1 00:00:00,840 --> 00:00:03,160 Speaker 1: This is the Bloomberg Business of Sports show, where we 2 00:00:03,200 --> 00:00:05,720 Speaker 1: explore the big money issues in the world of sports. 3 00:00:05,840 --> 00:00:09,600 Speaker 1: I'm Scarlett Poem and I'm Ami Sasaur. Now the NBA's 4 00:00:09,600 --> 00:00:12,560 Speaker 1: Philadelphia seventy Sixers want a new stadium. It seems like 5 00:00:12,600 --> 00:00:15,800 Speaker 1: every single team does. But the seventi Sixers plan to 6 00:00:15,920 --> 00:00:19,319 Speaker 1: build one using private money instead of taxpayer dollars, and 7 00:00:19,320 --> 00:00:22,240 Speaker 1: it's going to be a brand new sports and entertainment 8 00:00:22,280 --> 00:00:26,239 Speaker 1: complex in downtown Philadelphia. The plan is for the one 9 00:00:26,239 --> 00:00:29,680 Speaker 1: point three billion dollar project to be completed by one 10 00:00:29,840 --> 00:00:33,480 Speaker 1: So for more, let's bring in Bloomberg Markets editor Michael Moroy's, 11 00:00:33,560 --> 00:00:37,159 Speaker 1: who is based in Sacramento. Um. Michael talked to us 12 00:00:37,159 --> 00:00:39,360 Speaker 1: a little bit here about how this is kind of 13 00:00:39,440 --> 00:00:42,920 Speaker 1: unusual that the owners of the seventi sixers are looking 14 00:00:42,960 --> 00:00:48,480 Speaker 1: to build a new arena that involves no taxpayer money. Hi, Scarlett, Um, 15 00:00:48,760 --> 00:00:52,640 Speaker 1: you're right. There is a growing trend in sports financing, 16 00:00:52,880 --> 00:00:56,920 Speaker 1: stadium financing for you know, private financing versus public financing. 17 00:00:57,880 --> 00:01:02,800 Speaker 1: The Golden Warriors the current NBA championship they hosted the 18 00:01:02,880 --> 00:01:05,080 Speaker 1: NBA Finals this year, and a brand new one point 19 00:01:05,120 --> 00:01:08,479 Speaker 1: six billion dollar privately financed stadiums. So this is something 20 00:01:08,520 --> 00:01:12,640 Speaker 1: that's happening more and more. These these wealthy billionaire owners 21 00:01:12,640 --> 00:01:14,880 Speaker 1: of these sports teams are asking the public less and 22 00:01:14,920 --> 00:01:18,120 Speaker 1: less for money. Um, that's not complete. You know, the 23 00:01:18,160 --> 00:01:23,199 Speaker 1: Buffalo bills just recently you know, secured as a uh, 24 00:01:23,319 --> 00:01:25,200 Speaker 1: you know, some public financing. I think they're getting six 25 00:01:25,240 --> 00:01:27,160 Speaker 1: hundred million dollars from the state in two hundred and 26 00:01:27,160 --> 00:01:29,920 Speaker 1: fifty million dollars from Erie County, which I believe will 27 00:01:29,959 --> 00:01:32,959 Speaker 1: be the biggest public subody subsidy for sports stadium in 28 00:01:33,080 --> 00:01:37,080 Speaker 1: US history. But there is this increasing trend where um, 29 00:01:37,319 --> 00:01:39,680 Speaker 1: the teams are building themselves. That way, they get to 30 00:01:39,760 --> 00:01:41,760 Speaker 1: keep all the money themselves. Obviously as they build it 31 00:01:41,760 --> 00:01:44,880 Speaker 1: in too, they don't have to give into any specific 32 00:01:44,920 --> 00:01:47,920 Speaker 1: needs that the local community wants. Michael, just feel me 33 00:01:47,960 --> 00:01:50,640 Speaker 1: out here. I mean, the Wells Fargo Center in Philadelphia, 34 00:01:50,760 --> 00:01:53,200 Speaker 1: it's twenty six years old. I mean, what's the you know, 35 00:01:53,640 --> 00:01:56,320 