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Speaker 1: This is the business of sports. Let's talk Super Bowl

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Speaker 1: and Fox Sports guarantee money isn't necessarily guaranteed. One major

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Speaker 1: League soccer owner is leading out fifty billion dollar investment

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Speaker 1: gloring of the lines between sports team owners and the

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Speaker 1: sports gambling space. How high can these valuations go? Evan

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Speaker 1: Nobody william Off the field, the NBA has never been buzzier,

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Speaker 1: and the leaders in the sports industry Major League Baseball

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Speaker 1: Commissioner Rob Manfred Fidy O'Neill is President of Director Consumer

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Speaker 1: in that game, then the race car driver Elio Castro

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Speaker 1: and Evs Jared Smith, president of Ticketmasters Bloomberg Business of

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Speaker 1: Sports from Bloomberg Radio. Hello, I'm Evan Novie Williams, and

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Speaker 1: I'm Michael Barr And this is the Bloomberg Business of

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Speaker 1: Sports podcast and we have our special guest. And we

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Speaker 1: were so happy that he returned from Monday show. We

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Speaker 1: didn't scare him off, Mike Lynch. He has been a

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Speaker 1: legend in doing this for decades in sports. We didn't mention,

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Speaker 1: by the way yet we know, we know you did

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Speaker 1: it in Boston where you had your career, but you

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Speaker 1: did a lot of it at w c V in

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Speaker 1: Boston correct, absolutely all of it from two until last September.

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Speaker 1: And actually I'm still there on a part time basis,

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Speaker 1: so still in Boston, haven't left. It's nice to have

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Speaker 1: that hometown that you can always call home. And Boston

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Speaker 1: has been a very nice town. I when I had

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Speaker 1: a chance to visit one time, uh, I loved it,

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Speaker 1: and uh I've always said I gotta go back more often.

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Speaker 1: So I am so glad that you hear, Mike. And

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Speaker 1: we're gonna talk about some of the topics that are

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Speaker 1: running around for the week. And let's start with the UFC.

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Speaker 1: And I know we talked about this Monday, but let's

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Speaker 1: go a little deeper. Now we have more details, Evan,

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Speaker 1: what's going on. Yeah, so you know we discussed earlier

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Speaker 1: in the week. UFC seems adamant that their April eighteenth

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Speaker 1: event is going to happen. We now know where it's

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Speaker 1: going to happen or where they're planning to hold it,

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Speaker 1: and that is the Tachy Palace Casino Resort. Again, it's

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Speaker 1: on tribal land in California. I believe it's about thirty

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Speaker 1: four miles south of Fresno. Again, you know that's intentional.

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Speaker 1: This is kind of an end around around some regulation. Also,

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Speaker 1: there are some you know, some some combat sports bodies

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Speaker 1: that don't think that this should be happening, the Association

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Speaker 1: of Ringside Physicians. But again, guys, as we talked about,

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Speaker 1: and Mike, I want to get your thoughts here as well.

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Speaker 1: You know, this is an attempt because UFC, like a

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Speaker 1: lot of other sports bodies, needs to make the money

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Speaker 1: their owners endeavor. You know, William Morris, I MG. They

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Speaker 1: need the money and this is the way that they're

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Speaker 1: hoping to do it. Well, obviously they've circumvented the no

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Speaker 1: gatherings of more than ten people by being on tribal land.

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Speaker 1: I know. One of the options was something fantasy island

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Speaker 1: where they sort of could be Uh, that's the only

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Speaker 1: word I could come up with for the only phrase

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Speaker 1: I come up with, Fantasy island. That was one of

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Speaker 1: the options that they were as as recently as last night. Um,

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Speaker 1: but this, I just don't see how anybody with any

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Speaker 1: common sense can think that this is a good idea,

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Speaker 1: a safe idea, or healthy idea. But anybody that knows

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Speaker 1: Dana White knows that he he gets his way more

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Speaker 1: often than he gets denied. His his wishes absolutely, And

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Speaker 1: there's I mean, we should talk about kind of the

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Speaker 1: ownership structure here For folks who don't remember, back in

