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Speaker 1: Hello, I'm Scott, I'm Evan Nobe Williams, and I'm Michael

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Speaker 1: bar And this is the Bloomberg Business of Sports podcast.

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Speaker 1: We explored the big money issues in the world of

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Speaker 1: sports today. We begin with the New York Post reporting

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Speaker 1: that Silver Like Partners is considering buying a major steak

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Speaker 1: in the New York Knicks and Rangers. You didn't even

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Speaker 1: welcome Eben back. Hi that sorry, man's a business that

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Speaker 1: our listeners miss. Evan Nobe Williams hios. When we get

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Speaker 1: all feedback and it's like, you know, Bar, you're an idiots. Nick,

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Speaker 1: shut up, you're talking over people, and Evan is the

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Speaker 1: only reason the show exists. That is true. That's the

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Speaker 1: feedback we get. So I just figured we want to

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Speaker 1: recognize that Evan has returned. How was the Michigan Northwest?

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Speaker 1: It was good? Yeah, very nice up there. The leaves

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Speaker 1: are changing color, which if you live in New York

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Speaker 1: City you don't get to see on a daily basis. Yeah,

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Speaker 1: no complaints at all. All Right, Well, you were hanging

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Speaker 1: out at Nike and all that, and yeah, the folks Nike,

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Speaker 1: saw the folks at Adidas. Uh. Portland is the U

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Speaker 1: hub for sneakers. It's kind of pervasive in the city there,

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Speaker 1: but it was a fun art. You'll hear more about

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Speaker 1: it in the future, all right, so bar Yeah, Well

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Speaker 1: we're gonna talk under Oarman a little bit, so get

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Speaker 1: it ready, all right. Yeah, So it looks like, UM,

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Speaker 1: silver Lake Partners, which as you know, already has about

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Speaker 1: ten pert ten percent stake in MSG. Looks like silver

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Speaker 1: Lake wants to buy more of the Nixon Rangers prior.

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Speaker 1: This is the important piece here there those incoming to MSG.

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Speaker 1: This wasn't MSG saying hey, we're putting up for sale.

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Speaker 1: This was silver Lake and others, I'm told looking to

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Speaker 1: acquire a greater steak of the Nixon Rangers and also

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Speaker 1: involved by the sports team, the minor league team, you know,

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Speaker 1: all that UM prior to the spinoff. So they don't

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Speaker 1: want the entertainment assets like Radio City, the Town Nightclub,

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Speaker 1: all that other stuff. That's gonna be a separate part

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Speaker 1: of the company. But if you do it after the spinoff,

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Speaker 1: you gotta take the whole shebang. So they're looking to

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Speaker 1: acquire a greater stake in the teams now pre spinoff. Yeah,

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Speaker 1: let's remind listeners as a square Garden Company, the team

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Speaker 1: that owned the company that owns the Knicks and the Rangers,

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Speaker 1: at one point a number of years ago, was a

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Speaker 1: was a massive company of television networks, of entertainment venues,

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Speaker 1: of teams of arenas. UH. In two thousand fifteen, they

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Speaker 1: spun off the networks to make that kind of a

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Speaker 1: separate entity. And they announced last year that at some

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Speaker 1: point either before the end of this year or early

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Speaker 1: in and it seems like it's going to be on

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Speaker 1: the later end of that of that time frame, they

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Speaker 1: announced that they were also then going to spin off

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Speaker 1: the sports team assets. And as Scott said, that's the Knicks,

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Speaker 1: that's the Rangers, that's the Westchester Knicks, that the d

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Speaker 1: League team, counter Logic Gaming, and the sports team um

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Speaker 1: is the is the Garden training facility. The guardens not

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Speaker 1: Garden is not. So the Garden stays with the entertainment

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Speaker 1: part of the company, which the Beacon Radio Music called

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Speaker 1: Town Nightclubs, and er don't want that. And if the

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Speaker 1: wait till after the spin off, that's probably all included. Yes,

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Speaker 1: So they don't want that. And you know Dolan needs

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Speaker 1: the money, you should say needs once the money will

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Speaker 1: utilize the money. Um, he's got this project out in Vegas.

