May 16, 2025 • 33 mins
Where’s the inflation? With this week’s Consumer Price Index coming in softer than predicted (inflation at its lowest level since 2021, according to government data), a lot of people are wondering why tariffs haven’t pushed prices up. In the debut episode of Everybody’s Business from Bloomberg Businessweek, hosts Stacey Vanek Smith and Max Chafkin tackle President Donald Trump’s trade war, inflation and when the rubber will (if ever) hit the road.
Consumer spending columnist Amanda Mull takes Stacey on a tariff tour through Target, explaining why import taxes have yet to show up in inflation data and how you’re likely to see them in the future. It turns out flatscreen TVs, pineapples and mascara will all manifest tariffs in different ways. Mull concludes tariffs could very well ruin Christmas.
Then sports reporter Randall WIlliams joins to talk about why private equity has started buying up sports teams. It turns out teams are becoming more valuable as games dominate live television, attracting bigger audiences (and commanding higher ad rates). That’s got private equity sneaking into the game, pumping up prices and injecting billions of dollars into teams. Randall concludes that private equity won’t ruin sports (but Max and Stacey are skeptical). Finally, for the underrated story for the week, we look at the rising trend of rising sneaker soles. Shoe brands are creating ever puffier soles even as racing authorities try to put restrictions in place. Ultramarathoner Max realizes his beloved sport is in the crosshairs of controversy.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hey everybody. Max Chafkin here just wanted to let you
know you're gonna hear another episode of Everybody's Business, our
new podcast from Bloomberg Business Week. Now, Everybody's Business has
been appearing in the elon inkfeed but exciting times. Today's
the day it gets its own feed. So go on
your podcast app, type in Everybody's Business and subscribe, and
(00:21):
we'd really appreciate that. You'll hear a couple more episodes
of Everybody's Business over the next couple of weeks. But
you're gonna need to go over there if you want
to keep hearing this show. For now here it.
Speaker 2 (00:30):
Is Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 1 (00:43):
It's Everybody's Business from Bloomberg BusinessWeek.
Speaker 3 (00:46):
I'm Max Chaffin and I'm Stacy Vanicksmith.
Speaker 1 (00:49):
Hey Stacy, Hey Max.
Speaker 3 (00:51):
This is a special day. It's our first shows show.
Speaker 1 (00:55):
It's a holy day, is Stacy the first official episode
of a new podcast from Bloomberg Business Week, where we
break down the news of the week. We bring in
some of the smartest journalists we know from the extended
Bloomberg universe. The writers and reporters and editors from Bloomberg BusinessWeek,
and sort of chew over what happened, what matters, and
what's coming next.
Speaker 3 (01:16):
In today's show, our first show is all about beginnings,
our brave new world or brave new economy, actually things
like tariffs. Those are still pretty new and changing by
the hour, but have not been showing up in prices.
Speaker 1 (01:31):
Not yet showing up in prizes. And we have Amanda
mal BusinessWeek columnists consumer spending expert to talk that over.
To mull that over if you will, Stacy, you and Amanda,
you went on a field trip without me? We did okay?
And then the NBA playoffs are heating up, and there
is a new sports owner in town, an owner that
(01:53):
I think most fans are going to be really excited about.
I'm talking, of course, about the private equity bro They
are buying up teams, valuations are going up. And we
have Randall Williams, BusinessWeek columnist and sports reporter coming in
to talk to us all about that.
Speaker 3 (02:07):
Who does not love private equity. And finally we have
our underrated story of the week, in this case a
new kind of sporting equipment that might be breaking some
pretty important rules. Max, I'm going to tell you this
one gets personal for you.
Speaker 1 (02:21):
I can't wait. Okay, But of course this show is
called Everybody's Business, and we take the everybody very serious.
Speaker 3 (02:30):
We do take it seriously and we want to make
sure that there is something in the show for everybody.
But Max, you and I have both been covering the
world of business and economics for a very long time,
and it can be a little bit of a bubble,
can be hard to know, like what normal people find interesting.
Speaker 1 (02:45):
Are saying that we're not normal ever.
Speaker 3 (02:49):
So slightly siloed is all I'm saying. So we wanted
to see what other people who don't spend all their
time looking at this stuff want to know about.
Speaker 1 (02:58):
Well, this is my favorite part of the show because
we're in New York. Obviously, people from all over the
world are here, and you, Stacy Vanicksmith, are like very
good at going out and talking to those people in
the world.
Speaker 3 (03:09):
Yes, I am getting very good at going up to
people and saying, have you heard the good news? You
can be on a podcast. So to get the voice
of the people, I went to the beating heart of
New York City, of New York City Times Square to
ask people, what are the business and economic stories that
you want to hear?
Speaker 4 (03:29):
About I mean, AI, for sure, everybody wants to know
more about that. We all just graduated college, so it's
like keeping up with the different economic policies that will
affect us as like young investors.
Speaker 1 (03:41):
Obviously, the price of eggs.
Speaker 3 (03:43):
Really, you're a big egg watcher?
Speaker 1 (03:45):
Yes, I work at a boutique grocery store where, like
I'm not joking, a box of a dozen eggs is
like ten twelve dollars. Everyone's talking about Terris.
Speaker 2 (03:55):
I work at a small consulting firm, and I worry
about how that's going to affect like my job, you
know what I mean. I'm just glued to the gossip
of the markets.
Speaker 3 (04:05):
Are you a markets watcher.
Speaker 2 (04:06):
In times of crisis? Yes?
Speaker 3 (04:08):
Would you guys listen to a new business podcast?
Speaker 1 (04:11):
I would?
Speaker 3 (04:11):
Yeah, what about you guys.
Speaker 4 (04:13):
I'm not a big podcast person, but if I were
to listen to a podcast, thank you?
Speaker 1 (04:17):
Sure? Am I going to be on the podcast?
Speaker 4 (04:19):
Yes?
Speaker 3 (04:19):
Is that okay? Did you get good sound bites on
my good Yeah? I got great sound bites.
Speaker 2 (04:23):
I wish say you that I would have sounded better.
Speaker 1 (04:26):
Wow, people have spoken. So we're worried about eggs. We're
worried about consulting rates.
Speaker 3 (04:33):
I think jobs, I think people are worried about their jobs.
Speaker 1 (04:37):
Well, that's fair. We're going to do this every week,
not always questions about what should be on the podcast,
but we do want to hear from you listeners about
what you want us to talk about and what you're
seeing in the economy. You should send us an email.
Everybody's at Bloomberg dot net. That's everybody's with an s
at Bloomberg dot net. We're going to repeat that email
address over and over again many times until you actually
(04:58):
send us some email. So aready all right, Stacy. The
big kind of business news earlier this week, it was
good news. It was that inflation, which everybody had been
really worried about, with you know, Trump's high tariffs and
the erratic nature of the tariffs. It actually wasn't that bad.
It was two point three percent. I think that was
the lowest level that we've seen since twenty twenty one.
(05:20):
You know, that was before we had the post pandemic spike.
Trump also backed down on his China tariffs, announcing a
ninety day pause. It's going down to thirty percent from
one hundred and forty five percent, So this is good right.
I mean basically those eggs that we heard about in
the UH eggs they're gonna cost less now, I think,
and consultants will be able to flourish, and those those
(05:43):
graduates will all get to Everything is great.
Speaker 3 (05:46):
I mean I have to say, I really expected to
see the consumer price index, that's the inflation index go
up a lot, because Trump's tariffs have been in effect
for a couple months now, so we should be starting
to see them. But you're the numbers just didn't show that,
and the markets have been on this happy tear.
Speaker 1 (06:04):
And we should just say for anyone who hasn't followed
this as closely as us, the reason we expected, yeah,
which is everyone. The reason we expected prices to go
up is because a tariff is essentially a tax on
a consumer good. You know, it costs more money to
bring some item, you know, an article of clothing, a toy, whatever,
into the United States, and somebody has to pay for
(06:26):
that cost, whether it's a company, and ultimately consumers are
going to pay. And that's why we wanted to talk
to Amanda Mull because this is what she does. She
writes about consumer behavior and retail businesses and kind of
all the ways that affects culture. Amanda's here now, how
you doing.
Speaker 4 (06:44):
I'm doing great, Thanks for having me.
Speaker 3 (06:46):
We're very excited to have you on our first episode.
And you just wrote this article called Trump's tariffs are
going to ruin Christmas, and it is all about tariffs
and prices. So, just to start out very simply, looking
at the data this week, inflation numbers looking really good.
What's going on? Why are the tariffs not showing up?
Speaker 4 (07:07):
The most important thing to remember in trying to understand
all of this is that, like our experience of the
economy as sort of like end consumers, is a lagging
indicator of what is going on in the economy.
Speaker 3 (07:18):
Lagging mean like it doesn't show up until after it's
already happened.
