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Speaker 1: Hello, and welcome to the Bloomberg Business of Sports podcast,

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Speaker 1: and we explore some of the big money issues in

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Speaker 1: the world of sports on like the Bar, and we've

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Speaker 1: got a lot to talk about. We're going to talk

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Speaker 1: about teams up for sale, who can buy them, the

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Speaker 1: NBA media rights and with us our own Bloomberg's Brian

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Speaker 1: Japata and Jerry Smith. Guys, thank you so much for

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Speaker 1: joining us on the Bloomberg Business of Sports. It's great

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Speaker 1: to be here, thanks for having us. Let's let's start

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Speaker 1: with teams that are up for sale, and Brian, I'm

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Speaker 1: gonna start with you. Uh. Let's start with the teams

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Speaker 1: that are out there, uh, that have really piqued the

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Speaker 1: interest of a lot of people. Yeah, I mean, I

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Speaker 1: think we have to start with the Washington commanders of

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Speaker 1: the NFL. UM. They're up for sale, and right now

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Speaker 1: reports are out there that it could be a six

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Speaker 1: billion dollar deal, which as we know in the Broncos

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Speaker 1: sold for four point six billion, so we're talking of

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Speaker 1: record by leaps and bounds here. Um. And one of

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Speaker 1: the since perhaps for that is because one of the

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Speaker 1: people who is reportedly interested in bidding is not other

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Speaker 1: than that Amazon's Jeff Bezos obviously one of the world's

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Speaker 1: richest people, and he has basically an unlimited firepower as

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Speaker 1: far as UH as far as bidding here, so uh,

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Speaker 1: combining perhaps with Jay Z, perhaps with Matthew McConaughey, UM,

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Speaker 1: they're out there, but Bezos will be the bulk of this.

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Speaker 1: There are other reported interested bidders, but the Washington Commanders

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Speaker 1: are really the one to watch. Brian we here so

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Speaker 1: many times is this team is going to be up

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Speaker 1: for sale for X amount of money, and everybody out

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Speaker 1: there is like, who in the world would pay that

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Speaker 1: much money for that? But then by the time if

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Speaker 1: they ever have to sell the team, they're always making

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Speaker 1: a profit. Yeah. I mean we were just talking, I

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Speaker 1: think in the show last week about the Phoenix Suns sale.

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Speaker 1: Four billion dollar valuation for the Phoenix Suns and the

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Speaker 1: w NBA's mercury and that's a really large amount for

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Speaker 1: uh Phoenix franchise. Um, it's it's been pretty staggering. UM.

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Speaker 1: We ad the Bloomberg Billionaires Index have actually had to

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Speaker 1: revalue UM some of our billionaires multiple times this year

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Speaker 1: because the valuations of these franchises just keep going up.

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Speaker 1: UM it's been pretty incredible to see in a year

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Speaker 1: where there's been a lot of wealth loss. UM, those

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Speaker 1: who only sports franchises seemed to be relatively immune from that.

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Speaker 1: Another team up for sale soccer or football as they

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Speaker 1: say overseas, Manchester United right now. They are owned by

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Speaker 1: the Glazer family. They put the club up for sale

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Speaker 1: last month. Some fans have been protesting about the way

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Speaker 1: the Glazier family has been handling that. Bryan, Yeah, I

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Speaker 1: wouldn't say that that menu fans really like the Glazers

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Speaker 1: very much right now. Jim Ratcliffe is a potential suitor. UM,

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Speaker 1: that's gonna be interesting, interesting, want to watch. His name

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Speaker 1: was also voted for Chelsea, although we didn't ultimately get that. Um,

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Speaker 1: it's possible that Saudi Arabia could be involved again. They've

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Speaker 1: obvious he has shown that they're willing to spend for

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Speaker 1: marquee names in sports. David Duca's names to float out there.

