WEBVTT - Marc Lasry Talks Private Equity in Sports

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Let's move on to our top story this hour, because

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<v Speaker 2>private equity is making a big splash in pro sports

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<v Speaker 2>with two major deals in basketball and baseball this week.

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<v Speaker 2>The Boston Celtics today reaching agreement to be a sold

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<v Speaker 2>to a consortium for six point one billion dollars, making

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<v Speaker 2>it the largest sports takeover deal ever, while two days earlier,

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<v Speaker 2>the San Francisco Giants announced they sold a ten percent

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<v Speaker 2>steak to Six Street Partners. We're so pleased now to

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<v Speaker 2>bring in one of the savviest investors in sports, and

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<v Speaker 2>he is Mark Lasry. Mark bought a twenty five percent

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<v Speaker 2>steak in the Milwaukee Books in twenty fourteen. He sold

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<v Speaker 2>it nine years later in twenty twenty three. Mark is

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<v Speaker 2>chairman and CEO of Avenue Capitol, which has its own

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<v Speaker 2>sports fund.

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<v Speaker 1>Great to see you, my pleasure, Thank you for having me.

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<v Speaker 2>So let's talk about that six point one billion dollar

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<v Speaker 2>price tag for the Celtics. The Washington commanders of fetch

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<v Speaker 2>what six point oh five billions, So.

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<v Speaker 3>This is the biggest deal.

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<v Speaker 2>The Celtics might be raining inions on the court, but

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<v Speaker 2>they don't own their own court at TD gardens. So

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<v Speaker 2>I'm curious what you make of this price tag.

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<v Speaker 4>Look, I think it's a great price for the league,

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<v Speaker 4>and you had four people who wanted to buy it,

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<v Speaker 4>so it was a competitive process. The fact that they

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<v Speaker 4>got six point one billion, it's it's great for the holders,

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<v Speaker 4>for the folks who own the Celtics today.

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<v Speaker 1>But I think it's it's a high price. But it

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<v Speaker 1>seems that's where teams are selling for today.

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<v Speaker 2>Back in the day, you had said that you paid

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<v Speaker 2>too much for the Bucks, and at least at the

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<v Speaker 2>time you thought you did. I guess when it comes

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<v Speaker 2>to wondering whether they paid too much for the Celtics

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<v Speaker 2>this time around, because of real estate was not part

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<v Speaker 2>of that component, I got wonder, you know, how much

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<v Speaker 2>more should it have been if there was real estate involved.

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<v Speaker 4>It probably would have been more because you would have

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<v Speaker 4>made more on the team because of owning the owning

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<v Speaker 4>TD or the garden. Yeah, and you know the question is, well,

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<v Speaker 4>they try to build their own arena, and they may

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<v Speaker 4>do that, but at the end of the day, like

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<v Speaker 4>when we bought the Bucks, we had paid the most

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<v Speaker 4>for any NBA team, and that was about five hundred

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<v Speaker 4>and fifty million today.

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<v Speaker 3>That's funny now, I know.

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<v Speaker 1>I no, it does. It sounds funny.

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<v Speaker 4>And when I sold, I thought that was a great

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<v Speaker 4>price around you know, three and a half. So look,

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<v Speaker 4>I knew at the time that when we sold, prices

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<v Speaker 4>would probably go up. I think because of the new

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<v Speaker 4>media deal that got done, price have gone up a

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<v Speaker 4>lot more. I thought Adam Silver had done a phenomenal

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<v Speaker 4>job in getting that new media deal, and I think

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<v Speaker 4>that's what's spurring these new prices.

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<v Speaker 5>All Right, we just have us some breaking news for

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<v Speaker 5>us here is Nike just gonna give out the earnings Here.

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<v Speaker 5>Nike third quarter earnings comes in and fifty four cents

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<v Speaker 5>a share, well below estimates, about seventy seven cents of share.

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<v Speaker 5>Revenue a little better than estimated, though, coming in eleven

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<v Speaker 5>point is two seven billion dollars. We were looking for

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<v Speaker 5>about eleven billion estimates, so definitely better. China though not

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<v Speaker 5>great that ebit coming in at four hundred and twenty

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<v Speaker 5>one million dollars in inventory still a little high at

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<v Speaker 5>seven point five billion looking at that stock though pretty

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<v Speaker 5>much flat. So digesting that reaction mark, does this make

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<v Speaker 5>you want to get back into pro mba?