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Speaker 1: two thousands sixteen, Endeavor IMG William Morris bought UFC four

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Speaker 1: billion dollars and when they did that, they took on

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Speaker 1: a pretty significant amount of debt to kind of make

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Speaker 1: the transaction happen. And as a result, you know, there's

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Speaker 1: there's quarterly debt service on that. And you know it's

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Speaker 1: a little bit different from you know, leagues like the

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Speaker 1: NBA and NFL, which are you know, certainly losing out

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Speaker 1: on you know, big revenue money, TV money, etcetera. If

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Speaker 1: if games don't happen, the UFC, when it is humming along,

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Speaker 1: spins off a lot of cash which helps pay off

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Speaker 1: that debt. When the UFC is not humming along, obviously

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Speaker 1: it becomes a little bit harder to pay off the

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Speaker 1: debt service. Uh. And you know, for for William Morris,

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Speaker 1: you know, Endeavor, you know a company that you know

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Speaker 1: represents a lot of people. Their talent agency, you know,

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Speaker 1: is a big part of their business. They also have

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Speaker 1: a lot out of you know media ticketing, you know,

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Speaker 1: live event business as well. That's obviously hurting as well.

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Speaker 1: Anything that they can do in their portfolio right now

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Speaker 1: to get things up and running is potentially critical for

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Speaker 1: them holding onto some of these assets. So I think

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Speaker 1: that the debt piece is probably the biggest portion that

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Speaker 1: and the fact that you know, UFC has ESPN contracts

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Speaker 1: that they'd love to get some money flowing through. I

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Speaker 1: think that's probably the biggest portion of what we're seeing here.

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Speaker 1: How do you feel about ESPN jumping in on this

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Speaker 1: and and being being part of this, this pay per view,

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Speaker 1: their their social responsibility and obligations in this. Do you

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Speaker 1: have any thoughts on that? Yeah, it's good, it's a

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Speaker 1: good question. I mean, certainly, you know, ESPN, like everybody

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Speaker 1: else in this world, as we've talked about, is dying

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Speaker 1: for content. You know, they really need something to hold

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Speaker 1: to fill the void that that that Live sports has

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Speaker 1: left for them. Um and again, you know, I think

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Speaker 1: you're right. And who knows if if ESPN has maybe

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Speaker 1: some some qualms, some concerns of out you know, maybe

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Speaker 1: the way this is is happening. I think one thing

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Speaker 1: I will say about you know, if you think about UFC,

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Speaker 1: certainly less so than other sports, has the ability to

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Speaker 1: do things on a very very small personnel budget, right.

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Speaker 1: I mean, there's a chance that these fights are going

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Speaker 1: to have two fighters, you know, two trainers, a referee,

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Speaker 1: and maybe two or three people you know, holding cameras.

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Speaker 1: There's a way to do this in a very in

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Speaker 1: a very small social interactive manner. And I think that

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Speaker 1: is that is something that they will lean on pretty significantly.

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Speaker 1: Let's move on to the next topic. And uh, this

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Speaker 1: is more about the Diamondbacks and there is an ownership lawsuit.

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Speaker 1: Apparently the minority owners are filing a lawsuit against the

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Speaker 1: majority owners here. What is going on with that happen? Yeah,

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Speaker 1: it's funny, Michael, Well, it's kind of nice to talk

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Speaker 1: about a topic that is not directly coronavirus related for

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Speaker 1: a second. And this one's super interesting. And who are

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Speaker 1: For folks who are interested, I would recommend you know,

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Speaker 1: they read Mike McCann's piece and s I because you know,

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Speaker 1: we are not law experts unfortunately. But it sounds as though,

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Speaker 1: you know, there's a fight going on with the ownership

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Speaker 1: group of the Arizona Diamondbacks right now, where the man

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Speaker 1: who controls the principal owner, Ken Kendrick, has apparently, you know,

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Speaker 1: trying to get minority owners who buy you know, let's say,

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Speaker 1: a half a percent of the team, a quarter of

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Speaker 1: a percent of the team, try to get them to

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Speaker 1: either buy their way up to one percent of the team,

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Speaker 1: or to get them to accept a buy out of

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Speaker 1: their of their stakes. And we've talked a lot on

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Speaker 1: this show about you know, the way that minority stakes operate,

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Speaker 1: you know, who wants them, why they want them, kind

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Speaker 1: of the social cash that goes along with it. Uh.

