Speaker 1: This is Wall Street Week. I'm David Weston bringing you
Speaker 1: stories of capitalism this week. How women are gaining on
Speaker 1: men in the professional sports race, particularly in soccer and basketball.
Speaker 1: Plus how all professional sports for men and for women
Speaker 1: has become an important alternative asset class for investors, and
Speaker 1: putting your money where your faith is the growing role
Speaker 1: of faith based investment. But we start with a story
Speaker 1: about course correction when things aren't going so well and
Speaker 1: when some adjustments may be warranted. China began its annual
Speaker 1: Two Sessions meeting this week to set its economic course
Speaker 1: as it faces problems with consumer confidence for an investment, outflows,
Speaker 1: the housing market, and more tariffs from President Trump. We
Speaker 1: asked our special contributor, Larry Summers of Harvard, whether China
Speaker 1: is on its way back.
Speaker 2: I think is too early to know for sure. I
Speaker 2: think that the technology developments on around Deep Seak are
Speaker 2: an important reminder of China's profound technological capacity. I think
Speaker 2: there are signs that the Chinese government is having, frankly,
Speaker 2: the kind of experience that often happens in societies where
Speaker 2: fear does the work of reason.
Speaker 3: Their fear of economic stagnation is driving a reprochmall with
Speaker 3: their technology businesses which have enormous potential economic energy, and
Speaker 3: there are some signs that the commitment to economic reform
Speaker 3: is increasing in China. I also have to say that
Speaker 3: I think the degree of division that has been created
Speaker 3: in the last two weeks between the United States and Europe,
Speaker 3: the degree of abandonment of the developing world that the
Speaker 3: United States has manifest with its attack on developing countries
Speaker 3: with efforts to essentially eliminate our international aid agencies, that
Speaker 3: is also an immense strategic gift to China. And I
Speaker 3: cannot imagine a greater strategic gift over the medium and
Speaker 3: long term to China than the prospect that has been
Speaker 3: raised by the Secretary of Defense with White House support
Speaker 3: of eight percent annual defense cuts for the United States
Speaker 3: on an annual basis going forward.
Speaker 1: Elizabeth Economy, senior fellow at the Hoover Institution, gave us
Speaker 1: an overview of the two sessions, what they could mean
Speaker 1: for the direction of the Chinese economy and how the
Speaker 1: United States might respond.
Speaker 4: And it's not just about the economy. They're going to
Speaker 4: look at foreign policy. They're going to look at the
Speaker 4: judiciary and the anti corruption campaign, they'll look at the military.
Speaker 4: And then third, it's an opportunity to present new proposals
Speaker 4: and ideas for legislation, and they'll present a couple thousand
Speaker 4: different proposals over the course of the year and then
Speaker 4: debate them during this period. So it's a kind of
Speaker 4: interesting moment, But fundamentally this is about assessing how successful
Speaker 4: has the Chinese government been and what do they need
Speaker 4: to do moving forward.
Speaker 1: Put us in the seats of some of the delegates,
Speaker 1: what are the challenges do you think that they are
Speaker 1: looking at right now?
Speaker 4: And there's no doubt that the Chinese economy, I think
Speaker 4: from COVID until now has faced a pretty significant set
Speaker 4: of challenge. Is at the same time, you know, January
Speaker 4: was not so bad. You had the breakthrough of China's
Speaker 4: ai company Deep Seek, you had some good news in
Speaker 4: the property sector, some good news in lending. So I
Speaker 4: think there there's enough that sigen Ping and the sort
Speaker 4: of Chinese leadership can speak to that's reasonably positive. And
Speaker 4: they'll try to make the case that right now they're
Speaker 4: going through some challenges, but they see the path forward
Speaker 4: and ultimately they will succeed. So the delegates know the
Speaker 4: reality of the economy on the ground. But they're going
Speaker 4: to be also, you know, caught in the middle of
Speaker 4: some pretty positive propaganda that the leadership is going to
Speaker 4: try to feed to.
Speaker 1: Them as they come together with a plan for the future.
Speaker 1: What levers could they pull? I mean, and let me
Speaker 1: be specific, how much fiscal headspace do they have, because
Speaker 1: I've read a lot of things at the level of
Speaker 1: debt that actually may be underestimated. I'm part of the
Speaker 1: Chinese government, right.
Speaker 4: So, you know, they put forward an number of steps
Speaker 4: fiscal stimulus back in September, and again it seemed to
Speaker 4: have some some positive have some positive implications for the economy.
Speaker 1: How would you describe the overall economic goals of China
Speaker 1: of the Chinese government right now?
Speaker 4: I mean, China has a number of goals, I think,
Speaker 4: you know, one goal certainly is to prompt proof the economy.
Speaker 4: Uh you know, she didn't Ping, you know, announced his
Speaker 4: theory of dual circulation, which is basically the idea that
Speaker 4: China can innovate, manufacture, and consume largely within itself. He says,
Speaker 4: you know, the Chinese economy is incomparable in terms of
Speaker 4: its size and its ingenuity. It wants to continue to
Speaker 4: export to continuing to have you know, foreign manufacturers depend
Speaker 4: on China for parts of their supply chains. But you know,
Speaker 4: for the most part, he wants to insulate China from
Speaker 4: the pressures of the global economy. I think that's one
Speaker 4: big goal. Again, I think number two, they want to
Speaker 4: you know, make China the leading innovation power in the world.
Speaker 4: They want to increase GDP per capita that's really slowed
Speaker 4: down in the past couple of years. You know, they
Speaker 4: want consumer spending to be rebooted.
Speaker 5: So I think they have a lot.
Speaker 4: Of different kinds of goals for their economy. Fundamentally, Xi Jinping,
Speaker 4: i think, is saying this is a difficult period for us,
Speaker 4: but it's part of our industrial upgrading. These are sort
Speaker 4: of normal bumps in the road. Once we get through these,
Speaker 4: you know, challenges, it's you know, we're going to see
Speaker 4: the Chinese economy take off. So I think there are
Speaker 4: a lot of different elements to this. In terms of
Speaker 4: what Chi Jinping wants to see moving forward.
