it is

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Speaker 1: on the NBA's Utah Jazz entering their experimental post cable phase.

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Speaker 1: First of all, thank you so much for joining us

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Speaker 1: on the Bloomberg Business of Sports.

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Speaker 6: Thanks for having me on.

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Speaker 1: I'm thinking that I'm still modern XU. I have cable

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Speaker 1: in the house. This is going to end, and it's

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Speaker 1: bringing up a whole brand new business model on how

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Speaker 1: sports teams are going to approach as they go out

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Speaker 1: into the world and bring their product.

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Speaker 6: Yeah, it's basically kind of back to the future. For

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Speaker 6: the last thirty forty years, cable and the regional sports

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Speaker 6: network in particular, which is how baseball, hockey, and basketball

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Speaker 6: teams have distributed their games in their markets. They've made

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Speaker 6: a lot of money with this regional sports network model,

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Speaker 6: but it seems to be dying, and in the case

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Speaker 6: of the Utah Jazz, their network actually died, and so

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Speaker 6: they're having to figure out what's next.

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Speaker 4: And this is all due to people cutting the cord,

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Speaker 4: not wanting these two hundred dollars cable bills because they

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Speaker 4: don't watch half the things and if they did want sports,

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Speaker 4: then they can go directly to a streaming option, which

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Speaker 4: is what the Utah Jazz are now offering. And a

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Speaker 4: lot of this IRA has to do with the owner

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Speaker 4: of the team and his new way of thinking about

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Speaker 4: the business model of broadcasting his team's games.

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Speaker 6: Yeah, so the Jazz were sold to Ryan Smith, the

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Speaker 6: co founder of Qualtrics back in twenty twenty, and he's

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Speaker 6: one of this new group of NBA owners who made

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Speaker 6: their fortunes in tech and Qualtrics in particular is basically

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Speaker 6: an online survey software company, and so he is used

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Speaker 6: to kind of figuring out the experience first for the consumer,

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Speaker 6: for the customer, and the business model later. So that's

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Speaker 6: the approach they're taking in Utah. Now he's put games

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Speaker 6: on free TV on over the air and TENA network Kjazz,

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Speaker 6: and he's offering a subscription streaming service that's showing the

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Speaker 6: games also plus all this other behind the scenes programming

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Speaker 6: they're going to build. And the idea is, as he

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Speaker 6: puts it, you know, if he can get this stuff

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Speaker 6: in front of as many people as possible, then they

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Speaker 6: will figure out how to monetize that, you know, in time.

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Speaker 2: Well, right, I mean, like, let's just go there, because

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Speaker 2: I mean, i mean, congratulations, the article's so awesome. But

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Speaker 2: the awesome for me part of it was how local

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Speaker 2: it goes. Right, you said, back to the future, and

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Speaker 2: that's the best analogy for what's going on here because

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Speaker 2: you've got Travis Henderson and his team of thirty five

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Speaker 2: is night Game Crew. Basically, the only reason that the

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Speaker 2: Jazz are able to do this as quickly as as

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Speaker 2: they can is because they do everything in house to

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Speaker 2: begin with, right, they even sell their own media. Right,

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Speaker 2: So talk to us a little bit about how the

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Speaker 2: Jazz uniquely are equipped to do this given their small market,

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Speaker 2: you know, kind of presence in town.

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Speaker 6: Yeah, I mean, they are a perfect peatra dish for this.

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Speaker 6: They were vulnerable because they're in a smaller market, and

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Speaker 6: so once the cable numbers started to erode, the number

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Speaker 6: of subscribers, they you know, it fell apart quicker. But

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Speaker 6: on the other hand, they were used to doing these

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Speaker 6: things themselves. They have for decades had their own production

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Speaker 6: crew for games. So they were just handing off fully

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Speaker 6: produced games to their cable partner in the past, so

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Speaker 6: that means they don't have to figure out how to

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Speaker 6: ramp up production. They were also selling their own advertising

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Speaker 6: inventory in the past, so they now just keep doing that.

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Speaker 6: So they were largely a do it yourself shop. They

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Speaker 6: even used to own Cajazz, the station that they now

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Speaker 6: show their games on that their previous owner, Larry Miller

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Speaker 6: bought that changed the name to Cajazz to put Jazz

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Speaker 6: games on it. So they are just returning there to

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Speaker 6: what they used to do. So they were really primed

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Speaker 6: for this. They're just kind of now adding on this

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Speaker 6: layer of a streaming service in the style of so

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Speaker 6: many that we see now Disney Plus, etc.

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Speaker 1: Well, this all really started for the Jazz back in

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Speaker 1: twenty twenty. The Jazz they signed Rudy Gobert and they

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Speaker 1: had the big old contract. It was simple, five years,

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Speaker 1: two hundred five million dollars and they said, okay, simple,

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Speaker 1: we're going to do this simply because we're going to

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Speaker 1: you know, the fees are going to be passed on

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Speaker 1: to the cable provider, and then the cable provider is

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Speaker 1: going to pass the fees onto us. Everything is dandy,

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Speaker 1: And then this happened when all of a sudden, the

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Speaker 1: regional sports networks went starting to go out of business,

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Speaker 1: and there was a point two weeks before the season

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Speaker 1: started where the Jazz did not have anybody to carry

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Speaker 1: their games, and this really put the whole thing in motion.

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Speaker 6: Well, so they lost a bunch of carriage a couple

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Speaker 6: seasons ago, right before the season started. So basically the

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Speaker 6: AT and T Sports net is the Rocky Mountain was

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Speaker 6: their network. And when Warner Brothers merged with Discovery, they

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Speaker 6: looked at the RSN business, including this channel and a

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Speaker 6: few others they had, and said, this is a loser.

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Speaker 6: We got to get out of this, and they tried

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Speaker 6: to sell it couldn't. So then they went to teams

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Speaker 6: and said, we're exiting. You take back your rights and

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Speaker 6: do what you want with them, but you're not going

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Speaker 6: to be able to get more money from us. The

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Speaker 6: Jazz by that point had already let their last deal expire.

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Speaker 6: They'd sort of seen the writing on the wall and

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Speaker 6: decided to go a different direction. So they were actually,

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Speaker 6: you know, to your earlier point, it well positioned that

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Speaker 6: way too. They didn't have like half of a deal

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Speaker 6: left when their network went out of business. But yeah,

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Speaker 6: I mean this, that model, while it lasted, was incredibly

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Speaker 6: lucrative for everybody. You know, the Jazz were getting like

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Speaker 6: twenty five million dollars a year from AT and T

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Speaker 6: sports Net, and you know, they were able to generate

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Speaker 6: that kind of revenue because, as you mentioned, a lot

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Speaker 6: of people were getting this programming as part of their

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Speaker 6: cable bundle and paying for it as part of their

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Speaker 6: cable bill, but not watching it, you know. So it

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Speaker 6: was just a great gravy train. But now that's that's

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Speaker 6: going away, and you have to figure out how to

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Speaker 6: through ads and through direct consumer services how to make

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Speaker 6: up that difference. And the Jazz have not figured it

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Speaker 6: out entirely yet. Right they're not going to make the

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Speaker 6: same money they used to be making right away. They

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Speaker 6: think they will get there, but it remains to be seen.

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Speaker 4: So that's where I want to go, because this is

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Speaker 4: not as profitable as it was. And the Utah Jazz,

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Speaker 4: as you mentioned, have their own distinct advantages. Smaller market,

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Speaker 4: They already have a lot of this stuff in house.

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Speaker 4: They had the capability to just kind of go out

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Speaker 4: there and do this. It'd be a lot different if

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Speaker 4: you were talking about it somewhat bigger market, right, the

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Speaker 4: number of games that they play is reduced.

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Speaker 1: Yeah.

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Speaker 6: I mean, so the NFL does not have to worry

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Speaker 6: about this because they're just not on research NFL snworks

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Speaker 6: and they are what drives national TV nowadays. But for

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Speaker 6: Major League Baseball this is a big, big problem because

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Speaker 6: it's an even bigger piece of the pie for them.

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Speaker 6: It's just they depend on these regional sports.

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Speaker 4: Networks a lot more games.

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Speaker 6: Yeah, there's a huge number of games, and really that's

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Speaker 6: where the audience is for them in aggregate. They're not

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Speaker 6: as much of a national TV presence.

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Speaker 2: So well, the Minnesota Twins have already come out and

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Speaker 2: said this is in facting payroll, right, I mean, and

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Speaker 2: this takes me to the point, right, all right, I

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Speaker 2: just have to ask your thoughts on this. You know,

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Speaker 2: one point six seven billion was paid for the Jazz

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Speaker 2: back in December twenty twenty. I don't know if Smith

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Speaker 2: was under the belief that, you know, the Arsons wouldlast forever,

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Speaker 2: this game would go on forever, but he paid that number, right,

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Speaker 2: and so he has to ramp back up as quickly

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Speaker 2: as possible. Obviously, the subscriber service is one way. But

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Speaker 2: you know, cageazz is still you know, they still got

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Speaker 2: you know, I don't know Wheel of Fortune on during

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Speaker 2: the day, right, I mean that's I mean if I'm wrong, right,

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Speaker 2: I mean.

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Speaker 1: Son, I mean, look, I got it.

