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Speaker 3: Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Speaker 3: Well a big week for US economic data. Reads on
Speaker 3: the US labor market, we got the Fed Beaige book,
Speaker 3: a few earnings continuing to trickle out as well. We
Speaker 3: even hit an all time high on the S and
Speaker 3: P five hundred. Just head to the Bloomberg or Bloomberg
Speaker 3: dot com for all the specifics and for more clues
Speaker 3: on the outlook. We leaned in big time on views
Speaker 3: from the c suite from industries that can tell us
Speaker 3: a lot about the US economy.
Speaker 4: On that this hour, we talked to the CITA CEO
Speaker 4: of commercial construction company Mackissick and McKissick, which has worked
Speaker 4: on some iconic projects in New York City think Barkley Center,
Speaker 4: the Oculus. Yeah, Billy Jean King Tennis Center.
Speaker 3: I had no idea.
Speaker 4: Yeah, they've done so much, She joins us with a
Speaker 4: somewhat sobering view.
Speaker 3: Yeah, it really kind of stopped us for a moment.
Speaker 5: Hey.
Speaker 3: Plus, we've got the billionaire real estate developer who is
Speaker 3: in the midst of the rebuild after the LA Fires
Speaker 3: earlier this year. He also may or may not be
Speaker 3: seeking public office in his home state of California. That
Speaker 3: interview to come.
Speaker 4: Also, for another read on the economy and the US consumer,
Speaker 4: we speak with the CEO of the buy Now, Pay
Speaker 4: Later company affirm that's Max Levchin.
Speaker 3: And later on in our second hour Bloomberg Power Players
Speaker 3: New York, we talked the business of sports with Derek Sprague,
Speaker 3: CEO of PGA America. Also baseball MVP Legend and sports
Speaker 3: team owner Alex Rodriguez, and Gary Bettman, NHL commissioner, and
Speaker 3: Ted Leonsis of Monumental Sports.
Speaker 4: All that to come. We begin with a look at
Speaker 4: construction and spending on big projects think airports, sporting arenas,
Speaker 4: hospitals and more. Jerald mcisock Daniel as president and CEO
Speaker 4: of Mackissick and Mackissick. It's a one hundred and twenty
Speaker 4: year old construction firm that's behind some well known and
Speaker 4: very large projects. We're talking Barkley Center, the Oculus in Manhattan,
Speaker 4: the new Terminal one at JFK International Airport, and Lincoln
Speaker 4: Financial Field where the Philadelphia Eagles play much more too.
Speaker 4: I want to start by just getting an understanding from
Speaker 4: you about the economy, where it is in your view,
Speaker 4: and if people are spending money.
Speaker 6: I think people are holding back a little bit. Of
Speaker 6: prices are high. I know as far as the construction industry,
Speaker 6: we are beginning to fill some of the tariffs, and
Speaker 6: so yeah, I think people are holding back on spending.
Speaker 4: Talk a little bit about where you're feeling the tariffs.
Speaker 6: Well, one in particular, I would say, is JFK Terminal one.
Speaker 6: We're finishing Phase A of that project, which is almost
Speaker 6: three million square feet in twenty twenty six, but we
Speaker 6: are scheduled to start work on Phase B and that's
Speaker 6: been pushed out, I believe because of tourism is not
Speaker 6: has decreased quite a bit to New York City.
Speaker 3: Wow, how much has it been pushed out?
Speaker 6: Well, right now, it's just slowed and it's been pushed
Speaker 6: out several.
Speaker 3: Months where else are you seeing that too in terms
Speaker 3: of projects that you guys are working on, because your
Speaker 3: portfolio is just vast and you cover, like we said, academia,
Speaker 3: just so many different kind of commercial aspects. Where else
Speaker 3: are things maybe being slowed down pushed out?
Speaker 6: Well, I mean I can only talk about the areas
Speaker 6: where we work, which is in rail and transportation. You know,
Speaker 6: FTA I think has slowed on releasing projects. As you know,
Speaker 6: several of their staff, more than i'd say fifty percent
Speaker 6: staff has been released, and so it was very difficult
Speaker 6: for them to push out the capital program projects that
Speaker 6: they do have. And so you know, the Gateway seems
Speaker 6: to be moving ahead just fine.
Speaker 4: And this is the Gateway tunnel between New York and
Speaker 4: New Jersey.
Speaker 6: Yes, okay, yes, yes, and I just pray that that continues.
Speaker 4: Well, let's I just want to contextualize that a single
Speaker 4: project of yours, this is the terminal one at JFK
Speaker 4: International Airport. It's a nine and a half billion dollars
Speaker 4: in value project. Your firm is working specifically on the
Speaker 4: oversight of project management construction management. As a government liaison,
Speaker 4: you also handle community outreach, so really runs the gamut
Speaker 4: of what you're working on. Can you give us an
Speaker 4: idea of the pipeline, Not necessarily projects that have been
Speaker 4: announced or where the shovel is in the ground, but
Speaker 4: projects that you're talking to municipalities about, projects that you're
Speaker 4: talking to academic institutions about that you're not necessarily ready
Speaker 4: to announce. But give us a good idea of what
Speaker 4: that pipeline looks like in terms of how these entities
Speaker 4: are ready to spend.
Speaker 6: Well, I think you know it's positive when we think
Speaker 6: about infrastructure projects, waterfront projects with New York City Economic
Speaker 6: Development Corporation, I believe the MTA projects are eventually going
Speaker 6: to move forward. I think the big frontier is some
Speaker 6: of the micro trips manufacturing plants like Mikron that's upstate
Speaker 6: New York. That's one hundred billion dollars. It's moving forward.
Speaker 6: And then right after that, I think it'll be the casinos.
Speaker 6: Once a casino owner, once the three licensing licenses are awarded,
Speaker 6: do you think you'll see starting there and that will
Speaker 6: be billions of dollars.
Speaker 4: Do you think New York City will get one of
Speaker 4: these licenses?
Speaker 6: Who knows? You know, if I had to bid on it,
Speaker 6: I would say probably not in Manhattan, inside of.
Speaker 4: Manhattan, so that would be maybe Queen's near the area
Speaker 4: close to City Field.
Speaker 6: Yeah, okay, Queens, Yeah, well absolutely.
Speaker 3: Cheryl talked to us about the environment, and you know,
Speaker 3: as you mentioned about what's going on in terms of
Speaker 3: various government officials or departments that you know, we're official
Speaker 3: where folks have been let go and show what that
Speaker 3: is doing to different projects. The political environment, the federal
Speaker 3: political environment. We talk about whether administrations, you know, are
Speaker 3: good for the business environment or not. And we do
Speaker 3: have folks who come on and say that this is
Speaker 3: an administration that's going to cut back some of the
Speaker 3: regulatory issues and make it easier better. Is it not
Speaker 3: making it better easier for what you do?
Speaker 6: I don't see evidence of that. You know, if you
Speaker 6: don't have people sitting behind the desk to actually push
Speaker 6: the workout, I don't see it getting better. And you know,
Speaker 6: I have to shift to our energy crisis that can
Speaker 6: potentially happen. You know now that the administration has really
Speaker 6: sunset all of the offshore and onshore wind projects that
Speaker 6: we terribly need to supplement our electrical systems. So I
Speaker 6: am very concerned about where we are headed.
Speaker 4: We're speaking right now with Cheryl McKissick. Daniel, President CEO
Speaker 4: of McKissick and McKissick. You mentioned the offshore when Bloomberg
Speaker 4: New Energy Finance BLOOMBERGETIAFF reporting that US offshore wind faces
Speaker 4: a twenty eight billion dollar hole. With President Trump's moves
Speaker 4: five under construction, US offshore wind farms, representing about twenty
Speaker 4: eight billion dollars of committed capital, faced severe delays and
Speaker 4: even cancelation after recent actions from the Trump administration. At
Speaker 4: McKissick and McKissick, do you work on offshore wind.
Speaker 6: We do not work on offshore wind. But I am
Speaker 6: a board of advisor for National Grid, and so I
Speaker 6: understand how critical these other resources are to our grid.
Speaker 6: You know, there's a high demand for electricity. Buildings that
Speaker 6: are being constructed now are one hundred percent electric. We
Speaker 6: have the ev cars, we have the data centers, and
Speaker 6: so electricity is critical for us. And I believe well
Speaker 6: we definitely were counting on these wind forms as another
Speaker 6: strong resource to help us supply the electricity we need.
Speaker 3: You sound show pretty negative, not I don't mean negative,
Speaker 3: but down on the environment, and I guess we were
Speaker 3: really looking forward to talking to you because we're trying
Speaker 3: to get an idea of the way forward in an
Speaker 3: environment where there's a lot of presidential pressure to cut
Speaker 3: interest rates, and there's some who say, well, wait to meet.
Speaker 3: The economy is doing just fine. We don't need that.
Speaker 3: I'm just trying to understand is it just the overall
Speaker 3: environment because of politics or is it higher rates? Like,
Speaker 3: what is it that you think is causing kind of
Speaker 3: the biggest issues for you?
Speaker 6: I think it's politics.
Speaker 3: Well do you feel do you feel targeted? Can I
Speaker 3: ask you as as the owner of a minority owner
Speaker 3: of a business.
Speaker 6: No, I don't feel targeted personally. You know, I think
Speaker 6: for some reason, there is a focus on DEI programs,
Speaker 6: and you know, it has not affected our business in
Speaker 6: New York, but it has affected our businesses in other
Speaker 6: states where municipalities have had to suspend their D and
Speaker 6: I programs if they wanted to get funding from the
Speaker 6: federal government. And so that is somewhat of a concern.
Speaker 7: Now.
Speaker 6: I hope that we continue to be isolated from that
Speaker 6: in New York. I don't know how much longer that
Speaker 6: will last.
Speaker 4: Do you get you know, on the website, I noticed
Speaker 4: the firm is referred to as quote the oldest minority
Speaker 4: women owned professional design and construction firm in the United States.
Speaker 4: Do you ever consider because of the political environment that
Speaker 4: we're in right now, not necessarily highlighting that.
Speaker 6: No, I do not feel that way. That's why I
Speaker 6: recently wrote my book, The Black Family Who Built America.
Speaker 6: I'm so glad that it's coming out in this time
Speaker 6: and in this age, because it is an account of
Speaker 6: our family history. After two hundred years when the first
Speaker 6: descent of our family came to this country in latest
Speaker 6: first brick, we are still here and we are an
Speaker 6: unshakable pillar of ingenuity and resilience. And this book is
Speaker 6: all about saying, you know, this is a receipt to
Speaker 6: say that we've always been here and we're not going anywhere.
Speaker 6: Black excellence may have been ignored, but that doesn't mean
Speaker 6: it's not here.
Speaker 4: Cheryl, you got to come back and join us. It's
Speaker 4: great to have you back here. Cheryl McKissick Daniel. The
Speaker 4: new book is called The Black Family Who Built America,
Speaker 4: The Mckissics Two Centuries of Daring Pioneers. It was out
Speaker 4: last month. Cheryl McKissick Daniel, President CEO of Mickissic and mckissic.
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Speaker 3: So we got a lot of economic data this past week, payrolls,
Speaker 3: joelt Sturbel Goods, some anecdotes thanks to the Fed's Beige Book.
Speaker 3: All of that helping to inform how investors are thinking
Speaker 3: about this economy as we are just about one and
Speaker 3: a half weeks away from the next FED decision.
Speaker 4: Also helping inform them is what we hear from the
Speaker 4: people who are big players in this economy. Caruso has
Speaker 4: over two point five million square feet of property assets,
Speaker 4: all owned and operated by Caruso, all capital two coming
Speaker 4: from within. The assets include upscale retail, resort, office and
Speaker 4: residential properties all across southern California. Rick Caruso has been
Speaker 4: investing in and developing property going back to nineteen eighty seven.
Speaker 3: Yes, he is the man behind the firm, Rick Caruso.
Speaker 3: He's also a philanthropist, a former president of the LA
Speaker 3: Police Commission, was part of the board of water and
Speaker 3: power commissioners, and has been involved in politics, notably running
Speaker 3: as a candidate for LA mayor in twenty twenty two.
Speaker 3: He leads a nonprofit aimed at accelerating private sector involvement
Speaker 3: in the LA area's massive rebuilding effort, known as steadfast LA.
