May 16, 2025 • 32 mins
Where’s the inflation? With this week’s Consumer Price Index coming in softer than predicted (inflation at its lowest level since 2021, according to government data), a lot of people are wondering why tariffs haven’t pushed prices up. In the debut episode of Everybody’s Business from Bloomberg Businessweek, hosts Stacey Vanek Smith and Max Chafkin tackle President Donald Trump’s trade war, inflation and when the rubber will (if ever) hit the road.
Consumer spending columnist Amanda Mull takes Stacey on a tariff tour through Target, explaining why import taxes have yet to show up in inflation data and how you’re likely to see them in the future. It turns out flatscreen TVs, pineapples and mascara will all manifest tariffs in different ways. Mull concludes tariffs could very well ruin Christmas.
Then sports reporter Randall WIlliams joins to talk about why private equity has started buying up sports teams. It turns out teams are becoming more valuable as games dominate live television, attracting bigger audiences (and commanding higher ad rates). That’s got private equity sneaking into the game, pumping up prices and injecting billions of dollars into teams. Randall concludes that private equity won’t ruin sports (but Max and Stacey are skeptical). Finally, for the underrated story for the week, we look at the rising trend of rising sneaker soles. Shoe brands are creating ever puffier soles even as racing authorities try to put restrictions in place. Ultramarathoner Max realizes his beloved sport is in the crosshairs of controversy.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. It's Everybody's Business from
Bloomberg BusinessWeek.
Speaker 2 (00:15):
I'm Max Chaffin and I'm Stacy Vannocksmith.
Speaker 1 (00:17):
Hey, Stacy, I'm Max.
Speaker 2 (00:19):
This is a special day. It's our first show. It's
oursial show.
Speaker 1 (00:23):
It's the Holy Day Stacy. The first official episode of
a new podcast from Bloomberg Business Week, where we break
down the news of the week. We bring in some
of the smartest journalists we know from the extended Bloomberg
universe and of the writers and reporters and editors from
Bloomberg BusinessWeek and sort of chew over what happened, what matters,
and what's coming next.
Speaker 2 (00:44):
And today's show, our first show, is all about beginnings,
our brave new world or brave new economy, actually things
like tariffs. Those are still pretty new and changing by
the hour, but have not been showing up in prices.
Speaker 1 (01:00):
Yet showing up in prizes. And we have Amanda mal
BusinessWeek columnists consumer spending expert to talk that over, to
mull that over, if you will, Stacy, you and Amanda,
you went on a field trip without me? We did okay?
And then the NBA playoffs are heating up, and there
is a new sports owner in town, an owner that
(01:21):
I think most fans are going to be really excited about.
I'm talking, of course, about the private equity bro They
are buying up teams, valuations are going up, and we
have Randall Williams, BusinessWeek columnists and sports reporter coming in
to talk to us all about that.
Speaker 2 (01:36):
Who does not love private equity? And finally we have
our underrated story of the week, in this case a
new kind of sporting equipment that might be breaking some
pretty important rules. Max, I'm gonna tell you this one
gets personal for you.
Speaker 1 (01:50):
I can't wait. Okay, But of course this show is
called Everybody's Business, and we take the everybody very serious.
Speaker 2 (01:59):
We do it seriously, and we want to make sure
that there is something in the show for everybody. But Max,
you and I have both been covering the world of
business and economics for a very long time, and it
can be a little bit of a bubble. Can be
hard to know, like what normal people find interesting?
Speaker 1 (02:14):
Are you saying that we're not normal? Ever?
Speaker 2 (02:17):
So slightly siloed is all I'm saying. So we wanted
to see what other people who don't spend all their
time looking at this stuff want to know about.
Speaker 1 (02:26):
Well, this is my favorite part of the show because
we're in New York. Obviously, people from all over the
world are here, and you, Stacy Vanick Smith, are like
very good at going out and talking to those people
in the world.
Speaker 2 (02:38):
Yes, I am getting very good at going up to
people and saying, have you heard the good news? You
can be on a podcast, So to get the voice
of the people, I went to the beating heart of
New York City, of New York City Times Square to
ask people what are the business and economic stories that
you want to hear about.
Speaker 3 (02:59):
I mean, for sure everybody wants to know more about that.
We all just graduated college, so it's like keeping up
with the different economic policies that will affect us as
like young investors.
Speaker 1 (03:10):
Obviously, the price of eggs.
Speaker 2 (03:12):
Really you're a big egg watcher.
Speaker 1 (03:13):
Yes, I work at a boutique grocery store where, like
I'm not joking, a box of a dozen eggs is
like ten twelve dollars. Everyone's talking about terrorists. I work
at a.
Speaker 3 (03:24):
Small consulting firm, and I'm worried about how that's gonna
affect like like my job.
Speaker 1 (03:30):
You know what I mean, I'm just glued to the
gossip of the markets.
Speaker 2 (03:33):
Are you a markets watcher.
Speaker 4 (03:35):
In times of crisis? Yes?
Speaker 2 (03:36):
Would you guys listen to a new business podcast?
Speaker 1 (03:39):
I would? Yeah?
Speaker 2 (03:40):
What about you guys.
Speaker 3 (03:41):
I'm not a big podcast person, but if I were
to listen to a podcast, thank you?
Speaker 1 (03:46):
Sure?
Speaker 2 (03:46):
Am I going to be on the podcast? Yes? Is
that okay? Did you get good sound bites on my
good Yeah? I got great sound bites. I wish I
knew that I would have sounded better.
Speaker 1 (03:55):
Wow, people have spoken. So we're worried about eggs, worried
about consulting rates.
Speaker 2 (04:02):
I think jobs. Ok, people are worried about their jobs.
Speaker 1 (04:05):
Well that's fair. We're going to do this every week,
not always questions about what should be on the podcast,
but we do want to hear from you listeners about
what you want us to talk about and what you're
seeing in the economy. You should send us an email.
Everybody's at Bloomberg dot net. That's everybody's with an s
at Bloomberg dot net. We're going to repeat that email
address over and over again many times until you actually
(04:27):
send us some email. So get ready, all right, Stacey,
the big kind of business news earlier this week. It
was good news. It was that inflation, which everybody had
been really worried about with you know, Trump's high tariffs
and the erratic nature of the tariffs. It actually wasn't
that bad. It was two point three percent. I think
that was the lowest level that we've seen since twenty
(04:48):
twenty one. You know, that was before we had the
post pandemic spike. Trump also backed down on his China tariffs,
announcing a ninety day pause. It's going down to thirty
percent from one hundred and forty f five percent. So
this is good, right. I mean, basically those eggs that
we heard about in the UH eggs they're gonna cost
less now, I think, and consultants will be able to flourish,
(05:11):
and those those graduates will all get you. Everything is great.
Speaker 2 (05:14):
I mean, I have to say, I really expected to
see the consumer price index, that's the inflation index, go
up a lot, because Trump's tariffs have been in effect
for a couple months now, so we should be starting
to see them. But you're right, the numbers just didn't
show that. And the markets have been on this happy tear.
Speaker 1 (05:33):
And we should just say, for for anyone who hasn't
followed this as closely as us. The reason we expected, yeah,
which is everyone. The reason we expected prices to go
up is because a tariff is essentially a tax on
a consumer good. You know, it costs more money to
bring some item, you know, an article of clothing, a toy, whatever,
into the United States, and somebody has to pay for
(05:55):
that cost, whether it's a company, and ultimately consumers are
gonna pay. And that's why we wanted to talk to
Amanda Mull because this is what she does. She writes
about consumer behavior and retail businesses and kind of all
the ways that affects culture. Amanda's here, Now, how you doing.
Speaker 5 (06:12):
I'm doing great, Thanks for having me.
Speaker 2 (06:14):
We're very excited to have you on our first episode.
And you just wrote this article called Trump's tariffs are
going to ruin Christmas, and it is all about tariffs
and prices. So, just to start out very simply, looking
at the data this week, inflation numbers looking really good.
What's going on? Why are the tariffs not showing up?
Speaker 3 (06:36):
The most important thing to remember in trying to understand
all of this is that our experience of the economy
as sort of like end consumers is a lagging indicator
of what is going on in the economy.
Speaker 2 (06:46):
Lagging mean like it doesn't show up until after it's
already happened.
Speaker 3 (06:50):
Our experience will change after months of many other things
going into effect that will eventually affect us. The process
of getting goods onto the shelves is a month long
and sometimes years long process, depending on what the product is.
So a lot of the stuff that's on shelves right
now was imported in warehouse before any tariffs went into effect.
So we still have like a lot of goods in
(07:11):
the system that would have been tariff affected if they
had been imported a little bit later, but they weren't.