Speaker 1: what's the lifetime, what's you know, how long did these stadiums, 36 00:01:56,360 --> 00:01:58,280 Speaker 1: these new ones like so Fie and the one that's 37 00:01:58,280 --> 00:02:01,320 Speaker 1: being proposed in Buffalo, how long did they really last? 38 00:02:01,360 --> 00:02:04,280 Speaker 1: I mean, what's the what's the shelf life? Good questions, right, 39 00:02:04,320 --> 00:02:07,160 Speaker 1: I think I believe the self shelf life is expected 40 00:02:07,200 --> 00:02:10,080 Speaker 1: to be about thirty to forty or forty to fifty years. 41 00:02:10,400 --> 00:02:12,639 Speaker 1: So by the time that they move into this new stadium, 42 00:02:12,639 --> 00:02:15,200 Speaker 1: it'll be thirty five years old, about thirty thirty six 43 00:02:15,320 --> 00:02:17,359 Speaker 1: years old, they'll be getting to the end. It's the 44 00:02:17,440 --> 00:02:20,840 Speaker 1: current stadium, the Wells Fargo Center is not an ideal 45 00:02:20,840 --> 00:02:24,040 Speaker 1: location forum a sports stadium. There's not a lot of 46 00:02:24,080 --> 00:02:25,799 Speaker 1: development up and around it. And this new one is 47 00:02:25,800 --> 00:02:27,880 Speaker 1: going to be built right on top of a transit 48 00:02:27,919 --> 00:02:31,080 Speaker 1: hub downtown. People can come into town, they can go 49 00:02:31,160 --> 00:02:32,600 Speaker 1: to a game, they can go out to dinner, they 50 00:02:32,600 --> 00:02:35,079 Speaker 1: can go to a concert, they can stay hotels that 51 00:02:35,080 --> 00:02:38,240 Speaker 1: will be built around the area. Um. So the the 52 00:02:38,280 --> 00:02:42,240 Speaker 1: idea is, once they get out of this older style stadium, 53 00:02:42,240 --> 00:02:44,280 Speaker 1: they're going to move into what is a newer trend 54 00:02:44,280 --> 00:02:47,040 Speaker 1: of building these stadiums on top of public transit right 55 00:02:47,080 --> 00:02:49,120 Speaker 1: in the center of downtown. So the thing we need 56 00:02:49,200 --> 00:02:52,440 Speaker 1: to mention here with the seventy sixers is that it's 57 00:02:52,480 --> 00:02:55,840 Speaker 1: owned by Harris Blitzer Sports and Entertainment, which is a 58 00:02:55,880 --> 00:02:58,560 Speaker 1: group created by David Blitzer, who is the senior managing 59 00:02:58,560 --> 00:03:01,640 Speaker 1: director of Blackstone and Josh Harris, who is a co 60 00:03:01,760 --> 00:03:04,480 Speaker 1: founder of Apollo Global Management. So we're talking about to 61 00:03:04,639 --> 00:03:08,560 Speaker 1: private equity firms. Both of these gentlemen are billionaires. What 62 00:03:08,680 --> 00:03:11,440 Speaker 1: do they get out of funding the stadium on their own? 63 00:03:11,480 --> 00:03:15,280 Speaker 1: How does it mesh with their own, uh, financial interests 64 00:03:15,320 --> 00:03:18,400 Speaker 1: and their firm's financial interests. So that's a good question. 65 00:03:18,480 --> 00:03:20,760 Speaker 1: And obviously they're going to be able to you know, 66 00:03:20,919 --> 00:03:23,040 Speaker 1: rake in. You know, the profits are going to come 67 00:03:23,040 --> 00:03:26,480 Speaker 1: from ticket sales, corporate advertising concessions, you know, something that's 68 00:03:26,520 --> 00:03:28,720 Speaker 1: going to be earned over the next several decades, thirty 69 00:03:28,800 --> 00:03:31,880 Speaker 1: forty years that they're doing this, but they're losing is what. 70 00:03:32,040 --> 00:03:34,920 Speaker 1: You know, why billionaires have