WEBVTT - Bloomberg Surveillance TV: August 26th, 2026 0:00:02.430 --> 0:00:06.710 Bloomberg Audio Studios. Podcasts Radio News. 0:00:11.619 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along 0:00:15.480 --> 0:00:18.640 with Lisa Abramowitz and Anne-Marie Hordern. Join us each day 0:00:18.700 --> 0:00:22.189 for insight from the best in markets, economics and geopolitics. 0:00:22.510 --> 0:00:24.889 From our global headquarters in New York City, we are 0:00:24.950 --> 0:00:27.910 live on Bloomberg Television weekday mornings from 6 to 9 a.m. 0:00:27.970 --> 0:00:28.290 Eastern. 0:00:28.770 --> 0:00:31.930 Subscribe to the podcast on Apple, Spotify or anywhere else 0:00:31.970 --> 0:00:34.699 you listen. And as always, on the Bloomberg Terminal and 0:00:34.720 --> 0:00:37.980 the Bloomberg Business App. We begin this hour with stocks 0:00:38.020 --> 0:00:40.979 and yields holding steady ahead of more earnings and inflation 0:00:41.000 --> 0:00:43.740 data later this morning. Marvin Lowe of State Street writing, 0:00:43.760 --> 0:00:45.760 while recent data has thrown a bit of cold water 0:00:45.780 --> 0:00:47.800 on the strength of the economy, we don't find a 0:00:47.860 --> 0:00:49.880 reason to fade the view that the Fed will still 0:00:49.940 --> 0:00:52.680 need to tighten before year end. Marvin joins us now 0:00:52.700 --> 0:00:55.080 for more. Marvin, good morning, sir. It's good to see you. 0:00:55.100 --> 0:00:57.180 Do you expect to get a guide from Kevin Walsh 0:00:57.200 --> 0:00:58.220 in a few days' time on that? 0:00:59.700 --> 0:01:00.040 You know what? 0:01:01.150 --> 0:01:03.690 We're not going to hear from him with regard to 0:01:03.810 --> 0:01:05.649 what he thinks September is going to look like or 0:01:05.690 --> 0:01:07.810 even December is going to look like. All we can 0:01:07.830 --> 0:01:09.790 hope for is that we get a little bit more 0:01:09.870 --> 0:01:13.770 sense into what his thinking is, how the Fed's going 0:01:13.810 --> 0:01:19.580 to actually approach the concept of the reaction function, and 0:01:19.620 --> 0:01:22.619 really to give the market a little bit more comfort 0:01:22.640 --> 0:01:26.080 that July is not the way the Fed operates and 0:01:26.160 --> 0:01:27.720 not the way the new chairman operates. 0:01:28.060 --> 0:01:30.020 How do you think the Fed operates and the new 0:01:30.040 --> 0:01:30.780 chairman operates? 0:01:31.950 --> 0:01:35.330 Well, you know, I think it's still, you know, generally 0:01:35.510 --> 0:01:38.100 as divided as we saw at the beginning of this year. 0:01:38.420 --> 0:01:41.419 Those opinions are out there. You know, certainly the data 0:01:42.040 --> 0:01:44.380 has given the Fed a little bit more room to 0:01:44.459 --> 0:01:48.160 think about things. But you continue to have half of 0:01:48.220 --> 0:01:52.050 the committee that thinks that there is a fairly low 0:01:52.110 --> 0:01:54.710 hurdle with which they should hike rates. And I think 0:01:54.730 --> 0:01:56.670 that that winds up being the theme that we take 0:01:56.810 --> 0:01:59.090 into the latter part of this year. 0:01:59.730 --> 0:02:01.890 To your point, Marvin, we even heard from Susan Collins, 0:02:01.910 --> 0:02:04.620 somebody who previously had been in the hold camp. Yesterday, 0:02:04.660 --> 0:02:06.360 she had an essay where it seemed to be a 0:02:06.720 --> 0:02:09.260 bit more hawkish, saying that the onus is on the 0:02:09.300 --> 0:02:11.870 inflation data to keep getting better for her to remain 0:02:11.910 --> 0:02:14.669 on hold. Otherwise, it might be appropriate to tighten. Where 0:02:14.730 --> 0:02:17.210 is the inflation coming from if it isn't coming from 0:02:17.330 --> 0:02:19.570 oil prices, if it isn't coming from some of these 0:02:19.610 --> 0:02:20.710 supply-side shocks? 