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Speaker 1: And I think this is a very interesting question. And

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Speaker 1: I do wonder and Michael, give me your thoughts here

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Speaker 1: if you think that this might be something that is

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Speaker 1: going to happen kind of around the sports world, if

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Speaker 1: if there may be more fighting right now between the billionaires,

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Speaker 1: the guys who own the big pieces of these teams

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Speaker 1: and the smaller Probably one of these guys is a jewel.

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Speaker 1: I believe, you know, local businessmen who you know are

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Speaker 1: maybe big fans of the team, who put in a

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Speaker 1: lot of money for them to buy a very small

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Speaker 1: chunk of a team and then end up, you know,

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Speaker 1: in this fight with the principal owner about whether they

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Speaker 1: can even stay on as a as a half a

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Speaker 1: percent owner. Well, when when people buy clubs, they're very

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Speaker 1: interested in limited partners because they're trying to raise enough

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Speaker 1: cash to buy the team. So they are buddy buddies

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Speaker 1: with all those people. And it's amazing how after years,

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Speaker 1: all of a sudden they asked them to anti upper

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Speaker 1: pony up to get up to the one percent level. Uh,

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Speaker 1: And all of a sudden, don't need them anymore. We

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Speaker 1: had an incident here in Boston in two Buddy LaRue

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Speaker 1: used to be a trainer for the Boston Celtics and

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Speaker 1: for the Boston Red Sox. He somehow became a limited

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Speaker 1: partner with the Red Sox. And it was a June

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Speaker 1: night where they were honoring Tony knigli Aro at Fenway Park,

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Speaker 1: and it's known in these parts as the LaRue Coup.

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Speaker 1: He was a limited partner and he held the press

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Speaker 1: conference while Tony c was being honored on the field,

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Speaker 1: announcing that he, as one of the limited partners, was

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Speaker 1: now taking over management of the Boston Red Sox. And

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Speaker 1: this thing wounded up being in court for about three years,

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Speaker 1: and it was it was a mess, and the players

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Speaker 1: had no idea who was in charge every day, who

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Speaker 1: was making the decisions, who was going to make the

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Speaker 1: decisions on trades, on free agent signings and hiring and

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Speaker 1: firing managers and personnel, etcetera. So, um, this this, this,

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Speaker 1: this if if the Diamondbacks go down this path, Um,

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Speaker 1: they're fortunate right now that they're not on the field.

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Speaker 1: If they were on the field, it would be inescapable

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Speaker 1: to have this not affect the play of the players

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Speaker 1: on the field, because they'd be wondering what the heck

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Speaker 1: was going on every single day. Michael, how would you

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Speaker 1: feel if you, you know, we're a big fan of

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Speaker 1: let's say the Diamondbacks. You you know, you invested three

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Speaker 1: million dollars and a number of years ago for a

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Speaker 1: half a percent, and then suddenly, you know, flash forward,

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Speaker 1: you know, a decade plus, and now there's a letter

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Speaker 1: sitting on your desk from the majority owner saying, Hey,

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Speaker 1: either you're going to pony up another three points six

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Speaker 1: million to get yourself to to one percent, or we're

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Speaker 1: gonna buy you out and you have no choice but

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Speaker 1: to to sell to us. How would that make you feel?

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Speaker 1: But it as mad as Walter Brennan stunned by a beat.

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Speaker 1: I mean, it's like, wait a minute, you can't. You know,

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Speaker 1: you agree to something and then you know later on.

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Speaker 1: I don't know where we got into this mindset. It's like, well, okay,

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Speaker 1: we're gonna change it, uh, and you do this. I

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Speaker 1: don't understand that, and I don't blame him for being mad.

