Bloomberg Businessweek Weekend - September 5th, 2025 - Bloomberg Businessweek

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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.

Speaker 2 (00:08):
This is Bloomberg Business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.

Speaker 3 (00:31):
Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast.
Well a big week for US economic data. Reads on
the US labor market, we got the Fed Beaige book,
a few earnings continuing to trickle out as well. We
even hit an all time high on the S and
P five hundred. Just head to the Bloomberg or Bloomberg
dot com for all the specifics and for more clues
on the outlook. We leaned in big time on views

(00:53):
from the c suite from industries that can tell us
a lot about the US economy.

Speaker 4 (00:57):
On that this hour, we talked to the CITA CEO
of commercial construction company Mackissick and McKissick, which has worked
on some iconic projects in New York City think Barkley Center,
the Oculus. Yeah, Billy Jean King Tennis Center.

Speaker 3 (01:12):
I had no idea.

Speaker 4 (01:13):
Yeah, they've done so much, She joins us with a
somewhat sobering view.

Speaker 3 (01:17):
Yeah, it really kind of stopped us for a moment.

Speaker 5 (01:20):
Hey.

Speaker 3 (01:20):
Plus, we've got the billionaire real estate developer who is
in the midst of the rebuild after the LA Fires
earlier this year. He also may or may not be
seeking public office in his home state of California. That
interview to come.

Speaker 4 (01:32):
Also, for another read on the economy and the US consumer,
we speak with the CEO of the buy Now, Pay
Later company affirm that's Max Levchin.

Speaker 3 (01:40):
And later on in our second hour Bloomberg Power Players
New York, we talked the business of sports with Derek Sprague,
CEO of PGA America. Also baseball MVP Legend and sports
team owner Alex Rodriguez, and Gary Bettman, NHL commissioner, and
Ted Leonsis of Monumental Sports.

Speaker 4 (01:57):
All that to come. We begin with a look at
construction and spending on big projects think airports, sporting arenas,
hospitals and more. Jerald mcisock Daniel as president and CEO
of Mackissick and Mackissick. It's a one hundred and twenty
year old construction firm that's behind some well known and
very large projects. We're talking Barkley Center, the Oculus in Manhattan,
the new Terminal one at JFK International Airport, and Lincoln

(02:21):
Financial Field where the Philadelphia Eagles play much more too.
I want to start by just getting an understanding from
you about the economy, where it is in your view,
and if people are spending money.

Speaker 6 (02:35):
I think people are holding back a little bit. Of
prices are high. I know as far as the construction industry,
we are beginning to fill some of the tariffs, and
so yeah, I think people are holding back on spending.

Speaker 4 (02:50):
Talk a little bit about where you're feeling the tariffs.

Speaker 6 (02:54):
Well, one in particular, I would say, is JFK Terminal one.
We're finishing Phase A of that project, which is almost
three million square feet in twenty twenty six, but we
are scheduled to start work on Phase B and that's

(03:15):
been pushed out, I believe because of tourism is not
has decreased quite a bit to New York City.

Speaker 3 (03:24):
Wow, how much has it been pushed out?

Speaker 6 (03:29):
Well, right now, it's just slowed and it's been pushed
out several.

Speaker 3 (03:32):
Months where else are you seeing that too in terms
of projects that you guys are working on, because your
portfolio is just vast and you cover, like we said, academia,
just so many different kind of commercial aspects. Where else
are things maybe being slowed down pushed out?

Speaker 6 (03:50):
Well, I mean I can only talk about the areas
where we work, which is in rail and transportation. You know,
FTA I think has slowed on releasing projects. As you know,
several of their staff, more than i'd say fifty percent

(04:11):
staff has been released, and so it was very difficult
for them to push out the capital program projects that
they do have. And so you know, the Gateway seems
to be moving ahead just fine.

Speaker 4 (04:29):
And this is the Gateway tunnel between New York and
New Jersey.

Speaker 6 (04:33):
Yes, okay, yes, yes, and I just pray that that continues.

Speaker 4 (04:38):
Well, let's I just want to contextualize that a single
project of yours, this is the terminal one at JFK
International Airport. It's a nine and a half billion dollars
in value project. Your firm is working specifically on the
oversight of project management construction management. As a government liaison,
you also handle community outreach, so really runs the gamut

(05:01):
of what you're working on. Can you give us an
idea of the pipeline, Not necessarily projects that have been
announced or where the shovel is in the ground, but
projects that you're talking to municipalities about, projects that you're
talking to academic institutions about that you're not necessarily ready
to announce. But give us a good idea of what
that pipeline looks like in terms of how these entities

(05:25):
are ready to spend.

Speaker 6 (05:27):
Well, I think you know it's positive when we think
about infrastructure projects, waterfront projects with New York City Economic
Development Corporation, I believe the MTA projects are eventually going
to move forward. I think the big frontier is some

(05:48):
of the micro trips manufacturing plants like Mikron that's upstate
New York. That's one hundred billion dollars. It's moving forward.
And then right after that, I think it'll be the casinos.
Once a casino owner, once the three licensing licenses are awarded,

(06:10):
do you think you'll see starting there and that will
be billions of dollars.

Speaker 4 (06:14):
Do you think New York City will get one of
these licenses?

Speaker 6 (06:19):
Who knows? You know, if I had to bid on it,
I would say probably not in Manhattan, inside of.

Speaker 4 (06:26):
Manhattan, so that would be maybe Queen's near the area
close to City Field.

Speaker 6 (06:31):
Yeah, okay, Queens, Yeah, well absolutely.

Speaker 3 (06:36):
Cheryl talked to us about the environment, and you know,
as you mentioned about what's going on in terms of
various government officials or departments that you know, we're official
where folks have been let go and show what that
is doing to different projects. The political environment, the federal
political environment. We talk about whether administrations, you know, are

(07:01):
good for the business environment or not. And we do
have folks who come on and say that this is
an administration that's going to cut back some of the
regulatory issues and make it easier better. Is it not
making it better easier for what you do?

Speaker 6 (07:17):
I don't see evidence of that. You know, if you
don't have people sitting behind the desk to actually push
the workout, I don't see it getting better. And you know,
I have to shift to our energy crisis that can
potentially happen. You know now that the administration has really

(07:40):
sunset all of the offshore and onshore wind projects that
we terribly need to supplement our electrical systems. So I
am very concerned about where we are headed.

Speaker 4 (07:56):
We're speaking right now with Cheryl McKissick. Daniel, President CEO
of McKissick and McKissick. You mentioned the offshore when Bloomberg
New Energy Finance BLOOMBERGETIAFF reporting that US offshore wind faces
a twenty eight billion dollar hole. With President Trump's moves
five under construction, US offshore wind farms, representing about twenty

(08:17):
eight billion dollars of committed capital, faced severe delays and
even cancelation after recent actions from the Trump administration. At
McKissick and McKissick, do you work on offshore wind.

Speaker 6 (08:29):
We do not work on offshore wind. But I am
a board of advisor for National Grid, and so I
understand how critical these other resources are to our grid.
You know, there's a high demand for electricity. Buildings that
are being constructed now are one hundred percent electric. We

(08:52):
have the ev cars, we have the data centers, and
so electricity is critical for us. And I believe well
we definitely were counting on these wind forms as another
strong resource to help us supply the electricity we need.

Speaker 3 (09:09):
You sound show pretty negative, not I don't mean negative,
but down on the environment, and I guess we were
really looking forward to talking to you because we're trying
to get an idea of the way forward in an
environment where there's a lot of presidential pressure to cut
interest rates, and there's some who say, well, wait to meet.
The economy is doing just fine. We don't need that.

(09:31):
I'm just trying to understand is it just the overall
environment because of politics or is it higher rates? Like,
what is it that you think is causing kind of
the biggest issues for you?

Speaker 6 (09:46):
I think it's politics.

Speaker 3 (09:49):
Well do you feel do you feel targeted? Can I
ask you as as the owner of a minority owner
of a business.

Speaker 6 (09:57):
No, I don't feel targeted personally. You know, I think
for some reason, there is a focus on DEI programs,
and you know, it has not affected our business in
New York, but it has affected our businesses in other
states where municipalities have had to suspend their D and

(10:22):
I programs if they wanted to get funding from the
federal government. And so that is somewhat of a concern.

Speaker 7 (10:31):
Now.

Speaker 6 (10:31):
I hope that we continue to be isolated from that
in New York. I don't know how much longer that
will last.

Speaker 4 (10:38):
Do you get you know, on the website, I noticed
the firm is referred to as quote the oldest minority
women owned professional design and construction firm in the United States.
Do you ever consider because of the political environment that
we're in right now, not necessarily highlighting that.

Speaker 6 (10:54):
No, I do not feel that way. That's why I
recently wrote my book, The Black Family Who Built America.
I'm so glad that it's coming out in this time
and in this age, because it is an account of
our family history. After two hundred years when the first
descent of our family came to this country in latest

(11:17):
first brick, we are still here and we are an
unshakable pillar of ingenuity and resilience. And this book is
all about saying, you know, this is a receipt to
say that we've always been here and we're not going anywhere.
Black excellence may have been ignored, but that doesn't mean

(11:38):
it's not here.

Speaker 4 (11:39):
Cheryl, you got to come back and join us. It's
great to have you back here. Cheryl McKissick Daniel. The
new book is called The Black Family Who Built America,
The Mckissics Two Centuries of Daring Pioneers. It was out
last month. Cheryl McKissick Daniel, President CEO of Mickissic and mckissic.

Speaker 2 (12:00):
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Speaker 3 (12:13):
So we got a lot of economic data this past week, payrolls,
joelt Sturbel Goods, some anecdotes thanks to the Fed's Beige Book.
All of that helping to inform how investors are thinking
about this economy as we are just about one and
a half weeks away from the next FED decision.

Speaker 4 (12:28):
Also helping inform them is what we hear from the
people who are big players in this economy. Caruso has
over two point five million square feet of property assets,
all owned and operated by Caruso, all capital two coming
from within. The assets include upscale retail, resort, office and
residential properties all across southern California. Rick Caruso has been

(12:49):
investing in and developing property going back to nineteen eighty seven.