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Speaker 1: The spheres these and attainment orbs, I guess we can

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Speaker 1: we call them. That's where the money goes. And from

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Speaker 1: what I understand here the the announcement of the spinoff,

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Speaker 1: they were going to spin off two thirds of the Knicks,

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Speaker 1: Rangers and the rest of the sports assets. The Dolan

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Speaker 1: MSG was going to keep that final third. And the

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Speaker 1: thought here is that silver Lake is looking at buying

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Speaker 1: a chunk of that third that MSG is keeping. Correct,

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Speaker 1: So this doesn't affect the spinoff in any way, that

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Speaker 1: those two thirds is still going to be spun off

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Speaker 1: at some point early. This does two things. A one,

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Speaker 1: it will enable MSG to get a real market valuation

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Speaker 1: on the clubs. There ain't no discounts on the Knicks

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Speaker 1: and Rangers, I guess. And then too, there's been these

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Speaker 1: rumblings of Jimmy Dolan selling the teams. He's always said no,

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Speaker 1: but it is publicly traded. It does, so they'll have

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Speaker 1: to see if you are investors. We've heard all that.

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Speaker 1: But this certainly puts silver Lake with with a with

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Speaker 1: an increased share if they get it done. Should these

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Speaker 1: things ever be sold, and my god, the Nixon Rangers

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Speaker 1: on the open market. Well, let's talk Let's talk a

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Speaker 1: bit about about valuation. Obviously, the Knicks are are much

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Speaker 1: more valuable than the Rangers. Forbes has then but both

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Speaker 1: number one and there was. Forbes has the Knicks in

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Speaker 1: about four billion. I think the Rangers around around one

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Speaker 1: point something like that. Um, we've talked a lot on

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Speaker 1: this show recently about minority stakes sales. Oftentimes you don't

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Speaker 1: get the full valuation as part of just a minor one. Obviously,

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Speaker 1: the path to potentially owning these things in the future,

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Speaker 1: you should Dolan want to sale seems like a pretty

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Speaker 1: valuable head start to have. What do we think valuation

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Speaker 1: is when these things come together, I say, greater than

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Speaker 1: the Forbes numbers combined. Interesting, Well, let me answer a

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Speaker 1: question to you, guys, and this shows you something. The

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Speaker 1: Nixt they're still looking for their second win. But the Knicks,

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Speaker 1: they are a very valuable franchise simply because of the

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Speaker 1: two words New York. And it's the same for the Rangers.

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Speaker 1: Anything coming out of New York. There's a lot of

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Speaker 1: value out of that. We'll call it beach on property,

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Speaker 1: which the Clippers literally were, I mean, I know they're

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Speaker 1: not on the beach, but um closer than we are here.

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Speaker 1: But yeah, I mean you're talking global brand, um, an

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Speaker 1: avid fan base, and when you're tied the ability to

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Speaker 1: to monetize locally, and of course you're buying into your

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Speaker 1: partner in the Bigger League and the NBA. Obviously most

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Speaker 1: watchers seem to think UH is on an upward swear.

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Speaker 1: Another thing we talked about a bit is is the

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Speaker 1: tremendous value the synergy value of owning both the arena

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Speaker 1: and the franchise and the network plays there and the network. Um,

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Speaker 1: this would be a situation where you know, we're now

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Speaker 1: separating those two things. Does that hurt valuation at all?

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Speaker 1: If if you can look in the future and own

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Speaker 1: the Knicks but not own Madison Square, good question. I'd

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Speaker 1: have to dig deeper into the relationship of where the

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Speaker 1: money comes from. Uh, you with the Holy Trinity had

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Speaker 1: always been as you said, team venue and network. Maybe

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Speaker 1: that's not the case anymore. And real quick on silver

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Speaker 1: Lake kind of amassing a pretty decent sports portfolio here right.

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Speaker 1: They're a big investor in Endeavor, the former William Morris

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Speaker 1: i AMG Agency. They have a chunk of fanatics outside

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Speaker 1: of sports, Ali Baba Tesla pretty pretty nice if they

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Speaker 1: add the Nixon Rangers or a bigger piece in the

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Speaker 1: Nixon Rangers to that list, a pretty nice little portfolio.

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Speaker 1: Up next, let's talk about under Armour disclosing a federal

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Speaker 1: probe into its accounting practices. The company denies any wrongdoing

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Speaker 1: and says it is cooperating with investigations by the Justice

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Speaker 1: Department and Securities and Exchange Commission, which have been underway

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Speaker 1: for more than two years. But oh my goodness, the

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Speaker 1: stock took a hit. I'll let have been talking on

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Speaker 1: this one because it probably occupied his entire boarding. It did.

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Speaker 1: Just recently got off the under arming earnings call. Pretty

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Speaker 1: messy weekend for under armer Right, start with the earnings.

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Speaker 1: How did they do? The earnings were mixed. You know,

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Speaker 1: the company has been in a transformation that was once

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Speaker 1: three years and there's now five years. They you know

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Speaker 1: that Plank recently said, Kevin recently said he was stepping aside.

