1 00:00:02,440 --> 00:00:09,600 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business 2 00:00:09,640 --> 00:00:10,240 Speaker 1: of Sports. 3 00:00:10,400 --> 00:00:13,200 Speaker 2: Business of sports can be intimidating for hard for a 4 00:00:13,240 --> 00:00:14,200 Speaker 2: start to break into. 5 00:00:14,280 --> 00:00:17,279 Speaker 3: We really appreciate when our owners are actually there, you know, 6 00:00:17,360 --> 00:00:18,439 Speaker 3: with us through the journey. 7 00:00:18,480 --> 00:00:22,160 Speaker 4: Teams ours especially been very intentional to diversify at all 8 00:00:22,239 --> 00:00:24,320 Speaker 4: levels of the company. Maybe we're in the golden years 9 00:00:24,400 --> 00:00:26,320 Speaker 4: for the NFL and college football. 10 00:00:26,400 --> 00:00:29,400 Speaker 5: Our demographic reach has continued to explode. 11 00:00:29,520 --> 00:00:33,160 Speaker 4: This is going to be really unlocking the streaming platform 12 00:00:33,240 --> 00:00:34,480 Speaker 4: for sports fans. 13 00:00:34,280 --> 00:00:36,720 Speaker 1: Sports evaluations arising. We'll see when they peak. 14 00:00:36,800 --> 00:00:39,360 Speaker 3: You don't have to be the best in your sport 15 00:00:39,440 --> 00:00:42,320 Speaker 3: to make a whole ton of money. 16 00:00:42,360 --> 00:00:46,960 Speaker 2: Bloomberg Business of Sports from Bloomberg Radio, don't you This 17 00:00:47,159 --> 00:00:50,320 Speaker 2: is the Bloomberg Business of Sports. We explore the big 18 00:00:50,320 --> 00:00:52,080 Speaker 2: money issues in the world of sports. 19 00:00:52,120 --> 00:00:54,320 Speaker 6: I'm Michael Black and I'm Danian sas hour. 20 00:00:54,200 --> 00:00:57,200 Speaker 2: Scarletfu is on assignment. Coming up on the show, We 21 00:00:57,440 --> 00:01:01,080 Speaker 2: talked to our friend of the show, Marty Eatle. He 22 00:01:01,200 --> 00:01:06,040 Speaker 2: is co chair of Gulston and Stores, Sports Law practice 23 00:01:06,319 --> 00:01:09,800 Speaker 2: and adjunct professor of law at Columbia University. 24 00:01:09,959 --> 00:01:11,920 Speaker 4: Yes, Michael will get his take on the latest in 25 00:01:11,959 --> 00:01:15,600 Speaker 4: college sports as nil and sports betting continued to grow. 26 00:01:15,840 --> 00:01:19,919 Speaker 7: Maybe you have the Power five as a place where 27 00:01:19,959 --> 00:01:24,200 Speaker 7: perspective professional athletes go, and you have the other schools 28 00:01:24,560 --> 00:01:28,480 Speaker 7: as having a vigorous athletic program, but perhaps not as 29 00:01:28,560 --> 00:01:30,120 Speaker 7: vigorous as the Power fives. 30 00:01:30,720 --> 00:01:34,480 Speaker 2: We'll also talk footwear. We'll find out why Nike and 31 00:01:34,600 --> 00:01:38,080 Speaker 2: Footlocker are partnering up. That's right, you heard it, they 32 00:01:38,160 --> 00:01:41,000 Speaker 2: kissed him made up sort of. All that is on 33 00:01:41,120 --> 00:01:43,880 Speaker 2: the way on the Bloomberg Business of Sports. But first, 34 00:01:43,959 --> 00:01:48,080 Speaker 2: Lebron James Media company spring Hill is still looking to 35 00:01:48,120 --> 00:01:51,240 Speaker 2: turn a profit, even with a lot of popular products. 36 00:01:51,640 --> 00:01:56,080 Speaker 2: For more on what's going on with spring Hill and more, 37 00:01:56,600 --> 00:02:02,040 Speaker 2: we welcome Bloomberg News, Media and Entertainment team leader Chris Palmery. Chris, 38 00:02:02,160 --> 00:02:06,480 Speaker 2: Welcome to the Bloomberg Business of Sports. Thanks, let's start this. Well, 39 00:02:06,520 --> 00:02:09,919 Speaker 2: it's not good news for Lebron james is Media company. 40 00:02:10,080 --> 00:02:12,680 Speaker 6: Oh, come on, it's Lebron James. It's all goodness. 41 00:02:12,919 --> 00:02:13,280 Speaker 1: You ever? 42 00:02:13,400 --> 00:02:15,040 Speaker 2: Yeah, have you ever had a good day of losing 43 00:02:15,080 --> 00:02:16,679 Speaker 2: thirty million dollars a year? 44 00:02:16,760 --> 00:02:17,240 Speaker 6: Fair enough? 45 00:02:19,200 --> 00:02:20,640 Speaker 2: What happened here, Chris. 46 00:02:21,000 --> 00:02:23,600 Speaker 5: Well, what's what's happened to Levon Is happening to a 47 00:02:23,639 --> 00:02:26,160 Speaker 5: lot of people in the entertainment business. There's a lot 48 00:02:26,200 --> 00:02:30,000 Speaker 5: of hype about streaming and all the opportunities that folks 49 00:02:30,040 --> 00:02:33,079 Speaker 5: could do creating movies and TV shows for this new 50 00:02:33,120 --> 00:02:35,920 Speaker 5: generation of services like Netflix. 51 00:02:36,760 --> 00:02:36,960 Speaker 2: You know. 52 00:02:37,120 --> 00:02:38,960 Speaker 5: Part of it is also a bit of a bubble 53 00:02:38,960 --> 00:02:43,839 Speaker 5: in sports programming in particular, and it's all ties into 54 00:02:43,880 --> 00:02:48,160 Speaker 5: this whole idea of celebrities starting their own businesses and 55 00:02:48,200 --> 00:02:50,440 Speaker 5: it's and it all is about, you know, when a 56 00:02:50,480 --> 00:02:54,040 Speaker 5: few people have a hit, then everybody tries to do 57 00:02:54,080 --> 00:02:58,079 Speaker 5: the same thing, and it's a bubble, and bubbles often. 58 00:02:59,560 --> 00:03:01,040 Speaker 4: I hope you not calling it a bubble. I mean, 59 00:03:01,080 --> 00:03:04,239 Speaker 4: there's some big investors in spring Hill, right, Googenheim. I mean, 60 00:03:04,560 --> 00:03:06,720 Speaker 4: talk to us a little bit about you know, these 61 00:03:06,720 --> 00:03:10,519 Speaker 4: fundraising rounds, right, and what the value of the company 62 00:03:10,560 --> 00:03:13,160 Speaker 4: I guess was before we just got this release. 63 00:03:13,600 --> 00:03:16,000 Speaker 5: Yeah, I mean in the last round, which is a 64 00:03:16,040 --> 00:03:17,320 Speaker 5: couple of years ago now, but it was it was 65 00:03:17,360 --> 00:03:21,200 Speaker 5: a seven hundred and fifty million dollars for what is 66 00:03:21,520 --> 00:03:22,800 Speaker 5: essentially a startup. 67 00:03:22,840 --> 00:03:24,400 Speaker 8: I meant, granted tied. 68 00:03:24,320 --> 00:03:26,720 Speaker 5: To the you know, one of the best sports celebrities 69 00:03:26,720 --> 00:03:30,560 Speaker 5: in the world right now, but still you know, a 70 00:03:30,639 --> 00:03:35,760 Speaker 5: risky business making entertainment. And but as we've seen so 71 00:03:35,880 --> 00:03:37,920 Speaker 5: many cases, I mean, if you think about like Vice 72 00:03:38,000 --> 00:03:41,640 Speaker 5: Media and BuzzFeed, and you know, there have been so 73 00:03:41,720 --> 00:03:46,160 Speaker 5: many instances that we're seemingly smart big media companies even 74 00:03:46,280 --> 00:03:49,920 Speaker 5: invest in these startups and it. 75 00:03:49,840 --> 00:03:50,640 Speaker 8: Doesn't pay off. 76 00:03:50,720 --> 00:03:55,440 Speaker 5: And you know what's unusual about this case is that 77 00:03:55,560 --> 00:03:59,200 Speaker 5: Lucashaw was able to get some real numbers behind the company. 78 00:04:00,280 --> 00:04:02,520 Speaker 5: And we could talk about some of their projects, but 79 00:04:02,640 --> 00:04:05,080 Speaker 5: you know, this is a lineup of shows that is 80 00:04:05,240 --> 00:04:06,240 Speaker 5: not unimpressive. 81 00:04:06,320 --> 00:04:09,120 Speaker 8: I mean, they were diversified. They were working with. 82 00:04:09,520 --> 00:04:12,920 Speaker 5: HBO, Warner Brothers, they did movies, they did TV shows, 83 00:04:12,960 --> 00:04:14,800 Speaker 5: they did docs, Wefflix. 84 00:04:15,080 --> 00:04:16,719 Speaker 4: Well, I mean, let's take a step back, you know, 85 00:04:16,920 --> 00:04:19,560 Speaker 4: I mean, and you're absolutely right, right, I mean, you know, Lebron, 86 00:04:19,640 --> 00:04:23,120 Speaker 4: James Gougenheim Partners, Elizabeth Murdoch, Redbird, Nike, the owners of 87 00:04:23,160 --> 00:04:25,640 Speaker 4: the Red Sox are all invested in this business that 88 00:04:25,800 --> 00:04:27,760 Speaker 4: is valued at or it was valued at seven hundred 89 00:04:27,760 --> 00:04:30,000 Speaker 4: and twenty five million dollars, right, Chris, And I mean, 90 00:04:30,200 --> 00:04:32,240 Speaker 4: let's talk about Maverick Carter for a second. He runs 91 00:04:32,240 --> 00:04:34,880 Speaker 4: the business, if I'm not mistaken, and Spring Hill employed. 