Speaker 4: Rick joined US from Los Angeles. He began by discussing
Speaker 4: his view of the economy, particularly in southern California.
Speaker 1: I think it's still very robust, to be honest. Now,
Speaker 1: the data that I look at is obviously off of
Speaker 1: our properties, and our properties are growing in terms of
Speaker 1: attendance on a double digit basis year over years, so
Speaker 1: that's very strong. Our sales per square foot are continuing
Speaker 1: to grow at a very strong pace, and we have
Speaker 1: a lot of demand for retail space. So retailers, the
Speaker 1: best in class retailers are growing. You take a look
Speaker 1: at a broader picture, I think there's a little bit
Speaker 1: of softness out there in some of the categories. Luxury
Speaker 1: is not growing as much as it has. There's some
Speaker 1: luxury retailers that are for a bit, but I'm still
Speaker 1: pretty bullish on the consumer in the United States.
Speaker 4: We should remind everybody the properties and the developments that
Speaker 4: you've done have really served at the higher end of
Speaker 4: the consumer. People even outside of the Los Angeles area
Speaker 4: would be familiar with the Grove for example, or perhaps
Speaker 4: Miramar in Montecito, just around Santa Barbara, but the vast
Speaker 4: majority in the Southern California area. What about Southern California's economy,
Speaker 4: that economy that you focus on. What have you noticed
Speaker 4: in terms of changes in the last couple of years,
Speaker 4: as we've heard the steady drumbeat of information about people
Speaker 4: leaving the region because of the regulatory environment, the cost pressures,
Speaker 4: what have.
Speaker 1: You Well, I think you're right, and I think it's
Speaker 1: a challenge. So when you take a look at La
Speaker 1: City in particular La County, you do have a very
Speaker 1: over regulated, tough business environment, and it's very tough, especially
Speaker 1: on middle or small businesses to operate in the city
Speaker 1: because of the cost of operation. So you do have
Speaker 1: businesses leaving and that's troubling because the backbone of our
Speaker 1: economy in Southern California are the small businesses. So, you know,
Speaker 1: one of the things that we push for, I push
Speaker 1: for as just a business person and a member of
Speaker 1: this community, is to be more business friendly and to
Speaker 1: start deregulating so we can grow businesses in the Los
Speaker 1: Angeles region. And I think as a state, we have
Speaker 1: a problem with that. We have businesses leaving the state
Speaker 1: of California going to regions that are more business friendly,
Speaker 1: have less red tape, allow businesses to thrive on a
Speaker 1: much easier basis. So you know, hopefully the tide will
Speaker 1: change on that, but it's certainly an issue in southern
Speaker 1: California and I think California in general.
Speaker 4: Yet you remain rick. You have not moved to Arizona.
Speaker 4: You have not moved businesses to Arizona, to Texas, to Florida,
Speaker 4: these areas of the country where people from California have
Speaker 4: been going as a result of regulatory easing. One could say,
Speaker 4: will you stay in California.
Speaker 1: Well, I'm bullish on California. I'm going to stay in California.
Speaker 1: I believe in it. I think we should be leading
Speaker 1: the nation in California. I think we should be leading
Speaker 1: the nation in Los Angeles. And I also have a
Speaker 1: practical problem. You can't pick up large projects and move them.
Speaker 1: I can't pick up the movement. So I have to
Speaker 1: remain engaged, bullish, and hope we change the trajectory, and
Speaker 1: I think we will, I really do. I think people
Speaker 1: are at a point, certainly in the Los Angeles area,
Speaker 1: that they've realized that the path we're going down is
Speaker 1: not sustainable. We've got a budget in LA City that's
Speaker 1: a billion dollars out of budget. We have revenue decreases
Speaker 1: in LA City because businesses have pulled back and left,
Speaker 1: and we don't have new capital and investment coming into
Speaker 1: LA like we should. They're going into other regions. Even
Speaker 1: immediately outside of Los Angeles. You have cities that are
Speaker 1: doing incredibly good jobs, the city of Glendale, the city
Speaker 1: of Culver City, that are more business friendly, are safer, cleaner,
Speaker 1: more supportive of great neighborhoods, and they're attracting the business
Speaker 1: at the cost of LA City. So we've got to
Speaker 1: change that. But I remain optimistic the change is coming soon.
Speaker 3: How are politics getting in the way of all of this?
Speaker 3: And I ask it, Rick, You've got California Governor Newsom
Speaker 3: and President Trump really in kind of high stakes feuds
Speaker 3: over a bunch of issues, whether it's California's universities, their environment, redistricting,
Speaker 3: redistricting excuse me, and other issues. I mean, talk to
Speaker 3: me about that, and who side are you on in
Speaker 3: all of this?
Speaker 1: Well, I'm on the honestly, I'm on the side of
Speaker 1: the people of LA and the people of California. Here's
Speaker 1: the problem that I have with the battle that's going on.
Speaker 1: We've got some really serious problems that need to be
Speaker 1: dealt with, crime, shortage of housing, homelessness, etc. The cost
Speaker 1: of living in California. Having an argument between the governor
Speaker 1: and the president, between the mayor and the president, a
Speaker 1: lot of name calling going on doesn't advance anybody's cause
Speaker 1: to solving these problems. So what I hope is that
Speaker 1: we get past the rhetoric, figure out a way to
Speaker 1: sit down, find some common ground, and work together. Here
Speaker 1: in Los Angeles, we have three hundred thousand acres in
Speaker 1: Pacific Palisades, Malibu, and then also at an Alta Dina
Speaker 1: that was burned to the ground the size of two Manhattans.
Speaker 1: To put it in perspective for New Yorkers, we need
Speaker 1: federal help, we need federal funding, and we're getting none
Speaker 1: of that. And I don't think as the bickering is
Speaker 1: going on and the name calling is going on, that
Speaker 1: serves any purpose in advancing the negotiations of the discussions
Speaker 1: and getting federal help.
Speaker 4: In Los Angeles, we're speaking with Rick Caruso, founder and
Speaker 4: executive chairman of Caruso, the privately held real estate company,
Speaker 4: on the federal aid. On the federal funding. Have you
Speaker 4: had conversations with President Trump or members of the Trump
Speaker 4: administration expressing the need in your view for federal help
Speaker 4: for California in the wake of these disasters.
Speaker 1: I've had those discussions now with the President directly, but
Speaker 1: I've had those discussions with intermediaries. I've certainly had that
Speaker 1: discussion with our governor, and we need to find a
Speaker 1: way to get those discussions at a higher level and
Speaker 1: more productive. I know there's some talk Governor Scott or
Speaker 1: Senator Scott was out here in Los Angeles and talking
Speaker 1: about it, but it really is critical path because you
Speaker 1: have hundreds of thousands of people that have been displaced,
Speaker 1: You've got jobs that have been lost, you have a massive,
Speaker 1: massive rebuilding effort that's going to take tens and tens
Speaker 1: of billions of dollars in infrastructure. So we need the
Speaker 1: federal help. It just has to happen. Well, you know
Speaker 1: it should.
Speaker 3: Yeah, No, I hear you, and you've since the fires.
Speaker 3: I know, Tim and I just kind of preparing for this.
Speaker 3: Listen to a lot of conversations you've had with various
Speaker 3: individuals about this in terms of what needs to be done.
Speaker 3: You know what's interesting is need more federal help in
Speaker 3: terms of the rebuilding efforts. So then, how do you
Speaker 3: feel when President Trump illegally used federal troops in LA.
Speaker 3: I mean, if you were mayor there, how would you
Speaker 3: respond to President Trump and his threats and use of
Speaker 3: troops like that's going on when obviously, as you say,
Speaker 3: there are efforts needed to do the rebuild.
Speaker 1: Well, I've been very clear the federal troops coming into
Speaker 1: LA were wrong, and I don't think it should have
Speaker 1: ever happened. I would have gone to court immediately. They
Speaker 1: finally did go to court, as you know, the court
Speaker 1: ruled that it was an illegal use of those troops
Speaker 1: to come into the city of Los Angeles in this region.
Speaker 1: So it's not right to be doing that, and we
Speaker 1: don't need to be doing that. I mean that just
Speaker 1: this power grab that's going on does not advance the
Speaker 1: cause for any It just doesn't. And the division between
Speaker 1: the politics is harmful to the residents of Los Angeles.
Speaker 1: We've got to find some gum ground. We've got to
Speaker 1: act like grown ups. We've got to put our differences
Speaker 1: aside as elected officials and figure out how to work together.
Speaker 1: And so I would hope that our elected officials find
Speaker 1: a way to drop the name calling, maybe get on
Speaker 1: a plane and get over to Washington and see if
Speaker 1: we can find some common ground to work together. We
Speaker 1: also have the Olympics coming here, so Los Angeles is
Speaker 1: going to be the world stage for the United States
Speaker 1: and we need to be putting our best foot forward
Speaker 1: and we're going to be need to be making a
Speaker 1: lot of investments in order to do that, and again
Speaker 1: we need to have the help of the federal government
Speaker 1: to do that.
Speaker 3: So Rick, I'm kind of waiting for the flood of
Speaker 3: my emails to come into my Bloomberg because I think
Speaker 3: people who are listening with saying, well, this is a
Speaker 3: kind of folk, you know, individual you do want in politics.
Speaker 3: So what's your latest thinking on maybe running again for
Speaker 3: mayor or possibly governor of the state of California.
Speaker 1: Well, I'm seriously looking at it, and I've got a
Speaker 1: team of people that are working on it, and I'll
Speaker 1: make a decision soon on that, and I'm looking at
Speaker 1: both paths and there's good opportunities in both paths. But
Speaker 1: now I'm just remaining focus on what we're doing at steadfast,
Speaker 1: making sure we're getting people back in their communities as
Speaker 1: quick as possible. Yesterday I spent the afternoon in Altadena.
Speaker 1: We were giving out grants for small businesses to get
Speaker 1: reopened in all Toadna. We're doing the same in Palisades
Speaker 1: and in Malibu. So those kind of efforts are incredibly
Speaker 1: important to me because again, small businesses are critically important
Speaker 1: for jobs, and we're giving out about a million dollars
Speaker 1: in grants over the next couple of weeks. So that's
Speaker 1: what I'm going to stay focused on for now. Politics
Speaker 1: will come down the road fairly soon.
Speaker 3: All right, we want to talk about some of those
Speaker 3: efforts you're doing in terms of the rebuild. I got
Speaker 3: to ask you, though, if you do run or make
Speaker 3: a decision, would it be for mayor or for governor.
Speaker 1: I don't know yet. We're fine, We're going to find out.
Speaker 1: I'll let you know.
Speaker 3: Okay, I'm going to hold you to it. I'm going
Speaker 3: to hold you to it.
Speaker 4: Hey, Rick, I'm curious about just fire resilience in California,
Speaker 4: especially in the wake of Palace States. I'm from the
Speaker 4: Central Coast. I was glued to watch duty because of
Speaker 4: the Gifford fire just a couple of weeks ago. I
Speaker 4: mean I spent you know, ten days just refreshing that thing,
Speaker 4: watching the progress of that fire. What is the right
Speaker 4: way for Californians to be ready for what has become
Speaker 4: just a part of daily life for a big portion
Speaker 4: of the year.
Speaker 1: Well, we have to have very smart brush management. You know.
Speaker 1: One of the problems in the Palisades we had forty
Speaker 1: years of brush that were not maintained by the state,
Speaker 1: the county or the city that was rocket fuel. We
Speaker 1: have to have water. I mean, it was an unbelievable
Speaker 1: circumstance that we had reservoirs that are empty. So the
Speaker 1: competency level at the government and being prepared is critically important.
Speaker 1: LA's City was not prepared for this fire. This fire,
Speaker 1: in my opinion, and I think in most people's opinion
Speaker 1: that have seen the facts, as this fire could have
Speaker 1: been prevent it certainly significantly mitigated in terms of the damage.
Speaker 1: And then we have to be encouraging people to build
Speaker 1: with non combustible materials. Unfortunately, village that we built survived it,
Speaker 1: but it survived it because we were prepared to fight
Speaker 1: the fire. But equally important, we built it with non
Speaker 1: combustible materials and so it was able to stain the
Speaker 1: fire around us. And we had a lot of smart
Speaker 1: people doing some things, so we can build better and smarter.
