March 28, 2025 • 38 mins
Join hosts Michael Barr, Scarlet Fu, Damian Sassower and guest host Vanessa Perdomo for a look at some of the latest headlines and stories in the business of sports.
Former MLB All Star and MLB Network lead studio analyst Harold Reynolds joins to help celebrate the return of big league baseball. He shares his thoughts on some of the top storylines heading into the year.
Then, we dive into the latest research from Bloomberg Intelligence with Bloomberg Intelligence technology and media analysts Geetha Ranganathan and Kevin Near on the value of NCAA Tournament programming and StubHub’s recently announced IPO plans.
Plus, ImpactX Sports Group chairman and CEO Xavier Gutierrez details some of the biggest projects at his private investment and strategic advisory firm and where he sees the biggest moves in sports-related investing.
See omnystudio.com/listener for privacy information.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is the business
of sports.
Speaker 2 (00:10):
The business of sports can be intimidating or hard for
a starting to break into.
Speaker 3 (00:14):
We really appreciate when our owners are actually there, you know,
with us through the journey.
Speaker 4 (00:18):
Teams ours especially have been very intentional to diversify at
all levels of the company. I think we're in bolden
years for the NFL and college football.
Speaker 5 (00:26):
Our demographic reach has continued to explaide.
Speaker 6 (00:29):
This is going to be really unlocking the streaming platform
for sports fans. Sports valuations arising, We'll see when they peak.
Speaker 3 (00:37):
You don't have to be the best in your sport
to make a whole ton of money.
Speaker 1 (00:42):
Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (00:47):
This is the Bloomberg Business of Sports, where we explore
the big money issues in the world of sports. I'm
Michael Barr, along with my colleagues Damian Tasauur and Vanessa Perdomo.
Scarlet Flo would join us later in the show. Coming up,
March Madness rolls on. We get the latest research from
our friends at Bloomberg Intelligence about the value of the
NCAA tournament is providing the network's carrying it plus we
check in with an old friend of the show, Impact
(01:09):
ex Sports Group chairman and CEO, Xavier Gutierras, for his
thoughts on some of the latest headlines in sports investing
and private equities growth in sports.
Speaker 8 (01:19):
There are limitations when you invest in a team in
terms of the percentage of ownership, the structure, the debt.
When you're looking at these opportunities for the hold code,
not the team co a lot more flexibility, a lot
more exit opportunities, a lot more structuring. And so I
believe that private equity is looking at that opportunity and
that valuation increase, and I think we're barely at the
(01:43):
first inn.
Speaker 7 (01:44):
All that is straight ahead on the Bloomberg business of sports.
But first, baseball is officially back. This weekend is the
first full weekend of baseball, and here now to talk
about all the big storylines heading into the year is
MLB Network's lead studiost Harold Reynolds. First of all, congratulations
on your new time slot five pm for your new show.
Speaker 9 (02:07):
Here we go.
Speaker 2 (02:08):
Yeah, no, thank you guys, thanks for having me. This
is like an annual yearly thing. I love it. But
the new studio time five o'clock, Greg amsinger Dan Pleazach myself.
You know the uniqueness of it is we're usually on
late at night and we're reacting in and out of
games with live lookings, and that's the bulk of that
(02:29):
show at late night. This year, from five to seven,
we'll be able to have a lot more scripted stuff
because there won't be a lot of games going at
that time. So we're excited to have people know exactly
where we are and when we are every day when
we'll be on, and we can craft a lot of
things directly to the sport. So it's gonna be a
lot of fun.
Speaker 5 (02:48):
Well, Harold, you were just in Tokyo, and I guess
I have to ask the elephant in the room the
question here, will the Los Angeles Dodgers go one hundred
and sixty two and zero this season? I mean, listen
to me, the record of one hundred and sixteen regular
season wins. I think, what's at the nineteen oh six Cubs,
the two thousand and one Mariners. You gotta believe that,
you know, there's a real chance here that they can
break that.
Speaker 2 (03:07):
Now, there's a real chance they're gonna they can pass
that number, no doubt, and one sixty two if they
play every other week, Yeah, they can do that. It's
like high school schedule, right. But no, I'll tell you what.
When you said the word let's talk about Japan, I'm
in that statement. Unbelievable. I hadn't been there since really
(03:28):
nineteen eighty eight when I went and played for the
US All Star Series over there, and it was just spectacular,
the fan engagement. Otani obviously with Otani, Yamamoto and Sasaki
on the Dodgers, and then I Inaga with the Cubs
and just all the five Japanese players, so they were
(03:48):
crazy about it in their country, but they love baseball.
It was so fun, so fun. Last thing, and I'll
let you guys get back at it. I've never seen this.
I saw a little bit when Aaron Judge was chasing
sixty two when I'm getting ready to tell you, but
every time show Hailed Tany came to the plate, he
could step his toe out the dugout. That went crazy, okay,
(04:11):
But as soon as he got in the batter's box
and the pitcher got his sign shook no, yes, okay,
here's my pitch. As soon as he got ready to deliver,
the place was dead. Silent, like fifty thousand whispers. It
was incredible. Everybody had their cameras and they didn't say
a word, and then he foul the ball off and
they go. It was incredible. If you're sitting at home
(04:37):
watching on TV, you're hitting your clicker, like the the
volume Braake was on here crazy.
Speaker 10 (04:42):
Well, we got to.
Speaker 6 (04:43):
Talk about that, hare. I mean, it's so interesting.
Speaker 10 (04:45):
Obviously with Otani, obviously we know he's, you know, the
best show in the game, and it's really we're seeing
something we haven't seen before. And he's supposedly supposed to
get back on the mound this year. What do you
think about that? Should he really try and get back
on the mound this year? I mean want MVP without
getting on the mound? Do we see it again? Do
we stop giving him the MVP at some point, even
though we know he could get it every single season?
Speaker 2 (05:08):
Absolutely he gets back on the mound, and if he
wins the MVP every year, it's okay with me. I mean, look,
we're coming across something you will never ever see again.
And I grew up on the West Coast. I grew
up in Oregon, and when John Wooden had his teams
coming through and they're winning those eighty eighth straight and
all that stuff. One of my brothers would say to me,
(05:32):
you better recognize greatness when it's upon you. You'll never
see it again.
Speaker 3 (05:35):
The old one is hit high and deep right field.
If it's fair, it's gone. And that one is fair.
Had a home run, a towering home run. He handed
a second deck for sho Hey Otanio.
Speaker 2 (05:49):
And I believe that we will never see anybody like
Otani again. Just recognize it and enjoy it.
Speaker 5 (05:54):
Well, yeah, Harold, I mean I couldn't agree more. And
I mean certainly, you know, if you're for Michael Barr
and you know you just got paid your bonus, you're
a lumberg and you're firing up your Fanuel account. Plus
two seventy five. I don't remember a team coming into
the season at plus two seventy five to win the
World Series. And that's where the Dodgers are today. And
a lot of it has to do with the fact
that the Yankees lost Garrett Cole. There is you know
that kind of skewed the betting lines. Talk to us
(06:16):
about some of the other teams, the Braves, the Yankees,
the Mets, the Phillies, the Orioles are those the teams
that have the next best shot of potentially getting a
win against the Dodgers the season.
Speaker 2 (06:26):
Well, what the Dodgs have done, there's that's great pitching depth.
So that's beyond all the Freddy Freeman, Moki Betts and
show Hey and all that. Let's still they're pitching, but
teams that can contend. I think the National League asis loaded.
The Phillies are still a team that's going to be
really good. The Braves are very young and they continue
to do things excellent. And then obviously the Mets have
(06:48):
jumped in the fray. But I think the one thing
that as I look down the stretch, it's not how
you start, it's who can add when they need it.
Speaker 3 (06:58):
And all those teams.
Speaker 2 (06:59):
I just talked to can add because they have a
minor league system, or they have young players that they
can trade, they can go do Those are the things
that I would look at. Who has the cachet that
can go trade a player. Seattle has six pitchers, they
can go get a player if they need it. Not
saying that that's the team to be. I like the
Rangers for that fact. There's a few teams. I think
(07:21):
that can in a series knock off anybody. That's the
beauty of our sport. But the Dodgers are clearly loaded.
I would not bet against them, but if there's a
way to look at maybe another club stepping up, that
would be it. And I think there's one pitcher out there,
Sandy al Cantara with the Marlins. I've been saying it
from all winter. When he threw his first pitch at
(07:43):
one hundred miles an hour, back healthy again in spring training,
in the first game, every team gravitated to him, and
I think he's a division changer. He's a playoff pitcher,
and he's a guy that could take you over the top.
You know, he's a guy that the Yankees can go
get and now you're back in the fold again. Those
are the time he's that kind of a pitcher. So
I keep my eyes on him, and then I keep
(08:04):
my eyes on the Dodgers, and if anybody can add
to beat.
Speaker 7 (08:06):
Them, well, we've talked about the best. Now we got
to talk about the rest. And I'm going to compare
it to I eighty. There's a big sinkhole in New
Jersey where I travel, and I got a detour and
the poor team that is in that sinkhole, the Chicago
White Sox. What is it going to take to get
that team at least put something on the board, Fellas.