92 00:04:34,920 --> 00:04:37,120 Speaker 4: What I mean, Michael bought two hundred people at one point, So, 93 00:04:37,320 --> 00:04:40,800 Speaker 4: you know, did they kind of lean in over their 94 00:04:40,800 --> 00:04:43,960 Speaker 4: skis just a bit here, I mean what happened, Yeah. 95 00:04:44,600 --> 00:04:45,000 Speaker 8: They did. 96 00:04:45,160 --> 00:04:47,920 Speaker 5: And the business to be fair, and I think Maverick 97 00:04:47,960 --> 00:04:51,320 Speaker 5: said this in a statement, the business had changed dramatically 98 00:04:51,360 --> 00:04:53,920 Speaker 5: since they really launched this. You know, first of all, 99 00:04:53,960 --> 00:04:56,680 Speaker 5: you had the pandemic and then which froze up a 100 00:04:56,720 --> 00:05:00,040 Speaker 5: lot of production. Then you had the twin strikes in 101 00:05:00,040 --> 00:05:04,920 Speaker 5: Hollywood last year by actors and writers that that also 102 00:05:04,960 --> 00:05:08,880 Speaker 5: shut down production and more importantly sort of changed the business. 103 00:05:10,320 --> 00:05:14,240 Speaker 5: The streaming companies, there was a huge boom trying to 104 00:05:14,279 --> 00:05:16,479 Speaker 5: get the idea was going to create as much movies 105 00:05:16,520 --> 00:05:19,039 Speaker 5: and TV shows as possible. That's going to lure people 106 00:05:19,040 --> 00:05:22,000 Speaker 5: to the streaming services. And never mind the profits. And 107 00:05:22,240 --> 00:05:27,880 Speaker 5: I'm talking about companies like Disney, Warner Brothers, Netflix, Paramounts 108 00:05:27,920 --> 00:05:32,040 Speaker 5: all spending a lot of money, NBC and Peacock to 109 00:05:32,640 --> 00:05:36,160 Speaker 5: just you know, produce shows regardless of whether there was 110 00:05:36,200 --> 00:05:42,039 Speaker 5: a payoff. And that changed with all that happened with 111 00:05:42,200 --> 00:05:47,599 Speaker 5: the pandemic, the strikes, the Wall Street changed its opinion. 112 00:05:47,680 --> 00:05:50,120 Speaker 5: It was no longer about just signing up subscribers for 113 00:05:50,160 --> 00:05:53,520 Speaker 5: your streaming service. It was about actually showing profits. So 114 00:05:53,560 --> 00:05:57,520 Speaker 5: we've seen this across the board in Hollywood, cutbacks in 115 00:05:57,680 --> 00:06:02,479 Speaker 5: spending on new projects, and so spring Hill was caught 116 00:06:02,560 --> 00:06:05,200 Speaker 5: up in that well, which. 117 00:06:05,080 --> 00:06:06,800 Speaker 2: Brings me to the next one. You talked about some 118 00:06:06,839 --> 00:06:10,440 Speaker 2: of the projects spring Hill. They just recently merged with 119 00:06:10,600 --> 00:06:14,360 Speaker 2: Fullwell seventy three and with that because they are behind 120 00:06:14,400 --> 00:06:18,080 Speaker 2: the Kardashians and then the Grammy Awards. So I mean, 121 00:06:18,120 --> 00:06:21,040 Speaker 2: this isn't like they merged with me and Michael Barr's 122 00:06:21,080 --> 00:06:23,120 Speaker 2: favorite board games. I mean we're talking to some big 123 00:06:23,160 --> 00:06:23,920 Speaker 2: projects here. 124 00:06:25,279 --> 00:06:25,520 Speaker 7: Yeah. 125 00:06:25,560 --> 00:06:27,839 Speaker 5: Well, they're both sort of companies in a similar position, 126 00:06:28,080 --> 00:06:34,400 Speaker 5: relatively new companies and entertainment with some high profile partners, 127 00:06:34,920 --> 00:06:37,920 Speaker 5: and so I mean what's interesting is that their content 128 00:06:38,320 --> 00:06:45,560 Speaker 5: is very different. The new company has done James Gordon's 129 00:06:45,640 --> 00:06:51,440 Speaker 5: TV show The Grammys has mentioned that the Kardashians these 130 00:06:51,440 --> 00:06:56,880 Speaker 5: are kind of more long lived projects in music and entertainment, 131 00:06:57,680 --> 00:07:00,880 Speaker 5: where spring Hills weren't focused course on sport, and so 132 00:07:01,120 --> 00:07:03,000 Speaker 5: they complement each other in that fashion. 133 00:07:03,520 --> 00:07:04,120 Speaker 8: I think. 134 00:07:05,880 --> 00:07:08,160 Speaker 5: What this other company was able to deliver was sort 135 00:07:08,200 --> 00:07:11,440 Speaker 5: of a more diversified business. They did a lot of 136 00:07:13,160 --> 00:07:17,320 Speaker 5: music videos, they did commercial work, and so full was 137 00:07:17,360 --> 00:07:21,320 Speaker 5: got that kind of body of work that maybe could 138 00:07:21,520 --> 00:07:24,720 Speaker 5: they can help, you know, stave off some of the 139 00:07:24,760 --> 00:07:27,040 Speaker 5: slower times you know in the business. 140 00:07:27,080 --> 00:07:28,880 Speaker 4: Well, Chris, in terms of content, what were they selling 141 00:07:28,880 --> 00:07:30,960 Speaker 4: their investors on? And here's my question, right, I mean, 142 00:07:31,000 --> 00:07:33,560 Speaker 4: you have Mowana. I mean, what twenty one million in 143 00:07:33,560 --> 00:07:35,640 Speaker 4: the US and Canada during the holiday weekend? Right, I mean, 144 00:07:35,640 --> 00:07:37,880 Speaker 4: were they trying to make movies like Mowana? Were they 145 00:07:37,920 --> 00:07:40,000 Speaker 4: trying to build content and compete with Netflix and just 146 00:07:40,000 --> 00:07:42,600 Speaker 4: crank stuff out? I mean in sports, for example, Lebron 147 00:07:42,640 --> 00:07:45,760 Speaker 4: James lends his name to the franchise. You think that 148 00:07:45,800 --> 00:07:47,640 Speaker 4: they're trying to tell stories that haven't yet been told 149 00:07:47,640 --> 00:07:49,640 Speaker 4: in the world of sports. But I mean, I mean, 150 00:07:50,320 --> 00:07:52,320 Speaker 4: I'm just curious what was their strategy here? 151 00:07:53,640 --> 00:07:54,000 Speaker 8: It was? 152 00:07:54,120 --> 00:07:57,880 Speaker 5: It was it was not entirely to be dependent on Lebron. 153 00:07:57,920 --> 00:08:01,200 Speaker 5: I mean, they've did some projects, you know, you know, 154 00:08:01,240 --> 00:08:03,720 Speaker 5: the Space Jam, the movie, the reboot of the movie 155 00:08:05,240 --> 00:08:09,040 Speaker 5: Shooting Star. I think there's a Lebron bio for Peacock, 156 00:08:09,920 --> 00:08:13,320 Speaker 5: but they were broader than that. But there was definitely 157 00:08:13,320 --> 00:08:15,960 Speaker 5: a sports theme to it all, which makes sense that 158 00:08:15,960 --> 00:08:18,960 Speaker 5: that's an area they know, you're probably not gonna like 159 00:08:19,040 --> 00:08:20,920 Speaker 5: hearing this, but sports has been a kind of an 160 00:08:20,960 --> 00:08:23,720 Speaker 5: iffy business from entertainment standpoint. 161 00:08:24,080 --> 00:08:24,360 Speaker 7: Uh. 162 00:08:24,440 --> 00:08:26,280 Speaker 5: There was you know, we all know and love our 163 00:08:26,320 --> 00:08:30,600 Speaker 5: sort of classic you know sports movies, but they were 164 00:08:30,680 --> 00:08:37,320 Speaker 5: never huge, right, not like Mohana or Mowana too, And 165 00:08:37,440 --> 00:08:43,240 Speaker 5: so that business was one that Hollywood was generally sort 166 00:08:43,240 --> 00:08:46,120 Speaker 5: of pulling away from those kind of mid two small 167 00:08:46,160 --> 00:08:51,160 Speaker 5: budget movies, and so there they saw an opportunity, particularly to. 168 00:08:51,120 --> 00:08:52,920 Speaker 8: Do this for streaming. Uh. 169 00:08:53,040 --> 00:08:55,080 Speaker 5: There was also a bit getting back to the whole 170 00:08:55,080 --> 00:08:58,880 Speaker 5: bubble concept. You know, there was an early success in 171 00:08:58,960 --> 00:09:02,840 Speaker 5: sports docks, you know, thirty for thirty ESPN and Chris 172 00:09:02,960 --> 00:09:06,120 Speaker 5: the Last Dance that Michael Jordan won, And you know, 173 00:09:06,240 --> 00:09:09,520 Speaker 5: when people saw the numbers that were in the awards 174 00:09:09,559 --> 00:09:12,640 Speaker 5: were coming to shows like that, then everybody had to 175 00:09:12,679 --> 00:09:15,920 Speaker 5: have one, right and so then you have you know, 176 00:09:16,320 --> 00:09:19,199 Speaker 5: they you know, I'm looking at the line of Spring 177 00:09:19,240 --> 00:09:23,480 Speaker 5: Hills shows, the Black Ice, Red Ball, Hustle, the Adam. 178 00:09:23,280 --> 00:09:24,440 Speaker 8: Sandler movie for Naturally. 