Speaker 1: But we also have to have better infrastructure. You know,
Speaker 1: the fire hydrants need to work. They were not working
Speaker 1: in Los Angeles. The reservoirs need to be full. And
Speaker 1: this is an opportunity right now to rebuild Malibu, Pasadena, Alta,
Speaker 1: Dina and Palisades in a way for the next hundred
Speaker 1: years and to get the right infrastructure put in. It's
Speaker 1: an incredible opportunity to create these communities for the future.
Speaker 1: And that's why we need to work with the federal government,
Speaker 1: get the right federal funding and get some smart leadership
Speaker 1: locally that builds it back properly so that we are
Speaker 1: can with stain fires and other natural disasters in the
Speaker 1: future can be done.
Speaker 3: The Rick, the nonprofit you are leading, as we said,
Speaker 3: called Steadfast LA. You've got companies such as Netflix, Amazon,
Speaker 3: JP Morgan cha CBRE Group, so many who are working
Speaker 3: to restore these communities. But you guys are looking at
Speaker 3: everything you're using AI. How long do you think it's
Speaker 3: going to take for the rebuild and ultimately are we
Speaker 3: talking about kind of the cities of the future in
Speaker 3: terms of the materials used and how it's done.
Speaker 1: You know, I think it's going to take. There's going
Speaker 1: to be phases. I look at it. What's going to
Speaker 1: be happening one year from now, three years from now,
Speaker 1: five years from now, one year from now, for example,
Speaker 1: the little downtown of the Palisades is going to get reopen.
Speaker 1: We're going to rebuild the park. Steadfast is leading the
Speaker 1: park rebuilding. Schools are getting back reopen, and we're involved
Speaker 1: and supporting the school systems and getting reopen Sam and
Speaker 1: all Tadena, Salmon, Malibu. I think in three years you're
Speaker 1: going to see a lot of the homes back and running.
Speaker 1: We have some really encouraging programs with an alliance of
Speaker 1: builders who are coming together to buy in bulk, be
Speaker 1: able to build less expensively, and so that's really important
Speaker 1: to do. And I think in five years we're going
Speaker 1: to be in pretty good shape getting these communities back
Speaker 1: on its feet. The biggest challenge we have, honestly is
Speaker 1: the lack of diligence, the lack of urgency from the
Speaker 1: local governments to get permits issued. And we've got to
Speaker 1: speed that up and cut the red tape both in
Speaker 1: the county and in La City so people can rebuild.
Speaker 4: Hey, Rick, before we let you go, I want to
Speaker 4: talk a little about your family foundation that's been involved
Speaker 4: at this point for more than thirty years in Watts,
Speaker 4: the Crusoe Family Foundation, and it serves organizations a slew
Speaker 4: of organizations in the area. And I'm just wondering, you know,
Speaker 4: the focus is in healthcare, it's on education at risk kids.
Speaker 4: I'm wondering why we need organizations to step in and
Speaker 4: fill the gap that isn't necessarily provided by other organizations.
Speaker 4: Why do we need the Crusoe Family Foundation to do this?
Speaker 4: When will your work be done and you won't have
Speaker 4: to help bridge that gap.
Speaker 1: Well, I don't think our work is ever going to
Speaker 1: be done, but I have to tell you something. It's
Speaker 1: one of the most rewarding parts of my life, and
Speaker 1: my wife's life, and my family's life that we can
Speaker 1: help kids that are at risk, living at or below
Speaker 1: the poverty line, and you bring opportunities to them and
Speaker 1: the right education and the right support. We have kids
Speaker 1: that are living in some of the worst and toughest
Speaker 1: conditions in LA and they're now at Harvard, MIT, Georgetown,
Speaker 1: USC UCLA and they're just excelling and doing it on
Speaker 1: their own because they have the right ecosystem around them
Speaker 1: in the right start and the right support. And a
Speaker 1: government alone can't do everything. It never has been able to.
Speaker 1: You have to have philanthropy, and people need to give
Speaker 1: back and lean in and support churches and schools and
Speaker 1: all these great organizations that we have out there. And
Speaker 1: what I would argue for is we need more people
Speaker 1: to be leaning in. We need more foundations to be
Speaker 1: giving back because the reward and the payoff is so
Speaker 1: great and so huge, and it really does change these
Speaker 1: communities because these kids are coming back and helping others.
Speaker 1: I just find it one of the greatest parts of
Speaker 1: my life is being involved in being able to see
Speaker 1: these kids just take off and do great things.
Speaker 3: Well, we're going to end it on that optimistic note
Speaker 3: that makes us, I think all feel really super good. Rick,
Speaker 3: thank you so much, really appreciate your time and efforts,
Speaker 3: and we're going to mark our calendars to check back
Speaker 3: with you about maybe that political decision you may make
Speaker 3: very soon. Rick Caruso, thank you so much. Be while
Speaker 3: founder executive chairman of Caruso joining us from LA.
Speaker 2: This is the Bloomberg Business Weekdaily podcast. Listen live each
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Speaker 2: York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: This past week, Swedish fintech giant Klarna officially launched its
Speaker 3: long long anticipated USIPO. The company is aiming to raise
Speaker 3: up to one point twenty seven billion dollars through its
Speaker 3: New York Stock Exchange debut under the ticker symbol KLAAR.
Speaker 3: Makes sense. This marks a revival of its IPO plans,
Speaker 3: which were paused earlier this year amid market turbulence.
Speaker 4: Meanwhile, a firm, Klarna's US based by now pay Later arrival,
Speaker 4: has reason to celebrate after posting strong fourth quarter earnings,
Speaker 4: leaping back into profitability after a disappointing first half of
Speaker 4: the year. According to Bloomberg Intelligence fintech analyst Dick SHAGERA
Speaker 4: A firm appears very well positioned to turn an operating
Speaker 4: profit in twenty twenty six with continued expansion and adjusted
Speaker 4: opera margin.
Speaker 3: To be fair, Affirm shares man, they've been on a
Speaker 3: tear for more and how consumers are choosing to spend
Speaker 3: and the state of their business. We cut up with
Speaker 3: Max Levchin and he's co founder and CEO at a firm.
Speaker 3: He's also you might recall, a co founder of PayPal.
Speaker 8: The Affirm consumer that is the folks that we approve
Speaker 8: for transactions, and each transaction is separately underwritten, so we
Speaker 8: do have a very discerning eye as we underride these loans.
Speaker 8: They're don't great. They are shopping demand for our product
Speaker 8: is accelerating, which is posted another accelerating fourth in a
Speaker 8: row quarter of cross merchandise sales. They're doing really well.
Speaker 8: Re payment is really strong, credit is steady to improving.
Speaker 8: So we lend to a huge percentage of US population.
Speaker 8: So you could infer from that that US consumer writ
Speaker 8: large is doing well as well. So I think the
Speaker 8: rumors of the American devise are greatly exaggerated. That is,
Speaker 8: you know that said, we continue to watch every metric
Speaker 8: we can all the time because that's what our job is.
Speaker 4: Are those metrics stronger now max than they were, say
Speaker 4: a year ago?
Speaker 8: Again, from a firm's point of view, we really are
Speaker 8: firing an all pistons. Our ability to serve folks has
Speaker 8: improved about twenty percent year over a year. That's measured
Speaker 8: in transaction frequency. Our user based crew about you know,
Speaker 8: just north of twenty percent as well. So consumers are
Speaker 8: enjoying us. Our user active acquisition as accelerated for the
Speaker 8: six quarter in a row. So there is a meaningful
Speaker 8: cycular shift from credit cards to affirm So I think
Speaker 8: again with an our ecosystem, every metric looks very good
Speaker 8: and better than last year.
Speaker 4: Can you talk a little bit about what transactions a
Speaker 4: firm customers are using the payment system for. Are they
Speaker 4: using it like they would use a credit card right now?
Speaker 4: What's the typical transaction? What's the transaction size?
Speaker 8: That's a great question and it's a little bit different
Speaker 8: shad tween players. So I can only speak to us.
Speaker 8: The average ticket for US is just under three hundred dollars.
Speaker 8: That should tell you a lot. So everything from a
Speaker 8: truly considered purchase, like a nice bicycle, maybe a couple
Speaker 8: hundred dollars, all the way down to a large party
Speaker 8: supply maybe a couple hundred dollars, that those are sort
Speaker 8: of the book ends. We tend to believe that really
Speaker 8: really low ticket items. You know, twenty dollars is just
Speaker 8: too small amount of an amount to finance with a firm.
Speaker 8: So we have a notion of you know where we
Speaker 8: start trying to tell our consumers, Hey, you know, this
Speaker 8: seems like a good idea to be a cash transaction,
Speaker 8: but generally speaking, because the product we offer is just
Speaker 8: so much better than credit cards for the end barrow
Speaker 8: or we're very pro idea that a firm should be
Speaker 8: used in place of credit cards, full stop. If you
Speaker 8: think of it very quickly, it is an obvious idea.
Speaker 8: So we don't charge laid fees, we don't compound interest,
Speaker 8: we don't do deferral or any of the sort of
Speaker 8: gimmicky things that look too good to be true, because
Speaker 8: they are too good to be true. So it is
Speaker 8: an honest financial product that really helps the end borrower
Speaker 8: get full grip on their finances and not get into trouble,
Speaker 8: not get over their skis so directionally, the more they
Speaker 8: use a firm for everything, I think the better off
Speaker 8: the consumer is going to be. That's the current average
Speaker 8: is two hundred and ninety seven dollars.
Speaker 3: I think, how often does somebody that miss a payment?
Speaker 3: Are they're late and then what happens as a result,
Speaker 3: what kicks in? I'll be honest, I'm not a huge user.
Speaker 4: Well, I mean, you you ever use it?
Speaker 3: I think I've used one of them, and I can't
Speaker 3: remember once because I was curious about it, you know,
Speaker 3: and I set it up so things just got paid
Speaker 3: and it was like three payments or because I was
Speaker 3: curious about it, because we talk about it all the time.
Speaker 3: Here grew up where you could put stuff away, you know,
Speaker 3: stuff on layaway. So it's interesting to see the evolution.
Speaker 3: But I am curious, Max, how often is it that
Speaker 3: somebody is late and then the terms start to change?
Speaker 3: And you know, this is a business, right.
Speaker 8: So that's actually thank you for that prompt. That is,
Speaker 8: let me let me try to make one thing. If
Speaker 8: there's one thing I can make clear in this conversation,
Speaker 8: I just really want to hammer this one home. Nothing
Speaker 8: will change. Terms will not change. Fees will not appear.
Speaker 8: Interest will not change. No dollar amounts will change. If
Speaker 8: something happens and you can't make your pay your bill
Speaker 8: on time. The fundamental promise of Affirm is what you
Speaker 8: see is what you get. When you're borrowing five hundred
Speaker 8: dollars and you're committing to paying let's say another twenty
Speaker 8: five dollars of interest. If you cannot make it on time,
Speaker 8: it will still be five hundred and twenty five dollars.
Speaker 8: It will not be eight penny more. If you prepay
Speaker 8: and pas us early, that interest amount will come down.
Speaker 8: So it is a profoundly pro consumer product. That's it.
Speaker 8: I just I just wanted to make that very very clear.
Speaker 8: We are a better financial product. About ninety eight percent
Speaker 8: of our consumers are never late, never never intervolved, and
Speaker 8: so it's fundamentally extremely extremely high probability of none of
Speaker 8: that will ever happen to you if you're within the
Speaker 8: Affirm ecosystem. When folks are delinquent to the fancy term
Speaker 8: for late with their payment, we'll reach out to them.
Speaker 8: We use all sorts of digital channels to get in
Speaker 8: touch with them, will remind them. Vast majority of folks
Speaker 8: that are late are actually what's called sloppy payers in
Speaker 8: the industry where they say, oh my god, I forgot
Speaker 8: to set the autopay, thank you for using that feature
Speaker 8: if you did, and they cure it, and so it goes,
Speaker 8: and so that the reason we don't charge lateies is
Speaker 8: because from folks where they really cannot something happened and
Speaker 8: the illustir job or something happened, they're not going to
Speaker 8: pay you any faster if they have no means of
Speaker 8: paying you back. The ones that are just stumbled somehow
Speaker 8: and forgot the reminder is the most you need to do.