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Speaker 2: I love Wheel of Fortune, you know Pat's age. I mean,

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Speaker 2: look seriously, I mean, like, how do they expect to

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Speaker 2: make up that shortfall? And what is the timing there?

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Speaker 2: And will this and this is really where I'm going, Well,

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Speaker 2: let's impact their ability to make those big name signings

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Speaker 2: when compared to the Lakers, the Knicks, the Bulls and

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Speaker 2: the other team that you know have you know in

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Speaker 2: house media and can afford to pay.

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Speaker 6: Yeah, I mean, they say that this will not change

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Speaker 6: their payroll spending, and they emphasize to me that they

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Speaker 6: have a pretty strong balance sheet. On the other parts

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Speaker 6: of the business. Ticketing is up, sponsorship deals are up,

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Speaker 6: and so they feel they can weather this. But if

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Speaker 6: you look at sort of the actual revenue streams from

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Speaker 6: their new model, it really isn't the streaming at least

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Speaker 6: in the short term. They've sold like sixteen thousand of

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Speaker 6: those subscriptions at roughly maybe one hundred bucks a pop,

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Speaker 6: So that is not going to be the difference maker

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Speaker 6: at least right away. What it is basically is now

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Speaker 6: hopefully more people watch the games, and so far this

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Speaker 6: year you've got audiences up by about forty percent. Because

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Speaker 6: it's in more homes, it's easier to get right, then

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Speaker 6: you can sell those ads for more. So that's the

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Speaker 6: biggest piece of the pie for them, and they think

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Speaker 6: that'll take about three years. You know, they as new

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Speaker 6: contracts get signed with advertisers to see those gains. The

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Speaker 6: other piece is that, you know a lot of people

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Speaker 6: get their so called free TV through a cable package.

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Speaker 6: So Cageazz at the moment is going to carriers, comcasts,

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Speaker 6: whoever and saying you can just basically have this programming

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Speaker 6: because it's who's going to pay for it. It's like

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Speaker 6: you said, weel fortune, but now they have Jazz games,

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Speaker 6: they have some of the most valuable programming in the market.

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Speaker 6: They can go back around and say, we need those

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Speaker 6: retrans fees, which are just like your cable subscriber fees,

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Speaker 6: where you're paying for each person who's getting that programming,

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Speaker 6: you're paying a monthly fee. And once that happens, once

437
00:20:11,240 --> 00:20:13,359
Speaker 6: you get those fees in place, the Jazz get a

438
00:20:13,400 --> 00:20:13,880
Speaker 6: share of that.

439
00:20:14,000 --> 00:20:15,679
Speaker 2: So I'm thinking you're because you're right, because they have

440
00:20:15,720 --> 00:20:18,080
Speaker 2: to show, you know, their growth, subscriber growth, They need

441
00:20:18,119 --> 00:20:19,679
Speaker 2: to show their numbers. So you've been thinking two to

442
00:20:19,720 --> 00:20:21,720
Speaker 2: three years, you know, then figure another couple of years

443
00:20:21,760 --> 00:20:23,760
Speaker 2: because things then always go according to plan. So I

444
00:20:23,800 --> 00:20:26,000
Speaker 2: figure five years would be a nice you know, in

445
00:20:26,040 --> 00:20:28,040
Speaker 2: the back of your head, you're like, Okay, that sets

446
00:20:28,080 --> 00:20:30,320
Speaker 2: me back five years, you know. I'm I'm It's not

447
00:20:30,359 --> 00:20:32,080
Speaker 2: like I don't have the money, but okay, fine, I

448
00:20:32,119 --> 00:20:33,800
Speaker 2: gotta make out, make ends meet, you know, and I'll

449
00:20:33,800 --> 00:20:35,600
Speaker 2: pay Rudy Gobert, right.

450
00:20:35,680 --> 00:20:36,720
Speaker 6: Yeah, I mean that's the idea.

451
00:20:36,800 --> 00:20:37,200
Speaker 1: Go Beart.

452
00:20:37,280 --> 00:20:40,199
Speaker 6: They offloaded to the Timberlves, but the same idea, I

453
00:20:40,240 --> 00:20:43,760
Speaker 6: got to pay your stars. I think that is basically

454
00:20:43,800 --> 00:20:46,160
Speaker 6: the thinking there that the balance sheet is strong enough.

455
00:20:46,240 --> 00:20:49,320
Speaker 6: I think when you look across sports, it's going to

456
00:20:49,400 --> 00:20:52,320
Speaker 6: be different. Bigger markets, the rsns are going to be

457
00:20:52,359 --> 00:20:56,720
Speaker 6: able to survive longer, smaller markets. Baseball teams like we're saying,

458
00:20:56,760 --> 00:20:59,000
Speaker 6: like you were saying, the Minnesota Twins, that's where it's

459
00:20:59,000 --> 00:21:01,640
Speaker 6: probably going to show them more the soonest because when

460
00:21:01,680 --> 00:21:03,639
Speaker 6: they lose their RSN deals and in some of the

461
00:21:03,680 --> 00:21:06,440
Speaker 6: cases these are just sort of imploding. The league in

462
00:21:06,480 --> 00:21:08,720
Speaker 6: that case has stepped in and said we'll backstop you

463
00:21:08,800 --> 00:21:10,600
Speaker 6: like up to eighty percent, Like We're not going to

464
00:21:10,640 --> 00:21:12,680
Speaker 6: just let this go into free fall. But I can't

465
00:21:12,680 --> 00:21:14,840
Speaker 6: go on forever. And it's still a come down. So

466
00:21:14,920 --> 00:21:17,919
Speaker 6: those teams are having the podres of the Diamondbacks, the Twins,

467
00:21:17,920 --> 00:21:19,919
Speaker 6: They are having to look at their payroll and make

468
00:21:20,000 --> 00:21:20,600
Speaker 6: some hard choice.

469
00:21:20,720 --> 00:21:22,320
Speaker 2: It does, It does to your point. I mean, them

470
00:21:22,400 --> 00:21:25,199
Speaker 2: releasing Rudy Gobert and Donovan Mitchell. You gotta believe they

471
00:21:25,200 --> 00:21:26,240
Speaker 2: saw this coming down the road.

472
00:21:26,760 --> 00:21:28,560
Speaker 6: Yeah, I mean there you could say maybe there were

473
00:21:28,560 --> 00:21:31,800
Speaker 6: basketball reasons, you know, maybe they did. They just wanted

474
00:21:31,840 --> 00:21:34,320
Speaker 6: to start over, whether the rebuild things weren't working, chemistry

475
00:21:34,320 --> 00:21:38,080
Speaker 6: maybe was not in place. But but yeah, it definitely

476
00:21:38,200 --> 00:21:41,240
Speaker 6: makes you, I think careful with your spending.

477
00:21:41,480 --> 00:21:44,600
Speaker 4: Are how healthy are the rsense of bigger market teams

478
00:21:44,840 --> 00:21:46,320
Speaker 4: like Yes Network or MSG.

479
00:21:46,920 --> 00:21:49,159
Speaker 6: I mean a good way to measure that in my

480
00:21:49,320 --> 00:21:52,840
Speaker 6: mind is how much are they charging for their standalone

481
00:21:52,920 --> 00:21:58,240
Speaker 6: streaming services? So if you look at like MSG, theyers, Yeah,

482
00:21:58,280 --> 00:22:00,960
Speaker 6: they charge a lot, which tells me they don't really

483
00:22:01,040 --> 00:22:05,840
Speaker 6: want this to siphon off from there from their cable business,

484
00:22:06,119 --> 00:22:08,800
Speaker 6: right they this is an offering that is really they're

485
00:22:08,840 --> 00:22:11,359
Speaker 6: not really yet to go full into it because they

486
00:22:11,400 --> 00:22:13,880
Speaker 6: don't want to cannibalize their own business, which means it's

487
00:22:13,880 --> 00:22:16,960
Speaker 6: doing okay. And I think, you know, there is probably

488
00:22:17,040 --> 00:22:19,200
Speaker 6: a lot of times when these businesses go into decline,

489
00:22:19,960 --> 00:22:23,520
Speaker 6: that's that's a problem, and but people think they're dead immediately,

490
00:22:23,560 --> 00:22:26,919
Speaker 6: and it's not. It's you know, it's a different and

491
00:22:26,960 --> 00:22:29,639
Speaker 6: it may it may hit a bottom where it coasts

492
00:22:29,720 --> 00:22:31,960
Speaker 6: for a long time, and no one really knows kind

493
00:22:31,960 --> 00:22:34,920
Speaker 6: of where that settles out. So we're starting to see

494
00:22:34,920 --> 00:22:37,320
Speaker 6: the impact. But it's it's more at the edges.

495
00:22:38,280 --> 00:22:43,359
Speaker 1: Way our own Bloomberg. And again, if if you have

496
00:22:43,560 --> 00:22:49,000
Speaker 1: our terminal, go and read the story on Bloomberg business Week.