179 00:09:24,480 --> 00:09:27,800 Speaker 5: I mean, these are all you know, worthy projects, but 180 00:09:28,040 --> 00:09:31,280 Speaker 5: it's the kind of stuff that you know, Hollywood was 181 00:09:31,360 --> 00:09:34,800 Speaker 5: kind of moving away for from in general, so and 182 00:09:34,840 --> 00:09:36,559 Speaker 5: that there seemed to be a lot of I mean, 183 00:09:36,679 --> 00:09:41,319 Speaker 5: right now the sports stock category is just sort of 184 00:09:41,679 --> 00:09:46,240 Speaker 5: really blown up and so so so that's again sort 185 00:09:46,240 --> 00:09:48,400 Speaker 5: of the trap that spring Hill caught itself in. 186 00:09:49,240 --> 00:09:52,520 Speaker 2: I thought a show that they were involved in was 187 00:09:52,559 --> 00:09:55,960 Speaker 2: a talk show called The Shop, and I thought that 188 00:09:56,160 --> 00:09:59,439 Speaker 2: was going to get over big time. It has it 189 00:10:00,160 --> 00:10:03,679 Speaker 2: been an asset for spring Hill. 190 00:10:05,280 --> 00:10:08,120 Speaker 5: You know, I don't think it any of these things 191 00:10:08,160 --> 00:10:12,000 Speaker 5: have really popped to the degree they would have loved. 192 00:10:13,000 --> 00:10:16,079 Speaker 5: All of this stuff is good, but it's just a 193 00:10:16,280 --> 00:10:18,360 Speaker 5: it's just a very competitive world. 194 00:10:18,360 --> 00:10:21,360 Speaker 8: If you think about the competition just to get. 195 00:10:21,160 --> 00:10:25,080 Speaker 5: That kind of one top spot on Netflix when you know, 196 00:10:25,520 --> 00:10:27,880 Speaker 5: when you turn on your Netflix and and granted, if 197 00:10:27,920 --> 00:10:30,080 Speaker 5: you're a sports fan and you watch these things, it's 198 00:10:30,120 --> 00:10:32,560 Speaker 5: they're going to recommend them through the whole algorithm, but 199 00:10:32,880 --> 00:10:37,000 Speaker 5: to get to that broader audience is it's just a challenge. 200 00:10:37,080 --> 00:10:41,360 Speaker 5: And so that's one of the things that that all 201 00:10:41,400 --> 00:10:44,440 Speaker 5: of these production companies are facing in this new streaming era. 202 00:10:45,000 --> 00:10:46,600 Speaker 4: I mean, Michael Barr I got to say, I mean, 203 00:10:46,600 --> 00:10:48,880 Speaker 4: it's just it's such a it's such a challenging market. 204 00:10:48,960 --> 00:10:52,080 Speaker 4: Right Netflix is eating everyone's lunch right now. 205 00:10:52,240 --> 00:10:52,719 Speaker 6: I mean my. 206 00:10:52,720 --> 00:10:54,720 Speaker 4: Wife, she goes to it first. I mean, we haven't 207 00:10:54,760 --> 00:10:56,360 Speaker 4: cut the cord yet, but we may as well. I 208 00:10:56,400 --> 00:10:58,920 Speaker 4: mean I'm starting to even go over to the dark side. 209 00:10:59,040 --> 00:11:02,400 Speaker 2: Yeah, yeah, I have to admit now I am watching 210 00:11:03,120 --> 00:11:05,840 Speaker 2: an old geezer bar saying this a lot of the 211 00:11:05,920 --> 00:11:10,679 Speaker 2: streaming channels like Netflix and Max. I mean, I'm I'm 212 00:11:10,720 --> 00:11:13,640 Speaker 2: max teaming. Oh yeah, I mean I'm deep into this. 213 00:11:14,360 --> 00:11:18,000 Speaker 2: So I'm wondering if part of the problem, also Chris, 214 00:11:18,080 --> 00:11:21,120 Speaker 2: is we're kind of in an unknown we don't know 215 00:11:21,800 --> 00:11:24,559 Speaker 2: where the market is going. And maybe why a lot 216 00:11:24,559 --> 00:11:28,640 Speaker 2: of companies like Lebron James with spring Hill, where should 217 00:11:28,640 --> 00:11:29,520 Speaker 2: they Where should they go? 218 00:11:30,160 --> 00:11:33,520 Speaker 5: Well, I think we're at a point now where things 219 00:11:33,520 --> 00:11:37,640 Speaker 5: are starting to stabilize. So by putting themselves in this 220 00:11:37,679 --> 00:11:40,240 Speaker 5: position where they have kind of a more diversified body 221 00:11:40,240 --> 00:11:43,040 Speaker 5: of work and so they got some new financing out 222 00:11:43,080 --> 00:11:46,360 Speaker 5: of this merger, uh, they'll be in a position to 223 00:11:47,040 --> 00:11:50,080 Speaker 5: continue to make shows, the really good ones that they're doing. 224 00:11:50,160 --> 00:11:53,640 Speaker 5: And and and maybe we've sort of hit bottom in 225 00:11:53,760 --> 00:11:56,240 Speaker 5: terms of the big media companies cutting back on spending. 226 00:11:57,240 --> 00:12:00,480 Speaker 5: We're definitely seeing a trend where thanks to all these cutbacks. Now, 227 00:12:00,559 --> 00:12:04,280 Speaker 5: Disney and Paramount and Warner Brothers, they're streaming businesses. 228 00:12:04,520 --> 00:12:06,840 Speaker 4: You're just hitting the nail on the head these streaming businesses. 229 00:12:06,840 --> 00:12:08,480 Speaker 4: I mean they had Warner Brothers, you know, as one 230 00:12:08,520 --> 00:12:10,319 Speaker 4: of their investors early on. I mean, and they aren't 231 00:12:10,400 --> 00:12:12,439 Speaker 4: a streamer, right, I mean, it's all about the transmission 232 00:12:12,440 --> 00:12:14,280 Speaker 4: of this content. So maybe that's the deal. Is that 233 00:12:14,280 --> 00:12:16,000 Speaker 4: what's coming next? Is that what we can expect? 234 00:12:16,320 --> 00:12:20,160 Speaker 8: Oh yeah, there's no doubt that, you know the future 235 00:12:20,480 --> 00:12:22,760 Speaker 8: of how we watch entertainment is going to be on 236 00:12:22,840 --> 00:12:23,760 Speaker 8: a streaming service. 237 00:12:24,080 --> 00:12:27,720 Speaker 2: Bloomberg's Chris Paul Murray, we love you man, thanks for 238 00:12:27,760 --> 00:12:31,600 Speaker 2: coming and joying them as buddy anytime. He is Bloomberg News, 239 00:12:31,640 --> 00:12:34,839 Speaker 2: Media and Entertainment team leader. Up next week, turn to 240 00:12:35,000 --> 00:12:37,920 Speaker 2: Nike and foot Locker and why they're joining for us 241 00:12:38,000 --> 00:12:41,560 Speaker 2: is again for Damian Sasaur. I'm Michael Barr. You're listening 242 00:12:41,640 --> 00:12:44,800 Speaker 2: to the Bloomberg Business of Sports Bloomberg Radio. 243 00:12:44,920 --> 00:12:58,520 Speaker 1: Around the world, you're listening to Bloomberg Business of Sports 244 00:12:58,720 --> 00:12:59,920 Speaker 1: from Bloomberg Radio. 245 00:13:01,400 --> 00:13:03,760 Speaker 2: This is the Bloomberg Business of Sports, where we explored 246 00:13:03,760 --> 00:13:05,600 Speaker 2: the big money issues in the world of sports. I'm 247 00:13:05,679 --> 00:13:09,960 Speaker 2: Michael Barr, along with Damien Sassawer Scarlett Fuo is on assignment. 248 00:13:09,840 --> 00:13:12,960 Speaker 4: Nike's hit on tough times lately, Michael Barr. They replaced 249 00:13:13,000 --> 00:13:17,800 Speaker 4: CEO John Donahoe with veteran Zach Elliott Hill in October. 250 00:13:17,920 --> 00:13:20,920 Speaker 2: And now we're learning a little more about what is 251 00:13:20,960 --> 00:13:25,200 Speaker 2: the strategy going forward, including a new partnership with foot Locker. 252 00:13:25,440 --> 00:13:28,360 Speaker 2: To take us through the latest, we bring in Kim Bessin. 253 00:13:29,000 --> 00:13:31,840 Speaker 2: You are an old friend of the show. He covers 254 00:13:31,880 --> 00:13:36,600 Speaker 2: celebrity and athlete business deals for Bloomberg News. Kim, welcome 255 00:13:36,640 --> 00:13:38,240 Speaker 2: back to the Bloomberg Business of Sports. 256 00:13:38,480 --> 00:13:40,520 Speaker 1: Hello, always so happy to be here. 257 00:13:41,120 --> 00:13:44,960 Speaker 2: Well, see, and we talked about this several months ago 258 00:13:45,600 --> 00:13:49,160 Speaker 2: when John Donahoe decided he was going to make these 259 00:13:49,200 --> 00:13:54,439 Speaker 2: decisions and branch away from foot Locker, and then Nike 260 00:13:54,640 --> 00:13:56,520 Speaker 2: was going to do it's thing and this and that whatever, 261 00:13:57,120 --> 00:14:00,760 Speaker 2: and finally they admitted not too long ago, So you know, 262 00:14:01,240 --> 00:14:02,480 Speaker 2: maybe we didn't think this through. 