April 18, 2025 • 38 mins
This week, Former Harvard University President Larry Summers assailed President Donald Trump over his deepening attacks on the school, slamming a “wildly extralegal” federal funding freeze earlier this week and warning of government “tyranny.”
Plus, the growing investment in women's sports...will leagues like the NWSL and WNBA continue to generate billions of dollars in revenue?
And, a broader look at sports as an asset class and the increase in investment opportunities. We hear from conservative activist investor Robby Starbuck as we look at the role of faith in investment decisions.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:13):
I'm David Weston. Welcome to Wall Street Week on Bloomberg Radio.
Coming up on the program, we take a look at
the growing investment opportunities in and around women's sports. Plus,
we hear from Robbie Starbuck, who's made news for his
anti DEI efforts, on his activism and his push to
advocate for values based investing. First up, though, President Trump
(00:33):
is in an escalating standoff with Harvard University after the
government froze two point two billion dollars in federal grants
for the school this week. The President went on to
threaten Harvard's tax exempt status and on Wednesday accused the
school of hiring radical left faculty and said it quote
can no longer be considered even a decent place for learning.
(00:54):
For more on this, we talked with former Harvard University
president and Wall Street Week contributor Larry Summers, who applauded
the university's effort to stand up to President Trump.
Speaker 3 (01:03):
David, I've been sharply critical of Harvard, and I continue
to be critical on many dimensions. Anti Semitism is still
not responded to strongly enough. There are still excesses of
identity politics. There's still concerns about intellectual diversity. That's all right,
(01:26):
But here's the thing. In America, you have to follow
the law and the approach the Trump administration is taking.
It is not at all consistent with the Civil Rights Act,
it is probably not consistent with Harvard's First Amendment rights.
Speaker 4 (01:46):
And so the right thing.
Speaker 3 (01:48):
To do was surely for Harvard to respond vigorously and strongly.
All the more because this is not an isolated thing
what's being done to Harvard. This is not a manifestation
of a particular concern about aspects of universities.
Speaker 4 (02:09):
This is a part of a broad.
Speaker 3 (02:11):
And sweeping effort to suppress institutions that challenge the presidential administration.
It's part of what's being done to law firms. It's
part of what's being done to countries. It's part of
what's being done to judges. It's part of what's being
done to legal residents.
Speaker 4 (02:32):
Of our country.
Speaker 3 (02:33):
And if an institution like Harvard cannot resist tyranny when
applied to it, with Harvard's fifty billion dollar endowment, with
all its network, with all its prestige.
Speaker 4 (02:49):
Then who can.
Speaker 3 (02:51):
So Harvard should not go interjecting itself into politics. But God,
when it is the object of an extra legal set
of orders and threats.
Speaker 4 (03:05):
I don't think it had any viable choice at all
but to respond strongly.
Speaker 2 (03:12):
Let's talk about that extra legal part of what you're saying,
at least defonic. The representative Republican from New York saying, listen,
colleges like Harvard don't have a right to money from
the government. They don't have a right to tax mayor money.
And if they don't have a right to tax mayor money,
can't the government put conditions on that money.
Speaker 3 (03:29):
First of all, the money is not going It's not
like the government's funding.
Speaker 4 (03:34):
The DEI office at Harvard.
Speaker 3 (03:37):
Not like the government is funding the student discipline mechanism
at Harvard. The government is funding researchers who are doing
vitally important research on diseases like diabetes and cancer, and
als show what sense does it make to cut their
(03:59):
funding off off because somebody doesn't like what the associate
Dean of students did in a student discipline case. And
what remit does the government have to set as a
condition the composition which beliefs are valued, in which beliefs
(04:21):
are not valued in the Harvard Sociology department. That's not
the way free speech works are in.
Speaker 4 (04:32):
A free society.
Speaker 3 (04:34):
And this is supposed to be done the power of
the purse. Remember by Congress. It is not the prerogative
of the executive branch with three days notice, with no hearing,
no judicial review, no transparent notification to Congress is mandated
(04:59):
by statute to simply indiscriminately start cutting off previously promised
and committed funds because it has a disagreement over an
issue with the university.
Speaker 2 (05:15):
So, Larry, give us a sense of what is a
practical matter this will mean if it continues through You
ran Harvard at one point. You know the budget, You
know that fifty three billion dollars in down there. What
will it do their operations?
Speaker 3 (05:26):
Look, they'll have to make some very important strategic choices.
I hope that the university will find ways even if
there is a cutoff for some interval of funds, to
maintain vitally important programs, to not cut back research. But potentially,
(05:51):
if the US government goes to war with our great universities,
it means a sharp production in the kind of scientific
progress that has caused the United States to be the
envy of the world and pull so far ahead of
Europe and Japan. It means the end of efforts at
(06:16):
cures to diseases like cancer and diabetes. It means a
substantial risk to our national security because one of our
great national assets has been our capacity for innovation, which
resides very heavily in our leading academic institutions. So a
(06:43):
short run problem, I think that can be managed painfully
until the judiciary steps in and does what's necessary. A
long run war against the universities that is going at
after what is our hugest asset. You know, if I
(07:04):
think about all the different sectors of the economy, it's
hard to think of one where we are as dominant
as in higher education. All the students from all over
the world, at least until this administration came, wanted to
come to the United States. A vast fraction of the
(07:25):
world's innovation takes place in American universities. If we put
at this put that at risk, we are making, I believe,
a very very grave mistake. And yes, these issues should
be pursued, But destroying medical research grants because you don't
(07:47):
think people have been disciplined severely enough.
Speaker 4 (07:50):
It really doesn't make any sense, Laria.
Speaker 2 (07:52):
I wonder if there's cautionary tail here that maybe the
higher education system has become too intertwined with the government,
that's why they're so dependent upon them.
Speaker 3 (08:00):
There may be questions that can be asked of that kind,
But gosh, if the government is not prepared to fund
basic research, the research which ultimately will make possible the
development of new products, I think.
Speaker 4 (08:19):
We have a problem.
Speaker 3 (08:21):
If the government is not prepared to fund scholarships that
promote opportunity for our poor students, who are very able
and generate social mobility, I think we have a problem.
I think what we need, frankly, is a more mature
relationship between the government, the broader society, and the universities. Yes,
(08:45):
the universities have made some very serious mistakes, and yes
they should be pressured and pressured with escalating strength to
change that. I didn't even have an objection to the
way in which the Biden administration opened civil rights cases
(09:07):
with respect to a variety of universities and anti semitism.
But that's a very different thing than the kind of
persecution that is involved here, and this escalated David in.
Speaker 4 (09:23):
A profoundly troubling way.
Speaker 3 (09:26):
When the President of the United States endeavored by social
media to engage in an individual specific tax matter, namely
Harvard's five oh one C three deduction, and to suggest
that it be decided on the basis of a political ground.
Speaker 4 (09:50):
That's the kind of interference with the irash that.
Speaker 3 (09:57):
It's a sacred duty of the Treasure Secretary to resist.
It is exactly what was alleged to have happened six
levels down, and many people got very upset in connection
with the so called Lois Learner case involving five O
(10:19):
one C three deductions and conservative groups. If there was
punishment of conservative groups, people were absolutely right to have
been hugely outraged about it during the Biden administration. I
don't know anything about the merits of the case, but
for the President of the United States to be calling
for changing the tax status of his adversaries, this is
(10:44):
new and I believe authoritarian and a real question about
our democracy.
Speaker 2 (10:53):
Larry, one last question, since we're on taxes and this
is tax week, Basically, what do you make of the
acts that the Trump adminstration is taking with respect to
the IRS.