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Speaker 1: Obviously he's going to need a partner. Um, he's not

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Speaker 1: quite rich enough to to compare with some of these billionaires. UM,

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Speaker 1: so that one will be will be interesting to want

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Speaker 1: to want to watch. And obviously man You is publicly

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Speaker 1: traded company, so as as another wrinkle, Um, you can

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Speaker 1: kind of watch in real time as as fans and

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Speaker 1: stockholders react to the to the news. And by the way,

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Speaker 1: if you don't know fans out there, Uh, Sir Jim

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Speaker 1: Ratcliffe is Britain's richest man. So yeah, he gets the

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Speaker 1: third title when you got all that money. What happens

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Speaker 1: also is that when the teams are up for sale,

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Speaker 1: one thing that is built into the cake or baked

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Speaker 1: into it. Uh, it involves the media rights and and Jerry,

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Speaker 1: that's that's something I want to talk about. Uh, let's

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Speaker 1: start with the future of regional sports networks. I'm not

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Speaker 1: so sure. It looks very good for a lot of teams. Yeah,

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Speaker 1: the regional sports networks business has really challenged. UM. You know,

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Speaker 1: a lot of the revenue that they get comes from

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Speaker 1: fees they get from cable companies, and as we all know,

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Speaker 1: the number of people subscribing to cable TV is declining. UM.

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Speaker 1: In fact that the client is accelerating. So they're really

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Speaker 1: under a lot of pressure. Um, these these regional sports

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Speaker 1: networks because they're also on the other side of the coin.

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Speaker 1: They are spending more and more on sports rights and

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Speaker 1: that gets to the conversation we were just having where

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Speaker 1: sports team franchises the value keeps going up, in large

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Speaker 1: part because the money that these teams are getting from

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Speaker 1: media companies keeps going up. UM. But yeah, the regional

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Speaker 1: sports network business is going to be something to watch

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Speaker 1: in three UM. Sinclair has owns the largest number of

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Speaker 1: regional sports channels and there's, um, you know, a lot

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Speaker 1: of questions about the future of these businesses, and you

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Speaker 1: know this goes this really ties into everything in the

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Speaker 1: sports business ecosystem because if you think about if the

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Speaker 1: regional sports networks can no longer afford to pay more

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Speaker 1: and more UH in rights fees to these teams, that

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Speaker 1: affects everything including how much players are getting paid on

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Speaker 1: these teams. So it's gonna be a big story to

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Speaker 1: watch what happens with the regional sports networks UM in

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Speaker 1: the coming year three UM. You know, individual teams are

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Speaker 1: even looking at doing their own directed consumer service and

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Speaker 1: know that the Clippers have are experimenting with that and

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Speaker 1: other teams are as well. UM. So I think there's

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Speaker 1: gonna be a lot of change in the regional sports

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Speaker 1: networks next year. Brian I mentioned about the sale involving

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Speaker 1: the Suns, which brings us to the NBA media rights deal.

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Speaker 1: What is that the big picture on that and is

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Speaker 1: that going to blow up? Yeah? You know, the that's

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Speaker 1: gonna be the next big sports deal to watch is

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Speaker 1: the NBA, UH, ESPN and Turner which is owned by

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Speaker 1: Warner Brothers Discovery. Uh. They own the rights to the NBA.

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Speaker 1: UM and I think a lot of people expect that

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Speaker 1: they will hold onto those rights. But some of the

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Speaker 1: big questions are, um, you know, do some of the

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Speaker 1: big tech companies get a slice of that it? Does

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Speaker 1: the NBA carve out a package for someone like Amazon

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Speaker 1: or Apple or YouTube? Um? You know, that's really an

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Speaker 1: interesting question. Also if you've we've been listening to the

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Speaker 1: heads of these companies, these media companies. UH. David Zaslov,

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Speaker 1: the head of Warner Brothers Discovery and said, you know,

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Speaker 1: we want to do a deal with the NBA, but

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Speaker 1: we wanted to be a deal for the future. And

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Speaker 1: I think a lot of people read into that that

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Speaker 1: there's going to be more streaming UM on these games.

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Speaker 1: So if you want to watch the NBA in the future,

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Speaker 1: you may have to go to HBO, Max or whatever

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Speaker 1: they decided to call their combined streaming service ESPN Plus

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Speaker 1: will probably get some, um some NBA games. But I

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Speaker 1: think the big question is is there going to be

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Speaker 1: a third or fourth media partner for the NBA. Is

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Speaker 1: someone like Amazon, which has demonstrated with Thursday Night Football

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Speaker 1: this season that uh, you know, they can be successful

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Speaker 1: in broadcasting really high profile sports rights. Does Amazon get

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Speaker 1: a piece? Um? You know Apple and YouTube? A lot

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Speaker 1: of people did not think about YouTube in the context

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Speaker 1: of sports, and they just recently won the rights to

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Speaker 1: NFL Sunday tickets. So now, uh, you know, Google, which

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Speaker 1: owns YouTube is a is a big player in sports

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Speaker 1: as well. Could we see someone like NBC or Fox

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Speaker 1: look at the NBA. I think it's gonna be something

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Speaker 1: that is going to be very much SCRUTINIZEDE is what

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Speaker 1: happens with NBA rights? And Jerry, we're talking about the league.