263 00:14:03,040 --> 00:14:05,839 Speaker 3: Yeah, this whole thing started back in twenty twenty one. 264 00:14:05,880 --> 00:14:09,080 Speaker 3: It really started when Mark Parker, the previous previous CEO, 265 00:14:09,320 --> 00:14:12,320 Speaker 3: was in charge over there at Nike. They wanted to 266 00:14:12,520 --> 00:14:17,280 Speaker 3: refocus their sales on Nike dot Com, the Nike apps 267 00:14:17,760 --> 00:14:19,960 Speaker 3: and lately sneakers and s n. 268 00:14:20,840 --> 00:14:22,400 Speaker 6: How do you how do you spell that sneaker? 269 00:14:22,520 --> 00:14:24,120 Speaker 1: Is this no vowels? 270 00:14:25,000 --> 00:14:28,920 Speaker 3: Yeah, that's their Like the hottest drops are up on 271 00:14:28,920 --> 00:14:30,920 Speaker 3: that app that you keep getting l on because you 272 00:14:30,920 --> 00:14:34,320 Speaker 3: can never beat all the bots who are out bidding you. Okay, 273 00:14:34,480 --> 00:14:36,440 Speaker 3: So like that's what they were trying to do, And 274 00:14:37,280 --> 00:14:41,280 Speaker 3: in twenty twenty one they ramped it up a whole lot. 275 00:14:41,440 --> 00:14:44,880 Speaker 3: They cut half of their retail partners out and just 276 00:14:44,880 --> 00:14:47,800 Speaker 3: stopped sending these Nike shoes there. Foot Locker was affected 277 00:14:47,800 --> 00:14:50,240 Speaker 3: by this too. It used to make up Nike used 278 00:14:50,240 --> 00:14:54,480 Speaker 3: to make up seventy five percent of purchases at foot Locker, 279 00:14:54,560 --> 00:14:57,960 Speaker 3: and that went all the way down below sixty percent 280 00:14:58,200 --> 00:14:59,120 Speaker 3: a couple of years later. 281 00:14:59,480 --> 00:15:01,280 Speaker 6: So, Kim, talk to me a little bit about you know, 282 00:15:01,320 --> 00:15:02,120 Speaker 6: who needs you more? 283 00:15:02,200 --> 00:15:02,360 Speaker 8: Right? 284 00:15:02,400 --> 00:15:04,440 Speaker 4: I mean I just saw a Footlocker slash. It's full 285 00:15:04,440 --> 00:15:07,360 Speaker 4: of your guidance after reporting a rough set of quarterly results. 286 00:15:08,080 --> 00:15:10,240 Speaker 4: You know, is that a warning sign for Nike? I mean, 287 00:15:10,320 --> 00:15:12,480 Speaker 4: does Nike even care? I mean, like talk to us 288 00:15:12,560 --> 00:15:16,800 Speaker 4: about this partnership. So in inverted comments, I mean, you 289 00:15:16,840 --> 00:15:17,720 Speaker 4: know what comes next. 290 00:15:18,280 --> 00:15:20,960 Speaker 3: Yeah, Footlocker has been around for fifty years and Nike's 291 00:15:21,000 --> 00:15:24,800 Speaker 3: always been their most important partner. The thing is, it's 292 00:15:24,840 --> 00:15:28,680 Speaker 3: the same the other way around. Footlocker sells tons and 293 00:15:28,760 --> 00:15:30,880 Speaker 3: tons and tons of Nike shoes. They're the most important 294 00:15:30,960 --> 00:15:34,120 Speaker 3: channel for them, I suppose, besides their own in the 295 00:15:34,320 --> 00:15:38,280 Speaker 3: United States. So they've been a critical part of each 296 00:15:38,280 --> 00:15:41,920 Speaker 3: other's sales. And these two companies have had problems in 297 00:15:42,000 --> 00:15:45,520 Speaker 3: the past. Back in two thousand and three, they had 298 00:15:45,520 --> 00:15:47,920 Speaker 3: this feud over sneaker prices where Nike was pulling back 299 00:15:47,920 --> 00:15:51,120 Speaker 3: some of their shoes over those over those prices. But they, 300 00:15:51,320 --> 00:15:54,600 Speaker 3: you know, they managed to work it out over time, 301 00:15:55,640 --> 00:15:57,880 Speaker 3: and they've had partnerships in the past as well. The 302 00:15:58,000 --> 00:16:01,960 Speaker 3: House of Hoops is a whole line of stores that 303 00:16:02,000 --> 00:16:07,120 Speaker 3: foot Locker opened that has exclusive Nike products in it. Uh, 304 00:16:07,400 --> 00:16:09,440 Speaker 3: and that's been a long time tie up for them. 305 00:16:09,480 --> 00:16:12,080 Speaker 3: So lately what they've what they've been rolling out is 306 00:16:12,120 --> 00:16:13,600 Speaker 3: something called Home Court. 307 00:16:14,640 --> 00:16:17,440 Speaker 6: This debut it's about Home Court. What is Home Court? 308 00:16:17,480 --> 00:16:22,200 Speaker 3: Yeah, Home Court debuted at the Footlocker flagship here in 309 00:16:22,320 --> 00:16:25,720 Speaker 3: New York over on thirty four Street, across the street 310 00:16:25,720 --> 00:16:27,520 Speaker 3: from the big old Macy's there. 311 00:16:27,800 --> 00:16:29,040 Speaker 6: Yeah, and and. 312 00:16:29,040 --> 00:16:33,080 Speaker 3: It's a it's a basketball section that the Nike executives 313 00:16:33,160 --> 00:16:38,080 Speaker 3: alongside foot Locker developed together. But what's different this time 314 00:16:38,440 --> 00:16:42,400 Speaker 3: is that Nike is allowing its competitors to be in there. 315 00:16:42,440 --> 00:16:44,520 Speaker 6: They're going to let new balance in, the new balances 316 00:16:44,560 --> 00:16:46,760 Speaker 6: in there in there. 317 00:16:48,640 --> 00:16:49,760 Speaker 3: In there as well. 318 00:16:51,000 --> 00:16:52,800 Speaker 6: Wow, I mean wow, that's pretty MC. 319 00:16:53,080 --> 00:16:54,240 Speaker 1: I got LaMelo ball. 320 00:16:54,400 --> 00:16:57,920 Speaker 3: I mean, LaMelo's in there. Anthony Edwards his shoes are 321 00:16:58,160 --> 00:17:01,520 Speaker 3: also in this section now, grant Okay, the big walls 322 00:17:01,560 --> 00:17:03,440 Speaker 3: in there. It got a big Nike swoosh on it, 323 00:17:03,480 --> 00:17:06,480 Speaker 3: and there's a whole bunch of Lebron's and Giannies and 324 00:17:06,560 --> 00:17:07,120 Speaker 3: everything too. 325 00:17:07,359 --> 00:17:07,520 Speaker 1: Well. 326 00:17:07,560 --> 00:17:11,080 Speaker 2: This is part because Mary Dylan, who is now the 327 00:17:11,200 --> 00:17:16,159 Speaker 2: current chief executive officer of Footlocker, she said, hey, you know, 328 00:17:16,359 --> 00:17:20,000 Speaker 2: the basketball culture is a really key part of our 329 00:17:20,160 --> 00:17:25,040 Speaker 2: overall strategic history. She has now changed the direction from Dunahoe. 330 00:17:26,200 --> 00:17:29,880 Speaker 3: Yeah, and with Nike's new CEO in place, Elliot Hill, 331 00:17:29,920 --> 00:17:35,000 Speaker 3: who started just back in October, he had had better 332 00:17:35,119 --> 00:17:39,159 Speaker 3: relationships with retailers. He was a longtime Nike executive who 333 00:17:39,359 --> 00:17:41,959 Speaker 3: retired and came all the way out of retirement to 334 00:17:42,160 --> 00:17:46,600 Speaker 3: replace John Donaho and take the lead at Nike. One 335 00:17:46,640 --> 00:17:50,040 Speaker 3: of his big initiatives is to rebuild these relationships with 336 00:17:50,080 --> 00:17:53,560 Speaker 3: retail It's not just footlocker, but across the board. And 337 00:17:54,359 --> 00:17:57,320 Speaker 3: they brought in this guy, Tom Petty out of retirement 338 00:17:57,880 --> 00:17:59,440 Speaker 3: even before Elli loved his music. 339 00:17:59,640 --> 00:18:02,440 Speaker 1: Yeah, I knew that was going to G D I E. 340 00:18:05,160 --> 00:18:08,320 Speaker 3: And he He's been working on this as well. They've 341 00:18:08,359 --> 00:18:11,480 Speaker 3: been holding hosting, you know, summits with the retailers to 342 00:18:11,560 --> 00:18:14,600 Speaker 3: show what's what products are in the pipeline coming up 343 00:18:14,600 --> 00:18:16,840 Speaker 3: in twenty twenty five and things like that, to increase 344 00:18:16,880 --> 00:18:19,040 Speaker 3: transparency and work with them a little bit more. 345 00:18:19,040 --> 00:18:19,800 Speaker 6: Well, Kam, let's go there. 