Speaker 3 (11:03):
I think it's possible that the Treasury Secretary and his
senior colleagues are being seriously delinquent in their duty. I
look at tens of thousands of people being pushed out
of the IRS, even as tax compliance is a massive problem,
(11:24):
and hear so many stories have increased tax seeing as
a consequence. I see the elevation of a person with
no experience, no administrative or information technology experience, to be
the contemporary commissioner of the IRS, chosen on the basis
(11:46):
of political loyalty to the Trump enterprise. I look at
what are probably the extra lawful agreements entered into without
even speaking to people at the IRS, with respec to
information sharing and immigration. I look at the president's involvement
(12:07):
in specific cases, and I see the most important line
that I thought I was supposed to defend when I
was Treasury Secretary, a political tax enforcement, neutral, professional tax enforcement,
(12:28):
not driven by politics. And I see that line being
crossed with the Treasury Department cheering it on, and it
makes me both very sad and very angry.
Speaker 2 (12:44):
That's former Treasury Secretary and former Harvard president Larry Summers
coming up on Wall Street Week. Will the money follow
the momentum of women's sports? I'm David Weston, and this
is Bloomberg. This is a story about perseverance and the
women who are laying the foundation for what looks to
(13:05):
be a huge investment opportunity women's sports, where two of
the fastest growing are the WNBA and the National Women's
Soccer League.
Speaker 5 (13:20):
I think when you're looking at the women's sports space,
specifically in the last five years, what you're seeing in
the surge of growth really begins with consumers.
Speaker 6 (13:29):
It wasn't really until the last five years that women's
sports has had as much ability to be broadcast than
ever before.
Speaker 7 (13:37):
You're finally putting this product in the right spotlight, and
it is exploding in popularity.
Speaker 2 (13:44):
From tennis to volleyball, to soccer to basketball. Women are
bringing it both on and off the courts and the pitches,
with women's sports sponsorships attracting over a billion dollars and
total team valuations predicted to increase from two point six
billion dollars in twenty twenty three to four point three
(14:04):
billion dollars in the next three years.
Speaker 8 (14:06):
Number one limit.
Speaker 2 (14:10):
There is no question that women are fueling fandoms across stadiums,
fields and arenas, but is it sustainable.
Speaker 6 (14:18):
Little by little we've been able to see huge increases
in viewership and investment. With that comes the investment that
we're now seeing today, where people are really seeing more viewership,
their form, more attendance, their for more sponsorship, their formre
merchandise being sold, and that all leads to more external
dollars coming into the ecosystem saying, I believe that this
(14:38):
is an economy that we can support and that also
will have great returns.
Speaker 2 (14:43):
More fair Level is the executive vice president of Wasserman's
The Collective, a women focused global advisory business whose mission
is to drive investment in women's professional sports.
Speaker 6 (15:00):
The exciting part right now about women's sports is that
we're seeing similar types of investors in women's sports, which
means that women's sports has reached a point where true
capital partners are coming in looking at how can they
invest in this Nason economy.
Speaker 2 (15:16):
Women's sports might still be new on the scene, but
they're growing fast. WNBA attendance almost doubled from twenty twenty
three to twenty twenty four, and in women's soccer, the
twenty twenty four final alone drew nearly a million viewers,
nearly twice the audience as its men's counterpart, and the
money is following the eyeballs, as media writes for the
(15:39):
NWSL jumped from one point five million dollars to sixty
million dollars in the most recent deal. What it's given
the numbers, it's no surprise that investors are paying attention,
leading Laval to work with RBC to produce a study
on the investment opportunity these women's sport provide.
Speaker 6 (16:02):
We started this particular study with RBC, which is our
second study with them earlier in twenty twenty four, really
wanted to look at the trends that we were seeing
about how much money was starting to come into From
an investment perspective, we were seeing an enormous amount of
private equity coming in different venture capital groups, individual family offices,
driving some real dollars into women's teams and leagues, and
(16:25):
so we wanted to stop and think about from an
RBC wealth investor perspective, how these teams and leagues would
prove to be really good investment for them. And so
we set out to look at this specifically through NWSL
and WNBA because they are the most mature leagues in
the United States, and really looked at very specific variables,
(16:45):
particularly the revenue drivers.
Speaker 7 (16:48):
It's amazing to me that we've reached a point where
this younger generation, this is their normal. They're normal is
that female athletes are able to play in a stadium
like this, sold out with incredible amount of fans.
Speaker 2 (17:00):
Chris and Angie Long are among those who have become investors,
leading the group that bought the NWSLS Kansas City Current give.
Speaker 9 (17:09):
A full panoramic view. As more and more opportunities to
watch women's sports have arisen, You've naturally now seen this
massive growth and popularity because at the end of the day,
it's all about the product.
Speaker 4 (17:24):
On the field. When you have a product that's.
Speaker 9 (17:26):
As fantastic as women's sports, there's no doubt it's going
to be successful.
Speaker 7 (17:32):
We have been big sports fans. We actually were season
ticket holders to a bi professional women's team that was
in Kansas City, and I think our experience in twenty
nineteen being in Paris that the Women's World Cup really
was enlightening to see the opportunity from an investment side,
(17:53):
especially in light of the tremendous amount of global growth
in the women's game.
Speaker 2 (17:59):
In building their friends in Kansas City, the Lungs are
focused on their brand.
Speaker 9 (18:03):
One of the leading jerseys sales.
Speaker 2 (18:05):
And one of the things that has limited the growth
of women's professional sports franchises a dedicated place to practice
and play.
Speaker 7 (18:13):
This whole space is the Can't State Current. I think
that alone is a big differentiator because most other women's
teams are playing in someone else's stadium, so they're relegated
to a smaller space that might be more akin to
a visitor's locker room.
Speaker 10 (18:30):
I mean.
Speaker 7 (18:30):
One of the things that is harder to put a
value on, but incredibly important is brand recognition. The first
year that we had a team, it was a little
bit like, oh, did you know there's a women's professional
team in Kansas City.
Speaker 8 (18:42):
Now to the point.
Speaker 7 (18:44):
Where we are now where if we go somewhere and
travel outside the country, people say, oh, Kansas City, isn't
that the place that built the stadium for the women's team,
And the first thing you see when you drive into
this city is this stadium. There's not a person in
Kansas City, the Midwest and a lot of the country
that doesn't know about the Kansas City Current and the
(19:05):
state and they play.
Speaker 9 (19:07):
I think from a revenue perspective, I'm unaware of another
women's professional sports team globally that's done as much revenue
as we did this past year, which by the way,
is only our fourth season in operation. So from a
financial success standpoint, I think that speaks volumes.
Speaker 7 (19:29):
From a revenue growth perspective, we're doing fantastic. I think
it is north of a twenty million dollars swing in revenue.
Speaker 8 (19:41):
Being in your own facilities.
Speaker 7 (19:43):
From a asset appreciation perspective, we're doing fantastic.
Speaker 9 (19:50):
You look at what you can do in women's sports
today and the multiple invested capital versus the risk taken,
it's out of lack. It's absolutely in the investor's favor,
and I think that's part of the reason you're seeing
a lot more capital pour in, including private equity firms
and these new sports funds and all the things that
(20:11):
are happening, I think are due to the fact people
are realizing, Wow, if I'm going to take an ill
liquid asset investment like a sports team, I should get
compensated for it. And there's no better game in town
than what we're seeing on women's side.