Speaker 8: You don't want to penalize them for being forgetful.
Speaker 4: So what is the default rate.
Speaker 8: It's on the order of two percent plus relindus that's remarkable. Well,
Speaker 8: it's meaningfully lower. It's meaningfully lower. The credit cards, by
Speaker 8: the way, are lower ticket items that trends below one percent.
Speaker 8: So just to give you a sent like this, the
Speaker 8: rumors of this being a bad financial product creating hidden
Speaker 8: leverage in the system is like bad math and ridiculousness.
Speaker 4: So push back on that a little bit, but do
Speaker 4: it through the explanation of the business model here, because
Speaker 4: I think a lot of people approach this product with
Speaker 4: being informed about how credit cards work and the idea
Speaker 4: that high interest, high interest if you miss a payment,
Speaker 4: fees if you miss a payment. In a sense, the
Speaker 4: risk is somehow put on a different party here Max,
Speaker 4: and there's also buy in from the retailer who partners
Speaker 4: with a firm. Just explain how this whole transaction works.
Speaker 8: Yeah, very simple. You typically find a firm at a
Speaker 8: point of sale on any online and now progressively more
Speaker 8: offline merchants. You will ask to use the product, so
Speaker 8: it's always an explicit request to borrow. And we take
Speaker 8: great pride and put a lot of technical emphasis on
Speaker 8: underwriting every transaction individually so that we have discretion to say, hey,
Speaker 8: you're overextending yourself. You know, two percent through two and
Speaker 8: a half percent default rates don't come for nothing. We
Speaker 8: do an enormous amount of work in this underwriting engines
Speaker 8: that we've built. So as you get approved through your
Speaker 8: real time application, of course, what happens we pay the
Speaker 8: merchant and you commit to paying us back over time,
Speaker 8: and we always give you a menu of choices. Could
Speaker 8: be anything as short as for payments every two weeks,
Speaker 8: could be as long as thirty six months, once every month.
Speaker 8: The rest of it happens more or less automatically if
Speaker 8: you opt into the autopay feature. If you don't, we
Speaker 8: will send you a reminder and then you arrange for
Speaker 8: repayment from your bank account typically, and that is it.
Speaker 8: In our case. There is no compounding. The interest is
Speaker 8: the interest expressed ten dollars and that is what you
Speaker 8: commit to. It will not go up independent of any
Speaker 8: modifications to the schedule. There are no late fees in
Speaker 8: our case. Again, this is weird, unique or almost i
Speaker 8: think at this point in the industry by just not
Speaker 8: charging any incrementalities at all. And so this really is
Speaker 8: the product where the cornerstone value is transparency. We are
Speaker 8: entirely transparent with every participant in the ecosystem. For merchants
Speaker 8: to consumers, everyone knows what they're getting into. You get
Speaker 8: your bicycle or your couch or your putty supply today,
Speaker 8: and you pay for it over time, and you know
Speaker 8: exactly when the payment plan stops and then you're no
Speaker 8: longer in debt. It is a betriponent to credit cards
Speaker 8: because when you use credit cards, which are very convenient,
Speaker 8: you don't have this extra approval step, so you know
Speaker 8: just drop the plastic and on you go. You're adding
Speaker 8: to this giant bucket of debt that just sits there
Speaker 8: and revolves. The interest compounds into principle, every month, every week,
Speaker 8: whatever it is you accrued an interest becomes a part
Speaker 8: of the base that accrues interest on interest on interest.
Speaker 8: That is why credit cards are so expensive. The reason
Speaker 8: APR matters as a measure is because it doesn't just
Speaker 8: measure interest you'll pay on a principle, it's the interest
Speaker 8: you'll pay on the interest on the interest, and so on.
Speaker 8: The model we invented. The reason we are so important,
Speaker 8: The reason people are coming to us, frankly, is they
Speaker 8: don't have to understand exponential mathematics to figure out what
Speaker 8: is the true end point of interest will be whatever
Speaker 8: it is we promised them that's exactly what the pay.
Speaker 4: We're speaking with Max Levchine's the founder and CEO of
Speaker 4: a firm, the twenty nine billion dollar market cap fintech company. Also,
Speaker 4: you'll notice Carelly keeps talking about bikes. He's a big cyclist,
Speaker 4: so that spends a lot of time on the bike.
Speaker 3: So is Tim.
Speaker 4: By the way, Max, Hey, oh we know we follow
Speaker 4: each other.
Speaker 3: I know you guys, do hey listen. One of the
Speaker 3: things I want to ask you. Your stock is on
Speaker 3: a tear. It's up fifty percent year to date. It's
Speaker 3: surged as much as twenty five percent intra day in
Speaker 3: response to your earnings, which you've been talking about that
Speaker 3: came out late August. You had analysts, several of them
Speaker 3: raising the price targets on the stock. What's the path
Speaker 3: to sustainable profitability? What do you need to see happen
Speaker 3: to kind of keep the momentum going.
Speaker 8: We just need to keep doing exactly what we've been doing.
Speaker 8: You know, the joker make all the time. As we are.
Speaker 8: An overnight success fifteen years into making profitability is not
Speaker 8: an accident. We gave this date exactly a year ago
Speaker 8: where we said, look, twelve months from now will be
Speaker 8: gap profitable. Two years ago we said, hey, twenty four
Speaker 8: months from now, we expect to get profitable. And so
Speaker 8: we've been on a journey that we've planned years ago
Speaker 8: to deliver on all these milestones. And so the celebration
Speaker 8: isn't of some clever overnight idea that we've had and
Speaker 8: finally just poked our head from the unprofitable side of
Speaker 8: the fence. We've been planning to be profitable. We've delivered
Speaker 8: on this plan. We have said publicly we intend to
Speaker 8: be gap profitable from this point on. That is not
Speaker 8: a thing you can decide last week and deliver tomorrow.
Speaker 8: It's something that you build over a long period of time.
Speaker 8: Takes discipline, takes execution, takes a great team, which I'm
Speaker 8: lucky to have, and so I'm not worried about that whatsoever.
Speaker 8: Whatever we commit to, we tend to deliver on.
Speaker 9: Well.
Speaker 3: Speaking of time, it's been a long time coming for
Speaker 3: and it's IPO and it does plan that Here in
Speaker 3: the United States, competition in the space is definitely max
Speaker 3: picking up. They are specifically rapidly expanding here in the US.
Speaker 3: You've got Sezl that stock is up about seven thousand
Speaker 3: percent less than two years. There's a lot going on.
Speaker 3: So how are you seeing the competitive landscape evolve and
Speaker 3: what does that mean for you guys specifically at a firm.
Speaker 8: You know, we're very happy doing our thing. As I
Speaker 8: just extolled, for a little while, we are different. We
Speaker 8: do our thing a little bit differently than the rest
Speaker 8: of the industry. We have a very strong point of
Speaker 8: view on what isn't isn't moral, What isn't isn't right
Speaker 8: for the consumer, for the merchant partners that we have.
Speaker 8: You know, it's made great dividends for us and our shareholders.
Speaker 8: So in that sense, we intend to change absolutely nothing.
Speaker 8: Part of why maybe I spend less time looking at
Speaker 8: the competition than one does in a competitive industry, and
Speaker 8: this one is certainly very competitive. Is an aggregate by
Speaker 8: now pay later is still just under one percent of
Speaker 8: total US retail and it's a worldwide phenomenon, and US
Speaker 8: is actually quite behind. If you look at markets like
Speaker 8: Australia and the Nordics, where by appilator is more mature,
Speaker 8: they're the penetration into e commerce and the order of
Speaker 8: twenty twenty five percent. I think in the US it's
Speaker 8: you know, how much more polite seven percent maybe, and
Speaker 8: if you expand it into offline, which there's no reason
Speaker 8: why this doesn't work offline. In fact, we have a
Speaker 8: card that's been growing extremely well better thane hundred percent
Speaker 8: a year of a year just in the last quarters report.
Speaker 8: You know, we're a fraction of a fraction, and so
Speaker 8: the opportunity to provide more honest financial products is you know,
Speaker 8: I said it in my showholder letter sort tongue in chek,
Speaker 8: it rounds up to infinity, And so for now we're
Speaker 8: not really running into each other in the hallways fighting
Speaker 8: for that last same customer or merchant. I'm sure one
Speaker 8: day we'll get to a point where it's so significant
Speaker 8: as a part of US economy, where it becomes, you know,
Speaker 8: a zero sum game. But even in that world, there's
Speaker 8: a Visa to a MasterCard. And for now, I think
Speaker 8: we're all just experiencing really good growth. And frankly, the
Speaker 8: fact that the market now will support a couple of
Speaker 8: large publicly traded companies, it's probably good thing that just
Speaker 8: gives shareholders a sense for this. This has a long
Speaker 8: week to go in terms of growth.
Speaker 4: Hey, Max, before we let you go, just thirty seconds
Speaker 4: on crypto and stable coins and opinion piece this week
Speaker 4: coming from Paul Davies of Bloomberg Opinion. He wrote that
Speaker 4: stable coins on our opportunity for merchants and airlines to
Speaker 4: recover costs from big banks and networks like Visa and MasterCard.
Speaker 4: Is there a use for digital assets at a firm?
Speaker 8: I think there are interesting opportunities around merchant settlement, which
Speaker 8: is sort of I'm echoing what this piece is saying.
Speaker 8: I'm not yet seeing consumer spending stable coins. They have
Speaker 8: acquired in droves and so as a back end mechanism,
Speaker 8: stable coins are very interesting and we're certainly looking at
Speaker 8: the opportunities there on the consumer side. I think folks
Speaker 8: are thinking in dollars and probably will continue to do so.
Speaker 3: All right, gott to leave it there, Hey, Max, thanks
Speaker 3: for carving out some time for us. Max Levchin, Founder
Speaker 3: and chief executive officer of a firm. Max. Of course,
Speaker 3: it's a great voice when it comes to what's going
Speaker 3: on in the fintech space.
Speaker 4: We're gonna work PayPal fame.
Speaker 3: A PayPal fame as well for the mafia.
Speaker 7: As they say.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and the Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on.
Speaker 3: YouTube Plenty ahead on our second hour of the weekend
Speaker 3: edition of Bloomberg Business Week, including putting sports back in
Speaker 3: the spotlight. I don't know have they ever left the spotlight?
Speaker 4: I feel like just feels like the spotlight is shining
Speaker 4: brighter than ever. I mean, there's more money than ever
Speaker 4: going into these things. And also the way that these
Speaker 4: teams are being valued.
Speaker 3: It's remarkable valuations off and running. Hey, we're going to
Speaker 3: take you to some of our favorite conversations from this
Speaker 3: past weeks Bloomberg Power Players New York Summit, held here
Speaker 3: at Bloomberg Headquarters in New York City, where we talked
Speaker 3: about the booming billion dollars sport. It's an entertainment industry
Speaker 3: with some of the biggest names in the space, a.
Speaker 4: Lineup that included the CEO of PGA of America on
Speaker 4: reshaping Golf's future, and the hosts of the Deal, Jason
Speaker 4: Kelly and baseball legend Alex Rodriguez on the deal shaping
Speaker 4: the business of sports.
Speaker 3: All of that to come, We begin with someone who's
Speaker 3: redefining how sports, entertainment and fan experiences collide. In the
Speaker 3: nation's capital.
Speaker 4: Ted Leonsis is CEO of Monumental Sports and Entertainment. It's
Speaker 4: the company behind some of the biggest Washington sports teams
Speaker 4: think NHL's Capitals, the NBA's Wizards, and the WNBA's Mystics.
Speaker 4: MSc also commands a portfolio with around seven point eight
Speaker 4: billion dollars in assets.
Speaker 3: It's a lot. It's grown a lot in the last
Speaker 3: few years. Ted joined us from the Bloomberg Power Player's
Speaker 3: Summit at our headquarters in New York City along with
Speaker 3: NHL Commissioner Gary Bettman.
Speaker 9: I think AI is really the NIXT big thing with sports.
Speaker 9: Oh yes, totally. How well, right now we're redoing our
Speaker 9: building and all we're talking about is physical AI. How
Speaker 9: do we collect data? How do we with three million
Speaker 9: people to come into our building? Where are they coming from?
