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Speaker 1: Welcome to Strictly Business Varieties, weekly podcasts featuring conversations with

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Speaker 1: industry leaders about the business of media and entertainment. I'm

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Speaker 1: Cynthia Littleton, co editor in chief of Variety Today. My

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Speaker 1: guest is Steve Balmer, former CEO of Microsoft. Since fourteen,

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Speaker 1: he's been chairman of the Los Angeles Clippers basketball team.

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Speaker 1: Balmer is a lifelong basketball fan who revels in being

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Speaker 1: a team owner. Now he's ready to realize his dream

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Speaker 1: of building the Clippers a dedicated arena in Inglewood, California

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Speaker 1: that he calls a mecca of basketball. He also calls

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Speaker 1: it into It Arena after unveiling a naming rights deal

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Speaker 1: with the software company. In our conversation, Balmer talks about

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Speaker 1: the cutting edge design of the arena that is set

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Speaker 1: to open in twenty four. It will be a stone's

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Speaker 1: throw from Sophi Stadium, where the Los Angeles Rams and

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Speaker 1: Los Angeles Chargers play. The Clippers Arena will be purpose

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Speaker 1: built for basketball. No other sports will be played there,

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Speaker 1: but it does have specific modular elements to make it

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Speaker 1: optimal for concerts, as Balmber explains. Also in this episode,

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Speaker 1: to mark the launch of the new NBA season. Next week,

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Speaker 1: my fellows, Strictly Business host Andrew Wallenstein and I discuss

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Speaker 1: some of the big picture issues surrounding the league. Nothing

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Speaker 1: is bigger than the new TV right steal that will

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Speaker 1: come up after the NBA season, right around the time

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Speaker 1: Balmer hopes to open the doors of his arena. Andy

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Speaker 1: and I discuss whether the seventy five billion dollar figure

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Speaker 1: that's been thrown around is anywhere near a slam dunk

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Speaker 1: for a long term deal. All of that is coming

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Speaker 1: right up after this break, h Welcome back to Strictly Business. Hello,

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Speaker 1: Andy Wallenstein. It's nice to see you in person. Absolutely

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Speaker 1: how are you. I'm glad that we're here the old

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Speaker 1: fashioned way, sitting across the table, looking at each other

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Speaker 1: and trying to figure out where in the world the

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Speaker 1: media business is going. But before we do that, I

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Speaker 1: wanted I wanted to indulge you a little. I know

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Speaker 1: you are a long time Los Angeles Clippers fan, a

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Speaker 1: long time way before it was cool to like the Clippers,

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Speaker 1: and so you must be excited. Last month, the owner

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Speaker 1: of the Clippers, Steve Balmer, unveiled journalists down to downtown

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Speaker 1: l A to unveil his rendering vision of a very

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Speaker 1: cutting edge new stadium for the Los Angeles Clippers that

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Speaker 1: will be built in Englewood, just kitty corner to the

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Speaker 1: new Sofi Stadium that is the home of the l

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Speaker 1: A Chargers. It's a very high tech, very flashy, brand

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Speaker 1: spanking new vision. It's it's like nothing I could imagine

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Speaker 1: for Inglewood when I grew up in this area a

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Speaker 1: long time ago. It's really something to see. Tell us, what,

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Speaker 1: how does all this strike you as a Clippers fan.

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Speaker 1: It's a long time coming. I mean, this is something

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Speaker 1: that Steve Balmer had intended to happen all along, and

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Speaker 1: it's amazing to see his his dream come to reality.

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Speaker 1: He's been nothing short of a messianic figure for Clippers

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Speaker 1: fans like myself. When you think about the trouble this

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Speaker 1: franchise was in going back to the Donald Sterling era,

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Speaker 1: and along comes this legend of Microsoft pours unfathomable billions

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Speaker 1: into this team, and we are now at a team

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Speaker 1: that has a different focus, a whole different vibe than

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Speaker 1: what a lot of Clipper fans of your are used to.

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Speaker 1: And I think the stadium is sort of like the

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Speaker 1: cherry on Top, a place where the team could not

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Speaker 1: just share with the Lakers, but have its own space.

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Speaker 1: It's very important as a fan. It was very impressive.