asked public taxpayers to help 71 00:03:34,960 --> 00:03:37,880 Speaker 1: finance their stadiums in the past is you know, cheap 72 00:03:37,920 --> 00:03:40,360 Speaker 1: to no cost financing to help build a stadium that 73 00:03:40,440 --> 00:03:42,200 Speaker 1: are have to pay for it. Why why would you 74 00:03:42,240 --> 00:03:45,080 Speaker 1: not ask the public to you know, pitching to pay 75 00:03:45,120 --> 00:03:47,000 Speaker 1: for something, even if you're a billionaire. That's why they're 76 00:03:47,040 --> 00:03:49,120 Speaker 1: billionaires because they know how to ask those kind of questions. 77 00:03:49,600 --> 00:03:52,040 Speaker 1: But what they're gonna get is total control over a project, 78 00:03:52,400 --> 00:03:56,960 Speaker 1: you know, absent sort of the the needed public approval 79 00:03:57,040 --> 00:04:00,880 Speaker 1: for location and traffic and those types of things. But 80 00:04:00,920 --> 00:04:02,440 Speaker 1: other than that, this is their so they own it. 81 00:04:02,640 --> 00:04:04,840 Speaker 1: Do you believe the stadium is going to increase the 82 00:04:04,920 --> 00:04:07,040 Speaker 1: value of the semi sixers? And and and correct me if 83 00:04:07,040 --> 00:04:09,680 Speaker 1: I'm wrong? Do the do the Flyers play and most 84 00:04:09,680 --> 00:04:11,760 Speaker 1: Fargo as well? We're right? So this new endeavor is 85 00:04:11,800 --> 00:04:14,240 Speaker 1: going to basically be, um, the same thing, right, So 86 00:04:14,280 --> 00:04:15,840 Speaker 1: you can have ice hockey, you get a basketball, you 87 00:04:15,840 --> 00:04:18,560 Speaker 1: can have concerts. Is that correct? Um, It's une sure 88 00:04:18,600 --> 00:04:21,159 Speaker 1: at the moment. The the initial talk that I heard 89 00:04:21,240 --> 00:04:23,200 Speaker 1: was that they would like to bring in the Flyers 90 00:04:23,200 --> 00:04:25,560 Speaker 1: into the into the team, I mean into the stadium, 91 00:04:25,600 --> 00:04:27,320 Speaker 1: but that hasn't been decided yet. I think they're still 92 00:04:27,320 --> 00:04:31,320 Speaker 1: in the concept stage. Um, but yes, if I think ideally, 93 00:04:31,360 --> 00:04:33,160 Speaker 1: what they would like to do is have you know, 94 00:04:33,200 --> 00:04:36,640 Speaker 1: the same type of structure that they had at how 95 00:04:36,640 --> 00:04:38,400 Speaker 1: the World's Fargo. I think it's being broth teams in 96 00:04:38,440 --> 00:04:41,520 Speaker 1: there since they're owned by the same people. Obviously. Let 97 00:04:41,520 --> 00:04:43,360 Speaker 1: me ask a dumb question here, and you kind of 98 00:04:43,360 --> 00:04:47,040 Speaker 1: touched upon it. Why don't more teams do this fund 99 00:04:47,080 --> 00:04:50,760 Speaker 1: their own fancy stadiums instead of saddling taxpayers with the bill? 100 00:04:51,360 --> 00:04:55,159 Speaker 1: Or conversely, why do other teams insist on getting public 101 00:04:55,200 --> 00:04:58,520 Speaker 1: funding like the Buffalo Bills? Is it? Does it just 102 00:04:58,560 --> 00:05:00,520 Speaker 1: come down to the fact that they as they can. 103 00:05:01,080 --> 00:05:04,560 Speaker 1: Absolutely yes. I mean there are teams that know that, 104 00:05:05,080 --> 00:05:07,080 Speaker 1: um they can go to the public and say, hey, 105 00:05:07,080 --> 00:05:09,239 Speaker 1: we're gonna we're gonna leave, We're gonna go someplace else. 106 00:05:09,279 --> 00:05:12,320 Speaker 1: And you know, we all know that Americans love sports. 