346 00:18:19,800 --> 00:18:21,399 Speaker 4: I mean, we're spending so much time talking about the 347 00:18:21,400 --> 00:18:24,280 Speaker 4: actual business of selling sneakers. We're not talking about what 348 00:18:24,320 --> 00:18:26,680 Speaker 4: those what the content looks like, right, I mean, like 349 00:18:26,720 --> 00:18:28,440 Speaker 4: talk to us a little bit about what comes next 350 00:18:28,480 --> 00:18:28,920 Speaker 4: for Nike. 351 00:18:29,000 --> 00:18:29,680 Speaker 6: What's in the hop? 352 00:18:30,080 --> 00:18:32,760 Speaker 4: You know, are there any interesting new designs, any interesting 353 00:18:32,960 --> 00:18:34,440 Speaker 4: you know, new things going on. 354 00:18:34,920 --> 00:18:37,680 Speaker 2: Actually, what you're trying to say, Damien is a old 355 00:18:37,720 --> 00:18:40,960 Speaker 2: man bar where some of the footwear while I look stupid. 356 00:18:42,440 --> 00:18:43,440 Speaker 1: No, you're good. 357 00:18:45,960 --> 00:18:51,440 Speaker 3: Look Lifestyle sneakers have been decreasing in sales lately. It's 358 00:18:51,440 --> 00:18:54,360 Speaker 3: been one of Nike's biggest problems. So the air Force one, 359 00:18:54,720 --> 00:18:58,320 Speaker 3: the Dunk and the Jordan one. We're three enormous product 360 00:18:58,359 --> 00:19:03,080 Speaker 3: lines and still are for Nike, but that has slowed significantly. 361 00:19:03,680 --> 00:19:06,720 Speaker 3: Nike's also lagging in running and they're trying to fix 362 00:19:06,760 --> 00:19:08,960 Speaker 3: that as well. I went to an event that they 363 00:19:08,960 --> 00:19:12,800 Speaker 3: hosted earlier this year in Paris where they unveiled the 364 00:19:12,840 --> 00:19:16,560 Speaker 3: Pegasus Premium, which is a more expensive running shoe that's 365 00:19:16,560 --> 00:19:19,400 Speaker 3: coming out sometime next year. The thing is, that's kind 366 00:19:19,440 --> 00:19:22,000 Speaker 3: of all we know. Nike keeps this stuff under wraps 367 00:19:22,160 --> 00:19:25,080 Speaker 3: so that they can debut these new shoes in these big, 368 00:19:25,119 --> 00:19:30,000 Speaker 3: surprising fun ways. And I mean, the new CEO, Elliott Hill, 369 00:19:30,119 --> 00:19:34,640 Speaker 3: has yet to outline a turnaround plan for Nike. It's 370 00:19:34,680 --> 00:19:37,480 Speaker 3: only been a couple months. They postponed an investor day 371 00:19:37,480 --> 00:19:40,159 Speaker 3: to give him more time to work out that plan. 372 00:19:40,920 --> 00:19:42,960 Speaker 3: But Nike does report earnings in December. 373 00:19:43,800 --> 00:19:47,400 Speaker 6: Nike swayed low top. You know, cool going out at night. 374 00:19:48,040 --> 00:19:48,879 Speaker 1: I could get into that. 375 00:19:49,160 --> 00:19:51,520 Speaker 4: Yeah, you know, that's what I'm looking for, you know, 376 00:19:51,600 --> 00:19:53,119 Speaker 4: I mean, that's that's the but you know, what do 377 00:19:53,200 --> 00:19:53,399 Speaker 4: I know? 378 00:19:53,480 --> 00:19:55,359 Speaker 6: I mean, you know, but you're right. The Nike Field General, 379 00:19:55,359 --> 00:19:57,320 Speaker 6: the Nike kill shot, you know, all these kind of 380 00:19:57,400 --> 00:19:59,000 Speaker 6: kill show. Yeah, all these brands. 381 00:19:59,080 --> 00:20:00,800 Speaker 4: But you know, I guess you know, for me, you know, 382 00:20:00,960 --> 00:20:03,399 Speaker 4: I'm just curious, like, is this really gonna have a 383 00:20:04,040 --> 00:20:07,439 Speaker 4: definitive impact on on the bottom line, on shareholders, on 384 00:20:07,440 --> 00:20:09,320 Speaker 4: the equity price? I mean, like, do we really think 385 00:20:09,359 --> 00:20:12,840 Speaker 4: that just you know, repairing the relationship between foot Locker 386 00:20:12,840 --> 00:20:15,320 Speaker 4: and Nike is going to be meaningful in terms of 387 00:20:15,359 --> 00:20:15,840 Speaker 4: the stock price. 388 00:20:15,880 --> 00:20:16,680 Speaker 6: What are your thoughts there, Kim. 389 00:20:16,800 --> 00:20:19,080 Speaker 3: It's a piece of the puzzle, but they still need 390 00:20:19,560 --> 00:20:24,480 Speaker 3: theysolve themselves compelling product to keep shoppers coming back and 391 00:20:24,520 --> 00:20:28,199 Speaker 3: wanting to wear Nikes everywhere. I mean, sneakers are everyday shoes. Now, 392 00:20:28,200 --> 00:20:29,639 Speaker 3: we wear it to work, we we we wear these 393 00:20:29,680 --> 00:20:32,840 Speaker 3: things everywhere. So that's where that's what That's what the 394 00:20:32,880 --> 00:20:35,040 Speaker 3: bar is. It's got to be something that you want 395 00:20:35,040 --> 00:20:35,919 Speaker 3: to wear all. 396 00:20:35,760 --> 00:20:38,439 Speaker 4: The time or real performance performance like I could use 397 00:20:38,440 --> 00:20:40,440 Speaker 4: a few inches on my you know, my jump shot 398 00:20:40,560 --> 00:20:41,359 Speaker 4: or something like that. 399 00:20:41,480 --> 00:20:43,199 Speaker 1: Oh you're good, you know me? 400 00:20:43,480 --> 00:20:48,440 Speaker 3: You know, I mean, get some insols. Maybe I'll help 401 00:20:48,480 --> 00:20:49,640 Speaker 3: you done check that. 402 00:20:51,720 --> 00:20:55,840 Speaker 2: I get have they thought? I don't want to slam 403 00:20:56,000 --> 00:20:59,399 Speaker 2: John Dunnaho the previous CEO of Night No please do, 404 00:20:59,520 --> 00:21:05,000 Speaker 2: but you're but I'm about to Yeah, it's I don't know. 405 00:21:05,080 --> 00:21:09,960 Speaker 2: I never understood why would you get away from foot 406 00:21:09,960 --> 00:21:13,240 Speaker 2: Locker at the time when foot Locker was one of 407 00:21:13,280 --> 00:21:18,240 Speaker 2: your biggest partners to sell your product and then just 408 00:21:18,320 --> 00:21:20,199 Speaker 2: go Nike dot Com. 409 00:21:20,680 --> 00:21:23,560 Speaker 3: Nike is kind of a king maker, right, They're the 410 00:21:23,560 --> 00:21:26,760 Speaker 3: the most important brand for for most of these retailers 411 00:21:26,760 --> 00:21:31,480 Speaker 3: who had been working with them, and the thought was they, 412 00:21:31,800 --> 00:21:35,760 Speaker 3: you know, the premiumization of how their brand is portrayed. 413 00:21:36,359 --> 00:21:39,320 Speaker 3: And I heard, you know, from sources that in a 414 00:21:39,320 --> 00:21:42,800 Speaker 3: lot of ways, the Nike executives didn't like how foot 415 00:21:42,800 --> 00:21:46,800 Speaker 3: Locker was presenting the shoes. You know, this new home 416 00:21:46,840 --> 00:21:49,960 Speaker 3: court that you're seeing. If you look up a photo 417 00:21:49,960 --> 00:21:52,640 Speaker 3: of this court, it's a it's a beautiful space, right, 418 00:21:52,640 --> 00:21:54,679 Speaker 3: It's it looks it looks a lot nicer than just 419 00:21:54,920 --> 00:21:59,160 Speaker 3: one big wall shoes. And that's what happened with with Nike. 420 00:21:59,280 --> 00:22:02,200 Speaker 3: They were out of you know, discount stores and things 421 00:22:02,240 --> 00:22:06,200 Speaker 3: like that, and they selected a few retailers to bring 422 00:22:06,240 --> 00:22:08,680 Speaker 3: them forward, and that was JD Sports in Europe and 423 00:22:08,800 --> 00:22:11,879 Speaker 3: Dick's Sporting Goods in the US. They felt like they 424 00:22:11,920 --> 00:22:13,919 Speaker 3: had a really good presence in dix'porting goods, so they 425 00:22:13,920 --> 00:22:16,800 Speaker 3: sent them more stuff instead. It just depended on who 426 00:22:16,840 --> 00:22:19,520 Speaker 3: they selected as the winners here. 427 00:22:19,560 --> 00:22:22,240 Speaker 4: Okay, one last question, is this all about sneakers or 428 00:22:22,280 --> 00:22:25,120 Speaker 4: I mean what about wardrobe? What about clothing? I mean, 429 00:22:25,200 --> 00:22:27,040 Speaker 4: are they working more? Are they trying to you know, 430 00:22:27,080 --> 00:22:30,240 Speaker 4: this this new endeavor, this new collaboration between Nike and 431 00:22:30,280 --> 00:22:33,760 Speaker 4: foot Locker doesn't span all products or is it really 432 00:22:33,800 --> 00:22:35,040 Speaker 4: just focused on footwear? 