Speaker 2 (08:30):
I don't think they're going to lose one hundred and
twenty or whatever it was last year again, and that
will affect the whole division. You know, it was easy
for them to have, you know, whether they have two
or three teams out of Central last year make the
playoffs because they beat up on the White Sox every day.
They'll be better. How do they turn it around? They've
got some young prospects coming, but it's going to come
(08:51):
down to eventually they have to sign some free agents
and you can't just say our farm system is going
to be better than everybody else. The disadvantage of today
is now you have a draft lottery, you have a
more of a slotted draft. You can't sit there and
say i'll wait for this guy, I'll pay him more
money and we'll get him in the fifth round. That
(09:14):
doesn't happen anymore. So it's a little harder to turn
it around than it was maybe ten or fifteen years
ago when the Astros were able to turn it all
around and get things going in Houston?
Speaker 10 (09:25):
Well, do you think one of those reasons, you know,
Michael said it there it's the best and then the rest.
Do you think one of those reasons it really is?
It goes back to the owners who are willing to spend.
Speaker 1 (09:35):
I mean, I.
Speaker 10 (09:36):
Feel like they've sort of broken the system again that
their Yankees are almost going to beat at their own
game at this point by the Dodgers in by the
Mets obviously stealing Sodo. Does that actually have this cachet
that is it worse now than it ever has been before?
Do you think between teams that are willing to spend
and teams are willing that aren't willing.
Speaker 2 (09:55):
To Well, I think what is a challenge is the
system has changed. You don't have young players signing long
term contracts when offered. You look at the Braves even
four or five years ago, right, you get Albi's signs
a long term deal. Tunya does all these young players
took one hundred million, thirty million, fifty million now they're
(10:17):
lad Junior sent five hundreds not enough, you know, And
so how the blue Jay is going to sign a
guy like that? Comes out of your system? I think
that's been more of an effect on how the sport
is being played than necessarily ownership trying to spend big
money on free agents. If you can't lock up guys
that you've had in your system for six years before
they're a free agent, then how are you going to
(10:38):
be able to compete? And that was always something that
the Guardians, who were the Indians back in the day,
were able to do. They locked up all their young
players at Alamar and locked in and Tolmi and all
those guys, and they could make a run. Even the
Yankees back in the day, you know, they get the
Moniker for the Evil Empire, but you locked up Jeter
(11:00):
Posada Rivera guys that are in your minor league system
to long term deals. That doesn't happen today because players
are not taking those long term deals. And that's why
the Braves are where they're at and the position they're in.
And so I think that's been more of a problem
than necessarily the owners are not spending. Hard to say
(11:20):
owners are spending when you got over five billion dollars
in salaries out in baseball, you know that's that's.
Speaker 10 (11:26):
Just the Dodgers and the Mets alone.
Speaker 5 (11:28):
Honestly, Well, you know, I mean, Harold, we're talking big
numbers here, we're talking big money. I'm gonna give you
a number here. Six point one billion. That's what the
Celtics just went for. And they don't even own their
own stadium. That's sixteen times total revenue. That's the price.
That's the ticket. Now, if you look at Major League Baseball,
the on average teams in Major League Baseball are trading
at six point six times revenue. Significantly less than that, right,
(11:49):
and it's actually the lowest of you know, the major sports,
plus Major League Soccer, which trades at a nine point
four x. So you know, what I need to know
is just how much higher can the value of the
New York Yankees at eight point four billionaire the Dodgers
at seven point seven billion?
Speaker 2 (12:02):
Go?
Speaker 5 (12:02):
I mean, are we capped here now? Finally?
Speaker 9 (12:05):
I mean?
Speaker 5 (12:05):
Or is it really just anyone's guess? I mean, can
these valuations continue to explode from here?
Speaker 2 (12:11):
I think they can continue to explode because there's only
thirty of them. It's a road gym, you know, that's
the uniqueness of it. And even the other sports we're
starting to see more soccer franchises are gonna come along.
You're going to see even football is expanding. Baseball eventually
will probably expand as well. But right now you've got
thirty teams, so that is like a.
Speaker 7 (12:32):
Jewel our Thanks to Harold Reynolds for joining us. He's
MLB Network's lead studio analyst and of course, a twelve
year MLB pro and two time AL All Star. Up Next,
we turn to March Madness and all the businesses looking
to make big money this year during the tournament. My
colleagues Damian Sasseur and Vanessa Perdomo, Michael Barr, You're listening
(12:55):
to the Bloomberg Business of Sports from Bloomberg Radio around
the world.
Speaker 1 (13:00):
This is Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (13:05):
This is the Bloomberg Business of Sports where we explore
the big money issues in the world of sports. I'm
Michael Barr along with my colleagues Damian Sassauer and Vanessa Bernomo.
March Madness is well under way, and our colleagues at
Bloomberg Intelligence have been tracking how a lot of businesses
are looking to earn big with all the interest in
the games. The men's tournament alone could draw over a
(13:28):
billion dollars in ad money. To take a deep dive
into who's looking to win big and how cord cutting
is factoring in. We bring in Bloomberg Intelligence senior media
analysts Keitha Raghanoffin and Bloomberg Intelligence equities analysts Kevin nar Keitha, Kevin,
Welcome to the Bloomberg Business of Sports. I'm going to
start this one with Giesa Keitha. And this is about
(13:50):
March Madness pureamount. They seemed to be enjoying March Madness
so far, at least maybe ratings wise, yes they are.
Speaker 9 (14:02):
So you know again, we come back to this point
over and over again, Michael, So, sports tends to be
the most resilient genre on linear TV if you just
kind of look at it big picture. It makes up
about thirty percent of all linear TV viewing. But what's
even more important is that it makes up forty five
percent of total AD sales. So really really important for
all of the media companies and definitely for Paramount as well, which,
(14:26):
along with Warner Brothers Discovery has the rights to the
NCAA March Madness and of course majority of the games
this time around, So it keeps alternating between CBS and
the Turner Networks and of course CBS this year will
have the Semis and the finals, and so they're going
to have a big, big ad haul as you just
pointed out.
Speaker 5 (14:47):
Yeah, but GITHA fees getting higher. I mean, isn't it
getting more and more expensive to pay for these you know,
for these slots, to pay for these sports, and to
pay for these sponsorship rights, and then to make money
off of them and sell those ads. I mean taught
to us a little bit about the margins.
Speaker 9 (15:01):
Yeah, you bring up an excellent point, Damien. So sports, Yes,
they are definitely very lucrative in terms of ad dollars.
But at the same time, there you know, all of
these media companies are dealing with rights fees escalating at
astronomical rates. Right, We've seen rights fees go up something
like thirty forty percent in every renewal cycle. And actually
this is really timely because even for the NCAA Men's
(15:23):
March Madness Tournament, we're actually seeing rights fees step up
pretty significantly this year. So this is when you know,
in twenty twenty five is when the new extension goes
into effect, and so we're seeing you know, both of
these companies pay the NC doublea about over close to
about a billion dollars in rights fees. That's up from
about eight hundred million. So, yes, sports is an expensive
(15:47):
proposition and sometimes in some cases, as you rightly mentioned, Damien,
it is a loss leader. In this case, we actually
think they're able to attract just about enough ad dollars
to cover the rights face, so hopefully it will not
be a last making proposition. But you're absolutely right, this
is a very very tricky game because rights face continue
(16:08):
to keep going up in every renewal cycle.
Speaker 10 (16:10):
Interesting to me that it's going to be continued even
this year. Obviously you said they're going to have a
big hole for the semi finals and for the rest
of the tournament, even though this year is the first
time that we don't really have any Cinderella stories going
into the sweet sixteen and beyond, really there won't be
as big of a draw. Is that not halting the
(16:32):
idea that there's going to be a drop off in
viewership or anything like that for advertisers.
Speaker 9 (16:37):
Yeah, So that's a great observation. So when I said ratings,
so far, despite the fact that there have been no
dramatic upsets, ratings have actually been really strong. So in
the early games, we've seen men's games averaging about nine
point five million viewers, but that's actually the highest in
about thirty years. Sports betting tends to be a key reason.
(16:59):
But we we are continuing to see really really strong
numbers across the board. I think it's up about eight
to nine percent from last year, so I don't necessarily
think we're anticipating a big drop off. And remember, most
of these ad spots, they've already been committed to and
spoken for, so that's all good money at this point.
Speaker 5 (17:18):
Let's bring in Kevin Near here. Kevin Near, for our audience,
is the senior sociate analyst on Get This Team. But
he focuses on tickets. He focuses on StubHub Live Nation
all that fun stuff. And you know, Kevin, I just
got to ask you, whe're are ticket prices coming in
this year? I mean, look, we've asked a lot of
people on the show. You know, where are we in
the business cycle or you know, people willing to pay
our households willing to pay these higher prices. I guess
(17:38):
our question for you is.
Speaker 6 (17:39):
Are they Yeah? They are so far? I mean, ticket
prices have been at record levels. Coming out of the pandemic,
we saw just incredible pens up demand, explosive demand for
live events. People want to get out of their house,
they wanted to go see these musty events. So ticket
prices are already at record highs and now looking out
into this year, really the question is demand, right. I mean,
on the supply side, if you look at the concert pipeline,
you have a lot of stadium activity on the metallity,
(18:03):
there's tons of stuff on the concert side, so that's
all good. And then on the on the sports side, obviously,
again it just really comes down to demand. I mean,
you're seeing a big tailwind that the venues themselves are
pushing deeper and deeper into VIP clubs, luxury boxes, you know,
really really driving up those prices. I think, you know,
just recently, the Florida Panthers raised their season ticket prices.
