This week, we look at China’s economic challenges with former Treasury Secretary Lawrence H. Summers. And, commemorating International Women’s Day through women’s sports… will leagues like the NWSL and WNBA continue to generate billions of dollars in revenue? Plus, a broader look at sports as an asset class and the increase in investment opportunities. Later, we interview conservative activist investor Robby Starbuck as we look at role of faith in investment decisions.
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Episode Transcript
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Speaker 1 (00:13):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism this week. How women are gaining on
men in the professional sports race, particularly in soccer and basketball.
Plus how all professional sports for men and for women
has become an important alternative asset class for investors, and
(00:33):
putting your money where your faith is the growing role
of faith based investment. But we start with a story
about course correction when things aren't going so well and
when some adjustments may be warranted. China began its annual
Two Sessions meeting this week to set its economic course
as it faces problems with consumer confidence for an investment, outflows,
(00:56):
the housing market, and more tariffs from President Trump. We
asked our special contributor, Larry Summers of Harvard, whether China
is on its way back.
Speaker 2 (01:07):
I think is too early to know for sure. I
think that the technology developments on around Deep Seak are
an important reminder of China's profound technological capacity. I think
there are signs that the Chinese government is having, frankly,
(01:31):
the kind of experience that often happens in societies where
fear does the work of reason.
Speaker 3 (01:37):
Their fear of economic stagnation is driving a reprochmall with
their technology businesses which have enormous potential economic energy, and
there are some signs that the commitment to economic reform
is increasing in China. I also have to say that
(02:00):
I think the degree of division that has been created
in the last two weeks between the United States and Europe,
the degree of abandonment of the developing world that the
United States has manifest with its attack on developing countries
(02:22):
with efforts to essentially eliminate our international aid agencies, that
is also an immense strategic gift to China. And I
cannot imagine a greater strategic gift over the medium and
(02:45):
long term to China than the prospect that has been
raised by the Secretary of Defense with White House support
of eight percent annual defense cuts for the United States
on an annual basis going forward.
Speaker 1 (03:06):
Elizabeth Economy, senior fellow at the Hoover Institution, gave us
an overview of the two sessions, what they could mean
for the direction of the Chinese economy and how the
United States might respond.
Speaker 4 (03:18):
And it's not just about the economy. They're going to
look at foreign policy. They're going to look at the
judiciary and the anti corruption campaign, they'll look at the military.
And then third, it's an opportunity to present new proposals
and ideas for legislation, and they'll present a couple thousand
different proposals over the course of the year and then
debate them during this period. So it's a kind of
(03:38):
interesting moment, But fundamentally this is about assessing how successful
has the Chinese government been and what do they need
to do moving forward.
Speaker 1 (03:47):
Put us in the seats of some of the delegates,
what are the challenges do you think that they are
looking at right now?
Speaker 4 (03:52):
And there's no doubt that the Chinese economy, I think
from COVID until now has faced a pretty significant set
of challenge. Is at the same time, you know, January
was not so bad. You had the breakthrough of China's
ai company Deep Seek, you had some good news in
the property sector, some good news in lending. So I
(04:15):
think there there's enough that sigen Ping and the sort
of Chinese leadership can speak to that's reasonably positive. And
they'll try to make the case that right now they're
going through some challenges, but they see the path forward
and ultimately they will succeed. So the delegates know the
reality of the economy on the ground. But they're going
to be also, you know, caught in the middle of
(04:37):
some pretty positive propaganda that the leadership is going to
try to feed to.
Speaker 1 (04:41):
Them as they come together with a plan for the future.
What levers could they pull? I mean, and let me
be specific, how much fiscal headspace do they have, because
I've read a lot of things at the level of
debt that actually may be underestimated. I'm part of the
Chinese government, right.
Speaker 4 (04:58):
So, you know, they put forward an number of steps
fiscal stimulus back in September, and again it seemed to
have some some positive have some positive implications for the economy.