Speaker 4 (07:21):
Our experience will change after months of many other things
going into effect that will eventually affect us. The process
of getting goods onto the shelves is like a months
long and sometimes years long process, depending on what the
product is. So a lot of the stuff that's on
shelves right now was imported in warehouse before any tariffs
went into effect, So we still have like a lot
(07:42):
of goods in the system that would have been tariff
affected if they had been imported a little bit later,
but they weren't. And then you also get this behavior
from retailers in brands that are like looking at projections
for what happens once some level of tariff goes into effect,
and they're saying, Okay, we need cash on hand, and
we need to move inventory now. We need to front
(08:02):
load a lot of this consumer spending because consumers are worried,
and a lot of them have their wallets open right
now for purchases that they might have otherwise made in
six months or in a year or at the end
of the summer. So you've got retailers going, hey, we
know you're worried about tariffs. We have brought in a
lot of extra inventory, and we know that you want
to buy right now. So here's fifteen percent off, or
here's buy one, get one fifty percent off. So you
(08:24):
have all of these behaviors that are happening right now
with this pre tariff merchandise. That is keeping prices stable
and that is encouraging people to buy at a pretty
pretty steady rate. But what like Goldman Analysts said in
a note to clients about this CPI reading is that
we're not done with this, like probably next month and
maybe in the months to come after. That is where
(08:45):
we're going to see a lot of these pricing variations
start to bubble up, because that's when you're going to
get goods in the system that are more tariff affected.
I've seen a lot of anecdotal evidence that a lot
of customs processors and a lot of shippers don't know
what they's supposed to be charging interiors. Yeah, people are
very confused.
Speaker 1 (09:04):
So what you're saying basically is boats move slowly, Like, yes,
you know, a lot of this stuff comes on a
giant container and those container ships take weeks to get here.
And not just that, but a lot of the goods
that are being brought on those container ships contain other
items that also arrive on container ships. This just takes
a long time. And a lot of companies like Apple, right,
(09:26):
they just like frantically imported as much of their stuff
as they.
Speaker 3 (09:30):
Could because like six hundred tons or something and iPhone.
Speaker 1 (09:34):
Trump made this very easy for them, and maybe even deliberately,
right he put the date on the calendar Liberation Day,
so we all know got to get as much, you know,
stuff ahead of Liberation Day. It seems like that kind
of happened, right absolutely.
Speaker 4 (09:48):
I talked to a consumer industry expert from EY who
said that of the businesses that he has sort of
been observing and the ones you know that are in
their client base, he saw retailers and brands bringing in
on average about ninety days of excess inventory, and to
the point where you could look around the freight industry
and the logistics industry in the US and see like
warehouses filling up, and like warehouse space being sort of
(10:10):
at a premium, especially near ports. Companies that had the
cash on hand to bring in extra stuff really did
just frontload as much as they could.
Speaker 3 (10:18):
So tariffs haven't really shown up yet, but they're definitely
going to show up. And so Max, I don't know
if you know this, but Amanda and I live pretty
close to each other in Brooklyn, and we live pretty
close to a Target, which is basically Amanda's church as
a consumer reporter, so she agreed to meet me there
and take me on a little Target tariff tour.
Speaker 4 (10:39):
We're looking at a rather large TV. It's a sixty
five inch Broku TV two fifty. When I worked in
Best Buy from like two thousand and four to two
thousand and eight, flat panel TVs were still several thousand dollars.
We would put one on sale for like one thousand bucks,
and you know, people would line up for that stuff.
But they've come down in price a ton in the past,
(10:59):
like fifteen years. The ultra inexpensive two hundred and fifty
dollars sixty five inch TV that you can take home
today from Target is a product, ultimately of what a
globalized manufacturing chain produces for wealthy consumers.
Speaker 3 (11:13):
And what happens to our flat screen TVs in a.
Speaker 4 (11:17):
Tariffed world, Like everything, they get a lot more expensive.
This is the type of manufacturing that is really hard
to reproduce in new places because it is a very
delicate process. It requires a lot of specialized machinery and
you need like a ton of workers that you can
pay not that much money in order to pull this
(11:38):
off at these prices.
Speaker 3 (11:39):
All right, shall we go to produce?
Speaker 4 (11:42):
Yeah, that's good.
Speaker 3 (11:43):
And why have you brought us here?
Speaker 2 (11:45):
We're looking at pineapples.
Speaker 4 (11:46):
Let me see, it's a del Monte pineapple. They are
three bucks for big and heavy. Pineapple is getting this
from Costa Rica, and you can buy it like fresh
off the shelf. Three Bucks is like.
Speaker 3 (12:00):
In Target a miracle. So what is going to happen
to this section of the store with tariffs?
Speaker 4 (12:07):
Fresh produce supply chains rely on a cold storage and
cold chain and a lot of elements of global shipping
that are set to become more expensive. We get a
lot of our fruit from Central and South America. If
you want pineapple, if you want mangoes, then tariffs are
going to make a lot of those things, if a
lot more expensive, especially out of season. Like, I don't
(12:28):
know if they're going to be like affordable to somebody
that's like trying to figure out their grocery budget.
Speaker 3 (12:31):
You like, these might not be in Target next year.
Speaker 4 (12:35):
No, the apples probably will be, but like, I don't
know if we're gonna have mangoes.
Speaker 1 (12:39):
I have joked to my wife many times that when
we're all gone and the alien archaeologists find our civilization,
the thing that they are going to be most impressed
by is this the produce that you can get from
Like the fact that you can like walk into a
Whole Foods or a Target and buy an exotic fruit
(13:00):
or a freaking ostrich egg or whatever for almost no money.
Speaker 3 (13:04):
It is amazing, like from halfway around the world, and.
Speaker 1 (13:07):
It would still be amazing to buy that del Monte
pineapple for four fifty even like still a pineapple that
made it like you know, a huge distance. But you
do wonder like at what point does that price become
too much and does the whole system that we've kind
of created around these cheap goods, like when does it
start to break down? Like how much could people of
(13:29):
the world really be willing to spend?
Speaker 4 (13:32):
And fresh produce is really tough when you look at
like how little small changes in price could affect availability
because the margins at every step of the fresh produce
chain are like really really thin, even in grocery, like
grocery as far as retail goes in America is known
to have just like the most razor thin margins. The
items themselves may not be like super heavily tariffed. A
(13:55):
lot of it comes from Central and South America, which
is less affected by the liber day tariff table then
China would be. But you still end up in a
situation where you need a lot of logistics resources that
are built out to work at scale in moving around
all of these different types of goods from different places.
So if you have like a big drop in imports
from some places, logistics companies and freight companies and truck
(14:17):
drivers sort of like drop out of the system. They
go elsewhere, they find other types of jobs, warehouses, close trucks,
you know, leave the road. So this is one of
those second third, fourth order effects where it's like, if
you change your logistics system in the country significantly, how
does that affect the moving around like really fragile, really
perishable goods like fresh fruit that comes in from Costa
(14:38):
Rico or from Mexico or from Columbia or wherever. You
start tinkering with little things and then the effects just
reverberate out in ways that are not necessarily like super
easily predictable from where we are today.
Speaker 3 (14:51):
So we have some flat screen TVs that are going
to get a lot more expensive pineapples that might not
be there. But we went to another part of the store.
Here we go.
Speaker 4 (14:59):
We're in the one of the makeup aisles right now.
You know, if you look at makeup, there's lots of
like fiddly little plastic parts. There's lots of packaging.
Speaker 3 (15:05):
Yes, the packaging is like the best part.
Speaker 4 (15:07):
Yes, packaging is super important to selling makeup. Packaging is
one of the most overseas concentrated parts of the supply
chain period. Most of it is in China and other
parts of Asia, with some types of packaging, mascaro, whatever else.
Like sometimes the tube will be made in one place,
in the cap to the tube will be made in
another in the brush bristles will be made in another,
and that sort of all comes together to be manufactured
(15:28):
into a saleable product. For instance, this elf mascaren has
a box around it so that it can hang on
a shelf, and then like the group that goes inside
might come from someplace else entirely, and they're all shipped
to these manufacturing facilities that then put the product together.
Speaker 3 (15:40):
It's funny because I feel like what you're talking about
is something I always think of when we talk about
like iPhones. It's like, oh, they've components made in forty
four countries, But it actually seems like maybe mascara is
not different.
Speaker 4 (15:51):
Yes, the things we think of as simple are rarely
simple because we've basically set up the entire global economy
to ensure that like they're efficient by a certain definition
and cheap, right, so you find, you know, quote unquote
efficiencies that enable you to do all of this across
like a massive geographic space in order to make something
that is ultimately like extremely complex, but much cheaper than
(16:13):
it would be if done beginning to end in one place.
Speaker 3 (16:17):
Okay, so I feel like we should probably pick one
of these up.