0:02:22.050 --> 0:02:22.889 Yeah, I mean, for sure. 0:02:23.010 --> 0:02:26.730 After five plus years of this kind of embedded inflation, 0:02:28.130 --> 0:02:31.450 that is the concern of the Fed. Forward guidance and 0:02:31.470 --> 0:02:36.200 forward expectations around inflation is ultimately the self-fulfilling prophecy. And 0:02:36.220 --> 0:02:38.600 I think that that's the risk, that we've got a 0:02:38.700 --> 0:02:42.859 Fed that theoretically is remaining patient in the face of 0:02:42.880 --> 0:02:46.740 an inflation target, which is starting to mean nothing. And 0:02:47.040 --> 0:02:49.970 that is influences both the services part of the economy, 0:02:50.000 --> 0:02:52.470 which certainly is the bigger part of what we wind 0:02:52.550 --> 0:02:56.250 up generating wealth from in this country. And it's something 0:02:56.310 --> 0:02:59.810 that standing on the sidelines becomes less and less acceptable. 0:03:00.650 --> 0:03:02.450 Isn't this a data story, though, and less of a 0:03:02.470 --> 0:03:04.690 Kevin Warsh story? I mean, what can you learn from 0:03:04.730 --> 0:03:07.340 Kevin Warsh that gives you a sense of whether or 0:03:07.400 --> 0:03:09.620 not the degree to which they are prepared to hike 0:03:09.700 --> 0:03:10.480 rates later this year? 0:03:11.840 --> 0:03:15.060 Yeah, I mean, certainly data is always going to be 0:03:15.080 --> 0:03:17.650 an important part of this discussion. And we've got this 0:03:17.690 --> 0:03:20.630 kind of little bit of soft patch in the middle 0:03:20.650 --> 0:03:23.169 of the summer. We'll see what August inflation looks like. 0:03:23.750 --> 0:03:26.630 Our readings kind of around August inflation kind of in 0:03:26.650 --> 0:03:30.190 a more real-time perspective is that it is coming back 0:03:30.610 --> 0:03:34.010 to a certain degree. So that hat is not completely 0:03:34.060 --> 0:03:37.260 shoved back in the bag. But it also is a 0:03:37.340 --> 0:03:38.220 story about U.S. 0:03:38.260 --> 0:03:38.520 Growth. 0:03:38.560 --> 0:03:43.380 It also is a story about demand for duration capital 0:03:43.400 --> 0:03:43.990 in the U.S. 0:03:44.190 --> 0:03:44.810 And globally. 0:03:45.630 --> 0:03:48.650 And what we need to learn from Warsh is how 0:03:48.710 --> 0:03:51.810 he parses the data as well as kind of this 0:03:52.050 --> 0:03:55.930 R-star capital demand perspective. And, you know, clearly the Treasury 0:03:55.970 --> 0:04:00.320 Secretary is throwing his hat in the ring around that 0:04:00.420 --> 0:04:03.760 longer-term duration story and that broader demand for capital. And 0:04:04.040 --> 0:04:06.560 for me, it's always been part of why we need 0:04:06.580 --> 0:04:07.680 to think about tightening, and. 0:04:07.620 --> 0:04:08.480 That hasn't changed. 0:04:08.740 --> 0:04:11.180 Marvin, do you care that Drucker Miller used AI? way 0:04:11.200 --> 0:04:12.800 in place. That's where the buzz. 0:04:12.660 --> 0:04:13.200 Is right now. 0:04:13.880 --> 0:04:14.720 Yeah, I don't. 0:04:15.210 --> 0:04:17.430 I loved your conversation because I have the same on 0:04:18.150 --> 0:04:20.130 the trading desk every day. I still write all of 0:04:20.190 --> 0:04:24.150 my work. I find that the actual writing helps me think. 0:04:25.010 --> 0:04:27.170 I think my analysis improves as a result of that. 0:04:27.190 --> 0:04:30.650 So call me a Luddite. I'm not necessarily willing to 0:04:30.750 --> 0:04:34.420 allow it to write my analysis. But Stanley Druckenmiller is 0:04:35.140 --> 0:04:38.490 has all the street credit that is needed. And it's 0:04:38.589 --> 0:04:40.650 fine that he uses AI. 0:04:41.089 --> 0:04:44.560 Stay with us. More Bloomberg surveillance coming up after this. 0:04:53.730 --> 0:04:55.670 A small move in the grand scheme of things, but 0:04:56.210 --> 0:04:59.970 a stronger economy and a slightly hotter economy. If you 0:04:59.990 --> 0:05:02.930 look at the strength, personal income better than expected, personal 0:05:02.950 --> 0:05:06.839 spending better than expected. And as for the heat, PCE 0:05:07.060 --> 0:05:09.599 coming in just a bit firmer than anticipated on the headline. 