And then you also get this behavior from retailers in
brands that are like looking at projections for what happens
once some level of tariff goes into effect, and they're saying, Okay,
we need cash on hand, we need to move inventory now,
we need to front load a lot of this consumer
(07:33):
spending because consumers are worried and a lot of them
have their wallets open right now for purchases that they
might have otherwise made in six months or in a
year or at the end of the summer. So you've
got retailers going, hey, we know you're worried about tariffs.
We have brought in a lot of extra inventory, and
we know that you want to buy right now. So
here's fifteen percent off, or here's buy one, get one
fifty percent off. So you have all of these behaviors
(07:54):
that are happening right now with this pre tariff merchandise.
That is keeping prices stable, and that is encouraging people
to buy at a pretty pretty steady rate. But what
like Goldman Analysts said in a note to clients about
this CPI reading is that we're not done with this,
like probably next month and maybe in the months to
come after.
Speaker 5 (08:13):
That is where we're going.
Speaker 3 (08:14):
To see a lot of these pricing variations start to
bubble up, because that's when you're going to get goods
in the system that are more teriff affected. I've seen
a lot of like anecdotal evidence that a lot of
like customs processors and a lot of shippers don't know
what they're supposed to be charging interiors. Yeah, people are
very confused.
Speaker 1 (08:33):
So what you're saying basically is boats move slowly, Like yes,
you know, a lot of this stuff comes on a
giant container, and those container ships take weeks to get here.
And not just that, but a lot of the goods
that are being brought on those container ships contain other
items that also arrive on container ships. This just takes
a long time. And a lot of companies like Apple, right,
(08:55):
they just like frantically imported as much of their stuff
as they.
Speaker 2 (08:59):
Could because six hundred tons or something and iPhone.
Speaker 1 (09:03):
Trump made this very easy for them, and maybe even deliberately,
right he put the date on the calendar Liberation Day,
so we all know, got to get as much you know,
stuff ahead of Liberation Day. It seems like that kind
of happened.
Speaker 5 (09:15):
Right absolutely.
Speaker 3 (09:16):
I talked to a consumer industry expert from ey who
said that of the businesses that he has sort of
been observing and the ones you know that are in
their client base, he saw retailers and brands bringing in
on average about ninety days of excess inventory, and to
the point where you could look around the freight industry
and the logistics industry in the US and see like
warehouses filling up and like warehouse space being sort of
(09:39):
at a premium, especially near ports. Companies that had the
cash on hands to bring in extra stuff really did
just frontload as much as they could.
Speaker 2 (09:47):
So tariffs haven't really shown up yet, but they're definitely
going to show up. And so Max, I don't know
if you know this, but Amanda and I live pretty
close to each other, are in Brooklyn, and we live
pretty close to a Target, which is basically Amanda's church
as it can summer reporter, so she agreed to meet
me there and take me on a little Target tariff tour.
Speaker 3 (10:07):
We're looking at a rather large TV. It's a sixty
five inch Roku TV two fifty. When I worked a
Best Buy from like two thousand and four to two
thousand and eight, flat panel TVs.
Speaker 5 (10:18):
Were still several thousand dollars.
Speaker 3 (10:20):
We would put one on sale for like one thousand bucks,
and you know, people would line up for that stuff.
But they've come down in price a ton in the past,
like fifteen years. The ultra inexpensive two hundred and fifty
dollars sixty five inch TV that you can take home
today from Target is a product, ultimately of what a
globalized manufacturing chain produces for wealthy consumers.
Speaker 2 (10:42):
And what happens to our flat screen TVs in a tariffed.
Speaker 3 (10:46):
World like everything they get a lot more expensive. This
is the type of manufacturing that is really hard to
reproduce in new places because it is a very delicate process.
It requires a lot of specialized and you need like
a ton of workers that you can pay not that
much money in order to pull this off at these prices.
Speaker 2 (11:08):
All right, shall we go to produce? Yeah, that's good,
And why have you brought us here?
Speaker 5 (11:14):
We're looking at pineapples. Let me see, it's a del
Monte pineapple.
Speaker 3 (11:19):
They are three bucks from big and Heavy Pineapple is
getting this from Costa Rica and you can.
Speaker 5 (11:27):
Buy it like fresh off the shelf for three bucks.
Speaker 2 (11:29):
Is like Target and Miracle. So what is going to
happen to this section of the store with tariffs?
Speaker 3 (11:35):
Fresh produce supply chains rely on a cold storage and
cold chain and a lot of elements of global shipping
that are set to become more expensive. We get a
lot of our fruit from Central and South America. If
you want pineapple, if you want mangoes, then tariffs are
going to make a lot of those things a lot
more expensive, especially out of season. Like I don't know
(11:56):
if they're going to be like affordable to somebody that's
like trying to figure out their grocery budget.
Speaker 2 (12:00):
You like, these might not be in Target next year.
Speaker 3 (12:03):
No, the apples probably will be that. Like I don't
know if we're gonna have mangos.
Speaker 1 (12:08):
I have joked to my wife many times that when
we're all gone and the alien archaeologists find our civilization,
the thing that they are going to be most impressed
by is this the produce that you can get from
Like the fact that you can like walk into a
Whole Foods or a Target and buy an exotic fruit
(12:28):
or a freaking ostrich egg or whatever for almost no money.
Speaker 2 (12:32):
It is amazing, like from halfway around the world, and it.
Speaker 1 (12:35):
Would still be amazing to buy that del Monte pineapple
for four fifty even like still a pineapple that made
it like, you know, a huge distance. But you do wonder,
like at what point does that price become too much?
And does the whole system that we've kind of created
around these cheap goods, like when does it start to
break down? Like how much could people of the world
(12:58):
really be willing to spend.
Speaker 5 (13:00):
In fresh produce?
Speaker 3 (13:01):
Is really tough when you look at like how little
small changes in price could affect availability because the margins
at every step of the fresh produce chain are like
really really thin even at grocery. Like grocery as far
as retail goes in America is known to have just
like the most razor thin margins. The items themselves may
(13:21):
not be like super heavily tariffed. A lot of it
comes from Central and South America, which is less affected
by the Liberation Day tariff table than China would be,
but you still end up in a situation where you
need a lot of logistics resources that are built out
to work at scale in moving around all of these
different types of goods from different places. So if you
(13:42):
have like a big drop in imports from some places,
logistics companies and freight companies and truck drivers sort of
like drop out of the system. They go elsewhere, they
find other types of jobs, warehouses, close trucks, you know,
leave the road. So this is one of those second third,
fourth order effects where it's like if you change your
logistics system in the country significantly, how does that affect
(14:02):
the moving around like really fragile, really perishable goods like
fresh fruit that comes in from Costa Rico or from
Mexico or from Columbia or wherever. You start tinkering with
little things and then the effects just reverberate out in
ways that are not necessarily like super easily predictable from
where we are today.
Speaker 2 (14:20):
So we have some flat screen TV's that are going
to get a lot more expensive pineapples that might not
be there. But we went to another part of the store.
Here we go.
Speaker 3 (14:28):
We're in the one of the makeup aisles right now.
You know, if you look at makeup, there's lots of
like fiddly little plastic parts.
Speaker 5 (14:33):
There's lots of packaging.
Speaker 2 (14:34):
Yes, the packaging is like the best part.
Speaker 3 (14:36):
Yes, packaging is super important to selling makeup. Packaging is
one of the most overseas concentrated parts of the supply
chain period.
Speaker 5 (14:43):
Most of it is in China and other.
Speaker 3 (14:45):
Parts of Asia, with some types of packaging mescaro whatever else.
Like sometimes the tube will be made in one place,
in the cap to the tube will be made in
another in the brush brissels will be made in another,
and that sort of all comes together to be manufactured
into a saleable product. For instance, this elf Karen has
a box around it so that it can hang on
a shelf, and then like the group that goes inside
might come from someplace else entirely, and they're all shipped
(15:06):
to these manufacturing facilities that then put the product together.
Speaker 2 (15:09):
It's funny because I feel like what you're talking about
is something I always think of when we talk about
like iPhones. It's like, oh, they've components made in forty
four countries. But it actually seems like maybe mascara is
not different.
Speaker 3 (15:20):
Yes, the things we think of as simple are rarely
simple because we've basically set up the entire global economy
to ensure that, like they're efficient by a certain definition
and cheap.
Speaker 5 (15:29):
Right, so you find, you know.
Speaker 3 (15:32):
Quote unquote efficiencies that enable you to do all of
this across like a massive geographic space in order to
make something that is ultimately like extremely complex, but much
cheaper than it would be if done beginning to end
in one place.
Speaker 2 (15:46):
Okay, so I feel like we should probably pick one
of these up. For Max.
Speaker 3 (15:49):
We brought you a mascara, oh elf, flash extender mascara.
Speaker 5 (15:53):
Wow, Oh for you.
Speaker 1 (15:54):
I just have to ask why this product Just a.
