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Speaker 1: The mission that guides the Fenway Sports Group's chief financial

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Speaker 1: officer is the same simple principle that drives each and

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Speaker 1: every player on the Boston Red Sox, the Pittsburgh Penguins,

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Speaker 1: and the Liverpool.

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Speaker 2: Football Club winnings at the core of everything we do here.

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Speaker 1: The scoreboard tells the results. The balance sheet lays the foundation.

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Speaker 2: The balance sheet is so important to the success of

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Speaker 2: the team.

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Speaker 1: With financial integrity, success will come. But any sports fan

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Speaker 1: can tell you it's not that simple. Alongside cash flow,

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Speaker 1: there's a flow of emotion, tradition, and generations of expectations.

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Speaker 1: Decisions CFO Julie Sweinhardt makes today will resonate for decades.

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Speaker 1: As Red Sox CEO Sam Kennedy well knows, capital allocation

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Speaker 1: is the key challenge. What is she brought to that challenge?

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Speaker 3: I think Julie brought a discipline to really study potential

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Speaker 3: growth opportunities for us. She understands that when we're deploying

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Speaker 3: resources that the first line item are the teams. The

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Speaker 3: first line item is investing in that product on the field,

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Speaker 3: on the pitch, on the ice to be successful. We

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Speaker 3: are in a business of long term value creation for

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Speaker 3: our partnership, not a quarter by quarter cash flow projection

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Speaker 3: frame out the internal rate of return study.

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Speaker 1: There's the model in the CFA Institute work of seven

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Speaker 1: years terminal value. Maybe it's short termism of three years.

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Speaker 1: And then there's the emotion of Pittsburgh, Liverpool and Boston.

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Speaker 1: Is your internal rate of return study fifty years?

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Speaker 2: The returns that we see might be short term and

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Speaker 2: some are long term. And what I've found so far

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Speaker 2: is there's elements of that kind of computational return math,

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Speaker 2: if you will, But as you alluded to, there's so

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Speaker 2: much more to it. You have to be aware of

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Speaker 2: the intangibles. It's a nice blend that's not so academic

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Speaker 2: and strictly academic. I think you'd lose if you just

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Speaker 2: focused there.

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Speaker 1: One year since joining Fenway Sports Group, Julie Swinehart's still

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Speaker 1: honing her focus, bringing her expertise to an iconic company.

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Speaker 1: It is a newly created role. It is under a

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Speaker 1: fierce spotlight.

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Speaker 3: Julie has a tremendous amount of pressure because we've had

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Speaker 3: success here, we need to keep it going. She brings leadership, experience,

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Speaker 3: passion for the industry, and we've never had a CFO

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Speaker 3: at the parent company level.

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Speaker 2: I'm used to rigor and controls and a cadence of

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Speaker 2: financial reporting and kind of enhance nuts and bolts of

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Speaker 2: a process. I have to appreciate that this group has

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Speaker 2: been highly successful in the model that they have. They're

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Speaker 2: very entrepreneurial, innovative group of people, very smart, very talented.

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Speaker 2: And me coming in with a heavy hand saying this

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Speaker 2: is how we need to do things is certainly not

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Speaker 2: my stuff. I quickly try to assess what's working and

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Speaker 2: let's continue to support those things, try to assess what's

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Speaker 2: not working, what could be improved, and try to add

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Speaker 2: value there. But I do it in a way that

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Speaker 2: starts with relationship building.

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Speaker 1: When John Henry and Tom Warner bought the Boston Red

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Speaker 1: Sox in two thousand and two, the word Fenway referred

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Speaker 1: to a decaying ballpark housing a beloved but draggled baseball franchise.

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Speaker 1: What happened next was unprecedented.

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Speaker 3: The courage it took for John Henry and Tom Warner

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Speaker 3: to say, not only are we going to say Fenway,

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Speaker 3: but we're going to invest hundreds of millions of dollars

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Speaker 3: into it was a really big deal. Back in two

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Speaker 3: thousand and two and twenty two years later, we're still

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Speaker 3: here and this jewel has been preserved.