Speaker 9: How old are they, who are they married to? How
Speaker 9: long have they had the tickets? What are they like
Speaker 9: when they eat? What do we what can we do
Speaker 9: to be anticipatory with our building? It's not just smart
Speaker 9: buildings anymore. It's build the intelligence and the data right
Speaker 9: into that experience.
Speaker 4: You know, I just want to ask you, Ted, because
Speaker 4: you were at AOL in the early days. I mean
Speaker 4: this is before you were in sports, you were in technology,
Speaker 4: So you understand the space is are we in.
Speaker 7: A moment now?
Speaker 4: That is is like when AOL brought us the World
Speaker 4: Wide Web?
Speaker 9: Well, I think the leagues it's been a it seems
Speaker 9: like it's been a long time, but it's been a
Speaker 9: quick pivot to go from analog and bricks and mortar
Speaker 9: and linear distribution and local to be a global digital
Speaker 9: power plant, if you will. We look at our teams
Speaker 9: obviously there they have high fan avidity, but it's IP
Speaker 9: and how do we digitize everything that we're doing from
Speaker 9: the start right and distributed over our own channels. That's
Speaker 9: why we bought our RSN. Everyone was running out of
Speaker 9: the burning house. We said, let's run in. It will
Speaker 9: never be a better time to buy and reinvent the
Speaker 9: distribution model than there is right now.
Speaker 3: Gary, I want you to come in on the roll
Speaker 3: of technology. I think all of us were watching sports.
Speaker 3: I love it, whether it's tennis, whether it's golf, whether
Speaker 3: it's baseball, the statistics that come up hockey. Sorry, sorry,
Speaker 3: I was getting there. I was getting there. Sorry, sorry, sorry,
Speaker 3: Well that's what I wanted to get to though, like
Speaker 3: you know, how fast the puck is going or something
Speaker 3: like how much fans love that engagement.
Speaker 7: I'm going to respond to that, but I want to
Speaker 7: add onto its headshot.
Speaker 3: So you know, I have four brothers and growing up
Speaker 3: in an ice skating pond that they dug out of
Speaker 3: the woods in the back and would play hockey like
Speaker 3: your family.
Speaker 2: But grew up.
Speaker 10: Sports tends to focus people at an instant, at a
Speaker 10: moment in time, the score of the game, what's the result.
Speaker 7: I don't think we're at a moment of time. I
Speaker 7: think we're on a journey and we've been on a
Speaker 7: journey for decades.
Speaker 10: And the speed limits change on the road, road conditions change,
Speaker 10: there are curves, there are hills. But at the end
Speaker 10: of the day, it starts with the authenticity of sports
Speaker 10: and how important sports are in people's lives and how
Speaker 10: it brings people in communities together. And technology has enabled
Speaker 10: us to connect better with our fans, so AI we're
Speaker 10: like any other consumer business. It's going to help us
Speaker 10: do business better, but also it's going to help us
Speaker 10: make sure that our games stay true to themselves. It's
Speaker 10: I always tell particularly my tech and strategy guys, we're
Speaker 10: not going to change the game to make it more
Speaker 10: tech savvy or a tech you know favorable. What we're
Speaker 10: going to do is use technology to make the game
Speaker 10: more consumable, more connected, and so pucking player tracking an
Speaker 10: HL edge is a function of that. We're gathering millions
Speaker 10: of data points a minute. But it's enabling us to
Speaker 10: take people inside the game, maybe even people who don't
Speaker 10: know the game, and understand it and let them say, wow,
Speaker 10: that pup you know traveled fourteen miles with average eighty
Speaker 10: eight miles an hour. This player can skate as fast
Speaker 10: as thirty five miles an hour, and he's already skated
Speaker 10: six miles in this game. This gets people to understand
Speaker 10: and feel more connected, and it's going to let us
Speaker 10: give them the game on their terms. Because with all
Speaker 10: the streaming platforms, you're going to be able to sit
Speaker 10: at home and decide how you want to watch the game,
Speaker 10: not the way we've done it from a linear standpoint
Speaker 10: since I was a little kid. People my age are
Speaker 10: used to sitting on the couch and doing it, but
Speaker 10: we used get in.
Speaker 3: Front of my dad and be like, you know, get down,
Speaker 3: get downwind.
Speaker 10: But if you're a gen Z or a Jena and
Speaker 10: you want to focus on a particular player and you
Speaker 10: want Danna simultaneously and you want to place a bet,
Speaker 10: you're going to be able to do all that and
Speaker 10: buy a jersey all at the same time. In addition,
Speaker 10: what fucking player tracking has enabled us to do is
Speaker 10: use the metaverse. We use animated versions of our game
Speaker 10: in real time. We were the first sports league to
Speaker 10: do that and it works really well and it engages young.
Speaker 7: People and their parents.
Speaker 4: You know, I'm thinking about this all this, and I'm
Speaker 4: thinking about the technology and thinking about the investment that's
Speaker 4: being made, and it reminds me of the way that
Speaker 4: we've seen sports turn into this premium experience. Now in
Speaker 4: the premiumization, this idea of it being a luxury good,
Speaker 4: And I'm wondering how you think about that, Ted, and
Speaker 4: how you know it's not like you go to the
Speaker 4: ball ball Well, I guess ball games are still affordable,
Speaker 4: but apart from that, I mean some tickets just to
Speaker 4: end up being so expensive. How do you think about
Speaker 4: that for your customers.
Speaker 9: Well, many of us have run big public tech companies,
Speaker 9: and when you come into sports, you say, oh, the
Speaker 9: model is like a software company. We have nothing but
Speaker 9: blue chip clients, naming rights, sweet sales, big sponsorships, media
Speaker 9: deals with the biggest companies in the world, Amazon and NBC,
Speaker 9: Comcast and Disney, ESPN, and they pay us over ten
Speaker 9: years or longer with escalator. So the model looks just
Speaker 9: like Salesforce, dot Com or Oracle. Those are very valuable companies.
Speaker 9: It's why they're valued. And a multiple of revenues, not
Speaker 9: a multiple of ibata. Okay, so that's what's happened to
Speaker 9: sports teams. It's this where six times eight times, ten
Speaker 9: times twelve times revenues. Right. But for those of us
Speaker 9: who came in from public companies and tech companies that go,
Speaker 9: we don't have an R and D budget, think about that.
Speaker 9: We didn't have a CTO. We were one of the
Speaker 9: first teams that I mean, we made a major high.
Speaker 9: We have software developers. There's like those software developers in
Speaker 9: these teams. That's a big part of the pivot, right,
Speaker 9: If you're going to be digitize or die, if you're
Speaker 9: going to try to get your products and services out
Speaker 9: and build brand and build audience on a global basis,
Speaker 9: it all starts with, you know, taking a pixel and
Speaker 9: digitizing it. And we're now you know, I've owned the
Speaker 9: team twenty six years, but there's now a lot of
Speaker 9: the big markets and more innovative companies that have said, yeah,
Speaker 9: we are We're not We're not just a hockey team.
Speaker 9: You've got to have the hockey team as the ethos,
Speaker 9: you know, for the competition, for the fans, but as
Speaker 9: a business, these have become big businesses. We're going to
Speaker 9: be doing two years from now billion dollars in revenue.
Speaker 4: You were valued at about four billion dollars back in
Speaker 4: twenty twenty three with victory.
Speaker 9: Meant we've been valued now close to seven.
Speaker 4: It's big growth in three years.
Speaker 7: Good business.
Speaker 5: It's good business.
Speaker 9: But we're doing seven and fifty million.
Speaker 10: But the landscape, and it relates to everything that's going
Speaker 10: on with the distribution of content. No matter what platform
Speaker 10: you're talking about, live sports is the most compelling, most
Speaker 10: valuable content and that's what's driving a great values that
Speaker 10: you're seeing, right, because there's.
Speaker 3: So much stuff out there, but you're right, people tune
Speaker 3: in to conve something.
Speaker 9: It's it's reality TV. I mean it really is right.
Speaker 9: But I think one thing that people miss to the
Speaker 9: world's in chaos and it's not going to get more calm.
Speaker 9: But there's something about you. You go to a game
Speaker 9: and you know it's the puck's gonna drop at seven
Speaker 9: oh six. You know where the game is going to
Speaker 9: be televised, You know where your seats are. The players
Speaker 9: know if you make the wrong pass, it's you know,
Speaker 9: it goes over the blue line. They know what penalties are,
Speaker 9: there's referees, and while.
Speaker 3: There's people will booth guardrails.
Speaker 9: I'm saying that that there's their structure, right.
Speaker 7: Yeah.
Speaker 9: I was amazed that at the World Cup you have
Speaker 9: countries fighting each other, at war with each other, yet
Speaker 9: they get on the pitch and it's I know this
Speaker 9: line is out of bounds, that this is a boundary.
Speaker 9: I think we crave that we want a level playing field,
Speaker 9: and you want meritocracy and you want to see how
Speaker 9: people can compete.
Speaker 3: And yet politics, geopolitics a play gotten their way into sports.
Speaker 3: And I think about the NHL being kind of the
Speaker 3: most international and Canadian of all US pro sports, and
Speaker 3: yet geopolitics coming from the White House, weather is ever
Speaker 3: trading terror policies. We saw that play out, certainly.
Speaker 7: It did during the Four Nations in February.
Speaker 10: Canada was playing the US in two games, including right
Speaker 10: the final game. But what's great about sports and it
Speaker 10: transcends geopolitics because sports brings out people's passion and it
Speaker 10: brings people together, even if their rivals, their common interest
Speaker 10: in seeing the game and the outcome and even within
Speaker 10: a particular country. You know, no matter how diverse a
Speaker 10: country is, on whatever basis, you're figuring out what the
Speaker 10: diversity is. People come together. It brings communities together. And
Speaker 10: when you have assets franchises like ped has in Washington,
Speaker 10: they make a difference in people's lives, their outreaching the community,
Speaker 10: their youth programs, using sports to teach young.
Speaker 7: People life lessons.
Speaker 10: That's as important as anything else that we can do
Speaker 10: in sports. And I think monumental of what Ted does
Speaker 10: in Washington is a great example of being outward facing
Speaker 10: in the community and making a difference.
Speaker 9: So we helped the White House had the inaugural at
Speaker 9: our arena we called the world's most important arena. And
Speaker 9: that same week there was a study out on who
Speaker 9: is the most popular and best athlete in Washington sports history,
Speaker 9: and it's a Russian Alex Ovechkin. Right, he brote Wayne
Speaker 9: Gretzky's record last year and he is beloved in Washington, DC.
Speaker 9: Yesterday we announced the naming rights deal with Coupon No
Speaker 9: South Korean company e commerce company. We're global, right, we
Speaker 9: are exporting our ip around the world. We have these icons,
Speaker 9: these great global brands, advertisers want to reach those fans,
Speaker 9: and so you know, it's just ironic. Here we are
Speaker 9: in Washington, d C. As I said, I can see
Speaker 9: the White House and while they're churning on on things,
Speaker 9: sports is the Great United.
Speaker 7: And then that poll will also say that you were
Speaker 7: the most popular owner.
Speaker 4: Let the record show ten did not answer the question.
Speaker 9: You want to be bodestod.
Speaker 3: It's good to hear that. It's good to hear that
Speaker 3: that sports really kind of brings people together. We do
Speaker 3: see that over and over. Gentlemen, Thank you so much.
Speaker 7: Thank you.
Speaker 3: Teddy owns Is, Founder chairman Magic Partners. You have monumental
Speaker 3: sports and entertainment. Gary Betman, Commissioner of the NHL, gentleman,
Speaker 3: thank you so much.
Speaker 2: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 2: each weekday starting at two pm Eastern on Apple car
Speaker 2: Play and the Android Auto with the Bloomberg Business App.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3: More from Bloomberg Power Players, New York. This event that
Speaker 3: brought together influential voices from the business of sports to
Speaker 3: identify the next wave of disruption that could hit this
Speaker 3: multi trillion dollar global industry. Next up, a name got
Speaker 3: to say that baseball fans are very very familiar with,
Speaker 3: so are Bloomberg fans familiar with.