497
00:22:49,320 --> 00:22:52,600
Speaker 1: I mean, it really is excellent, folks. And Ioad just

498
00:22:52,640 --> 00:22:55,560
Speaker 1: breaks it down. By the way, he had lunch with

499
00:22:55,640 --> 00:22:59,840
Speaker 1: the owner of the jazz and we we can find

500
00:22:59,840 --> 00:23:05,600
Speaker 1: out what do you hate? I thank you again, I

501
00:23:05,600 --> 00:23:07,880
Speaker 1: appreciate it. Up next on the show, we dive into

502
00:23:07,960 --> 00:23:11,760
Speaker 1: the world of private equity in sports with Velocity Capital

503
00:23:11,800 --> 00:23:15,040
Speaker 1: Management co founder David Abrams. That is straight ahead on

504
00:23:15,200 --> 00:23:24,480
Speaker 1: Bloomberg Business of Sports from Bloomberg Radio around the world. Hello,

505
00:23:24,720 --> 00:23:28,440
Speaker 1: Welcome to the Bloomberg Business of Sports podcast. We explore

506
00:23:28,440 --> 00:23:30,280
Speaker 1: some of the big money issues in the world of sports.

507
00:23:30,520 --> 00:23:33,160
Speaker 2: Michael barn I'm Scarlett Film and I'm Deman Sasauer.

508
00:23:33,240 --> 00:23:35,919
Speaker 1: You know, we know we don't mess around when we

509
00:23:36,000 --> 00:23:38,720
Speaker 1: do this show because we always make sure to get

510
00:23:38,720 --> 00:23:41,800
Speaker 1: the top notch folks who know what the Sam hill

511
00:23:41,840 --> 00:23:45,359
Speaker 1: they are talking about, the movers and the shakers today

512
00:23:45,840 --> 00:23:49,680
Speaker 1: no exception. He is the founding partner of Velocity Capital Management.

513
00:23:50,119 --> 00:23:52,520
Speaker 1: David Abrams, thank you for joining us on the Bloomberg

514
00:23:52,560 --> 00:23:53,440
Speaker 1: Business of Sports.

515
00:23:53,640 --> 00:23:56,040
Speaker 3: It's great to be here. Thank you for having me.

516
00:23:56,280 --> 00:23:58,640
Speaker 1: Well, first of all, to clarify for people out there,

517
00:23:59,080 --> 00:24:01,879
Speaker 1: Velocity Capital Management, what is it all about.

518
00:24:02,080 --> 00:24:05,840
Speaker 3: Velocity Capital Management is a private ecity firm that my

519
00:24:05,920 --> 00:24:09,280
Speaker 3: partner Ernie Rees and I founded two years ago. We

520
00:24:09,320 --> 00:24:13,320
Speaker 3: are investing in companies at their growth inflection point across

521
00:24:13,359 --> 00:24:18,720
Speaker 3: the entertainment, sports and media ecosystem. We really strive to

522
00:24:18,760 --> 00:24:23,119
Speaker 3: be a value add hands on both investment and an

523
00:24:23,200 --> 00:24:27,240
Speaker 3: operating partner. Both Arnie and I have backgrounds in owning, investing,

524
00:24:27,280 --> 00:24:30,920
Speaker 3: and operating a range of entertainment, sports and media companies,

525
00:24:30,960 --> 00:24:33,000
Speaker 3: and so you know, in a bit of the traditional

526
00:24:33,080 --> 00:24:36,360
Speaker 3: private equity model, we try to be very actively involved

527
00:24:36,400 --> 00:24:37,840
Speaker 3: in the companies that we invest in.

528
00:24:38,080 --> 00:24:40,360
Speaker 4: So one of the new investments that you've made is

529
00:24:40,400 --> 00:24:43,520
Speaker 4: in Pirella Motorsports, which is the owner, the largest owner

530
00:24:43,560 --> 00:24:47,879
Speaker 4: and operator of Grassroots Motorsports live events racing across North America.

531
00:24:48,320 --> 00:24:51,440
Speaker 4: What are the growth opportunities there? How can people access

532
00:24:51,640 --> 00:24:54,320
Speaker 4: this sport right now aside from attending the event live?

533
00:24:55,040 --> 00:24:58,680
Speaker 3: Well, I must say I really don't know much about motorsports,

534
00:25:00,119 --> 00:25:04,080
Speaker 3: and I had never been to a Grassroots Motorsports event

535
00:25:04,320 --> 00:25:08,159
Speaker 3: before we started looking at the company. But what was

536
00:25:08,480 --> 00:25:13,000
Speaker 3: amazing to me is the passion that our spectators and

537
00:25:13,160 --> 00:25:17,280
Speaker 3: racing entrance had for motorsports. And the theme of the

538
00:25:17,320 --> 00:25:20,760
Speaker 3: company is we make racing dreams come true. When you

539
00:25:20,800 --> 00:25:23,520
Speaker 3: go to these events and you see all of their

540
00:25:23,520 --> 00:25:26,800
Speaker 3: participants and the spectators, you start to get a sense

541
00:25:26,840 --> 00:25:31,199
Speaker 3: for how this is a business that has only started

542
00:25:31,240 --> 00:25:34,360
Speaker 3: to reach its full potential. And the business is kind

543
00:25:34,359 --> 00:25:37,399
Speaker 3: of a very interesting mix of intellectual property, which is

544
00:25:37,880 --> 00:25:40,239
Speaker 3: one of our key investment themes. And so I never

545
00:25:40,320 --> 00:25:43,480
Speaker 3: knew this before, but there actually is a racing classification

546
00:25:43,680 --> 00:25:48,560
Speaker 3: called the sports Car Vintage Racing Association, and this classification

547
00:25:48,720 --> 00:25:51,600
Speaker 3: is if you own a classic car, you will go

548
00:25:51,600 --> 00:25:54,000
Speaker 3: get licensed to be a driver, and you show up

549
00:25:54,040 --> 00:25:56,320
Speaker 3: at one of our events and you go on the

550
00:25:56,400 --> 00:26:00,320
Speaker 3: track and you race the same course where some of

551
00:26:00,359 --> 00:26:03,080
Speaker 3: the most iconic races in the world are held Indianapolis

552
00:26:03,080 --> 00:26:06,439
Speaker 3: Speedway Lagoon to Seka Circular. The Americas was just hosted

553
00:26:06,480 --> 00:26:10,080
Speaker 3: the Formula One and you make your racing dreams come true, right,

554
00:26:10,119 --> 00:26:13,280
Speaker 3: And so it's an amateur sport. But the individuals who

555
00:26:13,400 --> 00:26:16,639
Speaker 3: buy these cars and they they fix them up, and

556
00:26:16,240 --> 00:26:19,280
Speaker 3: they bring their family and their racing team and they

557
00:26:19,280 --> 00:26:21,399
Speaker 3: go out on the track and they're living, you know,

558
00:26:21,440 --> 00:26:24,359
Speaker 3: they're living a dream. And I thought that was a

559
00:26:24,840 --> 00:26:28,000
Speaker 3: not only is it quote unquote cool, but our partner

560
00:26:28,040 --> 00:26:31,560
Speaker 3: Tony Perella figured out a way to create a platform

561
00:26:31,600 --> 00:26:34,320
Speaker 3: out of this. So we've got the sports Car Vintage

562
00:26:34,359 --> 00:26:37,880
Speaker 3: Racing Association, which is really amateurs who own their classic

563
00:26:37,880 --> 00:26:42,439
Speaker 3: cars racing. We also own the Prei trans Nd Racing Series,

564
00:26:42,480 --> 00:26:44,960
Speaker 3: which has been around for sixty years. It's stock car

565
00:26:45,080 --> 00:26:48,440
Speaker 3: racing in some ways. It's people that had race professionally

566
00:26:48,880 --> 00:26:51,560
Speaker 3: a NASCAR or young up and coming drivers who want

567
00:26:51,560 --> 00:26:55,000
Speaker 3: to be professionals. And then we also host the two

568
00:26:55,040 --> 00:26:59,440
Speaker 3: lower levels of Formula one, so there actually are fourteen fifteen,

569
00:26:59,440 --> 00:27:03,480
Speaker 3: sixteen years roles who are aspiring professional race car drivers.

570
00:27:03,680 --> 00:27:08,480
Speaker 3: And the analogy is minor league Baseball, Single A. Then

571
00:27:08,520 --> 00:27:10,800
Speaker 3: you go from Double A to Triple A and hopefully

572
00:27:10,840 --> 00:27:14,040
Speaker 3: the major leagues. I never knew that in Formula one,

573
00:27:14,119 --> 00:27:16,560
Speaker 3: which we can always talk about the popularity and the

574
00:27:16,560 --> 00:27:20,240
Speaker 3: growth globally, there are young individuals who aspire to be

575
00:27:20,280 --> 00:27:22,520
Speaker 3: whether it's a Formula One driver or a NASCAR driver,

576
00:27:22,800 --> 00:27:25,440
Speaker 3: and this is where they get their start. So when

577
00:27:25,440 --> 00:27:27,240
Speaker 3: I went to Circuit of the America is really literally

578
00:27:27,280 --> 00:27:30,119
Speaker 3: two weeks after the Formula one race was held. You

579
00:27:30,560 --> 00:27:33,119
Speaker 3: we have races from eight to more into six o'clock

580
00:27:33,160 --> 00:27:36,240
Speaker 3: at night. We had I think over five hundred different

581
00:27:36,359 --> 00:27:39,200
Speaker 3: racing entrants over the course of the weekend, all these

582
00:27:39,200 --> 00:27:43,359
Speaker 3: different racing classifications, all these different walks of life in

583
00:27:43,400 --> 00:27:47,320
Speaker 3: a very kind of intimate and enjoyable setting. When you