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Speaker 1: Patrick frisk is taking over, who's been the president for

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Speaker 1: a couple of years. So kind of an internal you know,

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Speaker 1: long long plan, secession plan there the companies, you know, there,

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Speaker 1: their sales are down, especially in North America, which is

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Speaker 1: was to be expected this quarter, but is not what

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Speaker 1: you want from a company that you know, does seventies

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Speaker 1: its business domestically. Uh, that that's not a great look.

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Speaker 1: They are still in this kind of process of writing

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Speaker 1: down inventory, getting rid of a lot of underselling products.

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Speaker 1: Inventories up, which is good. Gross margins are up, which

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Speaker 1: is good. But but on the whole, I think, you know,

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Speaker 1: investors are looking at this company right now and wondering

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Speaker 1: kind of exactly where the direction is, especially given there's

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Speaker 1: going to be a new leader and and and and

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Speaker 1: the first leader they've had since Kevin Plank founded the

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Speaker 1: thing back in in the mid ninety nineties. And to

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Speaker 1: you know, an SEC probe that you know, who knows

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Speaker 1: where that go and how that might affect two years ago,

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Speaker 1: But this has been going on for two years. Yeah,

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Speaker 1: so under arm Er, you know, acknowledge the probe first

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Speaker 1: reported by the Wall Street Journal said, you know, we've

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Speaker 1: been working with FEDS for two and a half years. Uh,

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Speaker 1: they're under a different CFO now than they were back then.

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Speaker 1: I can't remember his name, but the guy who was

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Speaker 1: the CFO of the company back in early two seventeen

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Speaker 1: stepped down. Uh so under Armer says they've done nothing wrong.

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Speaker 1: They believe their accounting practices have all been on the

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Speaker 1: up and up. Um, and who knows what the time

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Speaker 1: frame is forgetting how does it? Aren't there standard accounting practices?

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Speaker 1: I think there are, yeah, and and and under Armour

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Speaker 1: seems to be thinking that, you know, their disclosures will

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Speaker 1: be It seems like this investigation is a look at

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Speaker 1: whether under arm or somehow fudge the numbers to make

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Speaker 1: the company look healthier than it was, kind of quarter

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Speaker 1: by quarter sales numbers. Well, I have to ask, we

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Speaker 1: just had a change at the top here at under Armour. Yeah,

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Speaker 1: I mean, I don't want to imply anything, but did

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Speaker 1: people know what the heck was going on before this

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Speaker 1: came about? It's a question in mind. Nothing bothers me

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Speaker 1: more when they say you inferred. No no no, no

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Speaker 1: no no, that person implied you do the infer. Thank you,

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Speaker 1: thank you for getting that right. It's a good question.

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Speaker 1: And um, when when Kevin stepped down a couple of

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Speaker 1: weeks ago, you know, the messaging from under Armour was

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Speaker 1: essentially that you know, we've known this was he was

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Speaker 1: going to step down at some point for a while.

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Speaker 1: In two thousand seventeen, when we hired Patrick First to

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Speaker 1: be the president, the plan all along was that if

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Speaker 1: he did well at the company, he would eventually succeed

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Speaker 1: Kevin Plank. But it's a good question to ask now

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Speaker 1: that we know the time frame here. You know, this

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Speaker 1: federal probe also started around SEV team when Patrick first

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Speaker 1: came in. UM. So, yeah, I think it's it's worth

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Speaker 1: asking whether or not. And Kevin says this was his

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Speaker 1: decision and his decision alone. Um, but it is certainly

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Speaker 1: worth asking whether the fact that this SEC probe, depending

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Speaker 1: on how big big a deal it actually ends up being,

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Speaker 1: whether this contributed in any way to his stepping as evenue.

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Speaker 1: And I had lunch and a few others here at

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Speaker 1: Bloomberg with Kevin not long ago, and we talked about

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Speaker 1: those people, this process and this products. He's like, I

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Speaker 1: think we have the right people. We finally have our process, right,

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Speaker 1: So man, you gotta come up with products people one right,

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Speaker 1: We're down to the products at this point. Yeah, it's

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Speaker 1: and it's you know under Armmer has you know, it

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Speaker 1: is kind of a new bi into footwear. But they're

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Speaker 1: looking to expand that as much as they can. One

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Speaker 1: of the big knocks against under Armmer in this whole process,

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Speaker 1: and the reason why they stopped selling the products that

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Speaker 1: they made is that a lot of it was underperforming

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Speaker 1: and wasn't what consumers want to make cool stuff. Now

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Speaker 1: to hold on bar, this is normally where you would

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Speaker 1: jump in and introduce the last topic. But because it

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Speaker 1: is what it is, I'm gonna do it, and you're

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Speaker 1: going to comment first, right this is this makes sense.