0:05:09.779 --> 0:05:12.620 One more payrolls report on the 4th, a week later, 0:05:12.880 --> 0:05:15.339 a CPI print. Stephanie Roth of Wolf Research joins us 0:05:15.380 --> 0:05:16.560 now for more. Stephanie, good morning. 0:05:16.660 --> 0:05:17.100 Good morning. 0:05:17.140 --> 0:05:19.260 Have you seen enough to stop this Fed from hiking 0:05:19.440 --> 0:05:20.020 in September? 0:05:20.700 --> 0:05:23.300 Yes, I think so. I mean, barely so, but I 0:05:23.339 --> 0:05:26.969 think so. I mean, today's core PC just barely rounded 0:05:27.010 --> 0:05:31.390 down to 0.2. It's 0.2455, so we almost got a 0.3, 0:05:31.390 --> 0:05:33.620 which would have potentially rattled markets just to some extent 0:05:33.640 --> 0:05:36.250 as everybody sees their Bloomberg screen. I think we're in 0:05:36.270 --> 0:05:37.870 an environment where the data will look a little bit 0:05:37.910 --> 0:05:39.730 cooler in the next couple of prints, such that the 0:05:39.770 --> 0:05:40.990 Fed can avoid hiking and. 0:05:40.990 --> 0:05:41.650 Do it credibly. 0:05:42.310 --> 0:05:45.130 So we're going to see another round of inflation data. 0:05:45.230 --> 0:05:47.730 That will probably come in on the softer side. The 0:05:47.830 --> 0:05:48.910 seasonals are in our favor. 0:05:49.730 --> 0:05:52.170 The Fed officials all know that at the end of September, 0:05:52.190 --> 0:05:52.930 we're going to get. 0:05:53.070 --> 0:05:56.300 Some revisions to how they're calculating PCE. In today's print, 0:05:57.080 --> 0:06:02.080 portfolio management was up 5.6%. That is a piece of 0:06:02.140 --> 0:06:04.820 the inflation data that's going to change in a couple 0:06:04.839 --> 0:06:07.960 of in a couple of weeks, therefore it might bring 0:06:08.000 --> 0:06:09.159 some downward pressure to the data. 0:06:09.180 --> 0:06:11.140 So overall, we're likely to see. 0:06:11.060 --> 0:06:12.979 An environment where the labor market data look a little 0:06:13.000 --> 0:06:16.580 bit softer from here and the inflation data also cool 0:06:16.640 --> 0:06:19.850 such that they can just sort of wait and see 0:06:20.080 --> 0:06:21.440 and therefore they don't ultimately have to hike. 0:06:21.620 --> 0:06:23.830 Are you looking for a wait and see speech on Friday? 0:06:24.630 --> 0:06:26.330 Yeah, I think he's not going to say a whole lot. 0:06:26.500 --> 0:06:28.080 I mean, granted, of course, it's not Q & A, 0:06:28.100 --> 0:06:31.159 which is what tends to sort of create some market volatility. 0:06:31.540 --> 0:06:33.460 He'll probably correct some of the. 0:06:33.820 --> 0:06:35.900 Points that the market didn't like last time. 0:06:35.960 --> 0:06:39.820 He'll probably talk about 2% is for sure the inflation target. 0:06:39.839 --> 0:06:42.120 We're not looking at changing the inflation measures, at least 0:06:42.140 --> 0:06:45.600 at this point. He'll correct the reasons as to why 0:06:45.640 --> 0:06:49.060 they did not end up hiking in July. They were 0:06:49.080 --> 0:06:51.500 probably looking for softer inflation data. And then outside of that, 0:06:51.620 --> 0:06:52.700 I don't think we're going to hear a whole lot. 0:06:53.020 --> 0:06:55.640 Do you think that the emphasis still will be on 0:06:56.830 --> 0:06:59.430 remaining on hold, that otherwise this would be a Fed 0:06:59.470 --> 0:07:01.890 that would be desiring to hike rates? In other words, 0:07:02.450 --> 0:07:05.380 are we going to see the hawk still dominate the discussion, 0:07:05.620 --> 0:07:08.420 even with a non-speech from Kevin Warsh and this sort 0:07:08.440 --> 0:07:10.080 of assumption that he's going to try to remain on 0:07:10.120 --> 0:07:11.140 hold as long as possible? 