(18:24):
Recently the Buffalo Bills raised their seats ticket prices. So
it's all going up. But really, and especially on the
resale market, what matters most is demand, right, So we're
gonna be taking a close look at consumer confidence and
seeing on that trends this year.
Speaker 7 (18:36):
Well, while Damien is crowdsurfing at the concert. I remember,
and take this from an old man here and help
me understand what's happening today. When you wanted a ticket
to go see the Detroit Tigers, you had to go
to the ticket office at Michigan and Trumbull. Okay, I
want these tickets, blah blah blah blah blah. And if
(18:58):
you were really fancy, you buy the season tickets there
and that was it, right, And then it all changed, man,
it all changed. Stub Hub and everything going. Secondary ticket
markets explain that evolution.
Speaker 6 (19:12):
Yeah, absolutely. I mean we are in the Internet age,
of course, and right now ticketing is just dominated by
Ticketmaster right especially the primary market, the original issuance market.
A big part of that is these exclusive contracts that
Ticketmaster has with some of the biggest venues, the stadiums,
the arenas. That's really you know, been locked up for
the most part. On the secondary side, what we've been
(19:33):
seeing is that stub Hub has been taking a lot
of share because they've just been spending so aggressively on marketing.
So the past few years we've seen their gross order
volume really explode, which has been great for them. If
you look outside of the us though, You're absolutely right.
You know, resale markets are predominantly offline.
Speaker 7 (19:48):
They are.
Speaker 6 (19:49):
They are heavily regulated in a lot of markets. So
StubHub will have an uphill climb under their their Via
Go Go brand. Internationally, they'll have a very you know,
significant uphill climb internationally. But it's a big market. There's
a lot of open field out there.
Speaker 7 (20:01):
Ste Vanessa, if I wanted tickets back in the old
day the Tiger Stadium, i'd see many right outside and
he'd like, give me something for the second level. That's
the way the secondary market used to work.
Speaker 10 (20:12):
Right, you know, but you still have to stand outside.
Sometimes you can go to Broadway if you want to
see Broadway play, you go in person to avoid fees.
Because that's the biggest problem with some of these with
some of these platforms, right It's it's the it's the
extra fees and everything that people seem not willing to pay.
But it seems like, I guess if there's still if
the ticket market's going up, then I guess it's no problem.
(20:33):
Must must be fine. Yeah, But one of the things
I wanted to ask you about, Kevin, is, like in
before we were talking about March manis, you know, ratings
are going up even though with cord cutting, and we
were talking about how you said it's saying that one
point one billion dollars will bring in just from the
men's side of March. Manis, what about the women's side,
because last year the championship for the women out drew
(20:55):
the men by four million viewers. So what are we
seeing on that side And did we see more advertising,
you know, fever for the women's side this year.
Speaker 6 (21:03):
Yeah, there's definitely a little bit of lagging going on
with the women's side. You're seeing just this you know,
unbelievable explosion and engagement across that side. Now for the
women's March Madness Tournament this year, ratings are down a
little bit against those just incredible, you know record numbers
that you just mentioned. You know, we'll have to see
for the next few rounds kind of what happens on
again on the TV rating side, just with with Juji
(21:24):
Watkins going down with the injury. But again, the women's
sports side is a huge amount of upside, right, I mean,
just look at what's happening in the WNBA. And yes,
this is you know, the Caate and Clark effects, but
we're seeing almost on the daily basis announcements of teams
that are playing against the Indiana Fever. They're moving those
games to bigger venues, right, They're moving those games to
arena size venues because there's just so much interest in
(21:46):
the women's side.
Speaker 5 (21:47):
Well, ga if I'd love to bring it back in
here because you know, and Kevin as well. I mean,
I'd love to hear your thoughts because I know, you know,
you both live in a world where you know it's
quarter to quarter and but just how far ahead are
you looking? Are you guys paying attention to the FIFA
World Cut up in the run up to that? I mean,
we're a little more than a year out here, and
I mean, I for one, my wife just kind of
put paying me down. She's like, listen, stub Hub, we
(22:07):
can get tickets for the champion at the Metal Lands,
And so, you know, I mean, is that real? Are
we really seeing the beginnings of this FIFA World Cup
you know build up?
Speaker 11 (22:16):
Not yet?
Speaker 7 (22:17):
Not yet.
Speaker 6 (22:17):
In fact, FIFA actually put out a warning saying be
very careful about speculative buying on any of these resale sites.
They mentioned StubHub, they mentioned Vivid, so keep it a
high hat, Dan, you gotta be careful.
Speaker 5 (22:26):
I haven't bought anything yet, right, I mean just told
me not to buy.
Speaker 6 (22:29):
I'm not buying those World Cup tickets. Those World Cup
tickets are going to be sold directly on FIFA's website.
But yes, I mean it's a huge opportunity for StubHub
in twenty twenty six. There's a lot of upside. Obviously,
big demand for an event like that, so a lot
of those tickets will be hitting the resale markets eventually,
and that's a big part of why we think they're
launching this IPO now, even with these you know, let's
(22:50):
call them term tumultuous market conditions, they want to get
ahead of that big event. And then obviously even looking
out even further, there's the Olympics in twenty eight as.
Speaker 7 (22:59):
Well, and the by the way, look out for the
fake sites and talk more about it. Don't buy it
from stump hub.
Speaker 1 (23:06):
Okay, got it?
Speaker 7 (23:10):
Now? There is a problem though, I mean, you got
you know, the crooks is the best way I can
describe it. That will try to achieve people over the
money with a fake website or this or that whatever,
and you have to be careful out there.
Speaker 5 (23:24):
Well, I mean, here's my other question, Michael Barne, I
just have to jump in here. Tayos Swift's eras tour.
You know, we're still feeling the reverberations from that. You know,
we have Beyonce this, I mean, but I gotta believe
you guys, you know, are expecting a year over year
decrease in terms of a lot of you know, in
terms of just top line, right, because I mean, wasn't
Tallis Swift just such an incredible force of nature? Nothing
can possibly compete around my wrong, Cavin.
Speaker 6 (23:45):
Let's look at it in two different ways. Right on
the primary side, Live Nation says, you know, no tour
is ever going to be more than one percent of
their revenue, right, So that part aside. Yes, stub Hub
absolutely caught some tailwinds from the resale pricing. I mean,
you saw some just just ludicrous is on those tickets,
you know, But again there's still healthy demand. There's a
lot more concerts in stadiums this year, which means bigger
(24:09):
venues of more attendance, more c capacity, and then higher
average prices as well. So you're not wrong, You're not wrong.
It's really going to come down to ultimately where demand
is shaking out.
Speaker 7 (24:18):
Githa, I want to talk about gross merchandise sales, and
they did pretty strong that twelve point eight billion dollars.
Can you expand more into that?
Speaker 2 (24:28):
Oh?
Speaker 9 (24:28):
Absolutely, So you know, across the board, what we're seeing
for all of these leagues is, you know, meteorites of
course makes up a huge part of their revenue, but
we also see a lot of revenue coming in from
ticket sales as you pointed out, and then from merchandise sales,
and of course everything kind of feeds into everything, right,
this is this whole flywheel effect. So as we see
(24:50):
the interest build for the sports, as we see kind
of ratings go up, we see all these other ancillary
streams also kind of really do well. And that's exactly
where we're kind of seeing merchandise and we're seeing that
kind of across the board. You know, we see we
track merchandise sales even for some of the big companies,
you know, whether it's a Disney or you know, toy sales,
(25:11):
things like that, and across the board, you know, demand
has been fairly strong.
Speaker 7 (25:16):
Our thanks to Githa, Reganathan, and Kevin Neir of Bloomberg Intelligence,
for joining us. Up next, we take a look at
some of the latest big money moves in sports and
talk a little about private equity with my colleagues Damian
Sasaur and Vanessa Perdomo. I'm Michael Barr. You're listening to
the Bloomberg Business of Sports Bloomberg Radio around the world.
Speaker 1 (25:49):
This is Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (25:54):
Thanks for joining us on the Bloomberg Business of Sports,
where we explore the big money issues in the world
of sports. I'm Michael Barr, along with Scarlett Fu and
Damian Sasaur. We've got an old friend of the show
joining us now. Xavier Gutierras is chairman and CEO of
Impact ex Sports Group. That's a private investment and strategic
advisory firm with a focus on the global sports industry.
(26:17):
He's here now to take us through some of the
latest developments in sports investing, including the growth of private
equity in sports. Xavier, welcome back to the Bloomberg Business
of Sports.
Speaker 8 (26:28):
Thank you so much for having me. It's great to
see you guys again. I always enjoy coming in.
Speaker 11 (26:32):
Man.
Speaker 7 (26:32):
I thank you, we love talking to you and I'm
just gonna come out and say it, I have nothing
against Utah. Yes, you guys got the Utah hockey team.
God blesh blah blah blah blah blah blah.