Speaker 4 (16:19):
For Max, we brought you a Mascarra oh alf Flash
Extender Mascarra Wow for you.
Speaker 1 (16:25):
I just have to ask why this product.
Speaker 3 (16:29):
Just a good thing to keep in mind. There's no message. Really,
we're not implying anything. Not really, I'll.
Speaker 1 (16:35):
Take it out.
Speaker 3 (16:37):
Bet our lash has never hurt anybody.
Speaker 1 (16:39):
No. It is a great time to be a sports
fan right now. The NBA playoffs are heating up, Baseball
season is in full swing. The WNBA is about to start,
you know today as this episode drops. On Friday, we're
gonna have a Knicks playoff game and Mets against Yankees
going on the same time. I am so excited about it.
(17:02):
But there's just one thing that could make our sporting
experience a little bit better, and that would be owners
who knew how to squeeze efficiencies out of their franchises.
I was just thinking the values a little higher.
Speaker 3 (17:18):
Yes, absolutely, I feel like when when sports fans watch games,
what we're always looking for.
Speaker 1 (17:23):
More private equity, which is why absolutely we have Randall Williams,
Bloomberg BusinessWeek sports columnist, friend of the podcast here with
us in the studio. Randall just wrote a column about
the skyrocketing valuations for sports teams. Randall, how you doing?
Speaker 2 (17:39):
I'm doing all right? Thank you all for having me.
I'm excited.
Speaker 1 (17:41):
You know this, but many people probably don't. The Boston
Celtics were recently sold for six point one billion dollars.
That's a team that was worth four hundred million, I
believe according to Forbes in twenty eleven. Who and yeah,
and it goes on and on. The Eagles has.
Speaker 3 (17:56):
Been to them? That's a big Boston glow up.
Speaker 2 (17:58):
What happened to them?
Speaker 1 (18:00):
I mean? And it's not just the Celtics, right, The
Eagles went from being worth one point two billion back
then to eight point three the Dodgers eight hundred million
now six point nine billion. Yep, Randall, what's happening here?
What is causing this?
Speaker 2 (18:14):
The media deals are getting bigger for each of these leagues,
and the sports are growing in popularity. The stars are
getting bigger. You just named three different teams where we
could all name a superstar on them. For the Dodgers,
it's show hal time.
Speaker 3 (18:26):
Might be a stretch, you could do it, Jalen Hurt
say yeah yeah.
Speaker 2 (18:31):
And with the Celtics Jason Tatum and Jalen Brown of course,
and overtime that was Paul Pierce and Kevin Garnett and
Ray Allen. So the media deals are driving these valuations up,
and ultimately the cost to run these teams is also
going up as well.
Speaker 3 (18:45):
Yeah, what goes into a team valuation? Like, what does
it mean if a team is worth eight billion dollars?
Speaker 2 (18:49):
Well, first of all, it's a market real estate. So
like the stadium, Yes, for sure the stadium. If you
own your own stadium, then that gives you the ability
to make a lot of revenue from things outside of
you sports team. So let's use the Boston Celtics as
an example. They get forty one home games a year,
but you know, forty one dates out of three hundred
and sixty five, that's not a lot of opportunity to
make money. Now, granted, I think it's the Boston Bruins
(19:11):
are also in that stadium, but the Celtics don't own
their own stadium, so as part of the six point
one billion dollar deal, one of the things that NBA owners,
NBA executives, and business people alike were watching to see
is how much this team would go for because the
NBA is looking to expand now for the expansion people,
they're watching this because like, okay, the Celtics don't own
their stadium, can't go for that much. And then it
(19:32):
goes for six point one billion dollars, which is more
than the Commanders who.
Speaker 1 (19:35):
Bought the Celtics. I mean, it's this guy Bill Chisholm,
co founder of STG Partners. That's a PE firm. But
then there's PE money inside of.
Speaker 3 (19:43):
That, like private equity sorry not physical education.
Speaker 2 (19:46):
Yeah. Bill Chisholm is the leading investor. He has a
billion dollars in six Street money. He has Rob Hale,
he has Bruce A. Beal junior, so his ownership group
is very diverse. He's added some more money since then,
but it's a lot of money.
Speaker 3 (19:58):
Sixth Street is the private equity firm, correct, okay, and
the private equity firm bought it, not the guy who
runs it, but the actual private equity firm.
Speaker 2 (20:06):
No, No, bil Chisholm is the organizer. Now. The thing with
private equity firms and sports is that they cannot be
controlling owners. They are passive investors. Eventually they'll exit and
the exits of these deals is still to be determined.
Speaker 1 (20:18):
What is it in the NBA? Is it ten percent
or twenty percent? Is the limit for private equity?
Speaker 2 (20:22):
A single private equity firm can own up to twenty
percent of an NBA franchise. Private equity and totality can
own thirty percent. So you so ideally you could have
twenty percent of one firm and then ten percent to
another to get to thirty.
Speaker 1 (20:34):
This strikes me, and forgive my saying this, but this
strikes me as because you have a private equity guy
who is leading the deal. Like these are basically private
equity groups. They're just it's just private equity group made
up of a bunch of little private equity.
Speaker 2 (20:51):
Groups in some ways. In some ways, however, the biggest
difference is that you can have your money come from
private equity, but your firm cannot run the team. That's
the difference. So you could name any private equity person
in the world right now, and that individual could buy it,
but the firm could not, because.
Speaker 3 (21:06):
I feel like normally when private equity buys something like
for a while, private equity owned KFC and stuff, I
feel like they kind of tend to strip things for parts.
Speaker 1 (21:15):
Exactly why not be great?
Speaker 2 (21:17):
That's why sports leagues don't want private equity firms to
run teams. And there's a lot of fan fear if
you jump in Reddit threads, Fans hate the idea of
this because they think that private equity firms are going
to strip the teams down and be like, you know what,
we're not paying Jalen Hurts, We're not paying Saquon Barkley.
We're just going to invest in the stadium. In stead, foam.
Speaker 3 (21:34):
Fingers are going to get smaller.
Speaker 1 (21:36):
They they're definitely making fingers. It does kind of cut
against what I think most people understand as fandom, right.
You understand teams as being kind of community groups almost,
and then you have these these groups of owners and
they're buying not just one franchise, they're buying another franchise.
And you might think, oh, it's like the guy who
owns the baseball team in town is buying the hockey
(21:59):
team in town, or what But no, the group that
owns the Celtics also owns I think ten percent of
the Giants, and like that doesn't fit with like how
a normal fan I think understands the point of a
sports team or even the point of sports. But I'm wondering, Randall,
are we seeing changes in how these ownership groups manage
their teams? Are they doing the private equity playbook? Are
(22:20):
they making the foam hand smaller?
Speaker 2 (22:22):
It depends on who you are. Yeah, Like I think
if you look at Josh Harris and the Washington Commanders,
when he bought that team was a total train wreck.
Now since then he's struck a four billion dollars stadium deal.
He has put more money into a quite frankly, a
horrible stadium. And so you have Josh Harris, who comes
from private equity investing all of this money. Now he
has the money to do this, There aren't going to
(22:44):
be a lot of people who have the same money.
But if you look at the Celtics deal, for example,
Bill Chisholm has not said anything about a new stadium,
even though he's not making any money from let's say concerts.
If Taylor Swift comes in town or another.
Speaker 3 (22:56):
Oh, that's how you can kind of leverage.
Speaker 2 (22:58):
Your stadium any money from those things, and so it's
really dependent on how much money you have. Private equity
can come in and help these stadium costs, other real
estate things, other projects, liquidity things like that.
Speaker 1 (23:11):
Randall, let's dig into a little bit around like what
is driving these valuations. We kind of hit on the
media deals, so just talk a little bit about what's
behind that. I mean my understanding sports viewership is up
a little bit historically, but it's relatively flat. Like if
you look at like super Bowl viewership numbers over the
last like fifty years, like it's gone up, but it's
(23:31):
sort of gone up in the way that you would
expect given population growth, but everything else has fallen a lot.
So basically sports has sort of maintained high viewership while
like sitcoms, reality shows, all that stuff has fallen out.
These games, those are live, Those are unique events that
if you care about it, and a lot of people
care about sports, there is no way of getting around it.
(23:52):
And that is like gold for advertisers, for media.
Speaker 2 (23:55):
Yeah, absolutely, it is the only thing people watch live.
The reality is the NFL is a behemoth. I mean
I was shocked that the Super Bowl had one hundred
and twenty seven million people watch it when at one
point the game was forty to six at halftime, I
believe it was like twenty four to nothing or something
like one hundred and twenty seven million people when the
previous two games were incredible games.
Speaker 3 (24:14):
But it was an underdog win, which was thrilling.
Speaker 1 (24:16):
Eh.