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Speaker 1: The first Red Sox World Series title in eighty six years,

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Speaker 1: turbocharged the turnaround. The Boston Red Sox are world chip groups.

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Speaker 1: The Fenway brand was suddenly golden and led by Henry

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Speaker 1: Werner and Mike Gordon, it grew over two decades. It

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Speaker 1: has become a ten billion dollar global business.

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Speaker 3: Part of Fenway Sports Group. Secret Sauce is investing in

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Speaker 3: blue chip sports assets that our fans care deeply about,

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Speaker 3: so we can win on the field, on the ice,

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Speaker 3: on the pitch, but also invest in their venues. The

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Speaker 3: beauty of Fenway Sports Group is we feel we can

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Speaker 3: do it all.

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Speaker 1: That's where Julie Sweinhardt comes in. What is a strategy

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Speaker 1: to move this success to the next level.

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Speaker 2: We have distinct management teams throughout each entity, so the

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Speaker 2: Red Sox have a CEO and a CFO, Liverpool has

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Speaker 2: a CEO and CFO, and those folks are are offered

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Speaker 2: a fair bit of autonomy and decision decision making authority.

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Speaker 2: Part of my role is to make sure that we

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Speaker 2: continue to maintain access to capital, keep our cost of

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Speaker 2: capital as low as it can be fortify the balance

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Speaker 2: sheet so that we can go and seek out that

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Speaker 2: new team in an existing league, or perhaps dive into

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Speaker 2: a new venture in a new type of sport. We

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Speaker 2: are in growth mode.

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Speaker 1: FSG has been in growth mode all along. It kicked

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Speaker 1: up a notch in twenty twenty one when Jerry Cardinali's

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Speaker 1: Redbird Capital took an eleven percent equity stake. Months later,

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Speaker 1: the group bought the NHL Pittsburgh Penguins. They're on the

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Speaker 1: lookout to expand further.

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Speaker 3: As long as the growth opportunities fit our overarching criteria,

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Speaker 3: which are blue chip in nature. Great opportunities to either restore,

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Speaker 3: rebuild or enhance a venue that might need some TLC,

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Speaker 3: and we feel that the Fenways Sports Group can be

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Speaker 3: additive and create more value given our expertise. It's something we'll.

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Speaker 2: Look at what we do at Friendly Sports Group when

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Speaker 2: it comes to M and A in particular, we have

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Speaker 2: a call it a five person committee that takes ideas

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Speaker 2: that come from our chief strategy officer and his team.

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Speaker 2: The five of us digest it, analyze it. There's times

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Speaker 2: around playing Devil's Advocate to make sure that we're not

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Speaker 2: just getting too excited or too emotional about an idea,

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Speaker 2: and then the group of five vote, and then ultimately

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Speaker 2: that information is provided to ownership. So John Henry, Tom

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Speaker 2: Werner and Mike Gordon are the ultimate decision makers when

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Speaker 2: it comes to new investments.

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Speaker 1: Meanwhile, franchise prices keep setting records. There are no bargains

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Speaker 1: to be found in the NFL or NBA, but at

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Speaker 1: least those leagues have salary caps. In European soccer, the

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Speaker 1: price of entry is just as high. Financial controls are weak.

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Speaker 1: Petro dollars are pouring in. It's enough to give a

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Speaker 1: CFO migraines. How do you at FSG compete with these

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Speaker 1: huge blocks of money.

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Speaker 2: It is something that's top of mind for us. It

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Speaker 2: is becoming more competitive. I think we try to do

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Speaker 2: more with what's there.

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Speaker 3: These clubs, these franchises, they need massive investment. Are we disciplined?

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Speaker 3: Do we try to be disciplined? Yes, of course, because

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Speaker 3: we need to spend at the player development area, on

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Speaker 3: free agents, on transfers. When it comes to global football.

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Speaker 1: Discipline is the watchword. Also flexibility.