Speaker 1 (05:07):
How would you describe the overall economic goals of China
of the Chinese government right now?
Speaker 4 (05:14):
I mean, China has a number of goals, I think,
you know, one goal certainly is to prompt proof the economy.
Uh you know, she didn't Ping, you know, announced his
theory of dual circulation, which is basically the idea that
China can innovate, manufacture, and consume largely within itself. He says,
you know, the Chinese economy is incomparable in terms of
(05:36):
its size and its ingenuity. It wants to continue to
export to continuing to have you know, foreign manufacturers depend
on China for parts of their supply chains. But you know,
for the most part, he wants to insulate China from
the pressures of the global economy. I think that's one
big goal. Again, I think number two, they want to
you know, make China the leading innovation power in the world.
(05:58):
They want to increase GDP per capita that's really slowed
down in the past couple of years. You know, they
want consumer spending to be rebooted.
Speaker 5 (06:07):
So I think they have a lot.
Speaker 4 (06:09):
Of different kinds of goals for their economy. Fundamentally, Xi Jinping,
i think, is saying this is a difficult period for us,
but it's part of our industrial upgrading. These are sort
of normal bumps in the road. Once we get through these,
you know, challenges, it's you know, we're going to see
the Chinese economy take off. So I think there are
a lot of different elements to this. In terms of
(06:31):
what Chi Jinping wants to see moving forward.
Speaker 1 (06:34):
Let me ask about two specific sectors. One is I
call it green green energy. It can be ev solar panels,
things like that. The other is tech does Jijimping need
to win on those or is flourishing enough, and he
need to beat the United States.
Speaker 4 (06:49):
Now, I think at this point this is a zero
sum game in Chi Jinping's mind. And I think if
you listen and if you've listened to his rhetoric over
the past, you know, more than decades since he came
to power about the East is rising and the West
is declining, We're going to have the triumph of socialism
over capitalism, and all the targets that he's put in place.
(07:10):
He wants China to be the number one innovation power
in the world, and that does mean supplanting the United States.
So I do think that this is to some extent,
you know, China beating the United States just to look at.
One of the things that they're going to be looking
at in the two sessions is how successful China has
(07:30):
been with it's Made in China twenty twenty five program.
And this was a plan that was put in place
Undersigen Ping in twenty fifteen to ensure that Chinese companies
would become the dominant manufacturers in China across ten critical
cutting edge technologies like clean tech, like new materials, like
semiconductors like medical devices, they'd become domestic champions and then
(07:54):
become global champions, so they would dominate the global economy.
And we've already seen this happen, I think to some
extent in the sectors that you mentioned, or at least
in the clean tech sector. I think we should expect
to see China in the low end semiconductors, in new
materials in AI do exactly what it's done in the
clean tech sector for those sectors as well. So we're
(08:15):
going to be facing an enormous amount of overcapacity, an
enormous amount of competition from Chinese companies moving forward.
Speaker 1 (08:21):
President Trump seems to have a somewhat different goal in mind.
So let's flip over to the other side here. As
we look at a new Trump administration that is imposing
and threatening various sorts of tariffs, how big a risk
is that for China.
Speaker 4 (08:34):
I think China has spent the past eight years preparing
for the eventuality of more tariffs. There hasn't been a
moment since the first Trump administration that there haven't been
more tariffs placed on goods from China and various kinds
of goods. So I think this is nothing new for them.
I think they've taken several steps proactively to reduce the
(08:56):
share of Chinese exports that over all that go to
the United States. They've relocated some of their manufacturing to
third countries to try to avoid the tariffs. They've tried
to make progress in that idea of creating you know,
fortress China to become less dependent on the global economy,
including the United States. And I think critically, they've developed
(09:18):
their own retaliatory toolkit. Right, So, when when we put
tariffs on China, you know, China responds by putting you know,
teriffs back on on US goods. They you know, will
single out US companies like Google or like Micron for investigations.