433 00:22:35,520 --> 00:22:37,960 Speaker 3: This is focused on footwear, and foot Locker overall is 434 00:22:37,960 --> 00:22:42,520 Speaker 3: focused on footwear. But the apparel this past quarter did 435 00:22:42,560 --> 00:22:45,840 Speaker 3: not perform nearly as well as the footwear business at 436 00:22:45,920 --> 00:22:49,880 Speaker 3: foot Locker, and it was a down quarter anyway. So yeah, 437 00:22:49,880 --> 00:22:52,280 Speaker 3: there's concerns around athletic apparel right now as well. 438 00:22:52,600 --> 00:22:55,960 Speaker 2: And they before all this happened, before down a Hold 439 00:22:56,240 --> 00:23:00,360 Speaker 2: was shown, Hey, best luck in his retirement, that's what. 440 00:23:00,359 --> 00:23:04,720 Speaker 1: They best of. Yeah, that's that's the that's. 441 00:23:04,560 --> 00:23:06,399 Speaker 2: You know, that was showing you know what what they 442 00:23:06,400 --> 00:23:09,239 Speaker 2: were talking about with mister Donahoe. And again, you know, 443 00:23:09,280 --> 00:23:12,320 Speaker 2: I'm not slamming him because he could. I can't even 444 00:23:12,359 --> 00:23:14,439 Speaker 2: manage my check book, which shows you how old I am. 445 00:23:14,480 --> 00:23:17,000 Speaker 2: Because first time I'm going to a checkbook and then 446 00:23:17,080 --> 00:23:18,919 Speaker 2: you know, but you know, it happens, and. 447 00:23:19,160 --> 00:23:20,720 Speaker 4: I think it worked for a while, right, if I'm 448 00:23:20,720 --> 00:23:23,320 Speaker 4: not mistaking Kim. You know, Nike's results are actually pretty 449 00:23:23,320 --> 00:23:24,800 Speaker 4: strong for a while after the back of it, but 450 00:23:24,840 --> 00:23:27,879 Speaker 4: then when they really needed to sell some more inventory 451 00:23:28,240 --> 00:23:29,919 Speaker 4: and they didn't have those relationships. 452 00:23:29,920 --> 00:23:32,120 Speaker 3: And I really think when when you look back on 453 00:23:32,320 --> 00:23:36,160 Speaker 3: Donahoe's tenure at Nike, you'll, you'll, we'll see those first 454 00:23:36,200 --> 00:23:40,040 Speaker 3: two years as being hugely successful for that company, but 455 00:23:40,480 --> 00:23:44,119 Speaker 3: you know, flew too close to the sun there and eventually. 456 00:23:45,680 --> 00:23:49,720 Speaker 2: Bloomberg's Kim Bessen, thank you, my man, for again joining 457 00:23:49,760 --> 00:23:52,320 Speaker 2: us on the Bloomberg Business of Sports. We appreciate it 458 00:23:52,320 --> 00:23:55,719 Speaker 2: man anytime. By the way, if you don't know who 459 00:23:55,840 --> 00:23:58,800 Speaker 2: Kim Beissine is, we'll shame on you. He covers celebrity 460 00:23:58,920 --> 00:24:03,240 Speaker 2: and athlete business deals for Bloomberg News. Sticking with those brands, 461 00:24:03,280 --> 00:24:08,000 Speaker 2: Footlocker released earnings this past week, and it disappointed traders. 462 00:24:08,480 --> 00:24:11,720 Speaker 2: Shares sunk as much as twenty percent after the announcement. 463 00:24:12,080 --> 00:24:16,560 Speaker 2: On the earnings call, Footlockers CEO Mary Dylan talked about 464 00:24:16,600 --> 00:24:20,400 Speaker 2: how partnering with Nike is a big part of Footlocker's 465 00:24:20,520 --> 00:24:21,760 Speaker 2: strategy going forward. 466 00:24:21,920 --> 00:24:24,159 Speaker 9: Stepping back, we feel really great about our partnership with 467 00:24:24,240 --> 00:24:28,119 Speaker 9: Nike and our key areas of strategic focus together around basketball, 468 00:24:28,480 --> 00:24:31,159 Speaker 9: secret culture and kids. And you know we've heard us 469 00:24:31,200 --> 00:24:34,680 Speaker 9: talk about most recently the Clinic, which is a program 470 00:24:34,680 --> 00:24:36,840 Speaker 9: in conjunction with Nike and Jordan Brand, as well as 471 00:24:36,880 --> 00:24:39,679 Speaker 9: the Home Court are just two good examples. Does that 472 00:24:39,720 --> 00:24:42,000 Speaker 9: really come into life through our lace up plan? And 473 00:24:42,200 --> 00:24:44,560 Speaker 9: you know, Ellen and Estimar I think are absolutely taking 474 00:24:44,600 --> 00:24:47,080 Speaker 9: the right actions for the brand and the overall marketplace 475 00:24:47,600 --> 00:24:51,199 Speaker 9: and very confident in their actions that will benefit the 476 00:24:51,320 --> 00:24:54,600 Speaker 9: Nike brand as well as our overall industry and partnership. 477 00:24:54,680 --> 00:24:57,840 Speaker 9: So you know, and we continue as a brand as 478 00:24:57,840 --> 00:24:59,959 Speaker 9: a wholesaler to make the right investments we think for 479 00:25:00,040 --> 00:25:03,760 Speaker 9: our brand partners to showcase their brands and make us 480 00:25:03,840 --> 00:25:06,040 Speaker 9: is the strongest. I'm the channel retailer that we can be. 481 00:25:06,480 --> 00:25:10,080 Speaker 2: That's foot and Locker CEO Mary Dylon speaking on the 482 00:25:10,119 --> 00:25:15,920 Speaker 2: sneaker chain's earnings call after releasing results that sunk shares up. Next, 483 00:25:16,119 --> 00:25:19,880 Speaker 2: we turned to college sports with Gulston and Stores Sports 484 00:25:19,960 --> 00:25:24,480 Speaker 2: law practice co chair Marty Eedle, Damien Sassaur. I'm Michael Barr. 485 00:25:24,600 --> 00:25:28,479 Speaker 2: You're listening to the Bloomberg Business of Sports from Bloomberg Radio. 486 00:25:28,680 --> 00:25:45,960 Speaker 2: Around the world, you're. 487 00:25:45,800 --> 00:25:49,720 Speaker 1: Listening to Bloomberg Business of Sports from Bloomberg Radio. 488 00:25:50,800 --> 00:25:53,119 Speaker 2: Thanks for joining us on the Bloomberg Business of Sports, 489 00:25:53,119 --> 00:25:55,480 Speaker 2: where we explore the big money issues in the world 490 00:25:55,560 --> 00:25:59,320 Speaker 2: of sports. Michael Barr, along with Damien Sasaur Scarlett fu 491 00:25:59,400 --> 00:26:02,640 Speaker 2: is on assignment. There's always a lot to go over 492 00:26:02,720 --> 00:26:05,719 Speaker 2: in the world of college sports with the rise of 493 00:26:05,840 --> 00:26:10,119 Speaker 2: sports betting and nil and to help us break down 494 00:26:10,240 --> 00:26:13,040 Speaker 2: some of the latest headlines, we welcome back an old 495 00:26:13,119 --> 00:26:16,040 Speaker 2: friend of the show, Marty Eedle. He's co chair of 496 00:26:16,119 --> 00:26:19,879 Speaker 2: Gholston and Stories Sports Law practice and adjunct professor of 497 00:26:20,200 --> 00:26:24,360 Speaker 2: law at Columbia University. Welcome back to the Bloomberg Business 498 00:26:24,359 --> 00:26:25,679 Speaker 2: of Sports, old friend. 499 00:26:26,200 --> 00:26:29,280 Speaker 7: Michael, so nice to be back with you and Damien today. 500 00:26:30,280 --> 00:26:32,919 Speaker 2: I'm going to start with the again. I know we 501 00:26:33,000 --> 00:26:35,520 Speaker 2: always bring this up, Well, where are we now with 502 00:26:35,680 --> 00:26:39,320 Speaker 2: student athletes, students or employees? What the heck are we 503 00:26:39,840 --> 00:26:41,120 Speaker 2: in this arena here? 504 00:26:42,119 --> 00:26:45,639 Speaker 7: So let me use this three words to describe it. 505 00:26:46,320 --> 00:26:52,640 Speaker 7: What a mess. Since we last spoke about this, there 506 00:26:52,680 --> 00:26:56,920 Speaker 7: have been new developments. We've had the settlement provisionally approved 507 00:26:56,960 --> 00:26:58,760 Speaker 7: in what was called the House case, which is an 508 00:26:58,800 --> 00:27:05,280 Speaker 7: antitrust case that now has provisionally settled to pay student 509 00:27:05,320 --> 00:27:10,399 Speaker 7: athletes approximately two point eight billion dollars, which will be 510 00:27:10,440 --> 00:27:16,240 Speaker 7: funded by the NCAA and member conferences. To the member 511 00:27:16,240 --> 00:27:22,200 Speaker 7: conferences will pick up now about will pay approximately twenty 512 00:27:22,280 --> 00:27:27,240 Speaker 7: two percent of media revenues to student athletes. Scholarships no 513 00:27:27,320 --> 00:27:32,920 Speaker 7: longer will be capped at prior numbers, so that schools 514 00:27:32,920 --> 00:27:35,840 Speaker 7: can now offer scholarships and whole or in part to 515 00:27:36,040 --> 00:27:39,840 Speaker 