Speaker 11 (26:44):
But I look, I was really cool with I know,
the guy who is with the Phoenix Coyotes, and I'm like,
heck yeah, And then it didn't.
Speaker 8 (26:55):
That no, it didn't and it was very very disappointing.
So so let me talk about Utah. Utah has been phenomenal.
I mean, if you look at the embrace of that
community of the fans. Ryan Smith is an amazing owner.
Obviously has done some incredible things with the Jazz and
now obviously with the with the hockey club, and you know,
(27:15):
absolutely a market that's going to be very successful for many,
many years. Unfortunately, you know, we had a plan, and
the plan was to build a privately funded arena entertainment district,
and it was very disappointing. That is a hockey market,
and I've said this from day one. It's the second
largest Canadian snowbird market and it's been you know, a
hockey market for thirty plus years and it will remain
(27:39):
to be a hockey market and hopefully the NHL will
be back there in the future.
Speaker 7 (27:43):
I thought's Girland. It was a done deal. I'm like,
just like you see the black Jag dealers and they
slapped the hands coming.
Speaker 4 (27:49):
Off next Yeah, so close. It was close. So, Javier,
you make really good points about Arizona being hockey market.
Certainly it's successful at the collegiate level. What will it
take for hockey pro hockey to be viable in Arizona?
Speaker 8 (28:02):
A facility? It stops and starts with a facility. I
think that when the team first moved there from Winnipeg
in nineteen ninety six, if you recall, they actually played
where the Sun's currently played and they had instructed seats,
and then ultimately they moved out to Glende, Arizona, which
is a very vibrant and growing market. It has this
(28:23):
massive sports and entertainment center, but it wasn't the right
location for a sport that you need to bring people
in midweek. You know. Obviously the Cardinals do quite well,
it's one game a week, it's typically on the weekends.
But for us, it was quite challenging. It was a
little bit further away from sort of the core corporate center,
(28:46):
and so ultimately it really really undermined the attendance for many,
many years, and we tried to rectify that. We tried
to bring this vision of an entertainment district out in
the East Valley in Tempe first and then in North
Scottsdale or North Phoenix rather next to Scottsdale. And it
really is a facility.
Speaker 4 (29:07):
Have you given up on the dream of pro hockey
in Arizona? If there is, If the NHL returns to Arizona,
would you be a part of it?
Speaker 8 (29:15):
I mean, obviously you never say never. I do believe
that the NHL will be back in Arizona. I believe
that the fan bases there, the corporate bases there, the growth.
It's the fifth largest you know, DMA in the country,
and so you see all the momentum for sports there.
You need a facility, and in talking with folks at
(29:37):
the NHL, they'll tell you that that it needs to
You need to actually physically see it, or you need
to see the land being owned, the approvals having already
been granted, and the capital being assigned. And so I
do believe that that is a market that the NHL
would love to be back in at some point in
the future.
Speaker 7 (29:55):
Javier was the first Latino CEO in NHL history, and
you were one of the few real estate executives also
in pro sports all together. And that's like I'm saying,
my man, all right now, But you know what, you
have something that is kicking butt here the Impact ex
(30:17):
Sports Group, and more importantly, let's just say it involves
the Giants, and I'm not talking about the football Giants.
Speaker 11 (30:26):
Yeah.
Speaker 8 (30:26):
Well, you know, we sold the team last year and
I took some time off. I traveled with my wife Jericha,
my son Hobby, who's now a junior in high school,
until we went to visit schools, and then I started
feeling a lot of phone calls from the private equity
firms really targeting sports. Not only was I honored to
be the first Latino CuO in the history of the NHL,
(30:47):
I was one of the few real estate and private
equity guys to run a team, and so as sports
has become this institutional asset class, a lot of folks
were interested in talking to me. And what I kind
of realized, you know what, I would love to take
your money, but I actually have a slightly different take
as to the opportunities that exist, and that is the
(31:10):
core asset is the team or the league or the university,
and they have things right in front of them that
they have to deal with, whether that's media facilities, you know,
players or the sporting side. Then to the side of
them are all of these amazing strategic ventures that if
they had a capital partner and an operator, that they
(31:31):
would love to go and take advantage of and it
would be a creative to the value. So people think
immediately real estate, but there's so much more. This is
the most valuable intellectual property in the world, and there
are so many other businesses that you can leverage this
intellectual property. And that's what I'm looking to do. So
on one hand, partner with these large private equity funds
(31:52):
to be my capital partner. On the other hand, create
joint ventures with teams and leagues and universities and say,
how do we continue to explore leveraging new opportunities strategic ventures.
Speaker 4 (32:04):
So let's talk a little bit about private equities roles
in different teams. There was the news, of course that
Sixth Street Partners has bought a ten percent stake in
the San Francisco Giants, the MLB club, and of course
it's kind of the latest pe firm to enter pro
sports that already has stakes and a number of pro
sports teams, But just beyond providing funding for some of
(32:26):
those other opportunities that you talked about, how do you
see private equities role changing the operations of some of
these clubs and how they think about their growth potential.
Speaker 8 (32:36):
Well, I think this is a fantastic example of this.
If you ask Sixth Street, and they've made a public
statement about this, and the Giants have as well, what
are they using the money for. It's not simply just
for the team. It's for these sort of extensions of
the sports enterprise that is the San Francisco Giants. So
there's the team and then there's the enterprise, and that
(32:58):
enterprise entails massive real estate project that surrounds the stadium
Oracle Park, and so that is what I see the
role of private equity is saying, what are these other
components of the enterprise of the holding company that we
can go and take advantage of and we can invest
in and that there are no limitations. Right, So there
(33:21):
are limitations when you invest in a team in terms
of the percentage of ownership, the structure, the debt. When
you're looking at these opportunities for the hold code, not
the team co a lot more flexibility, a lot more
exit opportunities, a lot more structuring. And so I believe
that private equity is looking at that opportunity and that
(33:42):
valuation increase, and I think we're barely at the first
inning of looking at that as a as an investment opportunity.
Speaker 7 (33:50):
I used to say that in order, how does an
owner make money when he or she sells the team.
Now with private equity, they can make some coin. Because
let's think about it, maybe there are some folks out
there way back, you know, that bought a team for
thirty four dollars and a six pack, and now this
(34:12):
team is like in the billions. So all you could
just put up, like you said, like ten percent, and man,
you've made money back.
Speaker 8 (34:20):
Absolutely well. Obviously, the valuation increases are based on so
many things. Right, you have certain contracted and growing revenue
for the teams, whether it's media rights, whether it's sponsorships
which are multi year, even there's been studies done that
you know, the renewal rates for season ticket members are
fairly consistent, all right, and so so you have this
(34:43):
revenue stream. But the other opportunity is very simple. Take
the team and look at everything else around it. I've
said from day one, these teams are health and wellness businesses,
they're technology businesses, they're consumer businesses, they're real estate businesses.
Speaker 4 (34:57):
That's a lot of different industries.
Speaker 8 (34:59):
Percent and so when you think of the valuation, because
I get asked all the time, are we at peak valuations?
I said, well, number one, most teams haven't tapped into
their international markets. Number two, they haven't tapped into these
enterprises that are extensions of the core asset. And plenty
of people who have talked about I know George Pline
at Brewing Capital had an extensive, you know, conversation very
(35:23):
early on about these are enterprises, not teams. And what
you're seeing now is the investment thesis really pursuing.
Speaker 4 (35:31):
That playing itself out. Absolutely, talk a little bit about
your role as a Latino owner of a major sports
team and with your movement to impact Exports Group and
your efforts to get private equity and think through building
out the enterprise value. We're in a very different cultural
moment right now. The Trump administration has been very vocal
(35:52):
opposing anything DEI related. I'm wondering how that changes how
you market what you're doing.
Speaker 8 (36:00):
I don't think it changes at all. I think one
of the areas that you see an emphasis on leaning
into the growth cohorts, which are young, female, diverse, tech savvy,
and purpose driven, is actually in sports, this is a
business imperative. These are consumer businesses. So what does the
(36:22):
consumer look like in America? Where is it growing? When
you think of where these professional sports teams are. So
I've been asked a lot about well, you know the
backlash against DEI. I said, this isn't a DEI sor,
this is not a field with thing. This is a
business imperative. When you think of what the giants and
(36:42):
where they're located, and who they're targeting as ticket goers,
as social media followers, as people buying merchandise, it's a
very diverse community. They're leaning into that. I haven't heard
a single team or league saying, oh, we're backing away
from where the growth is coming in.
Speaker 4 (37:01):
From recognizing their market.
Speaker 8 (37:02):
They're absolutely recognizing their market and they're trying to be
creative and innovative in terms of how do we capture
them where you know, being where they're at and being
in unexpected places. So you're seeing collaborations across fashion brands
that you've never seen before. The omnipresence of sports across
multiple industries is a very concerted effort to go after
(37:27):
this growth cocor so for me, when people talk to
me about, oh, you know, what's your reaction to this fact,
I'm here to, you know, pursue a business imperative of
capturing growth, and this is where I'm going after it.
Speaker 7 (37:40):
Our thanks to Impact ex Sports Group Chairman and CEO
Xavier Gutierrez for joining us, and thank you for joining us.