0:07:11.900 --> 0:07:13.470 I think to some extent, but the data have very 0:07:13.510 --> 0:07:14.950 much been in their favor. I mean, if you look 0:07:14.970 --> 0:07:17.690 at the last two months, we've had two consecutive months 0:07:17.740 --> 0:07:21.640 of softer inflation data. We've had employment data that's mixed, 0:07:21.700 --> 0:07:24.690 if not somewhat concerning to some extent on the headline level. 0:07:25.690 --> 0:07:27.270 In the next print, we'll probably see a bit of 0:07:27.310 --> 0:07:30.050 a tick up in the unemployment rate with payrolls running 0:07:30.070 --> 0:07:32.730 at an okay pace. So they're not really going to 0:07:32.750 --> 0:07:34.880 be in the same urgency to hype that they felt 0:07:34.940 --> 0:07:37.960 in July. And we're in an environment where wage inflation 0:07:38.000 --> 0:07:40.239 is pretty sluggish and therefore it's not feeding into inflation. 0:07:40.380 --> 0:07:43.240 Are we just justifying why we're reacting so strongly to 0:07:43.320 --> 0:07:45.740 oil prices? I mean, essentially, is this a bond market 0:07:45.760 --> 0:07:48.780 that's being dictated by oil and people are running around 0:07:48.840 --> 0:07:51.280 fanatically saying, it's not just oil, it's all these other things. 0:07:51.300 --> 0:07:53.160 Then oil prices go down and it's like, oh, look 0:07:53.180 --> 0:07:54.640 at this, it's inflation and oil helps. 0:07:55.750 --> 0:07:56.950 To some extent, I think you're right. 0:07:56.970 --> 0:08:01.780 I mean, I was surprised the extent to which yields 0:08:01.820 --> 0:08:04.780 didn't reflect the softer inflation data that we've seen, because 0:08:05.240 --> 0:08:07.640 the data couldn't have been cooler for the most part 0:08:07.660 --> 0:08:10.230 in the last couple of months, yet yields continued to 0:08:10.270 --> 0:08:11.950 back up. And, you know, of course, people talk about 0:08:12.470 --> 0:08:15.570 supply and the deficit and all these dynamics that haven't 0:08:15.590 --> 0:08:17.890 really changed in the last couple of months, yet you 0:08:17.910 --> 0:08:20.390 see yields continue to back up. So certainly we saw 0:08:20.420 --> 0:08:23.240 the moves yesterday seem to be oil-related. I think it's 0:08:23.260 --> 0:08:25.940 a combination of things. When people wake up after Labor Day, 0:08:26.180 --> 0:08:28.000 we'll probably be in an environment where the data comes 0:08:28.020 --> 0:08:30.040 more into focus, then focus on a Fed that's not 0:08:30.080 --> 0:08:32.000 likely to hike, and therefore yields can come down a bit. 0:08:32.280 --> 0:08:36.100 Where is inflation the most problematic? Take out oil prices 0:08:36.140 --> 0:08:38.320 that are somewhat volatile. I know it's difficult because it 0:08:38.460 --> 0:08:43.120 impedes in a lot of different areas. Is AI-related inflation problematic? 0:08:43.340 --> 0:08:46.380 Are we seeing inflation in other areas that suggests that 0:08:46.400 --> 0:08:50.110 it's becoming more pervasive in the psychology and in commerce? 0:08:50.690 --> 0:08:52.470 So when we think about the reasons as to why 0:08:52.490 --> 0:08:54.790 core inflation has been elevated this year, I would say 0:08:54.809 --> 0:08:57.510 it's three things. It's been the Iran war, which at 0:08:57.530 --> 0:09:00.640 this point, we're kind of seeing a bouncing around in oil, 0:09:00.679 --> 0:09:02.220 but kind of somewhat stable at this point. 0:09:02.920 --> 0:09:04.540 It's been tariffs, which are going to be rolling off 0:09:04.559 --> 0:09:05.660 the data. And you're, in fact, you're. 0:09:05.559 --> 0:09:08.260 Starting to see some companies come out and say they're 0:09:08.280 --> 0:09:09.810 using some tariff refunds to. 0:09:09.790 --> 0:09:11.090 Offset some prices. 0:09:11.110 --> 0:09:11.990 Not with Sydney, Canada. 0:09:12.010 --> 0:09:16.390 Right. Fair. And then the big thing has been the chips. 