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Speaker 3: I'll tell you a little story about Liverpool. We started

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Speaker 3: looking at the club in August of two thousand and ten,

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Speaker 3: an email was sent from a passionate LFC supporter who

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Speaker 3: worked in our sponsorship department. Three months later, we own the.

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Speaker 1: Club, so that around in ninety days true, Stuart Wow.

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Speaker 3: So while there's nothing on paper, there's no strategic plan

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Speaker 3: right now to go out and acquire a new franchise

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Speaker 3: or a new venue, things can happen rapidly around here.

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Speaker 1: Fenway Sports Group teams consistently rank near the top of

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Speaker 1: their leagues in player salaries. The Red Sox have won

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Speaker 1: four championships on FSG's watch. Liverpool brought home its first

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Speaker 1: league title in thirty years. Still, spending can't guarantee victories.

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Speaker 1: How do you save money, save capital, save emotion for

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Speaker 1: that rainy day when you're not winning. How do you

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Speaker 1: budget that for a year.

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Speaker 2: There are things that we can do that are irrespective

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Speaker 2: of winning or losing, and that's look at today's interest

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Speaker 2: rate environment. How can we perhaps institute some techniques and

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Speaker 2: tools to lower interest rates. How can we take a

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Speaker 2: look at the first budget that comes from one of

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Speaker 2: the teams and ask questions about do you really need

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Speaker 2: to spend that much? Are you really shooting high enough?

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Speaker 2: When it comes to partnership revenue.

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Speaker 1: On the revenue side, Fenway Sports Management sells sponsorships across

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Speaker 1: the portfolio. They've brought some major brands on board. The

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Speaker 1: challenge is finding places to put all the labels.

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Speaker 2: These teams look under every rock and it's everything from

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Speaker 2: league patch from Jersey patches to space around the field

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Speaker 2: to Nessen has digital ad insertion now in their DTC products.

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Speaker 2: But it's also how can we expand our stadiums and

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Speaker 2: our arenas into more revenue generating space. We've done that

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Speaker 2: recently at Funway, We've done we're doing it right now

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Speaker 2: over at Anfield and at PPG Paints Arena in Pittsburgh.

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Speaker 1: That brings us full circle to FSG's original masterstroke unlocking

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Speaker 1: the value in venues. Now they're reimagining entireighborhoods.

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Speaker 3: The vision for the Fenway neighborhood, Fenway three point zero

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Speaker 3: as we call it, is to continue to establish this

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Speaker 3: as a place where people want to live, where they

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Speaker 3: want to work, where they want to play.

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Speaker 1: What's the biggest challenge of FSG working with Julie to

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Speaker 1: move forward sequentially on a real estate It's a great question.

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Speaker 3: Julie and others will be studying the viability of each

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Speaker 3: of these projects to make sure that there's the market.

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Speaker 3: We know we're challenge right now with the office market

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Speaker 3: is under duress because of COVID. There's an old saying

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Speaker 3: in baseball, if you build it, they will come. We

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Speaker 3: need to make sure if we build here in the

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Speaker 3: Fenway neighborhood, they will come.

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Speaker 2: Preserving what's here, but also enhancing it or elevating it

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Speaker 2: to make it better is what FSG's all about. You

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Speaker 2: need to time it well with the market, You need

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Speaker 2: to partner with the community. But there's certainly potential for

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Speaker 2: additional revenue generation.

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Speaker 3: Can you do it in Liverpool have Yeah, you can

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Speaker 3: do it in Liverpool if you have the right mix.

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Speaker 3: You have to recognize all these markets are different. Certainly

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Speaker 3: what works in Boston may not work.

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Speaker 1: In Pittsburgh or Liverpool.

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Speaker 3: So Julie is going to be tasked with going into

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Speaker 3: each of these markets and seeing what real estate development

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Speaker 3: in those markets is acceptable. It makes sense for that

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Speaker 3: particular neighborhood.

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Speaker 1: Some of the greatest stars in history have worn the

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Speaker 1: uniform of teams that now play under the banner a

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Speaker 1: Fenway Sports Group, Fenway Sports CFO, Julie Sweinhardt sported Bear's

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Speaker 1: colors while growing up outside Chicago, and also played some soccer,

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Speaker 1: But the budding athlete founder true calling as a me athlete.