Speaker 3 (12:53):
Yes, he is the man behind the firm, Rick Caruso.
He's also a philanthropist, a former president of the LA
Police Commission, was part of the board of water and
power commissioners, and has been involved in politics, notably running
as a candidate for LA mayor in twenty twenty two.
He leads a nonprofit aimed at accelerating private sector involvement
in the LA area's massive rebuilding effort, known as steadfast LA.

Speaker 4 (13:16):
Rick joined US from Los Angeles. He began by discussing
his view of the economy, particularly in southern California.

Speaker 1 (13:23):
I think it's still very robust, to be honest. Now,
the data that I look at is obviously off of
our properties, and our properties are growing in terms of
attendance on a double digit basis year over years, so
that's very strong. Our sales per square foot are continuing
to grow at a very strong pace, and we have
a lot of demand for retail space. So retailers, the

(13:45):
best in class retailers are growing. You take a look
at a broader picture, I think there's a little bit
of softness out there in some of the categories. Luxury
is not growing as much as it has. There's some
luxury retailers that are for a bit, but I'm still
pretty bullish on the consumer in the United States.

Speaker 4 (14:05):
We should remind everybody the properties and the developments that
you've done have really served at the higher end of
the consumer. People even outside of the Los Angeles area
would be familiar with the Grove for example, or perhaps
Miramar in Montecito, just around Santa Barbara, but the vast
majority in the Southern California area. What about Southern California's economy,

(14:26):
that economy that you focus on. What have you noticed
in terms of changes in the last couple of years,
as we've heard the steady drumbeat of information about people
leaving the region because of the regulatory environment, the cost pressures,
what have.

Speaker 1 (14:40):
You Well, I think you're right, and I think it's
a challenge. So when you take a look at La
City in particular La County, you do have a very
over regulated, tough business environment, and it's very tough, especially
on middle or small businesses to operate in the city
because of the cost of operation. So you do have
businesses leaving and that's troubling because the backbone of our

(15:03):
economy in Southern California are the small businesses. So, you know,
one of the things that we push for, I push
for as just a business person and a member of
this community, is to be more business friendly and to
start deregulating so we can grow businesses in the Los
Angeles region. And I think as a state, we have
a problem with that. We have businesses leaving the state

(15:25):
of California going to regions that are more business friendly,
have less red tape, allow businesses to thrive on a
much easier basis. So you know, hopefully the tide will
change on that, but it's certainly an issue in southern
California and I think California in general.

Speaker 4 (15:42):
Yet you remain rick. You have not moved to Arizona.
You have not moved businesses to Arizona, to Texas, to Florida,
these areas of the country where people from California have
been going as a result of regulatory easing. One could say,
will you stay in California.

Speaker 1 (16:01):
Well, I'm bullish on California. I'm going to stay in California.
I believe in it. I think we should be leading
the nation in California. I think we should be leading
the nation in Los Angeles. And I also have a
practical problem. You can't pick up large projects and move them.
I can't pick up the movement. So I have to
remain engaged, bullish, and hope we change the trajectory, and

(16:23):
I think we will, I really do. I think people
are at a point, certainly in the Los Angeles area,
that they've realized that the path we're going down is
not sustainable. We've got a budget in LA City that's
a billion dollars out of budget. We have revenue decreases
in LA City because businesses have pulled back and left,
and we don't have new capital and investment coming into

(16:44):
LA like we should. They're going into other regions. Even
immediately outside of Los Angeles. You have cities that are
doing incredibly good jobs, the city of Glendale, the city
of Culver City, that are more business friendly, are safer, cleaner,
more supportive of great neighborhoods, and they're attracting the business

(17:05):
at the cost of LA City. So we've got to
change that. But I remain optimistic the change is coming soon.

Speaker 3 (17:12):
How are politics getting in the way of all of this?
And I ask it, Rick, You've got California Governor Newsom
and President Trump really in kind of high stakes feuds
over a bunch of issues, whether it's California's universities, their environment, redistricting,
redistricting excuse me, and other issues. I mean, talk to
me about that, and who side are you on in
all of this?

Speaker 1 (17:33):
Well, I'm on the honestly, I'm on the side of
the people of LA and the people of California. Here's
the problem that I have with the battle that's going on.
We've got some really serious problems that need to be
dealt with, crime, shortage of housing, homelessness, etc. The cost
of living in California. Having an argument between the governor

(17:56):
and the president, between the mayor and the president, a
lot of name calling going on doesn't advance anybody's cause
to solving these problems. So what I hope is that
we get past the rhetoric, figure out a way to
sit down, find some common ground, and work together. Here
in Los Angeles, we have three hundred thousand acres in

(18:18):
Pacific Palisades, Malibu, and then also at an Alta Dina
that was burned to the ground the size of two Manhattans.
To put it in perspective for New Yorkers, we need
federal help, we need federal funding, and we're getting none
of that. And I don't think as the bickering is
going on and the name calling is going on, that

(18:39):
serves any purpose in advancing the negotiations of the discussions
and getting federal help.

Speaker 4 (18:44):
In Los Angeles, we're speaking with Rick Caruso, founder and
executive chairman of Caruso, the privately held real estate company,
on the federal aid. On the federal funding. Have you
had conversations with President Trump or members of the Trump
administration expressing the need in your view for federal help
for California in the wake of these disasters.

Speaker 1 (19:04):
I've had those discussions now with the President directly, but
I've had those discussions with intermediaries. I've certainly had that
discussion with our governor, and we need to find a
way to get those discussions at a higher level and
more productive. I know there's some talk Governor Scott or
Senator Scott was out here in Los Angeles and talking

(19:26):
about it, but it really is critical path because you
have hundreds of thousands of people that have been displaced,
You've got jobs that have been lost, you have a massive,
massive rebuilding effort that's going to take tens and tens
of billions of dollars in infrastructure. So we need the
federal help. It just has to happen. Well, you know
it should.

Speaker 3 (19:46):
Yeah, No, I hear you, and you've since the fires.
I know, Tim and I just kind of preparing for this.
Listen to a lot of conversations you've had with various
individuals about this in terms of what needs to be done.
You know what's interesting is need more federal help in
terms of the rebuilding efforts. So then, how do you
feel when President Trump illegally used federal troops in LA.

(20:07):
I mean, if you were mayor there, how would you
respond to President Trump and his threats and use of
troops like that's going on when obviously, as you say,
there are efforts needed to do the rebuild.

Speaker 1 (20:21):
Well, I've been very clear the federal troops coming into
LA were wrong, and I don't think it should have
ever happened. I would have gone to court immediately. They
finally did go to court, as you know, the court
ruled that it was an illegal use of those troops
to come into the city of Los Angeles in this region.
So it's not right to be doing that, and we

(20:41):
don't need to be doing that. I mean that just
this power grab that's going on does not advance the
cause for any It just doesn't. And the division between
the politics is harmful to the residents of Los Angeles.
We've got to find some gum ground. We've got to

(21:01):
act like grown ups. We've got to put our differences
aside as elected officials and figure out how to work together.
And so I would hope that our elected officials find
a way to drop the name calling, maybe get on
a plane and get over to Washington and see if
we can find some common ground to work together. We
also have the Olympics coming here, so Los Angeles is

(21:24):
going to be the world stage for the United States
and we need to be putting our best foot forward
and we're going to be need to be making a
lot of investments in order to do that, and again
we need to have the help of the federal government
to do that.

Speaker 3 (21:38):
So Rick, I'm kind of waiting for the flood of
my emails to come into my Bloomberg because I think
people who are listening with saying, well, this is a
kind of folk, you know, individual you do want in politics.
So what's your latest thinking on maybe running again for
mayor or possibly governor of the state of California.

Speaker 1 (21:54):
Well, I'm seriously looking at it, and I've got a
team of people that are working on it, and I'll
make a decision soon on that, and I'm looking at
both paths and there's good opportunities in both paths. But
now I'm just remaining focus on what we're doing at steadfast,
making sure we're getting people back in their communities as
quick as possible. Yesterday I spent the afternoon in Altadena.

(22:17):
We were giving out grants for small businesses to get
reopened in all Toadna. We're doing the same in Palisades
and in Malibu. So those kind of efforts are incredibly
important to me because again, small businesses are critically important
for jobs, and we're giving out about a million dollars
in grants over the next couple of weeks. So that's

(22:38):
what I'm going to stay focused on for now. Politics
will come down the road fairly soon.

Speaker 3 (22:42):
All right, we want to talk about some of those
efforts you're doing in terms of the rebuild. I got
to ask you, though, if you do run or make
a decision, would it be for mayor or for governor.

Speaker 1 (22:51):
I don't know yet. We're fine, We're going to find out.
I'll let you know.

Speaker 3 (22:54):
Okay, I'm going to hold you to it. I'm going
to hold you to it.

Speaker 4 (22:59):
Hey, Rick, I'm curious about just fire resilience in California,
especially in the wake of Palace States. I'm from the
Central Coast. I was glued to watch duty because of
the Gifford fire just a couple of weeks ago. I
mean I spent you know, ten days just refreshing that thing,
watching the progress of that fire. What is the right
way for Californians to be ready for what has become

(23:22):
just a part of daily life for a big portion
of the year.

Speaker 1 (23:27):
Well, we have to have very smart brush management. You know.
One of the problems in the Palisades we had forty
years of brush that were not maintained by the state,
the county or the city that was rocket fuel. We
have to have water. I mean, it was an unbelievable
circumstance that we had reservoirs that are empty. So the
competency level at the government and being prepared is critically important.

(23:51):
LA's City was not prepared for this fire. This fire,
in my opinion, and I think in most people's opinion
that have seen the facts, as this fire could have
been prevent it certainly significantly mitigated in terms of the damage.
And then we have to be encouraging people to build
with non combustible materials. Unfortunately, village that we built survived it,

(24:13):
but it survived it because we were prepared to fight
the fire. But equally important, we built it with non
combustible materials and so it was able to stain the
fire around us. And we had a lot of smart
people doing some things, so we can build better and smarter.
But we also have to have better infrastructure. You know,

(24:35):
the fire hydrants need to work. They were not working
in Los Angeles. The reservoirs need to be full. And
this is an opportunity right now to rebuild Malibu, Pasadena, Alta,
Dina and Palisades in a way for the next hundred
years and to get the right infrastructure put in. It's
an incredible opportunity to create these communities for the future.