Speaker 1: Let me ask about two specific sectors. One is I
Speaker 1: call it green green energy. It can be ev solar panels,
Speaker 1: things like that. The other is tech does Jijimping need
Speaker 1: to win on those or is flourishing enough, and he
Speaker 1: need to beat the United States.
Speaker 4: Now, I think at this point this is a zero
Speaker 4: sum game in Chi Jinping's mind. And I think if
Speaker 4: you listen and if you've listened to his rhetoric over
Speaker 4: the past, you know, more than decades since he came
Speaker 4: to power about the East is rising and the West
Speaker 4: is declining, We're going to have the triumph of socialism
Speaker 4: over capitalism, and all the targets that he's put in place.
Speaker 4: He wants China to be the number one innovation power
Speaker 4: in the world, and that does mean supplanting the United States.
Speaker 4: So I do think that this is to some extent,
Speaker 4: you know, China beating the United States just to look at.
Speaker 4: One of the things that they're going to be looking
Speaker 4: at in the two sessions is how successful China has
Speaker 4: been with it's Made in China twenty twenty five program.
Speaker 4: And this was a plan that was put in place
Speaker 4: Undersigen Ping in twenty fifteen to ensure that Chinese companies
Speaker 4: would become the dominant manufacturers in China across ten critical
Speaker 4: cutting edge technologies like clean tech, like new materials, like
Speaker 4: semiconductors like medical devices, they'd become domestic champions and then
Speaker 4: become global champions, so they would dominate the global economy.
Speaker 4: And we've already seen this happen, I think to some
Speaker 4: extent in the sectors that you mentioned, or at least
Speaker 4: in the clean tech sector. I think we should expect
Speaker 4: to see China in the low end semiconductors, in new
Speaker 4: materials in AI do exactly what it's done in the
Speaker 4: clean tech sector for those sectors as well. So we're
Speaker 4: going to be facing an enormous amount of overcapacity, an
Speaker 4: enormous amount of competition from Chinese companies moving forward.
Speaker 1: President Trump seems to have a somewhat different goal in mind.
Speaker 1: So let's flip over to the other side here. As
Speaker 1: we look at a new Trump administration that is imposing
Speaker 1: and threatening various sorts of tariffs, how big a risk
Speaker 1: is that for China.
Speaker 4: I think China has spent the past eight years preparing
Speaker 4: for the eventuality of more tariffs. There hasn't been a
Speaker 4: moment since the first Trump administration that there haven't been
Speaker 4: more tariffs placed on goods from China and various kinds
Speaker 4: of goods. So I think this is nothing new for them.
Speaker 4: I think they've taken several steps proactively to reduce the
Speaker 4: share of Chinese exports that over all that go to
Speaker 4: the United States. They've relocated some of their manufacturing to
Speaker 4: third countries to try to avoid the tariffs. They've tried
Speaker 4: to make progress in that idea of creating you know,
Speaker 4: fortress China to become less dependent on the global economy,
Speaker 4: including the United States. And I think critically, they've developed
Speaker 4: their own retaliatory toolkit. Right, So, when when we put
Speaker 4: tariffs on China, you know, China responds by putting you know,
Speaker 4: teriffs back on on US goods. They you know, will
Speaker 4: single out US companies like Google or like Micron for investigations.
Speaker 4: And even if those investigations don't amount to much, the
Speaker 4: mere threat, the mere statement that they're going to do
Speaker 4: that can often spook suppliers and consumers inside China and
Speaker 4: make it very difficult for those companies. They've taken up
Speaker 4: export controls, right. So, we've seen arrange now of critical
Speaker 4: minerals that China has placed new licensing requirements on, and
Speaker 4: those are minerals that we need and metals that we
Speaker 4: need for our you know, defense industry. For our own
Speaker 4: clean tech industry. So China has a lot of tools
Speaker 4: at its disposal that is prepared to deploy.
Speaker 1: Coming up. Will the money follow the momentum of women's sports?
Speaker 1: That's next on Wall Street Week. This is a story
Speaker 1: about perseverance and the women who are laying the foundation
Speaker 1: for what looks to be a huge investment opportunity women's sports,
Speaker 1: where two of the fastest growing are the WNBA and
Speaker 1: the National Women's Soccer League.
Speaker 6: I think when you're looking at the women's sports space
Speaker 6: specifically in the last five years, what you're seeing in
Speaker 6: the surge of growth really begins with consumers.
Speaker 7: It wasn't really until the last five years that women's
Speaker 7: sports has had as much ability to be broadcast than
Speaker 7: ever before.
Speaker 8: You're finally putting this product in the right spotlight, and
Speaker 8: it is exploding in popularity.
Speaker 1: From tennis to volleyball, to soccer to basketball. Women are
Speaker 1: bringing it both on and off the courts and the pitches,
Speaker 1: with women's sports sponsorships attracting over a billion dollars and
Speaker 1: total team valuations predicted to increase from two point six
Speaker 1: billion dollars in twenty twenty three to four point three
Speaker 1: billion dollars in the next three years.
Speaker 2: Number one, don't live it up.
Speaker 1: There is no question that women are fueling fandoms across stadiums,
Speaker 1: fields and arenas, but is it sustainable.
Speaker 7: Little by little we've been able to see huge increases
Speaker 7: in viewership and investment. With that comes the investment that
Speaker 7: we're now seeing today, where people are really seeing more
Speaker 7: viewership their form, more attendance their form, more sponsorship their form,
Speaker 7: more merchandise being sold, and that all leads to more
Speaker 7: external dollars coming into the ecosystem saying I believe that
Speaker 7: this is an economy that we can support and that
Speaker 7: also will have great returns.
Speaker 1: More fair Level is the executive vice president of Wasserman's
Speaker 1: The Collective, a women focused global advisory business whose mission
Speaker 1: is to drive investment in women's professional sports.
Speaker 7: The exciting part right now about women's sports is that
Speaker 7: we're seeing similar types of investors in women's sports, which
Speaker 7: means that women's sports has reached a point where true
Speaker 7: capital partners are coming in looking at how can they
Speaker 7: invest in this Nason economy.