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Speaker 1: The NBA preparing to sell about a billion dollars in

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Speaker 1: exclusive streaming rights, Which brings me to the question, old

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Speaker 1: man bar like me and I bring it up all

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Speaker 1: the time. I'm just you to simply cable and those

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Speaker 1: days look to be well numbered, right, I mean there

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Speaker 1: is more and more street Uh if you don't have cable.

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Speaker 1: There's more and more sports that you can watch on

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Speaker 1: streaming service. But the big major sports leagues are really

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Speaker 1: do seem committed to traditional television. If you look in

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Speaker 1: the NFL, which is the big tajuna, they did long

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Speaker 1: term deals with all the major broadcasters, so PBS, NBC, Fox, UH,

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Speaker 1: They're still going to have NFL games for a long

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Speaker 1: long time. What we're seeing more of is sort of

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Speaker 1: the smaller leagues that are experimenting more with streaming. The

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Speaker 1: best example of that was Major League Soccer in two

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Speaker 1: did a big deal with Apple, where now if you

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Speaker 1: want to watch Major League stccer in UH three, you

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Speaker 1: need to have UM, you need to go to Apple.

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Speaker 1: It's not going to be on ESPN anymore. So that

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Speaker 1: is really an interesting UH develop men were starting to

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Speaker 1: see of of UM these leagues that are starting to

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Speaker 1: dip their toes into streaming more and more. And Brian.

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Speaker 1: One of the people that is a big player in

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Speaker 1: buying minority shares UH is Lebron James with the Los

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Speaker 1: Angeles Lakers. Now he's almost thirty eight, but according to

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Speaker 1: some of his teammates, he wants to play until he's

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Speaker 1: forty five. So when he hits that number at can

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Speaker 1: Lebron James Kenny, Kenny Polar Michael Jordan's and and get

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Speaker 1: his own team. That's a good question. I mean, I

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Speaker 1: think a lot is going to depend on what he

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Speaker 1: does with with his salary and how he invests over

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Speaker 1: the next several years. But I mean Lebron has certainly

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Speaker 1: been one of the most savvy business people in UM

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Speaker 1: among the players in any league frankly um, so I

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Speaker 1: certainly could see him at least by by minority stakes,

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Speaker 1: if not try to do an outright um majority per

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Speaker 1: per just or kind of be the face UM like

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Speaker 1: Michael Jordan's on a on a franchise going forward. Certainly

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Speaker 1: within the realm of possibility, he would be the NBA

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Speaker 1: at least definitely number one option in my book to

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Speaker 1: watch for the next five ten years. And Brian, what

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Speaker 1: about a person like a Tom Brady. Now he had retired,

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Speaker 1: then he came back. Uh, we don't know what's going

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Speaker 1: to happen now after this season. We know Tom Brady

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Speaker 1: loves pickleball, so he's he's already put his toe in that.

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Speaker 1: But can he tom Brady the goat invest in an

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Speaker 1: NFL team or or even an NBA team. Yeah. I mean,

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Speaker 1: I think that one of the trends that we're seeing

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Speaker 1: and is probably only going to get more prominent going forward,

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Speaker 1: is the fact of a lot of minority interests in

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Speaker 1: coming in and buying, you know, something like a one

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Speaker 1: percent to five percent stake in a team. I mean

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Speaker 1: it's not obviously going to be making the executive decisions,

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Speaker 1: but kind of just owning a ease of these franchises, which,

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Speaker 1: as we've talked about, keep going up in value, continue

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Speaker 1: to be more valuable, and you know, spreading uh, you know,

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Speaker 1: spreading the ownership around is going to be I think

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Speaker 1: a big theme even with the Broncos sale. Obviously Rob Walton,

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Speaker 1: heir to the Walmart fortune, could just buy it out right,

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Speaker 1: but he also had a various UM partners like Melody

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Speaker 1: Hopson of Aerial Investments, UM, Condoleeza, Rice Lewis, Hamilton's. I mean,

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Speaker 1: all of them were involved buying a very small, small piece,

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Speaker 1: and I think we'll continue to see that going for

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Speaker 1: the NBA. Actually, just UM allowed sovereign wealth funds, pension funds,

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Speaker 1: and endowments to also invest in the in the league.

