1
00:00:00,120 --> 00:00:05,520
Speaker 1: Bain Capital senior advisor Steve Pangliuca says Disney's decision to

2
00:00:05,600 --> 00:00:09,760
Speaker 1: extend CEO Bob Igers contract will be great for shareholders.

3
00:00:10,039 --> 00:00:13,760
Speaker 1: Pankluca spoke with Bloomberg's Ed Ludlow on the sidelines of

4
00:00:13,920 --> 00:00:17,880
Speaker 1: Allen and Company's annual Sun Valley conference, where they discussed

5
00:00:17,920 --> 00:00:20,680
Speaker 1: disney His sports interests in Europe and.

6
00:00:20,520 --> 00:00:24,360
Speaker 2: More so here in North America. We know you as

7
00:00:24,440 --> 00:00:27,320
Speaker 2: co owner of the Boston Celtics, but if you step

8
00:00:27,360 --> 00:00:30,680
Speaker 2: outside the United States, I know you this co owner

9
00:00:30,760 --> 00:00:35,440
Speaker 2: of a football club in Italy Atalanta. Can you just

10
00:00:35,440 --> 00:00:38,599
Speaker 2: reflect for a minute on who you think you are? Oh,

11
00:00:38,640 --> 00:00:39,120
Speaker 2: you're both.

12
00:00:39,280 --> 00:00:43,040
Speaker 3: I think I'm maybe a classic renaissance person. I've been

13
00:00:43,040 --> 00:00:46,080
Speaker 3: fortunate to be in the arena of business and sports,

14
00:00:46,400 --> 00:00:52,159
Speaker 3: two global sports football slave soccer and basketball, and luckily

15
00:00:52,320 --> 00:00:55,520
Speaker 3: I happen to be of Italian descent. So Atalanta is

16
00:00:55,840 --> 00:00:58,480
Speaker 3: to me, it's kind of like the Celtics of Italy.

17
00:00:58,840 --> 00:00:59,840
Speaker 4: Okay I.

18
00:01:00,040 --> 00:01:03,000
Speaker 3: When I landed there the first time I met the Percassis,

19
00:01:03,040 --> 00:01:06,000
Speaker 3: who still run the club today in partnership with us,

20
00:01:07,560 --> 00:01:09,520
Speaker 3: everyone looked like me. I said, this is a great place.

21
00:01:10,680 --> 00:01:14,480
Speaker 3: My whole family immigrated from Italy in nineteen twenty two.

22
00:01:15,000 --> 00:01:17,960
Speaker 2: There is news there and that you finished in the

23
00:01:17,959 --> 00:01:22,480
Speaker 2: Europa League spot, the second tier of European competition. But

24
00:01:22,560 --> 00:01:25,639
Speaker 2: that must be a massive boost financially for that club.

25
00:01:25,840 --> 00:01:29,840
Speaker 3: Absolutely, it's very significant for us, and more importantly it

26
00:01:29,920 --> 00:01:32,479
Speaker 3: helps us attract great players because they want to play

27
00:01:32,520 --> 00:01:36,000
Speaker 3: on a European level. And interesting enough, if we had

28
00:01:36,040 --> 00:01:38,600
Speaker 3: finished fifth next year, we would be in the Champions

29
00:01:38,680 --> 00:01:41,319
Speaker 3: League because of the slots coming next year. So we

30
00:01:41,400 --> 00:01:44,280
Speaker 3: missed that by year and I'm hoping with the great

31
00:01:44,280 --> 00:01:46,640
Speaker 3: season we had and the new players were bringing in

32
00:01:46,640 --> 00:01:48,400
Speaker 3: and the development of the young players we had like

33
00:01:48,440 --> 00:01:50,600
Speaker 3: Hoyland and Luckman, you know we can really compete for

34
00:01:50,640 --> 00:01:51,360
Speaker 3: a Champions.

35
00:01:51,080 --> 00:01:54,960
Speaker 2: League and a bit of extra transfer budget. Absolutely, so

36
00:01:55,360 --> 00:01:57,680
Speaker 2: there's an interesting situation here that you are a co

37
00:01:57,760 --> 00:02:02,880
Speaker 2: owner of a European club. You tried to become an

38
00:02:02,920 --> 00:02:07,280
Speaker 2: owner of Chelsea Football Club. That was obviously not successful.

39
00:02:08,080 --> 00:02:11,600
Speaker 2: Todd Bowley and his partners bought Chelsea Football Club. But

40
00:02:11,639 --> 00:02:15,040
Speaker 2: I have to ask you what you've made of the result.

41
00:02:15,520 --> 00:02:17,160
Speaker 2: You know, the health of that club.

42
00:02:17,000 --> 00:02:19,880
Speaker 3: Well, I think you can never you know, it's there

43
00:02:20,000 --> 00:02:24,200
Speaker 3: are always several counterfactuals. You can't look back in hindsight.