584
00:27:47,320 --> 00:27:49,760
Speaker 3: were asking me about, well, what's so exciting about this

585
00:27:50,800 --> 00:27:53,199
Speaker 3: when we look at these live entertainment businesses, This was

586
00:27:53,200 --> 00:27:57,119
Speaker 3: a founder owned business that had built a really good platform,

587
00:27:57,680 --> 00:28:00,359
Speaker 3: but it was never run like you would say a

588
00:28:00,440 --> 00:28:04,239
Speaker 3: traditional live entertainment asset like a sports team. So the

589
00:28:04,280 --> 00:28:07,800
Speaker 3: intellectual property had not been monetized properly. There hadn't been

590
00:28:08,000 --> 00:28:10,800
Speaker 3: a cogent content strategy, how you can distribute it, how

591
00:28:10,800 --> 00:28:14,560
Speaker 3: you can create shoulder content and create interesting stories. So

592
00:28:14,640 --> 00:28:17,119
Speaker 3: we looked at it as like a natural extension of

593
00:28:17,119 --> 00:28:20,600
Speaker 3: what we do. But really we're working with an individual

594
00:28:20,720 --> 00:28:23,359
Speaker 3: named Tony Perella who's a bit of a quote unquote

595
00:28:23,480 --> 00:28:26,520
Speaker 3: legend in the grassroots industry. And it's a lot of

596
00:28:26,520 --> 00:28:27,400
Speaker 3: fun working with Tony.

597
00:28:27,440 --> 00:28:29,960
Speaker 1: You're making this old motorhead just crime.

598
00:28:31,200 --> 00:28:33,159
Speaker 2: You know, David Velocity Capital. I mean, when you think

599
00:28:33,200 --> 00:28:35,520
Speaker 2: of a private equity firm, especially investing in sports and

600
00:28:35,520 --> 00:28:38,560
Speaker 2: media properties, you think of performance, you think a process, pedigree,

601
00:28:38,600 --> 00:28:40,320
Speaker 2: you think of people, and I think we have to

602
00:28:40,320 --> 00:28:42,400
Speaker 2: take a step back. We have to understand the people

603
00:28:42,400 --> 00:28:44,600
Speaker 2: at Philosity. We need to understand you. We need to

604
00:28:44,640 --> 00:28:47,719
Speaker 2: understand how someone can come from UPenn, from bear Stearns DLJ,

605
00:28:47,920 --> 00:28:52,800
Speaker 2: toiling going through Apollo European buyouts and becoming the CIO

606
00:28:52,840 --> 00:28:55,400
Speaker 2: of Harris Blitzk Sports and Entertainment and being an owner

607
00:28:55,440 --> 00:28:58,200
Speaker 2: of Crystal Palace, and like you mentioned, you know, the

608
00:28:58,240 --> 00:29:00,800
Speaker 2: Scranton Wilkes Bar are triple affiliated the Yankees. I mean,

609
00:29:00,840 --> 00:29:03,040
Speaker 2: did you ever imagine when you were toiling at DLJ

610
00:29:03,200 --> 00:29:04,000
Speaker 2: that this is where you'd be?

611
00:29:04,200 --> 00:29:04,720
Speaker 1: Definitely not.

612
00:29:05,760 --> 00:29:08,760
Speaker 3: You know, I have three adult age children, and it's

613
00:29:08,800 --> 00:29:13,000
Speaker 3: a little funny story because when they learned how to Google,

614
00:29:13,080 --> 00:29:15,320
Speaker 3: my middle son came to me and said, Dad, you're

615
00:29:15,360 --> 00:29:18,760
Speaker 3: not There's another David Abrams and he's more famous than you.

616
00:29:20,320 --> 00:29:21,760
Speaker 3: And I tried to explain to him, you know, I

617
00:29:21,800 --> 00:29:24,600
Speaker 3: had a Bursu's bubble that you know, your dad's not superman,

618
00:29:24,680 --> 00:29:29,600
Speaker 3: so to speak. So to answer your question, I never

619
00:29:29,680 --> 00:29:32,400
Speaker 3: envisioned to being the Seedamn. I really never thought that

620
00:29:32,480 --> 00:29:35,400
Speaker 3: I would start a firm that you know, had my

621
00:29:35,480 --> 00:29:37,600
Speaker 3: name on it, so to speak, because I've always worked

622
00:29:37,600 --> 00:29:41,720
Speaker 3: in larger organizations. But the different career paths I've taken

623
00:29:41,960 --> 00:29:45,160
Speaker 3: have really set me up to be successful today. You know,

624
00:29:45,400 --> 00:29:47,640
Speaker 3: when we think about what we're trying to do, you know,

625
00:29:47,720 --> 00:29:50,600
Speaker 3: having really the first person at Apollo to ever start

626
00:29:50,640 --> 00:29:54,160
Speaker 3: a business that was outside private equity and outside the US,

627
00:29:54,400 --> 00:29:56,920
Speaker 3: and we built an amazing platform and Apollo is a

628
00:29:56,960 --> 00:29:59,760
Speaker 3: fantastic place to work. So when you're there, you think well,

629
00:29:59,760 --> 00:30:01,280
Speaker 3: that's I'm going to be forever. It's all I'm going

630
00:30:01,320 --> 00:30:04,160
Speaker 3: to do. And then when I transitioned out of Apollo

631
00:30:04,200 --> 00:30:06,920
Speaker 3: and I started investing in operating a handful of these

632
00:30:06,920 --> 00:30:11,320
Speaker 3: different businesses. It was before capital really started flowing into

633
00:30:11,320 --> 00:30:14,120
Speaker 3: buy professional sports teams the way it is today. This

634
00:30:14,280 --> 00:30:19,640
Speaker 3: was twenty twelve, thirteen fourteen, and I saw this unique

635
00:30:19,800 --> 00:30:23,360
Speaker 3: what I call disruption and intellectual property technology was starting

636
00:30:23,400 --> 00:30:27,440
Speaker 3: to create ways for intellectual property to be further commercialized.

637
00:30:27,920 --> 00:30:30,000
Speaker 3: And so I said, well, this is really what I

638
00:30:30,040 --> 00:30:32,320
Speaker 3: want to do. And you know, made a handful of

639
00:30:32,360 --> 00:30:35,840
Speaker 3: investments with close friends and former colleagues, and you know,

640
00:30:35,880 --> 00:30:39,520
Speaker 3: I worked very closely with both Josh Harris and David Blitzer.

641
00:30:39,560 --> 00:30:42,280
Speaker 3: And then when I moved back to the US after

642
00:30:42,440 --> 00:30:45,720
Speaker 3: fifteen years in London, Josh and David had created Harris S.

643
00:30:45,720 --> 00:30:49,280
Speaker 3: Blitzer Sports and Entertainment. Today it's an entity which really

644
00:30:49,360 --> 00:30:51,600
Speaker 3: is the largest owner of sports assets in the world.

645
00:30:51,760 --> 00:30:55,560
Speaker 3: The Devil, The Devil's the Sixers, you know, Joe Gibbs Racing,

646
00:30:55,600 --> 00:30:58,120
Speaker 3: and then you know Crystal Palace is an affiliate, and

647
00:30:58,280 --> 00:31:01,680
Speaker 3: obviously Josh is now taking control of the Commanders, and

648
00:31:01,720 --> 00:31:03,320
Speaker 3: so I moved back to the US, and we kind

649
00:31:03,360 --> 00:31:06,720
Speaker 3: of had this idea of you've got this incredible amount

650
00:31:06,760 --> 00:31:10,160
Speaker 3: of operating insight from all these companies you own, because

651
00:31:10,160 --> 00:31:14,080
Speaker 3: they're companies, how do we harness that intelligence to make

652
00:31:14,120 --> 00:31:17,720
Speaker 3: better investment decisions? And obviously, having worked with Josh at

653
00:31:17,760 --> 00:31:21,080
Speaker 3: Apollo or even David at Blackstone, that's what big firms do.

654
00:31:21,920 --> 00:31:25,400
Speaker 3: What's your competitive advantage? So when opportunities would come into

655
00:31:25,440 --> 00:31:27,880
Speaker 3: the organization prior to me joining, there really wasn't a

656
00:31:28,520 --> 00:31:32,600
Speaker 3: conduit to actually properly underwrite them and make investments. So

657
00:31:32,640 --> 00:31:36,520
Speaker 3: we set up a very integrated investment platform that leveraged

658
00:31:36,600 --> 00:31:40,000
Speaker 3: all the deal flow and all of the intelligence of

659
00:31:40,040 --> 00:31:43,040
Speaker 3: the employees in the assets globally and it was really

660
00:31:43,760 --> 00:31:47,040
Speaker 3: going well. And so there's a lot of challenges that

661
00:31:47,120 --> 00:31:50,120
Speaker 3: everybody went through during COVID, and we came to the conclusion

662
00:31:50,200 --> 00:31:52,560
Speaker 3: together that you know what, we're close friends, we worked

663
00:31:52,560 --> 00:31:54,760
Speaker 3: together a long time. It was the best fit for

664
00:31:54,920 --> 00:31:57,600
Speaker 3: me to say, you know what, let me go start

665
00:31:57,880 --> 00:32:01,160
Speaker 3: a business. I have all this connectivity relationships with this

666
00:32:01,200 --> 00:32:05,400
Speaker 3: broader organization. Love to have you guys as my you know,

667
00:32:05,480 --> 00:32:09,080
Speaker 3: limited partners, which they all are, And we set out

668
00:32:09,160 --> 00:32:11,720
Speaker 3: to set up velocity, you know, as I left Harris

669
00:32:11,760 --> 00:32:14,520
Speaker 3: Splitzer Sports again the twenty one. But the last thing

670
00:32:14,560 --> 00:32:18,280
Speaker 3: I'd say is, while I've never thought about setting this up,

671
00:32:18,640 --> 00:32:21,800
Speaker 3: I also, in my wildest dreams, never thought it would

672
00:32:21,840 --> 00:32:22,680
Speaker 3: be as hard as it is.