(24:58):
And that's why we need to work with the federal government,
get the right federal funding and get some smart leadership
locally that builds it back properly so that we are
can with stain fires and other natural disasters in the
future can be done.

Speaker 3 (25:14):
The Rick, the nonprofit you are leading, as we said,
called Steadfast LA. You've got companies such as Netflix, Amazon,
JP Morgan cha CBRE Group, so many who are working
to restore these communities. But you guys are looking at
everything you're using AI. How long do you think it's
going to take for the rebuild and ultimately are we

(25:34):
talking about kind of the cities of the future in
terms of the materials used and how it's done.

Speaker 1 (25:41):
You know, I think it's going to take. There's going
to be phases. I look at it. What's going to
be happening one year from now, three years from now,
five years from now, one year from now, for example,
the little downtown of the Palisades is going to get reopen.
We're going to rebuild the park. Steadfast is leading the
park rebuilding. Schools are getting back reopen, and we're involved
and supporting the school systems and getting reopen Sam and

(26:03):
all Tadena, Salmon, Malibu. I think in three years you're
going to see a lot of the homes back and running.
We have some really encouraging programs with an alliance of
builders who are coming together to buy in bulk, be
able to build less expensively, and so that's really important
to do. And I think in five years we're going

(26:24):
to be in pretty good shape getting these communities back
on its feet. The biggest challenge we have, honestly is
the lack of diligence, the lack of urgency from the
local governments to get permits issued. And we've got to
speed that up and cut the red tape both in
the county and in La City so people can rebuild.

Speaker 4 (26:44):
Hey, Rick, before we let you go, I want to
talk a little about your family foundation that's been involved
at this point for more than thirty years in Watts,
the Crusoe Family Foundation, and it serves organizations a slew
of organizations in the area. And I'm just wondering, you know,
the focus is in healthcare, it's on education at risk kids.

(27:04):
I'm wondering why we need organizations to step in and
fill the gap that isn't necessarily provided by other organizations.
Why do we need the Crusoe Family Foundation to do this?
When will your work be done and you won't have
to help bridge that gap.

Speaker 1 (27:19):
Well, I don't think our work is ever going to
be done, but I have to tell you something. It's
one of the most rewarding parts of my life, and
my wife's life, and my family's life that we can
help kids that are at risk, living at or below
the poverty line, and you bring opportunities to them and
the right education and the right support. We have kids
that are living in some of the worst and toughest

(27:40):
conditions in LA and they're now at Harvard, MIT, Georgetown,
USC UCLA and they're just excelling and doing it on
their own because they have the right ecosystem around them
in the right start and the right support. And a
government alone can't do everything. It never has been able to.
You have to have philanthropy, and people need to give

(28:02):
back and lean in and support churches and schools and
all these great organizations that we have out there. And
what I would argue for is we need more people
to be leaning in. We need more foundations to be
giving back because the reward and the payoff is so
great and so huge, and it really does change these
communities because these kids are coming back and helping others.

(28:27):
I just find it one of the greatest parts of
my life is being involved in being able to see
these kids just take off and do great things.

Speaker 3 (28:36):
Well, we're going to end it on that optimistic note
that makes us, I think all feel really super good. Rick,
thank you so much, really appreciate your time and efforts,
and we're going to mark our calendars to check back
with you about maybe that political decision you may make
very soon. Rick Caruso, thank you so much. Be while
founder executive chairman of Caruso joining us from LA.

Speaker 2 (28:57):
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Speaker 3 (29:16):
This past week, Swedish fintech giant Klarna officially launched its
long long anticipated USIPO. The company is aiming to raise
up to one point twenty seven billion dollars through its
New York Stock Exchange debut under the ticker symbol KLAAR.
Makes sense. This marks a revival of its IPO plans,
which were paused earlier this year amid market turbulence.

Speaker 4 (29:38):
Meanwhile, a firm, Klarna's US based by now pay Later arrival,
has reason to celebrate after posting strong fourth quarter earnings,
leaping back into profitability after a disappointing first half of
the year. According to Bloomberg Intelligence fintech analyst Dick SHAGERA
A firm appears very well positioned to turn an operating
profit in twenty twenty six with continued expansion and adjusted

(29:59):
opera margin.

Speaker 3 (30:00):
To be fair, Affirm shares man, they've been on a
tear for more and how consumers are choosing to spend
and the state of their business. We cut up with
Max Levchin and he's co founder and CEO at a firm.
He's also you might recall, a co founder of PayPal.

Speaker 8 (30:13):
The Affirm consumer that is the folks that we approve
for transactions, and each transaction is separately underwritten, so we
do have a very discerning eye as we underride these loans.
They're don't great. They are shopping demand for our product
is accelerating, which is posted another accelerating fourth in a
row quarter of cross merchandise sales. They're doing really well.

(30:37):
Re payment is really strong, credit is steady to improving.
So we lend to a huge percentage of US population.
So you could infer from that that US consumer writ
large is doing well as well. So I think the
rumors of the American devise are greatly exaggerated. That is,
you know that said, we continue to watch every metric

(30:58):
we can all the time because that's what our job is.

Speaker 4 (31:01):
Are those metrics stronger now max than they were, say
a year ago?

Speaker 8 (31:07):
Again, from a firm's point of view, we really are
firing an all pistons. Our ability to serve folks has
improved about twenty percent year over a year. That's measured
in transaction frequency. Our user based crew about you know,
just north of twenty percent as well. So consumers are
enjoying us. Our user active acquisition as accelerated for the

(31:31):
six quarter in a row. So there is a meaningful
cycular shift from credit cards to affirm So I think
again with an our ecosystem, every metric looks very good
and better than last year.

Speaker 4 (31:42):
Can you talk a little bit about what transactions a
firm customers are using the payment system for. Are they
using it like they would use a credit card right now?
What's the typical transaction? What's the transaction size?

Speaker 8 (31:57):
That's a great question and it's a little bit different
shad tween players. So I can only speak to us.
The average ticket for US is just under three hundred dollars.
That should tell you a lot. So everything from a
truly considered purchase, like a nice bicycle, maybe a couple
hundred dollars, all the way down to a large party
supply maybe a couple hundred dollars, that those are sort

(32:20):
of the book ends. We tend to believe that really
really low ticket items. You know, twenty dollars is just
too small amount of an amount to finance with a firm.
So we have a notion of you know where we
start trying to tell our consumers, Hey, you know, this
seems like a good idea to be a cash transaction,
but generally speaking, because the product we offer is just

(32:43):
so much better than credit cards for the end barrow
or we're very pro idea that a firm should be
used in place of credit cards, full stop. If you
think of it very quickly, it is an obvious idea.
So we don't charge laid fees, we don't compound interest,
we don't do deferral or any of the sort of
gimmicky things that look too good to be true, because
they are too good to be true. So it is

(33:04):
an honest financial product that really helps the end borrower
get full grip on their finances and not get into trouble,
not get over their skis so directionally, the more they
use a firm for everything, I think the better off
the consumer is going to be. That's the current average
is two hundred and ninety seven dollars.

Speaker 3 (33:22):
I think, how often does somebody that miss a payment?
Are they're late and then what happens as a result,
what kicks in? I'll be honest, I'm not a huge user.

Speaker 4 (33:30):
Well, I mean, you you ever use it?

Speaker 3 (33:33):
I think I've used one of them, and I can't
remember once because I was curious about it, you know,
and I set it up so things just got paid
and it was like three payments or because I was
curious about it, because we talk about it all the time.
Here grew up where you could put stuff away, you know,
stuff on layaway. So it's interesting to see the evolution.
But I am curious, Max, how often is it that

(33:53):
somebody is late and then the terms start to change?
And you know, this is a business, right.

Speaker 8 (33:58):
So that's actually thank you for that prompt. That is,
let me let me try to make one thing. If
there's one thing I can make clear in this conversation,
I just really want to hammer this one home. Nothing
will change. Terms will not change. Fees will not appear.
Interest will not change. No dollar amounts will change. If
something happens and you can't make your pay your bill
on time. The fundamental promise of Affirm is what you

(34:20):
see is what you get. When you're borrowing five hundred
dollars and you're committing to paying let's say another twenty
five dollars of interest. If you cannot make it on time,
it will still be five hundred and twenty five dollars.
It will not be eight penny more. If you prepay
and pas us early, that interest amount will come down.
So it is a profoundly pro consumer product. That's it.
I just I just wanted to make that very very clear.

(34:42):
We are a better financial product. About ninety eight percent
of our consumers are never late, never never intervolved, and
so it's fundamentally extremely extremely high probability of none of
that will ever happen to you if you're within the
Affirm ecosystem. When folks are delinquent to the fancy term

(35:02):
for late with their payment, we'll reach out to them.
We use all sorts of digital channels to get in
touch with them, will remind them. Vast majority of folks
that are late are actually what's called sloppy payers in
the industry where they say, oh my god, I forgot
to set the autopay, thank you for using that feature
if you did, and they cure it, and so it goes,
and so that the reason we don't charge lateies is

(35:23):
because from folks where they really cannot something happened and
the illustir job or something happened, they're not going to
pay you any faster if they have no means of
paying you back. The ones that are just stumbled somehow
and forgot the reminder is the most you need to do.
You don't want to penalize them for being forgetful.

Speaker 4 (35:41):
So what is the default rate.

Speaker 8 (35:45):
It's on the order of two percent plus relindus that's remarkable. Well,
it's meaningfully lower. It's meaningfully lower. The credit cards, by
the way, are lower ticket items that trends below one percent.
So just to give you a sent like this, the
rumors of this being a bad financial product creating hidden
leverage in the system is like bad math and ridiculousness.

Speaker 4 (36:07):
So push back on that a little bit, but do
it through the explanation of the business model here, because
I think a lot of people approach this product with
being informed about how credit cards work and the idea
that high interest, high interest if you miss a payment,
fees if you miss a payment. In a sense, the

(36:28):
risk is somehow put on a different party here Max,
and there's also buy in from the retailer who partners
with a firm. Just explain how this whole transaction works.