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Speaker 1: They built sort of small replicas in their in their

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Speaker 1: downtown l A office space. They built small replicas that

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Speaker 1: gave you a sense of what it would be to

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Speaker 1: be in this space. And it will be no surprise,

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Speaker 1: the former CEO of Microsoft, no surprise, it will be

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Speaker 1: cutting edge tech. You will be able to walk around,

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Speaker 1: walk up to a vending machine or open a open

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Speaker 1: a door, grab a coke. You won't have to have transactions.

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Speaker 1: That will all be handled seamlessly using a lot of

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Speaker 1: the same kind of technology that you're seeing being experimented

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Speaker 1: within the Disney parks. More ways to get consumers to

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Speaker 1: separate from their dollars seamlessly. That is the cutting edge

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Speaker 1: of retail tech. And this this will have it um

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Speaker 1: all kinds of bells and whistles, all kinds of green elements,

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Speaker 1: elements to make it very very water a lot of

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Speaker 1: thought on sustainability. It's gonna be it's going to recycle

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Speaker 1: almost all of its water, all of those, all of

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Speaker 1: those elements that you would expect, they were all thought.

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Speaker 1: It was also interesting. It was very it was a

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Speaker 1: point of pride that there is no private there's no

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Speaker 1: public money going into this stadium that will spare us

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Speaker 1: the the headaches in the the the conflict over public

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Speaker 1: money goes into a stadium and and the city does

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Speaker 1: not get enough out of it. I think it was

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Speaker 1: very clear they didn't. They wanted to sidestep all of that.

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Speaker 1: And Steve Bomber's bank account is big enough. When I

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Speaker 1: asked him, he looked at me and he said, yep,

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Speaker 1: I'm going to be the sole owner of this stadium.

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Speaker 1: That's also a new It's it's not a new phenomenon

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Speaker 1: for team ownership, but it just in terms of the

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Speaker 1: high net worth individuals and what they can if they

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Speaker 1: want to bring to a team, a sport, a cause.

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Speaker 1: It's it's it's really something. And as you know, as

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Speaker 1: again as a Clipper fan, I'm sure you're happy that

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Speaker 1: Bomber settled in. It was a record at the time,

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Speaker 1: he spent two billion to buy the Clippers. What do

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Speaker 1: you think, again, being a being a fan of the team,

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Speaker 1: what do you think that kind of investment means for

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Speaker 1: the players themselves? Do you sense like do you sense

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Speaker 1: that the players feel that they have this enormous cheerleader

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Speaker 1: with enormous deepa gets and that that alone gives them

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Speaker 1: potential to seek the championship. I don't think you could

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Speaker 1: underestimate what it means to the players. Um, you do

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Speaker 1: not go to even a major market like Los Angeles

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Speaker 1: unless you, as a player, feel that the owner is

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Speaker 1: going to invest what it takes to win. Is the

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Speaker 1: kind of person you want to work for. I mean,

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Speaker 1: it factors tremendously, and I think also the addition of

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Speaker 1: the stadium is something that shows his level of commitment,

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Speaker 1: shows his level of investment, and so it makes me

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Speaker 1: feel as a fan that the talent is going to

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Speaker 1: come to this city for years to come. Here's what

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Speaker 1: Steve Bohmer had to say about his Mecca of basketball

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Speaker 1: when I sat down with him in September. I had

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Speaker 1: a vision of a of a building that was very

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Speaker 1: intimate in the sense. Now for basketball, that means energy.

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Speaker 1: For concerts, it can mean again a sense of community.

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Speaker 1: The more people feel like they're brought together. I think

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Speaker 1: that makes for better experiences myself. And there are a

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Speaker 1: lot of great buildings that get pretty spread out, and

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Speaker 1: you know, particularly have hockey too. It doesn't. It doesn't

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Speaker 1: feel that same warm community feel and you know, in

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Speaker 1: basketball that means a place to cheer. I wanted to

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Speaker 1: make sure it was a basketball mecca. I mean, I

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Speaker 1: wanted to make sure we carried the themes of basketball

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Speaker 1: through very consistently. And you know, but a lot of

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Speaker 1: the same things work for concerts in basketball. I don't

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Speaker 1: want people waiting in line for food and bathroom. It

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Speaker 1: turns out it's good for both. That's good for both purposes.

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Speaker 1: Let's let people get back and focus in on why

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Speaker 1: you're there, right, It's always it's always awful to be

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Speaker 1: in the concession line and you hear cheers from the

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Speaker 1: you know, from the floor. You know. I didn't want

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Speaker 1: breaks in the building and break in the bowl, which means,

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Speaker 1: you know, we don't have you know, like lounges that

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Speaker 1: are open, because I think it brings again more intimacy

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Speaker 1: to have people there and experience. It won't be for everybody.