7: any number of student athletes. There are lots of other 516 00:27:39,880 --> 00:27:44,439 Speaker 7: provisions to the House settlement, but the question here becomes, 517 00:27:44,480 --> 00:27:48,200 Speaker 7: if you're paying student athletes a share of media revenue, 518 00:27:48,680 --> 00:27:53,800 Speaker 7: if you're giving them grant in aids, tuition, room and board, 519 00:27:53,920 --> 00:27:57,679 Speaker 7: if you're allowing them to receive nil dollars name, image 520 00:27:57,720 --> 00:28:01,800 Speaker 7: and likeness, and we know from a federal court in 521 00:28:01,880 --> 00:28:06,800 Speaker 7: Tennessee earlier this year, you can now offer student athletes 522 00:28:07,359 --> 00:28:11,080 Speaker 7: sign on bonuses in order to enroll in schools and 523 00:28:11,200 --> 00:28:17,680 Speaker 7: guarantee them an il dollars. Are student athletes really students 524 00:28:18,400 --> 00:28:21,880 Speaker 7: or have we pushed the envelope over into making them 525 00:28:22,040 --> 00:28:25,400 Speaker 7: employees and what will this mean for school. So those 526 00:28:25,440 --> 00:28:30,720 Speaker 7: are the new developments since we last spoke, which raises 527 00:28:30,800 --> 00:28:31,359 Speaker 7: that question. 528 00:28:31,680 --> 00:28:33,879 Speaker 4: You know, you know, Marty, I'm sitting here and you know, 529 00:28:33,920 --> 00:28:37,600 Speaker 4: I've been, you know, analyzing everything that's going on with 530 00:28:37,680 --> 00:28:40,600 Speaker 4: a president of Trump's, you know, cabinet and his administration 531 00:28:40,760 --> 00:28:42,560 Speaker 4: and you know, the spots that he's feeling for it, 532 00:28:42,600 --> 00:28:45,080 Speaker 4: and you know, and all my research and analysis, I 533 00:28:45,080 --> 00:28:47,120 Speaker 4: haven't done really much on what where he stands on 534 00:28:47,160 --> 00:28:48,760 Speaker 4: an il And you know, the one thing I have 535 00:28:48,920 --> 00:28:52,040 Speaker 4: seen is where he stands if you look at his website, 536 00:28:52,080 --> 00:28:54,280 Speaker 4: he's got like this list of twenty, you know, things 537 00:28:54,280 --> 00:28:56,760 Speaker 4: that he core promises, and one of them is keep 538 00:28:56,800 --> 00:28:59,720 Speaker 4: men out of women's sports. So I imagine he's talking 539 00:28:59,760 --> 00:29:03,760 Speaker 4: about transgender and so what impacts do you think Trump 540 00:29:03,760 --> 00:29:06,360 Speaker 4: and a Trump administration might have on college sports? 541 00:29:07,560 --> 00:29:11,920 Speaker 7: So great question. Let me segue slightly to transgender and 542 00:29:11,920 --> 00:29:14,840 Speaker 7: then come back to the issue that we were just discussing. 543 00:29:15,520 --> 00:29:19,959 Speaker 7: On transgender sports, we know there's been a big push 544 00:29:20,120 --> 00:29:24,560 Speaker 7: in the Biden administration to give lots of opportunities to 545 00:29:24,680 --> 00:29:28,920 Speaker 7: transgender athletes to compete in there in a sport in 546 00:29:29,000 --> 00:29:34,240 Speaker 7: their gender of choice. And there have been several decisions 547 00:29:34,280 --> 00:29:38,600 Speaker 7: by federal courts saying that under the Equal Protection Amendment, 548 00:29:39,320 --> 00:29:43,480 Speaker 7: transgender athletes ought to be able to choose. I suspect 549 00:29:43,520 --> 00:29:47,200 Speaker 7: that the new Department of Education, for however long it lasts, 550 00:29:47,360 --> 00:29:52,320 Speaker 7: under Linda McMahon, if she's accepted as the nominee to 551 00:29:52,400 --> 00:29:55,920 Speaker 7: head that department, they're going to rescind a lot of 552 00:29:55,960 --> 00:30:01,000 Speaker 7: the Biden executive orders and Department of Education executive orders 553 00:30:01,040 --> 00:30:03,280 Speaker 7: that permitted transgender. 554 00:30:02,600 --> 00:30:03,760 Speaker 1: Athletes to compete. 555 00:30:05,000 --> 00:30:09,600 Speaker 7: So there'll be a push to keep sports men's sports 556 00:30:09,640 --> 00:30:12,320 Speaker 7: as men's sports, women's sports as women's sports. Whether that 557 00:30:12,400 --> 00:30:18,200 Speaker 7: will pass constitutional muster is a different question with respect 558 00:30:18,280 --> 00:30:26,680 Speaker 7: to college athletes as students or athletes. The President elect 559 00:30:26,840 --> 00:30:31,080 Speaker 7: has some involvement in sports. You may remember he was 560 00:30:31,160 --> 00:30:36,400 Speaker 7: an owner of the now defunct USFL Football League tried 561 00:30:36,440 --> 00:30:41,120 Speaker 7: to buy the Bills right and with the USFL. What 562 00:30:41,200 --> 00:30:44,920 Speaker 7: I'd like telling my class at Columbia Law School is 563 00:30:45,000 --> 00:30:48,640 Speaker 7: that he was part of a successful anti trust case 564 00:30:48,680 --> 00:30:53,000 Speaker 7: against the NFL, for which he and the other owners 565 00:30:53,000 --> 00:30:56,560 Speaker 7: in the UFFL were awarded the grand sum of one 566 00:30:56,640 --> 00:31:01,000 Speaker 7: dollar in damages, which under our anti trust laws gets troubled. 567 00:31:01,000 --> 00:31:06,800 Speaker 7: So if he got three dollars. It seems, at least 568 00:31:06,840 --> 00:31:12,120 Speaker 7: from some of his statements, that the President elect seems 569 00:31:12,160 --> 00:31:18,120 Speaker 7: to view athletes through the uni dimensional view as being professionals. 570 00:31:19,040 --> 00:31:23,480 Speaker 7: If they're professionals, that distinction between college and professional athletes 571 00:31:24,040 --> 00:31:28,920 Speaker 7: will disappear even more quickly than it's been going at 572 00:31:28,920 --> 00:31:32,800 Speaker 7: this point, and nothing will be done to impact that. 573 00:31:34,520 --> 00:31:38,600 Speaker 7: The new head of the NCAA, of the NCAA, Charlie Baker, 574 00:31:39,040 --> 00:31:44,680 Speaker 7: so new anymore, I've been told, has been lobbying in 575 00:31:44,760 --> 00:31:50,360 Speaker 7: Congress for various exemptions for the colleges and universities from 576 00:31:50,400 --> 00:31:52,520 Speaker 7: some of our laws, the antitrust laws, some of the 577 00:31:52,600 --> 00:31:57,080 Speaker 7: labor laws, to allow them to do the things that 578 00:31:57,240 --> 00:32:03,480 Speaker 7: professional athletes do. Is going to create a phenomenal crisis 579 00:32:03,520 --> 00:32:08,840 Speaker 7: in college sports and college education for schools outside the 580 00:32:08,880 --> 00:32:09,560 Speaker 7: power five. 581 00:32:11,120 --> 00:32:13,200 Speaker 4: Well, you know, Marty, here's where my question comes down to, right. 582 00:32:13,200 --> 00:32:15,520 Speaker 4: I mean, you're mentioning the wild West, of which that's 583 00:32:15,520 --> 00:32:18,200 Speaker 4: where we are, right because nobody can agree. Lawmakers can't 584 00:32:18,200 --> 00:32:20,440 Speaker 4: agree be at the House, the Senate, the President, et cetera. 585 00:32:20,520 --> 00:32:23,880 Speaker 4: And where and how to you know, regulate the payments 586 00:32:23,920 --> 00:32:25,479 Speaker 4: that are going to student athletes. But you know, if 587 00:32:25,480 --> 00:32:27,760 Speaker 4: you just look at some of you know, Trump's other policies, right, 588 00:32:27,840 --> 00:32:31,320 Speaker 4: easier financial sector regulations, and you read through that into 589 00:32:31,520 --> 00:32:34,000 Speaker 4: you know, I guess you know the business of college sports, 590 00:32:34,040 --> 00:32:36,360 Speaker 4: because it is a business. Maybe it's just going to 591 00:32:36,480 --> 00:32:39,080 Speaker 4: leave the status quo as is. I mean, is that possible. 592 00:32:41,360 --> 00:32:44,840 Speaker 7: Sure, you can let the marketplace work things out, which 593 00:32:44,880 --> 00:32:49,959 Speaker 7: is the general philosophy of the president elect. How it 594 00:32:50,040 --> 00:32:52,640 Speaker 7: will work it out. This is something that I know 595 00:32:52,720 --> 00:32:56,640 Speaker 7: we have discussed a little bit in the past, which 596 00:32:56,680 --> 00:33:02,000 Speaker 7: is what role will colleges taken in this new environment. 