Speaker 4: Alex Rodriguez has long been known as one of baseball's
Speaker 4: brightest stars, but in recent years he's become almost as
Speaker 4: well known for what he's done off the field. From
Speaker 4: co owning the NBA's Timberwolves to WNBA's Links, a Rod
Speaker 4: has shown how retired athletes are approaching business. He also
Speaker 4: co hosts a podcast for Bloomberg. It's called The Deal
Speaker 4: with Alex Rodriguez and Jason Kelly.
Speaker 3: Yeah, that's why he's so familiar to the Bloomberg audience
Speaker 3: as well. A Rod joined us at the Power Player,
Speaker 3: summoned alongside his Deal co host Bloomberg Originals chief correspondent
Speaker 3: Jason Kelly.
Speaker 5: We've had a crazy last couple of days because we
Speaker 5: and you're gonna love this one, Carol, because I know
Speaker 5: you're a fan of this person. The first was Erica Maddon,
Speaker 5: who is former Erica Nardini. She ran Barstool, she had
Speaker 5: some incredible stories. And then yesterday Robin ours on from Peloton,
Speaker 5: who you and I interviewed the day. Yeah, I mean,
Speaker 5: Alex that was unbelievable. I mean, she's a force of
Speaker 5: nature and what a story. Right to be a litigator
Speaker 5: lawyer one of the top firms in New York.
Speaker 11: And then around twenty eleven says, you know what, I'm
Speaker 11: going to do a radical pivot and she cold emails
Speaker 11: Palotson gets the job. And one of the most things,
Speaker 11: I mean, there's so much to admire, but the fact
Speaker 11: they've been to the moon with their stock right over
Speaker 11: thirty billion dollar market cap, but now is you know,
Speaker 11: obviously a lot less than that, and she has stuck
Speaker 11: it through and we asked her about it and she
Speaker 11: gave a fantastic answer.
Speaker 12: That's my tease for Yeah.
Speaker 5: The other thing that she said, which is so funny.
Speaker 5: So this is how I mean, I'm gonna tell a
Speaker 5: little bit behind the scenes sid inside Baseball, Inside Baseball
Speaker 5: at the about the deal. And this is how I
Speaker 5: know that I think this show is really working, is
Speaker 5: we literally send each other voice my moos this morning
Speaker 5: saying like independent of each other, saying my favorite part
Speaker 5: of the interview with Robin rs On was this thing
Speaker 5: that she said, and you'll have to wait to listen
Speaker 5: to what it is. But that was kind of a
Speaker 5: cool moment where we like, in this forty five minute conversation,
Speaker 5: there was one thing that we're both like, I'm going
Speaker 5: to use that in my day to day life. And
Speaker 5: I do think one of the things that we've started
Speaker 5: to achieve with this show is like sort of a
Speaker 5: level of intimacy with our guests. You know, they tend
Speaker 5: to open up.
Speaker 12: You know.
Speaker 5: We had in this most recent season, we had Bill
Speaker 5: Belichick on, you know, a pretty rare business side interview.
Speaker 5: You know, I think he told us stuff that you know,
Speaker 5: he hadn't really talked about before, and really talked about
Speaker 5: his approach to coaching, what it's like to sort of
Speaker 5: take this new job in college sports. And so, I
Speaker 5: mean we're having a ton of I mean, this is fun.
Speaker 11: Another fun one with Timely Wise, because you mentioned time
Speaker 11: is Mark Shapiro's the day they rang the bell and
Speaker 11: they took TKO public, and he gave us some fascinating
Speaker 11: stories going back to the Bob Ager days and what
Speaker 11: he was doing at ESPN and he was a rising
Speaker 11: star and now he's obviously the president of TKO and Endeavor.
Speaker 11: So so many great stories, and now people are starting
Speaker 11: to reach out to us as saying, hey, can.
Speaker 12: We be it?
Speaker 4: That's what I was gonna ask Alex. I mean, now
Speaker 4: that it is a third season, you're not necessarily having
Speaker 4: to knock down doors the way you guys did just
Speaker 4: two or three years ago in order to do this.
Speaker 4: How are you thinking differently about the conversations and who
Speaker 4: you want on the program?
Speaker 11: Well, I think Jason reminded me yesterday that we've done
Speaker 11: around fifty shows, so we're getting some reps, we're getting
Speaker 11: out there.
Speaker 12: We're dropping one.
Speaker 11: Every week, which is the consistency's key in podcasting anything,
Speaker 11: just like your job here, and I think we're thinking
Speaker 11: bigger and we're thinking, you know, how do we think
Speaker 11: outside the box? How do we storytell? But I think
Speaker 11: Robin from Peloton was like the epitome of everything. Right,
Speaker 11: you have a lawyer who's now in fitness, who now
Speaker 11: you know, one of the most influential fitness people in
Speaker 11: sports in the country.
Speaker 5: Well, and I think you know, to building what Alex
Speaker 5: is saying, I think one of the key things that
Speaker 5: we think about with our show, and honestly, you know,
Speaker 5: infuses everything we're doing today with power Players is you
Speaker 5: know from the beginning, and this is why I think,
Speaker 5: you know, Alex really bought into our shared vision of
Speaker 5: this is we're talking about the intersection of business, sports
Speaker 5: and culture. And I think, you know, there's a fair
Speaker 5: amount that's being done around business and sports. You know,
Speaker 5: it's it's undeniable what's happening there. But I think, and
Speaker 5: we just literally talked about this on a panel that
Speaker 5: I moderated with Tom Garfigel from the Dolphins and Mike
Speaker 5: gary Getty, the CEO of Ares, this amazing cultural impact
Speaker 5: that sports has on everybody's lives at a time when
Speaker 5: we're so polarized, we're so divided. You know, Alex is
Speaker 5: you know, very involved on the board of University of Miami.
Speaker 5: University of Miami beating Notre Dame at hard Rock Stadium
Speaker 5: last weekend was an unbelievable moment, Like in the broad culture,
Speaker 5: I mean, it really was incredible.
Speaker 11: Yeah, And I had a huge number on thirteen million people, right,
Speaker 11: and that is a huge number, right.
Speaker 5: And it's one of these things, especially after COVID.
Speaker 11: I think and Tom talked about it in your last panel,
Speaker 11: that people still want to come together in the stadium,
Speaker 11: So I have seventy five thousand people cheering on remember
Speaker 11: the old history, like bringing the old days back for
Speaker 11: the University of Miami Convicts versus Catholics. Right, it's pretty
Speaker 11: awesome and the fact that we won, I'm very very
Speaker 11: happy about that.
Speaker 4: We're speaking, of course, with Alex Rodriguez, chairman and CEO
Speaker 4: of A Rod Corp. Also Bloomberg Original's chief correspondent Jason Kelly,
Speaker 4: talking about the newest season of the Deal and more.
Speaker 4: Is that culture around sport today? Is that a lot
Speaker 4: different than it was when you played?
Speaker 7: Oh, there's no question about it.
Speaker 11: I mean, I think Michael Raghetti was talking about, you know,
Speaker 11: ten fifteen years ago, the ownership landscape looked a lot different,
Speaker 11: a little bit you know his words, a little bit
Speaker 11: more sleepy.
Speaker 12: And I'm paraphrasing.
Speaker 11: And the sophistication with the newer owners that have come in,
Speaker 11: with the ability and the appetite to take risk while
Speaker 11: still being disciplined. But you know, it takes a certain
Speaker 11: amount of you know, a cowboy or a bit of
Speaker 11: a poker player to innovate and keep pushing the envelope
Speaker 11: and making these assets amote. But then as all the
Speaker 11: businesses around, whether it's a stadium, networks.
Speaker 7: Uh.
Speaker 11: You know, what the Atlanta Braves have done is incredible.
Speaker 11: They did seventy five million dollars of extra cashtrow for
Speaker 11: the team. I think that's the new model moving forward.
Speaker 5: Thank you for mentioning the right now, but for everybody
Speaker 5: does but one thing you know that's so smart, so smart,
Speaker 5: so thoughtful. But you know, I'll sort of talk right
Speaker 5: back in the sense that I do think to answer
Speaker 5: your question, Tim, one of the things that's also changed
Speaker 5: is in these years that we've been doing this, Alex
Speaker 5: has become the majority owner of an NBA and w
Speaker 5: NBA team, and I do think being able to you know,
Speaker 5: we talk a lot about, you know, in our partnership,
Speaker 5: sort of the roles that we play in the conversations
Speaker 5: we have with our guests, and I think Alex's now
Speaker 5: ability and curiosity and willingness to essentially say to people,
Speaker 5: whether it's Robin, whether it's Erica, whether it's Ted Leonsis
Speaker 5: who's been on our show, whether it's Belichick, to be like, hey, listen,
Speaker 5: I'm doing something new. We had superd on our show.
Speaker 5: You know, WNBA legend, you know, to be able to say, like, listen,
Speaker 5: I'm doing something new. Help me understand this new job.
Speaker 5: I mean that I do think that sort of unlocked something.
Speaker 7: Do you agree for sure?
Speaker 11: Especially like they just handed us the keys about color
Speaker 11: a few months ago, and it's fun for us to
Speaker 11: think we just brought in a new CEO in Matthew Caldwell,
Speaker 11: who was forming at the Florida Panthers, worked for my
Speaker 11: great friend mentor of Vinnie Biola, who's won two titles
Speaker 11: back to back. No, it's just really the other thing
Speaker 11: that has changed, Jason, I think is now we've brought
Speaker 11: institutional capital to the game. And if you think about
Speaker 11: the ninety two professional sports team, when you include the
Speaker 11: four major leagues NBA, NFL, NHL in Major League Baseball,
Speaker 11: that changed the whole landscape of the ability to find
Speaker 11: some liquidity, put that money to work and keep growing
Speaker 11: these assets.
Speaker 3: You know, I think there was always the worry though,
Speaker 3: and I post this question to both of you of
Speaker 3: a lot of money coming in, gambling coming in what
Speaker 3: that does to the sport haws it let me start
Speaker 3: with you, Alex, has it changed sports overall?
Speaker 9: All?
Speaker 3: This money?
Speaker 11: In additional question, there's a new data point that came
Speaker 11: out that blowout games in the fourth quarter in the NFL,
Speaker 11: we're doing better numbers in the second and first quarter,
Speaker 11: and that's because of fantasy football and the interest level
Speaker 11: that is no no longer about the score. The NFL
Speaker 11: has found another hook to like if they needed one,
Speaker 11: to bring in more fan base and become even stickier.
Speaker 11: I thought that was fascinating because most people in the
Speaker 11: fourth quarter, if it's a blowout, they're done net good.
Speaker 5: Yeah, what the pins.
Speaker 4: It's complicated.
Speaker 12: It is complicated.
Speaker 11: Look, and there's regulations that you have to have to
Speaker 11: put guardrails around everything, but I mean.
Speaker 5: For money in college sports, So I think so that's
Speaker 5: the one. So that's the one that I think is
Speaker 5: probably It was funny. I was talking with the athletic
Speaker 5: director of Ohio State, who is here on a panel early.
Speaker 4: A Dartment's athletic director drag just a few.
Speaker 5: And what I said to him, which he did not
Speaker 5: disagree with, is what has happening in the business of
Speaker 5: college sports over the past five years is the most
Speaker 5: radical thing that has happened in any sport in the
Speaker 5: past one hundred to two hundred years. I mean, there's
Speaker 5: no question. Yeah, because the entire business model has changed,
Speaker 5: the amount of money coming in has changed, I mean
Speaker 5: even the idea. So let's use University of Miami. University
Speaker 5: of Miami. The reason they won that game almost, I
Speaker 5: mean not completely, but a huge part of it is
Speaker 5: because the former quarterback of the University of Georgia was
Speaker 5: done playing at Georgia, he was headed for the NFL.
Speaker 5: Got a call from the University of Miami and said, hey, bro, hey,
Speaker 5: Carson Beck, we'll pay you four million dollars to come
Speaker 5: to University of Miami, which was probably four x what
Speaker 5: he would have made his first season in the NFL
Speaker 5: if he got drafted. And then he goes down plays
Speaker 5: in front of a bigger crowd, in front of a
Speaker 5: you know, in a in a higher profile game, higher viewership,
Speaker 5: you know, than than he would have gotten if he
Speaker 5: had even been on the field in the NFL. That's
Speaker 5: a radical different, Like, that's completely that.
Speaker 3: It's a game change.