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<v Speaker 3>Yeah?

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<v Speaker 1>You know, look I think.

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<v Speaker 4>I think there's a lot of growth that's still going

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<v Speaker 4>to happen. I think part of it is going to be,

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<v Speaker 4>hopefully when they end up having an expansion team. We've

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<v Speaker 4>been looking at Vegas, so we'll end up seeing what happens.

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<v Speaker 5>What do you think that, like the froth is done

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<v Speaker 5>at some point. I'm just trying to understand how you

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<v Speaker 5>can suck more value out of something that doesn't have

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<v Speaker 5>the real estate yet.

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<v Speaker 3>Like, how do you how do you get more value

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<v Speaker 3>from them?

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<v Speaker 1>Well, I think the way you'll get more value.

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<v Speaker 4>Look, you only make money in sports three ways, so

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<v Speaker 4>it's ticket sales, sponsorship, and media. So if the Celtics

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<v Speaker 4>win again, they'll be able to ticket prices anywhere between

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<v Speaker 4>ten to twenty percent. If you have a team that's

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<v Speaker 4>the worst in the league, that team is still raising

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<v Speaker 4>prices five ten percent. Nobody stops giving up on their team.

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<v Speaker 4>It's actually one of the great little secrets about pro sports.

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<v Speaker 4>Every year, you know, the whole mantra in sports is next.

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<v Speaker 1>Year is our year, right, and everybody believes that.

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<v Speaker 4>So I think you're always going to see that teams

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<v Speaker 4>are going to keep on growing at sort of anywhere

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<v Speaker 4>between you know ten percent, fifteen percent.

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<v Speaker 1>I think if you own the real estate, you'll.

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<v Speaker 4>End up growing faster because you can end up having concerts,

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<v Speaker 4>you can do everything within your own arena, and so

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<v Speaker 4>I wouldn't be surprised if ultimately the Celtics end up

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<v Speaker 4>building their own arena.

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<v Speaker 2>When it comes to the Vegas franchise that you're considering

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<v Speaker 2>that you're weighing, have you thought about where that franchise

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<v Speaker 2>would play.

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<v Speaker 4>Yeah, we've been looking at a bunch of areas in Vegas.

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<v Speaker 4>I don't want to talk about it, becau if I do,

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<v Speaker 4>then those guys will raise the price.

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<v Speaker 3>Of where it usually works.

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<v Speaker 1>Yeah, that's yours. It works.

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<v Speaker 4>But I think for everybody who does something in Vegas,

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<v Speaker 4>it'll be at the T Mobile Arena at least for

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<v Speaker 4>the next few years, until people are able to figure

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<v Speaker 4>out where they want to move the team to.

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<v Speaker 2>All the sports franchises are looking overseas to expand their

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<v Speaker 2>brand and their market. The LA Dodgers would show Hayes

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<v Speaker 2>a perfect example. Right, They've got this built in Asian

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<v Speaker 2>fan base. What's the single best way of doing that?

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<v Speaker 2>For teams that maybe aren't obvious candidates for international fans, Well,

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<v Speaker 2>I think first.

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<v Speaker 1>If you win, people love that, right.

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<v Speaker 4>So for us, we had Yannis, and because we had Yannis,

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<v Speaker 4>you wanted to play games in Greece. We never did,

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<v Speaker 4>but we ended up playing in Europe. We ended up

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<v Speaker 4>playing in Paris, we played in London. So part of

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<v Speaker 4>when you have international players wherever they are, you want

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<v Speaker 4>to try to end up playing there because it just

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<v Speaker 4>feeds that popularity. So I think for every team, what

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<v Speaker 4>you want to do is you want to grow outside

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<v Speaker 4>your market. You want to grow in the US, and

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<v Speaker 4>then you want to grow internationally, and a lot of

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<v Speaker 4>that is the media, and that's sort of what everybody

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<v Speaker 4>is seeing that all these teams are becoming global in

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<v Speaker 4>scope as opposed to what they were, which was national

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<v Speaker 4>in scope.