Speaker 2 (24:17):
The Eagles were pretty good all three season. They had
the three peak going, they had the three peak going.
But if you I mean, if you were paying attention
to both teams, the Eagles were the dominant team. The
Chiefs were surviving week by week. Now, the NBA has
seen some fluctuation. Of course, NBA Finals ratings were down.
Now the current playoff viewership is at an all time high. However,
(24:37):
what happens on Lebron exits, Steph Curry exits, and I mean,
if the Knicks don't pull this series out, you could
see a dramatic fall of not just because they're a
popular team, but you look at the markets that are
out there, Oklahoma City, the Indiana Pacers, the Minnesota Timberwolves,
and the Denver Nuggets. It's not the same thing as
the New York Knicks. Even the brand recognition isn't the same.
But at the same time, NBA has a seventy six
(24:57):
billion dollar media deal that isn't up until twenty.
Speaker 3 (25:00):
Thirty pay them to air their games.
Speaker 2 (25:03):
Yes, the NBA's new media deals with ESPN, it is
with Amazon and NBC, and the NFL has like six
different media partners. The MLB will be negotiating theres pretty
soon as well.
Speaker 3 (25:14):
What does private equity see in sports teams?
Speaker 2 (25:17):
Like?
Speaker 3 (25:17):
Why are they making this investment?
Speaker 2 (25:19):
I mean, I think if you keep looking at the
media deals and they keep doubling, they keep tripling, and
the franchise valuations, if you look at the NBA or
the NFL or the MLB, these sales keep going for
higher and higher and higher. I mean the Panthers sold
for two to two, the Denver Broncos sold for four
to six, The Washington Commanders, yes, billions, and then the
(25:39):
Washington Commanders sold for six billion. You're looking at these
exits and it's like wow, Like these teams are tripling
over time in a matter of a decade. You don't
normally see that in business. And so what the NFL
has done with their rules is if a private equity
firm buys into it, you have to hold it for
six years. They're not looking for immediate exits, and quite frankly,
I'm not sure that Blue Au was looking to exit
(25:59):
as as they were with the Phoenix Suns. It's just
that Robert Sarver got in trouble and so he was
forced to sell the team, or he elected to sell
the team.
Speaker 1 (26:07):
So, having done some reporting on this and kind of
followed private equity in general, private equity in healthcare for instance,
you know, the business model is basically like, you cut
a bunch of costs, you raise prices where you can,
and then you sell, often to another private equity firm.
What I'm wondering is who are the buyers? Like, if
the price of the Celtics has gone up, the math
(26:29):
is going to be hard, But you know, like one
thousand percent or whatever over the last fifteen years, how
do you get that? Are they expecting another thousand percent?
And if that happens, who's the buyer? Like? At what
point does this start to look like a bubble rather
than an asset with a lot of upside?
Speaker 2 (26:45):
Well, I think that it really depends on who you ask.
As I'm watching this, I think it's incredible that the
Celtics got to six to one. I've talked to plenty
of NFL owners and they all tell me like they
don't think they're anywhere near the ceiling of this. And
the Super Bowl is kind of a telltale sign at
that because if you're big, this event is a blowout
and it sets a record in viewership, you're still going
to have media companies that are going to want to
(27:06):
buy in at a new, bigger price. And this is
a reminder. The NFL's media deal is over one hundred
billion dollars, and yet they set a record in a
blowout game. And so what's the next one going to be?
One hundred and fifty billion, one hundred and seventy five billion,
We don't know. And so that's going to drive valuations up.
The NBA's media deal begins this upcoming season, and so
that's a seventy six billion dollar media deal that's going
(27:26):
to drive up values for the next ten years as well. Now,
what's going to be interesting to see is how these
owners offset the cost because stadiums aren't getting any cheaper,
contracts aren't getting any cheaper, and you're right, there are
going to be some billionaires who are priced out of this,
and you will see the NFL, the NBA, the MLB
adjust their private equity rules so that you know, these
(27:46):
private equity firms can come in and provide solutions to
owners who aren't capital heavy.
Speaker 1 (27:50):
Randall, Like, you're a sports business reporter, but I mean,
I assume you can't totally divorce your fandom from your
I know we're all objective journalists, but I'm sure it
sometimes it slips through the cracks. I mean, how are
you feeling about this? We are to our final segment,
(28:11):
and Randall, you're gonna need to stick around for this,
all right? All right, this is where either Stacy or
I will go through the depths of the news cycles.
We'll do deep dives, will do extensive research and find
the underrated story of the week, the story that people
should be paying more attention to. And Stacy, what is
(28:32):
it this week?
Speaker 3 (28:32):
So I brought this story? Randall, I don't know if
you know this, but both Max and I are runners,
and over the weekend, Max and I accumulatively ran one
hundred miles. Well, okay, I'll be truthful, which is that
Max ran one hundred miles and I ran no miles.
He runs ultra marathons because sometimes one marathon isn't enough.
(28:53):
How is that embarrassing? It would be the first thing
I said to everybody.
Speaker 2 (28:56):
Wait a minute, the marathon was one hundred.
Speaker 3 (28:58):
No he yeah, he ran a tra marathon one hundred.
Speaker 2 (29:01):
You not the first person I've met that does this?
Speaker 1 (29:03):
Yeah, no, I know. It's like a middle aged cliche.
Speaker 3 (29:07):
Does that.
Speaker 2 (29:08):
Let's set automobiles and vehicles aside. He doesn't hasn't heard
of horses, mules, anything like that.
Speaker 1 (29:16):
There is a mule whet.
Speaker 3 (29:20):
Well, so, my underrated story is that the sport of
ultra marathoning, very long distance running, has been plagued by
scandal in the form of super puffee shoes. So apparently,
when you run one hundred miles and this feels reasonable,
you want super poofy soles on your shoes. And we've
all seen this has become a trend, right, the Hokah
(29:42):
shoes and stuff like that getting poofy or and poofier,
And apparently if you run one hundred miles you want
super lofty shoes. But there are now these careful regulations
around how.
Speaker 1 (29:52):
Shoe sole high, how much poof can you.
Speaker 3 (29:55):
Have yes, and people are getting disqualified from races for
overly poof shoes.
Speaker 1 (30:00):
Wow.
Speaker 3 (30:01):
Yeah, but the shoemakers keep making them and they don't care.
They are upping the anti. There's a new shoe from
Puma where the sole of the shoe is fifty eight millimeters,
which is the size of a Rubik's cube.
Speaker 1 (30:15):
Okay, can you show me yes?
Speaker 3 (30:16):
Here is the picture. My god, that's this is your people.
Speaker 1 (30:20):
That is obscene.
Speaker 3 (30:21):
Well, apparently people love these shoes, and the poofy or
the sole, the more people will pay. And because shoe
sales have been declining for the past two years, they're
down by two percent. Running shoes shoes like shoemakers are
getting more and more invested in shoes that they can
charge a premium for and apparently people will just pay
endless amounts of money. So actual money being made from
(30:41):
shoes up fourteen percent in spite of the sales drop
because of poofy soles.
Speaker 2 (30:47):
And you're basically heals for men.
Speaker 3 (30:49):
Heals form men.
Speaker 1 (30:50):
First of all, there is no this is not an
ultra running story. There is no fashion. I mean, you.
Speaker 2 (30:57):
Confirm or deny that these are heels for men.
Speaker 1 (30:59):
They are, but I'm just saying that this is these
are two worlds that are are that could not be
further from one another. No one who is actually running
one hundred miles looks their best, uh, to say the least.
I also think it's funny how in shoes you have
all of this amazing innovation. You know, earlier it was
(31:20):
the carbon fiber soles, and they're always there are always
these like crazy innovations and all this conversation around performance
and is it is it cheating or whatever. And then
you have fashion, which is like totally on the opposite
end of innovation, and like those two forces are sometimes
pushing against each other, sometimes pushing with each other. I
don't know what's what.
Speaker 2 (31:40):
We're just pushing you forward.
Speaker 1 (31:42):
When I started running long distances, the big thing was
having no soul, was having like these, yeah, or wearing
those like shoes with the toes where your toes stick out,
and even today, like you see people with giant souls.
I saw a guy this this past weekend running in
sort of like what you think of as like a
Roman thong, like like sandal really like my story.
Speaker 2 (32:06):
I think he's trying to get away from the story.
Speaker 3 (32:07):
Well, here's the thing like if you're running one hundred miles, like,
is it cheating if you have like a slightly more
comfortable shoe, like if I ran, I don't even think
using like a moped is cheating if it's one hundred miles.
Speaker 2 (32:22):
We got to ask him, if you saw someone who
was speeding past you and they had some bigger, bigger souls,
are you going to point them out and flag down
an official.
Speaker 1 (32:30):
Them in the race? Director? No, I don't think I
would notice.
Speaker 3 (32:35):
People have been turning each other in apparently too, there
was this.