673
00:32:23,080 --> 00:32:26,240
Speaker 4: Really, yes, harder than the worst days at a DLJ

674
00:32:26,440 --> 00:32:28,760
Speaker 4: for instance, Well, there were.

675
00:32:28,680 --> 00:32:33,400
Speaker 3: A lot of really good days, you know, real quick aside,

676
00:32:33,440 --> 00:32:35,760
Speaker 3: So I did work at bear Stearn's, I did spend

677
00:32:35,760 --> 00:32:37,920
Speaker 3: a year a banker's tress before I went to DLJ.

678
00:32:38,520 --> 00:32:41,880
Speaker 3: Then obviously DLJ, and then DLJ got bought by Credit Swiss,

679
00:32:41,920 --> 00:32:44,840
Speaker 3: and then Credit Swiss doesn't exist anymore. So for the

680
00:32:44,840 --> 00:32:47,000
Speaker 3: firms I've worked out of my life don't exist again.

681
00:32:47,600 --> 00:32:48,960
Speaker 3: I'm not sure if that's a good thing or a

682
00:32:49,000 --> 00:32:52,920
Speaker 3: bad thing. But DALJ was, you know, unbelievable business. And

683
00:32:52,960 --> 00:32:56,040
Speaker 3: then obviously when we merger Credit Swiss, it gave us

684
00:32:56,040 --> 00:32:58,440
Speaker 3: a European footprint and that really enabled me to start

685
00:32:58,480 --> 00:33:02,240
Speaker 3: to move into the next phase of my career, moving abroad.

686
00:33:02,280 --> 00:33:04,040
Speaker 3: And then when I went to London and went to Apollo.

687
00:33:04,120 --> 00:33:06,760
Speaker 3: But when I was raising my first Apollo fund, it

688
00:33:06,840 --> 00:33:09,560
Speaker 3: was during the financial crisis, and I remember being in

689
00:33:09,600 --> 00:33:12,520
Speaker 3: Tokyo for the first time. It's a wonderful experience and

690
00:33:12,560 --> 00:33:14,720
Speaker 3: I'm you know, it's like lost in translation, walking around

691
00:33:14,800 --> 00:33:17,200
Speaker 3: all night long. And the next day Lehman Brothers goes

692
00:33:17,200 --> 00:33:20,800
Speaker 3: out of business. And I thought that was a challenging

693
00:33:20,880 --> 00:33:23,960
Speaker 3: time to raise capital. Yeah, you know, it took us

694
00:33:24,160 --> 00:33:26,280
Speaker 3: three years, got the first fund raised, and we built

695
00:33:26,320 --> 00:33:29,160
Speaker 3: an amazing platform. You know, at the end of twenty one,

696
00:33:29,720 --> 00:33:33,720
Speaker 3: as capital flow started changing and people realized the mistakes

697
00:33:33,760 --> 00:33:36,520
Speaker 3: they may have made when money was really cheap, it's

698
00:33:36,560 --> 00:33:41,480
Speaker 3: become very challenging for emerging startup managers to raise capital.

699
00:33:41,560 --> 00:33:44,120
Speaker 3: Doesn't matter what your background is, what your pedigree is,

700
00:33:44,720 --> 00:33:47,480
Speaker 3: there's just not a lot of capital. So we've done it,

701
00:33:47,560 --> 00:33:49,720
Speaker 3: you know, in a way that I think is the

702
00:33:49,760 --> 00:33:52,880
Speaker 3: only way, which is slow and execute on what you

703
00:33:52,880 --> 00:33:55,560
Speaker 3: tell people you're going to do. And so with Pirella,

704
00:33:55,640 --> 00:33:58,960
Speaker 3: this is our you know, fifth investment. It's a control deal.

705
00:33:59,040 --> 00:34:02,040
Speaker 3: It's the exact microcosm of a transaction that we want

706
00:34:02,080 --> 00:34:05,320
Speaker 3: to do and this will hopefully enable us to continue

707
00:34:05,320 --> 00:34:06,240
Speaker 3: to grow our capital base.

708
00:34:06,320 --> 00:34:09,520
Speaker 2: And you've got other investments as well, elevate sports, video cities,

709
00:34:09,680 --> 00:34:11,680
Speaker 2: X games, et cetera. You know, I'm curious you mentioned

710
00:34:11,680 --> 00:34:15,080
Speaker 2: capital flows, and you know, how closely do you track

711
00:34:15,320 --> 00:34:18,600
Speaker 2: some of the big capital flows we're seeing into new

712
00:34:18,640 --> 00:34:22,239
Speaker 2: sports teams or for that matter, these media licensing and

713
00:34:22,320 --> 00:34:24,279
Speaker 2: rights deals. I mean, like, are you watching all that

714
00:34:24,360 --> 00:34:26,120
Speaker 2: each and every day and how do you attrack that well?

715
00:34:26,160 --> 00:34:29,440
Speaker 3: I definitely see the trends that are that are taking place.

716
00:34:29,719 --> 00:34:33,359
Speaker 3: You know, when you think about private equity or institutional capital, right,

717
00:34:33,400 --> 00:34:35,480
Speaker 3: there are a lot of really smart people. And what

718
00:34:35,520 --> 00:34:38,560
Speaker 3: I always say is if there's a good risk adjusted

719
00:34:38,640 --> 00:34:43,120
Speaker 3: return investment opportunity, capital pools will form to take advantage

720
00:34:43,120 --> 00:34:45,480
Speaker 3: of them. And that's how the big alternative platforms have

721
00:34:45,480 --> 00:34:48,000
Speaker 3: gotten bigger. Right, you started with those credit or real

722
00:34:48,080 --> 00:34:50,200
Speaker 3: estate or private equity, and you can just migrate it out,

723
00:34:50,200 --> 00:34:54,040
Speaker 3: and you brought experts in. So as institutional property has

724
00:34:54,120 --> 00:34:57,960
Speaker 3: now become disrupted, it's being commercialized in a way where

725
00:34:57,960 --> 00:35:01,640
Speaker 3: you have very consistent and stable revenue streams, The underlying

726
00:35:01,719 --> 00:35:05,799
Speaker 3: asset becomes more valuable. Therefore you can actually underwrite it

727
00:35:05,880 --> 00:35:09,200
Speaker 3: from with an institutional lens. And so the capital flows

728
00:35:09,200 --> 00:35:11,280
Speaker 3: that have come in, let's just pick sports teams first.

729
00:35:11,520 --> 00:35:14,440
Speaker 3: The reason why larger pools were not investing in these

730
00:35:14,480 --> 00:35:17,080
Speaker 3: assets let's call it even ten to fifteen years ago,

731
00:35:17,719 --> 00:35:21,439
Speaker 3: is they weren't big enough and they weren't really stable enough.

732
00:35:21,440 --> 00:35:24,160
Speaker 3: In many cases they were family run businesses focused on

733
00:35:24,200 --> 00:35:29,800
Speaker 3: a local market. As technology has disrupted the distribution of content,

734
00:35:30,400 --> 00:35:34,800
Speaker 3: you've seen just simple evolution of sports betting becoming legal,

735
00:35:34,840 --> 00:35:39,600
Speaker 3: which is a new sustainable revenue stream. You've seen innovation

736
00:35:39,960 --> 00:35:43,040
Speaker 3: where the owner of intellectual property, meaning the team who

737
00:35:43,040 --> 00:35:46,839
Speaker 3: has a ticket. Now tickets can be distributed and repackaged

738
00:35:46,840 --> 00:35:49,560
Speaker 3: in ways that couldn't be before with the advent of technology,

739
00:35:49,600 --> 00:35:52,880
Speaker 3: doing on your phone. So all of this is happening

740
00:35:52,960 --> 00:35:56,839
Speaker 3: at the same time that the value of the live

741
00:35:56,880 --> 00:35:59,960
Speaker 3: event is only worth more because more people can now

742
00:36:00,080 --> 00:36:02,160
Speaker 3: see it around the world. Right when I was growing up,

743
00:36:02,480 --> 00:36:06,319
Speaker 3: Scarlet's wearing her Rangers fleece. But if I wanted to

744
00:36:06,320 --> 00:36:08,480
Speaker 3: watch a Yankee game as a Yankee fan, I'd watch,

745
00:36:08,600 --> 00:36:10,799
Speaker 3: you know, one game a week on Channel eleven and

746
00:36:10,800 --> 00:36:11,200
Speaker 3: black and.

747
00:36:11,120 --> 00:36:11,799
Speaker 1: White in my room.