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<v Speaker 1>Or even regional or even regional. I agree with that.

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<v Speaker 3>What are you most excited about right now?

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<v Speaker 1>For US?

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<v Speaker 3>Yeah, I think our.

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<v Speaker 1>Sports fund is very exciting.

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<v Speaker 4>We've invested in a number of new leagues that are

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<v Speaker 4>doing exceptionally well.

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<v Speaker 1>We ended up investing in the Orioles, and you know,

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<v Speaker 1>we're very excited about that.

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<v Speaker 4>But in a number of the investments we've made, we've

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<v Speaker 4>already seen prices that have gone up already about fifty

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<v Speaker 4>percent plus. So what you find in new leagues and

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<v Speaker 4>new teams is if.

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<v Speaker 1>You're right, it's going to grow exponentially. Right.

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<v Speaker 4>So the whole key in the nice thing about that

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<v Speaker 4>is you see the ratings the next day, so I

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<v Speaker 4>can tell you if it's grown. Like we've invested in

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<v Speaker 4>PBR and Professional bull Riding, that league is growing thirty

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<v Speaker 4>percent plus a year.

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<v Speaker 3>We have professional bull Riding.

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<v Speaker 1>Yes, do you want to get on a ball? You'll

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<v Speaker 1>let up if you could say eight seconds?

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<v Speaker 3>This sounds awesome. Do you have to go? I don't

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<v Speaker 3>want to go to rodeo for that's.

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<v Speaker 1>No, No, you could do it. We are here in

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<v Speaker 1>New York.

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<v Speaker 4>We owned the New York Mavericks, so you can come

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<v Speaker 4>anytime you want to go.

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<v Speaker 1>Okay, yeah, well.

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<v Speaker 5>So would you own little bits and then it grows exponentially?

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<v Speaker 5>What area would you not touch right now?

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<v Speaker 3>In sports?

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<v Speaker 4>I don't want to touch leagues or teams where we

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<v Speaker 4>think you've got flat growth. Okay, right, So when you're

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<v Speaker 4>doing a new league or new team like TGL.

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<v Speaker 1>We ended up doing that. The golf league that Tiger.

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<v Speaker 4>And Rory started, a lot of that was how many

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<v Speaker 4>people are going to watch it, and what you've seen

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<v Speaker 4>is they've had great growth over the course of the year.

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<v Speaker 4>Just had the semifinals and finals are going to be

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<v Speaker 4>this Tuesday. It's actually been going great and you've had

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<v Speaker 4>more people tuning in than you thought. Originally, we thought

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<v Speaker 4>it'd be two fifty to five hundred and it's been

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<v Speaker 4>about seven to fifty to one million. So that's letting

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<v Speaker 4>you know that people love it and people want to

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<v Speaker 4>be a part of it.

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<v Speaker 2>When it comes to TGL, it's a new simulator golf League.

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<v Speaker 2>It feels like the ticket sales might be capped right

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<v Speaker 2>because it's in this arena, So then you have to

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<v Speaker 2>really rely on those other two legs of the soul

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<v Speaker 2>that you were talking about, media and sponsorship is to

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<v Speaker 2>really really grow that business. How is that looking right now?

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<v Speaker 2>I mean, this is the first season, so you've just

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<v Speaker 2>gotten started.

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<v Speaker 4>We've gone started. What's happening is you've had more people

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<v Speaker 4>watching it. It has more people watching it, you end

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<v Speaker 4>up having more sponsors who want to be a part

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<v Speaker 4>of that. So it's actually gone far better than we thought.

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<v Speaker 4>And you know the only problem with it, I would

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<v Speaker 4>tell you is we lost our match a couple of

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<v Speaker 4>days ago. Yeah, I thought it would have been nice.

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<v Speaker 3>To would make it to the playoffs.

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<v Speaker 1>So we did.

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<v Speaker 4>We did, but Stevie Cohenes in the playoffs, Arthur Blanks

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<v Speaker 4>in the playoffs.

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<v Speaker 1>So we'll see who ends up winning.