Speaker 2 (32:37):
Guy running around with a ruler. This show is.
Speaker 3 (32:45):
Produced by Stacy Wong. Magnus Hendrickson is our supervising producer,
Amy Keene is our editor, and Brendan Francis Newnham is
our executive producer. Special thanks to Jeff Muscus and Maria
Ling and Sage Bauman heads Boomberg Podcasts. If you have
a minute, please rate and review the show. It helps
people find us and it would really mean a lot
to us. And if you have a story that should
(33:06):
be our business, email us at Everybody's at Bloomberg dot net.
That is, Everybody's with an us at Bloomberg dot net
and thank you for listening. To see you next week.
Hey everybody. Max Chafkin here just wanted to let you
know you're gonna hear another episode of Everybody's Business, our
new podcast from Bloomberg Business Week. Now, Everybody's Business has
been appearing in the elon inkfeed but exciting times. Today's
the day it gets its own feed. So go on
your podcast app, type in Everybody's Business and subscribe, and
(00:21):
we'd really appreciate that. You'll hear a couple more episodes
of Everybody's Business over the next couple of weeks. But
you're gonna need to go over there if you want
to keep hearing this show. For now here it.
Speaker 2 (00:30):
Is Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 1 (00:43):
It's Everybody's Business from Bloomberg BusinessWeek.
Speaker 3 (00:46):
I'm Max Chaffin and I'm Stacy Vanicksmith.
Speaker 1 (00:49):
Hey Stacy, Hey Max.
Speaker 3 (00:51):
This is a special day. It's our first shows show.
Speaker 1 (00:55):
It's a holy day, is Stacy the first official episode
of a new podcast from Bloomberg Business Week, where we
break down the news of the week. We bring in
some of the smartest journalists we know from the extended
Bloomberg universe. The writers and reporters and editors from Bloomberg BusinessWeek,
and sort of chew over what happened, what matters, and
what's coming next.
Speaker 3 (01:16):
In today's show, our first show is all about beginnings,
our brave new world or brave new economy, actually things
like tariffs. Those are still pretty new and changing by
the hour, but have not been showing up in prices.
Speaker 1 (01:31):
Not yet showing up in prizes. And we have Amanda
mal BusinessWeek columnists consumer spending expert to talk that over.
To mull that over if you will, Stacy, you and Amanda,
you went on a field trip without me? We did okay?
And then the NBA playoffs are heating up, and there
is a new sports owner in town, an owner that
(01:53):
I think most fans are going to be really excited about.
I'm talking, of course, about the private equity bro They
are buying up teams, valuations are going up. And we
have Randall Williams, BusinessWeek columnist and sports reporter coming in
to talk to us all about that.
Speaker 3 (02:07):
Who does not love private equity. And finally we have
our underrated story of the week, in this case a
new kind of sporting equipment that might be breaking some
pretty important rules. Max, I'm going to tell you this
one gets personal for you.
Speaker 1 (02:21):
I can't wait. Okay, But of course this show is
called Everybody's Business, and we take the everybody very serious.
Speaker 3 (02:30):
We do take it seriously and we want to make
sure that there is something in the show for everybody.
But Max, you and I have both been covering the
world of business and economics for a very long time,
and it can be a little bit of a bubble,
can be hard to know, like what normal people find interesting.
Speaker 1 (02:45):
Are saying that we're not normal ever.
Speaker 3 (02:49):
So slightly siloed is all I'm saying. So we wanted
to see what other people who don't spend all their
time looking at this stuff want to know about.
Speaker 1 (02:58):
Well, this is my favorite part of the show because
we're in New York. Obviously, people from all over the
world are here, and you, Stacy Vanicksmith, are like very
good at going out and talking to those people in
the world.
Speaker 3 (03:09):
Yes, I am getting very good at going up to
people and saying, have you heard the good news? You
can be on a podcast. So to get the voice
of the people, I went to the beating heart of
New York City, of New York City Times Square to
ask people, what are the business and economic stories that
you want to hear?
Speaker 4 (03:29):
About I mean, AI, for sure, everybody wants to know
more about that. We all just graduated college, so it's
like keeping up with the different economic policies that will
affect us as like young investors.
Speaker 1 (03:41):
Obviously, the price of eggs.
Speaker 3 (03:43):
Really, you're a big egg watcher?
Speaker 1 (03:45):
Yes, I work at a boutique grocery store where, like
I'm not joking, a box of a dozen eggs is
like ten twelve dollars. Everyone's talking about Terris.
Speaker 2 (03:55):
I work at a small consulting firm, and I worry
about how that's going to affect like my job, you
know what I mean. I'm just glued to the gossip
of the markets.
Speaker 3 (04:05):
Are you a markets watcher.
Speaker 2 (04:06):
In times of crisis? Yes?
Speaker 3 (04:08):
Would you guys listen to a new business podcast?
Speaker 1 (04:11):
I would?
Speaker 3 (04:11):
Yeah, what about you guys.
Speaker 4 (04:13):
I'm not a big podcast person, but if I were
to listen to a podcast, thank you?
Speaker 1 (04:17):
Sure? Am I going to be on the podcast?
Speaker 4 (04:19):
Yes?
Speaker 3 (04:19):
Is that okay? Did you get good sound bites on
my good Yeah? I got great sound bites.
Speaker 2 (04:23):
I wish say you that I would have sounded better.
Speaker 1 (04:26):
Wow, people have spoken. So we're worried about eggs. We're
worried about consulting rates.
Speaker 3 (04:33):
I think jobs, I think people are worried about their jobs.
Speaker 1 (04:37):
Well, that's fair. We're going to do this every week,
not always questions about what should be on the podcast,
but we do want to hear from you listeners about
what you want us to talk about and what you're
seeing in the economy. You should send us an email.
Everybody's at Bloomberg dot net. That's everybody's with an s
at Bloomberg dot net. We're going to repeat that email
address over and over again many times until you actually
(04:58):
send us some email. So aready all right, Stacy. The
big kind of business news earlier this week, it was
good news. It was that inflation, which everybody had been
really worried about, with you know, Trump's high tariffs and
the erratic nature of the tariffs. It actually wasn't that bad.
It was two point three percent. I think that was
the lowest level that we've seen since twenty twenty one.
(05:20):
You know, that was before we had the post pandemic spike.
Trump also backed down on his China tariffs, announcing a
ninety day pause. It's going down to thirty percent from
one hundred and forty five percent, So this is good right.
I mean basically those eggs that we heard about in
the UH eggs they're gonna cost less now, I think,
and consultants will be able to flourish, and those those
(05:43):
graduates will all get to Everything is great.
Speaker 3 (05:46):
I mean I have to say, I really expected to
see the consumer price index, that's the inflation index go
up a lot, because Trump's tariffs have been in effect
for a couple months now, so we should be starting
to see them. But you're the numbers just didn't show that,
and the markets have been on this happy tear.
Speaker 1 (06:04):
And we should just say for anyone who hasn't followed
this as closely as us, the reason we expected, yeah,
which is everyone. The reason we expected prices to go
up is because a tariff is essentially a tax on
a consumer good. You know, it costs more money to
bring some item, you know, an article of clothing, a toy, whatever,
into the United States, and somebody has to pay for
(06:26):
that cost, whether it's a company, and ultimately consumers are
going to pay. And that's why we wanted to talk
to Amanda Mull because this is what she does. She
writes about consumer behavior and retail businesses and kind of
all the ways that affects culture. Amanda's here now, how
you doing.
Speaker 4 (06:44):
I'm doing great, Thanks for having me.
Speaker 3 (06:46):
We're very excited to have you on our first episode.
And you just wrote this article called Trump's tariffs are
going to ruin Christmas, and it is all about tariffs
and prices. So, just to start out very simply, looking
at the data this week, inflation numbers looking really good.
What's going on? Why are the tariffs not showing up?
Speaker 4 (07:07):
The most important thing to remember in trying to understand
all of this is that, like our experience of the
economy as sort of like end consumers, is a lagging
indicator of what is going on in the economy.
Speaker 3 (07:18):
Lagging mean like it doesn't show up until after it's
already happened.