Speaker 8 (36:40):
Yeah, very simple. You typically find a firm at a
point of sale on any online and now progressively more
offline merchants. You will ask to use the product, so
it's always an explicit request to borrow. And we take
great pride and put a lot of technical emphasis on
underwriting every transaction individually so that we have discretion to say, hey,

(37:03):
you're overextending yourself. You know, two percent through two and
a half percent default rates don't come for nothing. We
do an enormous amount of work in this underwriting engines
that we've built. So as you get approved through your
real time application, of course, what happens we pay the
merchant and you commit to paying us back over time,
and we always give you a menu of choices. Could

(37:24):
be anything as short as for payments every two weeks,
could be as long as thirty six months, once every month.
The rest of it happens more or less automatically if
you opt into the autopay feature. If you don't, we
will send you a reminder and then you arrange for
repayment from your bank account typically, and that is it.

(37:46):
In our case. There is no compounding. The interest is
the interest expressed ten dollars and that is what you
commit to. It will not go up independent of any
modifications to the schedule. There are no late fees in
our case. Again, this is weird, unique or almost i
think at this point in the industry by just not
charging any incrementalities at all. And so this really is

(38:06):
the product where the cornerstone value is transparency. We are
entirely transparent with every participant in the ecosystem. For merchants
to consumers, everyone knows what they're getting into. You get
your bicycle or your couch or your putty supply today,
and you pay for it over time, and you know
exactly when the payment plan stops and then you're no
longer in debt. It is a betriponent to credit cards

(38:28):
because when you use credit cards, which are very convenient,
you don't have this extra approval step, so you know
just drop the plastic and on you go. You're adding
to this giant bucket of debt that just sits there
and revolves. The interest compounds into principle, every month, every week,
whatever it is you accrued an interest becomes a part
of the base that accrues interest on interest on interest.

(38:49):
That is why credit cards are so expensive. The reason
APR matters as a measure is because it doesn't just
measure interest you'll pay on a principle, it's the interest
you'll pay on the interest on the interest, and so on.
The model we invented. The reason we are so important,
The reason people are coming to us, frankly, is they
don't have to understand exponential mathematics to figure out what

(39:09):
is the true end point of interest will be whatever
it is we promised them that's exactly what the pay.

Speaker 4 (39:14):
We're speaking with Max Levchine's the founder and CEO of
a firm, the twenty nine billion dollar market cap fintech company. Also,
you'll notice Carelly keeps talking about bikes. He's a big cyclist,
so that spends a lot of time on the bike.

Speaker 3 (39:26):
So is Tim.

Speaker 4 (39:27):
By the way, Max, Hey, oh we know we follow
each other.

Speaker 3 (39:30):
I know you guys, do hey listen. One of the
things I want to ask you. Your stock is on
a tear. It's up fifty percent year to date. It's
surged as much as twenty five percent intra day in
response to your earnings, which you've been talking about that
came out late August. You had analysts, several of them
raising the price targets on the stock. What's the path
to sustainable profitability? What do you need to see happen

(39:53):
to kind of keep the momentum going.

Speaker 8 (39:55):
We just need to keep doing exactly what we've been doing.
You know, the joker make all the time. As we are.
An overnight success fifteen years into making profitability is not
an accident. We gave this date exactly a year ago
where we said, look, twelve months from now will be
gap profitable. Two years ago we said, hey, twenty four
months from now, we expect to get profitable. And so

(40:17):
we've been on a journey that we've planned years ago
to deliver on all these milestones. And so the celebration
isn't of some clever overnight idea that we've had and
finally just poked our head from the unprofitable side of
the fence. We've been planning to be profitable. We've delivered
on this plan. We have said publicly we intend to

(40:39):
be gap profitable from this point on. That is not
a thing you can decide last week and deliver tomorrow.
It's something that you build over a long period of time.
Takes discipline, takes execution, takes a great team, which I'm
lucky to have, and so I'm not worried about that whatsoever.
Whatever we commit to, we tend to deliver on.

Speaker 9 (40:57):
Well.

Speaker 3 (40:57):
Speaking of time, it's been a long time coming for
and it's IPO and it does plan that Here in
the United States, competition in the space is definitely max
picking up. They are specifically rapidly expanding here in the US.
You've got Sezl that stock is up about seven thousand
percent less than two years. There's a lot going on.

(41:17):
So how are you seeing the competitive landscape evolve and
what does that mean for you guys specifically at a firm.

Speaker 8 (41:26):
You know, we're very happy doing our thing. As I
just extolled, for a little while, we are different. We
do our thing a little bit differently than the rest
of the industry. We have a very strong point of
view on what isn't isn't moral, What isn't isn't right
for the consumer, for the merchant partners that we have.
You know, it's made great dividends for us and our shareholders.

(41:46):
So in that sense, we intend to change absolutely nothing.
Part of why maybe I spend less time looking at
the competition than one does in a competitive industry, and
this one is certainly very competitive. Is an aggregate by
now pay later is still just under one percent of
total US retail and it's a worldwide phenomenon, and US
is actually quite behind. If you look at markets like

(42:07):
Australia and the Nordics, where by appilator is more mature,
they're the penetration into e commerce and the order of
twenty twenty five percent. I think in the US it's
you know, how much more polite seven percent maybe, and
if you expand it into offline, which there's no reason
why this doesn't work offline. In fact, we have a
card that's been growing extremely well better thane hundred percent
a year of a year just in the last quarters report.

(42:30):
You know, we're a fraction of a fraction, and so
the opportunity to provide more honest financial products is you know,
I said it in my showholder letter sort tongue in chek,
it rounds up to infinity, And so for now we're
not really running into each other in the hallways fighting
for that last same customer or merchant. I'm sure one
day we'll get to a point where it's so significant

(42:52):
as a part of US economy, where it becomes, you know,
a zero sum game. But even in that world, there's
a Visa to a MasterCard. And for now, I think
we're all just experiencing really good growth. And frankly, the
fact that the market now will support a couple of
large publicly traded companies, it's probably good thing that just
gives shareholders a sense for this. This has a long

(43:14):
week to go in terms of growth.

Speaker 4 (43:15):
Hey, Max, before we let you go, just thirty seconds
on crypto and stable coins and opinion piece this week
coming from Paul Davies of Bloomberg Opinion. He wrote that
stable coins on our opportunity for merchants and airlines to
recover costs from big banks and networks like Visa and MasterCard.
Is there a use for digital assets at a firm?

Speaker 8 (43:31):
I think there are interesting opportunities around merchant settlement, which
is sort of I'm echoing what this piece is saying.
I'm not yet seeing consumer spending stable coins. They have
acquired in droves and so as a back end mechanism,
stable coins are very interesting and we're certainly looking at
the opportunities there on the consumer side. I think folks
are thinking in dollars and probably will continue to do so.

Speaker 3 (43:54):
All right, gott to leave it there, Hey, Max, thanks
for carving out some time for us. Max Levchin, Founder
and chief executive officer of a firm. Max. Of course,
it's a great voice when it comes to what's going
on in the fintech space.

Speaker 4 (44:06):
We're gonna work PayPal fame.

Speaker 3 (44:08):
A PayPal fame as well for the mafia.

Speaker 7 (44:11):
As they say.

Speaker 2 (44:16):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and the Android Auto with the Bloomberg
Business app, or watch us live on.

Speaker 3 (44:29):
YouTube Plenty ahead on our second hour of the weekend
edition of Bloomberg Business Week, including putting sports back in
the spotlight. I don't know have they ever left the spotlight?

Speaker 4 (44:38):
I feel like just feels like the spotlight is shining
brighter than ever. I mean, there's more money than ever
going into these things. And also the way that these
teams are being valued.

Speaker 3 (44:46):
It's remarkable valuations off and running. Hey, we're going to
take you to some of our favorite conversations from this
past weeks Bloomberg Power Players New York Summit, held here
at Bloomberg Headquarters in New York City, where we talked
about the booming billion dollars sport. It's an entertainment industry
with some of the biggest names in the space, a.

Speaker 4 (45:03):
Lineup that included the CEO of PGA of America on
reshaping Golf's future, and the hosts of the Deal, Jason
Kelly and baseball legend Alex Rodriguez on the deal shaping
the business of sports.

Speaker 3 (45:15):
All of that to come, We begin with someone who's
redefining how sports, entertainment and fan experiences collide. In the
nation's capital.

Speaker 4 (45:22):
Ted Leonsis is CEO of Monumental Sports and Entertainment. It's
the company behind some of the biggest Washington sports teams
think NHL's Capitals, the NBA's Wizards, and the WNBA's Mystics.
MSc also commands a portfolio with around seven point eight
billion dollars in assets.

Speaker 3 (45:38):
It's a lot. It's grown a lot in the last
few years. Ted joined us from the Bloomberg Power Player's
Summit at our headquarters in New York City along with
NHL Commissioner Gary Bettman.

Speaker 9 (45:48):
I think AI is really the NIXT big thing with sports.
Oh yes, totally. How well, right now we're redoing our
building and all we're talking about is physical AI. How
do we collect data? How do we with three million
people to come into our building? Where are they coming from?
How old are they, who are they married to? How

(46:11):
long have they had the tickets? What are they like
when they eat? What do we what can we do
to be anticipatory with our building? It's not just smart
buildings anymore. It's build the intelligence and the data right
into that experience.

Speaker 4 (46:26):
You know, I just want to ask you, Ted, because
you were at AOL in the early days. I mean
this is before you were in sports, you were in technology,
So you understand the space is are we in.

Speaker 7 (46:34):
A moment now?

Speaker 4 (46:35):
That is is like when AOL brought us the World
Wide Web?

Speaker 9 (46:38):
Well, I think the leagues it's been a it seems
like it's been a long time, but it's been a
quick pivot to go from analog and bricks and mortar
and linear distribution and local to be a global digital
power plant, if you will. We look at our teams

(47:01):
obviously there they have high fan avidity, but it's IP
and how do we digitize everything that we're doing from
the start right and distributed over our own channels. That's
why we bought our RSN. Everyone was running out of
the burning house. We said, let's run in. It will
never be a better time to buy and reinvent the

(47:24):
distribution model than there is right now.

Speaker 3 (47:27):
Gary, I want you to come in on the roll
of technology. I think all of us were watching sports.
I love it, whether it's tennis, whether it's golf, whether
it's baseball, the statistics that come up hockey. Sorry, sorry,
I was getting there. I was getting there. Sorry, sorry, sorry,
Well that's what I wanted to get to though, like
you know, how fast the puck is going or something
like how much fans love that engagement.