44
00:02:25,320 --> 00:02:27,240
Speaker 3: I think the great thing in being involved in that

45
00:02:27,360 --> 00:02:30,639
Speaker 3: was we really had got an in depth knowledge of

46
00:02:31,080 --> 00:02:33,760
Speaker 3: the Career League and European football, and we already had

47
00:02:33,760 --> 00:02:36,320
Speaker 3: a good knowledge from being in Atalanta and Chelsea would

48
00:02:36,360 --> 00:02:38,280
Speaker 3: have fit very well with Atalanta. And they've loosened the

49
00:02:38,320 --> 00:02:41,120
Speaker 3: rules on multi club yes strategy, so that would have

50
00:02:41,120 --> 00:02:44,200
Speaker 3: fit really well. You know, they've gotten out to a

51
00:02:44,280 --> 00:02:46,639
Speaker 3: rough start, but that often happens when when someone new

52
00:02:46,639 --> 00:02:49,840
Speaker 3: buys a team and brings in new ideas. So Chelsea's

53
00:02:49,840 --> 00:02:52,760
Speaker 3: a storied franchise and Todd Bowie is a very smart person,

54
00:02:52,760 --> 00:02:53,800
Speaker 3: so I think will make the best of it.

55
00:02:53,880 --> 00:02:56,200
Speaker 4: But they have been off to a rocky start.

56
00:02:57,040 --> 00:03:00,840
Speaker 3: Irrespective of Chelsea, one of the most concerned about for

57
00:03:00,880 --> 00:03:04,720
Speaker 3: the Premier League and football slash soccer in general is

58
00:03:04,919 --> 00:03:12,000
Speaker 3: with sovereigns buying clubs such as Newcastle, It's Manchester City.

59
00:03:12,040 --> 00:03:16,840
Speaker 3: You know, it's very hard to compete without that competitive balance.

60
00:03:16,880 --> 00:03:20,639
Speaker 3: If you have an unlimited balance sheet to compete, you're

61
00:03:20,639 --> 00:03:23,520
Speaker 3: at a disadvantage. And the great thing about the NBA

62
00:03:24,320 --> 00:03:27,240
Speaker 3: is there's not huge disparities with the system we have

63
00:03:27,600 --> 00:03:30,359
Speaker 3: in the NFL, not huge disparacy, not all disparities in

64
00:03:30,440 --> 00:03:35,440
Speaker 3: terms of payer play role, and so I think football

65
00:03:35,440 --> 00:03:37,640
Speaker 3: in Europe he has to look at the system and

66
00:03:37,680 --> 00:03:40,240
Speaker 3: figure out a way to preserve competitive balance because obviously,

67
00:03:40,760 --> 00:03:42,560
Speaker 3: if in a league late premier year, if three or

68
00:03:42,600 --> 00:03:47,080
Speaker 3: four teams are owned by sovereigns with basically unlimited investment

69
00:03:47,240 --> 00:03:49,920
Speaker 3: budgets to be in the champions need to be a

70
00:03:49,920 --> 00:03:52,560
Speaker 3: top four or five teams, there's only one spot left

71
00:03:52,600 --> 00:03:54,320
Speaker 3: for the other sixteen teams that don't have those kind

72
00:03:54,360 --> 00:03:56,080
Speaker 3: of resources. So I think they're going to have to

73
00:03:56,080 --> 00:03:57,080
Speaker 3: figure out a way to address that.

74
00:03:57,680 --> 00:04:02,600
Speaker 2: The broader issue. Does that threats apply to the NBA

75
00:04:02,960 --> 00:04:05,800
Speaker 2: or do you have faith that the rules and system

76
00:04:05,840 --> 00:04:10,320
Speaker 2: in place prevents a sovereign from from entering the system.

77
00:04:10,440 --> 00:04:13,280
Speaker 3: Well, a sovereign con enter the system, but the system,

78
00:04:13,320 --> 00:04:16,040
Speaker 3: Adam Silver and the players, in partnership with the players,

79
00:04:17,040 --> 00:04:20,360
Speaker 3: we now have a system that promotes competitive balance. So

80
00:04:20,360 --> 00:04:22,880
Speaker 3: so there aren't there there aren't ten to one disparities

81
00:04:22,880 --> 00:04:26,720
Speaker 3: between the salary levels of any team, and and there

82
00:04:26,760 --> 00:04:29,000
Speaker 3: are a lot of shared revenues, so you just don't

83
00:04:29,040 --> 00:04:31,840
Speaker 3: have that big gap like you have in European football.

84
00:04:32,120 --> 00:04:34,400
Speaker 3: In European football you can have a team with a

85
00:04:34,400 --> 00:04:36,080
Speaker 3: five hundred million dollar pay role playing a team with

86
00:04:36,120 --> 00:04:37,320
Speaker 3: a forty million dollar payer.

87
00:04:37,400 --> 00:04:39,400
Speaker 4: Yesig, and that that that.

88
00:04:39,200 --> 00:04:41,800
Speaker 3: That doesn't happen in the NBA, and that with with

89
00:04:41,839 --> 00:04:44,880
Speaker 3: the with the system of a second apron and taxation,

90
00:04:45,880 --> 00:04:46,960
Speaker 3: that gap.

91
00:04:46,720 --> 00:04:48,080
Speaker 4: Is going to get smaller and smaller.