And even if those investigations don't amount to much, the
(09:38):
mere threat, the mere statement that they're going to do
that can often spook suppliers and consumers inside China and
make it very difficult for those companies. They've taken up
export controls, right. So, we've seen arrange now of critical
minerals that China has placed new licensing requirements on, and
those are minerals that we need and metals that we
need for our you know, defense industry. For our own
(10:01):
clean tech industry. So China has a lot of tools
at its disposal that is prepared to deploy.
Speaker 1 (10:09):
Coming up. Will the money follow the momentum of women's sports?
That's next on Wall Street Week. This is a story
about perseverance and the women who are laying the foundation
(10:30):
for what looks to 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 6 (10:41):
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 7 (10:55):
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 8 (11:04):
You're finally putting this product in the right spotlight, and
it is exploding in popularity.
Speaker 1 (11:10):
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
(11:31):
billion dollars in the next three years.
Speaker 2 (11:33):
Number one, don't live it up.
Speaker 1 (11:36):
There is no question that women are fueling fandoms across stadiums,
fields and arenas, but is it sustainable.
Speaker 7 (11:45):
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 form, more sponsorship their form,
more merchandise being sold, and that all leads to more
external dollars coming into the ecosystem saying I believe that
this is an economy that we can support and that
(12:07):
also will have great returns.
Speaker 1 (12:10):
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 7 (12:26):
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 1 (12:42):
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 rights for the
(13:06):
NWSL jumped from one point five million dollars to sixty
million dollars in the most recent deal.
Speaker 9 (13:12):
What it's.
Speaker 1 (13:17):
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 opportunities that women's sport provide.
Speaker 7 (13:29):
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
(13:51):
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 leads in
the United States, and really looked at very specific variables,
(14:12):
particularly the revenue drivers.
Speaker 8 (14:14):
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 an incredible amount of fans.
Speaker 1 (14:27):
Chris and Angie Long are among those who have become investors,
leading the group that bought the NWSLS Kansas City Current give.
Speaker 10 (14:35):
It 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 on the field. When you
have a product that's as fantastic as women's sports, there's
(14:56):
no doubt it's going to be successful.
Speaker 8 (14:58):
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 you know our experience
in twenty nineteen being in Paris at the Women's World
Cup really was enlightening to see the opportunity from an
investment side, especially in light of the tremendous amount of
(15:21):
global growth in the women's game.
Speaker 1 (15:25):
In building their franchise in Kansas City, the Lungs are
focused on their brand.
Speaker 10 (15:30):
One of the leading jersey sales.
Speaker 1 (15:32):
And one of the things that has limited the growth
of women's professional sports franchises, a dedicated place to practice.
Speaker 11 (15:39):
And play this whole space is the Kanti 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. I think one of
the things that is harder to put a value on,
(16:00):
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 5 (16:09):
Now to the point.
Speaker 8 (16:10):
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.
Speaker 5 (16:26):
There's not a person.
Speaker 8 (16:26):
In Kansasity, the Midwest and a lot of the country
that doesn't know about the Kansas City Current and the
state and they play in.
Speaker 10 (16:34):
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 8 (16:56):
From a revenue growth perspective, we're doing fantastic. I think
it is north of a twenty million dollars swing in
revenue being in your own facilities. From a asset appreciation perspective,
we're doing fantastic.
Speaker 10 (17:16):
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 whack. 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
(17:38):
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 1 (17:53):
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 6 (18:10):
We are the first expansion team since two thousand and eight.
Last was Atlanta and then following us we have Portland
in Toronto next year. So growth of WMBA has been
a long time coming and it's taken many years to
get here. This building has actually always been here for
the Golden State Warriors, and now it's our Valkyrie's Performance Center.
So this is the area that you know, the championships
(18:32):
were one 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 1 (18:41):
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 6 (18:58):
When you look back during COVID, WNBA actually got together
and played.