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Speaker 1: From people they tell me millennials like to mill in bars,

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Speaker 1: you know, and and be accessible the action. It's not

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Speaker 1: what we did because it's not what I wanted in

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Speaker 1: our in our building. So we took we took that approach. Uh.

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Speaker 1: And you know, we put in a magnificent scoreboard. I

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Speaker 1: don't know if anybody will use it for concerts, but

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Speaker 1: they can. We put in a magnificent scoreboardwise, so we

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Speaker 1: can tell you more about the game the game of basketball.

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Speaker 1: We put in this incredible wall of sound, you know,

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Speaker 1: for our fans. Uh. And oh, by the way, that

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Speaker 1: disappears for concerts because it's behind the stage. So it's

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Speaker 1: kind of appropriate for both both functions in the building.

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Speaker 1: Remember it's a different configuration, so it's not the same

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Speaker 1: making thousand sees the floor opens up for seats and

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Speaker 1: you lose the concert the end of the the the building. Now,

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Speaker 1: when we designed this thing, we thought through the acoustics,

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Speaker 1: We thought through all of the things that are required

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Speaker 1: to allow an artist to perform and make money in

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Speaker 1: our building. So you know, I would say we will

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Speaker 1: be pretty heads down on concerts in addition to addition

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Speaker 1: to the basketball. And you know, we've got our business

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Speaker 1: now at the Forum and we can think about, you know,

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Speaker 1: kind of both of those assets. Is the forum do

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Speaker 1: you anticipate is there a way to kind of work

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Speaker 1: together with both arenas to kind of support each other

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Speaker 1: or yeah, we're you know, we'll figure them. Right now,

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Speaker 1: we're just flat out in the process of ramping the

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Speaker 1: Forum back up after COVID, but we'll figuring. We'll figure

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Speaker 1: that out when the building gets this building gets open.

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Speaker 1: At this point, do you anticipate changes to the Forum

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Speaker 1: or do you think it will stay a venue? A

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Speaker 1: lot of that right now we are planned is to

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Speaker 1: put forward and as we get into it, because we

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Speaker 1: don't I don't know about the concert business. The people

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Speaker 1: obviously the Forum do. We we can study the concert business,

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Speaker 1: but we'll get a chance to learn and get a

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Speaker 1: talented team at the Forum that'll have a chance to

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Speaker 1: teach us. Can I ask you how much it's all

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Speaker 1: going to cost when all of a sudden done. Yeah,

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Speaker 1: one point eight billion plus. We bought the Forum as

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Speaker 1: part of this, so you can add another four million

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Speaker 1: to that. Well, and you know, obviously you're doing it

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Speaker 1: without any you're doing it privately, you're not doing it

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Speaker 1: with funding from any you know, l A city, Ela County.

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Speaker 1: Can you talk about that. Has that been a lot

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Speaker 1: to take on or do you feel like you've got

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Speaker 1: the support it? It's not an issue. There's there's investment

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Speaker 1: money out there for something like this. Yeah, no, it's

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Speaker 1: you know, that's the way things work in California, and

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Speaker 1: I'm fine with that. You know. So we are funding

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Speaker 1: a privately. What that means is a combination of essentially

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Speaker 1: money I'll put in and money that the building will borrow.

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Speaker 1: But you know, I'll secure and uh we get we

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Speaker 1: will swing this and you'll be the soul owner or

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Speaker 1: will you have other investors in three or four years time.

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Speaker 1: When you're when you're driving up to Intuit Dome, what

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Speaker 1: do you hope to see out there? Well, pre game,

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Speaker 1: I want to make sure things are activated, our fans

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Speaker 1: get there early. There's plenty to do, There's plenty to see.