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<v Speaker 4>That'll be a pretty nice championship for either one of them.

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<v Speaker 5>I'm just really into the fact that you can watch

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<v Speaker 5>it in two hours, like that's huge.

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<v Speaker 1>But that was the whole key to it.

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<v Speaker 3>That's a game changer.

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<v Speaker 4>No, it is, and that's exactly it, because the problem

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<v Speaker 4>I think that TV or media had with golf was

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<v Speaker 4>it was three or four or five hours. It was long,

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<v Speaker 4>it was fever So now that it's two hours, you've

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<v Speaker 4>got a lot more people watching, and they love it

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<v Speaker 4>and they love the interaction.

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<v Speaker 1>Between the players.

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<v Speaker 2>You've also invested in women's sports, and I know that

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<v Speaker 2>you're looking at that very carefully. Where are we in

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<v Speaker 2>the trajectory of the valuation of those teams?

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<v Speaker 3>Are we in like the second inning? The sixth inning?

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<v Speaker 1>I think you're in the first inning first, I really do.

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<v Speaker 4>If you think about it, five years ago, you could

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<v Speaker 4>have bought a women's soccer team for a million dollars.

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<v Speaker 4>Today they're trading around one hundred, one hundred and fifty million.

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<v Speaker 4>We've ended up starting to buy women's soccer teams in Europe,

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<v Speaker 4>and part of the reason for that is we think

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<v Speaker 4>right now they're under value, but we've invested in unrivaled.

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<v Speaker 4>You want to invest in women's sports, and the reason

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<v Speaker 4>you do so here's.

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<v Speaker 1>A nice little tidbit of information.

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<v Speaker 4>When Kaitlyn Clark played in the women's final in college,

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<v Speaker 4>you had close to nineteen million people who watch that.

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<v Speaker 4>By the way, that is more that I've ever watched

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<v Speaker 4>a Stanley Cup finals game, more that I've watched the

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<v Speaker 4>World Series game, right, And it's pretty much almost as

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<v Speaker 4>much as washing NBA finals.

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<v Speaker 3>So that that's great.

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<v Speaker 4>The fact that you ended up having a woman's NCAA

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<v Speaker 4>basketball game and you had all those people come, what

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<v Speaker 4>is telling you is there really is a change that's happening.

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<v Speaker 1>And that change is very simple.

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<v Speaker 4>When I was a kid, if I went to a

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<v Speaker 4>baseball game or a football game, my.

0:10:44.960 --> 0:10:46.880
<v Speaker 1>Dad didn't bring my sisters. It was him and I.

0:10:47.320 --> 0:10:49.920
<v Speaker 4>Today, the idea that you would not bring your daughters

0:10:50.320 --> 0:10:53.920
<v Speaker 4>is inconceivable to someone. And so because of that, your

0:10:54.000 --> 0:10:56.360
<v Speaker 4>daughters are going to games they're playing, so it's actually

0:10:56.360 --> 0:10:56.760
<v Speaker 4>been great.

0:10:56.920 --> 0:10:59.160
<v Speaker 5>Oh sorry the Stanley Cup that was her final scarlet.

0:10:59.200 --> 0:11:01.640
<v Speaker 5>But anyway, this is where I'm going to pair sports

0:11:01.679 --> 0:11:05.120
<v Speaker 5>with the macro environment. A lot of uncertainty. CEOs are

0:11:05.160 --> 0:11:07.280
<v Speaker 5>on the pause button all the way. How does that

0:11:07.720 --> 0:11:10.880
<v Speaker 5>and all the uncertainty in DC affects sports, Like, how

0:11:10.920 --> 0:11:12.200
<v Speaker 5>do you view through that lens?

0:11:12.520 --> 0:11:15.280
<v Speaker 1>I think it's the one thing that people it's immune.

0:11:16.480 --> 0:11:19.600
<v Speaker 4>I would never tell you something's immune, but I would

0:11:19.600 --> 0:11:21.640
<v Speaker 4>tell you for the short term, I think it is.

