1 00:00:02,160 --> 00:00:05,040 Speaker 1: Hello, I'm Scott Sasman, and I'm Evan Novi Williams and 2 00:00:05,240 --> 00:00:08,440 Speaker 1: Michael Barr. And this is the Bloomberg Business of Sports podcast, 3 00:00:08,520 --> 00:00:12,480 Speaker 1: where we explore the big money issues in the world 4 00:00:12,520 --> 00:00:17,360 Speaker 1: of sports all together again. We today we begin with Fanatics, 5 00:00:17,400 --> 00:00:20,320 Speaker 1: a serious situation. Yeah, a lawsuit that was filed this 6 00:00:20,400 --> 00:00:23,720 Speaker 1: week by the US government, specifically the e e O C, 7 00:00:23,960 --> 00:00:31,200 Speaker 1: the Equal Employment Opportunity Group, alleging racial harassment, discrimination failure 8 00:00:31,240 --> 00:00:37,040 Speaker 1: to promote at Fanatics at their Jacksonville location. A large 9 00:00:37,120 --> 00:00:40,280 Speaker 1: part of this lawsuit seems to stem from one employee, 10 00:00:40,960 --> 00:00:44,120 Speaker 1: a black man, who was hired in two thousand twelve. Uh, 11 00:00:44,159 --> 00:00:45,960 Speaker 1: there are some ugly things in here, you know. There's 12 00:00:46,080 --> 00:00:50,520 Speaker 1: racial slurs by managers. There's attempts at jokes that are 13 00:00:50,680 --> 00:00:54,680 Speaker 1: that are very much not jokes. Uh. It's unclear exactly 14 00:00:54,680 --> 00:00:56,480 Speaker 1: how far they date back. Fanatics has said in a 15 00:00:56,520 --> 00:01:00,880 Speaker 1: statement that they did nothing wrong and that all will 16 00:01:01,000 --> 00:01:04,520 Speaker 1: fight the accusations. But you know, this is a company 17 00:01:04,520 --> 00:01:07,960 Speaker 1: that has connections across the sports world. There's investment from 18 00:01:08,000 --> 00:01:10,560 Speaker 1: the NFL, there's investment from Major League's a company that 19 00:01:10,600 --> 00:01:13,480 Speaker 1: you don't even know you're doing business with. Fanatics that 20 00:01:13,680 --> 00:01:15,480 Speaker 1: you could do that if you're doing on the website 21 00:01:15,480 --> 00:01:17,800 Speaker 1: of the NFL, the website of a league, you don't 22 00:01:17,800 --> 00:01:20,120 Speaker 1: realize it's powered by Fanatic. Exactly. It's a it's a 23 00:01:20,560 --> 00:01:23,760 Speaker 1: four and a half billion dollar company right now by Michael. 24 00:01:23,760 --> 00:01:27,280 Speaker 1: Real sports fan that has bought a T shirt or 25 00:01:27,319 --> 00:01:30,760 Speaker 1: anything online sports related, officially licensed sports related in the 26 00:01:30,800 --> 00:01:34,440 Speaker 1: past couple of years probably has bought it from Fanatics. Uh, 27 00:01:34,440 --> 00:01:36,520 Speaker 1: this is a company that is that is massive. It's 28 00:01:36,560 --> 00:01:39,960 Speaker 1: the it's the biggest seller of licensed sportswear. Your closer 29 00:01:40,040 --> 00:01:43,319 Speaker 1: Fanatic And I am when did Michael Reuben buy the company? 