107 00:05:12,400 --> 00:05:14,560 Speaker 1: You know, there's fanatical team loyalty. They don't want to 108 00:05:14,600 --> 00:05:17,440 Speaker 1: see their team leave, you know, so they have a 109 00:05:17,480 --> 00:05:20,919 Speaker 1: bit of a leverage that they can use the taxpayers 110 00:05:20,920 --> 00:05:23,800 Speaker 1: to demand that. On the converse side, you know, I 111 00:05:23,800 --> 00:05:25,800 Speaker 1: mean if you look at there, there are real dangers 112 00:05:25,800 --> 00:05:28,039 Speaker 1: and I think public officials are starting to realize that. 113 00:05:28,120 --> 00:05:32,160 Speaker 1: Look at the Las Vegas Raiders when they moved to 114 00:05:32,279 --> 00:05:35,719 Speaker 1: Las Vegas recently. They used public financing seven and fifty 115 00:05:35,760 --> 00:05:39,160 Speaker 1: million dollars at the time, and Clark County sold bonds 116 00:05:39,279 --> 00:05:42,760 Speaker 1: right before COVID and the bombs are backed by hotel 117 00:05:43,040 --> 00:05:46,760 Speaker 1: um charted hotel rooms, so you know, they I'm sure 118 00:05:46,800 --> 00:05:48,880 Speaker 1: they weren't predicting that, but you know they had to 119 00:05:48,920 --> 00:05:51,800 Speaker 1: tap into reserves to make a first couple of bomb 120 00:05:51,800 --> 00:05:54,560 Speaker 1: payments on that, So there's a real danger that if 121 00:05:54,960 --> 00:05:58,000 Speaker 1: if the public pays for something that they're going to 122 00:05:58,040 --> 00:06:00,279 Speaker 1: get a return on their investment, and there are buddies 123 00:06:00,320 --> 00:06:03,600 Speaker 1: that have shown that that's questionable. Is a local community 124 00:06:03,680 --> 00:06:06,120 Speaker 1: going to spend enough and taxpayer of money to get 125 00:06:06,240 --> 00:06:09,080 Speaker 1: enough in return to cover that cost? Could they spend 126 00:06:09,120 --> 00:06:11,520 Speaker 1: that money on something else that is you know, would 127 00:06:11,560 --> 00:06:14,479 Speaker 1: be spread out across the entire community versus just the 128 00:06:14,480 --> 00:06:17,120 Speaker 1: people who are going to benefit from having a stadium 129 00:06:17,120 --> 00:06:19,360 Speaker 1: in town. And Mike, I mean, just to be clear, 130 00:06:19,400 --> 00:06:21,719 Speaker 1: I mean, this is you're hitting on that nerve that 131 00:06:21,720 --> 00:06:24,320 Speaker 1: that that's resonating through China. For example, I mean the 132 00:06:24,360 --> 00:06:26,760 Speaker 1: Guangzhou Evergrand Stadium, which was supposed to all a hundred 133 00:06:26,800 --> 00:06:29,719 Speaker 1: thousand people in Guangzo. I mean, you know that stadium 134 00:06:29,720 --> 00:06:31,400 Speaker 1: is not gonna be finished, right and you hear about 135 00:06:31,400 --> 00:06:33,799 Speaker 1: these stadiums that they built in these wonderful cities that 136 00:06:33,880 --> 00:06:36,599 Speaker 1: no one's really using right now in a post pandemic environment. 