Speaker 7 (47:47):
I'm going to respond to that, but I want to
add onto its headshot.

Speaker 3 (47:50):
So you know, I have four brothers and growing up
in an ice skating pond that they dug out of
the woods in the back and would play hockey like
your family.

Speaker 2 (47:58):
But grew up.

Speaker 10 (48:01):
Sports tends to focus people at an instant, at a
moment in time, the score of the game, what's the result.

Speaker 7 (48:10):
I don't think we're at a moment of time. I
think we're on a journey and we've been on a
journey for decades.

Speaker 10 (48:17):
And the speed limits change on the road, road conditions change,
there are curves, there are hills. But at the end
of the day, it starts with the authenticity of sports
and how important sports are in people's lives and how
it brings people in communities together. And technology has enabled
us to connect better with our fans, so AI we're

(48:41):
like any other consumer business. It's going to help us
do business better, but also it's going to help us
make sure that our games stay true to themselves. It's
I always tell particularly my tech and strategy guys, we're
not going to change the game to make it more
tech savvy or a tech you know favorable. What we're

(49:06):
going to do is use technology to make the game
more consumable, more connected, and so pucking player tracking an
HL edge is a function of that. We're gathering millions
of data points a minute. But it's enabling us to
take people inside the game, maybe even people who don't
know the game, and understand it and let them say, wow,

(49:27):
that pup you know traveled fourteen miles with average eighty
eight miles an hour. This player can skate as fast
as thirty five miles an hour, and he's already skated
six miles in this game. This gets people to understand
and feel more connected, and it's going to let us
give them the game on their terms. Because with all

(49:48):
the streaming platforms, you're going to be able to sit
at home and decide how you want to watch the game,
not the way we've done it from a linear standpoint
since I was a little kid. People my age are
used to sitting on the couch and doing it, but
we used get in.

Speaker 3 (50:03):
Front of my dad and be like, you know, get down,
get downwind.

Speaker 10 (50:07):
But if you're a gen Z or a Jena and
you want to focus on a particular player and you
want Danna simultaneously and you want to place a bet,
you're going to be able to do all that and
buy a jersey all at the same time. In addition,
what fucking player tracking has enabled us to do is
use the metaverse. We use animated versions of our game

(50:29):
in real time. We were the first sports league to
do that and it works really well and it engages young.

Speaker 7 (50:36):
People and their parents.

Speaker 4 (50:39):
You know, I'm thinking about this all this, and I'm
thinking about the technology and thinking about the investment that's
being made, and it reminds me of the way that
we've seen sports turn into this premium experience. Now in
the premiumization, this idea of it being a luxury good,
And I'm wondering how you think about that, Ted, and
how you know it's not like you go to the
ball ball Well, I guess ball games are still affordable,
but apart from that, I mean some tickets just to

(51:02):
end up being so expensive. How do you think about
that for your customers.

Speaker 9 (51:05):
Well, many of us have run big public tech companies,
and when you come into sports, you say, oh, the
model is like a software company. We have nothing but
blue chip clients, naming rights, sweet sales, big sponsorships, media

(51:26):
deals with the biggest companies in the world, Amazon and NBC,
Comcast and Disney, ESPN, and they pay us over ten
years or longer with escalator. So the model looks just
like Salesforce, dot Com or Oracle. Those are very valuable companies.

(51:49):
It's why they're valued. And a multiple of revenues, not
a multiple of ibata. Okay, so that's what's happened to
sports teams. It's this where six times eight times, ten
times twelve times revenues. Right. But for those of us
who came in from public companies and tech companies that go,

(52:10):
we don't have an R and D budget, think about that.
We didn't have a CTO. We were one of the
first teams that I mean, we made a major high.
We have software developers. There's like those software developers in
these teams. That's a big part of the pivot, right,
If you're going to be digitize or die, if you're

(52:31):
going to try to get your products and services out
and build brand and build audience on a global basis,
it all starts with, you know, taking a pixel and
digitizing it. And we're now you know, I've owned the
team twenty six years, but there's now a lot of

(52:51):
the big markets and more innovative companies that have said, yeah,
we are We're not We're not just a hockey team.
You've got to have the hockey team as the ethos,
you know, for the competition, for the fans, but as
a business, these have become big businesses. We're going to
be doing two years from now billion dollars in revenue.

Speaker 4 (53:12):
You were valued at about four billion dollars back in
twenty twenty three with victory.

Speaker 9 (53:16):
Meant we've been valued now close to seven.

Speaker 4 (53:20):
It's big growth in three years.

Speaker 7 (53:22):
Good business.

Speaker 5 (53:23):
It's good business.

Speaker 9 (53:23):
But we're doing seven and fifty million.

Speaker 10 (53:26):
But the landscape, and it relates to everything that's going
on with the distribution of content. No matter what platform
you're talking about, live sports is the most compelling, most
valuable content and that's what's driving a great values that
you're seeing, right, because there's.

Speaker 3 (53:44):
So much stuff out there, but you're right, people tune
in to conve something.

Speaker 9 (53:47):
It's it's reality TV. I mean it really is right.
But I think one thing that people miss to the
world's in chaos and it's not going to get more calm.
But there's something about you. You go to a game
and you know it's the puck's gonna drop at seven

(54:09):
oh six. You know where the game is going to
be televised, You know where your seats are. The players
know if you make the wrong pass, it's you know,
it goes over the blue line. They know what penalties are,
there's referees, and while.

Speaker 3 (54:27):
There's people will booth guardrails.

Speaker 9 (54:31):
I'm saying that that there's their structure, right.

Speaker 7 (54:35):
Yeah.

Speaker 9 (54:35):
I was amazed that at the World Cup you have
countries fighting each other, at war with each other, yet
they get on the pitch and it's I know this
line is out of bounds, that this is a boundary.
I think we crave that we want a level playing field,
and you want meritocracy and you want to see how

(54:56):
people can compete.

Speaker 3 (54:57):
And yet politics, geopolitics a play gotten their way into sports.
And I think about the NHL being kind of the
most international and Canadian of all US pro sports, and
yet geopolitics coming from the White House, weather is ever
trading terror policies. We saw that play out, certainly.

Speaker 7 (55:16):
It did during the Four Nations in February.

Speaker 10 (55:19):
Canada was playing the US in two games, including right
the final game. But what's great about sports and it
transcends geopolitics because sports brings out people's passion and it
brings people together, even if their rivals, their common interest
in seeing the game and the outcome and even within
a particular country. You know, no matter how diverse a

(55:42):
country is, on whatever basis, you're figuring out what the
diversity is. People come together. It brings communities together. And
when you have assets franchises like ped has in Washington,
they make a difference in people's lives, their outreaching the community,
their youth programs, using sports to teach young.

Speaker 7 (56:03):
People life lessons.

Speaker 10 (56:05):
That's as important as anything else that we can do
in sports. And I think monumental of what Ted does
in Washington is a great example of being outward facing
in the community and making a difference.

Speaker 9 (56:18):
So we helped the White House had the inaugural at
our arena we called the world's most important arena. And
that same week there was a study out on who
is the most popular and best athlete in Washington sports history,
and it's a Russian Alex Ovechkin. Right, he brote Wayne

(56:40):
Gretzky's record last year and he is beloved in Washington, DC.
Yesterday we announced the naming rights deal with Coupon No
South Korean company e commerce company. We're global, right, we
are exporting our ip around the world. We have these icons,

(57:03):
these great global brands, advertisers want to reach those fans,
and so you know, it's just ironic. Here we are
in Washington, d C. As I said, I can see
the White House and while they're churning on on things,
sports is the Great United.

Speaker 7 (57:23):
And then that poll will also say that you were
the most popular owner.

Speaker 4 (57:31):
Let the record show ten did not answer the question.

Speaker 9 (57:35):
You want to be bodestod.

Speaker 3 (57:39):
It's good to hear that. It's good to hear that
that sports really kind of brings people together. We do
see that over and over. Gentlemen, Thank you so much.

Speaker 7 (57:46):
Thank you.

Speaker 3 (57:47):
Teddy owns Is, Founder chairman Magic Partners. You have monumental
sports and entertainment. Gary Betman, Commissioner of the NHL, gentleman,
thank you so much.

Speaker 2 (57:57):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and the Android Auto with the Bloomberg Business App.
You can also listen live on Amazon Alexa from our
flagship New York station, Just Say Alexa played Bloomberg eleven thirty.

Speaker 3 (58:15):
More from Bloomberg Power Players, New York. This event that
brought together influential voices from the business of sports to
identify the next wave of disruption that could hit this
multi trillion dollar global industry. Next up, a name got
to say that baseball fans are very very familiar with,
so are Bloomberg fans familiar with.

Speaker 4 (58:35):
Alex Rodriguez has long been known as one of baseball's
brightest stars, but in recent years he's become almost as
well known for what he's done off the field. From
co owning the NBA's Timberwolves to WNBA's Links, a Rod
has shown how retired athletes are approaching business. He also
co hosts a podcast for Bloomberg. It's called The Deal
with Alex Rodriguez and Jason Kelly.

Speaker 3 (58:57):
Yeah, that's why he's so familiar to the Bloomberg audience
as well. A Rod joined us at the Power Player,
summoned alongside his Deal co host Bloomberg Originals chief correspondent
Jason Kelly.

Speaker 5 (59:07):
We've had a crazy last couple of days because we
and you're gonna love this one, Carol, because I know
you're a fan of this person. The first was Erica Maddon,
who is former Erica Nardini. She ran Barstool, she had
some incredible stories. And then yesterday Robin ours on from Peloton,
who you and I interviewed the day. Yeah, I mean,

(59:28):
Alex that was unbelievable. I mean, she's a force of
nature and what a story. Right to be a litigator
lawyer one of the top firms in New York.

Speaker 11 (59:35):
And then around twenty eleven says, you know what, I'm
going to do a radical pivot and she cold emails
Palotson gets the job. And one of the most things,
I mean, there's so much to admire, but the fact
they've been to the moon with their stock right over
thirty billion dollar market cap, but now is you know,
obviously a lot less than that, and she has stuck
it through and we asked her about it and she
gave a fantastic answer.