Speaker 5 (19:03):
They were the first league to do this.
Speaker 6 (19:04):
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, and there was an unlock
that began to happen with consumers and women's sports.
Speaker 5 (19:21):
So as consumers.
Speaker 6 (19:22):
Began to unlock giving those ratings, began to unlock buying 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 that is equated to the growth.
Speaker 1 (19:44):
When we talk about growth, how do you measure it?
What are the metrics you pay attention to?
Speaker 6 (19:49):
There's two things. One is money and revenue. Right, are
your revenue lines growing? Are you investing 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 eye
(20:11):
on both every single day.
Speaker 1 (20:13):
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
(20:36):
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 6 (20:51):
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
(21:12):
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, well, 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
(21:34):
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 was an untapped opportunity. How do we create
the most robust partnership portfolio and assets, How do we
(21:54):
have the best content? And then you saw the market respond.
And now you've seen that effectie and certainly within the
different leagues and teams. You know, but that's that's only
just getting started.
Speaker 7 (22:06):
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 1 (22:20):
Hey, Fever fans is Caitlin Clark.
Speaker 5 (22:22):
I can't wait to get to Indianapolis. I know you
guys are excited.
Speaker 1 (22:25):
I am to go Fever.
Speaker 6 (22:27):
There's often been so many misconceptions about audience in women's sports.
So long people have said an NBA 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
(22:50):
incredible product for everybody.
Speaker 1 (22:52):
With all the success of the WNBA, it's still less
than the NBA in terms of dollars, in terms of audiences,
but it's growing faster the NBA. Can you see a
day that actually the WNBA overtakes the NBA.
Speaker 6 (23:05):
I don't think it's about overtaking. I think there's this
limiting mindset that there can only be one like can
there only be one NFL versus NBA? The answer is no.
What I believe in what we're already seeing is that
this league will be one of the most successful sports
leagues in the world, regardless of gender. It's already the
fifth most watched sport here in North America and we
are only thirty years old. We have the best talent
(23:26):
globally coming to this league, playing in this league, with
an upward trajectory of expansion and growth and viewership and games,
that's going to be unstoppable. But there's not a this
or that. I do believe that this league will be
amongst the greats globally. When we think of viewership and engagement.
Speaker 1 (23:45):
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 where weturn next on Wall Street Week. If the
(24:08):
story of women's sports is one of dramatic growth, it
comes against the backdrop of sports overall growing into a
major asset class that has become an important alternative investment
for many portfolios.
Speaker 12 (24:26):
The rate of change has been pretty incredible.
Speaker 1 (24:29):
Nicole Pullen Ross leads sports and entertainment solutions in private
wealth for Golden Sacks.
Speaker 12 (24:36):
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,
(24:59):
both from a past perspective but also from a profitability perspective.
Speaker 1 (25:04):
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 watched
the private equity business grow around it.
Speaker 13 (25:21):
When you kind of take a step back and you
look at sports, it's primarily been run by governing bodies
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
(25:41):
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 14 (25:54):
Early in my career I was involved in one of
the sort of archetypal sport businesses, IMG Worldwide, my mentor
Ted Forsman, acquired in the early part of the Oughts.
Speaker 1 (26:07):
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 14 (26:22):
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,
(26:45):
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 parody. 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
(27:07):
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 1 (27:19):
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 including 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,
(27:39):
and sponsorships.
Speaker 13 (27:41):
So sports aggregates millions of people in a way that
nothing else does. As a Super Bowl at one hundred and
twenty 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
(28:02):
and have a passion for. That's what makes sports unique
and then being more global, so for all of those reasons.
Sports is becoming more and more attractive, and it wasn't
that complex or sophisticated twenty years ago. In terms of
capital markets.
Speaker 1 (28:19):
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.
Speaker 5 (28:27):
It really ranges.