Speaker 2 (15:58):
Good thing to keep in mind, there's no message. Really,
we're not implying anything. Not really, I'll.
Speaker 1 (16:03):
Take it out better.
Speaker 2 (16:06):
Lash has never hurt anybody.
Speaker 1 (16:08):
No, it is a great time to be a sports
fan right now. The NBA playoffs are heating up, Baseball
season is in full swing. The WNBA is about to start,
you know today as this episode drops. On Friday, We're
gonna have a Knicks playoff game and Mets against Yankees
going on the same time. I am so excited about it.
(16:31):
But there's just one thing that could make our sporting
experience a little bit better, and that would be owners
who knew how to squeeze efficiencies out of their franchises.
I was just thinking the values a little higher.
Speaker 2 (16:46):
Yes, absolutely, I feel like when when sports fans watch games,
what we're always looking for.
Speaker 1 (16:52):
More private equity, which is why absolutely we have Randall Williams,
Bloomberg BusinessWeek sports columnist, friend of the podcast here with
us in the studio. Randall just wrote a column about
the skyrocketing valuations for sports teams. Randal, how you.
Speaker 4 (17:07):
Doing, I'm doing all right, Thank you all for having me.
I'm excited.
Speaker 1 (17:10):
You know this, but many people probably don't. The Boston
Celtics were recently sold for six point one billion dollars.
That's a team that was worth four hundred million. I believe.
According to Forbes in twenty eleven, whoa and yeah, and
it goes on and on.
Speaker 2 (17:24):
The Eagles has been to them? That's a big Boston
glow up.
Speaker 4 (17:27):
What happened to them?
Speaker 1 (17:29):
I mean? And it's not just the Celtics, right. The
Eagles went from being worth one point two billion back
then to eight point three the Dodgers eight hundred million
now six point nine billion. Yep, randal. What's happening here?
What is causing this?
Speaker 6 (17:42):
The media deals are getting bigger for each of these leagues,
and the sports are growing in popularity. The stars are
getting bigger. You just named three different teams where we
could all name a superstar on them. For the Dodgers
it's show hal time.
Speaker 2 (17:54):
Might be a stretch, you could do it, Jalen Hurt
say crime, yeah yeah.
Speaker 6 (18:00):
And with the Celtics Jason Tatum and Jalen Brown of course,
and overtime that was Paul Pierce and Kevin Garnett and
Ray Allen. So the media deals are driving these valuations up,
and ultimately the cost to run these teams is also going.
Speaker 4 (18:13):
Up as well.
Speaker 2 (18:13):
Yeah, what goes into a team valuation? Like, what does
it mean if a team is worth eight billion dollars.
Speaker 4 (18:18):
Well, first of all, it's a market real estate. So
like the stadium, Yes, for sure, the stadium.
Speaker 6 (18:23):
If you own your own stadium, then that gives you
the ability to make a lot of revenue from things
outside of your sports team. So let's use the Boston
Celtics as an example. They get forty one home games
a year, but you know, forty one dates out of
three hundred and sixty five, that's not a lot of
opportunity to make money.
Speaker 4 (18:38):
Now.
Speaker 6 (18:38):
Granted, I think it's the Boston Bruins are also in
that stadium, but the Celtics don't own their own stadium.
So as part of the six point one billion dollar deal,
one of the things that NBA owners, NBA executives, and
business people alike were watching to see is how much
this team would go for because the NBA is looking
to expand. Now for the expansion, people, they're watching this
because like, Okay, the Celtics don't own their stadium, can't
(18:59):
go for that much. And then it goes for six
point one billion dollars, which is more than the Commanders who.
Speaker 1 (19:04):
Bought the Celtics. I mean, it's this guy, Bill Chisholm
co founder of STG Partners. That's a PE firm, but
then there's PE money inside of that.
Speaker 2 (19:12):
He like private equity, sorry, not physical education.
Speaker 1 (19:14):
Yeah.
Speaker 6 (19:15):
Bill Chisholm is the leading investor. He has a billion
dollars in six Street money. He has Rob Hale, he
has Bruce A. Beal junior. So his ownership group is
very diverse. He's added some more money since then, but
it's a lot of money.
Speaker 2 (19:27):
Sixth Street is the private equity firm. Correct, okay, and
the private equity firm bought it, not the guy who
runs it, but the actual private equity firm.
Speaker 6 (19:34):
No, No, Bill Chislm is the organizer. Now, the thing with
private equity firms and sports is that they cannot be
controlling owners. They are passive investors. Eventually they'll exit, and
the exits of these deals is still to be determined.
Speaker 1 (19:47):
What is it in the NBA? Is it ten percent
or twenty percent? Is the limit for private equity?
Speaker 6 (19:50):
A single private equity firm can own up to twenty
percent of an NBA franchise. Private equity and totality can
own thirty percent. So you so ideally you could have
twenty percent of one firm and then ten percent to
another to get to thirty.
Speaker 1 (20:03):
This strikes me, and forgive my saying this, but this
strikes me because you have a private equity guy who
is leading the deal. Like these are basically private equity groups.
They're just it's just equity group made up of a
bunch of little private equity.
Speaker 4 (20:19):
Groups in some ways.
Speaker 6 (20:20):
In some ways, however, the biggest difference is that you
can have your money come from private equity, but your
firm cannot run the team.
Speaker 4 (20:29):
That's the difference.
Speaker 6 (20:30):
So you can name any private equity person in the
world right now, and that individual could buy it, but
the firm could not.
Speaker 2 (20:35):
Because I feel like normally when private equity buys something
like for a while, private equity ow KFC and stuff,
I feel like they kind of tend to strip things
for parts. Yeah, that's exactly why it's great.
Speaker 6 (20:45):
That's why sports leagues don't want private equity firms to
run teams. And there's a lot of fan fear if
you jump in Reddit threads, Fans hate the idea of
this because they think that private equity firms are going
to strip the teams down and be like, you know what,
we're not paying Jalen Hurts we're not paying sequon bark,
We're just going to invest in the stadium instead.
Speaker 2 (21:02):
Foam fingers are going to get smaller.
Speaker 1 (21:04):
They're definitely making fingers. It does kind of cut against
what I think most people understand is fandom, Right. You
understand teams as being kind of community groups almost, and
then you have these groups of owners and they're buying
not just one franchise, they're buying another franchise. And you
might think, oh, it's like the guy who owns the
(21:25):
baseball team in town is buying the hockey team in
town or whatever. But no, the group that owns the
Celtics also owns i think ten percent of the Giants,
and like that doesn't fit with like how a normal
fan I think understands the point of a sports team
or even the point of sports. But I'm wondering, Randall,
are we seeing changes in how these ownership groups manage
(21:47):
their teams? Are they doing the private equity playbook? Are
they making the phone hand smaller?
Speaker 4 (21:51):
It depends on who you are.
Speaker 6 (21:52):
Yeah, Like I think if you look at Josh Harris
and the Washington Commanders, when he bought that team was
a total train wreck. Now since then, he's struck a
four billion dollar stadium deal. He has put more money
into a quite frankly, a horrible stadium. And so you
have Josh Eris, who comes from private equity investing all
of this money. Now he has the money to do this,
there aren't going to be a lot of people who
(22:14):
have the same money. But if you look at the
Celtics deal, for example, Bill Chisholm has not said anything
about a new stadium even though he's not making any
money from let's say concerts if Taylor Swift comes in
town or another.
Speaker 2 (22:25):
Oh, that's how you can kind of leverage your.
Speaker 6 (22:27):
Stadium any money from those things. And so it's really
dependent on how much money you have. Private equity can
come in and help these stadium costs, other real estate things,
other projects, liquidity things like that.
Speaker 1 (22:39):
Randall, let's dig into a little bit around like what
is driving these valuations. We kind of hit on the
media deals, so just talk a little bit about what's
behind that. I mean, my understanding sports viewership is up
a little bit historically, but it's relatively flat. Like if
you look at like super Bowl viewership numbers over the
last like fifty years, like it's gone up, but it's
(23:00):
sort of gone up in the way that you would
expect given population growth, but everything else has fallen a lot.
So basically sports has sort of maintained high viewership while
like sitcoms, reality shows, all that stuff has fallen out.
These games, those are live, Those are unique events that
if you care about it, and a lot of people
care about sports, there is no way of getting around it.
(23:21):
And that is like gold for advertisers, for media.
Speaker 6 (23:24):
Yeah, absolutely, it is the only thing people watch live.
The reality is the NFL is a behemoth. I mean,
I was shocked that the Super Bowl had one hundred
and twenty seven million people watch it when at one
point the game was forty to six at halftime, I
believe it was like twenty four to nothing or something
like one hundred and twenty seven million people when the
previous two games were incredible games.