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Speaker 1: We've got these beautiful steps. People couldn't you know, have

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Speaker 1: a little picnic if they want to. You know, we'll

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Speaker 1: have some basketball going on, you know, on the court

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Speaker 1: pre game. So we think we are a lot a

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Speaker 1: lot of energy there. And of course on big events,

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Speaker 1: we want to pack him into the pack him into

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Speaker 1: the plaza, which is pretty good size. It's not as

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Speaker 1: big as downtown Milwaukee, which is kind of the size

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Speaker 1: they had almost this year during their championships, But I

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Speaker 1: think it will be beautiful in a place of great energy,

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Speaker 1: and you know, we want to keep that open off

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Speaker 1: game times, UH and use it for community events. Are

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Speaker 1: you talking Are you at the stage of talking to

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Speaker 1: any partners. Obviously you have Into It on board, but

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Speaker 1: any other partners in terms of having you know, a

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Speaker 1: permanent retail partners or yeah, no, we're we are talking

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Speaker 1: to other partners. And you know, we you start with

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Speaker 1: the the naming on the building and we're pleased to

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Speaker 1: be working with Into It. They're a great company, very

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Speaker 1: customer focused. I have connection. We actually tried to buy

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Speaker 1: into it when I was at Microsoft, Is that right, Yeah,

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Speaker 1: we tried. That was probably early two thousand's, late nineties.

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Speaker 1: And actually the guy who founded UH Into It, he

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Speaker 1: was he recruited me for Procter and Gamble. He was

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Speaker 1: trying to get me to be there, so I worked.

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Speaker 1: I knew him from Procter and Gamble. I do his wife.

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Speaker 1: So I've known Scott Coke who started Into It since

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Speaker 1: seventy seven. I've known his wife since seventy seven. And

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Speaker 1: they're just a great company to have as a partner.

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Speaker 1: Don't go anywhere. We'll be right back with more from

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Speaker 1: l A Clippers chairman Steve Bomber, and we're back with

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Speaker 1: more from l A Clippers chairman Steve Balmer or NBA

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Speaker 1: team owners. You know some big decisions coming up, some

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Speaker 1: big media rights deals will be up in a couple

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Speaker 1: of years. Have you given any kind of big picture

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Speaker 1: thought to what? Maybe you know, do you think the

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Speaker 1: league would do something radical like do a do a

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Speaker 1: deal with the streaming service or maybe make make all

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Speaker 1: the games on demand just really amplify NBA TV. Well,

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Speaker 1: I'm not going to speak for the league. I can't now.

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Speaker 1: The thing I have been pushing, and I know the

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Speaker 1: league has been doing a good job, is to ask

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Speaker 1: what does it mean? Obviously, just from a customer experience standpoint,

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Speaker 1: the way you enjoy our games has got to use

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Speaker 1: to embrace digital technologies. It doesn't mean you can't work

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Speaker 1: with the ESPN and turners, but we're gonna be able

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Speaker 1: to offer a better game experience if if the experience

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Speaker 1: goes more and more digital. So where will that lead?

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Speaker 1: I'm not sure. Now we have a deal with Ballet

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Speaker 1: Sports that's up in a year, and we're trying to

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Speaker 1: figure out, even with them, what do things look like?

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Speaker 1: How do you evolve how do you become more digital? Um,

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Speaker 1: so we'll get our own mini experience and all the

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Speaker 1: questions you raised this year, but you know where the

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Speaker 1: league winds up going. I know Adam and Bill Coni

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Speaker 1: who runs the licensing business or figuring that out. M H.

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Speaker 1: Can I press you though on the local deal? Do

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Speaker 1: you do you see a future long term with ballet sports?

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Speaker 1: Do you think there are more options for the Clippers

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Speaker 1: on their own or in partnership with other local teams?

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Speaker 1: There's there there, There there are options. I mean the

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Speaker 1: obvious thing, if we can work the right deal, of course,

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Speaker 1: would be to work with Bally. They've been a great

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Speaker 1: partner for for a long period of time. But you know,

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Speaker 1: in business, you gotta have options, so we will have options.

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Speaker 1: Is there anything? UM, I know that right now. We're

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Speaker 1: just talking to Valley. That's you know, we we did

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Speaker 1: a deal with them. We're they have an exclusive period

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Speaker 1: and we're trying to work that through and that's that's

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Speaker 1: what we're doing. And now Andy rejoins me for a

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Speaker 1: deeper dive into Bomber's options and the future of the

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Speaker 1: NBA TV rights negotiation. The big picture question hanging over

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Speaker 1: all of the NBA, of course is it's next TV

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Speaker 1: rights deal. We have media obsessed for a good two

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Speaker 1: years solid over the NFL deals and they were as

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Speaker 1: blockbuster as predicted, hitting the hundred billion mark for a

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Speaker 1: ten year deal. Um, as we look at the NBA rights,

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Speaker 1: the big national NBA rights packs are the current deals

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Speaker 1: run through the NBA season, so it's a ways off.