92
00:04:48,120 --> 00:04:51,320
Speaker 3: So the teams will will will have competitive balance. That's

93
00:04:51,360 --> 00:04:52,880
Speaker 3: good for the players, that's good for league. And you've

94
00:04:52,880 --> 00:04:56,040
Speaker 3: seen our revenues. We had record record revenues, record growth,

95
00:04:56,400 --> 00:04:58,640
Speaker 3: and the players participate in a fifty to fifty partnership

96
00:04:58,680 --> 00:05:01,440
Speaker 3: and all that, so everyone's aligned. I think I think

97
00:05:01,520 --> 00:05:03,599
Speaker 3: Adam and the committee did a great job, you know,

98
00:05:03,680 --> 00:05:07,039
Speaker 3: being partners with the players, and so when the NBA grows,

99
00:05:07,080 --> 00:05:09,880
Speaker 3: everybody wins and everybody's happy. And so we've had labor piece,

100
00:05:10,400 --> 00:05:12,360
Speaker 3: we have more stars in the game than we've ever had,

101
00:05:12,760 --> 00:05:15,000
Speaker 3: and we've had five different champions in the last five years,

102
00:05:15,160 --> 00:05:17,360
Speaker 3: which I think is really exciting. If every city has

103
00:05:17,360 --> 00:05:19,080
Speaker 3: a chance to win, that's one of the keys in the NFL.

104
00:05:19,760 --> 00:05:21,520
Speaker 3: Every city has a chance to win because you have

105
00:05:21,600 --> 00:05:23,680
Speaker 3: a good competitive balance, and I think we need to

106
00:05:23,680 --> 00:05:24,159
Speaker 3: think about that.

107
00:05:24,200 --> 00:05:25,800
Speaker 4: In terms of European football.

108
00:05:26,839 --> 00:05:30,960
Speaker 2: Do you still have ambition to be in the Premier

109
00:05:31,040 --> 00:05:32,480
Speaker 2: League as an owner.

110
00:05:33,000 --> 00:05:36,360
Speaker 3: You know, we're assessing opportunities there. I think there's a

111
00:05:36,360 --> 00:05:38,719
Speaker 3: little higher bar for us than there.

112
00:05:38,680 --> 00:05:40,920
Speaker 2: You would have been valuation in the club's cols smaller.

113
00:05:41,040 --> 00:05:42,880
Speaker 3: No, I'm saying a little higher bar in terms of

114
00:05:43,440 --> 00:05:45,680
Speaker 3: you have to really be sure that you have an

115
00:05:45,720 --> 00:05:48,840
Speaker 3: academy or you have a strategy where you can compete

116
00:05:49,120 --> 00:05:52,240
Speaker 3: with the economic disparity in Boston.

117
00:05:52,800 --> 00:05:53,640
Speaker 4: You know, we grew up.

118
00:05:53,640 --> 00:05:56,360
Speaker 3: We want championships. Our fans don't want us to come

119
00:05:56,360 --> 00:05:57,599
Speaker 3: in second, third, fourth or fifth.

120
00:05:57,600 --> 00:05:57,920
Speaker 4: They want you.

121
00:05:58,440 --> 00:06:00,560
Speaker 3: So that's our attitude and with that the we want

122
00:06:00,640 --> 00:06:03,080
Speaker 3: to win as well. We just have to do that

123
00:06:03,320 --> 00:06:06,640
Speaker 3: in a more strategic way. And we're watching if the

124
00:06:06,640 --> 00:06:10,080
Speaker 3: gap grows so much that it's almost impossible to make

125
00:06:10,080 --> 00:06:11,800
Speaker 3: the Champions League if you're in the Premier League unless

126
00:06:11,839 --> 00:06:14,680
Speaker 3: you're one of the high funded sovereign teams. It makes

127
00:06:14,720 --> 00:06:17,640
Speaker 3: it less attractive frankly, to buy another Premier team and

128
00:06:17,680 --> 00:06:18,920
Speaker 3: be banging your head against that wall.

129
00:06:18,960 --> 00:06:21,920
Speaker 2: But what you're saying, I think is you're not looking

130
00:06:22,000 --> 00:06:26,720
Speaker 2: at a top five club or the historic pool of

131
00:06:26,839 --> 00:06:28,640
Speaker 2: legacy clubs. You're looking at the other end of the

132
00:06:28,680 --> 00:06:29,719
Speaker 2: table for opportunity.

133
00:06:29,839 --> 00:06:33,479
Speaker 3: Well no, I well, first of all, top five club,

134
00:06:33,839 --> 00:06:36,880
Speaker 3: four club isn't for sale, So all you can do

135
00:06:36,960 --> 00:06:40,200
Speaker 3: is look at the next sixteen, and the next sixteen

136
00:06:40,240 --> 00:06:43,400
Speaker 3: are going to have a hard time competing if the

137
00:06:43,760 --> 00:06:47,039
Speaker 3: top four clubs have that backing financial backing where you

138
00:06:47,080 --> 00:06:49,960
Speaker 3: know they're outspending them two to one, three to one,

139
00:06:50,000 --> 00:06:50,960
Speaker 3: four to one, five to one.