Speaker 2 (20:26):
But there is another league taking women's sports to the
next level, the WNBA. Since Caitlin Clark emerged as a
budding superstar at the University of Iowa, Women's basketball has skyrocketed,
garnering the league more fans and opening up new markets.
Speaker 5 (20:44):
We are the first expansion team since two thousand and eight.
The last was Atlanta and then following us, we have
Portland in Toronto next year. So growth of WNBA has
been a long time coming and it's taken many years
to get here. This building has actually always been here
for the State Warriors, and now it's our Valkyrie's Performance Center.
So this is the area that you know the championships
(21:06):
were won before Chase Center was Bill Steph Curry is
in Steph Curry. Yeah, small name, right, and now we've
had an opportunity to make it our own.
Speaker 2 (21:14):
Jess Smith was the head of revenue for the NWSL's
Angels City Football Club, where she introduced new sponsorship models
and broke records in attendance. She is now the president
of the WNBA's Golden State Valkyries, the first expansion team
in seventeen years.
Speaker 5 (21:32):
When you look back during COVID, the WNBA actually got
together and played. They were the first league to do this.
It was also a really key moment to where consumers
were sitting at home on their couch looking for entertainment
and tuning in and really taking note of these incredible athletes,
really taking note of what they were standing for when
it came to social justice.
Speaker 8 (21:50):
And there was an.
Speaker 5 (21:51):
Unlock that began to happen with consumers and women's sports.
Speaker 8 (21:54):
So as consumers.
Speaker 5 (21:55):
Began to unlock giving, those ratings began to unlock by merchandise,
buying tickets and understanding that their dollars in time and
interest was driving the growth of the w media listened, right,
teams listened, leagues listened, and more investment began to come in.
And those consumers have really really rewarded everyone in that circle.
Speaker 8 (22:16):
That is equated to the growth.
Speaker 2 (22:18):
When we talk about growth, how do you measure it?
What are the metrics you pay attention to?
Speaker 5 (22:23):
There's two things. One is money and revenue, right, are
your revenue lines growing? Are you investing in the right
way to make sure that those are growing exponentially? And
two is fandom? How many people are coming into your
ecosystem through purchases but also followship on social media or
TV ratings, and so if you're looking at both of those,
the growth is very significant. But we have a close
(22:44):
eye on both every single day.
Speaker 2 (22:47):
As fast as women's professional sports are growing, they still
lag behind their male counterparts, at least for the most part.
Where the NBA Playoffs averaged four point five million TV
viewers last year, the WNBA had one point one million.
Twenty two point five million fans attended NBA games in person,
where the WNBA had two point four million, But the
(23:09):
gap is closing. Viewership numbers were up one hundred and
thirty nine percent for the women last year, but down
twelve percent for the men. You have a foundation in
both men's and women's sports from your experience, what's different
about the two.
Speaker 5 (23:25):
That's a really good question. I don't know if I've
been asked that way before. I would say the assumptions
of things in women's sports, It's been assumed that when
you create a product, well, you better not lose any money.
And it's just interesting the standard that has existed there.
Before I joined the Angel City, I was in certain
rooms where organizations would think about should we get a
(23:46):
women's team, should we explore this? And what was really
interesting about the mindset there was that it was the
conversation always came back to, while if we sold four
thousand tickets, maybe we wouldn't lose money instead of what
would it take to sell this out? That advantageous opportunity
to build a product and build a business and seek
revenue and be relentless about it seemed to be lacking
(24:07):
from my personal experience when having the ability to kind
of compare it to and think of the rooms that
I was in at Angel City. What was beautiful about
that experience was we had so many people from outside
of sport really using sport as an opportunity to create
a better tomorrow, but wanted to build a sports product
because it.
Speaker 8 (24:22):
Was an untapped opportunity.
Speaker 5 (24:24):
How do we create the most robust partnership, portfolio and assets,
how do we have the best content? And then you
saw the market respond. And now you've seen that effect
globally and certainly within the different leagues and teams. But
that's only just getting started.
Speaker 6 (24:40):
Only in the last five years have we been able
to see more games online, more clanging of the drum
for more viewership of all of these sports through both
social media and through these athletes just having a bigger
platform to say hey, come and watch us.
Speaker 8 (24:53):
Hey, if you you fans, it's Caitlyn Clark. I can't
wait to get to Indianapolis. I know you guys are excited.
Speaker 2 (24:58):
I am so go fever.
Speaker 5 (25:00):
There's often been so many misconceptions about audience in women's sports.
Speaker 3 (25:04):
So long.
Speaker 5 (25:05):
People have said an MBA fan is a WNBA fan,
And what we know about our consumers is that it
really is for everyone. I don't know if you've seen
the T shirts that say everyone watches women's sports, and
that statement is so powerful because it's true. The audience
is actually pretty much fifty percent men and women. It's
not a women's product for women. This is an incredible
product for everybody.
Speaker 2 (25:27):
Coming up sports as an investment class. It's driven in
part by the rapid growth of women's professional soccer and basketball.
That's what we turn next on Wall Street Week. If
the story of women's sports is one of dramatic growth,
it comes against the backdrop of sports overall growing into
(25:47):
a major asset class that has become an important alternative
investment for many portfolios.
Speaker 8 (25:58):
The rate of change has been pretty incredible.
Speaker 2 (26:01):
Nicole Pullen Ross lead Sports and Entertainment Solutions in Private
Wealth for Golden Sachs.
Speaker 11 (26:08):
Whether it is the growth in women's basketball starting from
college through the WNBA, or whether it's the valuations that
we're seeing across various leagues, or whether there's the viewership
that we're seeing, all of those things have converged in
a way that has led our clients to think, I
want to have exposure. I want to participate in this growth,
(26:31):
both from a passion perspective but also from a profitability perspective.
Speaker 2 (26:36):
As big as investing in sports is today, it wasn't
always that way. It grew out of agents representing athletes
and the related businesses that grew around them. George Pine
was one of those at the iconic IMG and watch
the private equity business grow around it.
Speaker 1 (26:53):
When you kind of take a step back and you
look at sports, it's primarily been run by governing body
and families, and they were very conservative in the application
of capital and the use of capital, and so therefore
outside sources of the capital didn't see this as a
viable entry point. But as time has gone by and
(27:13):
the meteorites have increased in sports and the audience and
the abidity of sports of increase, so has the value
of the teams. So is the value of the industry,
and so has the opportunities within the sport.
Speaker 12 (27:26):
Early in my career I was involved in one of
the sort of archetypal sports businesses, IMG Worldwide, my mentor
Ted Forceman, acquired in the early part of the art.
Speaker 2 (27:39):
Josh Empson is another IMG alone. He is now the
new co head of Sports at investment and advisory firm
Sixth Street, owner and investor in sports teams such as
FC Barcelona, Real Madrid and the San Antonio Spurs.
Speaker 12 (27:54):
And the fascinating thing about the history of IMG is
that the founder, Mark McCormick, was effectively the financial advisor
for Arnold Palmer and then Jack Nicholas, and as he
looked at this, he realized that Palmer and Nicholas were
the value, not the league, not the tour that was
organizing them. And McCormick realized and built that entire business,
(28:17):
which became a multi billion dollar business, on the idea
that they could be their own brand, they could bring
the unique value to events, and I think that actually
allowed in some ways gender parity at an earlier stage.
And I think a lot of that is about the
sponsorship ecosystem, right that they didn't have to win just
on the court for the purse, you could find someone
(28:39):
whoever was the charismatic number one in the world in
either sport, could command a global audience for the period
of their ascendancy and monetize it.