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Speaker 1: But as you and I both know, it's the blank

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Speaker 1: of an eye, and the discussions are definitely even if

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Speaker 1: there's no quote formal discussions, there are informal discussions being

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Speaker 1: being had. And the number that has floated out there

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Speaker 1: in the media and sports press is seventy five billion

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Speaker 1: for probably about a ten year deal with you know,

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Speaker 1: probably all all consuming streaming, linear digital, you know, anyway,

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Speaker 1: any flat surface that you can show a basketball game,

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Speaker 1: they will undoubtedly figure out rights for in this new deal.

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Speaker 1: Do you think seventy five billion is just off the

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Speaker 1: charts delusional or do you think that that is given

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Speaker 1: another two and a half years and that's going to

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Speaker 1: be where the benchmark for NBA rights are. If NFL

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Speaker 1: sets a hundred billion is and is NBA worth? Yeah?

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Speaker 1: I do think the NBA as successful as it is

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Speaker 1: is not at an NFL level, So it does make

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Speaker 1: sense to me to hear a figure like seventy billion. Uh.

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Speaker 1: It just goes to know that even though when you

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Speaker 1: look at sports ratings that you know, compared to the

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Speaker 1: season prior to COVID, NBA is still down significantly. Nevertheless,

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Speaker 1: it retains a value at being one of the you know,

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Speaker 1: one of the few live attractions that advertisers are going

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Speaker 1: to want to glom onto for years to come, even

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Speaker 1: with an audience that's small because there's just at the

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Speaker 1: end of the day, even when you look beyond sports,

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Speaker 1: there's just so many places that TV can deliver a

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Speaker 1: mass audience the way advertisers want now. I think there's

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Speaker 1: also a big question beyond the value, is who's going

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Speaker 1: to be spending that se billion. I mean, it seems

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Speaker 1: to be that there is an assumption out there. It's

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Speaker 1: been reported that the current rights holders Disney Turner, which

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Speaker 1: I think pay a combined two point six billion. Obviously

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Speaker 1: they're gonna pay a lot more in the next deal.

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Speaker 1: Are they going to be the ones to hang onto this?

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Speaker 1: And I would be surprised. We're not seeing chattery yet,

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Speaker 1: but there as you know, there's been a narrative now

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Speaker 1: for years, and we're seeing growing evidence that the tech

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Speaker 1: companies are ready to bid. We saw this with Amazon

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Speaker 1: and Football on this last deal. It's hard for me

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Speaker 1: to believe it's going to be this simple, like, Okay,

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Speaker 1: ESPN in Turner retained and everyone lives happily. Ever after,

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Speaker 1: we'll carve out a few more streaming packages. But you

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Speaker 1: but you, you think it it's unlikely to be a

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Speaker 1: more traditional template that we've seen in the past. I

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Speaker 1: think it's going to be a little different. I think

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Speaker 1: we're going to see that if I had to predict

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Speaker 1: that ESPN and Turner are not going to be alone.

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Speaker 1: And by the way, I think the fact that there

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Speaker 1: will be more players will bid up this number so

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Speaker 1: that this you know, astronomical seventy billion dollar number will

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Speaker 1: be realistic because of the interest in the marketplace from bidders.

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Speaker 1: If you're ESPN plus, do you have to do whatever

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Speaker 1: it takes to get this so that you can slice

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Speaker 1: and dice and a games to your heart's desire and

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Speaker 1: give consumers sports crazy consumers. Absolutely that eight bucks for

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Speaker 1: ESPN Plus is going to seem cheap at the price.

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Speaker 1: If I have all these games at my fingertips. It's

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Speaker 1: absolutely critical. I think you saw at a at a

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Speaker 1: CEO level. Whenever Bob Japeck talks about ESPN these days,

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Speaker 1: he is talking about cornering the market on the very

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Speaker 1: best sports rights. I think from among all current major sports,

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Speaker 1: ESPN has at least a sliver of all of them,

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Speaker 1: and I think they're going to spend through the nose

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Speaker 1: to take whatever they can and hold onto that market share.

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Speaker 1: So I'd be shocked if Disney doesn't hold on to

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Speaker 1: some piece of the NBA. It's been very good to them.

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Speaker 1: They've been public about the fact it's been good to them.