Speaker 1: Women's sports might still be new on the scene, but
Speaker 1: they're growing fast. WNBA attendance almost doubled from twenty twenty
Speaker 1: three to twenty twenty four, and in women's soccer, the
Speaker 1: twenty twenty four final alone drew nearly a million viewers,
Speaker 1: nearly twice the audience as its men's counterpart, and the
Speaker 1: money is following the eyeballs, as media rights for the
Speaker 1: NWSL jumped from one point five million dollars to sixty
Speaker 1: million dollars in the most recent deal.
Speaker 9: What it's.
Speaker 1: Given the numbers, it's no surprise that investors are paying attention,
Speaker 1: leading Laval to work with RBC to produce a study
Speaker 1: on the investment opportunities that women's sport provide.
Speaker 7: We started this particular study with RBC, which is our
Speaker 7: second study with them earlier in twenty twenty four. Really
Speaker 7: wanted to look at the trends that we were seeing
Speaker 7: about how much money was starting to come into From
Speaker 7: an investment perspective, we were seeing an enormous amount of
Speaker 7: private equity coming in different venture capital groups, individual family offices,
Speaker 7: driving some real dollars into women's teams and leagues, and
Speaker 7: so we wanted to stop and think about from an
Speaker 7: RBC wealth investor perspective, how these teams and leagues would
Speaker 7: prove to be really good investment for them, and so
Speaker 7: we set out to look at this specifically through NWSL
Speaker 7: and WNBA because they are the most mature leads in
Speaker 7: the United States, and really looked at very specific variables,
Speaker 7: particularly the revenue drivers.
Speaker 8: It's amazing to me that we've reached a point where
Speaker 8: this younger generation, this is their normal. They're normal is
Speaker 8: that female athletes are able to play in a stadium
Speaker 8: like this sold out with an incredible amount of fans.
Speaker 1: Chris and Angie Long are among those who have become investors,
Speaker 1: leading the group that bought the NWSLS Kansas City Current give.
Speaker 10: It full panoramic view. As more and more opportunities to
Speaker 10: watch women's sports have arisen, you've naturally now seen this
Speaker 10: massive growth and popularity because at the end of the day,
Speaker 10: it's all about the product on the field. When you
Speaker 10: have a product that's as fantastic as women's sports, there's
Speaker 10: no doubt it's going to be successful.
Speaker 8: We have been big sports fans. We actually were season
Speaker 8: ticket holders to a bi professional women's team that was
Speaker 8: in Kansas City, and I think you know our experience
Speaker 8: in twenty nineteen being in Paris at the Women's World
Speaker 8: Cup really was enlightening to see the opportunity from an
Speaker 8: investment side, especially in light of the tremendous amount of
Speaker 8: global growth in the women's game.
Speaker 1: In building their franchise in Kansas City, the Lungs are
Speaker 1: focused on their brand.
Speaker 10: One of the leading jersey sales.
Speaker 1: And one of the things that has limited the growth
Speaker 1: of women's professional sports franchises, a dedicated place to practice.
Speaker 11: And play this whole space is the Kanti State Current.
Speaker 11: I think that alone is a big differentiator because most
Speaker 11: other women's teams are playing in someone else's stadium, so
Speaker 11: they're relegated to a smaller space that might be more
Speaker 11: akin to a visitor's locker room. I think one of
Speaker 11: the things that is harder to put a value on,
Speaker 11: but incredibly important is brand recognition. The first year that
Speaker 11: we had a team, it was a little bit like, oh,
Speaker 11: did you know there's a women's professional team in Kansas City.
Speaker 5: Now to the point.
Speaker 8: Where we are now where if we go somewhere and
Speaker 8: travel outside the country, people say, oh, Kansas City, isn't
Speaker 8: that the place that built the stadium for the women's team.
Speaker 8: And the first thing you see when you drive into
Speaker 8: this city is this stadium.
Speaker 5: There's not a person.
Speaker 8: In Kansasity, the Midwest and a lot of the country
Speaker 8: that doesn't know about the Kansas City Current and the
Speaker 8: state and they play in.
Speaker 10: I think from a revenue perspective, I'm unaware of another
Speaker 10: women's professional sports team globally that's done as much revenue
Speaker 10: as we did this past year, which by the way,
Speaker 10: is only our fourth season in operation. So from a
Speaker 10: financial success standpoint, I think that speaks volumes.
Speaker 8: From a revenue growth perspective, we're doing fantastic. I think
Speaker 8: it is north of a twenty million dollars swing in
Speaker 8: revenue being in your own facilities. From a asset appreciation perspective,
Speaker 8: we're doing fantastic.
Speaker 10: You look at what you can do in women's sports
Speaker 10: today and the multiple invested capital versus the risk taken,
Speaker 10: it's out of whack. It's absolutely in the investor's favor,
Speaker 10: and I think that's part of the reason you're seeing
Speaker 10: a lot more capital pour in, including private equity firms
Speaker 10: and these new sports funds and all the things that
Speaker 10: are happening, I think are due to the fact people
Speaker 10: are realizing, wow, if I'm going to take an ill
Speaker 10: liquid asset investment like a sports team, I should get
Speaker 10: compensated for it. And there's no better game in town
Speaker 10: than what we're seeing on women's side.
Speaker 1: But there is another league taking women's sports to the
Speaker 1: next level, the WNBA. Since Caitlin Clark emerged as a
Speaker 1: budding superstar at the University of Iowa, women's basketball has skyrocketed,
Speaker 1: garnering the league more fans and opening up new markets.
Speaker 6: We are the first expansion team since two thousand and eight.
Speaker 6: Last was Atlanta and then following us we have Portland
Speaker 6: in Toronto next year. So growth of WMBA has been
Speaker 6: a long time coming and it's taken many years to
Speaker 6: get here. This building has actually always been here for
Speaker 6: the Golden State Warriors, and now it's our Valkyrie's Performance Center.
Speaker 6: So this is the area that you know, the championships
Speaker 6: were one before Chase Center was Bill Steph Curry is
Speaker 6: in Steph Curry. Yeah, small name, right, and now we've
Speaker 6: had an opportunity to make it our own.
Speaker 1: Jess Smith was the head of revenue for the NWSL's
Speaker 1: Angels City Football Club, where she introduced new sponsorship models
Speaker 1: and broke records in attendance. She is now the president
Speaker 1: of the WNBA's Golden State Valkyries the first expansion team
Speaker 1: in seventeen years.
Speaker 6: When you look back during COVID, WNBA actually got together
Speaker 6: and played.