Speaker 2 (28:51):
Sports and investing in sports have come a long way
from the days of representing Arnold Palmer and Jack Nicholas
in their size and scope geographic scope. Yield Street estimates
the sports universe to be a five hundred billion dollar
market worldwide, with revenue coming from media rights, ticket sales, licensing,
(29:11):
and sponsorships.
Speaker 1 (29:13):
So sports aggregates millions of people in a way that
nothing else does.
Speaker 10 (29:17):
As a Super Bowl at one hundred and twenty.
Speaker 1 (29:19):
Six million viewers, it's very few things in America that
bring one hundred and twenty six million people together. And
then you have people that are passionate like Philadelphia Eagles fan.
Though you have big audiences in a world that's fragmenting,
that zero in around something that they love and have
a passion for. That's what makes sports unique. And then
being more global. So for all of those reasons, sports
(29:42):
is becoming more and more attractive. And it wasn't that
complex or sophisticated twenty years ago.
Speaker 10 (29:49):
In terms of capital markets.
Speaker 2 (29:51):
It's bigger and broader. But what is it that investors
are looking for when they seek to own a piece
of the sports pie ranges?
Speaker 11 (30:00):
I would say some of our clients who are long
term investors in the space have been investing as a
private family for generations, and those families have really leaned
in mostly around passion, and we're seeing them look not
only to the sport that they may have started with,
(30:23):
but look at multiple sports, potentially in the same city
or potentially across the world.
Speaker 8 (30:29):
And we see new investors.
Speaker 11 (30:30):
Who are trying to put a toe in the water,
and they're doing that through some of the many growing
number of private equity and institutional investors who have exposure
to the space, or they're doing it through a minority interest.
Speaker 2 (30:47):
It seems to me that owning a team might be
a very different investment from having a minority interest in
a team. Are they really different investment propositions?
Speaker 8 (30:56):
They cost a lot more, that's for sure.
Speaker 11 (30:58):
The average NFL team, for example, when the CBA was signed,
was worth one point three billion or something like that. Today,
the average team is worth more than nearly one and
a half times that value. And so although there's been
a lot of growth of billionaires.
Speaker 8 (31:13):
That's a much smaller list.
Speaker 11 (31:14):
Today than it was twenty years ago, and so when
individuals are coming together to invest in this space, they're
very much doing it in partnership. What they get for
that investment very significantly. It could be great seats, good parking,
really increased engagement with the team. But in many cases
(31:36):
it's not control, it's not the ability to direct where
the team is going. So there's a very big difference
between majority shares and minority shares.
Speaker 2 (31:47):
And it's not just team ownership in whole or in
part that provides sports businesses to invest in. A host
of ancillary businesses have grown up around teams that can
provide attractive investment opportunities, which is at the center of
Pine's private equity business.
Speaker 1 (32:04):
There are different ways you can look at sports today.
So the traditional has been investing in teams or leagues,
which are very safe investments, typically ill liquid and the
longer holds, but have a certain return threshold. So we've
invested in data companies. We've invested in webs apps and streamings.
I own a company in Amsterdam that lights the pitch
(32:26):
and creates a software so we can predict on the
pitch or the field, whether the moss is going to grow,
what the conditions are, and you know, as the media
rights go up and the team valuations the pitch is
the quality.
Speaker 10 (32:37):
Of your product and the safety of product.
Speaker 11 (32:40):
I think the revenue landscape and the diversity of revenue
has certainly grown over the past several years. You talk
to team owners about having the best experience for their
clients and their players, and then there's everything around the
stadium or the arena. The ability for vesters to participate
(33:02):
in the revenue in the surrounding area has certainly been important.
Speaker 8 (33:07):
We have seen a community impact.
Speaker 11 (33:09):
A lot of the owners with whom we work talk
about their investment and their team as a community investment,
a civic investment because they are prominent players in the community.
Speaker 2 (33:20):
But given the dramatic expansion and diversification in the sports business,
is there a danger of dilution? Typically when I think
about value, I think about supply and demand. But it
seems like there is an unending new supply of sports.
How can it be that the value keeps going up
when there's more and more supply.
Speaker 1 (33:38):
People are thirsting for great storylines, right, and of course
there are sports Formula One think about UFC didn't exist
almost twenty years ago.
Speaker 10 (33:47):
Look how popular that is today.
Speaker 1 (33:48):
So there are sports that can break in in ways
that nobody have an envisioned.
Speaker 10 (33:53):
And of course women's sports.
Speaker 1 (33:54):
As attraction today that it's never had before.
Speaker 2 (33:58):
Is expansion your enemy as an investor?
Speaker 12 (34:02):
I think expansion is your enemy as an investor, but
it's really more your opportunity. And that's because every time
you expand, you light up fandom in a new market.
Was Las Vegas a big hockey market before the Golden Knights?
Speaker 4 (34:17):
Probably not.
Speaker 12 (34:18):
Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 10 (34:23):
Yeah.
Speaker 4 (34:23):
If you look at the historical.
Speaker 12 (34:25):
Returns in sports, they've been surprisingly good, and some of
that's been driven by scarcity, but not necessarily scarcity of
franchises because all the leagues have expanded through this, but
just a scarcity of other forms of content that are
as engaging and energizing to such large fan bases.
Speaker 2 (34:47):
Sports competes with every other investment opportunity, and its status
as an alternative investment doesn't stop it from keeping up
with the main asset classes. Sports franchise valuations have outpaced
the s and P five hundreds returns, especially in the
past decade. But sport is a very different beast in
a very different jungle. As we look at sports as
(35:09):
an asset class, how does it differ from other alternative
asset investing.
Speaker 5 (35:14):
Nobody's ever asked me that.
Speaker 10 (35:16):
It's a great question.
Speaker 12 (35:17):
I think one thing that's really different about sports as
an asset class versus other forms of alternatives is the
multiple layers of partnership. So when you invest in a
sports franchise in the US, you have a partner who's
going to be the control owner, and that's a person
who has needs and ambitions that you're trying to support.
(35:41):
You also exist within the framework of a league that
has very particular rules and has its objectives and its goals.
And then beyond that, and most importantly, you have this
universe of fans and they care passionately about their team,
(36:02):
and they are stakeholders in that equation, just the way
the league and the owner is. And there is that
implicit compact that if you're coming in, you're going to
make this better for them as well as for the league.
Speaker 2 (36:14):
And the owners.
Speaker 12 (36:15):
And it's interesting to be in a dynamic where you
have those multiple layers of stakeholders and you're trying to
deliver value as an investor for all levels of that,
and that feels pretty different from other forms of alternative investment.
It's pretty satisfying when you get it right. But there's
something special about investing in something that you can watch
(36:36):
every Sunday, that you can come together with your family
and sort of share what you're trying to do.
Speaker 2 (36:44):
Alternative investing may be different when it's not your sports team.
To what extent are your investors who are looking for
psychic benefits in addition to monetary benefits.
Speaker 11 (36:54):
Yeah, it's an interesting part of the equation, right, So
there is a joy element to the return that you
can't necessarily quantify, and what we ask our clients to
do is not just focus on the joy part of
the return, but to think about the overall picture. And
for some clients that joy component is going to be
(37:17):
at a higher on the list of things that are
important in the return and for others. For institutional investors,
it's lower on the list. And so making sure that
we're helping our clients think through how to set return
expectations for themselves in terms of liquidity, etc. Is something
(37:38):
that we feel is our opportunity to do to help
them navigate the space. Alternatives in general are an area
of significant interest for our clients, and the type of
exposure that they're interested in is quite broad, and so
this is only a piece of that for most of
our clients. For some they really want to live and
(38:00):
look at this as a primer investment that.