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Speaker 1: There's got to be a good relationship between the league

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Speaker 1: and the network. That is also a part of how

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Speaker 1: these deals get done, and it seems like it's pretty

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Speaker 1: rosy on both sides. Do you think that there's there's

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Speaker 1: any scenario. Is there a lead will pad anywhere in

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Speaker 1: NBA headquarters that is crunching the numbers on what if

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Speaker 1: we just did What if the NBA just did entirely

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Speaker 1: direct consumer the whole thing, sidestep linear networks and other

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Speaker 1: digital streaming NBA TV pay you know, fans can pay

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Speaker 1: two hundred bucks get everything, and the sliding scale down

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Speaker 1: from that to get what they want is do you

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Speaker 1: think are we at the point where a major league

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Speaker 1: like the NBA would consider such a scenario. Well, let's

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Speaker 1: go this way. First off, I don't think there's actual

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Speaker 1: evidence that that is currently being explored. I know your

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Speaker 1: new friend Mr Ballmer has long been obsessed with this

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Speaker 1: subject at a local level, and I think we would

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Speaker 1: sooner see those innovations at a local level. When you

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Speaker 1: look at the crumbling state of the regional sports network business,

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Speaker 1: that to me is the place where we're going to

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Speaker 1: see more streaming plays. And by the way, it makes

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Speaker 1: you know, we're sort of making this distinction between local

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Speaker 1: and national. We could see big players like Sinclair in

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Speaker 1: these local markets come together to do something very national,

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Speaker 1: lumped together a whole bunch of markets. There was a

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Speaker 1: lot of speculation last year that by now Sinclair would

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Speaker 1: have already done this. So I do think we're going

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Speaker 1: to see something. I just don't know. I just don't

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Speaker 1: know really at this point that I could point to

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Speaker 1: any one thing and be like, keep your eye on this.

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Speaker 1: It's too early. It's one of the things about all

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Speaker 1: of the change that we've had in the business. It's

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Speaker 1: hard to remember sometimes that when we're talking about the business,

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Speaker 1: when we talk about the business of regional sports networks,

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Speaker 1: it's not Fox and Comcasts that are the big powers

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Speaker 1: here anymore. Now it's Sinclair and it's partners. And I

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Speaker 1: think everybody you know they would be they would have

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Speaker 1: to acknowledge that those are really challenged businesses. And I

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Speaker 1: think you're right that it's going to be the owners

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Speaker 1: of the scale of the bombers that can really can afford, frankly,

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Speaker 1: to step back and really even just think about expair

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Speaker 1: menting with different delivery options for games. I think that's

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Speaker 1: where that's where you'll see that early grassroots experimenting that

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Speaker 1: that may then carry over on a larger scale. Well,

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Speaker 1: I will say this, I think we're gonna see experimentation

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Speaker 1: of the type that you're talking about. But I think

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Speaker 1: it's also important to point out where we're already seeing

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Speaker 1: a good deal of experimentation, and I think we're just

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Speaker 1: at the point where it's going to snowball in a

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Speaker 1: big way, and that is the interactivity of game telecasts.

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Speaker 1: We recently saw what I think is kind of almost

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Speaker 1: a milestone moment with the Manning brothers in the NFL,

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Speaker 1: where on ESPN two they do an alternative telecast that's

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Speaker 1: getting great ratings. Not a new thing, but probably the

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Speaker 1: best version of what has been gone on for several

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Speaker 1: years now. I've seen all sorts of experimentation with alternative telecasts,

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Speaker 1: but that is just the beginning. Gambling sports betting is

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Speaker 1: going to become a much bigger part of the presentations.

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Speaker 1: Fantasy sports already is a big deal. I just think

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Speaker 1: you're going to see a lot of customization where instead

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Speaker 1: of this sort of cookie cutter one size fits all,

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Speaker 1: everyone gets the same presentation. I know personally, for instance,

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Speaker 1: I would love the ability to change camera angles. I

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Speaker 1: think all this stuff is really starting to get out

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Speaker 1: there in a big way. Now. It's only going to

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Speaker 1: get bigger. It's going to play out over a long time,

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Speaker 1: and I think it's a great thing for sports fans. Well.

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Speaker 1: From your lips. With the NBA season about to start

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Speaker 1: this week, good luck, go Clippers, Go Bills. Thank you, Andy, appreciated.

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Speaker 1: Thanks for listening. Be sure to leave us a review

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Speaker 1: at Apple Podcasts. We love to hear from listeners, and

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Speaker 1: be sure to tune in next week for another episode

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Speaker 1: of Strictly Business can be till the deep to him