Speaker 12 (59:55):
That's my tease for Yeah.

Speaker 5 (59:57):
The other thing that she said, which is so funny.
So this is how I mean, I'm gonna tell a
little bit behind the scenes sid inside Baseball, Inside Baseball
at the about the deal. And this is how I
know that I think this show is really working, is
we literally send each other voice my moos this morning
saying like independent of each other, saying my favorite part
of the interview with Robin rs On was this thing

(01:00:20):
that she said, and you'll have to wait to listen
to what it is. But that was kind of a
cool moment where we like, in this forty five minute conversation,
there was one thing that we're both like, I'm going
to use that in my day to day life. And
I do think one of the things that we've started
to achieve with this show is like sort of a
level of intimacy with our guests. You know, they tend
to open up.

Speaker 12 (01:00:39):
You know.

Speaker 5 (01:00:40):
We had in this most recent season, we had Bill
Belichick on, you know, a pretty rare business side interview.
You know, I think he told us stuff that you know,
he hadn't really talked about before, and really talked about
his approach to coaching, what it's like to sort of
take this new job in college sports. And so, I

(01:01:00):
mean we're having a ton of I mean, this is fun.

Speaker 11 (01:01:02):
Another fun one with Timely Wise, because you mentioned time
is Mark Shapiro's the day they rang the bell and
they took TKO public, and he gave us some fascinating
stories going back to the Bob Ager days and what
he was doing at ESPN and he was a rising
star and now he's obviously the president of TKO and Endeavor.
So so many great stories, and now people are starting
to reach out to us as saying, hey, can.

Speaker 12 (01:01:22):
We be it?

Speaker 4 (01:01:23):
That's what I was gonna ask Alex. I mean, now
that it is a third season, you're not necessarily having
to knock down doors the way you guys did just
two or three years ago in order to do this.
How are you thinking differently about the conversations and who
you want on the program?

Speaker 11 (01:01:35):
Well, I think Jason reminded me yesterday that we've done
around fifty shows, so we're getting some reps, we're getting
out there.

Speaker 12 (01:01:42):
We're dropping one.

Speaker 11 (01:01:43):
Every week, which is the consistency's key in podcasting anything,
just like your job here, and I think we're thinking
bigger and we're thinking, you know, how do we think
outside the box? How do we storytell? But I think
Robin from Peloton was like the epitome of everything. Right,
you have a lawyer who's now in fitness, who now
you know, one of the most influential fitness people in

(01:02:04):
sports in the country.

Speaker 5 (01:02:05):
Well, and I think you know, to building what Alex
is saying, I think one of the key things that
we think about with our show, and honestly, you know,
infuses everything we're doing today with power Players is you
know from the beginning, and this is why I think,
you know, Alex really bought into our shared vision of
this is we're talking about the intersection of business, sports
and culture. And I think, you know, there's a fair

(01:02:27):
amount that's being done around business and sports. You know,
it's it's undeniable what's happening there. But I think, and
we just literally talked about this on a panel that
I moderated with Tom Garfigel from the Dolphins and Mike
gary Getty, the CEO of Ares, this amazing cultural impact
that sports has on everybody's lives at a time when
we're so polarized, we're so divided. You know, Alex is

(01:02:50):
you know, very involved on the board of University of Miami.
University of Miami beating Notre Dame at hard Rock Stadium
last weekend was an unbelievable moment, Like in the broad culture,
I mean, it really was incredible.

Speaker 11 (01:03:04):
Yeah, And I had a huge number on thirteen million people, right,
and that is a huge number, right.

Speaker 5 (01:03:08):
And it's one of these things, especially after COVID.

Speaker 11 (01:03:10):
I think and Tom talked about it in your last panel,
that people still want to come together in the stadium,
So I have seventy five thousand people cheering on remember
the old history, like bringing the old days back for
the University of Miami Convicts versus Catholics. Right, it's pretty
awesome and the fact that we won, I'm very very
happy about that.

Speaker 4 (01:03:28):
We're speaking, of course, with Alex Rodriguez, chairman and CEO
of A Rod Corp. Also Bloomberg Original's chief correspondent Jason Kelly,
talking about the newest season of the Deal and more.
Is that culture around sport today? Is that a lot
different than it was when you played?

Speaker 7 (01:03:42):
Oh, there's no question about it.

Speaker 11 (01:03:44):
I mean, I think Michael Raghetti was talking about, you know,
ten fifteen years ago, the ownership landscape looked a lot different,
a little bit you know his words, a little bit
more sleepy.

Speaker 12 (01:03:54):
And I'm paraphrasing.

Speaker 11 (01:03:55):
And the sophistication with the newer owners that have come in,
with the ability and the appetite to take risk while
still being disciplined. But you know, it takes a certain
amount of you know, a cowboy or a bit of
a poker player to innovate and keep pushing the envelope
and making these assets amote. But then as all the
businesses around, whether it's a stadium, networks.

Speaker 7 (01:04:18):
Uh.

Speaker 11 (01:04:19):
You know, what the Atlanta Braves have done is incredible.
They did seventy five million dollars of extra cashtrow for
the team. I think that's the new model moving forward.

Speaker 5 (01:04:27):
Thank you for mentioning the right now, but for everybody
does but one thing you know that's so smart, so smart,
so thoughtful. But you know, I'll sort of talk right
back in the sense that I do think to answer
your question, Tim, one of the things that's also changed
is in these years that we've been doing this, Alex

(01:04:47):
has become the majority owner of an NBA and w
NBA team, and I do think being able to you know,
we talk a lot about, you know, in our partnership,
sort of the roles that we play in the conversations
we have with our guests, and I think Alex's now
ability and curiosity and willingness to essentially say to people,

(01:05:08):
whether it's Robin, whether it's Erica, whether it's Ted Leonsis
who's been on our show, whether it's Belichick, to be like, hey, listen,
I'm doing something new. We had superd on our show.
You know, WNBA legend, you know, to be able to say, like, listen,
I'm doing something new. Help me understand this new job.
I mean that I do think that sort of unlocked something.

Speaker 7 (01:05:27):
Do you agree for sure?

Speaker 11 (01:05:29):
Especially like they just handed us the keys about color
a few months ago, and it's fun for us to
think we just brought in a new CEO in Matthew Caldwell,
who was forming at the Florida Panthers, worked for my
great friend mentor of Vinnie Biola, who's won two titles
back to back. No, it's just really the other thing
that has changed, Jason, I think is now we've brought
institutional capital to the game. And if you think about

(01:05:50):
the ninety two professional sports team, when you include the
four major leagues NBA, NFL, NHL in Major League Baseball,
that changed the whole landscape of the ability to find
some liquidity, put that money to work and keep growing
these assets.

Speaker 3 (01:06:05):
You know, I think there was always the worry though,
and I post this question to both of you of
a lot of money coming in, gambling coming in what
that does to the sport haws it let me start
with you, Alex, has it changed sports overall?

Speaker 9 (01:06:18):
All?

Speaker 3 (01:06:18):
This money?

Speaker 11 (01:06:19):
In additional question, there's a new data point that came
out that blowout games in the fourth quarter in the NFL,
we're doing better numbers in the second and first quarter,
and that's because of fantasy football and the interest level
that is no no longer about the score. The NFL
has found another hook to like if they needed one,
to bring in more fan base and become even stickier.

(01:06:41):
I thought that was fascinating because most people in the
fourth quarter, if it's a blowout, they're done net good.

Speaker 5 (01:06:46):
Yeah, what the pins.

Speaker 4 (01:06:48):
It's complicated.

Speaker 12 (01:06:49):
It is complicated.

Speaker 11 (01:06:50):
Look, and there's regulations that you have to have to
put guardrails around everything, but I mean.

Speaker 5 (01:06:54):
For money in college sports, So I think so that's
the one. So that's the one that I think is
probably It was funny. I was talking with the athletic
director of Ohio State, who is here on a panel early.

Speaker 4 (01:07:06):
A Dartment's athletic director drag just a few.

Speaker 5 (01:07:08):
And what I said to him, which he did not
disagree with, is what has happening in the business of
college sports over the past five years is the most
radical thing that has happened in any sport in the
past one hundred to two hundred years. I mean, there's
no question. Yeah, because the entire business model has changed,
the amount of money coming in has changed, I mean
even the idea. So let's use University of Miami. University

(01:07:30):
of Miami. The reason they won that game almost, I
mean not completely, but a huge part of it is
because the former quarterback of the University of Georgia was
done playing at Georgia, he was headed for the NFL.
Got a call from the University of Miami and said, hey, bro, hey,
Carson Beck, we'll pay you four million dollars to come

(01:07:50):
to University of Miami, which was probably four x what
he would have made his first season in the NFL
if he got drafted. And then he goes down plays
in front of a bigger crowd, in front of a
you know, in a in a higher profile game, higher viewership,
you know, than than he would have gotten if he
had even been on the field in the NFL. That's
a radical different, Like, that's completely that.

Speaker 3 (01:08:12):
It's a game change.

Speaker 5 (01:08:13):
It a good change. So I mean, listen, I think
if you it depends if you're an investor, there is
certainly a lot of investing to be done around it.
I think there to Alex's point about guardrails, there need
to be new guardrails, you know. One of the things
the athletic director said was like, we are literally making

(01:08:33):
this up as we go along, which is crazy. I mean,
like none of us can do that in our jobs.
And it's like I try as you know, but like
we can't actually do it.

Speaker 11 (01:08:42):
Yeah, I mean, imagine in any league without a collective
bargain agreement, right, without a union, without what is the exchange?

Speaker 12 (01:08:48):
If you sign a.

Speaker 11 (01:08:49):
Player for five years guaranteed he can't just go on
to the you know, the opponent over there or the rival.

Speaker 5 (01:08:54):
So I think especially with the young kids.

Speaker 11 (01:08:56):
I mean, look, I have a junior, a girl who's
a junior in a young lady that's a junior at
the University of Michigan, and I have a senior this
year in high school. And I couldn't imagine one of
my girls getting five six, seven million dollars today and
they're not equipped for it right.