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Speaker 1: It does sound like the argument coming from you know,

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Speaker 1: the majority ownership of the Diamondbacks is that having a

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Speaker 1: large number of people that own less than one percent

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Speaker 1: kind of undermines the financial stability of a team. I mean,

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Speaker 1: don't forget that. You know, when things are going poorly

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Speaker 1: for a team like this, the you know, the losses

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Speaker 1: or the extra money that has to get ponied up.

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Speaker 1: You know, it's supposed to be shared evenly across across

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Speaker 1: all the ownership. So I think that this, this lawsuit

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Speaker 1: may hinge on on kind of that idea. But you know,

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Speaker 1: as we've talked about on the show a lot, you know,

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Speaker 1: all the these leagues are in some ways and this

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Speaker 1: runs counter to this lawsuit kind of struggling about the

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Speaker 1: idea of minority owners. You know that these teams are

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Speaker 1: skyrocketing and value so quickly on the amount of people

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Speaker 1: that can even afford you know, one percent of a

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Speaker 1: Major League Baseball team now is getting smaller and smaller,

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Speaker 1: you know, so there's talk of within Major League Baseball,

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Speaker 1: you know, investment vehicles where you can invest across a

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Speaker 1: number of different teams. You know, I would imagine that

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Speaker 1: ownership structure is a little bit easier to handle if

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Speaker 1: you're a majority owner, just because that's kind of a bigger,

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Speaker 1: deeper pocketed group versus maybe a single a single human um.

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Speaker 1: But you know, I do think you know that there's

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Speaker 1: so much interesting happening right now at the at the

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Speaker 1: little minority one percent two percent ownership of Major League Baseball,

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Speaker 1: and you know, all major major league clubs, by the way,

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Speaker 1: I know there are a lot of people right now.

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Speaker 1: I just made an old school reference and someone is saying, Daddy,

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Speaker 1: who's Walter Brennan. Just trust it's an actor. And you

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Speaker 1: know you used to get man and dad nam. That's

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Speaker 1: what I'm getting at. So and that's you know what show, Michael.

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Speaker 1: I went to the same high school as Walter Brennan,

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Speaker 1: Swampscott High School and Swampscott hess Really and I'm up.

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Speaker 1: He used to come to our Thanksgiving Day games when

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Speaker 1: I was a kid, and that was a big deal

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Speaker 1: because there was Amos McCoy, you know from h Walter Brennan,

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Speaker 1: who was in the Luke Garrick story. By the way,

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Speaker 1: played a big, big role in the Loue Garrick story.

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Speaker 1: But yeah, we went to the same high school. So

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Speaker 1: that's one of our claims to fame up here. See

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Speaker 1: that's cool man, the real McCool I love that show. Anyway,

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Speaker 1: let's talk about the last topic. This is uh, and

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Speaker 1: this one is a bit bizarre. Uh, fan duel. I

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Speaker 1: guess what do you do when you don't have any

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Speaker 1: sports that you can make any bets? So what they did,

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Speaker 1: uh West Virginia They put the odds up on the

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Speaker 1: presidential election, and then uh, the state lottery said hey, hey, hey, whoa, whoa, whoa,

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Speaker 1: take that down for a second. We got some more

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Speaker 1: questions about this. Now. Listen, I'm I'm a heathen, just

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Speaker 1: like everybody else at the casino. I want to make

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Speaker 1: a bet, but am I going to make a bet

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Speaker 1: on the presidential election? And I don't know if I'm

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Speaker 1: that desperate or not. This thing consumed my Tuesday night

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Speaker 1: and was very very bizarre sequence. And you you explained

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Speaker 1: it fairly well, there, Michael, the fan duel. You know,

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Speaker 1: very briefly on Tuesday night put up briefly put up

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Speaker 1: odds on the national presidential election for this year, um,

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Speaker 1: and they had said that they had you know, we're

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Speaker 1: asking the West Virginia State Lottery, which runs you know,

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Speaker 1: gambling in West Virginia, that they had gotten approval to

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Speaker 1: do it, and they kind of rushed the lines up

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Speaker 1: and then you know, flash forward maybe forty minutes. Suddenly

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Speaker 1: the lines come back down, and then the West Virginia

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Speaker 1: Lottery says, you know, we did approve this, but we're

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Speaker 1: asking operators to hold off while we while we answer

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Speaker 1: a few more questions. So, you know, a very kind

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Speaker 1: of bizarre couple hours. It seems as though it was

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Speaker 1: approved briefly, but nobody understood that vandal was going to

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Speaker 1: move so quickly. So once they did, you know, the

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Speaker 1: state a lot of we decided to pull things back.