0:09:16.570 --> 0:09:18.750 So I think by far the biggest thing we should 0:09:18.790 --> 0:09:22.589 be watching is on the AI-related inflation because that's a 0:09:22.610 --> 0:09:24.990 piece that hasn't fully worked its way through the data 0:09:25.010 --> 0:09:27.330 at this point. We think for the most part we've 0:09:27.370 --> 0:09:30.980 seen the impact flow through into computers and accessories and 0:09:31.010 --> 0:09:33.640 that type of thing. But it's possible there's another piece 0:09:33.679 --> 0:09:35.700 of the AI puzzle that pops up in the inflation 0:09:35.720 --> 0:09:37.559 data that we're not necessarily aware of at this point. 0:09:38.429 --> 0:09:41.290 This is the part that could be still adding some 0:09:41.330 --> 0:09:43.620 inflationary pressure. The other two factors are very much moving 0:09:43.640 --> 0:09:45.980 into disinflationary territory looking ahead. 0:09:46.000 --> 0:09:48.020 I just saw a headline from Bath & Body Works. 0:09:48.200 --> 0:09:52.160 They saw approximately $ 80 million in 2Q tariff refunds. So 0:09:52.179 --> 0:09:54.230 many of those companies got money back. How different would 0:09:54.250 --> 0:09:57.630 this conversation have been? We'd be this close to 0.3. 0:09:57.630 --> 0:10:00.400 You said it. How different would this conversation have been 0:10:01.120 --> 0:10:02.480 if we did get a 0.3? 0:10:02.480 --> 0:10:04.880 Funny enough, I mean, it's just, I mean, it's fractions 0:10:04.900 --> 0:10:06.679 of a basis point here. I think the conversation would 0:10:06.700 --> 0:10:07.120 be different. 0:10:07.280 --> 0:10:08.319 Isn't that really silly? 0:10:08.580 --> 0:10:11.439 Completely, no question. But it's just this, like, mental model. 0:10:11.460 --> 0:10:13.720 And you see, you know, you look on your Bloomberg screen, 0:10:13.740 --> 0:10:15.920 which is rounded to, you know, to one decimal, and 0:10:16.380 --> 0:10:18.660 it's 0.2, so we can all breathe a sigh of relief. 0:10:18.700 --> 0:10:19.179 But you're right. 0:10:19.520 --> 0:10:21.620 I think we would be talking more about yields rising 0:10:21.660 --> 0:10:23.200 a bit on the back of the data if we 0:10:23.220 --> 0:10:26.459 had just rounded up, you know, slightly to 0.3. I 0:10:26.480 --> 0:10:28.679 think the conversation would be modestly different. 0:10:29.150 --> 0:10:32.600 Stay with us. More Bloomberg surveillance coming up after this. 0:10:41.950 --> 0:10:44.950 Let's talk about something less risky than investing in open AI, apparently. 0:10:45.090 --> 0:10:47.989 Private capital piling into sports with at least five U.S. 0:10:48.030 --> 0:10:50.920 professional teams striking deals to change ownership just this summer. 0:10:51.280 --> 0:10:54.920 Investors fueling record valuations with more than 96 billion flowing 0:10:55.280 --> 0:10:58.200 to the asset class since 2018. Mark Heim is the 0:10:58.260 --> 0:11:01.020 CEO of Capital Investment Corp and has stakes in teams 0:11:01.070 --> 0:11:04.809 across the NFL, MLB and Premier League, telling Puck News recently... 0:11:04.860 --> 0:11:08.480 At today's valuations, there's meaningfully less downside risk in owning 0:11:08.520 --> 0:11:11.440 a piece of the Lakers than a piece of open AI. Mark, 0:11:11.500 --> 0:11:13.400 I'm pleased to say, join us now for more. Mark, 0:11:13.440 --> 0:11:15.400 welcome to the program. Quite a provocative quote, but I'm 0:11:15.420 --> 0:11:17.179 going to build on it and ask you this question, Mark. 0:11:17.540 --> 0:11:19.270 Do you think in some ways this is the one 0:11:19.309 --> 0:11:21.850 part of the entertainment industry that might well be insulated 0:11:22.190 --> 0:11:23.030 from what happens with AI? 0:11:24.410 --> 0:11:25.030 For sure. 0:11:25.050 --> 0:11:27.349 First of all, it's great to be with you guys. 0:11:27.929 --> 0:11:31.700 For sure, this is much more insulated from AI than 0:11:31.740 --> 0:11:37.719 most parts of the entertainment industry. Sports and music are 0:11:37.740 --> 0:11:40.319 the two things that bring us together at scale. 