Speaker 4 (07:21):
Our experience will change after months of many other things
going into effect that will eventually affect us. The process
of getting goods onto the shelves is like a months
long and sometimes years long process, depending on what the
product is. So a lot of the stuff that's on
shelves right now was imported in warehouse before any tariffs
went into effect, So we still have like a lot
(07:42):
of goods in the system that would have been tariff
affected if they had been imported a little bit later,
but they weren't. And then you also get this behavior
from retailers in brands that are like looking at projections
for what happens once some level of tariff goes into effect,
and they're saying, Okay, we need cash on hand, and
we need to move inventory now. We need to front
(08:02):
load a lot of this consumer spending because consumers are worried,
and a lot of them have their wallets open right
now for purchases that they might have otherwise made in
six months or in a year or at the end
of the summer. So you've got retailers going, hey, we
know you're worried about tariffs. We have brought in a
lot of extra inventory, and we know that you want
to buy right now. So here's fifteen percent off, or
here's buy one, get one fifty percent off. So you
(08:24):
have all of these behaviors that are happening right now
with this pre tariff merchandise. That is keeping prices stable
and that is encouraging people to buy at a pretty
pretty steady rate. But what like Goldman Analysts said in
a note to clients about this CPI reading is that
we're not done with this, like probably next month and
maybe in the months to come after. That is where
(08:45):
we're going to see a lot of these pricing variations
start to bubble up, because that's when you're going to
get goods in the system that are more tariff affected.
I've seen a lot of anecdotal evidence that a lot
of customs processors and a lot of shippers don't know
what they's supposed to be charging interiors. Yeah, people are
very confused.
Speaker 1 (09:04):
So what you're saying basically is boats move slowly, Like, yes,
you know, a lot of this stuff comes on a
giant container and those container ships take weeks to get here.
And not just that, but a lot of the goods
that are being brought on those container ships contain other
items that also arrive on container ships. This just takes
a long time. And a lot of companies like Apple, right,
(09:26):
they just like frantically imported as much of their stuff
as they.
Speaker 3 (09:30):
Could because like six hundred tons or something and iPhone.
Speaker 1 (09:34):
Trump made this very easy for them, and maybe even deliberately,
right he put the date on the calendar Liberation Day,
so we all know got to get as much, you know,
stuff ahead of Liberation Day. It seems like that kind
of happened, right absolutely.
Speaker 4 (09:48):
I talked to a consumer industry expert from EY who
said that of the businesses that he has sort of
been observing and the ones you know that are in
their client base, he saw retailers and brands bringing in
on average about ninety days of excess inventory, and to
the point where you could look around the freight industry
and the logistics industry in the US and see like
warehouses filling up, and like warehouse space being sort of
(10:10):
at a premium, especially near ports. Companies that had the
cash on hand to bring in extra stuff really did
just frontload as much as they could.
Speaker 3 (10:18):
So tariffs haven't really shown up yet, but they're definitely
going to show up. And so Max, I don't know
if you know this, but Amanda and I live pretty
close to each other in Brooklyn, and we live pretty
close to a Target, which is basically Amanda's church as
a consumer reporter, so she agreed to meet me there
and take me on a little Target tariff tour.
Speaker 4 (10:39):
We're looking at a rather large TV. It's a sixty
five inch Broku TV two fifty. When I worked in
Best Buy from like two thousand and four to two
thousand and eight, flat panel TVs were still several thousand dollars.
We would put one on sale for like one thousand bucks,
and you know, people would line up for that stuff.
But they've come down in price a ton in the past,
(10:59):
like fifteen years. The ultra inexpensive two hundred and fifty
dollars sixty five inch TV that you can take home
today from Target is a product, ultimately of what a
globalized manufacturing chain produces for wealthy consumers.
Speaker 3 (11:13):
And what happens to our flat screen TVs in a.
Speaker 4 (11:17):
Tariffed world, Like everything, they get a lot more expensive.
This is the type of manufacturing that is really hard
to reproduce in new places because it is a very
delicate process. It requires a lot of specialized machinery and
you need like a ton of workers that you can
pay not that much money in order to pull this
(11:38):
off at these prices.
Speaker 3 (11:39):
All right, shall we go to produce?
Speaker 4 (11:42):
Yeah, that's good.
Speaker 3 (11:43):
And why have you brought us here?
Speaker 2 (11:45):
We're looking at pineapples.
Speaker 4 (11:46):
Let me see, it's a del Monte pineapple. They are
three bucks for big and heavy. Pineapple is getting this
from Costa Rica, and you can buy it like fresh
off the shelf. Three Bucks is like.
Speaker 3 (12:00):
In Target a miracle. So what is going to happen
to this section of the store with tariffs?
Speaker 4 (12:07):
Fresh produce supply chains rely on a cold storage and
cold chain and a lot of elements of global shipping
that are set to become more expensive. We get a
lot of our fruit from Central and South America. If
you want pineapple, if you want mangoes, then tariffs are
going to make a lot of those things, if a
lot more expensive, especially out of season. Like, I don't
(12:28):
know if they're going to be like affordable to somebody
that's like trying to figure out their grocery budget.
Speaker 3 (12:31):
You like, these might not be in Target next year.
Speaker 4 (12:35):
No, the apples probably will be, but like, I don't
know if we're gonna have mangoes.
Speaker 1 (12:39):
I have joked to my wife many times that when
we're all gone and the alien archaeologists find our civilization,
the thing that they are going to be most impressed
by is this the produce that you can get from
Like the fact that you can like walk into a
Whole Foods or a Target and buy an exotic fruit
(13:00):
or a freaking ostrich egg or whatever for almost no money.
Speaker 3 (13:04):
It is amazing, like from halfway around the world, and.
Speaker 1 (13:07):
It would still be amazing to buy that del Monte
pineapple for four fifty even like still a pineapple that
made it like you know, a huge distance. But you
do wonder like at what point does that price become
too much and does the whole system that we've kind
of created around these cheap goods, like when does it
start to break down? Like how much could people of
(13:29):
the world really be willing to spend?
Speaker 4 (13:32):
And fresh produce is really tough when you look at
like how little small changes in price could affect availability
because the margins at every step of the fresh produce
chain are like really really thin, even in grocery, like
grocery as far as retail goes in America is known
to have just like the most razor thin margins. The
items themselves may not be like super heavily tariffed. A
(13:55):
lot of it comes from Central and South America, which
is less affected by the liber day tariff table then
China would be. But you still end up in a
situation where you need a lot of logistics resources that
are built out to work at scale in moving around
all of these different types of goods from different places.
So if you have like a big drop in imports
from some places, logistics companies and freight companies and truck
(14:17):
drivers sort of like drop out of the system. They
go elsewhere, they find other types of jobs, warehouses, close trucks,
you know, leave the road. So this is one of
those second third, fourth order effects where it's like, if
you change your logistics system in the country significantly, how
does that affect the moving around like really fragile, really
perishable goods like fresh fruit that comes in from Costa
(14:38):
Rico or from Mexico or from Columbia or wherever. You
start tinkering with little things and then the effects just
reverberate out in ways that are not necessarily like super
easily predictable from where we are today.
Speaker 3 (14:51):
So we have some flat screen TVs that are going
to get a lot more expensive pineapples that might not
be there. But we went to another part of the store.
Here we go.
Speaker 4 (14:59):
We're in the one of the makeup aisles right now.
You know, if you look at makeup, there's lots of
like fiddly little plastic parts. There's lots of packaging.
Speaker 3 (15:05):
Yes, the packaging is like the best part.
Speaker 4 (15:07):
Yes, packaging is super important to selling makeup. Packaging is
one of the most overseas concentrated parts of the supply
chain period. Most of it is in China and other
parts of Asia, with some types of packaging, mascaro, whatever else.
Like sometimes the tube will be made in one place,
in the cap to the tube will be made in
another in the brush bristles will be made in another,
and that sort of all comes together to be manufactured
(15:28):
into a saleable product. For instance, this elf mascaren has
a box around it so that it can hang on
a shelf, and then like the group that goes inside
might come from someplace else entirely, and they're all shipped
to these manufacturing facilities that then put the product together.
Speaker 3 (15:40):
It's funny because I feel like what you're talking about
is something I always think of when we talk about
like iPhones. It's like, oh, they've components made in forty
four countries, But it actually seems like maybe mascara is
not different.
Speaker 4 (15:51):
Yes, the things we think of as simple are rarely
simple because we've basically set up the entire global economy
to ensure that like they're efficient by a certain definition
and cheap, right, so you find, you know, quote unquote
efficiencies that enable you to do all of this across
like a massive geographic space in order to make something
that is ultimately like extremely complex, but much cheaper than
(16:13):
it would be if done beginning to end in one place.
Speaker 3 (16:17):
Okay, so I feel like we should probably pick one
of these up.
Speaker 4 (16:19):
For Max, we brought you a Mascarra oh alf Flash
Extender Mascarra Wow for you.
Speaker 1 (16:25):
I just have to ask why this product.
Speaker 3 (16:29):
Just a good thing to keep in mind. There's no message. Really,
we're not implying anything. Not really, I'll.
Speaker 1 (16:35):
Take it out.
Speaker 3 (16:37):
Bet our lash has never hurt anybody.
Speaker 1 (16:39):
No. It is a great time to be a sports
fan right now. The NBA playoffs are heating up, Baseball
season is in full swing. The WNBA is about to start,
you know today as this episode drops. On Friday, we're
gonna have a Knicks playoff game and Mets against Yankees
going on the same time. I am so excited about it.