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Speaker 1: I'll do it in your vote. And finally we have

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Speaker 1: the word that Indianapolis Motor Speedway in the Indie Car

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Speaker 1: Series had been sold to Penske Entertainment. It's a big

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Speaker 1: deal for the iconic speedway which had been owned by

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Speaker 1: the Home and Family for seventy four years. Mr Boss,

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Speaker 1: say you what now, I'm going to do it in

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Speaker 1: your voice? You know what this this is uh an

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Speaker 1: iconic change because I can go on anybody that knows

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Speaker 1: racing and Indianapolis A J. Foyt. We can go on

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Speaker 1: and on, Bobby, you can name the names you can.

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Speaker 1: My goodness is like Bill Vukovic, all of those winds

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Speaker 1: were under the Home and Family And did you say

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Speaker 1: Pete Vukovic the picture bill. He uh. The quick story

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Speaker 1: about this is that Tony Holman right after World War Two,

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Speaker 1: the track was dilapidated. It had been out of service

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Speaker 1: for about four years. And he saw the track that

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Speaker 1: weeds all over the place and this and that whatever,

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Speaker 1: and he said, you know what, I've got an idea

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Speaker 1: that he's got a vision. So he took all the

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Speaker 1: weeds out, spruced it back up, and they went back racing.

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Speaker 1: And ever since, for seventy four years, it has been

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Speaker 1: in the home and family. The good news is at

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Speaker 1: least it's going to the Penske. I gonna say, now

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Speaker 1: he has a name, I know, billionaire Roger Penske, and

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Speaker 1: I know he's involved in racing. He cares about the sport.

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Speaker 1: He obviously knows about getting and you're getting the entertainment

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Speaker 1: assets to the production from IndyCar. So let's see, we're

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Speaker 1: always wondering what always say, what is Indy Car need?

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Speaker 1: What does NASCAR need? I think Roger Pensky, of all people,

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Speaker 1: probably know, So I have I have a question for you,

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Speaker 1: Michael the this is a team, one of the more

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Speaker 1: successful IndyCar teams of all time from what I understand

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Speaker 1: also buying the series, am I correction and kind of

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Speaker 1: thinking that does that? How do how does that comfort

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Speaker 1: of interest? Well? Interesting because now with your team owner

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Speaker 1: and now you own the entire series, I know people

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Speaker 1: have a ruling on that violation. Violation you can use

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Speaker 1: five wheels. It's all right, it's good. I want to

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Speaker 1: see how this is going to settle out. I mean

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Speaker 1: it's you know, it's almost like the New England Patriots

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Speaker 1: buying the National Football League. At what happens here? So

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Speaker 1: it's I mean again you're talking an iconic name with Penskey,

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Speaker 1: uh at, which is good, But I just wonder what

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Speaker 1: happens here? So we don't do a lot of racing.

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Speaker 1: I'm gonna call Roger Penski, want to get them on

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Speaker 1: the sho I would love that. Heck yeah, alright. And

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Speaker 1: we had George Steinbrenner, grandson the third on the podcast recently.

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Speaker 1: He has an indiecar team. He was talking a lot about,

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Speaker 1: you know, attracting young viewers, using new technology, new media

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Speaker 1: to make that happen. We'll be curious to see if

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Speaker 1: if Penskey is is the right steward to kind of

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Speaker 1: to introduce a lot of those ideas to the racing series.

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Speaker 1: By the way, later this week we'll talk about the

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Speaker 1: New New York Marathon and the challenge that was offered

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Speaker 1: to me. Bertie is a whispering to me? I think

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Speaker 1: I know the answer. I'm not. Oh was that a

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Speaker 1: tip Was that a tip off? A tip off? This

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Speaker 1: is the Bloomberg Business of Sports cat Oh my God,

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Speaker 1: make me so mad. I'm bobbling words. This is the

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Speaker 1: Bloomberg Business of Sports podcast. I'm Michael Barr along with

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Speaker 1: Scott Say you're laughing at Every Monday, wednes and Thursday

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Speaker 1: sporadically show up. We explore the world of money in sports.

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Speaker 1: Join us again at the end of the week when

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Speaker 1: we speak with Hugh Weber, president of Harris Blitzer Sports

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Speaker 1: and Entertainment. You know that's the groups, the Devil's the seventies, stigmatized,

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Speaker 1: the prudential love lots to talk about with you, all right,

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Speaker 1: that called me down. Now you're listening to Bloomberg Business

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Speaker 1: with Sports on Bloomberg Radio around the world and online

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Speaker 1: wherever you get your podcast.