Speaker 2 (23:43):
But it was an underdog win, which was thrilling.
Speaker 5 (23:45):
Eh.
Speaker 6 (23:45):
The Eagles were pretty good all three chief They had
the three peak going, they had the three peak going.
But if you, I mean, if you were paying attention
to both teams, the Eagles were the dominant team. The
Chiefs were surviving week by week. Now the NBA has
seen some fluctuation. Of course, NBA Finals ratings were down.
Now current playoff viewership is that an all time high? However,
(24:05):
what happens in Lebron exits? Steph Curry exits, and I mean,
if the Knicks don't pull this series out, you could
see a dramatic fault, not just because they're a popular team,
but you look at the markets that are out there,
Oklahoma City, the Indiana Pacers, the Minnesota Timberwolves, and the
Denver Nuggets. It's not the same thing as the New
York Knicks. Even the brand recognition isn't the same. But
at the same time, NBA has a seventy six billion
(24:26):
dollar media deal that isn't up until twenty thirty.
Speaker 2 (24:30):
Pay them to air their games.
Speaker 6 (24:32):
Yes, the NBA's new media deals with ESPN, it is
with Amazon and NBC, and the NFL has like six
different media partners. The MLB will be negotiating theres pretty
soon as well.
Speaker 2 (24:43):
What does private equity see in sports teams?
Speaker 1 (24:46):
Like?
Speaker 2 (24:46):
Why are they making this investment?
Speaker 6 (24:47):
I mean, I think if you keep looking at the
media deals and they keep doubling, they keep tripling, and
the franchise valuations. If you look at the NBA or
the NFL or the MLB. These sales keep going for
higher and higher and high. I mean the Panthers sold
for two to two, the Denver Broncos sold for four
to six, The Washington Commanders, yes, billions, and then the
(25:08):
Washington Commanders sold for six billion. You're looking at these
exits and it's like wow, Like these teams are tripling
over time in a matter of a decade. You don't
normally see that in business. And so what the NFL
has done with their rules is if a private equity
firm buys into it, you have to hold it for
six years. They're not looking for immediate exits. And quite frankly,
I'm not sure that Blue IU was looking to exit
(25:28):
as early as they were with the Phoenix Suns. It's
just that Robert Sarver got in trouble and so he
was forced to sell the team, or he elected to
sell the team.
Speaker 1 (25:36):
So, having done some reporting on this and kind of
followed private equity in general, private equity in healthcare for instance,
you know, the business model is basically like you cut
a bunch of costs, you raise prices where you can,
and then you sell, often to another private equity firm.
What I'm wondering is who are the buyers? Like, if
the price of the Celtics has gone up, the math
(25:58):
is going to be hard. But you know, like one
thousand percent or whatever over the last fifteen years, how
do you get that? Are they expecting another thousand percent?
And if that happens, who's the buyer? Like, at what
point does this start to look like a bubble rather
than an asset with a lot of upside?
Speaker 4 (26:13):
Well, I think that it really depends on who you ask.
Speaker 6 (26:16):
As I'm watching this, I think it's incredible that the
Celtics got to six to one. I've talked to plenty
of NFL owners and they all tell me like they
don't think they're anywhere near the ceiling of this. And
the Super Bowl is kind of a telltale sign at that,
because if your biggest event is a blowout and it
sets a record in viewership, you're still going to have
media companies that are going to want to buy in
at a new, bigger price. And this is a reminder,
(26:37):
the NFL's media deal is over one hundred billion dollars
and yet they set a record in a blowout game.
And so what's the next one going to be one
hundred and fifty billion, one hundred and seventy five billion,
we don't know, and so that's going to drive valuations up.
The NBA's media deal begins this upcoming season, and so
that's a seventy six billion dollar media deal that's going
to drive up values for the next ten years as well. Now,
(26:58):
what's going to be interesting to see is how these
owners offset the cost because stadiums aren't getting any cheaper,
contracts aren't getting any cheaper. And you're right, there are
going to be some billionaires who are priced out of this,
and you will see the NFL, the NBA, the MLB
adjust their private equity rules so that, you know, these
private equity firms can come in and provide solutions to
owners who aren't capital heavy.
Speaker 1 (27:19):
Randall, Like, you're a sports business reporter, but I mean,
I assume you can't totally divorce your fandom from your
I know we're all objective journalists, but I'm sure it's
sometimes it slips through the cracks. I mean, how are
you feeling about this? We are to our final segment,
(27:40):
and Randall, you're gonna need to stick around for this,
all right? All right, This is where either Stacy or
I will go through the depths of the news cycle,
will do deep dives, will do extensive research and find
the underrated story of the week, the story that people
should be paying more attention to. And Stacy, what is
(28:00):
it this week?
Speaker 2 (28:01):
So I brought this story Randall. I don't know if
you know this, but both Max and I are runners,
and over the weekend, Max and I accumulatively ran one
hundred miles. Well, okay, I'll be truthful, which is that
Max ran one hundred miles and I ran no miles.
He runs ultra marathons because sometimes one marathon isn't enough.
(28:22):
How is that embarrassing? It would be the first thing
I said to everybody.
Speaker 4 (28:25):
Wait a minute, the marathon was one hundred.
Speaker 2 (28:27):
No he yeah, he ran an ultra marathon one hundred.
Speaker 4 (28:29):
You're not the first person I've met that does this.
Speaker 1 (28:32):
Yeah. No, I know it's like a middle aged cliche.
Speaker 2 (28:36):
Does that.
Speaker 6 (28:37):
Let's set automobiles and vehicles aside. Hasn't heard of horses, mules,
anything like that.
Speaker 1 (28:45):
There is a mule. You can get a sligh.
Speaker 2 (28:49):
Well, so my underrated story is that the sport of
ultra marathoning very long distance running has been plagued by
scandal in the form of super puffy shoes. So apparently,
when you run one hundred miles and this feels reasonable,
you want super poofy soles on your shoes. And we've
all seen this has become a trend, right, the Hokah
(29:11):
shoes and stuff like that getting poofier and poofier, And
apparently if you run one hundred miles you want super
lofty shoes. But there are now these careful regulations around
how shoe sole.
Speaker 1 (29:22):
High, how much poof can you have? Yes?
Speaker 2 (29:24):
And people are getting disqualified from races for overly poof Wow. Yeah,
but the shoemakers keep making them and they don't care.
They are upping the anti. There's a new shoe from
Puma where the sole of the shoe is fifty eight millimeters,
which is the size of a Rubik's cube.
Speaker 1 (29:43):
Okay, can you show me?
Speaker 2 (29:44):
Yes? Here is the picture. My god, that's this is
your people.
Speaker 1 (29:48):
That is obscene.
Speaker 2 (29:50):
Well, apparently people love these shoes, and the poofy or
the sole, the more people will pay. And because shoe
sales have been declining for the past two years, they're
down by two percent running shoes. Shoes like shoemakers are
getting more and more invested in shoes that they can
charge a premium for and apparently people will just pay
endless amounts of money. So actual money being made from
(30:10):
shoes up fourteen percent in spite of the sales drop
because of poofy.
Speaker 4 (30:14):
Soles, and you're basically heals for men.
Speaker 2 (30:18):
Heals from men.
Speaker 1 (30:19):
First of all, there is no this is not an
ultra running story. There is no fashion. I mean, you
confirm or deny that these are heels for men, they are,
But I'm just saying that this is These are two
worlds that are are that could not be further from
one another. No one who is actually running one hundred
miles looks their best, to say the least. I also
(30:41):
think it's funny how in shoes you have all of
this amazing innovation. You know, earlier it was the carbon
fiber soles, and there are always, yeah, there are always
these like crazy innovations and all this conversation around performance
and is it is it cheating or whatever. And then
you have fashion, which is like totally on the opposite
(31:02):
end of innovation, and like those two forces are sometimes
pushing against each other sometimes pushing with each other. I
don't know.
Speaker 4 (31:08):
What, We're just pushing you forward in a race.
Speaker 1 (31:10):
Wait. When I started running long distances, the big thing
was having no soul, was having like yeah, or wearing
those like shoes with the toes where your toes stick out,
and even today, like you see people with giant souls.
I saw a guy this this past weekend running in
in sort of like what you think of as like
a Roman thong, like like sandal. Really like he's story.
Speaker 4 (31:34):
I think he's trying to get away from the story.
Speaker 2 (31:36):
Well, here's the thing, like, if you're running one hundred miles, like,
is it cheating if you have like a slightly more
comfortable shoe, like if I ran, I don't even think
using like a moped is cheating if it's one hundred miles.
Speaker 6 (31:51):
We got to ask him, if you saw someone who
was speeding past you and they had some bigger, bigger souls,
are you going to point them out then flag down
an official.
Speaker 1 (31:58):
To turn them into the vice director? No, I don't
think I would notice.