140
00:06:51,160 --> 00:06:54,240
Speaker 2: What I've always wondered, if you stay, why don't you

141
00:06:54,320 --> 00:06:55,839
Speaker 2: have an interest in the MLS.

142
00:06:57,920 --> 00:07:01,040
Speaker 3: I've looked at MLS situations and haven't found the right

143
00:07:01,040 --> 00:07:03,840
Speaker 3: one yet. So in our strategy to be patient, we

144
00:07:03,880 --> 00:07:06,839
Speaker 3: looked at a lot of different clubs and then immediately

145
00:07:06,839 --> 00:07:08,680
Speaker 3: we saw Atalanta was the best fit of all the

146
00:07:08,720 --> 00:07:11,040
Speaker 3: clubs we had looked at. It had a great management team,

147
00:07:11,080 --> 00:07:13,120
Speaker 3: it had a great market. It is one of the

148
00:07:13,160 --> 00:07:14,880
Speaker 3: one of the two or three Italian teams that owns

149
00:07:14,920 --> 00:07:15,640
Speaker 3: its own stadium.

150
00:07:16,000 --> 00:07:16,760
Speaker 4: We're renovating.

151
00:07:16,880 --> 00:07:19,680
Speaker 3: We renovated the one end, We're renovating the south end

152
00:07:19,680 --> 00:07:20,360
Speaker 3: now of the stadium.

153
00:07:20,440 --> 00:07:23,320
Speaker 4: It's a beautiful stadium. We could use it for multi uses.

154
00:07:24,000 --> 00:07:24,080
Speaker 2: Uh.

155
00:07:24,280 --> 00:07:26,360
Speaker 3: The fans love it and it's going to be even

156
00:07:26,360 --> 00:07:28,920
Speaker 3: better now with the back end renovated and parking and

157
00:07:28,960 --> 00:07:31,840
Speaker 3: amenities you know, you know, really allah the things you

158
00:07:31,840 --> 00:07:33,840
Speaker 3: get in the NBA, in the NFL. So we're very

159
00:07:33,840 --> 00:07:36,360
Speaker 3: excited about that. So that was a great situation. We're

160
00:07:36,400 --> 00:07:38,600
Speaker 3: really trying to buy something of quality, you know, the

161
00:07:38,600 --> 00:07:42,480
Speaker 3: Celtics or quality historical. We think Atalanta is quality historical.

162
00:07:42,560 --> 00:07:45,240
Speaker 3: So if something like that comes along, even premierly or

163
00:07:45,280 --> 00:07:47,760
Speaker 3: any league, well, you know, we're looking at it.

164
00:07:48,720 --> 00:07:50,280
Speaker 4: So we think there's synergy between all of this.

165
00:07:50,440 --> 00:07:53,880
Speaker 3: Even we've had a great experience with bringing the coaches

166
00:07:53,960 --> 00:07:57,720
Speaker 3: and trainers and statistics people that we put in Atalanta

167
00:07:58,040 --> 00:08:01,160
Speaker 3: to the Boston Celtics and we've spent three or four

168
00:08:01,240 --> 00:08:04,360
Speaker 3: days together sharing notes, and there's very similar things with

169
00:08:04,400 --> 00:08:08,080
Speaker 3: all the acceleration needed in football sash soccer versus basketball,

170
00:08:08,440 --> 00:08:13,280
Speaker 3: the kind of keeping players healthy, the strategies. So it's

171
00:08:13,320 --> 00:08:15,080
Speaker 3: been great for both sides. We've learned from them and

172
00:08:15,560 --> 00:08:16,760
Speaker 3: they've learned from us.

173
00:08:17,000 --> 00:08:20,960
Speaker 2: The big news is that Bob Iger has extended his

174
00:08:21,200 --> 00:08:25,640
Speaker 2: contract with Disney through twenty twenty six. Your interest there

175
00:08:25,800 --> 00:08:31,080
Speaker 2: would be that Disney ESPN MBA. What is your reaction

176
00:08:31,240 --> 00:08:31,920
Speaker 2: to that news.

177
00:08:32,120 --> 00:08:33,560
Speaker 3: I'm thrilled by the news that you know, I know

178
00:08:33,600 --> 00:08:36,160
Speaker 3: Bob Biger for many years. Personally, I think he's one

179
00:08:36,200 --> 00:08:39,720
Speaker 3: of the best CEOs that I've ever seen. So the

180
00:08:39,760 --> 00:08:43,560
Speaker 3: Disney shareholders should be thrilled. He recognizes the value of

181
00:08:43,600 --> 00:08:47,440
Speaker 3: sports and he really understands the product and how to

182
00:08:47,440 --> 00:08:49,680
Speaker 3: put the product on and so I think that's a

183
00:08:49,800 --> 00:08:53,199
Speaker 3: major positive thing for the NBA and for Disney shareholders.

184
00:08:53,559 --> 00:08:56,080
Speaker 4: So I'm thrilled at that development.