748
00:36:12,840 --> 00:36:17,040
Speaker 3: Then, you know, cable was a disruptor. So when cable

749
00:36:17,080 --> 00:36:20,239
Speaker 3: came in, you could subscribe to the S Network. You

750
00:36:20,280 --> 00:36:22,239
Speaker 3: could watch all the Yankee games, but you had to

751
00:36:22,239 --> 00:36:24,759
Speaker 3: be kind of the New York metro area. Now you

752
00:36:24,800 --> 00:36:27,160
Speaker 3: can watch the Yankee game anywhere in the world anytime

753
00:36:27,160 --> 00:36:30,319
Speaker 3: you want. So by definition, that one game or piece

754
00:36:30,360 --> 00:36:33,960
Speaker 3: of IP is worth exponentially more to the rights holder.

755
00:36:34,480 --> 00:36:36,520
Speaker 3: So if the rights holder, if it's worth more and

756
00:36:36,560 --> 00:36:39,960
Speaker 3: it's got a stable revenue base coming in from sponsorship,

757
00:36:40,560 --> 00:36:43,200
Speaker 3: you could see paying more for it because you can

758
00:36:43,280 --> 00:36:45,839
Speaker 3: kind of forecast out what the value creation is going

759
00:36:45,880 --> 00:36:49,160
Speaker 3: to be. And that's always the simplest example I give

760
00:36:49,239 --> 00:36:51,480
Speaker 3: to why is everybody want to invest in sports teams.

761
00:36:52,000 --> 00:36:54,279
Speaker 3: It's not because they're charging more for parking, which of

762
00:36:54,320 --> 00:36:57,520
Speaker 3: course they do. It's not because your chicken tenders and fries,

763
00:36:57,560 --> 00:36:59,840
Speaker 3: which by the way, are the best seller in America,

764
00:37:00,080 --> 00:37:02,400
Speaker 3: they're going to charge you thirty instead of twenty bucks.

765
00:37:02,880 --> 00:37:05,920
Speaker 3: It's because the value of the intellectual property, the ability

766
00:37:05,960 --> 00:37:08,879
Speaker 3: to watch that event is just worth more because more

767
00:37:08,880 --> 00:37:10,080
Speaker 3: people can see it easier.

768
00:37:10,160 --> 00:37:11,800
Speaker 2: So how challenging is your job now with the collapse

769
00:37:11,840 --> 00:37:13,919
Speaker 2: of the RSNS, right? I mean you tae jazz games aren't.

770
00:37:14,080 --> 00:37:16,240
Speaker 2: Aren't You can't get those everywhere on the planet, right.

771
00:37:16,400 --> 00:37:19,120
Speaker 3: You definitely can't. But you know this, this is what

772
00:37:19,200 --> 00:37:22,520
Speaker 3: creates opportunities. Right, Well, if I think about Perella. We

773
00:37:22,719 --> 00:37:24,360
Speaker 3: in the past couple of years, we film all of

774
00:37:24,360 --> 00:37:26,880
Speaker 3: our races. We put it on a platform called MAVTV.

775
00:37:27,360 --> 00:37:29,520
Speaker 3: Nobody watches it, nobody pays for it.

776
00:37:30,000 --> 00:37:30,320
Speaker 1: Okay.

777
00:37:30,400 --> 00:37:33,360
Speaker 3: So if you think about Formula One as an analogy,

778
00:37:34,000 --> 00:37:37,880
Speaker 3: they created interest in the sport through a Netflix documentary.

779
00:37:38,000 --> 00:37:38,120
Speaker 1: Right.

780
00:37:38,320 --> 00:37:40,839
Speaker 3: I lived in London and I'm a pretty big sports fan.

781
00:37:41,360 --> 00:37:44,640
Speaker 3: I used to change the channel on Sky when they

782
00:37:44,680 --> 00:37:47,600
Speaker 3: start talking about Formula One with Lewis Hamilton, like put

783
00:37:47,640 --> 00:37:50,360
Speaker 3: on the football news. I don't care about racing.

784
00:37:50,560 --> 00:37:52,680
Speaker 1: What right, you know? I lived there.

785
00:37:52,719 --> 00:37:54,600
Speaker 3: I never went to Silverstone. I never went to He

786
00:37:54,640 --> 00:37:56,600
Speaker 3: was there when Lewis Hamilton probably won. It's seven years

787
00:37:56,600 --> 00:38:00,280
Speaker 3: in a row, so you know it. Just as someone

788
00:38:00,280 --> 00:38:03,840
Speaker 3: who understands the sport and likes going to live events,

789
00:38:03,880 --> 00:38:07,120
Speaker 3: I never did that. So when we think about how

790
00:38:07,160 --> 00:38:10,440
Speaker 3: do you create excitement in your sport, right, it's all

791
00:38:10,480 --> 00:38:12,959
Speaker 3: about the stories. And that's what gets us excited about

792
00:38:12,960 --> 00:38:15,919
Speaker 3: grassroots racing because there are some great storylines. I mean,

793
00:38:16,400 --> 00:38:20,000
Speaker 3: we have I think it's twenty years of historical footage

794
00:38:20,600 --> 00:38:24,280
Speaker 3: of the trans Am Racing series that's sitting in Tony

795
00:38:24,360 --> 00:38:28,840
Speaker 3: Perella's house in Romulus, New York inn eight Melimeiner, he

796
00:38:28,960 --> 00:38:33,080
Speaker 3: probably and don't laugh. In the X Games, which we

797
00:38:33,080 --> 00:38:35,280
Speaker 3: were part of a group that carved the X Games

798
00:38:35,320 --> 00:38:38,920
Speaker 3: out of Disney MSP Sports Capital at the deal and

799
00:38:39,120 --> 00:38:40,400
Speaker 3: my partner Arnie had.

800
00:38:40,480 --> 00:38:41,080
Speaker 1: He worked there.

801
00:38:41,200 --> 00:38:43,400
Speaker 3: He helped structure the deal and so we were an

802
00:38:43,440 --> 00:38:45,760
Speaker 3: investor in it. It's the same exact situation.

803
00:38:45,840 --> 00:38:46,560
Speaker 1: So think about this.

804
00:38:47,120 --> 00:38:51,759
Speaker 3: The Walt Disney company, which bought ESPN many years ago,

805
00:38:52,880 --> 00:38:56,600
Speaker 3: owned the X Games. Wasn't what you'd call their number

806
00:38:56,640 --> 00:39:00,600
Speaker 3: one asset, and when they sold it, there was the

807
00:39:00,640 --> 00:39:04,720
Speaker 3: equivalent of many, many years of historical footage of Tony

808
00:39:04,760 --> 00:39:07,319
Speaker 3: Hawk back in the old days that had never been

809
00:39:07,640 --> 00:39:12,879
Speaker 3: manigetized were monetized, right, And so for us those are

810
00:39:12,960 --> 00:39:17,839
Speaker 3: opportunities because that is valuable intellectual property that you can

811
00:39:17,880 --> 00:39:21,319
Speaker 3: now monetize and you can use that to create a

812
00:39:21,360 --> 00:39:22,480
Speaker 3: more valuable business.

813
00:39:22,840 --> 00:39:26,520
Speaker 1: You know, you were talking about so many things involved

814
00:39:26,560 --> 00:39:29,760
Speaker 1: with Mark Cuban, and we were talking about this before

815
00:39:29,800 --> 00:39:32,839
Speaker 1: we went on the air, and your thoughts about well,

816
00:39:32,880 --> 00:39:35,680
Speaker 1: what is Mark Cuban thinking it's like? And nobody knows

817
00:39:35,760 --> 00:39:38,680
Speaker 1: except Mark Cuban, of course, but you had some interesting thoughts.

818
00:39:38,800 --> 00:39:41,680
Speaker 3: One thing I didn't mention Michael. When we first bought

819
00:39:41,760 --> 00:39:43,920
Speaker 3: the Yankees Triple eighteen, we were on the phone with

820
00:39:44,000 --> 00:39:46,560
Speaker 3: the local media, right, and we were well, we went

821
00:39:46,600 --> 00:39:48,319
Speaker 3: to their off we went to Scranton Times and we

822
00:39:48,320 --> 00:39:51,760
Speaker 3: were with the local media, and I understood really well

823
00:39:52,040 --> 00:39:54,960
Speaker 3: that as an owner of a sports team, you're really

824
00:39:55,000 --> 00:39:58,759
Speaker 3: renting it, meaning it is a community asset. Your job

825
00:39:58,840 --> 00:40:01,560
Speaker 3: is to be a good steward everything that that means

826
00:40:01,560 --> 00:40:05,960
Speaker 3: from winning, being part of the community, providing a fun experience.