Speaker 12 (28:28):
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
(28:48):
to the sport that they may have started with, but
look at multiple sports, potentially in the same city or
potentially across the world. And we see new investors 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.
Speaker 5 (29:09):
Who have exposure to the space.
Speaker 12 (29:11):
Or they're doing it through a minority interest.
Speaker 1 (29:15):
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 12 (29:24):
They cost a lot more, that's for sure. 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, that's a much smaller
list today than it was twenty years ago. And so
(29:46):
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, increased engagement with the team, But in many
cases it's not control. It's not the ability to direct
(30:07):
where the team is going. So there's a very big
difference between majority shares and minority shares.
Speaker 1 (30:15):
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 13 (30:32):
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 illiquid 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 and
(30:54):
creates a software so we can predict on the pitch
or the field whether the moss is going to grow
with the conditions are and you know, as the media
rights go up and the team valuations. The pitch is
the quality of your product and the safety of product.
Speaker 12 (31:08):
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 investors to participate
(31:29):
in the revenue in the surrounding area has certainly been important.
We have seen a community impact. 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 1 (31:48):
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 they're 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 13 (32:06):
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. Look how popular that is today.
So there are sports that can break in in ways
that nobody have an envisioned. And of course women's sports
as attraction today that it's never had before.
Speaker 1 (32:26):
Is expansion your enemy as an investor?
Speaker 14 (32:30):
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 5 (32:45):
Probably not.
Speaker 14 (32:46):
Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 9 (32:51):
Yeah.
Speaker 14 (32:51):
If you look at the historical 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
(33:12):
such large fan bases. A fan is the value and
if you come in and you're not investing in a
way that's going to grow the value proposition for the fan,
and that can be through upgrading the venue, it can
be allowing the team to be more competitive.
Speaker 1 (33:31):
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
(33:53):
an asset class, how does it differ from other alternative
asset investing.
Speaker 14 (33:58):
Nobody's ever asked me that. It's a great question. 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
(34:21):
has needs and ambitions that you're trying to support. 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,
(34:46):
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 and the owners. And it 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
(35:07):
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 every Sunday, that you can
come together with your family and sort of share what
you're trying to do. I mean, it was pretty nice
(35:29):
to be able to have that day where, you know,
my son sort of said, what do you do? And
I sort of could point to, you know, what we
do together on a Sunday. The Super Bowl this year
was held in a venue that just had an almost
six hundred million dollar upgrade to make for a better
fan experience also help it deal with things like modern
demands for a stadium around climate change. That's not a
(35:51):
costless proposition. You've got to invest to do that, and
in some cases this can be billions of dollars.
Speaker 8 (35:57):
So far.
Speaker 14 (35:58):
Stadium, you know in Los Angeles was a multi billion
dollar project. And as you start to think about this
going from the actual stadium to the area around the
stadium and really creating a neighborhood around the stadium, you know,
the capital demand is just increasing, but so too is
the opportunity to profit from it.
Speaker 1 (36:19):
Alternative investing may be different when it's not your sports team.
To what extent are your investors we are looking for
psychic benefits in addition to monetary benefits.
Speaker 12 (36:28):
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.
Speaker 5 (36:51):
Be at a higher higher on the.
Speaker 12 (36:54):
List of things that are important in the return and
for others. For institutional investors, it's 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 that we feel is our opportunity to do
(37:16):
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
lean in and look at this as a primier investment.
Speaker 1 (37:39):
Faith based activist investing told through the eyes of Robbie Starbuck,
who has put American corporations on the defense over their
DEI policies, and why he says he is doing the
Lord's will. That's next on Wall Street Week. This is
(38:05):
a story about putting your money where your faith is,
something that Americans have been doing since colonial days, but
that recently has become a powerful tool for activist shareholders.
Speaker 15 (38:17):
The greatest savior beyond Jesus, in my view of the
human race, has been capitalism.
Speaker 5 (38:24):
Nothing has saved lives the way capitalism.