0:11:41.150 --> 0:11:44.290 AI is not going to change that. The drama and. 0:11:44.210 --> 0:11:48.200 The excitement and the communal experience of coming together to 0:11:48.240 --> 0:11:50.699 watch your favorite team isn't going away. In fact, I 0:11:50.720 --> 0:11:54.480 would argue it's only going to grow as people have 0:11:54.540 --> 0:11:56.460 more time and more money. They're going to go and 0:11:56.480 --> 0:11:59.599 try to do stuff like this and have these kind 0:11:59.640 --> 0:12:00.400 of experiences. 0:12:00.720 --> 0:12:03.520 Mark, let's talk about opportunities then for investment. I was 0:12:03.580 --> 0:12:05.750 reading through the transcript of that interview that you did 0:12:05.910 --> 0:12:08.010 with Park News. And within that, you reflected on that 0:12:08.050 --> 0:12:12.209 opportunity to get a franchise in Philadelphia, I believe, Mark, 0:12:12.250 --> 0:12:15.179 to get exposure to the NBA back then. Is there 0:12:15.220 --> 0:12:18.280 a similar opportunity that's available right now compared to the 0:12:18.320 --> 0:12:19.780 one that you passed up back then? 0:12:21.770 --> 0:12:22.050 No. 0:12:22.350 --> 0:12:28.030 To invest in the 76ers at a $ 250 million valuation? No. 0:12:28.090 --> 0:12:32.610 I mean, look, back then, sports teams have always had 0:12:32.770 --> 0:12:37.050 a bit of being valued on the business, traditional business valuations. 0:12:37.530 --> 0:12:41.079 and a bit on intangible things, whether people wanted it 0:12:41.179 --> 0:12:44.459 because they loved the sports or the experience, or because 0:12:44.500 --> 0:12:47.869 they viewed it as a store of value and uncorrelated assets, 0:12:47.950 --> 0:12:49.050 always had that mix. 0:12:49.470 --> 0:12:51.610 What's happened over time is that the. 0:12:51.530 --> 0:12:57.240 Amount of the valuation that's now the intangible part, the 0:12:57.290 --> 0:13:00.640 uncorrelated part, the store of value, has grown so much. 0:13:00.700 --> 0:13:03.179 And that's why I don't know what the 76ers would 0:13:03.200 --> 0:13:05.460 be worth today, but it's at least 20 times as much. 0:13:05.520 --> 0:13:08.140 And in the major sports, you're not going to find 0:13:08.160 --> 0:13:08.640 that again. 0:13:09.000 --> 0:13:12.130 Mark, a lot of people were decrying the Middle Eastern 0:13:12.150 --> 0:13:15.650 money that was going into soccer, in particular football. in 0:13:15.890 --> 0:13:19.130 Europe as distorting valuations so as to make it absolutely 0:13:19.170 --> 0:13:21.709 unaffordable to get involved if you are an investor, at 0:13:21.750 --> 0:13:25.729 least not attractive multiples. Do you see that kind of 0:13:25.790 --> 0:13:28.900 dynamic starting to happen in any other regions? Is that 0:13:28.940 --> 0:13:31.679 something that you are following closely? 0:13:33.200 --> 0:13:36.820 Well, I mean, look, it is getting harder and harder 0:13:36.920 --> 0:13:41.570 for all kinds of people to be the majority owner 0:13:42.140 --> 0:13:45.610 of these teams. You see the prices. You showed the 0:13:45.650 --> 0:13:48.570 logos of the five trades in the U.S. But what's 0:13:48.630 --> 0:13:51.410 interesting is at the same time the prices are going up, 0:13:51.490 --> 0:13:54.429 what is driving a lot of it is actually a 0:13:54.600 --> 0:13:58.459 much more vibrant market today. for minority owner stakes, limited 0:13:58.520 --> 0:14:02.020 partner stakes in these teams. And the amount of capital 0:14:02.480 --> 0:14:06.510 that people are investing to take those minority stakes is growing. 0:14:06.570 --> 0:14:10.390 And so the headline price is going up. The majority 0:14:10.550 --> 0:14:13.890 owner ticket price is also going up. But a lot 0:14:13.929 --> 0:14:16.359 of the capital is actually coming from the people in 0:14:16.380 --> 0:14:19.140 the cap structure around the majority owner. 