185
00:08:56,360 --> 00:09:01,640
Speaker 2: Let's end on TMT technology Media, Telecoms. You know, it

186
00:09:01,720 --> 00:09:03,880
Speaker 2: kind of seems to be back a little bit as

187
00:09:03,920 --> 00:09:06,960
Speaker 2: a grouping, and within that you have so many different

188
00:09:06,960 --> 00:09:10,640
Speaker 2: types of companies that what is your attitude towards I

189
00:09:10,640 --> 00:09:14,520
Speaker 2: guess isn't it from an investor's perspective towards media companies

190
00:09:14,559 --> 00:09:17,840
Speaker 2: in particular? Right now, what I keep getting asked is

191
00:09:18,520 --> 00:09:22,319
Speaker 2: how does a streaming company ever become profitable? Big existential question.

192
00:09:23,280 --> 00:09:27,480
Speaker 3: Well, we're going through I've been doing technology media investing

193
00:09:27,720 --> 00:09:30,520
Speaker 3: and biotech and healthcare investor for about thirty five years now,

194
00:09:31,400 --> 00:09:33,240
Speaker 3: and you go through these cycles.

195
00:09:33,240 --> 00:09:35,320
Speaker 4: And the cycle we're going through, you had bundling.

196
00:09:35,520 --> 00:09:39,320
Speaker 3: We're cable companies dominated and bundled programming and people were

197
00:09:39,320 --> 00:09:41,160
Speaker 3: paying you know, one hundred dollars one hundred dollars for

198
00:09:41,200 --> 00:09:42,000
Speaker 3: one hundred channels.

199
00:09:42,960 --> 00:09:44,080
Speaker 4: Their pricing got high.

200
00:09:44,160 --> 00:09:46,839
Speaker 3: New technology comes in where you can in a low

201
00:09:46,880 --> 00:09:48,720
Speaker 3: cost way stream direct to consumer.

202
00:09:49,440 --> 00:09:51,079
Speaker 4: So now we're seeing unbundling.

203
00:09:51,720 --> 00:09:56,840
Speaker 3: And secondly, we've seen the dynamic of the Internet companies,

204
00:09:56,840 --> 00:10:03,320
Speaker 3: you know, Google, Facebook, all those companies want Ali Baba, Amazon,

205
00:10:03,679 --> 00:10:06,960
Speaker 3: they want eyeballs, Apple, they want eyeballs on their sites.

206
00:10:07,720 --> 00:10:10,240
Speaker 3: So they're now a player for programming. So you have

207
00:10:10,280 --> 00:10:14,079
Speaker 3: the traditional players, new streaming players like Netflix, and then

208
00:10:14,120 --> 00:10:18,120
Speaker 3: the Internet players. The one thing they're missing is content,

209
00:10:18,320 --> 00:10:21,760
Speaker 3: and that has exploded sports valuations because sports this must

210
00:10:21,760 --> 00:10:23,319
Speaker 3: see TV, live TV.

211
00:10:24,920 --> 00:10:27,079
Speaker 4: And so we're going through this kind of.

212
00:10:27,520 --> 00:10:29,600
Speaker 3: I think it's going to be a messy transition from

213
00:10:30,440 --> 00:10:33,560
Speaker 3: the old to the new and the traditional networks, you know,

214
00:10:33,600 --> 00:10:37,199
Speaker 3: fighting with the Internet networks of Google and Amazon and

215
00:10:37,280 --> 00:10:39,480
Speaker 3: the rest. And the good news is we sit in

216
00:10:39,480 --> 00:10:42,760
Speaker 3: the middle of it, and they want that content. So

217
00:10:43,080 --> 00:10:44,840
Speaker 3: we're going to kind of be a winner anyway, but

218
00:10:45,440 --> 00:10:47,480
Speaker 3: we're gonna have to be a stute. We also want

219
00:10:47,480 --> 00:10:48,960
Speaker 3: to do the best thing for the fans so the

220
00:10:48,960 --> 00:10:50,800
Speaker 3: most people can see our games and do it in

221
00:10:50,840 --> 00:10:53,080
Speaker 3: the most convenient way. And we're fortunate to have a

222
00:10:53,080 --> 00:10:57,199
Speaker 3: commissioner like Adam Silver who really understands the media landscape

223
00:10:57,400 --> 00:11:00,440
Speaker 3: better than anybody I've ever seen and can optimize the mix.

224
00:11:00,480 --> 00:11:02,320
Speaker 3: So it's good for the fans, is good for the clubs,

225
00:11:02,600 --> 00:11:04,640
Speaker 3: and it's good for the broadcasters.

226
00:11:04,800 --> 00:11:08,720
Speaker 2: You are retired, or you're in the next capture, you're

227
00:11:08,760 --> 00:11:10,720
Speaker 2: creating other things. But I do want to get your

228
00:11:10,720 --> 00:11:13,760
Speaker 2: macro take on M and A. Basically, you know, the

229
00:11:13,800 --> 00:11:18,040
Speaker 2: attitude towards doing deals and some of the economic factors

230
00:11:18,080 --> 00:11:20,000
Speaker 2: behind doing a deal or not.