Speaker 5 (01:09:11):
Well, and the other thing, and and to your point,
Bill Belichick on our show said this is actually harder
than coaching in the NFL because it's free agency all
the time, so the kids can move around. Yeah, and
they will move around.

Speaker 4 (01:09:22):
Yeah, there's rich about the portal with the colleague here.
His son can just log into a portal and go
somewhere else.

Speaker 11 (01:09:29):
And he is going to move somewhere out And if
you look at some of the great coaches that we've
lost from these institutions, whether you go to Bills, you
go to Saban, Nick Saban, you go to coach k
you go to coach Righte for Villanova a tough name
for my George sound buddy here here.

Speaker 5 (01:09:44):
But but I think one of the reasons they're.

Speaker 11 (01:09:46):
Leaving is if you scream at a kid, he's going
I'm out, I'm going to Georgetown or I'm going to
Diversity in Miami.

Speaker 5 (01:09:51):
And that wasn't the case back then.

Speaker 4 (01:09:52):
So what does this do to the pipeline going into
the pros?

Speaker 9 (01:09:55):
Right now?

Speaker 5 (01:09:56):
I think the I think college football comes NFL Junior yeah,
and and I think it really just becomes an extension.
And so you start to what it could do is
you could have more in some former fashion Carson Becks
who opt not to go to the pros because they're
going to make several million dollars, you know, playing in
college for an extra year. And and then I mean

(01:10:17):
big time football is going to just get bigger and bigger,
and college is going to be a part of that.

Speaker 4 (01:10:22):
So Alex, I'll ask you the same question I was
asking you about sports gambling that net.

Speaker 7 (01:10:26):
Is this a good thing?

Speaker 11 (01:10:27):
It's interesting, right because I still remember the days with
p Rose, right. I think the answer we don't know yet.
I think depends for college sports, college for college sports,
for college sports. I'm not sure about that, but I
will tell you one correlation if you know, just to
back up what Jason was saying, is you know, you've
never had companies stay private longer, whether it's stripe or

(01:10:51):
whether it's many of many examples. I think you're gonna
have an example of players staying in college longer because
they can develop. They can go to the University of
Miami for a senior for four million dollars. The kid
over at Michigan, the quarterback twelve twelve and a half
million dollars.

Speaker 12 (01:11:06):
It's a different world.

Speaker 4 (01:11:07):
Yeah, so eight years in college and still no MD degree,
but they got a lot more money.

Speaker 5 (01:11:14):
Yeah, they got those student loans.

Speaker 3 (01:11:16):
We just got a few seconds left. Got a dream,
guest that you still guys are like if they're listening.

Speaker 5 (01:11:24):
Real quick. Roger Fetter oh good one. Roger Goodell, oh
good one. All right, a couple of Rogers.

Speaker 3 (01:11:33):
So Rogers, if you're listening ready, well do you guys?

Speaker 11 (01:11:37):
Thank you?

Speaker 3 (01:11:37):
Good luck on I think stage, getting ready to talk
to you about just to talk all right, of course.
Jason Kelly to correspond to Bloomberg Originals Alex Rodriguez, German,
CEO of A Rod Cork. They are the co hosts
of The Deal, the third season. It is underway. You
can find it wherever you download your podcast.

Speaker 2 (01:11:57):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five pm Eastern.
Listen on Apple car Play and Android Auto with the
Bloomberg Business app, or watch us live on YouTube.

Speaker 3 (01:12:10):
Wrapping up our Bloomberg Power Players New York coverage on
Bloomberg Business Week, we yes had to talk a little
bit about golf. With so much going on over the
last year or two, we had a great voice the
head of PGA of America, which is home to the
revered Ryder Cup.

Speaker 4 (01:12:25):
Derek Sprague is CEO of PGA of America. He joined
us alongside Bloomberg News Texas Bureau Chief Julie Fine from
Bloomberg Power Players in New York.

Speaker 12 (01:12:35):
Yeah.

Speaker 13 (01:12:35):
So we're the PGA of America, so commonly known as
the coaches of the game, the administrators of the game,
the club professionals. Right, there's sixteen thousand clubs in this country,
and we have PGA professionals at nearly ten thousand of
those clubs. So you'll see a PGA professional if you
go to a golf course, whether that's a public facility
or a private facility, you'll take lessons from our PGA members.

(01:12:56):
Versus the PGA Tour, which that's what you see on
television every week, the part of the game is the
PGA Tour. However, we work very closely with them because
a lot of our PGA members are coaches of their
tour players.

Speaker 7 (01:13:08):
Right.

Speaker 4 (01:13:09):
You know, during the pandemic, golf really exploded because it
was one of those sports that early on people realized
they could do and it was lower no risk. Have
you seen that growth continue.

Speaker 13 (01:13:19):
Yeah, it's been incredible. You know, we haven't used social
distancing word in a long time, but golf. PGA of
America actually went to bat during the pandemic to say
because as states were shutting down, we said, hey, golf
is a safe sport, and I think what we're seeing today,
you know, five years after the pandemic, is that growth
continuing Because as I told Julia earlier, families got together, right,

(01:13:41):
they are all living together, They got to play the
sport together. You got to play with your kids and
your grandkids in a safe environment, outdoors and small groups,
all the things that social distancing lend itself to.

Speaker 12 (01:13:52):
And we've seen that retention today. We have more golfers
in the game.

Speaker 13 (01:13:55):
We're up to like twenty eight million in this country,
five hundred and fifty million rounds of golf played in
twenty twenty four. It's just incredible growth since the pandemic.

Speaker 14 (01:14:04):
I mean, I think in terms of the financial aspect
of this game, what surprised me a little bit that
we discussed earlier is the global impact of it and
what a difference global sponsors are making. The biggest changes
You've seen in Ryder Cup in that aspect.

Speaker 13 (01:14:20):
Yeah, this year at the Ryder Cup here in a
few weeks and in New York City's backyard out in
Long Island and beth Page is we have about two
hundred and eighty corporate partners in thirty of those from
around the world. We certainly have our worldwide partners at
the PGA America for the Ryder Cup, but we have
thirty partners from Australia and Japan coming in. They're not
even those countries aren't involved with the Ryder Cup, but

(01:14:43):
they're investing in the Ryder Cup because it's a live
sporting event, one of the most epic sporting events in
all of sports, not just golf.

Speaker 3 (01:14:51):
How do you think of the role of the Rider's
Cup in the midst of what feels like a divided
golf world right now? How important is that?

Speaker 9 (01:14:58):
Yeah?

Speaker 13 (01:14:58):
I mean, I think I think we're past that a
little bit, Carol. But it's certainly divided when you talk
about the Ryder Cup, because you know it's going to
be loud in Ruckus on Long Island. The Europeans are
coming in into our home court, so to speak, and
as we call as Keegan calls it, our captain calls
it America's course now used to be New York's public course,

(01:15:20):
but it's America's course that week. So yeah, it'll be
divided that way. The crowds will be divided. But I
think the investment in golf is now global, like I
just mentioned, and so many people, golf is booming, not
only in this country's booming globally. Now, more golf courses
being built around the world because of more golfers from
around the world playing that are playing over.

Speaker 12 (01:15:40):
Here in America. They go back to their hometown and
home countries and help start the game there.

Speaker 14 (01:15:46):
Since the inception of the Live Tour, what we've also
seen boom is the persons. I mean, these players are
making a lot more money because of this really competing tour.

Speaker 13 (01:15:55):
What do you see the future of all this, Yeah,
I see it plateauing a little bit. You know, we
saw you know that was again we're different than the
PGA Tour, but it certainly increased our purses at our majors,
you know, all three of our majors, the KPMG, Women's PGA,
the Senior PG and the Men's PG which we'll be
holding at our home home course at Frisco, Texas there. So, yeah,

(01:16:18):
the purses have grown, but I don't think they're going
to continue to grow at the rate they have in
the last few years.

Speaker 3 (01:16:23):
Might you see the Ryder Cup grow beyond the United States?

Speaker 13 (01:16:27):
Yeah, I mean we play it every other year, So
it's only in this country, and I think that's why
the demand is so high for this year's Ryder Cup.
One being in New York City metro market.

Speaker 3 (01:16:36):
It's a great market to hold an a vest, it
sure is.

Speaker 13 (01:16:38):
And then we'll play it. It'll be in Ireland in
twenty twenty seven. So it goes back and forth every
two years. Just to show you the magnitude, a half
a million people registered for tickets for this year's Ryder Cup.
Only fifty thousand a day will be coming to it,
but a half a million, right, And then we had
thirty thousand on the list of volunteer, thirty thousand and
say hey we'll come and work, We'll buy uniform, will

(01:17:00):
come out there and work. We'll have about four thousand
volunteers out there.

Speaker 3 (01:17:03):
But do you expend it beyond the US and Europe?

Speaker 13 (01:17:05):
No, I don't think so, because this had been goes
back to nineteen twenty seven. We're coming up on our
one hundredth anniversary in Ireland in two years and I
don't see that changing at all.

Speaker 4 (01:17:13):
I'm wondering about accessibility to the sport here in the
US and how you grow that pipeline, especially for US players.
We just went to the US Open last week. We
broadcast from there every year, and every year we hear
from the USTA about their efforts to increase the ability
for kids to go out and play tennis, a sport
that oftentimes is associated with country club similar to golf.
What needs to be done in the US to increase
that pipeline for young Americans.

Speaker 13 (01:17:35):
Well, the PGA of America has been doing it now
for over ten years, and we have a program under
our PGA Reach Foundation umbrella called PGA Junior League. We
put these kids in jerseys with their names and numbers
on their backs. We'll have them out here at Ryder Cup,
so you'll see a little sprinkle of that cheering on
their favorite players or whatever. But we had last year
in twenty twenty four, we had seventy seven thousand juniors play.

(01:17:56):
So our PGA of America golf professionals, they form these
teams at their facilities, they compete against other teams from
from nearby facilities, and then we'll have a national championship
actually in Frisco here in a few weeks so I mean,
and that'll be televised on ESPN. So even junior sports
are are are seeing the big time on television right.

(01:18:18):
So again, our PGA professionals are hard at growing the
game and pg Junior League is just one of those
great programs, probably the most successful program we've ever had
for growing the game.