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Speaker 1: You know. All that to say that your your original

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Speaker 1: point is right in that, as you know, sports stay

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Speaker 1: dark and sports betting companies like FanDuel, elect DraftKings, you

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Speaker 1: know MGM is they look at their balance sheet right

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Speaker 1: now and see very little coming in. They are looking

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Speaker 1: to push the boundaries right now of what is what

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Speaker 1: we can have people bet on, and entertainment is one

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Speaker 1: of those areas. They're asking state regulators around this around

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Speaker 1: the country. Hey, can we do you know, betting on

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Speaker 1: you know, let's say, you know, a reality TV show

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Speaker 1: for example. And then the other one is politics, Michael,

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Speaker 1: and I know you're a better betting on politics. Does

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Speaker 1: that appeal to you? Is that something that you can

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Speaker 1: see maybe occupying the time at a time when you

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Speaker 1: get on NASCAR or the NFL. Now, very easy answer is,

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Speaker 1: and it's extremely an easy answer is like the thing

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Speaker 1: about sports is that you know you can, yes, you

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Speaker 1: do your homework. Also when politics is that whatever? But

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Speaker 1: I'm sorry, that's the real deal. Yeah, And that's that

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Speaker 1: has serious tones to it. When I'm talking about sports

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Speaker 1: and I'm talking about while a football game, you know,

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Speaker 1: it's it's a game and we can get down to

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Speaker 1: it and you know and throw in all the cliches

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Speaker 1: and you know, it's like we left a ten percent

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Speaker 1: out on the field. The bottom line is it's a game.

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Speaker 1: So I don't have a problem with that. And Mike,

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Speaker 1: I wonder your thoughts about that. Would you bet on politics.

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Speaker 1: I don't think I would. And I think the key

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Speaker 1: word here is the public interest that you know, where

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Speaker 1: where does if put it this way? Nevada, uh decided

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Speaker 1: not to do it back And I think and anything

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Speaker 1: goes in Nevada. So if betting on presidential or any

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Speaker 1: election in Nevada was was voted down, I mean, how

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Speaker 1: can it work in any other state? UM. I worry

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Speaker 1: about things like, you know, intimidation of the elderly. I mean,

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Speaker 1: someone's got a hundred thousand riding on the election and

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Speaker 1: you say, you know, they start making phone calls, Hey,

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Speaker 1: you better bet for you know, candidate Michael. You better

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Speaker 1: that vote for candidate Evan. And I just think the

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Speaker 1: public interest is is a good escape to not not

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Speaker 1: have this. Uh this happened. I don't think it has.

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Speaker 1: I don't think it serves the public interests at all. Yeah.

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Speaker 1: The thing I wonder, and again it's it's essentially the

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Speaker 1: same conversation we had at the top of the show

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Speaker 1: about you know about UFC kind of soldiering on with

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Speaker 1: it is that you know, as operators look and see

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Speaker 1: that they have very little money coming in and again

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Speaker 1: as states as well, think about the tax revenue that

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Speaker 1: they were banking on from a vibrant sports betting you know,

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Speaker 1: marketplace within their within their state. If they if both

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Speaker 1: those entities are looking at, oh man, this revenue is

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Speaker 1: not coming in right now, there may be some added

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Speaker 1: pressure to think about both of them, you know, both

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Speaker 1: the regulator on the state side and the operator on

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Speaker 1: the on the taking that side to think, you know, okay,

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Speaker 1: what can maybe we expand you know, maybe we expand

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Speaker 1: a little bit the idea of of what people can

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Speaker 1: be betting on, just to get you know, a little

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Speaker 1: bit of money flowing. And I think you're right, Michael.