Speaker 2 (38:03):
Does it for us. Here at Wall Street Week, I'm
David Weston. This is Bloomberg. See you next week for
more stories of capitalism.
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:13):
I'm David Weston. Welcome to Wall Street Week on Bloomberg Radio.
Coming up on the program, we take a look at
the growing investment opportunities in and around women's sports. Plus,
we hear from Robbie Starbuck, who's made news for his
anti DEI efforts, on his activism and his push to
advocate for values based investing. First up, though, President Trump
(00:33):
is in an escalating standoff with Harvard University after the
government froze two point two billion dollars in federal grants
for the school this week. The President went on to
threaten Harvard's tax exempt status and on Wednesday accused the
school of hiring radical left faculty and said it quote
can no longer be considered even a decent place for learning.
(00:54):
For more on this, we talked with former Harvard University
president and Wall Street Week contributor Larry Summers, who applauded
the university's effort to stand up to President Trump.
Speaker 3 (01:03):
David, I've been sharply critical of Harvard, and I continue
to be critical on many dimensions. Anti Semitism is still
not responded to strongly enough. There are still excesses of
identity politics. There's still concerns about intellectual diversity. That's all right,
(01:26):
But here's the thing. In America, you have to follow
the law and the approach the Trump administration is taking.
It is not at all consistent with the Civil Rights Act,
it is probably not consistent with Harvard's First Amendment rights.
Speaker 4 (01:46):
And so the right thing.
Speaker 3 (01:48):
To do was surely for Harvard to respond vigorously and strongly.
All the more because this is not an isolated thing
what's being done to Harvard. This is not a manifestation
of a particular concern about aspects of universities.
Speaker 4 (02:09):
This is a part of a broad.
Speaker 3 (02:11):
And sweeping effort to suppress institutions that challenge the presidential administration.
It's part of what's being done to law firms. It's
part of what's being done to countries. It's part of
what's being done to judges. It's part of what's being
done to legal residents.
Speaker 4 (02:32):
Of our country.
Speaker 3 (02:33):
And if an institution like Harvard cannot resist tyranny when
applied to it, with Harvard's fifty billion dollar endowment, with
all its network, with all its prestige.
Speaker 4 (02:49):
Then who can.
Speaker 3 (02:51):
So Harvard should not go interjecting itself into politics. But God,
when it is the object of an extra legal set
of orders and threats.
Speaker 4 (03:05):
I don't think it had any viable choice at all
but to respond strongly.
Speaker 2 (03:12):
Let's talk about that extra legal part of what you're saying,
at least defonic. The representative Republican from New York saying, listen,
colleges like Harvard don't have a right to money from
the government. They don't have a right to tax mayor money.
And if they don't have a right to tax mayor money,
can't the government put conditions on that money.
Speaker 3 (03:29):
First of all, the money is not going It's not
like the government's funding.
Speaker 4 (03:34):
The DEI office at Harvard.
Speaker 3 (03:37):
Not like the government is funding the student discipline mechanism
at Harvard. The government is funding researchers who are doing
vitally important research on diseases like diabetes and cancer, and
als show what sense does it make to cut their
(03:59):
funding off off because somebody doesn't like what the associate
Dean of students did in a student discipline case. And
what remit does the government have to set as a
condition the composition which beliefs are valued, in which beliefs
(04:21):
are not valued in the Harvard Sociology department. That's not
the way free speech works are in.
Speaker 4 (04:32):
A free society.
Speaker 3 (04:34):
And this is supposed to be done the power of
the purse. Remember by Congress. It is not the prerogative
of the executive branch with three days notice, with no hearing,
no judicial review, no transparent notification to Congress is mandated
(04:59):
by statute to simply indiscriminately start cutting off previously promised
and committed funds because it has a disagreement over an
issue with the university.
Speaker 2 (05:15):
So, Larry, give us a sense of what is a
practical matter this will mean if it continues through You
ran Harvard at one point. You know the budget, You
know that fifty three billion dollars in down there. What
will it do their operations?
Speaker 3 (05:26):
Look, they'll have to make some very important strategic choices.
I hope that the university will find ways even if
there is a cutoff for some interval of funds, to
maintain vitally important programs, to not cut back research. But potentially,
(05:51):
if the US government goes to war with our great universities,
it means a sharp production in the kind of scientific
progress that has caused the United States to be the
envy of the world and pull so far ahead of
Europe and Japan. It means the end of efforts at
(06:16):
cures to diseases like cancer and diabetes. It means a
substantial risk to our national security because one of our
great national assets has been our capacity for innovation, which
resides very heavily in our leading academic institutions. So a
(06:43):
short run problem, I think that can be managed painfully
until the judiciary steps in and does what's necessary. A
long run war against the universities that is going at
after what is our hugest asset. You know, if I
(07:04):
think about all the different sectors of the economy, it's
hard to think of one where we are as dominant
as in higher education. All the students from all over
the world, at least until this administration came, wanted to
come to the United States. A vast fraction of the
(07:25):
world's innovation takes place in American universities. If we put
at this put that at risk, we are making, I believe,
a very very grave mistake. And yes, these issues should
be pursued, But destroying medical research grants because you don't
(07:47):
think people have been disciplined severely enough.
Speaker 4 (07:50):
It really doesn't make any sense, Laria.
Speaker 2 (07:52):
I wonder if there's cautionary tail here that maybe the
higher education system has become too intertwined with the government,
that's why they're so dependent upon them.
Speaker 3 (08:00):
There may be questions that can be asked of that kind,
But gosh, if the government is not prepared to fund
basic research, the research which ultimately will make possible the
development of new products, I think.
Speaker 4 (08:19):
We have a problem.
Speaker 3 (08:21):
If the government is not prepared to fund scholarships that
promote opportunity for our poor students, who are very able
and generate social mobility, I think we have a problem.
I think what we need, frankly, is a more mature
relationship between the government, the broader society, and the universities. Yes,
(08:45):
the universities have made some very serious mistakes, and yes
they should be pressured and pressured with escalating strength to
change that. I didn't even have an objection to the
way in which the Biden administration opened civil rights cases
(09:07):
with respect to a variety of universities and anti semitism.
But that's a very different thing than the kind of
persecution that is involved here, and this escalated David in.
Speaker 4 (09:23):
A profoundly troubling way.
Speaker 3 (09:26):
When the President of the United States endeavored by social
media to engage in an individual specific tax matter, namely
Harvard's five oh one C three deduction, and to suggest
that it be decided on the basis of a political ground.
Speaker 4 (09:50):
That's the kind of interference with the irash that.
Speaker 3 (09:57):
It's a sacred duty of the Treasure Secretary to resist.
It is exactly what was alleged to have happened six
levels down, and many people got very upset in connection
with the so called Lois Learner case involving five O
(10:19):
one C three deductions and conservative groups. If there was
punishment of conservative groups, people were absolutely right to have
been hugely outraged about it during the Biden administration. I
don't know anything about the merits of the case, but
for the President of the United States to be calling
for changing the tax status of his adversaries, this is
(10:44):
new and I believe authoritarian and a real question about
our democracy.
Speaker 2 (10:53):
Larry, one last question, since we're on taxes and this
is tax week, Basically, what do you make of the
acts that the Trump adminstration is taking with respect to
the IRS.