Speaker 5: It a good change. So I mean, listen, I think
Speaker 5: if you it depends if you're an investor, there is
Speaker 5: certainly a lot of investing to be done around it.
Speaker 5: I think there to Alex's point about guardrails, there need
Speaker 5: to be new guardrails, you know. One of the things
Speaker 5: the athletic director said was like, we are literally making
Speaker 5: this up as we go along, which is crazy. I mean,
Speaker 5: like none of us can do that in our jobs.
Speaker 5: And it's like I try as you know, but like
Speaker 5: we can't actually do it.
Speaker 11: Yeah, I mean, imagine in any league without a collective
Speaker 11: bargain agreement, right, without a union, without what is the exchange?
Speaker 12: If you sign a.
Speaker 11: Player for five years guaranteed he can't just go on
Speaker 11: to the you know, the opponent over there or the rival.
Speaker 5: So I think especially with the young kids.
Speaker 11: I mean, look, I have a junior, a girl who's
Speaker 11: a junior in a young lady that's a junior at
Speaker 11: the University of Michigan, and I have a senior this
Speaker 11: year in high school. And I couldn't imagine one of
Speaker 11: my girls getting five six, seven million dollars today and
Speaker 11: they're not equipped for it right.
Speaker 5: Well, and the other thing, and and to your point,
Speaker 5: Bill Belichick on our show said this is actually harder
Speaker 5: than coaching in the NFL because it's free agency all
Speaker 5: the time, so the kids can move around. Yeah, and
Speaker 5: they will move around.
Speaker 4: Yeah, there's rich about the portal with the colleague here.
Speaker 4: His son can just log into a portal and go
Speaker 4: somewhere else.
Speaker 11: And he is going to move somewhere out And if
Speaker 11: you look at some of the great coaches that we've
Speaker 11: lost from these institutions, whether you go to Bills, you
Speaker 11: go to Saban, Nick Saban, you go to coach k
Speaker 11: you go to coach Righte for Villanova a tough name
Speaker 11: for my George sound buddy here here.
Speaker 5: But but I think one of the reasons they're.
Speaker 11: Leaving is if you scream at a kid, he's going
Speaker 11: I'm out, I'm going to Georgetown or I'm going to
Speaker 11: Diversity in Miami.
Speaker 5: And that wasn't the case back then.
Speaker 4: So what does this do to the pipeline going into
Speaker 4: the pros?
Speaker 9: Right now?
Speaker 5: I think the I think college football comes NFL Junior yeah,
Speaker 5: and and I think it really just becomes an extension.
Speaker 5: And so you start to what it could do is
Speaker 5: you could have more in some former fashion Carson Becks
Speaker 5: who opt not to go to the pros because they're
Speaker 5: going to make several million dollars, you know, playing in
Speaker 5: college for an extra year. And and then I mean
Speaker 5: big time football is going to just get bigger and bigger,
Speaker 5: and college is going to be a part of that.
Speaker 4: So Alex, I'll ask you the same question I was
Speaker 4: asking you about sports gambling that net.
Speaker 7: Is this a good thing?
Speaker 11: It's interesting, right because I still remember the days with
Speaker 11: p Rose, right. I think the answer we don't know yet.
Speaker 11: I think depends for college sports, college for college sports,
Speaker 11: for college sports. I'm not sure about that, but I
Speaker 11: will tell you one correlation if you know, just to
Speaker 11: back up what Jason was saying, is you know, you've
Speaker 11: never had companies stay private longer, whether it's stripe or
Speaker 11: whether it's many of many examples. I think you're gonna
Speaker 11: have an example of players staying in college longer because
Speaker 11: they can develop. They can go to the University of
Speaker 11: Miami for a senior for four million dollars. The kid
Speaker 11: over at Michigan, the quarterback twelve twelve and a half
Speaker 11: million dollars.
Speaker 12: It's a different world.
Speaker 4: Yeah, so eight years in college and still no MD degree,
Speaker 4: but they got a lot more money.
Speaker 5: Yeah, they got those student loans.
Speaker 3: We just got a few seconds left. Got a dream,
Speaker 3: guest that you still guys are like if they're listening.
Speaker 5: Real quick. Roger Fetter oh good one. Roger Goodell, oh
Speaker 5: good one. All right, a couple of Rogers.
Speaker 3: So Rogers, if you're listening ready, well do you guys?
Speaker 11: Thank you?
Speaker 3: Good luck on I think stage, getting ready to talk
Speaker 3: to you about just to talk all right, of course.
Speaker 3: Jason Kelly to correspond to Bloomberg Originals Alex Rodriguez, German,
Speaker 3: CEO of A Rod Cork. They are the co hosts
Speaker 3: of The Deal, the third season. It is underway. You
Speaker 3: can find it wherever you download your podcast.
Speaker 2: You're listening to the Bloomberg Business Week Daily podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern.
Speaker 2: Listen on Apple car Play and Android Auto with the
Speaker 2: Bloomberg Business app, or watch us live on YouTube.
Speaker 3: Wrapping up our Bloomberg Power Players New York coverage on
Speaker 3: Bloomberg Business Week, we yes had to talk a little
Speaker 3: bit about golf. With so much going on over the
Speaker 3: last year or two, we had a great voice the
Speaker 3: head of PGA of America, which is home to the
Speaker 3: revered Ryder Cup.
Speaker 4: Derek Sprague is CEO of PGA of America. He joined
Speaker 4: us alongside Bloomberg News Texas Bureau Chief Julie Fine from
Speaker 4: Bloomberg Power Players in New York.
Speaker 12: Yeah.
Speaker 13: So we're the PGA of America, so commonly known as
Speaker 13: the coaches of the game, the administrators of the game,
Speaker 13: the club professionals. Right, there's sixteen thousand clubs in this country,
Speaker 13: and we have PGA professionals at nearly ten thousand of
Speaker 13: those clubs. So you'll see a PGA professional if you
Speaker 13: go to a golf course, whether that's a public facility
Speaker 13: or a private facility, you'll take lessons from our PGA members.
Speaker 13: Versus the PGA Tour, which that's what you see on
Speaker 13: television every week, the part of the game is the
Speaker 13: PGA Tour. However, we work very closely with them because
Speaker 13: a lot of our PGA members are coaches of their
Speaker 13: tour players.
Speaker 7: Right.
Speaker 4: You know, during the pandemic, golf really exploded because it
Speaker 4: was one of those sports that early on people realized
Speaker 4: they could do and it was lower no risk. Have
Speaker 4: you seen that growth continue.
Speaker 13: Yeah, it's been incredible. You know, we haven't used social
Speaker 13: distancing word in a long time, but golf. PGA of
Speaker 13: America actually went to bat during the pandemic to say
Speaker 13: because as states were shutting down, we said, hey, golf
Speaker 13: is a safe sport, and I think what we're seeing today,
Speaker 13: you know, five years after the pandemic, is that growth
Speaker 13: continuing Because as I told Julia earlier, families got together, right,
Speaker 13: they are all living together, They got to play the
Speaker 13: sport together. You got to play with your kids and
Speaker 13: your grandkids in a safe environment, outdoors and small groups,
Speaker 13: all the things that social distancing lend itself to.
Speaker 12: And we've seen that retention today. We have more golfers
Speaker 12: in the game.
Speaker 13: We're up to like twenty eight million in this country,
Speaker 13: five hundred and fifty million rounds of golf played in
Speaker 13: twenty twenty four. It's just incredible growth since the pandemic.
Speaker 14: I mean, I think in terms of the financial aspect
Speaker 14: of this game, what surprised me a little bit that
Speaker 14: we discussed earlier is the global impact of it and
Speaker 14: what a difference global sponsors are making. The biggest changes
Speaker 14: You've seen in Ryder Cup in that aspect.
Speaker 13: Yeah, this year at the Ryder Cup here in a
Speaker 13: few weeks and in New York City's backyard out in
Speaker 13: Long Island and beth Page is we have about two
Speaker 13: hundred and eighty corporate partners in thirty of those from
Speaker 13: around the world. We certainly have our worldwide partners at
Speaker 13: the PGA America for the Ryder Cup, but we have
Speaker 13: thirty partners from Australia and Japan coming in. They're not
Speaker 13: even those countries aren't involved with the Ryder Cup, but
Speaker 13: they're investing in the Ryder Cup because it's a live
Speaker 13: sporting event, one of the most epic sporting events in
Speaker 13: all of sports, not just golf.
Speaker 3: How do you think of the role of the Rider's
Speaker 3: Cup in the midst of what feels like a divided
Speaker 3: golf world right now? How important is that?
Speaker 9: Yeah?
Speaker 13: I mean, I think I think we're past that a
Speaker 13: little bit, Carol. But it's certainly divided when you talk
Speaker 13: about the Ryder Cup, because you know it's going to
Speaker 13: be loud in Ruckus on Long Island. The Europeans are
Speaker 13: coming in into our home court, so to speak, and
Speaker 13: as we call as Keegan calls it, our captain calls
Speaker 13: it America's course now used to be New York's public course,
Speaker 13: but it's America's course that week. So yeah, it'll be
Speaker 13: divided that way. The crowds will be divided. But I
Speaker 13: think the investment in golf is now global, like I
Speaker 13: just mentioned, and so many people, golf is booming, not
Speaker 13: only in this country's booming globally. Now, more golf courses
Speaker 13: being built around the world because of more golfers from
Speaker 13: around the world playing that are playing over.
Speaker 12: Here in America. They go back to their hometown and
Speaker 12: home countries and help start the game there.
Speaker 14: Since the inception of the Live Tour, what we've also
Speaker 14: seen boom is the persons. I mean, these players are
Speaker 14: making a lot more money because of this really competing tour.
Speaker 13: What do you see the future of all this, Yeah,
Speaker 13: I see it plateauing a little bit. You know, we
Speaker 13: saw you know that was again we're different than the
Speaker 13: PGA Tour, but it certainly increased our purses at our majors,
Speaker 13: you know, all three of our majors, the KPMG, Women's PGA,
Speaker 13: the Senior PG and the Men's PG which we'll be
Speaker 13: holding at our home home course at Frisco, Texas there. So, yeah,
Speaker 13: the purses have grown, but I don't think they're going
Speaker 13: to continue to grow at the rate they have in
Speaker 13: the last few years.
Speaker 3: Might you see the Ryder Cup grow beyond the United States?
Speaker 13: Yeah, I mean we play it every other year, So
Speaker 13: it's only in this country, and I think that's why
Speaker 13: the demand is so high for this year's Ryder Cup.
Speaker 13: One being in New York City metro market.
Speaker 3: It's a great market to hold an a vest, it
Speaker 3: sure is.
Speaker 13: And then we'll play it. It'll be in Ireland in
Speaker 13: twenty twenty seven. So it goes back and forth every
Speaker 13: two years. Just to show you the magnitude, a half
Speaker 13: a million people registered for tickets for this year's Ryder Cup.
Speaker 13: Only fifty thousand a day will be coming to it,
Speaker 13: but a half a million, right, And then we had
Speaker 13: thirty thousand on the list of volunteer, thirty thousand and
Speaker 13: say hey we'll come and work, We'll buy uniform, will
Speaker 13: come out there and work. We'll have about four thousand
Speaker 13: volunteers out there.
Speaker 3: But do you expend it beyond the US and Europe?
Speaker 13: No, I don't think so, because this had been goes
Speaker 13: back to nineteen twenty seven. We're coming up on our
Speaker 13: one hundredth anniversary in Ireland in two years and I
Speaker 13: don't see that changing at all.
Speaker 4: I'm wondering about accessibility to the sport here in the
Speaker 4: US and how you grow that pipeline, especially for US players.
Speaker 4: We just went to the US Open last week. We
Speaker 4: broadcast from there every year, and every year we hear
Speaker 4: from the USTA about their efforts to increase the ability
Speaker 4: for kids to go out and play tennis, a sport
Speaker 4: that oftentimes is associated with country club similar to golf.
Speaker 4: What needs to be done in the US to increase
Speaker 4: that pipeline for young Americans.
Speaker 13: Well, the PGA of America has been doing it now
Speaker 13: for over ten years, and we have a program under
Speaker 13: our PGA Reach Foundation umbrella called PGA Junior League. We
Speaker 13: put these kids in jerseys with their names and numbers
Speaker 13: on their backs. We'll have them out here at Ryder Cup,
Speaker 13: so you'll see a little sprinkle of that cheering on
Speaker 13: their favorite players or whatever. But we had last year
Speaker 13: in twenty twenty four, we had seventy seven thousand juniors play.