Speaker 2 (32:03):
People have been turning each other in apparently too, there
was this guy. This show is produced by Stacy Wong
Magnus Hendrickson is our supervising producer, Amy Keen is our editor,
and Brendan Francis Noonham is our executive producer. Special thanks
to Jeff Muscus and Maria Ling and Sage Bauman heads
(32:26):
Bloomberg Podcasts. If you have a minute, please rate and
review the show. It helps people find us and it
would really mean a lot to us. And if you
have a story that should be our business, email us
at Everybody's at Bloomberg dot net. That is Everybody's with
an us at Bloomberg dot net. And thank you for listening.
To see you next week.
Bloomberg Audio Studios, Podcasts, radio news. It's Everybody's Business from
Bloomberg BusinessWeek.
Speaker 2 (00:15):
I'm Max Chaffin and I'm Stacy Vannocksmith.
Speaker 1 (00:17):
Hey, Stacy, I'm Max.
Speaker 2 (00:19):
This is a special day. It's our first show. It's
oursial show.
Speaker 1 (00:23):
It's the Holy Day Stacy. The first official episode of
a new podcast from Bloomberg Business Week, where we break
down the news of the week. We bring in some
of the smartest journalists we know from the extended Bloomberg
universe and of the writers and reporters and editors from
Bloomberg BusinessWeek and sort of chew over what happened, what matters,
and what's coming next.
Speaker 2 (00:44):
And today's show, our first show, is all about beginnings,
our brave new world or brave new economy, actually things
like tariffs. Those are still pretty new and changing by
the hour, but have not been showing up in prices.
Speaker 1 (01:00):
Yet showing up in prizes. And we have Amanda mal
BusinessWeek columnists consumer spending expert to talk that over, to
mull that over, if you will, Stacy, you and Amanda,
you went on a field trip without me? We did okay?
And then the NBA playoffs are heating up, and there
is a new sports owner in town, an owner that
(01:21):
I think most fans are going to be really excited about.
I'm talking, of course, about the private equity bro They
are buying up teams, valuations are going up, and we
have Randall Williams, BusinessWeek columnists and sports reporter coming in
to talk to us all about that.
Speaker 2 (01:36):
Who does not love private equity? And finally we have
our underrated story of the week, in this case a
new kind of sporting equipment that might be breaking some
pretty important rules. Max, I'm gonna tell you this one
gets personal for you.
Speaker 1 (01:50):
I can't wait. Okay, But of course this show is
called Everybody's Business, and we take the everybody very serious.
Speaker 2 (01:59):
We do it seriously, and we want to make sure
that there is something in the show for everybody. But Max,
you and I have both been covering the world of
business and economics for a very long time, and it
can be a little bit of a bubble. Can be
hard to know, like what normal people find interesting?
Speaker 1 (02:14):
Are you saying that we're not normal? Ever?
Speaker 2 (02:17):
So slightly siloed is all I'm saying. So we wanted
to see what other people who don't spend all their
time looking at this stuff want to know about.
Speaker 1 (02:26):
Well, this is my favorite part of the show because
we're in New York. Obviously, people from all over the
world are here, and you, Stacy Vanick Smith, are like
very good at going out and talking to those people
in the world.
Speaker 2 (02:38):
Yes, I am getting very good at going up to
people and saying, have you heard the good news? You
can be on a podcast, So to get the voice
of the people, I went to the beating heart of
New York City, of New York City Times Square to
ask people what are the business and economic stories that
you want to hear about.
Speaker 3 (02:59):
I mean, for sure everybody wants to know more about that.
We all just graduated college, so it's like keeping up
with the different economic policies that will affect us as
like young investors.
Speaker 1 (03:10):
Obviously, the price of eggs.
Speaker 2 (03:12):
Really you're a big egg watcher.
Speaker 1 (03:13):
Yes, I work at a boutique grocery store where, like
I'm not joking, a box of a dozen eggs is
like ten twelve dollars. Everyone's talking about terrorists. I work
at a.
Speaker 3 (03:24):
Small consulting firm, and I'm worried about how that's gonna
affect like like my job.
Speaker 1 (03:30):
You know what I mean, I'm just glued to the
gossip of the markets.
Speaker 2 (03:33):
Are you a markets watcher.
Speaker 4 (03:35):
In times of crisis? Yes?
Speaker 2 (03:36):
Would you guys listen to a new business podcast?
Speaker 1 (03:39):
I would? Yeah?
Speaker 2 (03:40):
What about you guys.
Speaker 3 (03:41):
I'm not a big podcast person, but if I were
to listen to a podcast, thank you?
Speaker 1 (03:46):
Sure?
Speaker 2 (03:46):
Am I going to be on the podcast? Yes? Is
that okay? Did you get good sound bites on my
good Yeah? I got great sound bites. I wish I
knew that I would have sounded better.
Speaker 1 (03:55):
Wow, people have spoken. So we're worried about eggs, worried
about consulting rates.
Speaker 2 (04:02):
I think jobs. Ok, people are worried about their jobs.
Speaker 1 (04:05):
Well that's fair. We're going to do this every week,
not always questions about what should be on the podcast,
but we do want to hear from you listeners about
what you want us to talk about and what you're
seeing in the economy. You should send us an email.
Everybody's at Bloomberg dot net. That's everybody's with an s
at Bloomberg dot net. We're going to repeat that email
address over and over again many times until you actually
(04:27):
send us some email. So get ready, all right, Stacey,
the big kind of business news earlier this week. It
was good news. It was that inflation, which everybody had
been really worried about with you know, Trump's high tariffs
and the erratic nature of the tariffs. It actually wasn't
that bad. It was two point three percent. I think
that was the lowest level that we've seen since twenty
(04:48):
twenty one. You know, that was before we had the
post pandemic spike. Trump also backed down on his China tariffs,
announcing a ninety day pause. It's going down to thirty
percent from one hundred and forty f five percent. So
this is good, right. I mean, basically those eggs that
we heard about in the UH eggs they're gonna cost
less now, I think, and consultants will be able to flourish,
(05:11):
and those those graduates will all get you. Everything is great.
Speaker 2 (05:14):
I mean, I have to say, I really expected to
see the consumer price index, that's the inflation index, go
up a lot, because Trump's tariffs have been in effect
for a couple months now, so we should be starting
to see them. But you're right, the numbers just didn't
show that. And the markets have been on this happy tear.
Speaker 1 (05:33):
And we should just say, for for anyone who hasn't
followed this as closely as us. The reason we expected, yeah,
which is everyone. The reason we expected prices to go
up is because a tariff is essentially a tax on
a consumer good. You know, it costs more money to
bring some item, you know, an article of clothing, a toy, whatever,
into the United States, and somebody has to pay for
(05:55):
that cost, whether it's a company, and ultimately consumers are
gonna pay. And that's why we wanted to talk to
Amanda Mull because this is what she does. She writes
about consumer behavior and retail businesses and kind of all
the ways that affects culture. Amanda's here, Now, how you doing.
Speaker 5 (06:12):
I'm doing great, Thanks for having me.
Speaker 2 (06:14):
We're very excited to have you on our first episode.
And you just wrote this article called Trump's tariffs are
going to ruin Christmas, and it is all about tariffs
and prices. So, just to start out very simply, looking
at the data this week, inflation numbers looking really good.
What's going on? Why are the tariffs not showing up?
Speaker 3 (06:36):
The most important thing to remember in trying to understand
all of this is that our experience of the economy
as sort of like end consumers is a lagging indicator
of what is going on in the economy.
Speaker 2 (06:46):
Lagging mean like it doesn't show up until after it's
already happened.
Speaker 3 (06:50):
Our experience will change after months of many other things
going into effect that will eventually affect us. The process
of getting goods onto the shelves is a month long
and sometimes years long process, depending on what the product is.
So a lot of the stuff that's on shelves right
now was imported in warehouse before any tariffs went into effect.
So we still have like a lot of goods in
(07:11):
the system that would have been tariff affected if they
had been imported a little bit later, but they weren't.
And then you also get this behavior from retailers in
brands that are like looking at projections for what happens
once some level of tariff goes into effect, and they're saying, Okay,
we need cash on hand, we need to move inventory now,
we need to front load a lot of this consumer
(07:33):
spending because consumers are worried and a lot of them
have their wallets open right now for purchases that they
might have otherwise made in six months or in a
year or at the end of the summer. So you've
got retailers going, hey, we know you're worried about tariffs.
We have brought in a lot of extra inventory, and
we know that you want to buy right now. So
here's fifteen percent off, or here's buy one, get one
fifty percent off. So you have all of these behaviors
(07:54):
that are happening right now with this pre tariff merchandise.