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Speaker 1: Were you so nerdy that you were excited about an

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Speaker 1: HP twelve C? Did you get Aculett packard calculator? I

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Speaker 1: have and you were doing You are essialo analysis sided.

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Speaker 2: I don't know if you knew, but you are talking

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Speaker 2: to someone who went downstate for the calculator competition of

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Speaker 2: math team in high school. One of my best my

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Speaker 2: best kept secrets, which is now no longer a secret.

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Speaker 1: After studying accounting at the Universe of Illinois, she landed

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Speaker 1: jobs at Arthur Anderson and then Deloitte. She then took

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Speaker 1: her talents to real estate, ultimately becoming CFO of a

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Speaker 1: publicly traded retail reit. Nothing in her professional resume suggested

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Speaker 1: she'd end up getting a call to Big League Sports.

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Speaker 1: You parachute in a nerdy accountant from the Midwest, you'd say,

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Speaker 1: help us, what did you need before you brought in

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Speaker 1: Julie's I think we needed some adult supervision.

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Speaker 3: Julie was just what the doctor ordered. She had incredible

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Speaker 3: experience in the public markets and what I'll call real

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Speaker 3: business in the real estate world, and bringing her into

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Speaker 3: the toy department of life of professional sports and media

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Speaker 3: and real estate was just the perfect fit.

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Speaker 1: Of course, even supervising adults get to have fun at

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Speaker 1: the office when the office's Fenway Park. Do you do

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Speaker 1: the wave?

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Speaker 2: I absolutely get involved in the the way every time,

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Speaker 2: every time. It's part of being here. I sing sweek Caroline,

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Speaker 2: I sing that I do it all you.

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Speaker 1: Sing, sweet Caroline when you're here. This is mostly ifos

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Speaker 1: don't do this well.

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Speaker 2: I got to dive in, got to be part of it.

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Speaker 1: Julie Sweinhardt is supremely skilled at navigating the rapids of

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Speaker 1: real estate. That's important because real estate development is the

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Speaker 1: next frontier in the business of sports. Teams are building

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Speaker 1: outward from their ballparks with budgets in the billions. Fenway

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Speaker 1: Sports Group has a blockbuster project in the works.

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Speaker 2: We are envisioning two million square feet. We have five

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Speaker 2: acres to play with here and when all is said

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Speaker 2: and done, we expect two million square feet across residential

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Speaker 2: commercial retail.

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Speaker 1: Given the track record of Messrs Henry Werner and Gordon,

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Speaker 1: the Fenway Corners Plan comes with the high hopes of success.

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Speaker 1: That doesn't mean it will be an easy lift, especially

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Speaker 1: right now what you learned with the dynamic move of

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Speaker 1: the interest rates that we see from Chairman Powell. I mean,

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Speaker 1: do you go fixed structure or floating structure much more

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Speaker 1: like what they do in Europe.

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Speaker 2: Yes, and yes we have a mixed currently it's a

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Speaker 2: little bit of a different model than what I was

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Speaker 2: used to in the public public company space. Say in

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Speaker 2: some ways that we've provided ourselves with a natural hedge,

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Speaker 2: leaving some of our debt floating in some fixed.

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Speaker 1: Julie Swineheert took me on a walking tour into the future.

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Speaker 2: This is going to become the true entrance to Fenway Park,

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Speaker 2: and that's part of the attractiveness of this project is

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Speaker 2: the age old recipe of increasing dwell times, bringing fans

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Speaker 2: to the park, bringing in businesses, maintaining what's here and

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Speaker 2: preserving some of the historic nature of what you see

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Speaker 2: around you, but making it even more accessible, making it

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Speaker 2: more fan friendly. In addition, the buildings that currently house

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Speaker 2: the team store will be transformed into it's something a

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Speaker 2: little less heavy.