Speaker 13: So our PGA of America golf professionals, they form these
Speaker 13: teams at their facilities, they compete against other teams from
Speaker 13: from nearby facilities, and then we'll have a national championship
Speaker 13: actually in Frisco here in a few weeks so I mean,
Speaker 13: and that'll be televised on ESPN. So even junior sports
Speaker 13: are are are seeing the big time on television right.
Speaker 13: So again, our PGA professionals are hard at growing the
Speaker 13: game and pg Junior League is just one of those
Speaker 13: great programs, probably the most successful program we've ever had
Speaker 13: for growing the game.
Speaker 14: You have some really big names in golf right now.
Speaker 14: You look at like a Scottie Scheffler from our neck
Speaker 14: of the woods, Texas really actually is becoming home to
Speaker 14: a lot of pro golfers now, but you look at him,
Speaker 14: you look at Bryson d.
Speaker 5: Chambeau.
Speaker 3: Overall, you've got a lot of younger players.
Speaker 14: They're really appealing to people via social media and different means,
Speaker 14: and you've got a traditional base as well.
Speaker 3: So how do you marry that?
Speaker 13: Yeah, well, I think I think the younger generation they're
Speaker 13: they're you know, they grew up a lot of them
Speaker 13: in this video game world. So now technology has helped
Speaker 13: them get in there. They got range finders and they're
Speaker 13: checking the yardage on their watches and stuff.
Speaker 12: I mean, it just connects them to the game.
Speaker 13: And then when you look at the alternative off course
Speaker 13: things like top golf in those type of venues, and
Speaker 13: you got some right here in the city, right you
Speaker 13: can go play golf inside the city here as some
Speaker 13: of the venues here. So I think that's transferring to
Speaker 13: whether you play nine holes, or play a short course
Speaker 13: or play eighteen holes. All these alternative forms of golf
Speaker 13: have helped elevate the game, especially with that demographic. And
Speaker 13: when they go all in on something, and I think
Speaker 13: other CEOs would tell you this, whether it's a certain
Speaker 13: product or a certain sport, they're all in that demographic
Speaker 13: they go they're not doing the mile wide and inch deep,
Speaker 13: They're going a mile deep in an inch wide.
Speaker 12: So if they get onto sport, a certain sport, they're
Speaker 12: staying with it.
Speaker 3: But Derek, you know, like everyone is competing for our
Speaker 3: eyeballs right now. There's so much content out there, and
Speaker 3: certainly just even sports content. There's so many different choices.
Speaker 3: So how do you guys kind of figure out how
Speaker 3: to expand your audiences in a way and then still
Speaker 3: stay kind of true to the tradition aspects of the game.
Speaker 13: Yeah, well, I think that's what the sport does. The
Speaker 13: multi generational part of our sport where you have, you know,
Speaker 13: right here at Bloomberg, you'll have some folks that have
Speaker 13: worked here for a number of years, they're mentoring the
Speaker 13: younger generation. They're taking them out to play golf. A
Speaker 13: lot of business deals are done on the golf course.
Speaker 3: So that's just one it's still like or is that
Speaker 3: just as scarious?
Speaker 7: No, No, it is.
Speaker 13: And when you think about it, as much as technology
Speaker 13: is in this in this environment now at a lot
Speaker 13: of the golf courses, it's great to put your phone
Speaker 13: down and actually talk with someone and just think about
Speaker 13: having a meeting for four or five hours. So on
Speaker 13: a golf course, the playteen holes, you're playing for four
Speaker 13: four and a half hours. You could be with your
Speaker 13: boss for four four and a half hours, you could
Speaker 13: be with a client for fore. You get to know
Speaker 13: these people and it's a great human interaction. That's another
Speaker 13: beautiful part of our sport is that you know, it's
Speaker 13: not only traditional, but you have the technology infused with it.
Speaker 12: But then you get to spend time.
Speaker 13: And that's why I said earlier, just being able to
Speaker 13: play with my kids and spend four or five hours
Speaker 13: when it's great.
Speaker 3: Is it still a lot of guys though playing No, we've.
Speaker 13: Seen and in fact, women's is the fastest growth of
Speaker 13: the sport since the pandemic. More women have gotten in
Speaker 13: the sport not only for recreational Again, I think being like, hey,
Speaker 13: when the families we're at home and they were shuttered
Speaker 13: at home, they said, hey, I want to go out
Speaker 13: and play too. A lot of women took up the
Speaker 13: sport in the last five years. They've stayed in the game,
Speaker 13: which is great. And then I hear I got a
Speaker 13: lot of nieces and they're taking up the sport because
Speaker 13: they know it's an important part not only for business,
Speaker 13: but for family. So it's wonderful to see and that's
Speaker 13: our one of our proudest moments is to see the
Speaker 13: sport grow with the youth and with women and other
Speaker 13: people of underserved populations. We have a PGA works part
Speaker 13: of our foundation, which really helps grow the game for
Speaker 13: underserved communities, and we're trying to make PGA America is
Speaker 13: the entity that's trying to make the game look like
Speaker 13: more like America.
Speaker 14: You just talked about the human aspect of this. I'm
Speaker 14: now going to the not human aspects of this. Great
Speaker 14: segue AI changes in the game and technology.
Speaker 5: PGA of America.
Speaker 14: Of course in Frisco, Texas, that's how we know each other.
Speaker 14: The technology is you take a shot and it tells
Speaker 14: you everything that's wrong with it and what's right with it.
Speaker 14: But I mean anything to dissect your game that is there.
Speaker 14: What is the future of technology.
Speaker 7: In the game.
Speaker 13: It's just going to continue to grow. In fact, that's
Speaker 13: one of the first things I did as the CEO
Speaker 13: when I got there, as I talked to our head
Speaker 13: of education and I said, what are we doing. We
Speaker 13: have all our associates that go through our headquarters there
Speaker 13: and they learn the trade and become a PGA professional there,
Speaker 13: and I said, what are we doing to teach them AI? Okay,
Speaker 13: not only would with the launch monitors and all that
Speaker 13: that'll have AI all factored in there, with the algorithms
Speaker 13: and all that, but we're teaching our young associates how
Speaker 13: to use AI in running their golf facilities. So whether
Speaker 13: that's doing a flyer that's generated in a couple of
Speaker 13: minutes rather than a couple of hours, or doing rounds
Speaker 13: forecasting for their budgets, or doing newsletters for their club
Speaker 13: and using the AI technology to save time, make it
Speaker 13: more efficient, hopefully it'll look better and then impress their
Speaker 13: bosses and their boards and their members.
Speaker 4: You know, one thing that we talked about again, tennis
Speaker 4: fresh on our mind as the US Open continues here
Speaker 4: in New York and as we broadcast from there last week.
Speaker 4: The average age of a tennis coach here in the
Speaker 4: US is relatively old, and I'm wondering if you're seeing
Speaker 4: similar challenges when it comes to coaching with golf, are
Speaker 4: you able to get those younger coaches in there who
Speaker 4: can spend their entire lifetime essentially teaching the game to others?
Speaker 13: Yeah, we have three career tracks really that sort of
Speaker 13: like when they want to become a PGA member, which
Speaker 13: direction you want to go. So we have club operations,
Speaker 13: we have coaching, and we have executive management. The highest
Speaker 13: growth is coaching, So we're not seeing that challenge. We're
Speaker 13: seeing more young professionals want.
Speaker 12: To get into coaching, and I think it's peak.
Speaker 13: Well, I think one is a good lifestyle, right, You're
Speaker 13: not club operations can be challenging, right, You're coming to
Speaker 13: the club at five in the morning, you might be
Speaker 13: closing it at eleven o'clock at night, where teaching, you know,
Speaker 13: generally is done in daylight hours. And I think, you know,
Speaker 13: we've had such great success teaching players, you know, Randy
Speaker 13: Smith is one of our PGA members and he's teaching
Speaker 13: the number one player in the game, Scottie Scheffler. And
Speaker 13: we've done a lot of great segments on that, and
Speaker 13: I think that just inspires our young professionals to say,
Speaker 13: I want to be like Randy Smith, and I want
Speaker 13: to be one of the best teachers in the game.
Speaker 3: We're talking with Derek Sprague, he's theo PGA of America.
Speaker 3: Also with us is are Julie Fine, texas PUER chief
Speaker 3: here at Bloomberg News. Things evolved, things change, and things
Speaker 3: are questioned about. I do remember these conversations we were
Speaker 3: having that like, younger generation isn't playing golf? Is it
Speaker 3: just the pandemic that you think got people more interested?
Speaker 13: Like well, that certainly that was probably a jump starter.
Speaker 13: But I you know, this sounds self serving, but I
Speaker 13: look at some of the programs that we're doing Carol,
Speaker 13: like PG Junior League.
Speaker 12: We've been doing that for ten years.
Speaker 13: Yeah, and it's grown every year for ten years, right,
Speaker 13: and you're getting seventy So what happens again, when you
Speaker 13: look at the multi generational.
Speaker 12: Part of our sport.
Speaker 13: These kids play okay, and then their parents again what's
Speaker 13: beautiful about the sport is they don't have to sit
Speaker 13: on the sidelines like some other U sports. They don't
Speaker 13: have to be up in the stands. They can participate
Speaker 13: with their kids. So all of a sudden, you take
Speaker 13: a couple of children and then a couple parents start
Speaker 13: and the game of golf grows. So, I mean, it's
Speaker 13: just I think programs like that. And then we've got
Speaker 13: another great program on our foundation for our veterans of
Speaker 13: this country called PGA Hope. And these veterans that they're
Speaker 13: trying to reassimilate back into civilian life, and our PGA
Speaker 13: coaches are helping them take up the game building community
Speaker 13: and now they're starting to play the sport. So I
Speaker 13: think all these programs that we do at the national level,
Speaker 13: at the PGA America plus are thirty we have close
Speaker 13: to thirty three thousand PGA professionals. One of the largest
Speaker 13: working sports organizations in the world, PGA America is so
Speaker 13: those members working at these you know, fifteen thousand clubs
Speaker 13: nationwide are helping grow the game day in and day.
Speaker 3: Out, starting to pay it off. We've got one last question.
Speaker 3: We're gonna like you got Julie wrap it up for
Speaker 3: perfect timing. And the last question is ten years, where
Speaker 3: are we in the game of golf.
Speaker 13: Yeah, well, today we're one hundred and two million dollar industry.
Speaker 13: I see that growing probably by another twenty or thirty
Speaker 13: billion dollars. I think the retention rate is going to continue,
Speaker 13: and I think we're going to see instead of five
Speaker 13: hundred and fifty million rounds of golf being play, we'll
Speaker 13: probably see six hundred million rounds of golf and in
Speaker 13: ten years and just continue to grow this sport.
Speaker 12: Instead of twenty eight million.
Speaker 13: Golfers, shall probably have thirty two to thirty four million
Speaker 13: golfers in ten years time. So again, all these all
Speaker 13: these programs are continuing to develop golfers, and our thirty
Speaker 13: three thousand PGA professionals are growing the game nationwide, and
Speaker 13: I think all these programs will just continue to add
Speaker 13: to the numbers and you know, economically in golf.
Speaker 3: Well, I gotta said, I loved hitting golf balls at
Speaker 3: the driving range, like it was just so much fun.
Speaker 3: It's just such a part of us growing up.
Speaker 5: Thank you so much.
Speaker 12: You're welcome, Othan.
Speaker 14: What do you guys doing the show from Texas?
Speaker 4: Anytime you got all the time.
Speaker 5: We will from Texas, bring us done.
Speaker 3: Lots of family in Texas.
Speaker 5: Love, We love to have you.
Speaker 3: Derek Spurak, Thank you so much for the CEO PGA
Speaker 3: of American of Personal Thanks for our own Julie Fine
Speaker 3: Texas for your chief of Bloomberg News. We're gonna put
Speaker 3: on a cowboy hat. We're gonna come down.
Speaker 14: I'm waiting come across and maybe yeah, sure I know somebody.
Speaker 2: So Chris scot This is the Bloomberg Business Week Daily podcast,
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