That is keeping prices stable, and that is encouraging people
to buy at a pretty pretty steady rate. But what
like Goldman Analysts said in a note to clients about
this CPI reading is that we're not done with this,
like probably next month and maybe in the months to
come after.
Speaker 5 (08:13):
That is where we're going.
Speaker 3 (08:14):
To see a lot of these pricing variations start to
bubble up, because that's when you're going to get goods
in the system that are more teriff affected. I've seen
a lot of like anecdotal evidence that a lot of
like customs processors and a lot of shippers don't know
what they're supposed to be charging interiors. Yeah, people are
very confused.
Speaker 1 (08:33):
So what you're saying basically is boats move slowly, Like yes,
you know, a lot of this stuff comes on a
giant container, and those container ships take weeks to get here.
And not just that, but a lot of the goods
that are being brought on those container ships contain other
items that also arrive on container ships. This just takes
a long time. And a lot of companies like Apple, right,
(08:55):
they just like frantically imported as much of their stuff
as they.
Speaker 2 (08:59):
Could because six hundred tons or something and iPhone.
Speaker 1 (09:03):
Trump made this very easy for them, and maybe even deliberately,
right he put the date on the calendar Liberation Day,
so we all know, got to get as much you know,
stuff ahead of Liberation Day. It seems like that kind
of happened.
Speaker 5 (09:15):
Right absolutely.
Speaker 3 (09:16):
I talked to a consumer industry expert from ey who
said that of the businesses that he has sort of
been observing and the ones you know that are in
their client base, he saw retailers and brands bringing in
on average about ninety days of excess inventory, and to
the point where you could look around the freight industry
and the logistics industry in the US and see like
warehouses filling up and like warehouse space being sort of
(09:39):
at a premium, especially near ports. Companies that had the
cash on hands to bring in extra stuff really did
just frontload as much as they could.
Speaker 2 (09:47):
So tariffs haven't really shown up yet, but they're definitely
going to show up. And so Max, I don't know
if you know this, but Amanda and I live pretty
close to each other, are in Brooklyn, and we live
pretty close to a Target, which is basically Amanda's church
as it can summer reporter, so she agreed to meet
me there and take me on a little Target tariff tour.
Speaker 3 (10:07):
We're looking at a rather large TV. It's a sixty
five inch Roku TV two fifty. When I worked a
Best Buy from like two thousand and four to two
thousand and eight, flat panel TVs.
Speaker 5 (10:18):
Were still several thousand dollars.
Speaker 3 (10:20):
We would put one on sale for like one thousand bucks,
and you know, people would line up for that stuff.
But they've come down in price a ton in the past,
like fifteen years. The ultra inexpensive two hundred and fifty
dollars sixty five inch TV that you can take home
today from Target is a product, ultimately of what a
globalized manufacturing chain produces for wealthy consumers.
Speaker 2 (10:42):
And what happens to our flat screen TVs in a tariffed.
Speaker 3 (10:46):
World like everything they get a lot more expensive. This
is the type of manufacturing that is really hard to
reproduce in new places because it is a very delicate process.
It requires a lot of specialized and you need like
a ton of workers that you can pay not that
much money in order to pull this off at these prices.
Speaker 2 (11:08):
All right, shall we go to produce? Yeah, that's good,
And why have you brought us here?
Speaker 5 (11:14):
We're looking at pineapples. Let me see, it's a del
Monte pineapple.
Speaker 3 (11:19):
They are three bucks from big and Heavy Pineapple is
getting this from Costa Rica and you can.
Speaker 5 (11:27):
Buy it like fresh off the shelf for three bucks.
Speaker 2 (11:29):
Is like Target and Miracle. So what is going to
happen to this section of the store with tariffs?
Speaker 3 (11:35):
Fresh produce supply chains rely on a cold storage and
cold chain and a lot of elements of global shipping
that are set to become more expensive. We get a
lot of our fruit from Central and South America. If
you want pineapple, if you want mangoes, then tariffs are
going to make a lot of those things a lot
more expensive, especially out of season. Like I don't know
(11:56):
if they're going to be like affordable to somebody that's
like trying to figure out their grocery budget.
Speaker 2 (12:00):
You like, these might not be in Target next year.
Speaker 3 (12:03):
No, the apples probably will be that. Like I don't
know if we're gonna have mangos.
Speaker 1 (12:08):
I have joked to my wife many times that when
we're all gone and the alien archaeologists find our civilization,
the thing that they are going to be most impressed
by is this the produce that you can get from
Like the fact that you can like walk into a
Whole Foods or a Target and buy an exotic fruit
(12:28):
or a freaking ostrich egg or whatever for almost no money.
Speaker 2 (12:32):
It is amazing, like from halfway around the world, and it.
Speaker 1 (12:35):
Would still be amazing to buy that del Monte pineapple
for four fifty even like still a pineapple that made
it like, you know, a huge distance. But you do wonder,
like at what point does that price become too much?
And does the whole system that we've kind of created
around these cheap goods, like when does it start to
break down? Like how much could people of the world
(12:58):
really be willing to spend.
Speaker 5 (13:00):
In fresh produce?
Speaker 3 (13:01):
Is really tough when you look at like how little
small changes in price could affect availability because the margins
at every step of the fresh produce chain are like
really really thin even at grocery. Like grocery as far
as retail goes in America is known to have just
like the most razor thin margins. The items themselves may
(13:21):
not be like super heavily tariffed. A lot of it
comes from Central and South America, which is less affected
by the Liberation Day tariff table than China would be,
but you still end up in a situation where you
need a lot of logistics resources that are built out
to work at scale in moving around all of these
different types of goods from different places. So if you
(13:42):
have like a big drop in imports from some places,
logistics companies and freight companies and truck drivers sort of
like drop out of the system. They go elsewhere, they
find other types of jobs, warehouses, close trucks, you know,
leave the road. So this is one of those second third,
fourth order effects where it's like if you change your
logistics system in the country significantly, how does that affect
(14:02):
the moving around like really fragile, really perishable goods like
fresh fruit that comes in from Costa Rico or from
Mexico or from Columbia or wherever. You start tinkering with
little things and then the effects just reverberate out in
ways that are not necessarily like super easily predictable from
where we are today.
Speaker 2 (14:20):
So we have some flat screen TV's that are going
to get a lot more expensive pineapples that might not
be there. But we went to another part of the store.
Here we go.
Speaker 3 (14:28):
We're in the one of the makeup aisles right now.
You know, if you look at makeup, there's lots of
like fiddly little plastic parts.
Speaker 5 (14:33):
There's lots of packaging.
Speaker 2 (14:34):
Yes, the packaging is like the best part.
Speaker 3 (14:36):
Yes, packaging is super important to selling makeup. Packaging is
one of the most overseas concentrated parts of the supply
chain period.
Speaker 5 (14:43):
Most of it is in China and other.
Speaker 3 (14:45):
Parts of Asia, with some types of packaging mescaro whatever else.
Like sometimes the tube will be made in one place,
in the cap to the tube will be made in
another in the brush brissels will be made in another,
and that sort of all comes together to be manufactured
into a saleable product. For instance, this elf Karen has
a box around it so that it can hang on
a shelf, and then like the group that goes inside
might come from someplace else entirely, and they're all shipped
(15:06):
to these manufacturing facilities that then put the product together.
Speaker 2 (15:09):
It's funny because I feel like what you're talking about
is something I always think of when we talk about
like iPhones. It's like, oh, they've components made in forty
four countries. But it actually seems like maybe mascara is
not different.
Speaker 3 (15:20):
Yes, the things we think of as simple are rarely
simple because we've basically set up the entire global economy
to ensure that, like they're efficient by a certain definition
and cheap.
Speaker 5 (15:29):
Right, so you find, you know.
Speaker 3 (15:32):
Quote unquote efficiencies that enable you to do all of
this across like a massive geographic space in order to
make something that is ultimately like extremely complex, but much
cheaper than it would be if done beginning to end
in one place.
Speaker 2 (15:46):
Okay, so I feel like we should probably pick one
of these up. For Max.
Speaker 3 (15:49):
We brought you a mascara, oh elf, flash extender mascara.
Speaker 5 (15:53):
Wow, Oh for you.
Speaker 1 (15:54):
I just have to ask why this product Just a.
Speaker 2 (15:58):
Good thing to keep in mind, there's no message. Really,
we're not implying anything. Not really, I'll.
Speaker 1 (16:03):
Take it out better.
Speaker 2 (16:06):
Lash has never hurt anybody.
Speaker 1 (16:08):
No, it is a great time to be a sports
fan right now. The NBA playoffs are heating up, Baseball
season is in full swing. The WNBA is about to start,
you know today as this episode drops. On Friday, We're
gonna have a Knicks playoff game and Mets against Yankees
going on the same time. I am so excited about it.
(16:31):
But there's just one thing that could make our sporting
experience a little bit better, and that would be owners
who knew how to squeeze efficiencies out of their franchises.