Speaker 3 (11:03):
I think it's possible that the Treasury Secretary and his
senior colleagues are being seriously delinquent in their duty. I
look at tens of thousands of people being pushed out
of the IRS, even as tax compliance is a massive problem,
(11:24):
and hear so many stories have increased tax seeing as
a consequence. I see the elevation of a person with
no experience, no administrative or information technology experience, to be
the contemporary commissioner of the IRS, chosen on the basis
(11:46):
of political loyalty to the Trump enterprise. I look at
what are probably the extra lawful agreements entered into without
even speaking to people at the IRS, with respec to
information sharing and immigration. I look at the president's involvement
(12:07):
in specific cases, and I see the most important line
that I thought I was supposed to defend when I
was Treasury Secretary, a political tax enforcement, neutral, professional tax enforcement,
(12:28):
not driven by politics. And I see that line being
crossed with the Treasury Department cheering it on, and it
makes me both very sad and very angry.
Speaker 2 (12:44):
That's former Treasury Secretary and former Harvard president Larry Summers
coming up on Wall Street Week. Will the money follow
the momentum of women's sports? I'm David Weston, and this
is Bloomberg. This is a story about perseverance and the
women who are laying the foundation for what looks to
(13:05):
be a huge investment opportunity women's sports, where two of
the fastest growing are the WNBA and the National Women's
Soccer League.
Speaker 5 (13:20):
I think when you're looking at the women's sports space,
specifically in the last five years, what you're seeing in
the surge of growth really begins with consumers.
Speaker 6 (13:29):
It wasn't really until the last five years that women's
sports has had as much ability to be broadcast than
ever before.
Speaker 7 (13:37):
You're finally putting this product in the right spotlight, and
it is exploding in popularity.
Speaker 2 (13:44):
From tennis to volleyball, to soccer to basketball. Women are
bringing it both on and off the courts and the pitches,
with women's sports sponsorships attracting over a billion dollars and
total team valuations predicted to increase from two point six
billion dollars in twenty twenty three to four point three
(14:04):
billion dollars in the next three years.
Speaker 8 (14:06):
Number one limit.
Speaker 2 (14:10):
There is no question that women are fueling fandoms across stadiums,
fields and arenas, but is it sustainable.
Speaker 6 (14:18):
Little by little we've been able to see huge increases
in viewership and investment. With that comes the investment that
we're now seeing today, where people are really seeing more viewership,
their form, more attendance, their for more sponsorship, their formre
merchandise being sold, and that all leads to more external
dollars coming into the ecosystem saying, I believe that this
(14:38):
is an economy that we can support and that also
will have great returns.
Speaker 2 (14:43):
More fair Level is the executive vice president of Wasserman's
The Collective, a women focused global advisory business whose mission
is to drive investment in women's professional sports.
Speaker 6 (15:00):
The exciting part right now about women's sports is that
we're seeing similar types of investors in women's sports, which
means that women's sports has reached a point where true
capital partners are coming in looking at how can they
invest in this Nason economy.
Speaker 2 (15:16):
Women's sports might still be new on the scene, but
they're growing fast. WNBA attendance almost doubled from twenty twenty
three to twenty twenty four, and in women's soccer, the
twenty twenty four final alone drew nearly a million viewers,
nearly twice the audience as its men's counterpart, and the
money is following the eyeballs, as media writes for the
(15:39):
NWSL jumped from one point five million dollars to sixty
million dollars in the most recent deal. What it's given
the numbers, it's no surprise that investors are paying attention,
leading Laval to work with RBC to produce a study
on the investment opportunity these women's sport provide.
Speaker 6 (16:02):
We started this particular study with RBC, which is our
second study with them earlier in twenty twenty four, really
wanted to look at the trends that we were seeing
about how much money was starting to come into From
an investment perspective, we were seeing an enormous amount of
private equity coming in different venture capital groups, individual family offices,
driving some real dollars into women's teams and leagues, and
(16:25):
so we wanted to stop and think about from an
RBC wealth investor perspective, how these teams and leagues would
prove to be really good investment for them. And so
we set out to look at this specifically through NWSL
and WNBA because they are the most mature leagues in
the United States, and really looked at very specific variables,
(16:45):
particularly the revenue drivers.
Speaker 7 (16:48):
It's amazing to me that we've reached a point where
this younger generation, this is their normal. They're normal is
that female athletes are able to play in a stadium
like this, sold out with incredible amount of fans.
Speaker 2 (17:00):
Chris and Angie Long are among those who have become investors,
leading the group that bought the NWSLS Kansas City Current give.
Speaker 9 (17:09):
A full panoramic view. As more and more opportunities to
watch women's sports have arisen, You've naturally now seen this
massive growth and popularity because at the end of the day,
it's all about the product.
Speaker 4 (17:24):
On the field. When you have a product that's.
Speaker 9 (17:26):
As fantastic as women's sports, there's no doubt it's going
to be successful.
Speaker 7 (17:32):
We have been big sports fans. We actually were season
ticket holders to a bi professional women's team that was
in Kansas City, and I think our experience in twenty
nineteen being in Paris that the Women's World Cup really
was enlightening to see the opportunity from an investment side,
(17:53):
especially in light of the tremendous amount of global growth
in the women's game.
Speaker 2 (17:59):
In building their friends in Kansas City, the Lungs are
focused on their brand.
Speaker 9 (18:03):
One of the leading jerseys sales.
Speaker 2 (18:05):
And one of the things that has limited the growth
of women's professional sports franchises a dedicated place to practice
and play.
Speaker 7 (18:13):
This whole space is the Can't State Current. I think
that alone is a big differentiator because most other women's
teams are playing in someone else's stadium, so they're relegated
to a smaller space that might be more akin to
a visitor's locker room.
Speaker 10 (18:30):
I mean.
Speaker 7 (18:30):
One of the things that is harder to put a
value on, but incredibly important is brand recognition. The first
year that we had a team, it was a little
bit like, oh, did you know there's a women's professional
team in Kansas City.
Speaker 8 (18:42):
Now to the point.
Speaker 7 (18:44):
Where we are now where if we go somewhere and
travel outside the country, people say, oh, Kansas City, isn't
that the place that built the stadium for the women's team,
And the first thing you see when you drive into
this city is this stadium. There's not a person in
Kansas City, the Midwest and a lot of the country
that doesn't know about the Kansas City Current and the
(19:05):
state and they play.
Speaker 9 (19:07):
I think from a revenue perspective, I'm unaware of another
women's professional sports team globally that's done as much revenue
as we did this past year, which by the way,
is only our fourth season in operation. So from a
financial success standpoint, I think that speaks volumes.
Speaker 7 (19:29):
From a revenue growth perspective, we're doing fantastic. I think
it is north of a twenty million dollars swing in revenue.
Speaker 8 (19:41):
Being in your own facilities.
Speaker 7 (19:43):
From a asset appreciation perspective, we're doing fantastic.
Speaker 9 (19:50):
You look at what you can do in women's sports
today and the multiple invested capital versus the risk taken,
it's out of lack. It's absolutely in the investor's favor,
and I think that's part of the reason you're seeing
a lot more capital pour in, including private equity firms
and these new sports funds and all the things that
(20:11):
are happening, I think are due to the fact people
are realizing, Wow, if I'm going to take an ill
liquid asset investment like a sports team, I should get
compensated for it. And there's no better game in town
than what we're seeing on women's side.
Speaker 2 (20:26):
But there is another league taking women's sports to the
next level, the WNBA. Since Caitlin Clark emerged as a
budding superstar at the University of Iowa, Women's basketball has skyrocketed,
garnering the league more fans and opening up new markets.
Speaker 5 (20:44):
We are the first expansion team since two thousand and eight.