137 00:06:36,600 --> 00:06:38,640 Speaker 1: I mean, so you know, how do you kind of 138 00:06:38,760 --> 00:06:41,960 Speaker 1: you know, think about you know Philadelphia and the city Philadelphia, 139 00:06:41,960 --> 00:06:44,640 Speaker 1: and we all know the some of the things that 140 00:06:44,640 --> 00:06:47,880 Speaker 1: have happened within the Pennsylvania government. You know, the Pennsylvania 141 00:06:47,880 --> 00:06:50,280 Speaker 1: State Employee Retirement System, some of the decisions they made, 142 00:06:50,279 --> 00:06:52,919 Speaker 1: some of the pension assets that they've lost. You know, 143 00:06:52,920 --> 00:06:55,159 Speaker 1: how do you how do you go to the government, 144 00:06:55,160 --> 00:06:57,160 Speaker 1: how do you go to the state of Pennsylvania and 145 00:06:57,200 --> 00:07:00,240 Speaker 1: make this request? How do you think Blackstone is pro hair? 146 00:07:00,279 --> 00:07:02,960 Speaker 1: And how is Josh Harris going about that? Right? I mean, 147 00:07:02,960 --> 00:07:05,320 Speaker 1: I think that and you if you read their statements, 148 00:07:05,360 --> 00:07:07,720 Speaker 1: they were they were very very cognizant of that they 149 00:07:07,720 --> 00:07:11,240 Speaker 1: were not going to go and ask local taxpayers for money. 150 00:07:11,320 --> 00:07:13,640 Speaker 1: And they specifically thought, you know, after everything we've been 151 00:07:13,640 --> 00:07:16,760 Speaker 1: through recently, it's just not the right time for billionaires 152 00:07:16,800 --> 00:07:19,680 Speaker 1: to go and ask, you know, the blue collar workers 153 00:07:19,840 --> 00:07:23,680 Speaker 1: of Philadelphia for you know, some of their harder and 154 00:07:23,720 --> 00:07:25,840 Speaker 1: tax money to pay for a stadium, and we can 155 00:07:25,840 --> 00:07:29,200 Speaker 1: build it ourselves. Um. And you know, there, I'm sure 156 00:07:29,240 --> 00:07:31,400 Speaker 1: that you know, this is gonna this is going to 157 00:07:31,480 --> 00:07:35,680 Speaker 1: do well with the city because it's privately financed. But 158 00:07:36,480 --> 00:07:38,840 Speaker 1: location is also something that they did have another plan 159 00:07:38,880 --> 00:07:41,000 Speaker 1: where they were going to privately finance and the city 160 00:07:41,040 --> 00:07:43,200 Speaker 1: said no, it was a waterfront property. And the city said, 161 00:07:43,200 --> 00:07:45,160 Speaker 1: I think we can do something better with that property. 162 00:07:45,600 --> 00:07:47,040 Speaker 1: You know, So I think that they saw that there 163 00:07:47,120 --> 00:07:48,520 Speaker 1: was an up the city saw that there was an 164 00:07:48,520 --> 00:07:52,120 Speaker 1: opportunity to earn more off of that private waterfront development 165 00:07:52,120 --> 00:07:55,400 Speaker 1: than building a stadium there. So the local officials are 166 00:07:55,440 --> 00:07:58,760 Speaker 1: making some you know, really sort of focused decisions when 167 00:07:58,760 --> 00:08:01,480 Speaker 1: they go about doing this. So the website for the 168 00:08:01,520 --> 00:08:05,920 Speaker 1: seventi sixers promotes the project as privately funded, no city subsidies. 169 00:08:06,440 --> 00:08:09,360 Speaker 1: When I read that, I thought, huh, interesting, no city subsidies, 170 00:08:09,400 --> 00:08:12,440 Speaker 1: But it doesn't preclude state subsidies or any other kind 171 00:08:12,440 --> 00:08:15,520 Speaker 1: of subsidies. How accurate is that statement in does it 172 00:08:15,840 --> 00:08:21,040 Speaker 1: give um the Harris Blitzer Sports and Entertainment Company room 173 00:08:21,120 --> 00:08:24,760 Speaker 1: to maneuver for other kinds of financing public and there 174 00:08:24,800 --> 00:08:26,680 Speaker 1: were right, there are two parts of that. I think 175 00:08:26,720 --> 00:08:29,600 Speaker 1: that you know, oftentimes what is left out of that 176 00:08:29,640 --> 00:08:31,600 Speaker 1: discussion when they say this is going