For my colleagues Scarlett Fou, Damien Saasaur and Vanessa Perdomo.
I'm Michael Barr. Tune in again next week for the
latest on the stories moving big money in the world
of sports, and don't forget to catch our podcast all
all your podcast platforms. You're listening to The Bloomberg Business
(38:03):
of Sports from Bloomberger Radio around the world.
Bloomberg Audio Studios, Podcasts, radio News. This is the business
of sports.
Speaker 2 (00:10):
The business of sports can be intimidating or hard for
a starting to break into.
Speaker 3 (00:14):
We really appreciate when our owners are actually there, you know,
with us through the journey.
Speaker 4 (00:18):
Teams ours especially have been very intentional to diversify at
all levels of the company. I think we're in bolden
years for the NFL and college football.
Speaker 5 (00:26):
Our demographic reach has continued to explaide.
Speaker 6 (00:29):
This is going to be really unlocking the streaming platform
for sports fans. Sports valuations arising, We'll see when they peak.
Speaker 3 (00:37):
You don't have to be the best in your sport
to make a whole ton of money.
Speaker 1 (00:42):
Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (00:47):
This is the Bloomberg Business of Sports, where we explore
the big money issues in the world of sports. I'm
Michael Barr, along with my colleagues Damian Tasauur and Vanessa Perdomo.
Scarlet Flo would join us later in the show. Coming up,
March Madness rolls on. We get the latest research from
our friends at Bloomberg Intelligence about the value of the
NCAA tournament is providing the network's carrying it plus we
check in with an old friend of the show, Impact
(01:09):
ex Sports Group chairman and CEO, Xavier Gutierras, for his
thoughts on some of the latest headlines in sports investing
and private equities growth in sports.
Speaker 8 (01:19):
There are limitations when you invest in a team in
terms of the percentage of ownership, the structure, the debt.
When you're looking at these opportunities for the hold code,
not the team co a lot more flexibility, a lot
more exit opportunities, a lot more structuring. And so I
believe that private equity is looking at that opportunity and
that valuation increase, and I think we're barely at the
(01:43):
first inn.
Speaker 7 (01:44):
All that is straight ahead on the Bloomberg business of sports.
But first, baseball is officially back. This weekend is the
first full weekend of baseball, and here now to talk
about all the big storylines heading into the year is
MLB Network's lead studiost Harold Reynolds. First of all, congratulations
on your new time slot five pm for your new show.
Speaker 9 (02:07):
Here we go.
Speaker 2 (02:08):
Yeah, no, thank you guys, thanks for having me. This
is like an annual yearly thing. I love it. But
the new studio time five o'clock, Greg amsinger Dan Pleazach myself.
You know the uniqueness of it is we're usually on
late at night and we're reacting in and out of
games with live lookings, and that's the bulk of that
(02:29):
show at late night. This year, from five to seven,
we'll be able to have a lot more scripted stuff
because there won't be a lot of games going at
that time. So we're excited to have people know exactly
where we are and when we are every day when
we'll be on, and we can craft a lot of
things directly to the sport. So it's gonna be a
lot of fun.
Speaker 5 (02:48):
Well, Harold, you were just in Tokyo, and I guess
I have to ask the elephant in the room the
question here, will the Los Angeles Dodgers go one hundred
and sixty two and zero this season? I mean, listen
to me, the record of one hundred and sixteen regular
season wins. I think, what's at the nineteen oh six Cubs,
the two thousand and one Mariners. You gotta believe that,
you know, there's a real chance here that they can
break that.
Speaker 2 (03:07):
Now, there's a real chance they're gonna they can pass
that number, no doubt, and one sixty two if they
play every other week, Yeah, they can do that. It's
like high school schedule, right. But no, I'll tell you what.
When you said the word let's talk about Japan, I'm
in that statement. Unbelievable. I hadn't been there since really
(03:28):
nineteen eighty eight when I went and played for the
US All Star Series over there, and it was just spectacular,
the fan engagement. Otani obviously with Otani, Yamamoto and Sasaki
on the Dodgers, and then I Inaga with the Cubs
and just all the five Japanese players, so they were
(03:48):
crazy about it in their country, but they love baseball.
It was so fun, so fun. Last thing, and I'll
let you guys get back at it. I've never seen this.
I saw a little bit when Aaron Judge was chasing
sixty two when I'm getting ready to tell you, but
every time show Hailed Tany came to the plate, he
could step his toe out the dugout. That went crazy, okay,
(04:11):
But as soon as he got in the batter's box
and the pitcher got his sign shook no, yes, okay,
here's my pitch. As soon as he got ready to deliver,
the place was dead. Silent, like fifty thousand whispers. It
was incredible. Everybody had their cameras and they didn't say
a word, and then he foul the ball off and
they go. It was incredible. If you're sitting at home
(04:37):
watching on TV, you're hitting your clicker, like the the
volume Braake was on here crazy.
Speaker 10 (04:42):
Well, we got to.
Speaker 6 (04:43):
Talk about that, hare. I mean, it's so interesting.
Speaker 10 (04:45):
Obviously with Otani, obviously we know he's, you know, the
best show in the game, and it's really we're seeing
something we haven't seen before. And he's supposedly supposed to
get back on the mound this year. What do you
think about that? Should he really try and get back
on the mound this year? I mean want MVP without
getting on the mound? Do we see it again? Do
we stop giving him the MVP at some point, even
though we know he could get it every single season?
Speaker 2 (05:08):
Absolutely he gets back on the mound, and if he
wins the MVP every year, it's okay with me. I mean, look,
we're coming across something you will never ever see again.
And I grew up on the West Coast. I grew
up in Oregon, and when John Wooden had his teams
coming through and they're winning those eighty eighth straight and
all that stuff. One of my brothers would say to me,
(05:32):
you better recognize greatness when it's upon you. You'll never
see it again.
Speaker 3 (05:35):
The old one is hit high and deep right field.
If it's fair, it's gone. And that one is fair.
Had a home run, a towering home run. He handed
a second deck for sho Hey Otanio.
Speaker 2 (05:49):
And I believe that we will never see anybody like
Otani again. Just recognize it and enjoy it.
Speaker 5 (05:54):
Well, yeah, Harold, I mean I couldn't agree more. And
I mean certainly, you know, if you're for Michael Barr
and you know you just got paid your bonus, you're
a lumberg and you're firing up your Fanuel account. Plus
two seventy five. I don't remember a team coming into
the season at plus two seventy five to win the
World Series. And that's where the Dodgers are today. And
a lot of it has to do with the fact
that the Yankees lost Garrett Cole. There is you know
that kind of skewed the betting lines. Talk to us
(06:16):
about some of the other teams, the Braves, the Yankees,
the Mets, the Phillies, the Orioles are those the teams
that have the next best shot of potentially getting a
win against the Dodgers the season.
Speaker 2 (06:26):
Well, what the Dodgs have done, there's that's great pitching depth.
So that's beyond all the Freddy Freeman, Moki Betts and
show Hey and all that. Let's still they're pitching, but
teams that can contend. I think the National League asis loaded.
The Phillies are still a team that's going to be
really good. The Braves are very young and they continue
to do things excellent. And then obviously the Mets have
(06:48):
jumped in the fray. But I think the one thing
that as I look down the stretch, it's not how
you start, it's who can add when they need it.
Speaker 3 (06:58):
And all those teams.
Speaker 2 (06:59):
I just talked to can add because they have a
minor league system, or they have young players that they
can trade, they can go do Those are the things
that I would look at. Who has the cachet that
can go trade a player. Seattle has six pitchers, they
can go get a player if they need it. Not
saying that that's the team to be. I like the
Rangers for that fact. There's a few teams. I think
(07:21):
that can in a series knock off anybody. That's the
beauty of our sport. But the Dodgers are clearly loaded.
I would not bet against them, but if there's a
way to look at maybe another club stepping up, that
would be it. And I think there's one pitcher out there,
Sandy al Cantara with the Marlins. I've been saying it
from all winter. When he threw his first pitch at
(07:43):
one hundred miles an hour, back healthy again in spring training,
in the first game, every team gravitated to him, and
I think he's a division changer. He's a playoff pitcher,
and he's a guy that could take you over the top.
You know, he's a guy that the Yankees can go
get and now you're back in the fold again. Those
are the time he's that kind of a pitcher. So
I keep my eyes on him, and then I keep
(08:04):
my eyes on the Dodgers, and if anybody can add
to beat.
Speaker 7 (08:06):
Them, well, we've talked about the best. Now we got
to talk about the rest. And I'm going to compare
it to I eighty. There's a big sinkhole in New
Jersey where I travel, and I got a detour and
the poor team that is in that sinkhole, the Chicago
White Sox. What is it going to take to get
that team at least put something on the board, Fellas.
Speaker 2 (08:30):
I don't think they're going to lose one hundred and
twenty or whatever it was last year again, and that
will affect the whole division. You know, it was easy
for them to have, you know, whether they have two
or three teams out of Central last year make the
playoffs because they beat up on the White Sox every day.