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Speaker 1: I think that the concern and the reason why it

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Speaker 1: certainly looks like what West Virginia did approve at least

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Speaker 1: temporarily on Tuesday night was just the national election, because

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Speaker 1: my guess is that they felt like that one is

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Speaker 1: a little bit harder to kind of manipulate, obviously for

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Speaker 1: from a scale standpoint, versus like you're not gonna be

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Speaker 1: able to bet on the judge getting re elected in

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Speaker 1: a small county in West Virginia, for example. And by

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Speaker 1: the way, is like and and you guys hit the

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Speaker 1: nail on the head. It's like It's one thing if

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Speaker 1: you have a national election, but when you start getting

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Speaker 1: down to these local elections and you start getting into

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Speaker 1: who's going to make the city council. Uh, life is

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Speaker 1: too important to have some intimidation factor going like that,

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Speaker 1: and that can easily happen. I could see that. So

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Speaker 1: you're right, Michael. And here's another thing that I learned

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Speaker 1: on Tuesday night which kind of shocked me. Um. Some

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Speaker 1: you know, people in the sports betting world think that

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Speaker 1: gambling on the election could be bigger and gambling on

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Speaker 1: the Super Bowl. That just the sheer amount of volume

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Speaker 1: that people, you know, the interest in the US, certainly

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Speaker 1: from a media coverage standpoint in the election, and the

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Speaker 1: length of time that the election takes in this country

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Speaker 1: just means a longer horizon for people to gamble if

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Speaker 1: they want to on the election. But that in sheer handle,

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Speaker 1: you know, you could be looking at a Super Bowl

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Speaker 1: sized event. So, you know, again going back to the

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Speaker 1: money real quick. If you think about why vandal might

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Speaker 1: want to offer these, why a state like West Virginia

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Speaker 1: might want to approve it and regulate it, you're talking

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Speaker 1: about adding potentially the biggest event of the calendar onto

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Speaker 1: your books from a betting standpoint, and that is obviously

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Speaker 1: an attractive proposition for for both sides. And you look

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Speaker 1: at the possibilities that unless you could have over unders

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Speaker 1: on percentage of the vote, that beach, you know, nominee

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Speaker 1: gets um you know, like like in like in boxing,

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Speaker 1: it's gonna go one round, two rounds, it's going to

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Speaker 1: be a knockout at t KO, etcetera. And you could

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Speaker 1: just the possibilities are endless, and I think there'd be

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Speaker 1: a lot of people are very curious about it, but

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Speaker 1: I just I just don't think it serves the public interest. Well,

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Speaker 1: we'll see what, you know, what I actually happens here,

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Speaker 1: if West Virginia eventually figures out that it has you know,

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Speaker 1: done enough research and understands it enough to reapprove it,

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Speaker 1: or if this was a very minor blip that you know,

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Speaker 1: we'll all be laughing about in a couple of years

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Speaker 1: and say, hey, remember when West Virginia very briefly allowed

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Speaker 1: betting on politics. So, you know, the next couple of months,

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Speaker 1: I think we'll get a good sense of whether this

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Speaker 1: is the future or whether this was just an admiration.

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Speaker 1: By the way, Mike I didn't get a chance to

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Speaker 1: say this, And first of all, I wanted to mention

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Speaker 1: in the podcast that you have your weekly podcast of

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Speaker 1: your own, Loby Lynchy and Friends with Hank Morris and Uh.

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Speaker 1: I wanted to people to know to check that podcast

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Speaker 1: out because it's a lot of fun. Mike Lynch, you've

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Speaker 1: been so kind to talk with us. Thank you, sir.

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Speaker 1: It's we appreciate your Michael. Thank you, Michael, Thank you Evans.

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Speaker 1: It's been a real play. Thank you, Mike. This is

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Speaker 1: the Bloomberg Business of Sports podcast on Michael Barr along

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Speaker 1: with Evan nob Williams and special guest host Mike Lynch.

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Speaker 1: We're here each and every Monday, Wednesday and Thursday talking

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Speaker 1: to the biggest names in sports business. You are listening

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Speaker 1: to the Bloomberg Business Affords on Bloomberg Radio around the

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Speaker 1: world and online wherever you get your podcasts.