Speaker 5: They were the first league to do this.
Speaker 6: It was also a really key moment to where consumers
Speaker 6: were sitting at home on their couch looking for entertainment
Speaker 6: and tuning in and really taking note of these incredible athletes,
Speaker 6: really taking note of what they were standing for when
Speaker 6: it came to social justice, and there was an unlock
Speaker 6: that began to happen with consumers and women's sports.
Speaker 5: So as consumers.
Speaker 6: Began to unlock giving those ratings, began to unlock buying merchandise,
Speaker 6: buying tickets, and understanding that their dollars in time and
Speaker 6: interest was driving the growth of the w Media listened right,
Speaker 6: teams listened, leagues listened, and more investment began to come in.
Speaker 6: And those consumers have really really rewarded everyone in that
Speaker 6: circle that is equated to the growth.
Speaker 1: When we talk about growth, how do you measure it?
Speaker 1: What are the metrics you pay attention to?
Speaker 6: There's two things. One is money and revenue. Right, are
Speaker 6: your revenue lines growing? Are you investing the right way
Speaker 6: to make sure that those are growing exponentially, And two
Speaker 6: is fandom. How many people are coming into your ecosystem
Speaker 6: through purchases but also followship on social media or TV ratings,
Speaker 6: And so if you're looking at both of those, the
Speaker 6: growth is very significant, but we have a close eye
Speaker 6: on both every single day.
Speaker 1: As fast as women's professional sports are growing, they still
Speaker 1: lag behind their male counterparts, at least for the most part.
Speaker 1: Where the NBA Playoffs averaged four point five million TV
Speaker 1: viewers last year, the WNBA had one point one million.
Speaker 1: Twenty two point five million fans attended NBA games in person,
Speaker 1: where the WNBA had two point four million, But the
Speaker 1: gap is closing. Viewership numbers were up one hundred and
Speaker 1: thirty nine percent for the women last year, but down
Speaker 1: twelve percent for the men. You have a foundation in
Speaker 1: both men's and women's sports from your experience, what's different
Speaker 1: about the two.
Speaker 6: That's a really good question. I don't know if I've
Speaker 6: been asked that way before. I would say the assumptions
Speaker 6: of things in women's sports, it's been assumed that when
Speaker 6: you create a product, well, you better not lose any money.
Speaker 6: And it's just interesting the standard that has existed there
Speaker 6: before I joined the Angel City, I was in certain
Speaker 6: rooms where organizations would think about should we get a
Speaker 6: women's team, should we explore this? And what was really
Speaker 6: interesting about the mindset there was that it was the
Speaker 6: conversation always came back to, well, if we sold four
Speaker 6: thousand tickets, maybe we wouldn't lose money, instead of what
Speaker 6: would it take to sell this out? That advantageous opportunity
Speaker 6: to build a product and build a business and seek
Speaker 6: revenue and be relentless about it seemed to be lacking
Speaker 6: from my personal experience when having the ability to kind
Speaker 6: of compare it to and think of the rooms that
Speaker 6: I was in at Angel City. What was beautiful about
Speaker 6: that experience was we had so many people from outside
Speaker 6: of sport really using sport as an opportunity to create
Speaker 6: a better tomorrow, but wanted to build a sports product
Speaker 6: because it was an untapped opportunity. How do we create
Speaker 6: the most robust partnership portfolio and assets, How do we
Speaker 6: have the best content? And then you saw the market respond.
Speaker 6: And now you've seen that effectie and certainly within the
Speaker 6: different leagues and teams. You know, but that's that's only
Speaker 6: just getting started.
Speaker 7: Only in the last five years have we been able
Speaker 7: to see more games online, more clanging of the drum,
Speaker 7: for more viewership of all of these sports through both
Speaker 7: social media and through these athletes just having a bigger
Speaker 7: platform to say, hey, come and watch us.
Speaker 1: Hey, Fever fans is Caitlin Clark.
Speaker 5: I can't wait to get to Indianapolis. I know you
Speaker 5: guys are excited.
Speaker 1: I am to go Fever.
Speaker 6: There's often been so many misconceptions about audience in women's sports.
Speaker 6: So long people have said an NBA fan is a
Speaker 6: WNBA fan, And what we know about our consumers is
Speaker 6: that it really is for everyone. I don't know if
Speaker 6: you've seen the T shirts that say everyone watches women's sports,
Speaker 6: and that statement is so powerful because it's true. The
Speaker 6: audience is actually pretty much fifty percent men and women.
Speaker 6: It's not a women's product for women. This is an
Speaker 6: incredible product for everybody.
Speaker 1: With all the success of the WNBA, it's still less
Speaker 1: than the NBA in terms of dollars, in terms of audiences,
Speaker 1: but it's growing faster the NBA. Can you see a
Speaker 1: day that actually the WNBA overtakes the NBA.
Speaker 6: I don't think it's about overtaking. I think there's this
Speaker 6: limiting mindset that there can only be one like can
Speaker 6: there only be one NFL versus NBA? The answer is no.
Speaker 6: What I believe in what we're already seeing is that
Speaker 6: this league will be one of the most successful sports
Speaker 6: leagues in the world, regardless of gender. It's already the
Speaker 6: fifth most watched sport here in North America and we
Speaker 6: are only thirty years old. We have the best talent
Speaker 6: globally coming to this league, playing in this league, with
Speaker 6: an upward trajectory of expansion and growth and viewership and games,
Speaker 6: that's going to be unstoppable. But there's not a this
Speaker 6: or that. I do believe that this league will be
Speaker 6: amongst the greats globally. When we think of viewership and engagement.
Speaker 1: Coming up sports as an investment class, it's driven in
Speaker 1: part by the rapid growth of women's professional soccer and basketball.
Speaker 1: That's where weturn next on Wall Street Week. If the
Speaker 1: story of women's sports is one of dramatic growth, it
Speaker 1: comes against the backdrop of sports overall growing into a
Speaker 1: major asset class that has become an important alternative investment
Speaker 1: for many portfolios.
Speaker 12: The rate of change has been pretty incredible.
Speaker 1: Nicole Pullen Ross leads sports and entertainment solutions in private
Speaker 1: wealth for Golden Sacks.