to be privately 177 00:08:31,600 --> 00:08:36,320 Speaker 1: financed is you know, local infrastructure financing that needs to 178 00:08:36,360 --> 00:08:38,480 Speaker 1: be done on a property before. And you know, I 179 00:08:38,559 --> 00:08:40,720 Speaker 1: believe that happened out here in Sacramento when they built 180 00:08:40,760 --> 00:08:43,920 Speaker 1: the arena for the Sacramento Kings. You know, the local 181 00:08:44,200 --> 00:08:48,120 Speaker 1: the local government paid for some changes to infrastructure, water sewers, 182 00:08:48,240 --> 00:08:52,280 Speaker 1: feets and that type of stuff that you know, ideally, 183 00:08:52,320 --> 00:08:54,160 Speaker 1: you know, why would taxpayers have to pay for that, 184 00:08:54,200 --> 00:08:55,800 Speaker 1: but they're going to benefit from that. I think that's 185 00:08:55,800 --> 00:08:59,679 Speaker 1: a legitimate um expense for the taxpayers. But that is 186 00:08:59,720 --> 00:09:01,480 Speaker 1: a a subsidy at the end of the day. And 187 00:09:01,520 --> 00:09:03,560 Speaker 1: we don't know if that's what's going to happen here. 188 00:09:04,000 --> 00:09:07,359 Speaker 1: Will taxpayers have to pay for a portion of the 189 00:09:07,400 --> 00:09:10,680 Speaker 1: site development before it gets ready for building up what 190 00:09:10,840 --> 00:09:15,800 Speaker 1: is basically a private operation? UM, So you know, and 191 00:09:15,840 --> 00:09:18,320 Speaker 1: I think that that's the thought that's going to be 192 00:09:18,320 --> 00:09:22,400 Speaker 1: going into local policymakers as they sit down and decide 193 00:09:22,840 --> 00:09:24,480 Speaker 1: do does the state want to pitch? And I be 194 00:09:24,520 --> 00:09:26,560 Speaker 1: really surprised if the states stepped up and said they 195 00:09:26,559 --> 00:09:29,240 Speaker 1: were going to provide money, because you know, the UM 196 00:09:29,760 --> 00:09:32,160 Speaker 1: Josh Harris and David Blitzer and David Adaman have been 197 00:09:32,200 --> 00:09:34,680 Speaker 1: very adamant about this being privately financed. I think it 198 00:09:34,720 --> 00:09:37,520 Speaker 1: would not sit well with locals if they came back 199 00:09:37,559 --> 00:09:39,360 Speaker 1: and said, we're sure the city isn't paying for it, 200 00:09:39,400 --> 00:09:41,199 Speaker 1: but the state's going to give us a billion dollars. 201 00:09:41,600 --> 00:09:43,920 Speaker 1: I don't think that would go over well. Michael, thank 202 00:09:43,960 --> 00:09:46,440 Speaker 1: you so much for sharing your expertise with us. On 203 00:09:46,480 --> 00:09:49,800 Speaker 1: this Bloomberg Markets editor Michael Moroys, who is joining us 204 00:09:49,800 --> 00:09:52,640 Speaker 1: from Sacramento. Thank you. This is the Bloomberg Business of 205 00:09:52,679 --> 00:09:55,600 Speaker 1: Sports podcast. I'm Scarlett Fod here with Damien Sassaur and 206 00:09:55,640 --> 00:09:58,360 Speaker 1: of course you can catch us here each and every Monday, 207 00:09:58,360 --> 00:10:01,400 Speaker 1: Wednesday and Thursday, where we explore all the issues in 208 00:10:01,440 --> 00:10:04,000 Speaker 1: the world of money and sports. You can also follow 209 00:10:04,080 --> 00:10:06,840 Speaker 1: us on Twitter. I'm on Twitter at Scarlet Foo and 210 00:10:07,000 --> 00:10:10,200 Speaker 1: I'm on Twitter at the hour you're listening to Bloomberg 211 00:10:10,200 --> 00:10:12,520 Speaker 1: Business of Sports on Bloomberg Radio around the world.