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Speaker 1: Should I get down on my knees. This is the

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Speaker 1: best merch store in all of sports, isn't it.

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Speaker 2: It's a fantastic store and it's been a great partnership

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Speaker 2: to have the D'Angelo family in their store right here,

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Speaker 2: and they're part of the project absolutely.

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Speaker 1: FSG says the neighborhood won't become a sports theme park.

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Speaker 1: They won't sweep all the grid away. They've made a

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Speaker 1: promising start with the MGM Music Hall. That venue open

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Speaker 1: next to Fenway Park in twenty twenty two. It fits

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Speaker 1: perfectly into the row of iconic music clubs on Lansdone Street.

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Speaker 2: It was a project that was many years in the making,

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Speaker 2: really the first project utilizing the real estate that surrounds

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Speaker 2: Fenway Park.

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Speaker 1: What was the best practice you got out of it?

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Speaker 1: I mean, it's an experiment that I would assume there

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Speaker 1: are forty other ideas out there. What's the key idea

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Speaker 1: from the MGM Hall.

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Speaker 2: We're looking to do something similar in Pittsburgh and we've

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Speaker 2: got some parcels adjacent to the hockey rink there and

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Speaker 2: MGM again is partnering with us to put something in

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Speaker 2: place that will serve again that smaller, more intimate venue

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Speaker 2: adjacent to a great sports venue.

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Speaker 1: Today, Lansdowne Street tomorrow the world. What Fenda Sports Group

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Speaker 1: has already done here was unimaginable twenty five years ago.

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Speaker 1: Julie Sweinhardt will have a hand in the next twenty five.

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Speaker 1: We are behind the architecture that holds the seats behind

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Speaker 1: the famed Green Monster. What's your next project? Like this?

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Speaker 1: We are going, I'm not sure this is going to work,

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Speaker 1: but let's try.

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Speaker 2: It if you come to mind that we probably haven't

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Speaker 2: shared publicly yet, but we.

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Speaker 1: Are right now.

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Speaker 2: We are constantly trying to assess and evaluate what's the

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Speaker 2: next thing, And a lot of leagues are established. Sure,

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Speaker 2: we'd love to one day have a team and already

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Speaker 2: at a state pablish league in the US or globally, but

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Speaker 2: there's other opportunities that are pretty much right in front

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Speaker 2: of us to leverage technology to create a new league.

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Speaker 2: There's one in the making that Tomorrow Sports has begun.

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Speaker 2: It's a tech forward golf league and we have made

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Speaker 2: a small investment into that venture.

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Speaker 1: Fenway Sports Group takes us name from Fenway Park, the

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Speaker 1: venue many thought John Henry and Tom Werner should abandon

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Speaker 1: when they bought the Boston Red Sox. Instead of getting out,

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Speaker 1: they've just kept leaning in. Part of this is getting

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Speaker 1: beyond the season. How do you get nineteen twelve Fenway Park,

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Speaker 1: it was cold and dark for months and months? How

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Speaker 1: do you get it beyond the season to a full.

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Speaker 3: Year winter classic for example, Irish hurling, Spartan racing, college football,

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Speaker 3: international soccer. We have a desire to establish Fenway Park

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Speaker 3: as the busiest three hundred and sixty five day a

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Speaker 3: year outdoor venue.

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Speaker 2: It's that kind of mindset, where what else can we do?

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Speaker 2: We had the busiest off season here at Fenway that

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Speaker 2: we had had in years.

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Speaker 1: Interesting that means more revenue. Of course, it also creates

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Speaker 1: buzz and expands the brand in all directions.

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Speaker 2: The opportunity to have some of these non core activities

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Speaker 2: bring in a new fan base. If you bring in

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Speaker 2: a music act that doesn't typically attract a baseball demographic,

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Speaker 2: some percentage of those people attending that concert are probably

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Speaker 2: going to have a good experience, hopefully a large percentage,

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Speaker 2: and they might come back for a game when there's

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Speaker 2: an opportunity.

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Speaker 1: Just don't stick with the same old, same old. The

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Speaker 1: same principle led FSG to retool its regional sports network.