The last was Atlanta and then following us, we have
Portland in Toronto next year. So growth of WNBA has
been a long time coming and it's taken many years
to get here. This building has actually always been here
for the State Warriors, and now it's our Valkyrie's Performance Center.
So this is the area that you know the championships
(21:06):
were won before Chase Center was Bill Steph Curry is
in Steph Curry. Yeah, small name, right, and now we've
had an opportunity to make it our own.
Speaker 2 (21:14):
Jess Smith was the head of revenue for the NWSL's
Angels City Football Club, where she introduced new sponsorship models
and broke records in attendance. She is now the president
of the WNBA's Golden State Valkyries, the first expansion team
in seventeen years.
Speaker 5 (21:32):
When you look back during COVID, the WNBA actually got
together and played. They were the first league to do this.
It was also a really key moment to where consumers
were sitting at home on their couch looking for entertainment
and tuning in and really taking note of these incredible athletes,
really taking note of what they were standing for when
it came to social justice.
Speaker 8 (21:50):
And there was an.
Speaker 5 (21:51):
Unlock that began to happen with consumers and women's sports.
Speaker 8 (21:54):
So as consumers.
Speaker 5 (21:55):
Began to unlock giving, those ratings began to unlock by merchandise,
buying tickets and understanding that their dollars in time and
interest was driving the growth of the w media listened, right,
teams listened, leagues listened, and more investment began to come in.
And those consumers have really really rewarded everyone in that circle.
Speaker 8 (22:16):
That is equated to the growth.
Speaker 2 (22:18):
When we talk about growth, how do you measure it?
What are the metrics you pay attention to?
Speaker 5 (22:23):
There's two things. One is money and revenue, right, are
your revenue lines growing? Are you investing in the right
way to make sure that those are growing exponentially? And
two is fandom? How many people are coming into your
ecosystem through purchases but also followship on social media or
TV ratings, and so if you're looking at both of those,
the growth is very significant. But we have a close
(22:44):
eye on both every single day.
Speaker 2 (22:47):
As fast as women's professional sports are growing, they still
lag behind their male counterparts, at least for the most part.
Where the NBA Playoffs averaged four point five million TV
viewers last year, the WNBA had one point one million.
Twenty two point five million fans attended NBA games in person,
where the WNBA had two point four million, But the
(23:09):
gap is closing. Viewership numbers were up one hundred and
thirty nine percent for the women last year, but down
twelve percent for the men. You have a foundation in
both men's and women's sports from your experience, what's different
about the two.
Speaker 5 (23:25):
That's a really good question. I don't know if I've
been asked that way before. I would say the assumptions
of things in women's sports, It's been assumed that when
you create a product, well, you better not lose any money.
And it's just interesting the standard that has existed there.
Before I joined the Angel City, I was in certain
rooms where organizations would think about should we get a
(23:46):
women's team, should we explore this? And what was really
interesting about the mindset there was that it was the
conversation always came back to, while if we sold four
thousand tickets, maybe we wouldn't lose money instead of what
would it take to sell this out? That advantageous opportunity
to build a product and build a business and seek
revenue and be relentless about it seemed to be lacking
(24:07):
from my personal experience when having the ability to kind
of compare it to and think of the rooms that
I was in at Angel City. What was beautiful about
that experience was we had so many people from outside
of sport really using sport as an opportunity to create
a better tomorrow, but wanted to build a sports product
because it.
Speaker 8 (24:22):
Was an untapped opportunity.
Speaker 5 (24:24):
How do we create the most robust partnership, portfolio and assets,
how do we have the best content? And then you
saw the market respond. And now you've seen that effect
globally and certainly within the different leagues and teams. But
that's only just getting started.
Speaker 6 (24:40):
Only in the last five years have we been able
to see more games online, more clanging of the drum
for more viewership of all of these sports through both
social media and through these athletes just having a bigger
platform to say hey, come and watch us.
Speaker 8 (24:53):
Hey, if you you fans, it's Caitlyn Clark. I can't
wait to get to Indianapolis. I know you guys are excited.
Speaker 2 (24:58):
I am so go fever.
Speaker 5 (25:00):
There's often been so many misconceptions about audience in women's sports.
Speaker 3 (25:04):
So long.
Speaker 5 (25:05):
People have said an MBA fan is a WNBA fan,
And what we know about our consumers is that it
really is for everyone. I don't know if you've seen
the T shirts that say everyone watches women's sports, and
that statement is so powerful because it's true. The audience
is actually pretty much fifty percent men and women. It's
not a women's product for women. This is an incredible
product for everybody.
Speaker 2 (25:27):
Coming up sports as an investment class. It's driven in
part by the rapid growth of women's professional soccer and basketball.
That's what we turn next on Wall Street Week. If
the story of women's sports is one of dramatic growth,
it comes against the backdrop of sports overall growing into
(25:47):
a major asset class that has become an important alternative
investment for many portfolios.
Speaker 8 (25:58):
The rate of change has been pretty incredible.
Speaker 2 (26:01):
Nicole Pullen Ross lead Sports and Entertainment Solutions in Private
Wealth for Golden Sachs.
Speaker 11 (26:08):
Whether it is the growth in women's basketball starting from
college through the WNBA, or whether it's the valuations that
we're seeing across various leagues, or whether there's the viewership
that we're seeing, all of those things have converged in
a way that has led our clients to think, I
want to have exposure. I want to participate in this growth,
(26:31):
both from a passion perspective but also from a profitability perspective.
Speaker 2 (26:36):
As big as investing in sports is today, it wasn't
always that way. It grew out of agents representing athletes
and the related businesses that grew around them. George Pine
was one of those at the iconic IMG and watch
the private equity business grow around it.
Speaker 1 (26:53):
When you kind of take a step back and you
look at sports, it's primarily been run by governing body
and families, and they were very conservative in the application
of capital and the use of capital, and so therefore
outside sources of the capital didn't see this as a
viable entry point. But as time has gone by and
(27:13):
the meteorites have increased in sports and the audience and
the abidity of sports of increase, so has the value
of the teams. So is the value of the industry,
and so has the opportunities within the sport.
Speaker 12 (27:26):
Early in my career I was involved in one of
the sort of archetypal sports businesses, IMG Worldwide, my mentor
Ted Forceman, acquired in the early part of the art.
Speaker 2 (27:39):
Josh Empson is another IMG alone. He is now the
new co head of Sports at investment and advisory firm
Sixth Street, owner and investor in sports teams such as
FC Barcelona, Real Madrid and the San Antonio Spurs.
Speaker 12 (27:54):
And the fascinating thing about the history of IMG is
that the founder, Mark McCormick, was effectively the financial advisor
for Arnold Palmer and then Jack Nicholas, and as he
looked at this, he realized that Palmer and Nicholas were
the value, not the league, not the tour that was
organizing them. And McCormick realized and built that entire business,
(28:17):
which became a multi billion dollar business, on the idea
that they could be their own brand, they could bring
the unique value to events, and I think that actually
allowed in some ways gender parity at an earlier stage.
And I think a lot of that is about the
sponsorship ecosystem, right that they didn't have to win just
on the court for the purse, you could find someone
(28:39):
whoever was the charismatic number one in the world in
either sport, could command a global audience for the period
of their ascendancy and monetize it.
Speaker 2 (28:51):
Sports and investing in sports have come a long way
from the days of representing Arnold Palmer and Jack Nicholas
in their size and scope geographic scope. Yield Street estimates
the sports universe to be a five hundred billion dollar
market worldwide, with revenue coming from media rights, ticket sales, licensing,
(29:11):
and sponsorships.