They'll be better. How do they turn it around? They've
got some young prospects coming, but it's going to come
(08:51):
down to eventually they have to sign some free agents
and you can't just say our farm system is going
to be better than everybody else. The disadvantage of today
is now you have a draft lottery, you have a
more of a slotted draft. You can't sit there and
say i'll wait for this guy, I'll pay him more
money and we'll get him in the fifth round. That
(09:14):
doesn't happen anymore. So it's a little harder to turn
it around than it was maybe ten or fifteen years
ago when the Astros were able to turn it all
around and get things going in Houston?
Speaker 10 (09:25):
Well, do you think one of those reasons, you know,
Michael said it there it's the best and then the rest.
Do you think one of those reasons it really is?
It goes back to the owners who are willing to spend.
Speaker 1 (09:35):
I mean, I.
Speaker 10 (09:36):
Feel like they've sort of broken the system again that
their Yankees are almost going to beat at their own
game at this point by the Dodgers in by the
Mets obviously stealing Sodo. Does that actually have this cachet
that is it worse now than it ever has been before?
Do you think between teams that are willing to spend
and teams are willing that aren't willing.
Speaker 2 (09:55):
To Well, I think what is a challenge is the
system has changed. You don't have young players signing long
term contracts when offered. You look at the Braves even
four or five years ago, right, you get Albi's signs
a long term deal. Tunya does all these young players
took one hundred million, thirty million, fifty million now they're
(10:17):
lad Junior sent five hundreds not enough, you know, And
so how the blue Jay is going to sign a
guy like that? Comes out of your system? I think
that's been more of an effect on how the sport
is being played than necessarily ownership trying to spend big
money on free agents. If you can't lock up guys
that you've had in your system for six years before
they're a free agent, then how are you going to
(10:38):
be able to compete? And that was always something that
the Guardians, who were the Indians back in the day,
were able to do. They locked up all their young
players at Alamar and locked in and Tolmi and all
those guys, and they could make a run. Even the
Yankees back in the day, you know, they get the
Moniker for the Evil Empire, but you locked up Jeter
(11:00):
Posada Rivera guys that are in your minor league system
to long term deals. That doesn't happen today because players
are not taking those long term deals. And that's why
the Braves are where they're at and the position they're in.
And so I think that's been more of a problem
than necessarily the owners are not spending. Hard to say
(11:20):
owners are spending when you got over five billion dollars
in salaries out in baseball, you know that's that's.
Speaker 10 (11:26):
Just the Dodgers and the Mets alone.
Speaker 5 (11:28):
Honestly, Well, you know, I mean, Harold, we're talking big
numbers here, we're talking big money. I'm gonna give you
a number here. Six point one billion. That's what the
Celtics just went for. And they don't even own their
own stadium. That's sixteen times total revenue. That's the price.
That's the ticket. Now, if you look at Major League Baseball,
the on average teams in Major League Baseball are trading
at six point six times revenue. Significantly less than that, right,
(11:49):
and it's actually the lowest of you know, the major sports,
plus Major League Soccer, which trades at a nine point
four x. So you know, what I need to know
is just how much higher can the value of the
New York Yankees at eight point four billionaire the Dodgers
at seven point seven billion?
Speaker 2 (12:02):
Go?
Speaker 5 (12:02):
I mean, are we capped here now? Finally?
Speaker 9 (12:05):
I mean?
Speaker 5 (12:05):
Or is it really just anyone's guess? I mean, can
these valuations continue to explode from here?
Speaker 2 (12:11):
I think they can continue to explode because there's only
thirty of them. It's a road gym, you know, that's
the uniqueness of it. And even the other sports we're
starting to see more soccer franchises are gonna come along.
You're going to see even football is expanding. Baseball eventually
will probably expand as well. But right now you've got
thirty teams, so that is like a.
Speaker 7 (12:32):
Jewel our Thanks to Harold Reynolds for joining us. He's
MLB Network's lead studio analyst and of course, a twelve
year MLB pro and two time AL All Star. Up Next,
we turn to March Madness and all the businesses looking
to make big money this year during the tournament. My
colleagues Damian Sasseur and Vanessa Perdomo, Michael Barr, You're listening
(12:55):
to the Bloomberg Business of Sports from Bloomberg Radio around
the world.
Speaker 1 (13:00):
This is Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (13:05):
This is the Bloomberg Business of Sports where we explore
the big money issues in the world of sports. I'm
Michael Barr along with my colleagues Damian Sassauer and Vanessa Bernomo.
March Madness is well under way, and our colleagues at
Bloomberg Intelligence have been tracking how a lot of businesses
are looking to earn big with all the interest in
the games. The men's tournament alone could draw over a
(13:28):
billion dollars in ad money. To take a deep dive
into who's looking to win big and how cord cutting
is factoring in. We bring in Bloomberg Intelligence senior media
analysts Keitha Raghanoffin and Bloomberg Intelligence equities analysts Kevin nar Keitha, Kevin,
Welcome to the Bloomberg Business of Sports. I'm going to
start this one with Giesa Keitha. And this is about
(13:50):
March Madness pureamount. They seemed to be enjoying March Madness
so far, at least maybe ratings wise, yes they are.
Speaker 9 (14:02):
So you know again, we come back to this point
over and over again, Michael, So, sports tends to be
the most resilient genre on linear TV if you just
kind of look at it big picture. It makes up
about thirty percent of all linear TV viewing. But what's
even more important is that it makes up forty five
percent of total AD sales. So really really important for
all of the media companies and definitely for Paramount as well, which,
(14:26):
along with Warner Brothers Discovery has the rights to the
NCAA March Madness and of course majority of the games
this time around, So it keeps alternating between CBS and
the Turner Networks and of course CBS this year will
have the Semis and the finals, and so they're going
to have a big, big ad haul as you just
pointed out.
Speaker 5 (14:47):
Yeah, but GITHA fees getting higher. I mean, isn't it
getting more and more expensive to pay for these you know,
for these slots, to pay for these sports, and to
pay for these sponsorship rights, and then to make money
off of them and sell those ads. I mean taught
to us a little bit about the margins.
Speaker 9 (15:01):
Yeah, you bring up an excellent point, Damien. So sports, Yes,
they are definitely very lucrative in terms of ad dollars.
But at the same time, there you know, all of
these media companies are dealing with rights fees escalating at
astronomical rates. Right, We've seen rights fees go up something
like thirty forty percent in every renewal cycle. And actually
this is really timely because even for the NCAA Men's
(15:23):
March Madness Tournament, we're actually seeing rights fees step up
pretty significantly this year. So this is when you know,
in twenty twenty five is when the new extension goes
into effect, and so we're seeing you know, both of
these companies pay the NC doublea about over close to
about a billion dollars in rights fees. That's up from
about eight hundred million. So, yes, sports is an expensive
(15:47):
proposition and sometimes in some cases, as you rightly mentioned, Damien,
it is a loss leader. In this case, we actually
think they're able to attract just about enough ad dollars
to cover the rights face, so hopefully it will not
be a last making proposition. But you're absolutely right, this
is a very very tricky game because rights face continue
(16:08):
to keep going up in every renewal cycle.
Speaker 10 (16:10):
Interesting to me that it's going to be continued even
this year. Obviously you said they're going to have a
big hole for the semi finals and for the rest
of the tournament, even though this year is the first
time that we don't really have any Cinderella stories going
into the sweet sixteen and beyond, really there won't be
as big of a draw. Is that not halting the
(16:32):
idea that there's going to be a drop off in
viewership or anything like that for advertisers.
Speaker 9 (16:37):
Yeah, So that's a great observation. So when I said ratings,
so far, despite the fact that there have been no
dramatic upsets, ratings have actually been really strong. So in
the early games, we've seen men's games averaging about nine
point five million viewers, but that's actually the highest in
about thirty years. Sports betting tends to be a key reason.
(16:59):
But we we are continuing to see really really strong
numbers across the board. I think it's up about eight
to nine percent from last year, so I don't necessarily
think we're anticipating a big drop off. And remember, most
of these ad spots, they've already been committed to and
spoken for, so that's all good money at this point.
Speaker 5 (17:18):
Let's bring in Kevin Near here. Kevin Near, for our audience,
is the senior sociate analyst on Get This Team. But
he focuses on tickets. He focuses on StubHub Live Nation
all that fun stuff. And you know, Kevin, I just
got to ask you, whe're are ticket prices coming in
this year? I mean, look, we've asked a lot of
people on the show. You know, where are we in
the business cycle or you know, people willing to pay
our households willing to pay these higher prices. I guess
(17:38):
our question for you is.
Speaker 6 (17:39):
Are they Yeah? They are so far? I mean, ticket
prices have been at record levels. Coming out of the pandemic,
we saw just incredible pens up demand, explosive demand for
live events. People want to get out of their house,
they wanted to go see these musty events. So ticket
prices are already at record highs and now looking out
into this year, really the question is demand, right. I mean,
on the supply side, if you look at the concert pipeline,
you have a lot of stadium activity on the metallity,
(18:03):
there's tons of stuff on the concert side, so that's
all good. And then on the on the sports side, obviously,
again it just really comes down to demand. I mean,
you're seeing a big tailwind that the venues themselves are
pushing deeper and deeper into VIP clubs, luxury boxes, you know,
really really driving up those prices. I think, you know,
just recently, the Florida Panthers raised their season ticket prices.