Speaker 14 (01:18:27):
You have some really big names in golf right now.
You look at like a Scottie Scheffler from our neck
of the woods, Texas really actually is becoming home to
a lot of pro golfers now, but you look at him,
you look at Bryson d.

Speaker 5 (01:18:40):
Chambeau.

Speaker 3 (01:18:41):
Overall, you've got a lot of younger players.

Speaker 14 (01:18:44):
They're really appealing to people via social media and different means,
and you've got a traditional base as well.

Speaker 3 (01:18:49):
So how do you marry that?

Speaker 13 (01:18:51):
Yeah, well, I think I think the younger generation they're
they're you know, they grew up a lot of them
in this video game world. So now technology has helped
them get in there. They got range finders and they're
checking the yardage on their watches and stuff.

Speaker 12 (01:19:04):
I mean, it just connects them to the game.

Speaker 13 (01:19:06):
And then when you look at the alternative off course
things like top golf in those type of venues, and
you got some right here in the city, right you
can go play golf inside the city here as some
of the venues here. So I think that's transferring to
whether you play nine holes, or play a short course
or play eighteen holes. All these alternative forms of golf
have helped elevate the game, especially with that demographic. And

(01:19:29):
when they go all in on something, and I think
other CEOs would tell you this, whether it's a certain
product or a certain sport, they're all in that demographic
they go they're not doing the mile wide and inch deep,
They're going a mile deep in an inch wide.

Speaker 12 (01:19:42):
So if they get onto sport, a certain sport, they're
staying with it.

Speaker 3 (01:19:45):
But Derek, you know, like everyone is competing for our
eyeballs right now. There's so much content out there, and
certainly just even sports content. There's so many different choices.
So how do you guys kind of figure out how
to expand your audiences in a way and then still
stay kind of true to the tradition aspects of the game.

Speaker 13 (01:20:01):
Yeah, well, I think that's what the sport does. The
multi generational part of our sport where you have, you know,
right here at Bloomberg, you'll have some folks that have
worked here for a number of years, they're mentoring the
younger generation. They're taking them out to play golf. A
lot of business deals are done on the golf course.

Speaker 3 (01:20:15):
So that's just one it's still like or is that
just as scarious?

Speaker 7 (01:20:18):
No, No, it is.

Speaker 13 (01:20:20):
And when you think about it, as much as technology
is in this in this environment now at a lot
of the golf courses, it's great to put your phone
down and actually talk with someone and just think about
having a meeting for four or five hours. So on
a golf course, the playteen holes, you're playing for four
four and a half hours. You could be with your
boss for four four and a half hours, you could

(01:20:41):
be with a client for fore. You get to know
these people and it's a great human interaction. That's another
beautiful part of our sport is that you know, it's
not only traditional, but you have the technology infused with it.

Speaker 12 (01:20:51):
But then you get to spend time.

Speaker 13 (01:20:53):
And that's why I said earlier, just being able to
play with my kids and spend four or five hours
when it's great.

Speaker 3 (01:20:57):
Is it still a lot of guys though playing No, we've.

Speaker 13 (01:21:01):
Seen and in fact, women's is the fastest growth of
the sport since the pandemic. More women have gotten in
the sport not only for recreational Again, I think being like, hey,
when the families we're at home and they were shuttered
at home, they said, hey, I want to go out
and play too. A lot of women took up the
sport in the last five years. They've stayed in the game,

(01:21:21):
which is great. And then I hear I got a
lot of nieces and they're taking up the sport because
they know it's an important part not only for business,
but for family. So it's wonderful to see and that's
our one of our proudest moments is to see the
sport grow with the youth and with women and other
people of underserved populations. We have a PGA works part

(01:21:42):
of our foundation, which really helps grow the game for
underserved communities, and we're trying to make PGA America is
the entity that's trying to make the game look like
more like America.

Speaker 14 (01:21:53):
You just talked about the human aspect of this. I'm
now going to the not human aspects of this. Great
segue AI changes in the game and technology.

Speaker 5 (01:22:03):
PGA of America.

Speaker 14 (01:22:04):
Of course in Frisco, Texas, that's how we know each other.
The technology is you take a shot and it tells
you everything that's wrong with it and what's right with it.
But I mean anything to dissect your game that is there.
What is the future of technology.

Speaker 7 (01:22:19):
In the game.

Speaker 13 (01:22:20):
It's just going to continue to grow. In fact, that's
one of the first things I did as the CEO
when I got there, as I talked to our head
of education and I said, what are we doing. We
have all our associates that go through our headquarters there
and they learn the trade and become a PGA professional there,
and I said, what are we doing to teach them AI? Okay,
not only would with the launch monitors and all that
that'll have AI all factored in there, with the algorithms

(01:22:42):
and all that, but we're teaching our young associates how
to use AI in running their golf facilities. So whether
that's doing a flyer that's generated in a couple of
minutes rather than a couple of hours, or doing rounds
forecasting for their budgets, or doing newsletters for their club
and using the AI technology to save time, make it
more efficient, hopefully it'll look better and then impress their

(01:23:04):
bosses and their boards and their members.

Speaker 4 (01:23:06):
You know, one thing that we talked about again, tennis
fresh on our mind as the US Open continues here
in New York and as we broadcast from there last week.
The average age of a tennis coach here in the
US is relatively old, and I'm wondering if you're seeing
similar challenges when it comes to coaching with golf, are
you able to get those younger coaches in there who
can spend their entire lifetime essentially teaching the game to others?

Speaker 13 (01:23:27):
Yeah, we have three career tracks really that sort of
like when they want to become a PGA member, which
direction you want to go. So we have club operations,
we have coaching, and we have executive management. The highest
growth is coaching, So we're not seeing that challenge. We're
seeing more young professionals want.

Speaker 12 (01:23:44):
To get into coaching, and I think it's peak.

Speaker 13 (01:23:46):
Well, I think one is a good lifestyle, right, You're
not club operations can be challenging, right, You're coming to
the club at five in the morning, you might be
closing it at eleven o'clock at night, where teaching, you know,
generally is done in daylight hours. And I think, you know,
we've had such great success teaching players, you know, Randy
Smith is one of our PGA members and he's teaching
the number one player in the game, Scottie Scheffler. And

(01:24:08):
we've done a lot of great segments on that, and
I think that just inspires our young professionals to say,
I want to be like Randy Smith, and I want
to be one of the best teachers in the game.

Speaker 3 (01:24:16):
We're talking with Derek Sprague, he's theo PGA of America.
Also with us is are Julie Fine, texas PUER chief
here at Bloomberg News. Things evolved, things change, and things
are questioned about. I do remember these conversations we were
having that like, younger generation isn't playing golf? Is it
just the pandemic that you think got people more interested?

Speaker 13 (01:24:36):
Like well, that certainly that was probably a jump starter.
But I you know, this sounds self serving, but I
look at some of the programs that we're doing Carol,
like PG Junior League.

Speaker 12 (01:24:46):
We've been doing that for ten years.

Speaker 13 (01:24:47):
Yeah, and it's grown every year for ten years, right,
and you're getting seventy So what happens again, when you
look at the multi generational.

Speaker 12 (01:24:54):
Part of our sport.

Speaker 13 (01:24:55):
These kids play okay, and then their parents again what's
beautiful about the sport is they don't have to sit
on the sidelines like some other U sports. They don't
have to be up in the stands. They can participate
with their kids. So all of a sudden, you take
a couple of children and then a couple parents start
and the game of golf grows. So, I mean, it's
just I think programs like that. And then we've got
another great program on our foundation for our veterans of

(01:25:19):
this country called PGA Hope. And these veterans that they're
trying to reassimilate back into civilian life, and our PGA
coaches are helping them take up the game building community
and now they're starting to play the sport. So I
think all these programs that we do at the national level,
at the PGA America plus are thirty we have close
to thirty three thousand PGA professionals. One of the largest

(01:25:40):
working sports organizations in the world, PGA America is so
those members working at these you know, fifteen thousand clubs
nationwide are helping grow the game day in and day.

Speaker 3 (01:25:50):
Out, starting to pay it off. We've got one last question.
We're gonna like you got Julie wrap it up for
perfect timing. And the last question is ten years, where
are we in the game of golf.

Speaker 13 (01:25:58):
Yeah, well, today we're one hundred and two million dollar industry.
I see that growing probably by another twenty or thirty
billion dollars. I think the retention rate is going to continue,
and I think we're going to see instead of five
hundred and fifty million rounds of golf being play, we'll
probably see six hundred million rounds of golf and in
ten years and just continue to grow this sport.

Speaker 12 (01:26:17):
Instead of twenty eight million.

Speaker 13 (01:26:18):
Golfers, shall probably have thirty two to thirty four million
golfers in ten years time. So again, all these all
these programs are continuing to develop golfers, and our thirty
three thousand PGA professionals are growing the game nationwide, and
I think all these programs will just continue to add
to the numbers and you know, economically in golf.

Speaker 3 (01:26:37):
Well, I gotta said, I loved hitting golf balls at
the driving range, like it was just so much fun.
It's just such a part of us growing up.

Speaker 5 (01:26:44):
Thank you so much.

Speaker 12 (01:26:45):
You're welcome, Othan.

Speaker 14 (01:26:46):
What do you guys doing the show from Texas?

Speaker 4 (01:26:49):
Anytime you got all the time.

Speaker 5 (01:26:51):
We will from Texas, bring us done.

Speaker 3 (01:26:53):
Lots of family in Texas.

Speaker 5 (01:26:54):
Love, We love to have you.

Speaker 3 (01:26:56):
Derek Spurak, Thank you so much for the CEO PGA
of American of Personal Thanks for our own Julie Fine
Texas for your chief of Bloomberg News. We're gonna put
on a cowboy hat. We're gonna come down.

Speaker 14 (01:27:05):
I'm waiting come across and maybe yeah, sure I know somebody.

Speaker 2 (01:27:10):
So Chris scot This is the Bloomberg Business Week Daily podcast,
available on Apple, Spotify, and anywhere else you get your podcasts.
Listen live weekday afternoons from two to five pm Eastern
on Bloomberg dot Com, the iHeartRadio app, tune In, and
the Bloomberg Business App. You can also watch us live

(01:27:32):
every weekday on YouTube and always on the Bloomberg terminal

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Bloomberg Businessweek Weekend - September 5th, 2025

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