0:14:19.840 --> 0:14:22.660 Do you have aspirations to become a control owner for 0:14:22.720 --> 0:14:23.400 any particular. 0:14:24.820 --> 0:14:28.400 Well, I do own the tennis tournament in Washington that 0:14:28.420 --> 0:14:31.750 just ended, which really was my childhood dream. I was 0:14:31.790 --> 0:14:35.310 a ball kid at the tournament, and I'm fortunate enough. 0:14:35.130 --> 0:14:36.440 That I do own that, and I. 0:14:37.170 --> 0:14:40.230 As you noted, I'm an investor in the Commanders and 0:14:40.290 --> 0:14:41.890 the Orioles and Leeds United. 0:14:41.910 --> 0:14:42.970 And I love that. 0:14:43.050 --> 0:14:45.750 I love both being the control owner in a big 0:14:45.820 --> 0:14:47.860 event that means a lot to me, but I also 0:14:47.960 --> 0:14:52.500 actually enjoy being a supportive minority owner in the other things. 0:14:52.720 --> 0:14:54.560 Mark, can we talk about Premier League football? You mentioned 0:14:54.580 --> 0:14:58.060 Leeds United. I'm always fascinated by the American perspective on this. 0:14:58.100 --> 0:15:00.460 When you look at the franchise value of, say, the 0:15:00.500 --> 0:15:03.040 Seattle Seahawks, close to $ 10 billion. 0:15:03.080 --> 0:15:03.280 Right. 0:15:03.930 --> 0:15:07.330 Without any disrespect to these Seattle Seahawks, I think that 0:15:07.370 --> 0:15:08.830 we can sit here and safely say that on a 0:15:08.870 --> 0:15:12.710 global basis, Manchester United is a far more visible franchise. 0:15:13.070 --> 0:15:18.180 And yet for some reason, These American franchises are able 0:15:18.600 --> 0:15:21.880 to generate that much more brand value and attract that 0:15:21.940 --> 0:15:24.380 much more money. And they seem to be valued at 0:15:24.420 --> 0:15:26.710 a higher level, a bigger premium, if you will, Mark, 0:15:26.730 --> 0:15:29.890 compared to English football, Mark. What gives? What explains that? 0:15:30.530 --> 0:15:32.410 It's such a fascinating question. 0:15:32.430 --> 0:15:35.190 And actually, the other thing I would add is actually 0:15:35.230 --> 0:15:39.060 now if you look at MLS franchises, Some of them 0:15:39.300 --> 0:15:41.680 are more than Premier League teams. And you would say, well, 0:15:41.720 --> 0:15:45.080 how is that possible? It really comes down to two things. 0:15:45.340 --> 0:15:50.210 One is the economic model for European football teams is 0:15:50.290 --> 0:15:54.650 not that great. Even the ones that generate the most 0:15:54.690 --> 0:15:57.790 revenue don't generate very much at all of a bottom line. 0:15:58.300 --> 0:16:01.620 And so that's one. But the other huge one is 0:16:01.700 --> 0:16:05.550 relegation risk. And it's best shown when you compare a 0:16:06.010 --> 0:16:09.320 league like MLS that doesn't have relegation risk and you 0:16:09.340 --> 0:16:12.590 look at the ones that do. It's a huge discount 0:16:12.750 --> 0:16:16.630 because not only, obviously, the prestige drops if you get relegated, 0:16:16.730 --> 0:16:20.350 but you lose a massive amount of revenue at all 0:16:21.310 --> 0:16:24.490 when that happens. And so a huge amount of the difference, 0:16:24.570 --> 0:16:26.840 I think, is explained by actually relegation risk. 0:16:26.920 --> 0:16:28.480 Can we pick up on that, Mark, and just apply 0:16:28.500 --> 0:16:30.880 it to, say, Leeds United? Leeds United is one of 0:16:30.920 --> 0:16:33.500 those clubs that always runs the risk of being relegated 0:16:33.640 --> 0:16:35.320 in the Premier League. It takes a lot of investment 0:16:35.340 --> 0:16:37.500 to stay up. You've managed to do that. Mark, does 0:16:37.520 --> 0:16:40.630 that affect and influence how you run the club? compared to, say, 0:16:40.650 --> 0:16:43.620 how you'd run a franchise in America. And for those 0:16:43.680 --> 0:16:45.780 not in your world, can you give us examples? 0:16:47.210 --> 0:16:50.210 Yeah. So, first of all, I'm not in the control. 