(18:24):
Recently the Buffalo Bills raised their seats ticket prices. So
it's all going up. But really, and especially on the
resale market, what matters most is demand, right, So we're
gonna be taking a close look at consumer confidence and
seeing on that trends this year.
Speaker 7 (18:36):
Well, while Damien is crowdsurfing at the concert. I remember,
and take this from an old man here and help
me understand what's happening today. When you wanted a ticket
to go see the Detroit Tigers, you had to go
to the ticket office at Michigan and Trumbull. Okay, I
want these tickets, blah blah blah blah blah. And if
(18:58):
you were really fancy, you buy the season tickets there
and that was it, right, And then it all changed, man,
it all changed. Stub Hub and everything going. Secondary ticket
markets explain that evolution.
Speaker 6 (19:12):
Yeah, absolutely. I mean we are in the Internet age,
of course, and right now ticketing is just dominated by
Ticketmaster right especially the primary market, the original issuance market.
A big part of that is these exclusive contracts that
Ticketmaster has with some of the biggest venues, the stadiums,
the arenas. That's really you know, been locked up for
the most part. On the secondary side, what we've been
(19:33):
seeing is that stub Hub has been taking a lot
of share because they've just been spending so aggressively on marketing.
So the past few years we've seen their gross order
volume really explode, which has been great for them. If
you look outside of the us though, You're absolutely right.
You know, resale markets are predominantly offline.
Speaker 7 (19:48):
They are.
Speaker 6 (19:49):
They are heavily regulated in a lot of markets. So
StubHub will have an uphill climb under their their Via
Go Go brand. Internationally, they'll have a very you know,
significant uphill climb internationally. But it's a big market. There's
a lot of open field out there.
Speaker 7 (20:01):
Ste Vanessa, if I wanted tickets back in the old
day the Tiger Stadium, i'd see many right outside and
he'd like, give me something for the second level. That's
the way the secondary market used to work.
Speaker 10 (20:12):
Right, you know, but you still have to stand outside.
Sometimes you can go to Broadway if you want to
see Broadway play, you go in person to avoid fees.
Because that's the biggest problem with some of these with
some of these platforms, right It's it's the it's the
extra fees and everything that people seem not willing to pay.
But it seems like, I guess if there's still if
the ticket market's going up, then I guess it's no problem.
(20:33):
Must must be fine. Yeah, But one of the things
I wanted to ask you about, Kevin, is, like in
before we were talking about March manis, you know, ratings
are going up even though with cord cutting, and we
were talking about how you said it's saying that one
point one billion dollars will bring in just from the
men's side of March. Manis, what about the women's side,
because last year the championship for the women out drew
(20:55):
the men by four million viewers. So what are we
seeing on that side And did we see more advertising,
you know, fever for the women's side this year.
Speaker 6 (21:03):
Yeah, there's definitely a little bit of lagging going on
with the women's side. You're seeing just this you know,
unbelievable explosion and engagement across that side. Now for the
women's March Madness Tournament this year, ratings are down a
little bit against those just incredible, you know record numbers
that you just mentioned. You know, we'll have to see
for the next few rounds kind of what happens on
again on the TV rating side, just with with Juji
(21:24):
Watkins going down with the injury. But again, the women's
sports side is a huge amount of upside, right, I mean,
just look at what's happening in the WNBA. And yes,
this is you know, the Caate and Clark effects, but
we're seeing almost on the daily basis announcements of teams
that are playing against the Indiana Fever. They're moving those
games to bigger venues, right, They're moving those games to
arena size venues because there's just so much interest in
(21:46):
the women's side.
Speaker 5 (21:47):
Well, ga if I'd love to bring it back in
here because you know, and Kevin as well. I mean,
I'd love to hear your thoughts because I know, you know,
you both live in a world where you know it's
quarter to quarter and but just how far ahead are
you looking? Are you guys paying attention to the FIFA
World Cut up in the run up to that? I mean,
we're a little more than a year out here, and
I mean, I for one, my wife just kind of
put paying me down. She's like, listen, stub Hub, we
(22:07):
can get tickets for the champion at the Metal Lands,
And so, you know, I mean, is that real? Are
we really seeing the beginnings of this FIFA World Cup
you know build up?
Speaker 11 (22:16):
Not yet?
Speaker 7 (22:17):
Not yet.
Speaker 6 (22:17):
In fact, FIFA actually put out a warning saying be
very careful about speculative buying on any of these resale sites.
They mentioned StubHub, they mentioned Vivid, so keep it a
high hat, Dan, you gotta be careful.
Speaker 5 (22:26):
I haven't bought anything yet, right, I mean just told
me not to buy.
Speaker 6 (22:29):
I'm not buying those World Cup tickets. Those World Cup
tickets are going to be sold directly on FIFA's website.
But yes, I mean it's a huge opportunity for StubHub
in twenty twenty six. There's a lot of upside. Obviously,
big demand for an event like that, so a lot
of those tickets will be hitting the resale markets eventually,
and that's a big part of why we think they're
launching this IPO now, even with these you know, let's
(22:50):
call them term tumultuous market conditions, they want to get
ahead of that big event. And then obviously even looking
out even further, there's the Olympics in twenty eight as.
Speaker 7 (22:59):
Well, and the by the way, look out for the
fake sites and talk more about it. Don't buy it
from stump hub.
Speaker 1 (23:06):
Okay, got it?
Speaker 7 (23:10):
Now? There is a problem though, I mean, you got
you know, the crooks is the best way I can
describe it. That will try to achieve people over the
money with a fake website or this or that whatever,
and you have to be careful out there.
Speaker 5 (23:24):
Well, I mean, here's my other question, Michael Barne, I
just have to jump in here. Tayos Swift's eras tour.
You know, we're still feeling the reverberations from that. You know,
we have Beyonce this, I mean, but I gotta believe
you guys, you know, are expecting a year over year
decrease in terms of a lot of you know, in
terms of just top line, right, because I mean, wasn't
Tallis Swift just such an incredible force of nature? Nothing
can possibly compete around my wrong, Cavin.
Speaker 6 (23:45):
Let's look at it in two different ways. Right on
the primary side, Live Nation says, you know, no tour
is ever going to be more than one percent of
their revenue, right, So that part aside. Yes, stub Hub
absolutely caught some tailwinds from the resale pricing. I mean,
you saw some just just ludicrous is on those tickets,
you know, But again there's still healthy demand. There's a
lot more concerts in stadiums this year, which means bigger
(24:09):
venues of more attendance, more c capacity, and then higher
average prices as well. So you're not wrong, You're not wrong.
It's really going to come down to ultimately where demand
is shaking out.
Speaker 7 (24:18):
Githa, I want to talk about gross merchandise sales, and
they did pretty strong that twelve point eight billion dollars.
Can you expand more into that?
Speaker 2 (24:28):
Oh?
Speaker 9 (24:28):
Absolutely, So you know, across the board, what we're seeing
for all of these leagues is, you know, meteorites of
course makes up a huge part of their revenue, but
we also see a lot of revenue coming in from
ticket sales as you pointed out, and then from merchandise sales,
and of course everything kind of feeds into everything, right,
this is this whole flywheel effect. So as we see
(24:50):
the interest build for the sports, as we see kind
of ratings go up, we see all these other ancillary
streams also kind of really do well. And that's exactly
where we're kind of seeing merchandise and we're seeing that
kind of across the board. You know, we see we
track merchandise sales even for some of the big companies,
you know, whether it's a Disney or you know, toy sales,
(25:11):
things like that, and across the board, you know, demand
has been fairly strong.
Speaker 7 (25:16):
Our thanks to Githa, Reganathan, and Kevin Neir of Bloomberg Intelligence,
for joining us. Up next, we take a look at
some of the latest big money moves in sports and
talk a little about private equity with my colleagues Damian
Sasaur and Vanessa Perdomo. I'm Michael Barr. You're listening to
the Bloomberg Business of Sports Bloomberg Radio around the world.
Speaker 1 (25:49):
This is Bloomberg Business of Sports from Bloomberg Radio.
Speaker 7 (25:54):
Thanks for joining us on the Bloomberg Business of Sports,
where we explore the big money issues in the world
of sports. I'm Michael Barr, along with Scarlett Fu and
Damian Sasaur. We've got an old friend of the show
joining us now. Xavier Gutierras is chairman and CEO of
Impact ex Sports Group. That's a private investment and strategic
advisory firm with a focus on the global sports industry.
(26:17):
He's here now to take us through some of the
latest developments in sports investing, including the growth of private
equity in sports. Xavier, welcome back to the Bloomberg Business
of Sports.
Speaker 8 (26:28):
Thank you so much for having me. It's great to
see you guys again. I always enjoy coming in.
Speaker 11 (26:32):
Man.
Speaker 7 (26:32):
I thank you, we love talking to you and I'm
just gonna come out and say it, I have nothing
against Utah. Yes, you guys got the Utah hockey team.
God blesh blah blah blah blah blah blah.
Speaker 11 (26:44):
But I look, I was really cool with I know,
the guy who is with the Phoenix Coyotes, and I'm like,
heck yeah, And then it didn't.
Speaker 8 (26:55):
That no, it didn't and it was very very disappointing.
So so let me talk about Utah. Utah has been phenomenal.