30 00:01:43,400 --> 00:01:45,920 Speaker 1: And when were these allegations again, so the allegations that 31 00:01:46,200 --> 00:01:48,720 Speaker 1: the man kind of the center of the lawsuit was 32 00:01:48,760 --> 00:01:51,880 Speaker 1: was hired in two thousand twelve. Michael Rubin bought Fanatics 33 00:01:51,880 --> 00:01:54,280 Speaker 1: in two thousand eleven, and then in the in the 34 00:01:54,320 --> 00:01:56,800 Speaker 1: first couple of years of his ownership, he merged some 35 00:01:56,880 --> 00:01:59,480 Speaker 1: of his other companies underneath it. He had some licensing 36 00:01:59,560 --> 00:02:02,480 Speaker 1: rights l where that he moved under Fanatics. Um, so 37 00:02:02,760 --> 00:02:04,919 Speaker 1: you know that this all happened at a time when 38 00:02:05,000 --> 00:02:07,360 Speaker 1: when the current owner, Michael Rubin, who's a who's an 39 00:02:07,400 --> 00:02:11,120 Speaker 1: e commerce billionaire, When he bought the company. Unclear how 40 00:02:11,160 --> 00:02:13,520 Speaker 1: how much this happened in the transition as he was 41 00:02:14,000 --> 00:02:18,639 Speaker 1: ramping it from a small sound North Florida of Michael 42 00:02:18,680 --> 00:02:21,079 Speaker 1: rub But I mean, here's a guy who who's fighting 43 00:02:21,120 --> 00:02:27,400 Speaker 1: incarceration injustice. He free mcmill He was instrumental in that. 44 00:02:27,880 --> 00:02:30,240 Speaker 1: So it's that backdrop of which his company is now 45 00:02:30,280 --> 00:02:34,360 Speaker 1: being painted in this light. What I don't understand is fanatics. 46 00:02:34,400 --> 00:02:38,280 Speaker 1: Are they saying that the gentleman who is bringing up 47 00:02:38,320 --> 00:02:41,640 Speaker 1: these allegations that it never existed, because, like you said, 48 00:02:41,720 --> 00:02:45,720 Speaker 1: the things that are on paper are pretty ugly. It's unclear, 49 00:02:45,760 --> 00:02:49,000 Speaker 1: And the fanatic statement was was was pretty brief in 50 00:02:49,000 --> 00:02:50,919 Speaker 1: which they said that that that they feel as that 51 00:02:51,000 --> 00:02:55,040 Speaker 1: the company h is not responsible or hasn't done anything wrong. Um. 52 00:02:55,560 --> 00:02:57,320 Speaker 1: They have not certainly have not said that this man 53 00:02:57,440 --> 00:03:00,880 Speaker 1: is lying. Um. But you know, I assume that as 54 00:03:00,960 --> 00:03:03,320 Speaker 1: things along, we may we may get a little more 55 00:03:03,880 --> 00:03:07,640 Speaker 1: like let's bring Starbucks into this. Here's a big company 56 00:03:07,919 --> 00:03:10,720 Speaker 1: and got a lot of attention, a lot of backlash 57 00:03:11,280 --> 00:03:16,399 Speaker 1: because one employee at one store, and here in New York, 58 00:03:16,440 --> 00:03:18,280 Speaker 1: you know, you can't walk five feet without tripping over 59 00:03:18,400 --> 00:03:23,880 Speaker 1: Starbucks did something really stupid and called police. Now, is 60 00:03:23,919 --> 00:03:29,040 Speaker 1: that an institutional problem of racism at Starbucks? Is this 61 00:03:29,120 --> 00:03:34,760 Speaker 1: an institutional problem of racism at Fanatics? Or did one 62 00:03:34,800 --> 00:03:39,960 Speaker 1: employee do something really abhorring and that's something we need 63 00:03:40,000 --> 00:03:45,600 Speaker 1: to clarify this. The allegations are against one's not what 64 00:03:45,720 --> 00:03:49,640 Speaker 1: one employees making allegations, So it's there are more so 65 00:03:49,760 --> 00:03:52,920 Speaker 1: this the gentleman who's making the allegations is saying that 66 00:03:53,160 --> 00:03:58,160 Speaker 1: several people and a number of them. Yeah, the ugliest 67 00:03:58,200 --> 00:04:01,480 Speaker 1: parts of the lawsuit are you know, of a variety 68 00:04:01,600 --> 00:04:05,000 Speaker 1: of things that were said to him by a plethora 69 00:04:05,200 --> 00:04:10,360 Speaker 1: of team managers, you know, superiors, colleagues. I mean, the 70 00:04:11,120 --> 00:04:14,760 Speaker 1: thrust of the allegation is that the workplace down in 71 00:04:14,880 --> 00:04:19,919 Speaker 1: Jacksonville at Fanatic Shop is uh systematic in its in 72 00:04:20,000 --> 00:04:23,320 Speaker 1: its treatment of of African Americans and and and and 73 00:04:23,360 --> 00:04:27,880 Speaker 1: biased based on race. Um. Yeah, so again a large 74 00:04:27,880 --> 00:04:29,960 Speaker 1: part of it stems from what one man said his 75 00:04:30,040 --> 00:04:35,040 Speaker 1: experience was. But these are about more than one Fanatics 76 00:04:35,040 --> 00:04:38,400 Speaker 1: employee for sure. Well, now I'm kind of blown here 77 00:04:38,480 --> 00:04:42,760 Speaker 1: because I I don't understand if several people are involved, 78 00:04:43,400 --> 00:04:48,400 Speaker 1: how how is everybody denying this or what's going on here? Well, 79 00:04:48,640 --> 00:04:52,320 Speaker 1: if it's in Jacksonville. This is far removed from your 80 00:04:52,360 --> 00:04:54,880 Speaker 1: company headquarters. How far do you know what's going on 81 00:04:54,880 --> 00:04:56,680 Speaker 1: in your tentacles? You need to know and you need 82 00:04:56,720 --> 00:05:00,360 Speaker 1: to clean up if it's true, obviously, so you you 83 00:05:00,360 --> 00:05:03,120 Speaker 1: you can bet that Michael Rubin has taken these things 84 00:05:03,160 --> 00:05:04,880 Speaker 1: seriously and he's going to find out what happened, who, 85 00:05:05,000 --> 00:05:08,240 Speaker 1: who said what, and who did what? And went? Can 86 00:05:08,279 --> 00:05:11,679 Speaker 1: we talk about something happier, We'll talk about PEPSI MSG. 87 00:05:12,240 --> 00:05:14,200 Speaker 1: Is it happier? Not if you're not? If you like coke? 88 00:05:14,279 --> 00:05:18,040 Speaker 1: Well you know that's the real thing. Well, oh, well 89 00:05:19,200 --> 00:05:20,320 Speaker 1: you know what? It took me a secon. Did you 90 00:05:20,360 --> 00:05:23,479 Speaker 1: see the way I lifted my head? I did. I 91 00:05:23,520 --> 00:05:25,640 Speaker 1: got it after there was a millisecond of wait a minute, 92 00:05:25,680 --> 00:05:27,440 Speaker 1: he was making a joke and a darn good one there, 93 00:05:27,480 --> 00:05:30,760 Speaker 1: Yeah you got to explain it then, Well, yeah you didn't. 94 00:05:30,760 --> 00:05:32,360 Speaker 1: But it just it took me. I think that's more 95 00:05:32,360 --> 00:05:34,440 Speaker 1: of a byproduct of my condition at the moment, and 96 00:05:34,480 --> 00:05:38,440 Speaker 1: not you, Barna. Was bart just quick and honey. I 97 00:05:38,480 --> 00:05:41,120 Speaker 1: had to confirm with Edman with a glance, and then 98 00:05:41,120 --> 00:05:43,520 Speaker 1: I can tell by his smile, yes he was. But 99 00:05:43,560 --> 00:05:45,560 Speaker 1: what I find interesting here and EM and I talked 100 00:05:45,560 --> 00:05:50,120 Speaker 1: about this off air yesterday. Is one Coke had had 101 00:05:50,160 --> 00:05:53,920 Speaker 1: these pouring rights at its MSG owned property. So you've 102 