Speaker 16 (38:25):
Has for faith investors' investment decisions and shareholder advocacy is
religious practice.
Speaker 17 (38:33):
The Bible is our core tenet that we're seeking to
try to hew closely to.
Speaker 1 (38:38):
There is a long history in the United States of
investors merging their religious beliefs with their personal wealth.
Speaker 16 (38:44):
This is a movement inspired by faith.
Speaker 1 (38:46):
As Amelia Miazad, acting Professor at UC Davis School of Law,
laid out in a New Law Review article.
Speaker 16 (38:53):
Faith based investing has a very long history in the
United States. It dates back to the seventeenth century. Some
early examples include the Quakers, who screened out what was
known as sinstocks from their investment so for example, the
slave trade, alcohol, what not to invest in, what to
(39:15):
screen out with religious beliefs, and the beliefs were rooted
in biblical scripture. During the Civil Rights movement, faith investors
began to use their voice as shareholders through the shareholder
proposal process. Some of the very earliest social shareholder proposals
(39:35):
on issues ranging from apartheid to civil rights, to inclusion
to climate risk before it was called climate risk. These
things happened in late nineteen sixties and early nineteen seventies.
Speaker 1 (39:50):
More recently, faith based investing has grown past issues like
civil rights, apartheid, and the Vietnam War. Some funds have
embraced so called so responsible investing and the well known Environmental,
Social and governance or ESG investing. And as the issues
have grown, so have the total assets in faith friendly funds,
(40:11):
up by some ninety billion dollars over the last twenty
five years, with the pace of growth picking up even
more between twenty eighteen and twenty twenty four.
Speaker 5 (40:20):
We help those that serve the Lord.
Speaker 17 (40:22):
We want to make sure that we're helping people to
start well, stay well, and finish well.
Speaker 1 (40:27):
Brandon Pizzuro is the president of Guidestone, a faith based
investment firm tracing its roots back to nineteen eighteen when
it was started to support retired Southern Baptist ministers and
their families. Today it manages over twenty four billion dollars
in assets.
Speaker 5 (40:43):
So we leave out five key areas.
Speaker 17 (40:45):
That's abortion, alcohol, tobacco, sexual morality, and gambling. But there's
also other areas such as predatory lending, THHC or cannabis production,
even private prisons. So we're screening out several key areas
verticals that we see that are antithetic to our moral
and ethical posturing. But you're really only screening out a
couple of percentage points out of some of the major
indices the Bloombergaggregate Bond Index or even the SMP five hundred.
Speaker 1 (41:09):
Are you growing in the number and the size of
the investments you have.
Speaker 17 (41:12):
We're certainly growing. It's been a slow burn. I think
that's for all of us. In the faith based investing ecosystem,
there continues to be growth. We believe the ecosystem for
liquid security is in a faith aligned manner or about
one hundred billion dollars. Our mutual fund complex is about
twenty billion of that, but there certainly can be more
than multiples of that two to three times, but some
of the most current estimates are around one hundred billion
(41:32):
dollar mark. We're not activists. We do engage in corporate engagement,
certainly on the margin. We'd like to have our voice
heard where we can, but we're not going after companies,
so to speak. That's not the way in which we
are seeking to have change.
Speaker 15 (41:44):
I'm not arguing that corporations should never do anything good
for their community. What I'm arguing is they should engage
in ways they're not divisive. But about those so called
faith based investors who embrace DEI, I think that it's
based on false doctrine, and you know, Christians would call
it heresy. In many ways, we are now three for
three taking down will companies enforcing changes.
Speaker 1 (42:03):
Robbie Starbuck is every bit the activists that Bizzurro says
he is not. He's made big news by pushing companies
to abandon their diversity, equity and inclusion efforts, and he's
had more than his share of success.
Speaker 4 (42:16):
I push against DEI has spilled into corporate America, while
the legal assault and diversity initiatives has actually gathered some steam.