(17:02):
But there's just one thing that could make our sporting
experience a little bit better, and that would be owners
who knew how to squeeze efficiencies out of their franchises.
I was just thinking the values a little higher.
Speaker 3 (17:18):
Yes, absolutely, I feel like when when sports fans watch games,
what we're always looking for.
Speaker 1 (17:23):
More private equity, which is why absolutely we have Randall Williams,
Bloomberg BusinessWeek sports columnist, friend of the podcast here with
us in the studio. Randall just wrote a column about
the skyrocketing valuations for sports teams. Randall, how you doing?
Speaker 2 (17:39):
I'm doing all right? Thank you all for having me.
I'm excited.
Speaker 1 (17:41):
You know this, but many people probably don't. The Boston
Celtics were recently sold for six point one billion dollars.
That's a team that was worth four hundred million, I
believe according to Forbes in twenty eleven. Who and yeah,
and it goes on and on. The Eagles has.
Speaker 3 (17:56):
Been to them? That's a big Boston glow up.
Speaker 2 (17:58):
What happened to them?
Speaker 1 (18:00):
I mean? And it's not just the Celtics, right, The
Eagles went from being worth one point two billion back
then to eight point three the Dodgers eight hundred million
now six point nine billion. Yep, Randall, what's happening here?
What is causing this?
Speaker 2 (18:14):
The media deals are getting bigger for each of these leagues,
and the sports are growing in popularity. The stars are
getting bigger. You just named three different teams where we
could all name a superstar on them. For the Dodgers,
it's show hal time.
Speaker 3 (18:26):
Might be a stretch, you could do it, Jalen Hurt
say yeah yeah.
Speaker 2 (18:31):
And with the Celtics Jason Tatum and Jalen Brown of course,
and overtime that was Paul Pierce and Kevin Garnett and
Ray Allen. So the media deals are driving these valuations up,
and ultimately the cost to run these teams is also
going up as well.
Speaker 3 (18:45):
Yeah, what goes into a team valuation? Like, what does
it mean if a team is worth eight billion dollars?
Speaker 2 (18:49):
Well, first of all, it's a market real estate. So
like the stadium, Yes, for sure the stadium. If you
own your own stadium, then that gives you the ability
to make a lot of revenue from things outside of
you sports team. So let's use the Boston Celtics as
an example. They get forty one home games a year,
but you know, forty one dates out of three hundred
and sixty five, that's not a lot of opportunity to
make money. Now, granted, I think it's the Boston Bruins
(19:11):
are also in that stadium, but the Celtics don't own
their own stadium, so as part of the six point
one billion dollar deal, one of the things that NBA owners,
NBA executives, and business people alike were watching to see
is how much this team would go for because the
NBA is looking to expand now for the expansion people,
they're watching this because like, okay, the Celtics don't own
their stadium, can't go for that much. And then it
(19:32):
goes for six point one billion dollars, which is more
than the Commanders who.
Speaker 1 (19:35):
Bought the Celtics. I mean, it's this guy Bill Chisholm,
co founder of STG Partners. That's a PE firm. But
then there's PE money inside of.
Speaker 3 (19:43):
That, like private equity sorry not physical education.
Speaker 2 (19:46):
Yeah. Bill Chisholm is the leading investor. He has a
billion dollars in six Street money. He has Rob Hale,
he has Bruce A. Beal junior, so his ownership group
is very diverse. He's added some more money since then,
but it's a lot of money.
Speaker 3 (19:58):
Sixth Street is the private equity firm, correct, okay, and
the private equity firm bought it, not the guy who
runs it, but the actual private equity firm.
Speaker 2 (20:06):
No, No, bil Chisholm is the organizer. Now. The thing with
private equity firms and sports is that they cannot be
controlling owners. They are passive investors. Eventually they'll exit and
the exits of these deals is still to be determined.
Speaker 1 (20:18):
What is it in the NBA? Is it ten percent
or twenty percent? Is the limit for private equity?
Speaker 2 (20:22):
A single private equity firm can own up to twenty
percent of an NBA franchise. Private equity and totality can
own thirty percent. So you so ideally you could have
twenty percent of one firm and then ten percent to
another to get to thirty.
Speaker 1 (20:34):
This strikes me, and forgive my saying this, but this
strikes me as because you have a private equity guy
who is leading the deal. Like these are basically private
equity groups. They're just it's just private equity group made
up of a bunch of little private equity.
Speaker 2 (20:51):
Groups in some ways. In some ways, however, the biggest
difference is that you can have your money come from
private equity, but your firm cannot run the team. That's
the difference. So you could name any private equity person
in the world right now, and that individual could buy it,
but the firm could not, because.
Speaker 3 (21:06):
I feel like normally when private equity buys something like
for a while, private equity owned KFC and stuff, I
feel like they kind of tend to strip things for parts.
Speaker 1 (21:15):
Exactly why not be great?
Speaker 2 (21:17):
That's why sports leagues don't want private equity firms to
run teams. And there's a lot of fan fear if
you jump in Reddit threads, Fans hate the idea of
this because they think that private equity firms are going
to strip the teams down and be like, you know what,
we're not paying Jalen Hurts, We're not paying Saquon Barkley.
We're just going to invest in the stadium. In stead, foam.
Speaker 3 (21:34):
Fingers are going to get smaller.
Speaker 1 (21:36):
They they're definitely making fingers. It does kind of cut
against what I think most people understand as fandom, right.
You understand teams as being kind of community groups almost,
and then you have these these groups of owners and
they're buying not just one franchise, they're buying another franchise.
And you might think, oh, it's like the guy who
owns the baseball team in town is buying the hockey
(21:59):
team in town, or what But no, the group that
owns the Celtics also owns I think ten percent of
the Giants, and like that doesn't fit with like how
a normal fan I think understands the point of a
sports team or even the point of sports. But I'm wondering, Randall,
are we seeing changes in how these ownership groups manage
their teams? Are they doing the private equity playbook? Are
(22:20):
they making the foam hand smaller?
Speaker 2 (22:22):
It depends on who you are. Yeah, Like I think
if you look at Josh Harris and the Washington Commanders,
when he bought that team was a total train wreck.
Now since then he's struck a four billion dollars stadium deal.
He has put more money into a quite frankly, a
horrible stadium. And so you have Josh Harris, who comes
from private equity investing all of this money. Now he
has the money to do this, There aren't going to
(22:44):
be a lot of people who have the same money.
But if you look at the Celtics deal, for example,
Bill Chisholm has not said anything about a new stadium,
even though he's not making any money from let's say concerts.
If Taylor Swift comes in town or another.
Speaker 3 (22:56):
Oh, that's how you can kind of leverage.
Speaker 2 (22:58):
Your stadium any money from those things, and so it's
really dependent on how much money you have. Private equity
can come in and help these stadium costs, other real
estate things, other projects, liquidity things like that.
Speaker 1 (23:11):
Randall, let's dig into a little bit around like what
is driving these valuations. We kind of hit on the
media deals, so just talk a little bit about what's
behind that. I mean my understanding sports viewership is up
a little bit historically, but it's relatively flat. Like if
you look at like super Bowl viewership numbers over the
last like fifty years, like it's gone up, but it's
(23:31):
sort of gone up in the way that you would
expect given population growth, but everything else has fallen a lot.
So basically sports has sort of maintained high viewership while
like sitcoms, reality shows, all that stuff has fallen out.
These games, those are live, Those are unique events that
if you care about it, and a lot of people
care about sports, there is no way of getting around it.
(23:52):
And that is like gold for advertisers, for media.
Speaker 2 (23:55):
Yeah, absolutely, it is the only thing people watch live.
The reality is the NFL is a behemoth. I mean
I was shocked that the Super Bowl had one hundred
and twenty seven million people watch it when at one
point the game was forty to six at halftime, I
believe it was like twenty four to nothing or something
like one hundred and twenty seven million people when the
previous two games were incredible games.
Speaker 3 (24:14):
But it was an underdog win, which was thrilling.
Speaker 1 (24:16):
Eh.
Speaker 2 (24:17):
The Eagles were pretty good all three season. They had
the three peak going, they had the three peak going.
But if you I mean, if you were paying attention
to both teams, the Eagles were the dominant team. The
Chiefs were surviving week by week. Now, the NBA has
seen some fluctuation. Of course, NBA Finals ratings were down.
Now the current playoff viewership is at an all time high. However,
(24:37):
what happens on Lebron exits, Steph Curry exits, and I mean,
if the Knicks don't pull this series out, you could
see a dramatic fall of not just because they're a
popular team, but you look at the markets that are
out there, Oklahoma City, the Indiana Pacers, the Minnesota Timberwolves,
and the Denver Nuggets. It's not the same thing as
the New York Knicks. Even the brand recognition isn't the same.