00:05:53,920 --> 00:05:57,200 Speaker 1: talked about Radio City and the Beacon Theater for more 103 00:05:57,240 --> 00:06:01,000 Speaker 1: than a hundred years. Then all of a sudden, you're 104 00:06:01,040 --> 00:06:05,080 Speaker 1: displaced by your biggest rival. And the conversation we had 105 00:06:05,880 --> 00:06:08,960 Speaker 1: was from a consumer standpoint, From an r O I, 106 00:06:09,520 --> 00:06:13,080 Speaker 1: how does this work? Like dor consumers care if they're 107 00:06:13,120 --> 00:06:15,880 Speaker 1: getting coke or pepsi. What's the promotion of having the 108 00:06:15,880 --> 00:06:18,480 Speaker 1: pouring rights in these venues? They switch all the time. 109 00:06:18,520 --> 00:06:21,599 Speaker 1: The Mets who had the pepsi porches, that Mets, Mets 110 00:06:21,600 --> 00:06:24,280 Speaker 1: had pepsi Ports City Field. Now it's not anymore. Now 111 00:06:24,320 --> 00:06:29,600 Speaker 1: it's Coke who cares. Well, Now wait a minute, there's 112 00:06:29,640 --> 00:06:34,000 Speaker 1: a there's a definite taste difference between pepsi and coke. 113 00:06:34,080 --> 00:06:36,599 Speaker 1: I'm not knocking out the one. We're going upstand. We're 114 00:06:36,600 --> 00:06:40,919 Speaker 1: going upstairs later the blind Medina. You're coming upstairs with 115 00:06:41,000 --> 00:06:43,240 Speaker 1: us later. We are going to put Bar in the 116 00:06:43,320 --> 00:06:48,600 Speaker 1: blind taste test. Well, let's see if bar can discern 117 00:06:48,680 --> 00:06:52,360 Speaker 1: which is Well, listen, when I make a rum and coke. Yeah, 118 00:06:53,160 --> 00:06:55,840 Speaker 1: but when I make a Rouman Coke. I can tell 119 00:06:55,880 --> 00:06:58,479 Speaker 1: the difference of putting a Coke in the drink as 120 00:06:58,480 --> 00:07:00,479 Speaker 1: opposed to a pepsi. But about the rum, can you 121 00:07:00,480 --> 00:07:03,719 Speaker 1: tell if I use good rum or bad room that 122 00:07:03,800 --> 00:07:07,640 Speaker 1: I believe Maybe I shouldn't have said that, but but 123 00:07:07,720 --> 00:07:09,680 Speaker 1: it is true. There is a taste anyway. What I'm 124 00:07:09,720 --> 00:07:11,360 Speaker 1: trying to get at is, but how do the companies 125 00:07:11,400 --> 00:07:13,320 Speaker 1: take advance? That's my question? How did the companies take 126 00:07:13,320 --> 00:07:15,520 Speaker 1: advantage of these I can? I think I can partially 127 00:07:15,520 --> 00:07:19,200 Speaker 1: answer this. This is a tremendous market opportunity, right, and 128 00:07:19,280 --> 00:07:23,280 Speaker 1: this is not necessarily about having eight thousand people in 129 00:07:23,360 --> 00:07:28,400 Speaker 1: the next brands. But then you're asking why does Coke 130 00:07:28,440 --> 00:07:31,320 Speaker 1: advertise on billboards? Why are their commercials? Because they want 131 00:07:31,320 --> 00:07:33,520 Speaker 1: to in and the you want every single time you 132 00:07:33,560 --> 00:07:36,800 Speaker 1: think of soda to think of them most affect there 133 00:07:36,840 --> 00:07:40,080 Speaker 1: are eighteen thousand people in Madison Square Garden almost every 134 00:07:40,160 --> 00:07:43,200 Speaker 1: night for some event, right, And because you're the of 135 00:07:43,200 --> 00:07:46,200 Speaker 1: the pouring rights, that means that you have