I mean, if you look at the embrace of that
community of the fans. Ryan Smith is an amazing owner.
Obviously has done some incredible things with the Jazz and
now obviously with the with the hockey club, and you know,
(27:15):
absolutely a market that's going to be very successful for many,
many years. Unfortunately, you know, we had a plan, and
the plan was to build a privately funded arena entertainment district,
and it was very disappointing. That is a hockey market,
and I've said this from day one. It's the second
largest Canadian snowbird market and it's been you know, a
hockey market for thirty plus years and it will remain
(27:39):
to be a hockey market and hopefully the NHL will
be back there in the future.
Speaker 7 (27:43):
I thought's Girland. It was a done deal. I'm like,
just like you see the black Jag dealers and they
slapped the hands coming.
Speaker 4 (27:49):
Off next Yeah, so close. It was close. So, Javier,
you make really good points about Arizona being hockey market.
Certainly it's successful at the collegiate level. What will it
take for hockey pro hockey to be viable in Arizona?
Speaker 8 (28:02):
A facility? It stops and starts with a facility. I
think that when the team first moved there from Winnipeg
in nineteen ninety six, if you recall, they actually played
where the Sun's currently played and they had instructed seats,
and then ultimately they moved out to Glende, Arizona, which
is a very vibrant and growing market. It has this
(28:23):
massive sports and entertainment center, but it wasn't the right
location for a sport that you need to bring people
in midweek. You know. Obviously the Cardinals do quite well,
it's one game a week, it's typically on the weekends.
But for us, it was quite challenging. It was a
little bit further away from sort of the core corporate center,
(28:46):
and so ultimately it really really undermined the attendance for many,
many years, and we tried to rectify that. We tried
to bring this vision of an entertainment district out in
the East Valley in Tempe first and then in North
Scottsdale or North Phoenix rather next to Scottsdale. And it
really is a facility.
Speaker 4 (29:07):
Have you given up on the dream of pro hockey
in Arizona? If there is, If the NHL returns to Arizona,
would you be a part of it?
Speaker 8 (29:15):
I mean, obviously you never say never. I do believe
that the NHL will be back in Arizona. I believe
that the fan bases there, the corporate bases there, the growth.
It's the fifth largest you know, DMA in the country,
and so you see all the momentum for sports there.
You need a facility, and in talking with folks at
(29:37):
the NHL, they'll tell you that that it needs to
You need to actually physically see it, or you need
to see the land being owned, the approvals having already
been granted, and the capital being assigned. And so I
do believe that that is a market that the NHL
would love to be back in at some point in
the future.
Speaker 7 (29:55):
Javier was the first Latino CEO in NHL history, and
you were one of the few real estate executives also
in pro sports all together. And that's like I'm saying,
my man, all right now, But you know what, you
have something that is kicking butt here the Impact ex
(30:17):
Sports Group, and more importantly, let's just say it involves
the Giants, and I'm not talking about the football Giants.
Speaker 11 (30:26):
Yeah.
Speaker 8 (30:26):
Well, you know, we sold the team last year and
I took some time off. I traveled with my wife Jericha,
my son Hobby, who's now a junior in high school,
until we went to visit schools, and then I started
feeling a lot of phone calls from the private equity
firms really targeting sports. Not only was I honored to
be the first Latino CuO in the history of the NHL,
(30:47):
I was one of the few real estate and private
equity guys to run a team, and so as sports
has become this institutional asset class, a lot of folks
were interested in talking to me. And what I kind
of realized, you know what, I would love to take
your money, but I actually have a slightly different take
as to the opportunities that exist, and that is the
(31:10):
core asset is the team or the league or the university,
and they have things right in front of them that
they have to deal with, whether that's media facilities, you know,
players or the sporting side. Then to the side of
them are all of these amazing strategic ventures that if
they had a capital partner and an operator, that they
(31:31):
would love to go and take advantage of and it
would be a creative to the value. So people think
immediately real estate, but there's so much more. This is
the most valuable intellectual property in the world, and there
are so many other businesses that you can leverage this
intellectual property. And that's what I'm looking to do. So
on one hand, partner with these large private equity funds
(31:52):
to be my capital partner. On the other hand, create
joint ventures with teams and leagues and universities and say,
how do we continue to explore leveraging new opportunities strategic ventures.
Speaker 4 (32:04):
So let's talk a little bit about private equities roles
in different teams. There was the news, of course that
Sixth Street Partners has bought a ten percent stake in
the San Francisco Giants, the MLB club, and of course
it's kind of the latest pe firm to enter pro
sports that already has stakes and a number of pro
sports teams, But just beyond providing funding for some of
(32:26):
those other opportunities that you talked about, how do you
see private equities role changing the operations of some of
these clubs and how they think about their growth potential.
Speaker 8 (32:36):
Well, I think this is a fantastic example of this.
If you ask Sixth Street, and they've made a public
statement about this, and the Giants have as well, what
are they using the money for. It's not simply just
for the team. It's for these sort of extensions of
the sports enterprise that is the San Francisco Giants. So
there's the team and then there's the enterprise, and that
(32:58):
enterprise entails massive real estate project that surrounds the stadium
Oracle Park, and so that is what I see the
role of private equity is saying, what are these other
components of the enterprise of the holding company that we
can go and take advantage of and we can invest
in and that there are no limitations. Right, So there
(33:21):
are limitations when you invest in a team in terms
of the percentage of ownership, the structure, the debt. When
you're looking at these opportunities for the hold code, not
the team co a lot more flexibility, a lot more
exit opportunities, a lot more structuring. And so I believe
that private equity is looking at that opportunity and that
(33:42):
valuation increase, and I think we're barely at the first
inning of looking at that as a as an investment opportunity.
Speaker 7 (33:50):
I used to say that in order, how does an
owner make money when he or she sells the team.
Now with private equity, they can make some coin. Because
let's think about it, maybe there are some folks out
there way back, you know, that bought a team for
thirty four dollars and a six pack, and now this
(34:12):
team is like in the billions. So all you could
just put up, like you said, like ten percent, and man,
you've made money back.
Speaker 8 (34:20):
Absolutely well. Obviously, the valuation increases are based on so
many things. Right, you have certain contracted and growing revenue
for the teams, whether it's media rights, whether it's sponsorships
which are multi year, even there's been studies done that
you know, the renewal rates for season ticket members are
fairly consistent, all right, and so so you have this
(34:43):
revenue stream. But the other opportunity is very simple. Take
the team and look at everything else around it. I've
said from day one, these teams are health and wellness businesses,
they're technology businesses, they're consumer businesses, they're real estate businesses.
Speaker 4 (34:57):
That's a lot of different industries.
Speaker 8 (34:59):
Percent and so when you think of the valuation, because
I get asked all the time, are we at peak valuations?
I said, well, number one, most teams haven't tapped into
their international markets. Number two, they haven't tapped into these
enterprises that are extensions of the core asset. And plenty
of people who have talked about I know George Pline
at Brewing Capital had an extensive, you know, conversation very
(35:23):
early on about these are enterprises, not teams. And what
you're seeing now is the investment thesis really pursuing.
Speaker 4 (35:31):
That playing itself out. Absolutely, talk a little bit about
your role as a Latino owner of a major sports
team and with your movement to impact Exports Group and
your efforts to get private equity and think through building
out the enterprise value. We're in a very different cultural
moment right now. The Trump administration has been very vocal
(35:52):
opposing anything DEI related. I'm wondering how that changes how
you market what you're doing.
Speaker 8 (36:00):
I don't think it changes at all. I think one
of the areas that you see an emphasis on leaning
into the growth cohorts, which are young, female, diverse, tech savvy,
and purpose driven, is actually in sports, this is a
business imperative. These are consumer businesses. So what does the
(36:22):
consumer look like in America? Where is it growing? When
you think of where these professional sports teams are. So
I've been asked a lot about well, you know the
backlash against DEI. I said, this isn't a DEI sor,
this is not a field with thing. This is a
business imperative. When you think of what the giants and
(36:42):
where they're located, and who they're targeting as ticket goers,
as social media followers, as people buying merchandise, it's a
very diverse community. They're leaning into that. I haven't heard
a single team or league saying, oh, we're backing away
from where the growth is coming in.
Speaker 4 (37:01):
From recognizing their market.
Speaker 8 (37:02):
They're absolutely recognizing their market and they're trying to be
creative and innovative in terms of how do we capture
them where you know, being where they're at and being
in unexpected places. So you're seeing collaborations across fashion brands
that you've never seen before. The omnipresence of sports across
multiple industries is a very concerted effort to go after
(37:27):
this growth cocor so for me, when people talk to
me about, oh, you know, what's your reaction to this fact,
I'm here to, you know, pursue a business imperative of
capturing growth, and this is where I'm going after it.
Speaker 7 (37:40):
Our thanks to Impact ex Sports Group Chairman and CEO
Xavier Gutierrez for joining us, and thank you for joining us.
For my colleagues Scarlett Fou, Damien Saasaur and Vanessa Perdomo.
I'm Michael Barr. Tune in again next week for the
latest on the stories moving big money in the world
of sports, and don't forget to catch our podcast all
all your podcast platforms. You're listening to The Bloomberg Business
(38:03):
of Sports from Bloomberger Radio around the world.
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