597 00:33:02,440 --> 00:33:07,800 Speaker 7: For example, let's take Vanderbilt. It's in the SEC. 598 00:33:09,480 --> 00:33:12,600 Speaker 6: I'm an alumnus. Okay, please, okay, let's go through. 599 00:33:12,400 --> 00:33:16,200 Speaker 7: That, and congratulations on your victory over Alabama. 600 00:33:16,280 --> 00:33:19,520 Speaker 4: Anchor down, my friend, anchor down. 601 00:33:21,520 --> 00:33:27,400 Speaker 7: But if we get past that part, Vanderbilt has a 602 00:33:27,480 --> 00:33:29,800 Speaker 7: reckoning to be made. It's the only I think it's 603 00:33:29,800 --> 00:33:34,760 Speaker 7: the only private school, private university in the SEC. If 604 00:33:35,560 --> 00:33:40,200 Speaker 7: the schools go towards the position of student athletes as employees, 605 00:33:40,400 --> 00:33:44,959 Speaker 7: National Labor Relations Board can step in and as they 606 00:33:45,000 --> 00:33:49,960 Speaker 7: have with Dartmouth for example, and recognize bargaining units that 607 00:33:50,080 --> 00:33:54,480 Speaker 7: will not apply to the state schools because state employees 608 00:33:54,520 --> 00:33:57,920 Speaker 7: are exempt from the scriptures of the National Labor Relations Act. 609 00:33:58,640 --> 00:34:02,400 Speaker 7: So right away you have an unequal or uneven playing 610 00:34:02,440 --> 00:34:08,000 Speaker 7: field between Vanderbilt and its competitors in the SEC. Its 611 00:34:08,040 --> 00:34:10,839 Speaker 7: competitors in the SEC seem to have a lot more 612 00:34:10,880 --> 00:34:15,080 Speaker 7: money that they are throwing at prospective athletes, that is, 613 00:34:15,320 --> 00:34:18,080 Speaker 7: athletes who are coming in either as freshmen or as 614 00:34:18,239 --> 00:34:23,160 Speaker 7: portal athletes transferring from other schools. I mean, if you 615 00:34:23,320 --> 00:34:26,000 Speaker 7: promise somebody over a million dollars, it's hard to turn 616 00:34:26,040 --> 00:34:29,719 Speaker 7: it down. In fact, you may find some of these 617 00:34:29,760 --> 00:34:33,400 Speaker 7: athletes deciding they don't want to go pro because they 618 00:34:33,440 --> 00:34:36,520 Speaker 7: may have to take a cut and pay to turn pro. 619 00:34:37,360 --> 00:34:40,279 Speaker 7: There used to be, by way of history, there used 620 00:34:40,320 --> 00:34:43,680 Speaker 7: to be a reference to athletes who went from school 621 00:34:43,719 --> 00:34:48,200 Speaker 7: to school, playing week to week as quote tramp athletes 622 00:34:48,280 --> 00:34:51,759 Speaker 7: close quote. That's from the eighteen seventies, when athletes were 623 00:34:51,800 --> 00:34:56,400 Speaker 7: paid to play for whoever wanted to pay them the most. 624 00:34:57,719 --> 00:35:00,920 Speaker 7: That is likely to happen. How will Vanderbilt compete in 625 00:35:00,920 --> 00:35:05,160 Speaker 7: that environment or will it? Does it want to compete 626 00:35:05,200 --> 00:35:11,160 Speaker 7: in that environment? Maybe it reaffirms its commitment to being 627 00:35:11,360 --> 00:35:13,000 Speaker 7: a school of higher learning. 628 00:35:13,680 --> 00:35:14,960 Speaker 6: Two words for you, Michael Barr, J. 629 00:35:15,120 --> 00:35:18,120 Speaker 4: Cutler, Jay Cutler, the Vandy alumni, you know, I mean, 630 00:35:18,160 --> 00:35:22,319 Speaker 4: there's not many of us out there football talking. Just 631 00:35:22,360 --> 00:35:24,480 Speaker 4: one last question for you here, Marty. You know we 632 00:35:24,480 --> 00:35:27,680 Speaker 4: had Adam Greenblatt, CEO BETEMGM on not long a though, 633 00:35:27,719 --> 00:35:29,799 Speaker 4: and you know he was talking about Missouri, you now 634 00:35:29,840 --> 00:35:33,080 Speaker 4: Missouri and Alberta, Canada. He's talking about sports gambling and 635 00:35:33,120 --> 00:35:35,040 Speaker 4: where it's being legalized. I mean, what can we expect 636 00:35:35,080 --> 00:35:37,840 Speaker 4: on the sports gambling front? Is there any interesting developments 637 00:35:37,880 --> 00:35:39,120 Speaker 4: on that side? 638 00:35:39,560 --> 00:35:43,799 Speaker 7: Well, there are a couple of interesting developments, and we've 639 00:35:43,840 --> 00:35:49,840 Speaker 7: seen penalties at the professional level tossed down for John d. 640 00:35:50,040 --> 00:35:53,920 Speaker 7: Porter and a couple of players in baseball and a 641 00:35:54,000 --> 00:36:01,719 Speaker 7: bunch of players in professional football eve for aging in gambling. 642 00:36:01,840 --> 00:36:04,759 Speaker 7: And this is both what we call prop betting as 643 00:36:04,760 --> 00:36:09,120 Speaker 7: well as regular betting. I mean, can you imagine now 644 00:36:09,239 --> 00:36:15,359 Speaker 7: players betting on individual statistics. You're back to an era 645 00:36:16,440 --> 00:36:18,839 Speaker 7: college sports. The thought they got rid of it from 646 00:36:18,880 --> 00:36:23,200 Speaker 7: the nineteen fifties, where a player might not score a 647 00:36:23,239 --> 00:36:25,279 Speaker 7: basket at the end of the game in order to 648 00:36:25,280 --> 00:36:30,719 Speaker 7: make the spread. There has to be ways of regulating it. 649 00:36:30,880 --> 00:36:33,880 Speaker 7: I think the professional leagues from what I understand have 650 00:36:34,120 --> 00:36:37,640 Speaker 7: vigorous investigative units, and that's how they can ferre it 651 00:36:37,719 --> 00:36:42,760 Speaker 7: out who gambles, whether that person is passing on tips 652 00:36:42,840 --> 00:36:48,800 Speaker 7: to friends and family. And the leagues, though, have different rules. 653 00:36:48,840 --> 00:36:54,960 Speaker 7: The NBA, for example, prohibits any player, and I think 654 00:36:54,960 --> 00:37:03,800 Speaker 7: it's players, coaches, owners, person nail and family from placing 655 00:37:03,800 --> 00:37:07,840 Speaker 7: a bet on any professional sports contest. I think the NFL, 656 00:37:07,920 --> 00:37:10,000 Speaker 7: and I'm not one hundred percent sure of this, limits 657 00:37:10,000 --> 00:37:13,520 Speaker 7: it to NFL games. And of course college sports is 658 00:37:13,760 --> 00:37:16,600 Speaker 7: entering this field and trying to figure out what to 659 00:37:16,680 --> 00:37:24,120 Speaker 7: do while players are engaging in sports betting, fanduels and 660 00:37:24,200 --> 00:37:26,759 Speaker 7: drafting is a huge phenomenon in this country and a 661 00:37:26,760 --> 00:37:30,680 Speaker 7: big money maker. How do you tell all How do 662 00:37:30,719 --> 00:37:34,479 Speaker 7: you tell a college student you can't engage in fan 663 00:37:34,560 --> 00:37:37,520 Speaker 7: duels and we're going to have some secret means of 664 00:37:38,080 --> 00:37:40,839 Speaker 7: checking your computer to see that you're not doing it 665 00:37:41,440 --> 00:37:45,680 Speaker 7: when his roommate or her roommate is doing the same thing. 666 00:37:47,120 --> 00:37:50,960 Speaker 7: Colleges aren't. In other words, colleges aren't asdvanced as pros 667 00:37:51,040 --> 00:37:54,360 Speaker 7: in trying to deal with the issue of sports betting. 668 00:37:55,360 --> 00:37:58,000 Speaker 2: Our thanks to Marty Eedel for joining us. He is 669 00:37:58,040 --> 00:38:01,320 Speaker 2: code hare at Gulston and Stores, sports Law practice and 670 00:38:01,400 --> 00:38:05,799 Speaker 2: adjunct Professor of Law at Columbia University. And that does 671 00:38:05,840 --> 00:38:09,080 Speaker 2: it for this edition of The Bloomberg Business of Sports 672 00:38:09,200 --> 00:38:12,520 Speaker 2: for Damian Sasaur. I'm Michael Barr. Thank you for joining us. 673 00:38:12,520 --> 00:38:14,880 Speaker 2: Tune in again next week for the latest on the 674 00:38:14,880 --> 00:38:17,680 Speaker 2: stories moving big old money in the world of sports. 675 00:38:18,000 --> 00:38:21,360 Speaker 2: You're listening to Bloomberg Business of Sports from Bloomberger Radio 676 00:38:21,400 --> 00:38:25,480 Speaker 2: around the world, and don't forget the catch our podcast 677 00:38:25,800 --> 00:38:27,759 Speaker 2: on all your podcast platforms.