probably if 136 00:07:46,240 --> 00:07:48,600 Speaker 1: you add up all the little signs and the big ones, 137 00:07:48,640 --> 00:07:53,679 Speaker 1: there's probably multiple thousands of formerly Coke now Pepsi signs 138 00:07:53,680 --> 00:07:55,560 Speaker 1: that are going to switching and when I now go 139 00:07:55,680 --> 00:07:58,520 Speaker 1: to a point of purchase sale, when I buy from 140 00:07:58,560 --> 00:08:01,559 Speaker 1: my home, if I oh somewhere, I mean half the time, 141 00:08:01,880 --> 00:08:03,720 Speaker 1: I'll sit down a little. You know, I like some 142 00:08:03,760 --> 00:08:06,480 Speaker 1: of these bad chain restaurants. I'm not gonna be promoting, 143 00:08:06,760 --> 00:08:08,320 Speaker 1: but you know, I like some of these chain restaurants. 144 00:08:08,360 --> 00:08:10,160 Speaker 1: And I'll sit down and I'm like, can I have 145 00:08:10,200 --> 00:08:12,960 Speaker 1: a diet bleep? And they'll say, well, we have, we 146 00:08:13,000 --> 00:08:15,560 Speaker 1: only have the other one. Is that? Okay? Does anybody 147 00:08:15,600 --> 00:08:18,120 Speaker 1: say no? Yes? No? I don't think people say no, 148 00:08:18,160 --> 00:08:19,600 Speaker 1: But I bet you when you're in line at the 149 00:08:19,640 --> 00:08:25,800 Speaker 1: supermarket and like, no, you you may, but they're not 150 00:08:25,840 --> 00:08:28,720 Speaker 1: necessarily marketing towards you. So you got Sam's Club in 151 00:08:28,720 --> 00:08:32,880 Speaker 1: your house, asking why the advertise at all? No, I 152 00:08:32,960 --> 00:08:37,959 Speaker 1: just wonder this particular venue, this particular product, how does 153 00:08:37,960 --> 00:08:40,360 Speaker 1: it work? Do I It's been a hundred years of coke, 154 00:08:40,480 --> 00:08:43,160 Speaker 1: all of a sudden people are going to be influenced 155 00:08:43,200 --> 00:08:46,720 Speaker 1: because it's changes PEPSI can I ask a question absolutely 156 00:08:46,840 --> 00:08:49,840 Speaker 1: if there is an artist or a team that's promoted 157 00:08:49,840 --> 00:08:53,240 Speaker 1: by a certain soft No, I never go by affiliate. 158 00:08:53,240 --> 00:08:55,240 Speaker 1: I do not care. But can they still think it's 159 00:08:55,240 --> 00:08:57,920 Speaker 1: still play there? Even if what's not Oh yeah, yeah, yeah, yeah. 160 00:08:57,960 --> 00:09:00,240 Speaker 1: They just can't. They just can't drink. Probably, I'll bet 161 00:09:00,240 --> 00:09:01,800 Speaker 1: you they would have trouble. Now if I'm a Madison 162 00:09:01,800 --> 00:09:05,240 Speaker 1: Square Garden and I'm let's say, Billy Joel, could Billy 163 00:09:05,360 --> 00:09:08,559 Speaker 1: Joel now put a diet Coke on his piano when 164 00:09:08,600 --> 00:09:12,240 Speaker 1: he plays piano, man, And I'll bet you the answer, no, No, 165 00:09:12,520 --> 00:09:14,840 Speaker 1: he cannot. All right here, when I was at the 166 00:09:14,880 --> 00:09:16,480 Speaker 1: All Star Game at the Pepsi Center, I don't know 167 00:09:16,480 --> 00:09:18,400 Speaker 1: how many years ago, I'm dating myself. When Denver hosted 168 00:09:18,440 --> 00:09:21,040 Speaker 1: the All Star Game, I'm not kidding. I walked onto 169 00:09:21,040 --> 00:09:25,000 Speaker 1: the floor with a Coke product. I almost got tackled. Yeah, 170 00:09:26,360 --> 00:09:28,600 