Speaker 12: Whether it is the growth in women's basketball starting from
Speaker 12: college through the WNBA, or whether it's the valuations that
Speaker 12: we're seeing across various leagues, or whether there's the viewership
Speaker 12: that we're seeing, all of those things have converged in
Speaker 12: a way that has led our clients to think, I
Speaker 12: want to have exposure. I want to participate in this growth,
Speaker 12: both from a past perspective but also from a profitability perspective.
Speaker 1: As big as investing in sports is today, it wasn't
Speaker 1: always that way. It grew out of agents representing athletes
Speaker 1: and the related businesses that grew around them. George Pine
Speaker 1: was one of those at the Iconic IMG and watched
Speaker 1: the private equity business grow around it.
Speaker 13: When you kind of take a step back and you
Speaker 13: look at sports, it's primarily been run by governing bodies
Speaker 13: and families, and they were very conservative in the application
Speaker 13: of capital and the use of capital, and so therefore
Speaker 13: outside sources of the capital didn't see this as a
Speaker 13: viable entry point. But as time has gone by and
Speaker 13: the meteorites have increased in sports and the audience and
Speaker 13: the abidity of sports of increase, so has the value
Speaker 13: of the teams, so is the value of the industry,
Speaker 13: and so has the opportunities within the sport.
Speaker 14: Early in my career I was involved in one of
Speaker 14: the sort of archetypal sport businesses, IMG Worldwide, my mentor
Speaker 14: Ted Forsman, acquired in the early part of the Oughts.
Speaker 1: Josh Empson is another IMG alone. He is now the
Speaker 1: new co head of Sports at investment and advisory firm
Speaker 1: Sixth Street, owner and investor in sports teams such as
Speaker 1: FC Barcelona, Real Madrid and the San Antonio Spurs.
Speaker 14: And the fascinating thing about the history of IMG is
Speaker 14: that the founder, Mark McCormick, was effectively the financial advisor
Speaker 14: for Arnold Palmer and then Jack Nicholas, and as he
Speaker 14: looked at this, he realized that Palmer and Nicholas were
Speaker 14: the value, not the league, not the tour that was
Speaker 14: organizing them. And McCormick realized and built that entire business,
Speaker 14: which became a multi billion dollar business, on the idea
Speaker 14: that they could be their own brand, they could bring
Speaker 14: the unique value to events, and I think that actually
Speaker 14: allowed in some ways gender parody. At an earlier stage
Speaker 14: and I think a lot of that is about the
Speaker 14: sponsorship ecosystem, right that they didn't have to win just
Speaker 14: on the court for the purse. You could find someone
Speaker 14: whoever was the charismatic number one in the world in
Speaker 14: either sport, could command a global audience for the period
Speaker 14: of their ascendancy and monetize it.
Speaker 1: Sports and investing in sports have come a long way
Speaker 1: from the days of representing Arnold Palmer and Jack Nicholas.
Speaker 1: In their size and scope including geographic scope, Yield Street
Speaker 1: estimates the sports universe to be a five hundred billion
Speaker 1: dollar market worldwide, with revenue coming from media rights, ticket sales, licensing,
Speaker 1: and sponsorships.
Speaker 13: So sports aggregates millions of people in a way that
Speaker 13: nothing else does. As a Super Bowl at one hundred and
Speaker 13: twenty six million viewers, it's very few things in America
Speaker 13: that bring one hundred and twenty six million people together.
Speaker 13: And then you have people that are passionate like Philadelphia
Speaker 13: Eagles fan. Though you have big audiences in a world
Speaker 13: that's fragmenting, that zero in around something that they love
Speaker 13: and have a passion for. That's what makes sports unique
Speaker 13: and then being more global, so for all of those reasons.
Speaker 13: Sports is becoming more and more attractive, and it wasn't
Speaker 13: that complex or sophisticated twenty years ago. In terms of
Speaker 13: capital markets.
Speaker 1: It's bigger and broader. But what is it that investors
Speaker 1: are looking for when they seek to own a piece
Speaker 1: of the sports pie.
Speaker 5: It really ranges.
Speaker 12: I would say some of our clients who are long
Speaker 12: term investors in the space have been investing as a
Speaker 12: private family for generations, and those families have really leaned in,
Speaker 12: mostly around passion, and we're seeing them look not only
Speaker 12: to the sport that they may have started with, but
Speaker 12: look at multiple sports, potentially in the same city or
Speaker 12: potentially across the world. And we see new investors who
Speaker 12: are trying to put a toe in the water, and
Speaker 12: they're doing that through some of the many growing number
Speaker 12: of private equity and institutional investors.
Speaker 5: Who have exposure to the space.
Speaker 12: Or they're doing it through a minority interest.
Speaker 1: It seems to me that owning a team might be
Speaker 1: a very different investment from having a minority interest in
Speaker 1: a team. Are they really different investment propositions?
Speaker 12: They cost a lot more, that's for sure. The average
Speaker 12: NFL team, for example, when the CBA was signed, was
Speaker 12: worth one point three billion or something like that. Today,
Speaker 12: the average team is worth more than nearly one and
Speaker 12: a half times that value, and so although there's been
Speaker 12: a lot of growth of billionaires, that's a much smaller
Speaker 12: list today than it was twenty years ago. And so
Speaker 12: when individuals are coming together to invest in this space,
Speaker 12: they're very much doing it in partnership. What they get
Speaker 12: for that investment very significantly. It could be great seats,
Speaker 12: good parking, increased engagement with the team, But in many
Speaker 12: cases it's not control. It's not the ability to direct
Speaker 12: where the team is going. So there's a very big
Speaker 12: difference between majority shares and minority shares.
Speaker 1: And it's not just team ownership in whole or in
Speaker 1: part that provides sports businesses to invest in. A host
Speaker 1: of ancillary businesses have grown up around teams that can
Speaker 1: provide attractive investment opportunities, which is at the center of
Speaker 1: Pine's private equity business.
Speaker 13: There are different ways you can look at sports today.