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Speaker 1: So any any number of options going forward, and then

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Speaker 1: they're spending their pools of wealth. And Brian, let's give

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Speaker 1: some love to Major League Baseball because the Washington Nationals

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Speaker 1: and the Los Angeles Angels, there's a lot of chatter

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Speaker 1: about those two teams up for sale. Yeah, those are

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Speaker 1: others that the billionaire class is circling for sure. Ted Leonsis,

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Speaker 1: who already owns other Washington Pro sports franchises, is in

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Speaker 1: the Nationals along with David Rubinstein Los Angeles Angels. Patrick

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Speaker 1: stuns Young is potentially interested in buying them. Uh, he

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Speaker 1: owns a small piece in the Lakers, which I believe

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Speaker 1: he actually bought out Magic Jonathan Steak over there. So

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Speaker 1: a lot of these, all these big names in the

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Speaker 1: various regions are interested in in adding to their portfolio. Um,

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Speaker 1: and for good reason, Jerry back to you. It doesn't

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Speaker 1: make a difference. We're we're talking about baseball, football, basketball, hockey.

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Speaker 1: One thing that people do and a lot of people

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Speaker 1: like me, we are into sports betting. We'll go online

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Speaker 1: and we'll go to our favorite sites and we'll place

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Speaker 1: our bets. What is the future that you see for

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Speaker 1: sports betting? Well, sports betting is about four years old

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Speaker 1: and was when the Supreme Court really opened up sports

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Speaker 1: betting outside of uh Las Vegas. So we're seeing more

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Speaker 1: and more states legalized sports betting. Massachusetts is most recent,

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Speaker 1: but there's a few really big states that have not

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Speaker 1: legalized sports betting yet. In November, California voters rejected a

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Speaker 1: referendum that would have allowed it, so online sports betting

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Speaker 1: is still banned in California, which is the biggest state.

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Speaker 1: I think a lot of people in the industry are

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Speaker 1: hoping that Texas legalized in sports betting in that would

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Speaker 1: be a very big state um to open up. But

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Speaker 1: every time a new state opens up these sports betting

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Speaker 1: apps like FanDuel and Draft Kings and Caesars, they lose

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Speaker 1: a lot of money acquiring customers. They spend a lot

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Speaker 1: of money on advertising, a lot of money on offering

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Speaker 1: free debts to entice people to gamble. So on one hand,

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Speaker 1: they're expanding into new markets. On the other hand, they're

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Speaker 1: starting to frustrate investors because they're really not anywhere near

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Speaker 1: close to profitability and uh, you know, having to acquire

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Speaker 1: customers and new states is very expensive. So that is

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Speaker 1: something we've seen. Wall Street has really hours on the industry.

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Speaker 1: Draft kings and stock price was down maybe about from

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Speaker 1: what it's high in March. So the investors are starting

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Speaker 1: to ask these sports betting companies, when are you finally

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Speaker 1: going to start turning a profit? And Brian, I'm back

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Speaker 1: to you about the sports betting. Many sports teams with

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Speaker 1: the sponsorship money, is that baked into the cake also

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Speaker 1: for the sales? Yeah, I mean I think there's just

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Speaker 1: there's just so many opportunities to monetize. I think that's

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Speaker 1: why you're seeing private equity certainly gravitate to UM sports ownership. UM.

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Speaker 1: There's there's any number of levers that they're able to pull,

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Speaker 1: and it certainly seems like you know, whether it's UM

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Speaker 1: streaming rights, whether it's betting, whether it's sponsorship opportunities. UM,

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Speaker 1: there's really a lot of ways that they can that

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Speaker 1: they can that they can get money and extract money

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Speaker 1: out of the fan base and the UH and the franchises,

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Speaker 1: UM in good times and bad because UH, you know,

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Speaker 1: whether we're in a good economic time or not. UM,

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Speaker 1: you know, sports goes on and UH and people keeping

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Speaker 1: for their for their teams and Brian and to also Jerry,

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Speaker 1: and I'm gonna start with Brian. One of the things

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Speaker 1: you're seeing in in baseball, especially in baseball, you're seeing

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Speaker 1: those big, big contracts, especially like to Aaron Judge, and

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Speaker 1: I can go on and on and people say, Okay,

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Speaker 1: that's great in the near future, but down the road,

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Speaker 1: you know you're gonna be paying almost you know, billion,

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Speaker 1: a million dollars plus for a forty plus year old player.