Speaker 18 (42:22):
McDonald is no longer setting aspirational representational goals. The company
is retiring its DEI pledge and its supply chain and
renaming its diversity team as a Global Inclusion team.
Speaker 9 (42:33):
Walmart is reversing course on diversity equity and inclusion initiatives,
joining a growing list of businesses retreating on DEI programs
targeted by conservative activists.
Speaker 15 (42:44):
I've had these conversations with CEOs at major companies where
they've asked, Okay, if we're getting rid of all these things,
what are things you do think are non divisive? And
I'll give them a list of things that I don't
see as devices that I think everybody could broadly accept
as good. Like look at JP Morgan, they spent thirty
billion dollars on racial equas and it's a very broad term,
but the way that they spent that money, in my view,
is terribly irresponsible and it didn't do a service to
(43:06):
the shareholders. It's like DEI in theory versus DEI in reality.
I'm the one holding up a mirror of what it
actually is in reality, because in theory, a lot of
people really like the theory because it made them feel good.
Speaker 5 (43:15):
It's like warm, fuzzy words.
Speaker 14 (43:16):
Right.
Speaker 16 (43:16):
There's been a surge of shareholder proposals by Christians who
believe that company should not embrace DEI and should not
embrace pride parades, for example. This is a relatively new phenomenon,
and there is a lot of ideological diversity even within
the Christian investor community in the United States. The Christian
(43:41):
investor community cannot be summarized on a bumper sticker.
Speaker 1 (43:46):
How did you first get started in Call it faith
based investing, call it faith based activism? What got you
into this?
Speaker 15 (43:53):
We think about our values, so it's not even necessarily
we start from the top line of Hey, we need
this to be Christian investing. Right, It's like what are
our values where do they align? And I think that's
something a lot of investors do. So when investors from
the outside look at it, if they're not familiar with
faith based investing, they are familiar with values based investing
because a lot of investors do it.
Speaker 1 (44:11):
What is your ultimate goal? I mean part of it
is the values of you and your family, your wife.
Is it to sleep better at night and feel better
that you're right with God? Or is it to change
the behavior of the corporation?
Speaker 15 (44:22):
Well, I would say I have fundamentally two different ones.
So from a faith based perspective, it's obviously my wife
and I want to sleep all night. Know we're not
investing in something that is diametrically opposed to our faith.
Secondary goal for me, just as somebody who wants to
see America win, is I want to see corporations get
out of the business of divisive everything.
Speaker 5 (44:41):
So if something you're.
Speaker 15 (44:42):
Doing is going to be extremely divisive in the marketplace
and it's going to divide your employees divide your consumers,
I think it's bad business. And I think that a
lot of the corporate world lost side of that, because
ultimately my thesis is many corporate executives lost side of
who their customer actually is. And so if you're embracing
policies that are going to divide people, your business is
(45:02):
going to suffer in the long run. On the side
of say the DEI and Well policy, I've been very
vocal because my desire there is to conform the companies
to my values, because at the end of the day,
I know, if they fully conform to my values, you're
going to divide this other group of people when it's
going to be incredibly unfair to them. So I'm not
advocating for a total theocracy here in corporate America. It's
more so I don't want to invest in companies that
(45:25):
are going to diametrically oppose everything I believe in in
such a visceral way that I would feel I'm doing
it as service not just to my country but to
my faith by investing in them.
Speaker 1 (45:34):
It raises a really fundamental question for me. At least,
there are other face based investing outfits, investment firms things
like that who have a very different view on diversity,
equity inclusion. They're all for it, yeah, you're all against it,
and they believe what they're doing is scriptural as well,
so is one right and the other wrong.
Speaker 15 (45:53):
You know, there'll be people who are mad at me
for this, but that's okay, that's not a new thing
for me. It's you know, they believe in something that
I would call comfortable christian which is one where you
want to attract the largest number of people, but it's
based off false doctrine. And so the idea for them
is that they'll take a cherry picked line and say
this line means that we need to behave this way.