231
00:11:21,000 --> 00:11:24,520
Speaker 3: Well, if we step back, I think from an investment standpoint,

232
00:11:24,559 --> 00:11:26,240
Speaker 3: you know the good thing about private equity in my

233
00:11:26,240 --> 00:11:29,959
Speaker 3: family office, and I'm still a senior advisor to Debate Capital.

234
00:11:30,400 --> 00:11:33,480
Speaker 3: I love those guys, still working on many things with them.

235
00:11:33,800 --> 00:11:36,360
Speaker 3: If you step back, we've had three dynamics that are

236
00:11:36,400 --> 00:11:39,600
Speaker 3: going to affect us for the next decade. The first

237
00:11:39,920 --> 00:11:43,120
Speaker 3: and foremost is the ending of quantitative easing. You know,

238
00:11:43,200 --> 00:11:46,000
Speaker 3: for most of my career, probably thirty of the forty

239
00:11:46,080 --> 00:11:48,440
Speaker 3: years of my career, T bills were at five percent,

240
00:11:48,440 --> 00:11:50,719
Speaker 3: four and a percent. Probably the laste hundred years they've

241
00:11:50,720 --> 00:11:53,680
Speaker 3: been at four and a half five percent of eighty

242
00:11:53,760 --> 00:11:54,080
Speaker 3: years or.

243
00:11:54,080 --> 00:11:54,880
Speaker 4: Laste hundred years.

244
00:11:55,080 --> 00:11:57,600
Speaker 3: Only since the crisis have we had this very cheap

245
00:11:57,600 --> 00:12:02,640
Speaker 3: money that quantitative easing as asset inflation caused us to

246
00:12:03,080 --> 00:12:05,240
Speaker 3: caused easy investments into things that didn't make a lot

247
00:12:05,280 --> 00:12:07,120
Speaker 3: of sense, a little bit like two thousand in the

248
00:12:07,120 --> 00:12:11,040
Speaker 3: Internet where every company had a huge valuation but no

249
00:12:11,200 --> 00:12:13,760
Speaker 3: no business plan and you know, no, no, no revenues.

250
00:12:14,559 --> 00:12:17,480
Speaker 3: That has ended now and so the next ten years

251
00:12:17,480 --> 00:12:18,960
Speaker 3: we're going to have more like four and a half

252
00:12:19,000 --> 00:12:20,760
Speaker 3: five ers. I don't see your fings coming down a lot.

253
00:12:21,720 --> 00:12:23,960
Speaker 3: And you know, we prosper to ban capital with interest rates.

254
00:12:24,200 --> 00:12:26,079
Speaker 3: We were borrowing at nine percent back in the back

255
00:12:26,080 --> 00:12:28,600
Speaker 3: in the eighties. So the private equity model can deal

256
00:12:28,640 --> 00:12:31,920
Speaker 3: with that. But there's no more easy money, and so

257
00:12:31,960 --> 00:12:33,719
Speaker 3: you've got to really go back to value. You got

258
00:12:33,720 --> 00:12:36,199
Speaker 3: to go back to companies that can can serve customers

259
00:12:36,200 --> 00:12:37,839
Speaker 3: and make a profit. So that's going to be a

260
00:12:37,880 --> 00:12:43,319
Speaker 3: big dynamic investing. Second is we're undergoing this this energy transition,

261
00:12:44,080 --> 00:12:46,320
Speaker 3: and essentially we're gonna have to build a dual system

262
00:12:46,400 --> 00:12:50,160
Speaker 3: until the new energy can displace the old carbon based energy.

263
00:12:50,600 --> 00:12:52,839
Speaker 3: And that's going to take a lot longer than people think.

264
00:12:53,360 --> 00:12:55,240
Speaker 3: That's going to put some pressure on inflation because you've

265
00:12:55,240 --> 00:12:57,240
Speaker 3: got to maintain a dual system. You've got to build

266
00:12:57,400 --> 00:13:02,160
Speaker 3: an electrification system that works for electronic vehicles and factories

267
00:13:02,840 --> 00:13:06,680
Speaker 3: and clean energy and whole blend of wind, hydrogen, and

268
00:13:06,720 --> 00:13:08,600
Speaker 3: I think nuclear has got to come back in vogue

269
00:13:08,800 --> 00:13:11,360
Speaker 3: to get us off the carbon to save the planet.

270
00:13:11,559 --> 00:13:13,800
Speaker 3: But you have to maintain the old infrastructure and we

271
00:13:13,840 --> 00:13:16,679
Speaker 3: haven't done that. People have disinvested in the last ten years.

272
00:13:16,720 --> 00:13:18,600
Speaker 3: So that's why you're going to see higher oal prices

273
00:13:18,640 --> 00:13:20,839
Speaker 3: because we need to find morele because you can't make

274
00:13:20,880 --> 00:13:23,280
Speaker 3: that transition. There's no way that's happening in twenty thirty.

275
00:13:23,480 --> 00:13:26,000
Speaker 3: You know, probably twenty forty, maybe twenty fifty to twenty sixty.