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Speaker 1: Are these teams hoping to make the money off of

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Speaker 1: the souvenir sales like jersey sales and things like that.

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Speaker 1: I mean, I think one of the main things that

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Speaker 1: I could focused on is Steve cohen Uh in the

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Speaker 1: New York Matts. I mean, he's basically changing the entire

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Speaker 1: model of MLB ownership. He basically does not care that

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Speaker 1: he has to pay a steep luxury tax. He's saying,

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Speaker 1: I'm going to go out and get the best players.

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Speaker 1: Didn't get Aaron Judge from the Yankees, but you know,

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Speaker 1: he got any number of players. He's he's paying for pictures,

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Speaker 1: he's paying for for for hitters, and he's just trying

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Speaker 1: to create the best lineup possible. And with the idea

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Speaker 1: being build a build a roster that's going to compete

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Speaker 1: for World Series and we'll make it up down the

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Speaker 1: road with a really strong franchise um that that's associated

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Speaker 1: with winning, and we'll see how that plays out. But

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Speaker 1: as the billionaire classics used to gravitate towards sports ownership,

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Speaker 1: um as as families who have on the franchises cash out,

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Speaker 1: I think we're gonna see an interesting break here between

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Speaker 1: those who can spend whatever it takes and those who

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Speaker 1: are trying to run it a little bit more like

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Speaker 1: a business. I know we're running out of time, but

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Speaker 1: I'm gonna put you guys on the spot here. I'm

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Speaker 1: gonna start with Jerry, and then my question is to

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Speaker 1: both of you, And we'll start with Jerry. What do

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Speaker 1: you see in where you're gonna tell yourself? Are you

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Speaker 1: kidding me that this really happened in the business of sports? Wow?

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Speaker 1: You put me on the spot here. Um, that's a

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Speaker 1: good question, you know, I think, Um, I think the

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Speaker 1: NBA deal is just going to be so much in

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Speaker 1: the focus of the industry right now. And you know,

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Speaker 1: I think that if Turner does not get the does

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Speaker 1: not renew its NBA rights, I think that would be

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Speaker 1: shocking to a lot of people because for a couple

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Speaker 1: of reasons. One, I mean, this is a relationship that

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Speaker 1: Turner has had with the NBA for for many decades. UM,

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Speaker 1: So there's a long relationship between the company in the league.

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Speaker 1: And also the other thing is is that Warner Brothers

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Speaker 1: Discovery really needs the NBA in a lot of ways. UM.

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Speaker 1: T n T is the channel where they air their games,

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Speaker 1: and that is a channel that doesn't have too much

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Speaker 1: else on it besides sports, and the NBA is the

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Speaker 1: biggest draw for t NT. So if they do not

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Speaker 1: renew at the NBA, I think that would be a

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Speaker 1: shock to a lot of people. Brian, same question to you, sir.

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Speaker 1: I'm gonna go back to kind of where I started

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Speaker 1: with the Washington Commanders. That's the one I'm watching, um,

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Speaker 1: And and we can very easily see a fairly shocking

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Speaker 1: headline number as far as the valuation of the Commanders,

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Speaker 1: which in turn would have a ripple effect at very

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Speaker 1: least across the NFL, if not the rest of sports

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Speaker 1: valuations more broadly. UM, if you start to get get

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Speaker 1: numbers that are really quite staggering, UM, it could be

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Speaker 1: really interesting for for the rest of the sporting world.

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Speaker 1: As these other teams go up for sale in the

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Speaker 1: next couple of years. Brian Japata and Jerry Smith our

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Speaker 1: own Bloomberg. They are way smarter than I am. That's

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Speaker 1: why I always count on them for their knowledge. Thank

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Speaker 1: you so much, gentlemen for joining us on the Bloomberg

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Speaker 1: Business of Sports. This has been the Bloomberg Business of

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Speaker 1: Sports podcast and we explore some of the big money

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Speaker 1: issues in the world of sports on Michael Barr. You

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Speaker 1: can follow me on Twitter at Dick bar Sports. By

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Speaker 1: the way, you can download this show every Monday day,

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Speaker 1: Wednesday and Thursday and download them wherever you get your

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Speaker 1: podcast