827
00:40:06,520 --> 00:40:08,839
Speaker 3: That's really your job, right when you when you own

828
00:40:08,840 --> 00:40:11,840
Speaker 3: a bigger asset in big cities, right, it's a really

829
00:40:12,000 --> 00:40:14,680
Speaker 3: big responsibility. Scrallt we were talking about it. You know,

830
00:40:14,719 --> 00:40:18,160
Speaker 3: it's emotional and it's a huge time commitment and sometimes

831
00:40:18,440 --> 00:40:21,160
Speaker 3: life is more important sometimes than owning a team. It's

832
00:40:21,160 --> 00:40:24,640
Speaker 3: no different than owning a business. And it's very hard

833
00:40:24,719 --> 00:40:29,200
Speaker 3: to be an owner of a professional sports team today

834
00:40:29,480 --> 00:40:32,800
Speaker 3: and to not be actively involved. You know, it's funny

835
00:40:32,800 --> 00:40:34,799
Speaker 3: when you know I was living in London. I was

836
00:40:34,880 --> 00:40:38,000
Speaker 3: running the scrant Wilkesbury rail Riders, which is not easy

837
00:40:38,040 --> 00:40:41,360
Speaker 3: to get to from London. And then I had a

838
00:40:41,640 --> 00:40:45,400
Speaker 3: Keymotion which I bought and ran, which was a computer

839
00:40:45,520 --> 00:40:49,680
Speaker 3: vision content capture business at a outside of Brussels, and

840
00:40:49,719 --> 00:40:51,759
Speaker 3: I had three kids that were in high school.

841
00:40:51,440 --> 00:40:54,120
Speaker 6: And younger, and you were pulled in every direction.

842
00:40:53,800 --> 00:40:57,200
Speaker 3: Pulled in every direction. And when we started thinking through

843
00:40:57,239 --> 00:41:01,120
Speaker 3: about setting a velocity, we had the opportunity to acquire

844
00:41:01,520 --> 00:41:05,120
Speaker 3: more minor league baseball teams or sell our team. And

845
00:41:05,160 --> 00:41:07,160
Speaker 3: I actually discussed it with my wife and I said, look,

846
00:41:07,200 --> 00:41:09,200
Speaker 3: I can't do all this. Actually she said you can't

847
00:41:09,239 --> 00:41:13,080
Speaker 3: do all this, but I so we made the decision

848
00:41:13,160 --> 00:41:15,719
Speaker 3: as a group to sell, which was a sad day

849
00:41:15,760 --> 00:41:18,080
Speaker 3: for me. You know, the Yankees Triple A team, the

850
00:41:18,160 --> 00:41:20,400
Speaker 3: Yankees were a partner. It was a lifelong dream. It's

851
00:41:20,440 --> 00:41:23,880
Speaker 3: a whole nother podcast to talk about some of the stories,

852
00:41:24,440 --> 00:41:28,000
Speaker 3: but I learned firsthand that you know, you're really quote

853
00:41:28,080 --> 00:41:30,480
Speaker 3: unquote renting these assets, and we had to give them

854
00:41:30,520 --> 00:41:32,440
Speaker 3: back to the community and make sure the team was

855
00:41:32,480 --> 00:41:33,600
Speaker 3: set up so they could, you.

856
00:41:33,520 --> 00:41:36,920
Speaker 4: Know, go on, Yeah, the team outlives the owners or

857
00:41:36,960 --> 00:41:39,600
Speaker 4: whoever is the owner at the time. So when you

858
00:41:39,680 --> 00:41:44,120
Speaker 4: talk about professional investors like private equity firms buying into

859
00:41:44,160 --> 00:41:47,640
Speaker 4: these different teams and monetizing the intellectual property, what kind

860
00:41:47,680 --> 00:41:50,920
Speaker 4: of tensions arise with the other teams within the league,

861
00:41:51,520 --> 00:41:53,840
Speaker 4: because you've got some teams are owned by families and

862
00:41:53,960 --> 00:41:55,839
Speaker 4: they have been for generations, and then you have other

863
00:41:55,880 --> 00:41:59,000
Speaker 4: teams that are being taken over by professional managers who

864
00:41:59,040 --> 00:42:00,520
Speaker 4: are looking at things very differently.

865
00:42:00,680 --> 00:42:01,319
Speaker 1: It's a good question.

866
00:42:01,360 --> 00:42:03,600
Speaker 3: I was actually over at Major League Baseball. We were

867
00:42:03,640 --> 00:42:07,000
Speaker 3: meeting with them yesterday about video sites, which helps rights

868
00:42:07,000 --> 00:42:11,520
Speaker 3: holders capture their social media content and help commercialize it further.

869
00:42:12,320 --> 00:42:15,600
Speaker 3: What I've typically seen is that most professional sports owners

870
00:42:15,640 --> 00:42:19,040
Speaker 3: really collaborate because they don't necessarily compete. If you will,

871
00:42:19,920 --> 00:42:22,719
Speaker 3: there is definitely a sharing of best practices. Out of

872
00:42:22,760 --> 00:42:24,840
Speaker 3: way games. We'd go sit with the management team, we

873
00:42:24,880 --> 00:42:27,799
Speaker 3: tour the building, we talk about different ways that we're

874
00:42:27,880 --> 00:42:30,719
Speaker 3: driving revenues, different companies that we're seeing. So I think

875
00:42:30,719 --> 00:42:33,000
Speaker 3: there's a lot of collaboration because the reality is you're

876
00:42:33,040 --> 00:42:35,600
Speaker 3: not really competing, especially in the league like the NFL,

877
00:42:35,640 --> 00:42:38,080
Speaker 3: where you don't even have local media rights, so the

878
00:42:38,160 --> 00:42:40,359
Speaker 3: NFL sells the media rights and you're just really a

879
00:42:40,440 --> 00:42:45,080
Speaker 3: game day focused revenue business. So I think the teams collaborate,

880
00:42:45,440 --> 00:42:48,319
Speaker 3: and I think the leagues now that capital flows have

881
00:42:48,360 --> 00:42:51,120
Speaker 3: come in, the valuations are so high and you've got

882
00:42:51,239 --> 00:42:54,480
Speaker 3: people with a professional investing background versus maybe it was

883
00:42:54,520 --> 00:42:56,560
Speaker 3: a family owned business for a long time and they

884
00:42:56,600 --> 00:43:00,680
Speaker 3: never understood some of the best practices. That's the other

885
00:43:00,719 --> 00:43:02,880
Speaker 3: part of it why people are getting ex cited about

886
00:43:03,360 --> 00:43:08,719
Speaker 3: owning sports, which is intellectual property, because the businesses themselves

887
00:43:09,400 --> 00:43:13,440
Speaker 3: have a lot of opportunities to further commercialize them. And

888
00:43:13,560 --> 00:43:15,480
Speaker 3: so you might have a new owner coming in who

889
00:43:15,520 --> 00:43:18,239
Speaker 3: will call up another owner and ask them to help

890
00:43:18,280 --> 00:43:21,760
Speaker 3: them on what's the best way to monetize our suites

891
00:43:21,800 --> 00:43:24,680
Speaker 3: and hiring an outside firm to help us drive revenues.

892
00:43:24,880 --> 00:43:27,360
Speaker 3: And that's actually the area of the market that we

893
00:43:27,440 --> 00:43:30,200
Speaker 3: are very excited about because if you just think about

894
00:43:30,200 --> 00:43:33,480
Speaker 3: it high level, all this cap was flowing into acquire

895
00:43:33,520 --> 00:43:38,080
Speaker 3: intellectual property, whether it's teams or leagues or events. What

896
00:43:38,120 --> 00:43:39,560
Speaker 3: are they looking to do? How are they going to

897
00:43:39,560 --> 00:43:42,080
Speaker 3: create value? Well, you got to start with revenue growth.

898
00:43:43,040 --> 00:43:46,160
Speaker 3: And when I first started at Harris Splitzer Sports and

899
00:43:46,719 --> 00:43:49,360
Speaker 3: we were talking internally and with some of our external partners,

900
00:43:49,360 --> 00:43:53,440
Speaker 3: and that was the genesis for the creation of a

901
00:43:53,520 --> 00:43:58,440
Speaker 3: company called Elevate Sports, which I saw firsthand. It was

902
00:43:58,640 --> 00:44:01,480
Speaker 3: an idea on a piece of paper, and we started

903
00:44:01,480 --> 00:44:04,279
Speaker 3: the business some interesting stories during COVID about how we

904
00:44:04,400 --> 00:44:06,920
Speaker 3: kept it funded. We had a board meeting yes to Elevate,

905
00:44:06,960 --> 00:44:11,040
Speaker 3: and the business is doing phenomenally well because what we

906
00:44:11,080 --> 00:44:14,880
Speaker 3: are doing is we are providing basically advice and consulting

907
00:44:14,960 --> 00:44:19,359
Speaker 3: services for owners of rights on how to better commercializer

908
00:44:19,440 --> 00:44:23,000
Speaker 3: o them, drive fan engagement. You know, we would just

909
00:44:23,040 --> 00:44:25,399
Speaker 3: announced we were working with the Tennessee Titans on their

910
00:44:25,400 --> 00:44:28,520
Speaker 3: new stadium. Right, So, how do you position your suites?

911
00:44:28,680 --> 00:44:30,400
Speaker 3: What's the best way to go to market for your

912
00:44:30,440 --> 00:44:33,680
Speaker 3: naming rights partner and your other you know, founding partners

913
00:44:33,680 --> 00:44:36,880
Speaker 3: for the stadium. Everything down to what does the signage

914
00:44:36,880 --> 00:44:38,719
Speaker 3: look like? How is it easy to get around the

915
00:44:38,719 --> 00:44:41,520
Speaker 3: stadium when you have kids and they can't find the bathroom. Well,

916
00:44:41,560 --> 00:44:45,160
Speaker 3: that fan experience actually matters, and so that's the modern

917
00:44:45,239 --> 00:44:50,560
Speaker 3: day professional sports. We are leveraging organizations that have best practices.