0:16:50.230 --> 0:16:54.100 I mean, the team is run terrifically well by a 0:16:54.140 --> 0:16:59.200 group of executives affiliated with actually the San Francisco 49ers. 0:16:59.700 --> 0:17:00.920 They do a great job. 0:17:00.980 --> 0:17:04.490 And I'm not in the weeds with them on that one. 0:17:04.530 --> 0:17:07.990 But we talk a lot and I see it. And, well, 0:17:08.190 --> 0:17:11.390 it does have a huge implication on how you run 0:17:11.430 --> 0:17:15.389 the team because you When you're relegated, you lose 200 0:17:15.390 --> 0:17:18.649 million pounds of revenue over two years. And then when 0:17:18.670 --> 0:17:21.340 you come back in, you get that back. And so 0:17:22.180 --> 0:17:25.580 when you're in that zone, it's a lot harder to 0:17:25.920 --> 0:17:29.020 have long-term planning the way you do in an American 0:17:29.060 --> 0:17:34.400 traditional sports franchise because you have this revenue uncertainty both ways. Now, 0:17:35.320 --> 0:17:37.760 We had a great season last year. We finished mid-table. 0:17:37.780 --> 0:17:41.040 We're feeling really good now. You start to see how 0:17:41.100 --> 0:17:43.460 you can start to invest. And in fact, once we 0:17:43.480 --> 0:17:48.460 got promoted, we announced meaningful stadium expansion plan to Ellen Road, 0:17:48.520 --> 0:17:51.609 our home stadium, which you wouldn't have done while you 0:17:51.619 --> 0:17:54.510 were relegated. But when you get promoted and you believe 0:17:54.530 --> 0:17:56.389 you're going to stay up, then you get the revenue 0:17:56.410 --> 0:17:58.690 certainty that then actually lets you invest in all parts 0:17:58.730 --> 0:18:00.150 of the club, including the stadium. 0:18:00.850 --> 0:18:03.369 Mark? Since you're on the other side of this discussion, 0:18:03.550 --> 0:18:06.030 often on this show we'll talk about ticket prices, whether 0:18:06.109 --> 0:18:08.879 it's to the U.S. Open or whether it was to 0:18:08.900 --> 0:18:11.920 the World Cup. We'll say the prices are just too high. 0:18:12.260 --> 0:18:16.300 How do you balance the actual price of tickets versus 0:18:16.359 --> 0:18:19.740 the revenues that you get from other streams of advertising 0:18:19.900 --> 0:18:22.660 and beyond from just having the most eyeballs possible? 0:18:23.260 --> 0:18:24.939 Yeah, that's a great question. 0:18:25.020 --> 0:18:28.240 Obviously, it's a hot topic this week already because of 0:18:28.280 --> 0:18:28.680 the U.S. 0:18:28.780 --> 0:18:30.440 Open and some of the ticket prices there. 0:18:31.040 --> 0:18:34.970 Look, I view our ownership in these teams as caretakers 0:18:35.030 --> 0:18:41.449 for community assets. You really these teams or these events 0:18:41.530 --> 0:18:43.790 means so much to so many people. I think you 0:18:43.830 --> 0:18:46.970 have a real obligation to finding ways to making them 0:18:47.109 --> 0:18:50.460 accessible for everyone in your community. And I think that 0:18:51.119 --> 0:18:53.459 there is a business part of it, that it's good business. 0:18:53.500 --> 0:18:55.680 But far beyond that, it really is part of your 0:18:55.720 --> 0:18:58.740 responsibility as the owner. is to make sure that people 0:18:58.780 --> 0:18:59.899 can attend these events. 0:19:00.780 --> 0:19:03.580 And so you've got to find ways. Now, there's a 0:19:03.600 --> 0:19:04.300 lot of ways to it. 0:19:04.359 --> 0:19:08.390 Some sessions in a tennis tournament are less popular than others. 0:19:08.410 --> 0:19:12.760 So you can offer cheaper tickets. You can allocate tickets 0:19:12.820 --> 0:19:15.200 to certain groups. The challenge, and this is what happened 0:19:15.220 --> 0:19:19.360 at the U.S. Open, is with an incredibly liquid and 0:19:19.700 --> 0:19:24.109 easily transferable secondary market, if you sell tickets cheap to someone, 0:19:24.609 --> 0:19:27.230 it's very hard to regulate them not putting them back 0:19:27.310 --> 0:19:29.109