276
00:13:26,240 --> 00:13:27,680
Speaker 3: But we've got to get a better plan for that.

277
00:13:29,160 --> 00:13:32,760
Speaker 3: And so those two things are you really going to

278
00:13:32,840 --> 00:13:36,840
Speaker 3: affect the investment outlook. And the third thing is we've

279
00:13:36,880 --> 00:13:38,719
Speaker 3: seen in the last in my career, we saw a

280
00:13:38,800 --> 00:13:43,520
Speaker 3: huge explosion of global trade, probably fifty times what it was.

281
00:13:43,800 --> 00:13:44,960
Speaker 4: Forty years ago.

282
00:13:45,360 --> 00:13:47,160
Speaker 3: Now we're seeing what I'll call it's not a massive

283
00:13:47,200 --> 00:13:49,880
Speaker 3: to coupling, but a strategic to coupling where countries are

284
00:13:49,880 --> 00:13:54,600
Speaker 3: taking back critical goods, medical goods, the Chips Act, bringing

285
00:13:54,679 --> 00:14:00,800
Speaker 3: back to EUROAI. I think that that we will sort

286
00:14:00,840 --> 00:14:02,640
Speaker 3: it out, you know, am optimistic, will sort it out,

287
00:14:03,120 --> 00:14:04,839
Speaker 3: but it's a dandemic. When you investor, you have to

288
00:14:04,880 --> 00:14:07,000
Speaker 3: be aware of that because you don't want to get

289
00:14:07,080 --> 00:14:10,040
Speaker 3: caught in a country cross fire where you buy a

290
00:14:10,040 --> 00:14:12,280
Speaker 3: business that happens to sell into China and then the

291
00:14:12,320 --> 00:14:13,280
Speaker 3: next day you can't sell.

292
00:14:13,160 --> 00:14:13,880
Speaker 4: It in China.

293
00:14:14,040 --> 00:14:16,600
Speaker 3: So so every deal we look at you have to say,

294
00:14:16,600 --> 00:14:20,000
Speaker 3: what's the country decoupling risk. And it's only for certain sectors,

295
00:14:20,040 --> 00:14:22,200
Speaker 3: so there can still be robust trade, but you're going

296
00:14:22,200 --> 00:14:24,200
Speaker 3: to see a slow down to that. And then finally

297
00:14:24,640 --> 00:14:27,960
Speaker 3: I'd say, you know, the United States is very well

298
00:14:28,000 --> 00:14:30,760
Speaker 3: positioned because we have one of the largest economies in

299
00:14:30,760 --> 00:14:32,920
Speaker 3: the world. We have probably the best rule of law still,

300
00:14:32,960 --> 00:14:34,800
Speaker 3: you know, we complain about everything here, but we have

301
00:14:34,920 --> 00:14:37,800
Speaker 3: large economy, deep markets, rule of law.

302
00:14:37,720 --> 00:14:38,960
Speaker 2: The going's pretty good.

303
00:14:39,720 --> 00:14:41,160
Speaker 4: Resources, great defense.

304
00:14:41,240 --> 00:14:43,560
Speaker 3: You know, we have two oceans and one of the

305
00:14:43,600 --> 00:14:46,920
Speaker 3: best the best military in the world. So on a

306
00:14:46,920 --> 00:14:50,520
Speaker 3: relative basis, we're in good shape. But what we have

307
00:14:50,600 --> 00:14:53,280
Speaker 3: to do is the thing that frustrates me with the politicians.

308
00:14:53,280 --> 00:14:55,800
Speaker 3: We have to better government. We have to figure out

309
00:14:56,120 --> 00:14:57,720
Speaker 3: the only way to really solve and they don't talk

310
00:14:57,760 --> 00:15:01,160
Speaker 3: about this. To solve income and quality and justices. Education

311
00:15:01,920 --> 00:15:04,360
Speaker 3: And if you think about education, the school I went

312
00:15:04,360 --> 00:15:08,640
Speaker 3: to fifty years ago is basically teaching the same way

313
00:15:08,640 --> 00:15:11,160
Speaker 3: from the same desks. They've thrown a few computers in,

314
00:15:11,560 --> 00:15:15,280
Speaker 3: but it hasn't had the technological revolution that everything else

315
00:15:15,280 --> 00:15:15,640
Speaker 3: has had.

316
00:15:16,320 --> 00:15:18,280
Speaker 4: So we've got to find a way to break the back.

317
00:15:18,120 --> 00:15:21,280
Speaker 3: Of the education system and make it more accessible, cheaper,

318
00:15:21,520 --> 00:15:25,040
Speaker 3: get more people into college, get higher graduation rates. That's

319
00:15:25,600 --> 00:15:27,200
Speaker 3: I think a societal thing that we have to face,

320
00:15:27,200 --> 00:15:28,680
Speaker 3: and it's going to be very critical in the next

321
00:15:29,120 --> 00:15:29,560
Speaker 3: ten years.

322
00:15:29,720 --> 00:15:31,000
Speaker 2: This is the private sector to lead that.

323
00:15:31,040 --> 00:15:33,400
Speaker 4: Then, I think the private sector has to lead it.