Speaker 1: I mean you can't bring water on because they have desany, yeah, 171 00:09:28,679 --> 00:09:33,640 Speaker 1: which is a coke product. But see this, here, I go, here, 172 00:09:33,679 --> 00:09:37,400 Speaker 1: I go. NASCAR has this problem right now because you 173 00:09:37,480 --> 00:09:39,920 Speaker 1: have people that are under the Coke brand and you 174 00:09:39,960 --> 00:09:42,280 Speaker 1: have people that are under the Pepsi brand. And there 175 00:09:42,320 --> 00:09:46,760 Speaker 1: was a moment in NASCAR when they would put a 176 00:09:46,800 --> 00:09:49,360 Speaker 1: certain brand on top of the car when the car 177 00:09:49,600 --> 00:09:52,560 Speaker 1: got into victory Lane. Well, the people that were sponsored 178 00:09:52,679 --> 00:09:59,600 Speaker 1: by the other soft drink would just accidentally knock it off. 179 00:10:00,520 --> 00:10:02,760 Speaker 1: The roof of the car. So this this happens all 180 00:10:02,800 --> 00:10:04,439 Speaker 1: the time. And by the way, I got an add 181 00:10:04,440 --> 00:10:07,599 Speaker 1: a bonus one shout out to the guy who was 182 00:10:07,640 --> 00:10:11,120 Speaker 1: at the Cubs game and got eviscerated on social media 183 00:10:11,200 --> 00:10:12,720 Speaker 1: like you stole the ball from a kid, But that 184 00:10:12,920 --> 00:10:16,480 Speaker 1: is not the case, because he helped the kid earlier. Earlier. No, 185 00:10:16,640 --> 00:10:19,240 Speaker 1: this is a case of Twitter that we used to 186 00:10:19,240 --> 00:10:21,559 Speaker 1: say in the neighborhood. You're all up in my kool 187 00:10:21,600 --> 00:10:23,800 Speaker 1: aid and you don't know the flavor because they didn't 188 00:10:23,840 --> 00:10:27,040 Speaker 1: get the holes. You have to chime in on the 189 00:10:27,040 --> 00:10:29,280 Speaker 1: air with that. I I almost don't even know what 190 00:10:29,320 --> 00:10:35,440 Speaker 1: to say, and you don't know that's what it's going 191 00:10:35,480 --> 00:10:39,840 Speaker 1: to be. The red stuff, the purple stuff. I love 192 00:10:39,880 --> 00:10:41,480 Speaker 1: the grape stuff. Please you know what they were down 193 00:10:41,520 --> 00:10:43,520 Speaker 1: in the bar household growing up, Mom. Where's the tank? 194 00:10:44,480 --> 00:10:53,400 Speaker 1: Where's the tank? Tab? Yeah? We did, we had time. Okay, yes, okay, 195 00:10:53,400 --> 00:10:56,599 Speaker 1: Now I'm gonna wrap. This is the Bloomberg Business of 196 00:10:56,679 --> 00:11:01,000 Speaker 1: Sports podcast. I'm Michael tang Bar along with Scott Sasnik 197 00:11:01,120 --> 00:11:04,199 Speaker 1: and eban Obie Williams. We are here each and every Monday. 198 00:11:04,520 --> 00:11:07,960 Speaker 1: Well not true. Bars are often oftentimes off Monday, Wednesday 199 00:11:07,960 --> 00:11:10,280 Speaker 1: and Friday exploring the world of money in sports. Join 200 00:11:10,400 --> 00:11:11,760 Speaker 1: us at the end of the week when we speak 201 00:11:11,760 --> 00:11:14,360 Speaker 1: with the biggest and brightest in the sports business industry. 202 00:11:14,559 --> 00:11:17,400 Speaker 1: You're listening to Bloomberg Business of Sports from Bloomberg Radio 203 00:11:17,600 --> 00:11:20,040 Speaker 1: around the world and online as an app podcast all 204 00:11:20,120 --> 00:11:20,280 Speaker 1: night