0:11:23.040 --> 0:11:25.000
<v Speaker 4>But part of that is because people want to be

0:11:25.320 --> 0:11:30.240
<v Speaker 4>part of something. They love sports, they love going so

0:11:30.320 --> 0:11:32.959
<v Speaker 4>I think you're always going to have that look. During COVID,

0:11:33.440 --> 0:11:35.840
<v Speaker 4>it was actually kind of interesting. During COVID, people wouldn't

0:11:35.840 --> 0:11:37.840
<v Speaker 4>come into the office, but they would.

0:11:37.640 --> 0:11:40.280
<v Speaker 1>Go to a stadium, they'd go to an arena.

0:11:39.920 --> 0:11:42.680
<v Speaker 4>They'd go to you know, it was outside, so you

0:11:42.760 --> 0:11:46.000
<v Speaker 4>still had thirty forty fifty thousand people showing up. What

0:11:46.120 --> 0:11:48.080
<v Speaker 4>that tells you is people want to be part of that,

0:11:48.480 --> 0:11:49.640
<v Speaker 4>and they're always going.

0:11:49.559 --> 0:11:51.120
<v Speaker 1>To want to be part of their sports team.

0:11:51.440 --> 0:11:54.360
<v Speaker 2>Do you find better value in sports assets right now

0:11:54.440 --> 0:11:58.240
<v Speaker 2>than in the conventional markets of public markets or private assets?

0:11:58.520 --> 0:12:00.480
<v Speaker 3>You know, debt anything else.

0:12:01.840 --> 0:12:05.679
<v Speaker 4>I think depending on where you're investing in sports, So

0:12:05.960 --> 0:12:08.480
<v Speaker 4>I think in our core business we're able to make

0:12:08.480 --> 0:12:11.200
<v Speaker 4>about ten to fifteen percent a year because really what

0:12:11.240 --> 0:12:11.840
<v Speaker 4>we're doing.

0:12:11.679 --> 0:12:12.959
<v Speaker 1>Is lending money.

0:12:13.040 --> 0:12:16.080
<v Speaker 4>I think in sports, especially in sort of emerging leagues,

0:12:16.480 --> 0:12:17.920
<v Speaker 4>you can make multiples of that.

0:12:18.040 --> 0:12:20.080
<v Speaker 1>You can make sort of ten twenty times for money.

0:12:20.480 --> 0:12:22.920
<v Speaker 4>And I think in sort of the Big Four, over

0:12:23.080 --> 0:12:26.600
<v Speaker 4>twenty years, the ir of that's been about eleven percent.

0:12:27.200 --> 0:12:29.760
<v Speaker 4>So if I think over the course next ten years,

0:12:29.800 --> 0:12:32.280
<v Speaker 4>I'm still going to make ten to fifteen in sort

0:12:32.280 --> 0:12:33.760
<v Speaker 4>of the Big Four, I would.

0:12:33.559 --> 0:12:37.679
<v Speaker 5>Do that interesting broadering out because for broader viewers, what

0:12:37.720 --> 0:12:40.280
<v Speaker 5>do you like in the non sports market right now?

0:12:41.559 --> 0:12:42.560
<v Speaker 1>Well, really what we love.

0:12:42.480 --> 0:12:44.959
<v Speaker 5>Is lending, yeah, and the recent we love lending and

0:12:44.960 --> 0:12:46.000
<v Speaker 5>a lot of other people right now.

0:12:46.120 --> 0:12:46.320
<v Speaker 1>Yeah.

0:12:46.320 --> 0:12:48.160
<v Speaker 4>But the reason for that is you're not taking the

0:12:48.200 --> 0:12:52.199
<v Speaker 4>equity risk, right, and if you can make in today's environment,

0:12:52.640 --> 0:12:56.600
<v Speaker 4>if you can make ten to fifteen percent, people want that, right.

0:12:56.720 --> 0:12:59.480
<v Speaker 1>It's very safe, you're not.

0:12:59.440 --> 0:13:02.360
<v Speaker 4>Taking as much risk, and when people are nervous, what

0:13:02.400 --> 0:13:05.319
<v Speaker 4>they want to do is take less risk. So for us,

0:13:05.559 --> 0:13:08.840
<v Speaker 4>we're able to lend and sort of generate those returns,

0:13:09.080 --> 0:13:10.280
<v Speaker 4>So that's really positive.