Speaker 1 (29:13):
So sports aggregates millions of people in a way that
nothing else does.
Speaker 10 (29:17):
As a Super Bowl at one hundred and twenty.
Speaker 1 (29:19):
Six million viewers, it's very few things in America that
bring one hundred and twenty six million people together. And
then you have people that are passionate like Philadelphia Eagles fan.
Though you have big audiences in a world that's fragmenting,
that zero in around something that they love and have
a passion for. That's what makes sports unique. And then
being more global. So for all of those reasons, sports
(29:42):
is becoming more and more attractive. And it wasn't that
complex or sophisticated twenty years ago.
Speaker 10 (29:49):
In terms of capital markets.
Speaker 2 (29:51):
It's bigger and broader. But what is it that investors
are looking for when they seek to own a piece
of the sports pie ranges?
Speaker 11 (30:00):
I would say some of our clients who are long
term investors in the space have been investing as a
private family for generations, and those families have really leaned
in mostly around passion, and we're seeing them look not
only to the sport that they may have started with,
(30:23):
but look at multiple sports, potentially in the same city
or potentially across the world.
Speaker 8 (30:29):
And we see new investors.
Speaker 11 (30:30):
Who are trying to put a toe in the water,
and they're doing that through some of the many growing
number of private equity and institutional investors who have exposure
to the space, or they're doing it through a minority interest.
Speaker 2 (30:47):
It seems to me that owning a team might be
a very different investment from having a minority interest in
a team. Are they really different investment propositions?
Speaker 8 (30:56):
They cost a lot more, that's for sure.
Speaker 11 (30:58):
The average NFL team, for example, when the CBA was signed,
was worth one point three billion or something like that. Today,
the average team is worth more than nearly one and
a half times that value. And so although there's been
a lot of growth of billionaires.
Speaker 8 (31:13):
That's a much smaller list.
Speaker 11 (31:14):
Today than it was twenty years ago, and so when
individuals are coming together to invest in this space, they're
very much doing it in partnership. What they get for
that investment very significantly. It could be great seats, good parking,
really increased engagement with the team. But in many cases
(31:36):
it's not control, it's not the ability to direct where
the team is going. So there's a very big difference
between majority shares and minority shares.
Speaker 2 (31:47):
And it's not just team ownership in whole or in
part that provides sports businesses to invest in. A host
of ancillary businesses have grown up around teams that can
provide attractive investment opportunities, which is at the center of
Pine's private equity business.
Speaker 1 (32:04):
There are different ways you can look at sports today.
So the traditional has been investing in teams or leagues,
which are very safe investments, typically ill liquid and the
longer holds, but have a certain return threshold. So we've
invested in data companies. We've invested in webs apps and streamings.
I own a company in Amsterdam that lights the pitch
(32:26):
and creates a software so we can predict on the
pitch or the field, whether the moss is going to grow,
what the conditions are, and you know, as the media
rights go up and the team valuations the pitch is
the quality.
Speaker 10 (32:37):
Of your product and the safety of product.
Speaker 11 (32:40):
I think the revenue landscape and the diversity of revenue
has certainly grown over the past several years. You talk
to team owners about having the best experience for their
clients and their players, and then there's everything around the
stadium or the arena. The ability for vesters to participate
(33:02):
in the revenue in the surrounding area has certainly been important.
Speaker 8 (33:07):
We have seen a community impact.
Speaker 11 (33:09):
A lot of the owners with whom we work talk
about their investment and their team as a community investment,
a civic investment because they are prominent players in the community.
Speaker 2 (33:20):
But given the dramatic expansion and diversification in the sports business,
is there a danger of dilution? Typically when I think
about value, I think about supply and demand. But it
seems like there is an unending new supply of sports.
How can it be that the value keeps going up
when there's more and more supply.
Speaker 1 (33:38):
People are thirsting for great storylines, right, and of course
there are sports Formula One think about UFC didn't exist
almost twenty years ago.
Speaker 10 (33:47):
Look how popular that is today.
Speaker 1 (33:48):
So there are sports that can break in in ways
that nobody have an envisioned.
Speaker 10 (33:53):
And of course women's sports.
Speaker 1 (33:54):
As attraction today that it's never had before.
Speaker 2 (33:58):
Is expansion your enemy as an investor?
Speaker 12 (34:02):
I think expansion is your enemy as an investor, but
it's really more your opportunity. And that's because every time
you expand, you light up fandom in a new market.
Was Las Vegas a big hockey market before the Golden Knights?
Speaker 4 (34:17):
Probably not.
Speaker 12 (34:18):
Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 10 (34:23):
Yeah.
Speaker 4 (34:23):
If you look at the historical.
Speaker 12 (34:25):
Returns in sports, they've been surprisingly good, and some of
that's been driven by scarcity, but not necessarily scarcity of
franchises because all the leagues have expanded through this, but
just a scarcity of other forms of content that are
as engaging and energizing to such large fan bases.
Speaker 2 (34:47):
Sports competes with every other investment opportunity, and its status
as an alternative investment doesn't stop it from keeping up
with the main asset classes. Sports franchise valuations have outpaced
the s and P five hundreds returns, especially in the
past decade. But sport is a very different beast in
a very different jungle. As we look at sports as
(35:09):
an asset class, how does it differ from other alternative
asset investing.
Speaker 5 (35:14):
Nobody's ever asked me that.
Speaker 10 (35:16):
It's a great question.
Speaker 12 (35:17):
I think one thing that's really different about sports as
an asset class versus other forms of alternatives is the
multiple layers of partnership. So when you invest in a
sports franchise in the US, you have a partner who's
going to be the control owner, and that's a person
who has needs and ambitions that you're trying to support.
(35:41):
You also exist within the framework of a league that
has very particular rules and has its objectives and its goals.
And then beyond that, and most importantly, you have this
universe of fans and they care passionately about their team,
(36:02):
and they are stakeholders in that equation, just the way
the league and the owner is. And there is that
implicit compact that if you're coming in, you're going to
make this better for them as well as for the league.
Speaker 2 (36:14):
And the owners.
Speaker 12 (36:15):
And it's interesting to be in a dynamic where you
have those multiple layers of stakeholders and you're trying to
deliver value as an investor for all levels of that,
and that feels pretty different from other forms of alternative investment.
It's pretty satisfying when you get it right. But there's
something special about investing in something that you can watch
(36:36):
every Sunday, that you can come together with your family
and sort of share what you're trying to do.
Speaker 2 (36:44):
Alternative investing may be different when it's not your sports team.
To what extent are your investors who are looking for
psychic benefits in addition to monetary benefits.
Speaker 11 (36:54):
Yeah, it's an interesting part of the equation, right, So
there is a joy element to the return that you
can't necessarily quantify, and what we ask our clients to
do is not just focus on the joy part of
the return, but to think about the overall picture. And
for some clients that joy component is going to be
(37:17):
at a higher on the list of things that are
important in the return and for others. For institutional investors,
it's lower on the list. And so making sure that
we're helping our clients think through how to set return
expectations for themselves in terms of liquidity, etc. Is something
(37:38):
that we feel is our opportunity to do to help
them navigate the space. Alternatives in general are an area
of significant interest for our clients, and the type of
exposure that they're interested in is quite broad, and so
this is only a piece of that for most of
our clients. For some they really want to live and
(38:00):
look at this as a primer investment that.
Speaker 2 (38:03):
Does it for us. Here at Wall Street Week, I'm
David Weston. This is Bloomberg. See you next week for
more stories of capitalism.
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