I was just thinking the values a little higher.
Speaker 2 (16:46):
Yes, absolutely, I feel like when when sports fans watch games,
what we're always looking for.
Speaker 1 (16:52):
More private equity, which is why absolutely we have Randall Williams,
Bloomberg BusinessWeek sports columnist, friend of the podcast here with
us in the studio. Randall just wrote a column about
the skyrocketing valuations for sports teams. Randal, how you.
Speaker 4 (17:07):
Doing, I'm doing all right, Thank you all for having me.
I'm excited.
Speaker 1 (17:10):
You know this, but many people probably don't. The Boston
Celtics were recently sold for six point one billion dollars.
That's a team that was worth four hundred million. I believe.
According to Forbes in twenty eleven, whoa and yeah, and
it goes on and on.
Speaker 2 (17:24):
The Eagles has been to them? That's a big Boston
glow up.
Speaker 4 (17:27):
What happened to them?
Speaker 1 (17:29):
I mean? And it's not just the Celtics, right. The
Eagles went from being worth one point two billion back
then to eight point three the Dodgers eight hundred million
now six point nine billion. Yep, randal. What's happening here?
What is causing this?
Speaker 6 (17:42):
The media deals are getting bigger for each of these leagues,
and the sports are growing in popularity. The stars are
getting bigger. You just named three different teams where we
could all name a superstar on them. For the Dodgers
it's show hal time.
Speaker 2 (17:54):
Might be a stretch, you could do it, Jalen Hurt
say crime, yeah yeah.
Speaker 6 (18:00):
And with the Celtics Jason Tatum and Jalen Brown of course,
and overtime that was Paul Pierce and Kevin Garnett and
Ray Allen. So the media deals are driving these valuations up,
and ultimately the cost to run these teams is also going.
Speaker 4 (18:13):
Up as well.
Speaker 2 (18:13):
Yeah, what goes into a team valuation? Like, what does
it mean if a team is worth eight billion dollars.
Speaker 4 (18:18):
Well, first of all, it's a market real estate. So
like the stadium, Yes, for sure, the stadium.
Speaker 6 (18:23):
If you own your own stadium, then that gives you
the ability to make a lot of revenue from things
outside of your sports team. So let's use the Boston
Celtics as an example. They get forty one home games
a year, but you know, forty one dates out of
three hundred and sixty five, that's not a lot of
opportunity to make money.
Speaker 4 (18:38):
Now.
Speaker 6 (18:38):
Granted, I think it's the Boston Bruins are also in
that stadium, but the Celtics don't own their own stadium.
So as part of the six point one billion dollar deal,
one of the things that NBA owners, NBA executives, and
business people alike were watching to see is how much
this team would go for because the NBA is looking
to expand. Now for the expansion, people, they're watching this
because like, Okay, the Celtics don't own their stadium, can't
(18:59):
go for that much. And then it goes for six
point one billion dollars, which is more than the Commanders who.
Speaker 1 (19:04):
Bought the Celtics. I mean, it's this guy, Bill Chisholm
co founder of STG Partners. That's a PE firm, but
then there's PE money inside of that.
Speaker 2 (19:12):
He like private equity, sorry, not physical education.
Speaker 1 (19:14):
Yeah.
Speaker 6 (19:15):
Bill Chisholm is the leading investor. He has a billion
dollars in six Street money. He has Rob Hale, he
has Bruce A. Beal junior. So his ownership group is
very diverse. He's added some more money since then, but
it's a lot of money.
Speaker 2 (19:27):
Sixth Street is the private equity firm. Correct, okay, and
the private equity firm bought it, not the guy who
runs it, but the actual private equity firm.
Speaker 6 (19:34):
No, No, Bill Chislm is the organizer. Now, the thing with
private equity firms and sports is that they cannot be
controlling owners. They are passive investors. Eventually they'll exit, and
the exits of these deals is still to be determined.
Speaker 1 (19:47):
What is it in the NBA? Is it ten percent
or twenty percent? Is the limit for private equity?
Speaker 6 (19:50):
A single private equity firm can own up to twenty
percent of an NBA franchise. Private equity and totality can
own thirty percent. So you so ideally you could have
twenty percent of one firm and then ten percent to
another to get to thirty.
Speaker 1 (20:03):
This strikes me, and forgive my saying this, but this
strikes me because you have a private equity guy who
is leading the deal. Like these are basically private equity groups.
They're just it's just equity group made up of a
bunch of little private equity.
Speaker 4 (20:19):
Groups in some ways.
Speaker 6 (20:20):
In some ways, however, the biggest difference is that you
can have your money come from private equity, but your
firm cannot run the team.
Speaker 4 (20:29):
That's the difference.
Speaker 6 (20:30):
So you can name any private equity person in the
world right now, and that individual could buy it, but
the firm could not.
Speaker 2 (20:35):
Because I feel like normally when private equity buys something
like for a while, private equity ow KFC and stuff,
I feel like they kind of tend to strip things
for parts. Yeah, that's exactly why it's great.
Speaker 6 (20:45):
That's why sports leagues don't want private equity firms to
run teams. And there's a lot of fan fear if
you jump in Reddit threads, Fans hate the idea of
this because they think that private equity firms are going
to strip the teams down and be like, you know what,
we're not paying Jalen Hurts we're not paying sequon bark,
We're just going to invest in the stadium instead.
Speaker 2 (21:02):
Foam fingers are going to get smaller.
Speaker 1 (21:04):
They're definitely making fingers. It does kind of cut against
what I think most people understand is fandom, Right. You
understand teams as being kind of community groups almost, and
then you have these groups of owners and they're buying
not just one franchise, they're buying another franchise. And you
might think, oh, it's like the guy who owns the
(21:25):
baseball team in town is buying the hockey team in
town or whatever. But no, the group that owns the
Celtics also owns i think ten percent of the Giants,
and like that doesn't fit with like how a normal
fan I think understands the point of a sports team
or even the point of sports. But I'm wondering, Randall,
are we seeing changes in how these ownership groups manage
(21:47):
their teams? Are they doing the private equity playbook? Are
they making the phone hand smaller?
Speaker 4 (21:51):
It depends on who you are.
Speaker 6 (21:52):
Yeah, Like I think if you look at Josh Harris
and the Washington Commanders, when he bought that team was
a total train wreck. Now since then, he's struck a
four billion dollar stadium deal. He has put more money
into a quite frankly, a horrible stadium. And so you
have Josh Eris, who comes from private equity investing all
of this money. Now he has the money to do this,
there aren't going to be a lot of people who
(22:14):
have the same money. But if you look at the
Celtics deal, for example, Bill Chisholm has not said anything
about a new stadium even though he's not making any
money from let's say concerts if Taylor Swift comes in
town or another.
Speaker 2 (22:25):
Oh, that's how you can kind of leverage your.
Speaker 6 (22:27):
Stadium any money from those things. And so it's really
dependent on how much money you have. Private equity can
come in and help these stadium costs, other real estate things,
other projects, liquidity things like that.
Speaker 1 (22:39):
Randall, let's dig into a little bit around like what
is driving these valuations. We kind of hit on the
media deals, so just talk a little bit about what's
behind that. I mean, my understanding sports viewership is up
a little bit historically, but it's relatively flat. Like if
you look at like super Bowl viewership numbers over the
last like fifty years, like it's gone up, but it's
(23:00):
sort of gone up in the way that you would
expect given population growth, but everything else has fallen a lot.
So basically sports has sort of maintained high viewership while
like sitcoms, reality shows, all that stuff has fallen out.
These games, those are live, Those are unique events that
if you care about it, and a lot of people
care about sports, there is no way of getting around it.
(23:21):
And that is like gold for advertisers, for media.
Speaker 6 (23:24):
Yeah, absolutely, it is the only thing people watch live.
The reality is the NFL is a behemoth. I mean,
I was shocked that the Super Bowl had one hundred
and twenty seven million people watch it when at one
point the game was forty to six at halftime, I
believe it was like twenty four to nothing or something
like one hundred and twenty seven million people when the
previous two games were incredible games.
Speaker 2 (23:43):
But it was an underdog win, which was thrilling.
Speaker 5 (23:45):
Eh.
Speaker 6 (23:45):
The Eagles were pretty good all three chief They had
the three peak going, they had the three peak going.
But if you, I mean, if you were paying attention
to both teams, the Eagles were the dominant team. The
Chiefs were surviving week by week. Now the NBA has
seen some fluctuation. Of course, NBA Finals ratings were down.