Speaker 13: So the traditional has been investing in teams or leagues,
Speaker 13: which are very safe investments, typically illiquid and the longer holds,
Speaker 13: but have a certain return threshold. So we've invested in
Speaker 13: data companies We've invested in webs apps and streamings. I
Speaker 13: own a company in Amsterdam that lights the pitch and
Speaker 13: creates a software so we can predict on the pitch
Speaker 13: or the field whether the moss is going to grow
Speaker 13: with the conditions are and you know, as the media
Speaker 13: rights go up and the team valuations. The pitch is
Speaker 13: the quality of your product and the safety of product.
Speaker 12: I think the revenue landscape and the diversity of revenue
Speaker 12: has certainly grown over the past several years. You talk
Speaker 12: to team owners about having the best experience for their
Speaker 12: clients and their players, and then there's everything around the
Speaker 12: stadium or the arena. The ability for investors to participate
Speaker 12: in the revenue in the surrounding area has certainly been important.
Speaker 12: We have seen a community impact. A lot of the
Speaker 12: owners with whom we work talk about their investment and
Speaker 12: their team as a community investment, a civic investment because
Speaker 12: they are prominent players in the community.
Speaker 1: But given the dramatic expansion and diversification in the sports business,
Speaker 1: is there a danger of dilution? Typically when I think
Speaker 1: about value, I think about supply and demand. But it
Speaker 1: seems like they're is an unending new supply of sports,
Speaker 1: How can it be that the value keeps going up
Speaker 1: when there's more and more supply.
Speaker 13: People are thirsting for great storylines, right, And of course
Speaker 13: there are sports Formula One think about UFC didn't exist
Speaker 13: almost twenty years ago. Look how popular that is today.
Speaker 13: So there are sports that can break in in ways
Speaker 13: that nobody have an envisioned. And of course women's sports
Speaker 13: as attraction today that it's never had before.
Speaker 1: Is expansion your enemy as an investor?
Speaker 14: I think expansion is your enemy as an investor, but
Speaker 14: it's really more your opportunity. And that's because every time
Speaker 14: you expand, you light up fandom in a new market.
Speaker 14: Was Las Vegas a big hockey market before the Golden Knights?
Speaker 5: Probably not.
Speaker 14: Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 9: Yeah.
Speaker 14: If you look at the historical returns in sports, they've
Speaker 14: been surprisingly good. And some of that's been driven by scarcity,
Speaker 14: but not necessarily scarcity of franchises because all the leagues
Speaker 14: have expanded through this, but just a scarcity of other
Speaker 14: forms of content that are as engaging and energizing to
Speaker 14: such large fan bases. A fan is the value and
Speaker 14: if you come in and you're not investing in a
Speaker 14: way that's going to grow the value proposition for the fan,
Speaker 14: and that can be through upgrading the venue, it can
Speaker 14: be allowing the team to be more competitive.
Speaker 1: Sports competes with every other investment opportunity, and its status
Speaker 1: as an alternative investment doesn't stop it from keeping up
Speaker 1: with the main asset classes. Sports franchise valuations have outpaced
Speaker 1: the S and P five hundreds returns, especially in the
Speaker 1: past decade, but sport is a very different beast in
Speaker 1: a very different jungle. As we look at sports as
Speaker 1: an asset class, how does it differ from other alternative
Speaker 1: asset investing.
Speaker 14: Nobody's ever asked me that. It's a great question. I
Speaker 14: think one thing that's really different about sports as an
Speaker 14: asset class versus other forms of alternatives is the multiple
Speaker 14: layers of partnership. So when you invest in a sports
Speaker 14: franchise in the US, you have a partner who's going
Speaker 14: to be the control owner, and that's a person who
Speaker 14: has needs and ambitions that you're trying to support. You
Speaker 14: also exist within the framework of a league that has
Speaker 14: very particular rules and has its objectives and its goals.
Speaker 14: And then beyond that, and most importantly, you have this
Speaker 14: universe of fans and they care passionately about their team,
Speaker 14: and they are stakeholders in that equation, just the way
Speaker 14: the league and the owner is, and there is that
Speaker 14: implicit compact that if you're coming in, you're going to
Speaker 14: make this better for them as well as for the
Speaker 14: league and the owners. And it interesting to be in
Speaker 14: a dynamic where you have those multiple layers of stakeholders
Speaker 14: and you're trying to deliver value as an investor for
Speaker 14: all levels of that, and that feels pretty different from
Speaker 14: other forms of alternative investment. It's pretty satisfying when you
Speaker 14: get it right. But there's something special about investing in
Speaker 14: something that you can watch every Sunday, that you can
Speaker 14: come together with your family and sort of share what
Speaker 14: you're trying to do. I mean, it was pretty nice
Speaker 14: to be able to have that day where, you know,
Speaker 14: my son sort of said, what do you do? And
Speaker 14: I sort of could point to, you know, what we
Speaker 14: do together on a Sunday. The Super Bowl this year
Speaker 14: was held in a venue that just had an almost
Speaker 14: six hundred million dollar upgrade to make for a better
Speaker 14: fan experience also help it deal with things like modern
Speaker 14: demands for a stadium around climate change. That's not a
Speaker 14: costless proposition. You've got to invest to do that, and
Speaker 14: in some cases this can be billions of dollars.
Speaker 8: So far.
Speaker 14: Stadium, you know in Los Angeles was a multi billion
Speaker 14: dollar project. And as you start to think about this
Speaker 14: going from the actual stadium to the area around the
Speaker 14: stadium and really creating a neighborhood around the stadium, you know,
Speaker 14: the capital demand is just increasing, but so too is
Speaker 14: the opportunity to profit from it.
Speaker 1: Alternative investing may be different when it's not your sports team.
Speaker 1: To what extent are your investors we are looking for
Speaker 1: psychic benefits in addition to monetary benefits.
Speaker 12: Yeah, it's an interesting part of the equation, right, So
Speaker 12: there is a joy element to the return that you
Speaker 12: can't necessarily quantify, and what we ask our clients to
Speaker 12: do is not just focus on the joy part of
Speaker 12: the return, but to think about the overall picture. And
Speaker 12: for some clients that joy component is going to.
Speaker 5: Be at a higher higher on the.
Speaker 12: List of things that are important in the return and
Speaker 12: for others. For institutional investors, it's on the list. And
Speaker 12: so making sure that we're helping our clients think through
Speaker 12: how to set return expectations for themselves in terms of liquidity, etc.