But at the same time, NBA has a seventy six
(24:57):
billion dollar media deal that isn't up until twenty.
Speaker 3 (25:00):
Thirty pay them to air their games.
Speaker 2 (25:03):
Yes, the NBA's new media deals with ESPN, it is
with Amazon and NBC, and the NFL has like six
different media partners. The MLB will be negotiating theres pretty
soon as well.
Speaker 3 (25:14):
What does private equity see in sports teams?
Speaker 2 (25:17):
Like?
Speaker 3 (25:17):
Why are they making this investment?
Speaker 2 (25:19):
I mean, I think if you keep looking at the
media deals and they keep doubling, they keep tripling, and
the franchise valuations, if you look at the NBA or
the NFL or the MLB, these sales keep going for
higher and higher and higher. I mean the Panthers sold
for two to two, the Denver Broncos sold for four
to six, The Washington Commanders, yes, billions, and then the
(25:39):
Washington Commanders sold for six billion. You're looking at these
exits and it's like wow, Like these teams are tripling
over time in a matter of a decade. You don't
normally see that in business. And so what the NFL
has done with their rules is if a private equity
firm buys into it, you have to hold it for
six years. They're not looking for immediate exits, and quite frankly,
I'm not sure that Blue Au was looking to exit
(25:59):
as as they were with the Phoenix Suns. It's just
that Robert Sarver got in trouble and so he was
forced to sell the team, or he elected to sell
the team.
Speaker 1 (26:07):
So, having done some reporting on this and kind of
followed private equity in general, private equity in healthcare for instance,
you know, the business model is basically like, you cut
a bunch of costs, you raise prices where you can,
and then you sell, often to another private equity firm.
What I'm wondering is who are the buyers? Like, if
the price of the Celtics has gone up, the math
(26:29):
is going to be hard, But you know, like one
thousand percent or whatever over the last fifteen years, how
do you get that? Are they expecting another thousand percent?
And if that happens, who's the buyer? Like? At what
point does this start to look like a bubble rather
than an asset with a lot of upside?
Speaker 2 (26:45):
Well, I think that it really depends on who you ask.
As I'm watching this, I think it's incredible that the
Celtics got to six to one. I've talked to plenty
of NFL owners and they all tell me like they
don't think they're anywhere near the ceiling of this. And
the Super Bowl is kind of a telltale sign at
that because if you're big, this event is a blowout
and it sets a record in viewership, you're still going
to have media companies that are going to want to
(27:06):
buy in at a new, bigger price. And this is
a reminder. The NFL's media deal is over one hundred
billion dollars, and yet they set a record in a
blowout game. And so what's the next one going to be?
One hundred and fifty billion, one hundred and seventy five billion,
We don't know. And so that's going to drive valuations up.
The NBA's media deal begins this upcoming season, and so
that's a seventy six billion dollar media deal that's going
(27:26):
to drive up values for the next ten years as well. Now,
what's going to be interesting to see is how these
owners offset the cost because stadiums aren't getting any cheaper,
contracts aren't getting any cheaper, and you're right, there are
going to be some billionaires who are priced out of this,
and you will see the NFL, the NBA, the MLB
adjust their private equity rules so that you know, these
(27:46):
private equity firms can come in and provide solutions to
owners who aren't capital heavy.
Speaker 1 (27:50):
Randall, Like, you're a sports business reporter, but I mean,
I assume you can't totally divorce your fandom from your
I know we're all objective journalists, but I'm sure it
sometimes it slips through the cracks. I mean, how are
you feeling about this? We are to our final segment,
(28:11):
and Randall, you're gonna need to stick around for this,
all right? All right, this is where either Stacy or
I will go through the depths of the news cycles.
We'll do deep dives, will do extensive research and find
the underrated story of the week, the story that people
should be paying more attention to. And Stacy, what is
(28:32):
it this week?
Speaker 3 (28:32):
So I brought this story? Randall, I don't know if
you know this, but both Max and I are runners,
and over the weekend, Max and I accumulatively ran one
hundred miles. Well, okay, I'll be truthful, which is that
Max ran one hundred miles and I ran no miles.
He runs ultra marathons because sometimes one marathon isn't enough.
(28:53):
How is that embarrassing? It would be the first thing
I said to everybody.
Speaker 2 (28:56):
Wait a minute, the marathon was one hundred.
Speaker 3 (28:58):
No he yeah, he ran a tra marathon one hundred.
Speaker 2 (29:01):
You not the first person I've met that does this?
Speaker 1 (29:03):
Yeah, no, I know. It's like a middle aged cliche.
Speaker 3 (29:07):
Does that.
Speaker 2 (29:08):
Let's set automobiles and vehicles aside. He doesn't hasn't heard
of horses, mules, anything like that.
Speaker 1 (29:16):
There is a mule whet.
Speaker 3 (29:20):
Well, so, my underrated story is that the sport of
ultra marathoning, very long distance running, has been plagued by
scandal in the form of super puffee shoes. So apparently,
when you run one hundred miles and this feels reasonable,
you want super poofy soles on your shoes. And we've
all seen this has become a trend, right, the Hokah
(29:42):
shoes and stuff like that getting poofy or and poofier,
And apparently if you run one hundred miles you want
super lofty shoes. But there are now these careful regulations
around how.
Speaker 1 (29:52):
Shoe sole high, how much poof can you.
Speaker 3 (29:55):
Have yes, and people are getting disqualified from races for
overly poof shoes.
Speaker 1 (30:00):
Wow.
Speaker 3 (30:01):
Yeah, but the shoemakers keep making them and they don't care.
They are upping the anti. There's a new shoe from
Puma where the sole of the shoe is fifty eight millimeters,
which is the size of a Rubik's cube.
Speaker 1 (30:15):
Okay, can you show me yes?
Speaker 3 (30:16):
Here is the picture. My god, that's this is your people.
Speaker 1 (30:20):
That is obscene.
Speaker 3 (30:21):
Well, apparently people love these shoes, and the poofy or
the sole, the more people will pay. And because shoe
sales have been declining for the past two years, they're
down by two percent. Running shoes shoes like shoemakers are
getting more and more invested in shoes that they can
charge a premium for and apparently people will just pay
endless amounts of money. So actual money being made from
(30:41):
shoes up fourteen percent in spite of the sales drop
because of poofy soles.
Speaker 2 (30:47):
And you're basically heals for men.
Speaker 3 (30:49):
Heals form men.
Speaker 1 (30:50):
First of all, there is no this is not an
ultra running story. There is no fashion. I mean, you.
Speaker 2 (30:57):
Confirm or deny that these are heels for men.
Speaker 1 (30:59):
They are, but I'm just saying that this is these
are two worlds that are are that could not be
further from one another. No one who is actually running
one hundred miles looks their best, uh, to say the least.
I also think it's funny how in shoes you have
all of this amazing innovation. You know, earlier it was
(31:20):
the carbon fiber soles, and they're always there are always
these like crazy innovations and all this conversation around performance
and is it is it cheating or whatever. And then
you have fashion, which is like totally on the opposite
end of innovation, and like those two forces are sometimes
pushing against each other, sometimes pushing with each other. I
don't know what's what.
Speaker 2 (31:40):
We're just pushing you forward.
Speaker 1 (31:42):
When I started running long distances, the big thing was
having no soul, was having like these, yeah, or wearing
those like shoes with the toes where your toes stick out,
and even today, like you see people with giant souls.
I saw a guy this this past weekend running in
sort of like what you think of as like a
Roman thong, like like sandal really like my story.
Speaker 2 (32:06):
I think he's trying to get away from the story.
Speaker 3 (32:07):
Well, here's the thing like if you're running one hundred miles, like,
is it cheating if you have like a slightly more
comfortable shoe, like if I ran, I don't even think
using like a moped is cheating if it's one hundred miles.
Speaker 2 (32:22):
We got to ask him, if you saw someone who
was speeding past you and they had some bigger, bigger souls,
are you going to point them out and flag down
an official.
Speaker 1 (32:30):
Them in the race? Director? No, I don't think I
would notice.
Speaker 3 (32:35):
People have been turning each other in apparently too, there
was this.
Speaker 2 (32:37):
Guy running around with a ruler. This show is.
Speaker 3 (32:45):
Produced by Stacy Wong. Magnus Hendrickson is our supervising producer,
Amy Keene is our editor, and Brendan Francis Newnham is
our executive producer. Special thanks to Jeff Muscus and Maria
Ling and Sage Bauman heads Boomberg Podcasts. If you have
a minute, please rate and review the show. It helps
people find us and it would really mean a lot
to us. And if you have a story that should
(33:06):
be our business, email us at Everybody's at Bloomberg dot net.
That is, Everybody's with an us at Bloomberg dot net
and thank you for listening. To see you next week.
Host
David Papadopoulos
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