Now current playoff viewership is that an all time high? However,
(24:05):
what happens in Lebron exits? Steph Curry exits, and I mean,
if the Knicks don't pull this series out, you could
see a dramatic fault, not just because they're a popular team,
but you look at the markets that are out there,
Oklahoma City, the Indiana Pacers, the Minnesota Timberwolves, and the
Denver Nuggets. It's not the same thing as the New
York Knicks. Even the brand recognition isn't the same. But
at the same time, NBA has a seventy six billion
(24:26):
dollar media deal that isn't up until twenty thirty.
Speaker 2 (24:30):
Pay them to air their games.
Speaker 6 (24:32):
Yes, the NBA's new media deals with ESPN, it is
with Amazon and NBC, and the NFL has like six
different media partners. The MLB will be negotiating theres pretty
soon as well.
Speaker 2 (24:43):
What does private equity see in sports teams?
Speaker 1 (24:46):
Like?
Speaker 2 (24:46):
Why are they making this investment?
Speaker 6 (24:47):
I mean, I think if you keep looking at the
media deals and they keep doubling, they keep tripling, and
the franchise valuations. If you look at the NBA or
the NFL or the MLB. These sales keep going for
higher and higher and high. I mean the Panthers sold
for two to two, the Denver Broncos sold for four
to six, The Washington Commanders, yes, billions, and then the
(25:08):
Washington Commanders sold for six billion. You're looking at these
exits and it's like wow, Like these teams are tripling
over time in a matter of a decade. You don't
normally see that in business. And so what the NFL
has done with their rules is if a private equity
firm buys into it, you have to hold it for
six years. They're not looking for immediate exits. And quite frankly,
I'm not sure that Blue IU was looking to exit
(25:28):
as early as they were with the Phoenix Suns. It's
just that Robert Sarver got in trouble and so he
was forced to sell the team, or he elected to
sell the team.
Speaker 1 (25:36):
So, having done some reporting on this and kind of
followed private equity in general, private equity in healthcare for instance,
you know, the business model is basically like you cut
a bunch of costs, you raise prices where you can,
and then you sell, often to another private equity firm.
What I'm wondering is who are the buyers? Like, if
the price of the Celtics has gone up, the math
(25:58):
is going to be hard. But you know, like one
thousand percent or whatever over the last fifteen years, how
do you get that? Are they expecting another thousand percent?
And if that happens, who's the buyer? Like, at what
point does this start to look like a bubble rather
than an asset with a lot of upside?
Speaker 4 (26:13):
Well, I think that it really depends on who you ask.
Speaker 6 (26:16):
As I'm watching this, I think it's incredible that the
Celtics got to six to one. I've talked to plenty
of NFL owners and they all tell me like they
don't think they're anywhere near the ceiling of this. And
the Super Bowl is kind of a telltale sign at that,
because if your biggest event is a blowout and it
sets a record in viewership, you're still going to have
media companies that are going to want to buy in
at a new, bigger price. And this is a reminder,
(26:37):
the NFL's media deal is over one hundred billion dollars
and yet they set a record in a blowout game.
And so what's the next one going to be one
hundred and fifty billion, one hundred and seventy five billion,
we don't know, and so that's going to drive valuations up.
The NBA's media deal begins this upcoming season, and so
that's a seventy six billion dollar media deal that's going
to drive up values for the next ten years as well. Now,
(26:58):
what's going to be interesting to see is how these
owners offset the cost because stadiums aren't getting any cheaper,
contracts aren't getting any cheaper. And you're right, there are
going to be some billionaires who are priced out of this,
and you will see the NFL, the NBA, the MLB
adjust their private equity rules so that, you know, these
private equity firms can come in and provide solutions to
owners who aren't capital heavy.
Speaker 1 (27:19):
Randall, Like, you're a sports business reporter, but I mean,
I assume you can't totally divorce your fandom from your
I know we're all objective journalists, but I'm sure it's
sometimes it slips through the cracks. I mean, how are
you feeling about this? We are to our final segment,
(27:40):
and Randall, you're gonna need to stick around for this,
all right? All right, This is where either Stacy or
I will go through the depths of the news cycle,
will do deep dives, will do extensive research and find
the underrated story of the week, the story that people
should be paying more attention to. And Stacy, what is
(28:00):
it this week?
Speaker 2 (28:01):
So I brought this story Randall. I don't know if
you know this, but both Max and I are runners,
and over the weekend, Max and I accumulatively ran one
hundred miles. Well, okay, I'll be truthful, which is that
Max ran one hundred miles and I ran no miles.
He runs ultra marathons because sometimes one marathon isn't enough.
(28:22):
How is that embarrassing? It would be the first thing
I said to everybody.
Speaker 4 (28:25):
Wait a minute, the marathon was one hundred.
Speaker 2 (28:27):
No he yeah, he ran an ultra marathon one hundred.
Speaker 4 (28:29):
You're not the first person I've met that does this.
Speaker 1 (28:32):
Yeah. No, I know it's like a middle aged cliche.
Speaker 2 (28:36):
Does that.
Speaker 6 (28:37):
Let's set automobiles and vehicles aside. Hasn't heard of horses, mules,
anything like that.
Speaker 1 (28:45):
There is a mule. You can get a sligh.
Speaker 2 (28:49):
Well, so my underrated story is that the sport of
ultra marathoning very long distance running has been plagued by
scandal in the form of super puffy shoes. So apparently,
when you run one hundred miles and this feels reasonable,
you want super poofy soles on your shoes. And we've
all seen this has become a trend, right, the Hokah
(29:11):
shoes and stuff like that getting poofier and poofier, And
apparently if you run one hundred miles you want super
lofty shoes. But there are now these careful regulations around
how shoe sole.
Speaker 1 (29:22):
High, how much poof can you have? Yes?
Speaker 2 (29:24):
And people are getting disqualified from races for overly poof Wow. Yeah,
but the shoemakers keep making them and they don't care.
They are upping the anti. There's a new shoe from
Puma where the sole of the shoe is fifty eight millimeters,
which is the size of a Rubik's cube.
Speaker 1 (29:43):
Okay, can you show me?
Speaker 2 (29:44):
Yes? Here is the picture. My god, that's this is
your people.
Speaker 1 (29:48):
That is obscene.
Speaker 2 (29:50):
Well, apparently people love these shoes, and the poofy or
the sole, the more people will pay. And because shoe
sales have been declining for the past two years, they're
down by two percent running shoes. Shoes like shoemakers are
getting more and more invested in shoes that they can
charge a premium for and apparently people will just pay
endless amounts of money. So actual money being made from
(30:10):
shoes up fourteen percent in spite of the sales drop
because of poofy.
Speaker 4 (30:14):
Soles, and you're basically heals for men.
Speaker 2 (30:18):
Heals from men.
Speaker 1 (30:19):
First of all, there is no this is not an
ultra running story. There is no fashion. I mean, you
confirm or deny that these are heels for men, they are,
But I'm just saying that this is These are two
worlds that are are that could not be further from
one another. No one who is actually running one hundred
miles looks their best, to say the least. I also
(30:41):
think it's funny how in shoes you have all of
this amazing innovation. You know, earlier it was the carbon
fiber soles, and there are always, yeah, there are always
these like crazy innovations and all this conversation around performance
and is it is it cheating or whatever. And then
you have fashion, which is like totally on the opposite
(31:02):
end of innovation, and like those two forces are sometimes
pushing against each other sometimes pushing with each other. I
don't know.
Speaker 4 (31:08):
What, We're just pushing you forward in a race.
Speaker 1 (31:10):
Wait. When I started running long distances, the big thing
was having no soul, was having like yeah, or wearing
those like shoes with the toes where your toes stick out,
and even today, like you see people with giant souls.
I saw a guy this this past weekend running in
in sort of like what you think of as like
a Roman thong, like like sandal. Really like he's story.
Speaker 4 (31:34):
I think he's trying to get away from the story.
Speaker 2 (31:36):
Well, here's the thing, like, if you're running one hundred miles, like,
is it cheating if you have like a slightly more
comfortable shoe, like if I ran, I don't even think
using like a moped is cheating if it's one hundred miles.
Speaker 6 (31:51):
We got to ask him, if you saw someone who
was speeding past you and they had some bigger, bigger souls,
are you going to point them out then flag down
an official.
Speaker 1 (31:58):
To turn them into the vice director? No, I don't
think I would notice.
Speaker 2 (32:03):
People have been turning each other in apparently too, there
was this guy. This show is produced by Stacy Wong
Magnus Hendrickson is our supervising producer, Amy Keen is our editor,
and Brendan Francis Noonham is our executive producer. Special thanks
to Jeff Muscus and Maria Ling and Sage Bauman heads
(32:26):
Bloomberg Podcasts. If you have a minute, please rate and
review the show. It helps people find us and it
would really mean a lot to us. And if you
have a story that should be our business, email us
at Everybody's at Bloomberg dot net. That is Everybody's with
an us at Bloomberg dot net. And thank you for listening.
To see you next week.
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