918
00:44:50,560 --> 00:44:50,960
Speaker 1: Think about it.

919
00:44:51,000 --> 00:44:53,920
Speaker 3: If you owned a manufacturing company, you might hire Bayner

920
00:44:54,040 --> 00:44:57,879
Speaker 3: McKenzie to help you think through strategy. Well, in today's world,

921
00:44:57,880 --> 00:45:01,600
Speaker 3: with the value of these assets, owners of the intellectual property,

922
00:45:01,719 --> 00:45:04,640
Speaker 3: they hire firms like Elevate or CA or Washington.

923
00:45:04,719 --> 00:45:05,680
Speaker 4: It's a great way to describe it.

924
00:45:05,680 --> 00:45:08,720
Speaker 3: That's exactly what you've seen. And so with all these

925
00:45:08,840 --> 00:45:12,960
Speaker 3: what I call smart people focused on these assets, more

926
00:45:13,000 --> 00:45:17,560
Speaker 3: predictable growth revenue streams, that's how capital pools get excited.

927
00:45:17,560 --> 00:45:19,680
Speaker 2: Well, David, I have to apologize on half a Michael Barr.

928
00:45:19,719 --> 00:45:21,920
Speaker 2: He gets upset when we talk about NIL because he

929
00:45:22,040 --> 00:45:24,680
Speaker 2: blames Vice Chair of the Federal Reserve Michael Barr for

930
00:45:24,760 --> 00:45:29,440
Speaker 2: stealing his NIL proceeds. So I apologize for that seats

931
00:45:29,880 --> 00:45:30,800
Speaker 2: potential proceeds.

932
00:45:31,280 --> 00:45:33,399
Speaker 1: Well, he'll make money off his an il.

933
00:45:34,440 --> 00:45:36,600
Speaker 2: But you know, David, last question I have for you is,

934
00:45:36,640 --> 00:45:39,960
Speaker 2: you know I mentioned it earlier, the four p's process people,

935
00:45:40,080 --> 00:45:43,880
Speaker 2: people really and Velocity, if I'm not mistaken, you know,

936
00:45:44,080 --> 00:45:46,840
Speaker 2: is owned by people and there might be some changes

937
00:45:46,880 --> 00:45:49,120
Speaker 2: in terms of the construct of the general partner. I'm

938
00:45:49,120 --> 00:45:50,960
Speaker 2: wondering how much you can share with our audience on that.

939
00:45:51,280 --> 00:45:51,560
Speaker 1: Sure.

940
00:45:51,640 --> 00:45:54,440
Speaker 3: Well, I answered the question before about how challenging this

941
00:45:54,600 --> 00:45:58,319
Speaker 3: environment is to launch a firm, and I think it's

942
00:45:58,360 --> 00:46:00,759
Speaker 3: always hard, you know, being an entrepre but in this

943
00:46:00,840 --> 00:46:03,919
Speaker 3: market specifically, so we have spent a lot of time

944
00:46:04,000 --> 00:46:07,440
Speaker 3: thinking about how do we do this a little bit differently? Right,

945
00:46:07,600 --> 00:46:10,239
Speaker 3: given the background that already and I have not only

946
00:46:10,320 --> 00:46:14,840
Speaker 3: as kind of investors, we recognize the importance of having

947
00:46:14,920 --> 00:46:18,319
Speaker 3: smart people around the table. And you know, it took

948
00:46:18,400 --> 00:46:19,600
Speaker 3: us a little bit of time and we had a

949
00:46:19,640 --> 00:46:24,040
Speaker 3: lot of conversations, but we recently have finalized a transaction

950
00:46:24,200 --> 00:46:29,320
Speaker 3: with a group called GDP Ventures, which is controlled by

951
00:46:29,360 --> 00:46:34,120
Speaker 3: the Hartono family of Indonesia. And what's so exciting about

952
00:46:34,120 --> 00:46:36,880
Speaker 3: that for us is, first of all, they are the nicest,

953
00:46:36,920 --> 00:46:40,040
Speaker 3: kindest people I've ever met. Their global reach and some

954
00:46:40,120 --> 00:46:43,040
Speaker 3: of their investments intersect perfectly.

955
00:46:42,600 --> 00:46:44,080
Speaker 1: With what we're doing. I'man give you an example.

956
00:46:44,080 --> 00:46:50,560
Speaker 3: You're going to say, really, so, the family acquired a

957
00:46:50,640 --> 00:46:53,520
Speaker 3: Seri C football team in Italy a couple of years ago.

958
00:46:54,000 --> 00:46:56,400
Speaker 3: Now it's in Serie B. The team's based in Lake Como.

959
00:46:56,560 --> 00:46:59,920
Speaker 3: What could be a better place. They own a lot

960
00:47:00,120 --> 00:47:03,000
Speaker 3: of the real estate around the area where they read

961
00:47:03,040 --> 00:47:05,080
Speaker 3: it with the stadium is and they've been looking about

962
00:47:05,160 --> 00:47:08,600
Speaker 3: ways to invest in it, build it out, further monetize it.

963
00:47:09,080 --> 00:47:11,440
Speaker 3: And of course during the conversations I said, look, we

964
00:47:11,560 --> 00:47:15,399
Speaker 3: have to introduce you to elevate everyone's excited about it.

965
00:47:15,520 --> 00:47:17,839
Speaker 3: I go to Jakarta, I come back. Of course I'm

966
00:47:17,880 --> 00:47:21,160
Speaker 3: remiss in doing it. During our Elevate board meeting. Yes,

967
00:47:21,160 --> 00:47:23,160
Speaker 3: today I find out because I got an update on

968
00:47:23,200 --> 00:47:27,320
Speaker 3: something that Elevate's already working with them on a feasibility study.

969
00:47:27,920 --> 00:47:30,320
Speaker 3: And it's just dawned on me that yes, while we

970
00:47:30,400 --> 00:47:33,400
Speaker 3: are trying to connect this stuff, my partner is already

971
00:47:33,400 --> 00:47:34,839
Speaker 3: in the middle of a lot of things that we're

972
00:47:34,840 --> 00:47:39,640
Speaker 3: doing and so connecting some of the other investments they have.

973
00:47:39,719 --> 00:47:42,320
Speaker 3: They're very active in the music space with a company

974
00:47:42,320 --> 00:47:48,239
Speaker 3: called eighty eight Rising. They own you know, content distribution platforms.

975
00:47:48,760 --> 00:47:52,720
Speaker 3: And for us having a partner that has operations around

976
00:47:52,760 --> 00:47:55,760
Speaker 3: the world and quite honestly that are really good people,

977
00:47:55,760 --> 00:47:58,640
Speaker 3: because this is kind of a family, I couldn't be

978
00:47:58,680 --> 00:47:59,240
Speaker 3: more excited.

979
00:47:59,360 --> 00:48:01,640
Speaker 1: Oh, David Abrams, you were so kind to come in

980
00:48:01,880 --> 00:48:06,840
Speaker 1: and talk with us, the founding partner of Velocity Capital Management, David,

981
00:48:06,840 --> 00:48:08,400
Speaker 1: thank you so much for joining us on the Bloomberg

982
00:48:08,440 --> 00:48:09,960
Speaker 1: Business of Sports. We really appreciate it.

983
00:48:10,040 --> 00:48:11,759
Speaker 3: Pleasure to be here. Thanks for having me, Agan.

984
00:48:12,040 --> 00:48:15,960
Speaker 1: And another story we are watching, it was announced that

985
00:48:16,080 --> 00:48:20,319
Speaker 1: Carlisle Group co founder David Rubinstein is in talks to

986
00:48:20,360 --> 00:48:25,240
Speaker 1: acquire the MLB's Baltimore Orioles. According to people with knowledge

987
00:48:25,239 --> 00:48:29,080
Speaker 1: of the matter, Rubinstein is among suitors pursuing the transaction.

988
00:48:29,440 --> 00:48:33,840
Speaker 1: Rubinstein's net worth is four point six billion dollars, according

989
00:48:33,880 --> 00:48:37,160
Speaker 1: to Bloomberg, and that's something we'll keep our eye on

990
00:48:37,200 --> 00:48:40,360
Speaker 1: as it develops. David Rubinstein is the host of The

991
00:48:40,480 --> 00:48:45,160
Speaker 1: David Rubinstein Show, Peer to Peer Conversations, which airs on

992
00:48:45,200 --> 00:48:48,800
Speaker 1: Bloomberg Radio and television. Thanks for listening to the Bloomberg

993
00:48:48,880 --> 00:48:51,879
Speaker 1: Business of Sports Show. We're here each and every week

994
00:48:51,920 --> 00:48:54,879
Speaker 1: at the same time for my colleague Scarlett Food and

995
00:48:55,080 --> 00:48:58,439
Speaker 1: Damian Sasaur. I'm Michael Barr. Tune in again next week

996
00:48:58,480 --> 00:49:01,320
Speaker 1: for the latest on the stories moving big old money

997
00:49:01,320 --> 00:49:04,120
Speaker 1: in the world of sports. You're listening to Bloomberg Business

998
00:49:04,120 --> 00:49:07,200
Speaker 1: of Sports from Bloomberg Radio around the world.