Speaker 12: Is something that we feel is our opportunity to do
Speaker 12: to help them navigate the space. Alternatives in general are
Speaker 12: an area of significant interest for our clients, and the
Speaker 12: type of exposure that they're interested in is quite broad,
Speaker 12: and so this is only a piece of that for
Speaker 12: most of our clients. For some they really want to
Speaker 12: lean in and look at this as a primier investment.
Speaker 1: Faith based activist investing told through the eyes of Robbie Starbuck,
Speaker 1: who has put American corporations on the defense over their
Speaker 1: DEI policies, and why he says he is doing the
Speaker 1: Lord's will. That's next on Wall Street Week. This is
Speaker 1: a story about putting your money where your faith is,
Speaker 1: something that Americans have been doing since colonial days, but
Speaker 1: that recently has become a powerful tool for activist shareholders.
Speaker 15: The greatest savior beyond Jesus, in my view of the
Speaker 15: human race, has been capitalism.
Speaker 5: Nothing has saved lives the way capitalism.
Speaker 16: Has for faith investors' investment decisions and shareholder advocacy is
Speaker 16: religious practice.
Speaker 17: The Bible is our core tenet that we're seeking to
Speaker 17: try to hew closely to.
Speaker 1: There is a long history in the United States of
Speaker 1: investors merging their religious beliefs with their personal wealth.
Speaker 16: This is a movement inspired by faith.
Speaker 1: As Amelia Miazad, acting Professor at UC Davis School of Law,
Speaker 1: laid out in a New Law Review article.
Speaker 16: Faith based investing has a very long history in the
Speaker 16: United States. It dates back to the seventeenth century. Some
Speaker 16: early examples include the Quakers, who screened out what was
Speaker 16: known as sinstocks from their investment so for example, the
Speaker 16: slave trade, alcohol, what not to invest in, what to
Speaker 16: screen out with religious beliefs, and the beliefs were rooted
Speaker 16: in biblical scripture. During the Civil Rights movement, faith investors
Speaker 16: began to use their voice as shareholders through the shareholder
Speaker 16: proposal process. Some of the very earliest social shareholder proposals
Speaker 16: on issues ranging from apartheid to civil rights, to inclusion
Speaker 16: to climate risk before it was called climate risk. These
Speaker 16: things happened in late nineteen sixties and early nineteen seventies.
Speaker 1: More recently, faith based investing has grown past issues like
Speaker 1: civil rights, apartheid, and the Vietnam War. Some funds have
Speaker 1: embraced so called so responsible investing and the well known Environmental,
Speaker 1: Social and governance or ESG investing. And as the issues
Speaker 1: have grown, so have the total assets in faith friendly funds,
Speaker 1: up by some ninety billion dollars over the last twenty
Speaker 1: five years, with the pace of growth picking up even
Speaker 1: more between twenty eighteen and twenty twenty four.
Speaker 5: We help those that serve the Lord.
Speaker 17: We want to make sure that we're helping people to
Speaker 17: start well, stay well, and finish well.
Speaker 1: Brandon Pizzuro is the president of Guidestone, a faith based
Speaker 1: investment firm tracing its roots back to nineteen eighteen when
Speaker 1: it was started to support retired Southern Baptist ministers and
Speaker 1: their families. Today it manages over twenty four billion dollars
Speaker 1: in assets.
Speaker 5: So we leave out five key areas.
Speaker 17: That's abortion, alcohol, tobacco, sexual morality, and gambling. But there's
Speaker 17: also other areas such as predatory lending, THHC or cannabis production,
Speaker 17: even private prisons. So we're screening out several key areas
Speaker 17: verticals that we see that are antithetic to our moral
Speaker 17: and ethical posturing. But you're really only screening out a
Speaker 17: couple of percentage points out of some of the major
Speaker 17: indices the Bloombergaggregate Bond Index or even the SMP five hundred.
Speaker 1: Are you growing in the number and the size of
Speaker 1: the investments you have.
Speaker 17: We're certainly growing. It's been a slow burn. I think
Speaker 17: that's for all of us. In the faith based investing ecosystem,
Speaker 17: there continues to be growth. We believe the ecosystem for
Speaker 17: liquid security is in a faith aligned manner or about
Speaker 17: one hundred billion dollars. Our mutual fund complex is about
Speaker 17: twenty billion of that, but there certainly can be more
Speaker 17: than multiples of that two to three times, but some
Speaker 17: of the most current estimates are around one hundred billion
Speaker 17: dollar mark. We're not activists. We do engage in corporate engagement,
Speaker 17: certainly on the margin. We'd like to have our voice
Speaker 17: heard where we can, but we're not going after companies,
Speaker 17: so to speak. That's not the way in which we
Speaker 17: are seeking to have change.
Speaker 15: I'm not arguing that corporations should never do anything good
Speaker 15: for their community. What I'm arguing is they should engage
Speaker 15: in ways they're not divisive. But about those so called
Speaker 15: faith based investors who embrace DEI, I think that it's
Speaker 15: based on false doctrine, and you know, Christians would call
Speaker 15: it heresy. In many ways, we are now three for
Speaker 15: three taking down will companies enforcing changes.
Speaker 1: Robbie Starbuck is every bit the activists that Bizzurro says
Speaker 1: he is not. He's made big news by pushing companies
Speaker 1: to abandon their diversity, equity and inclusion efforts, and he's
Speaker 1: had more than his share of success.
Speaker 4: I push against DEI has spilled into corporate America, while
Speaker 4: the legal assault and diversity initiatives has actually gathered some steam.
Speaker 18: McDonald is no longer setting aspirational representational goals. The company
Speaker 18: is retiring its DEI pledge and its supply chain and
Speaker 18: renaming its diversity team as a Global Inclusion team.
Speaker 9: Walmart is reversing course on diversity equity and inclusion initiatives,
Speaker 9: joining a growing list of businesses retreating on DEI programs
Speaker 9: targeted by conservative activists.
Speaker 15: I've had these conversations with CEOs at major companies where
Speaker 15: they've asked, Okay, if we're getting rid of all these things,
Speaker 15: what are things you do think are non divisive? And
Speaker 15: I'll give them a list of things that I don't
Speaker 15: see as devices that I think everybody could broadly accept
Speaker 15: as good. Like look at JP Morgan, they spent thirty
Speaker 15: billion dollars on racial equas and it's a very broad term,
Speaker 15: but the way that they spent that money, in my view,
Speaker 15: is terribly irresponsible and it didn't do a service to
Speaker 15: the shareholders. It's like DEI in theory versus DEI in reality.