324
00:15:33,920 --> 00:15:38,280
Speaker 3: Corporations have to start building training centers, flashbors, have to

325
00:15:38,280 --> 00:15:42,080
Speaker 3: start funding places get educated. We have to use the

326
00:15:42,600 --> 00:15:47,040
Speaker 3: capabilities of the internet and remote learning more and probably

327
00:15:47,080 --> 00:15:50,200
Speaker 3: pay teachers more. I think we need a fundamental, you know,

328
00:15:50,400 --> 00:15:53,960
Speaker 3: shift on giving people opportunity. This whole country was built

329
00:15:54,040 --> 00:15:57,440
Speaker 3: on giving people opportunity, and if we don't fix the

330
00:15:57,560 --> 00:15:59,800
Speaker 3: education system, they won't have that opportunity. So no matter

331
00:15:59,840 --> 00:16:02,800
Speaker 3: what you do, you're not going to have the kind

332
00:16:02,840 --> 00:16:06,000
Speaker 3: of the education needed to have great jobs in the

333
00:16:06,040 --> 00:16:09,040
Speaker 3: AI world, where AI is replacing a lot of people,

334
00:16:09,080 --> 00:16:11,880
Speaker 3: so it makes it even more important that we put

335
00:16:11,920 --> 00:16:14,240
Speaker 3: more money in we're more creative and we figure out

336
00:16:14,280 --> 00:16:17,640
Speaker 3: how to get people better educations. So, you know, my

337
00:16:17,680 --> 00:16:20,080
Speaker 3: grandfather was a shoemaker and made eight dollars a week

338
00:16:20,720 --> 00:16:22,600
Speaker 3: and he used to make shoes that they would sell

339
00:16:22,800 --> 00:16:24,680
Speaker 3: for fifty dollars a pair to saxophone them and a

340
00:16:24,680 --> 00:16:27,640
Speaker 3: wholesale And he didn't really speak English, but he was

341
00:16:27,680 --> 00:16:30,320
Speaker 3: a very smart guy. But they emphasized, you know, my family,

342
00:16:30,360 --> 00:16:32,240
Speaker 3: you had to get education, and so it was all

343
00:16:32,280 --> 00:16:33,560
Speaker 3: about school, all about education.

344
00:16:33,920 --> 00:16:35,200
Speaker 4: They forced me to be. I didn't want to be

345
00:16:35,200 --> 00:16:35,800
Speaker 4: an accountant.

346
00:16:35,960 --> 00:16:39,280
Speaker 3: I don't know anything against accountants, but but but they

347
00:16:39,320 --> 00:16:41,360
Speaker 3: forced me to be an accountant and that helped me

348
00:16:41,400 --> 00:16:41,760
Speaker 3: in business.

349
00:16:41,840 --> 00:16:42,080
Speaker 4: Later.

350
00:16:42,280 --> 00:16:44,200
Speaker 3: My grandfather was probably right I was a CPA because

351
00:16:44,240 --> 00:16:46,920
Speaker 3: he said the only people employed during the depression were CPAs.

352
00:16:47,200 --> 00:16:49,960
Speaker 3: So I became a CPA that learned the language of business,

353
00:16:49,960 --> 00:16:52,200
Speaker 3: and that's how I got into private equity and consulting.

354
00:16:52,240 --> 00:16:54,600
Speaker 3: The rest that allowed me to come from you know,

355
00:16:54,600 --> 00:16:58,040
Speaker 3: an Italian immigrant family to doing reasonably well in this country.

356
00:16:58,760 --> 00:17:04,000
Speaker 2: Steve Hayka, owner of Atalanta Football Club soccer.

357
00:17:03,680 --> 00:17:05,560
Speaker 4: Club for as they say.

358
00:17:05,720 --> 00:17:10,840
Speaker 2: Was Atalanta ConA, Boston Celtics administrator and runner of family Office,

359
00:17:10,880 --> 00:17:13,520
Speaker 2: and advisor to Baine Capital, among many other things.

360
00:17:13,600 --> 00:17:19,000
Speaker 3: Yeah, it's a pretty slow retirements.

361
00:17:17,359 --> 00:17:19,960
Speaker 2: The antithesis of retirement, I think. But it's good to

362
00:17:20,000 --> 00:17:20,240
Speaker 2: catch you.

363
00:17:20,320 --> 00:17:21,840
Speaker 3: No, we all have little time on this planet, so

364
00:17:22,200 --> 00:17:23,640
Speaker 3: I think you have to go full out what while

365
00:17:23,640 --> 00:17:24,000
Speaker 3: you're here.

366
00:17:24,160 --> 00:17:29,560
Speaker 1: That's Bain Capital Senior advisor Steve Baglioca speaking with Bloomberg's

367
00:17:29,680 --> 00:17:33,480
Speaker 1: Ed Ludlow in Sun Valley. For more conversations like this,

368
00:17:33,840 --> 00:17:38,480
Speaker 1: subscribe to the Bloomberg Talks podcast, available on your favorite

369
00:17:38,520 --> 00:17:40,080
Speaker 1: podcast platform