0:13:10.600 --> 0:13:13.120
<v Speaker 2>What do you need to see for people to be

0:13:13.320 --> 0:13:15.120
<v Speaker 2>on you to be more willing to take on risk?

0:13:15.160 --> 0:13:16.760
<v Speaker 3>Then at this point, I think what.

0:13:16.679 --> 0:13:19.000
<v Speaker 4>You want to see is you want to see positive

0:13:19.040 --> 0:13:21.840
<v Speaker 4>GDP growth. You want to sort of see an excess

0:13:21.880 --> 0:13:24.360
<v Speaker 4>of two percent. Part of it is really what's going

0:13:24.400 --> 0:13:25.520
<v Speaker 4>to happen to interest rates?

0:13:25.640 --> 0:13:25.880
<v Speaker 3>Yeah?

0:13:25.960 --> 0:13:26.160
<v Speaker 1>Right.

0:13:26.240 --> 0:13:28.920
<v Speaker 4>The lower rates are, the more people are going to

0:13:28.920 --> 0:13:33.880
<v Speaker 4>take risk because there's just more capital. The higher rates are,

0:13:34.360 --> 0:13:36.440
<v Speaker 4>the more people are just waiting. And that's sort of

0:13:36.440 --> 0:13:37.520
<v Speaker 4>what you're seeing today.

0:13:37.920 --> 0:13:39.520
<v Speaker 5>I love you just as we wrap up, get your

0:13:39.520 --> 0:13:42.920
<v Speaker 5>perspective on the uncertainty that we're seeing in the markets

0:13:42.920 --> 0:13:44.880
<v Speaker 5>and the economy today versus any other time.

0:13:44.920 --> 0:13:47.000
<v Speaker 3>Like you've lived through a lot of cycles. How does

0:13:47.040 --> 0:13:50.040
<v Speaker 3>this compare? Oh I don't think this is that big

0:13:50.080 --> 0:13:50.400
<v Speaker 3>of adeo.

0:13:50.600 --> 0:13:51.280
<v Speaker 1>No, I really do.

0:13:52.360 --> 0:13:56.400
<v Speaker 4>You've had real recessions. You've had real issues in my career.

0:13:56.960 --> 0:14:00.280
<v Speaker 4>I think what you're looking at today is little bit

0:14:00.280 --> 0:14:02.560
<v Speaker 4>of what you said. People are nervous, So people are waiting.

0:14:03.040 --> 0:14:05.760
<v Speaker 4>The real question is how long do they wait? Do

0:14:05.880 --> 0:14:08.280
<v Speaker 4>they wait three months, six months, a year, two years.

0:14:08.480 --> 0:14:10.959
<v Speaker 4>If you're waiting a long time, then you've got a

0:14:11.000 --> 0:14:14.200
<v Speaker 4>real recession. If it's three to six months, then what

0:14:14.280 --> 0:14:17.800
<v Speaker 4>you've got is sort of GDP that's flat up one percent.

0:14:18.640 --> 0:14:21.160
<v Speaker 4>I would be more nervous if six months from now

0:14:21.200 --> 0:14:25.680
<v Speaker 4>I'm back, and in essence people are still nervous, right right,

0:14:25.800 --> 0:14:27.520
<v Speaker 4>that's what you've got to look at.

0:14:27.680 --> 0:14:29.080
<v Speaker 1>So that's what I would try.

0:14:28.920 --> 0:14:30.480
<v Speaker 2>To do, and of course it all depends on what

0:14:30.560 --> 0:14:33.440
<v Speaker 2>this guy on the screen says and does to get

0:14:33.520 --> 0:14:34.080
<v Speaker 2>us to that.

0:14:34.200 --> 0:14:36.200
<v Speaker 3>Six months suck and we're obviously going back now in

0:14:36.280 --> 0:14:38.600
<v Speaker 3>six months. So thank you for a three Thank you,

0:14:38.880 --> 0:14:40.840
<v Speaker 3>Thank you so much, a pledgure spending time with you.

0:14:40.920 --> 0:14:44.560
<v Speaker 2>Mark Lasri is chairman and CEO of Avenue Capital