Speaker 15: I'm the one holding up a mirror of what it
Speaker 15: actually is in reality, because in theory, a lot of
Speaker 15: people really like the theory because it made them feel good.
Speaker 5: It's like warm, fuzzy words.
Speaker 14: Right.
Speaker 16: There's been a surge of shareholder proposals by Christians who
Speaker 16: believe that company should not embrace DEI and should not
Speaker 16: embrace pride parades, for example. This is a relatively new phenomenon,
Speaker 16: and there is a lot of ideological diversity even within
Speaker 16: the Christian investor community in the United States. The Christian
Speaker 16: investor community cannot be summarized on a bumper sticker.
Speaker 1: How did you first get started in Call it faith
Speaker 1: based investing, call it faith based activism? What got you
Speaker 1: into this?
Speaker 15: We think about our values, so it's not even necessarily
Speaker 15: we start from the top line of Hey, we need
Speaker 15: this to be Christian investing. Right, It's like what are
Speaker 15: our values where do they align? And I think that's
Speaker 15: something a lot of investors do. So when investors from
Speaker 15: the outside look at it, if they're not familiar with
Speaker 15: faith based investing, they are familiar with values based investing
Speaker 15: because a lot of investors do it.
Speaker 1: What is your ultimate goal? I mean part of it
Speaker 1: is the values of you and your family, your wife.
Speaker 1: Is it to sleep better at night and feel better
Speaker 1: that you're right with God? Or is it to change
Speaker 1: the behavior of the corporation?
Speaker 15: Well, I would say I have fundamentally two different ones.
Speaker 15: So from a faith based perspective, it's obviously my wife
Speaker 15: and I want to sleep all night. Know we're not
Speaker 15: investing in something that is diametrically opposed to our faith.
Speaker 15: Secondary goal for me, just as somebody who wants to
Speaker 15: see America win, is I want to see corporations get
Speaker 15: out of the business of divisive everything.
Speaker 5: So if something you're.
Speaker 15: Doing is going to be extremely divisive in the marketplace
Speaker 15: and it's going to divide your employees divide your consumers,
Speaker 15: I think it's bad business. And I think that a
Speaker 15: lot of the corporate world lost side of that, because
Speaker 15: ultimately my thesis is many corporate executives lost side of
Speaker 15: who their customer actually is. And so if you're embracing
Speaker 15: policies that are going to divide people, your business is
Speaker 15: going to suffer in the long run. On the side
Speaker 15: of say the DEI and Well policy, I've been very
Speaker 15: vocal because my desire there is to conform the companies
Speaker 15: to my values, because at the end of the day,
Speaker 15: I know, if they fully conform to my values, you're
Speaker 15: going to divide this other group of people when it's
Speaker 15: going to be incredibly unfair to them. So I'm not
Speaker 15: advocating for a total theocracy here in corporate America. It's
Speaker 15: more so I don't want to invest in companies that
Speaker 15: are going to diametrically oppose everything I believe in in
Speaker 15: such a visceral way that I would feel I'm doing
Speaker 15: it as service not just to my country but to
Speaker 15: my faith by investing in them.
Speaker 1: It raises a really fundamental question for me. At least,
Speaker 1: there are other face based investing outfits, investment firms things
Speaker 1: like that who have a very different view on diversity,
Speaker 1: equity inclusion. They're all for it, yeah, you're all against it,
Speaker 1: and they believe what they're doing is scriptural as well,
Speaker 1: so is one right and the other wrong.
Speaker 15: You know, there'll be people who are mad at me
Speaker 15: for this, but that's okay, that's not a new thing
Speaker 15: for me. It's you know, they believe in something that
Speaker 15: I would call comfortable christian which is one where you
Speaker 15: want to attract the largest number of people, but it's
Speaker 15: based off false doctrine. And so the idea for them
Speaker 15: is that they'll take a cherry picked line and say
Speaker 15: this line means that we need to behave this way.
Speaker 5: There is nothing in.
Speaker 15: The Bible that says we should you know, encapsulate our
Speaker 15: corporate structure around the idea that racism is okay. I
Speaker 15: don't think racism is ever okay and DEI. Ultimately, when
Speaker 15: you break it down, it does not mean that you
Speaker 15: love diversity.
Speaker 5: It doesn't mean that.
Speaker 15: You love inclusion, because if you look on the very
Speaker 15: top line just rational thinking, you immediately find that they're
Speaker 15: actually very much not inclusive of let's say Christians.
Speaker 1: No one should question the sincerity of anyone's faith, but
Speaker 1: how far does it go? Are faith based investors willing
Speaker 1: to give up returns for their true beliefs? Coming to
Speaker 1: investments and value based Christian based religious based investment. Are
Speaker 1: you willing to leave money on the table?
Speaker 15: Yes, that hasn't been the case, to be perfectly honest
Speaker 15: with you, but I am willing to one hundred percent
Speaker 15: because I look at it this way. I could die
Speaker 15: with a pot of money that's bigger, or I could
Speaker 15: die on my deathbed one day with my kids able
Speaker 15: to look at me and know that their dad had integrity,
Speaker 15: always lived by what he said.
Speaker 17: He was going to live by. We do have investment objectives.
Speaker 17: We have to be adherent to indexes and benchmarks that
Speaker 17: are well recognized. We have to compete versus the broad
Speaker 17: group of peers that compete in a similar asset class space.
Speaker 17: So while we might be willing to so called take
Speaker 17: a hit in some areas, I wouldn't necessarily characterize it
Speaker 17: as that.
Speaker 5: I think that we still have to have this.
Speaker 17: Values alignment as well as the return objective that are
Speaker 17: coherent with each other.
Speaker 15: At the end of the day, the thing that matters
Speaker 15: the most is that integrity, and so you've got to
Speaker 15: stick to what you've believe in even if it hurts.
Speaker 1: That does it for us On Wall Street Week, I'm
Speaker 1: David Weston. Join us next week for more stories of capitalism,