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Speaker 2: People aren't subscribing to cable packages to the degree they

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Speaker 2: used to be. So what did we do. We went

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Speaker 2: ahead and supported an initiative to create a direct to

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Speaker 2: consumer product, and we were the first to market in

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Speaker 2: the RSN space with SS and three sixty we transmit

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Speaker 2: in four K. My counsel to others would be to

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Speaker 2: try to stay ahead of consumer behavior, ahead of the curve,

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Speaker 2: and invest in areas such as a DTC product. I

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Speaker 2: do think we are one of the best in the

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Speaker 2: business when it comes to that.

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Speaker 1: Julie Sweinheart's expertise and energy are making a best in

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Speaker 1: class enterprise even better. I asked her what she sees

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Speaker 1: when she looks ahead. What is the goal for the

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Speaker 1: next five to ten years? What is your reach for

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Speaker 1: the next five to ten years.

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Speaker 2: The goal is to keep the good work going. Let's

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Speaker 2: keep growing. Let's continue to invest in the teams and

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Speaker 2: the real estate that where the teams play, to make

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Speaker 2: the fan experience amazing, and to introduce new generations of

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Speaker 2: fans to these sports that are so important to who

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Speaker 2: we are as people.

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Speaker 1: What's the biggest headache you have?

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Speaker 2: I constantly think about what I don't know, and I'm

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Speaker 2: staying curious about what else is out there, what's the

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Speaker 2: competition doing. What do they know that we don't know?

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Speaker 2: And there's ways to go about trying to put those

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Speaker 2: fears to rest. We tap into our networks, we participate

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Speaker 2: in industry events. We try to stay at the forefront

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Speaker 2: of data and technology. We try to scout that player

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Speaker 2: that no one else has their eye on. Right, That's

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Speaker 2: one way we stay successful.

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Speaker 1: So you're in charge of finding the next short stop?

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Speaker 2: Absolutely not. When I interviewed, I explained, guys, I'm not

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Speaker 2: sure that I'm the best fit for the job. I

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Speaker 2: don't know the players, And they said, don't worry, We've

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Speaker 2: got someone who handles that.

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Speaker 1: The CFO skills always comes back to the four accounting statement.

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Speaker 1: What's the most important line on the income statement to

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Speaker 1: balance sheet, the cash FW statement, some discussion of shareholders' equity.

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Speaker 1: Where's the CFO part of that? Where it really comes home.

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Speaker 2: I'm I think it's a combination of things. I'm very

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Speaker 2: focused on operating cash flow. I think that's a great

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Speaker 2: metric to look at and for USBITA.

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Speaker 1: Combines income statement dynamics and brings over some form of

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Speaker 1: depreciation and amortization. How do you depreciate that fullback on Liverpool.

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Speaker 1: That's so wonderful.

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Speaker 2: How do you depreciate that there's an amortization over a

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Speaker 2: useful life. It is a little awkward to talk about

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Speaker 2: players and useful lives because it's uh sure, it's human

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Speaker 2: and not a physical asset. There's accounting rules around it,

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Speaker 2: and it's not as different from other industries as you'd think.

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Speaker 1: Someone you know calls up and they say, OMG, I'm

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Speaker 1: a CFO. What do you say to them?

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Speaker 2: I say, congratulations, this is amazing. And my advice to

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Speaker 2: you as a new CFO would be to not feel alone.

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Speaker 2: Realize that you have one singular role, but you've got

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Speaker 2: many teams blow you, next to you and above you.

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Speaker 2: You've got leadership in every direction who are there to

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Speaker 2: support you, and you have to not put too much

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Speaker 2: on yourself, but to leverage the teams and to give

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Speaker 2: people decision making abilities at the team level. So to me,

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Speaker 2: teamwork is key. Stay curious, ask a lot of questions

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Speaker 2: and try to sort out what you don't know, and

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Speaker 2: then work tiresly to get better at those things.

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Speaker 1: I'm Tim Keen. This is Bloomberg