Speaker 5 (46:12):
There is nothing in.
Speaker 15 (46:13):
The Bible that says we should you know, encapsulate our
corporate structure around the idea that racism is okay. I
don't think racism is ever okay and DEI. Ultimately, when
you break it down, it does not mean that you
love diversity.
Speaker 5 (46:25):
It doesn't mean that.
Speaker 15 (46:26):
You love inclusion, because if you look on the very
top line just rational thinking, you immediately find that they're
actually very much not inclusive of let's say Christians.
Speaker 1 (46:37):
No one should question the sincerity of anyone's faith, but
how far does it go? Are faith based investors willing
to give up returns for their true beliefs? Coming to
investments and value based Christian based religious based investment. Are
you willing to leave money on the table?
Speaker 15 (46:56):
Yes, that hasn't been the case, to be perfectly honest
with you, but I am willing to one hundred percent
because I look at it this way. I could die
with a pot of money that's bigger, or I could
die on my deathbed one day with my kids able
to look at me and know that their dad had integrity,
always lived by what he said.
Speaker 17 (47:11):
He was going to live by. We do have investment objectives.
We have to be adherent to indexes and benchmarks that
are well recognized. We have to compete versus the broad
group of peers that compete in a similar asset class space.
So while we might be willing to so called take
a hit in some areas, I wouldn't necessarily characterize it
as that.
Speaker 5 (47:29):
I think that we still have to have this.
Speaker 17 (47:31):
Values alignment as well as the return objective that are
coherent with each other.
Speaker 15 (47:35):
At the end of the day, the thing that matters
the most is that integrity, and so you've got to
stick to what you've believe in even if it hurts.
Speaker 1 (47:43):
That does it for us On Wall Street Week, I'm
David Weston. Join us next week for more stories of capitalism,
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism this week. How women are gaining on
men in the professional sports race, particularly in soccer and basketball.
Plus how all professional sports for men and for women
has become an important alternative asset class for investors, and
(00:33):
putting your money where your faith is the growing role
of faith based investment. But we start with a story
about course correction when things aren't going so well and
when some adjustments may be warranted. China began its annual
Two Sessions meeting this week to set its economic course
as it faces problems with consumer confidence for an investment, outflows,
(00:56):
the housing market, and more tariffs from President Trump. We
asked our special contributor, Larry Summers of Harvard, whether China
is on its way back.
Speaker 2 (01:07):
I think is too early to know for sure. I
think that the technology developments on around Deep Seak are
an important reminder of China's profound technological capacity. I think
there are signs that the Chinese government is having, frankly,
(01:31):
the kind of experience that often happens in societies where
fear does the work of reason.
Speaker 3 (01:37):
Their fear of economic stagnation is driving a reprochmall with
their technology businesses which have enormous potential economic energy, and
there are some signs that the commitment to economic reform
is increasing in China. I also have to say that
(02:00):
I think the degree of division that has been created
in the last two weeks between the United States and Europe,
the degree of abandonment of the developing world that the
United States has manifest with its attack on developing countries
(02:22):
with efforts to essentially eliminate our international aid agencies, that
is also an immense strategic gift to China. And I
cannot imagine a greater strategic gift over the medium and
(02:45):
long term to China than the prospect that has been
raised by the Secretary of Defense with White House support
of eight percent annual defense cuts for the United States
on an annual basis going forward.
Speaker 1 (03:06):
Elizabeth Economy, senior fellow at the Hoover Institution, gave us
an overview of the two sessions, what they could mean
for the direction of the Chinese economy and how the
United States might respond.
Speaker 4 (03:18):
And it's not just about the economy. They're going to
look at foreign policy. They're going to look at the
judiciary and the anti corruption campaign, they'll look at the military.
And then third, it's an opportunity to present new proposals
and ideas for legislation, and they'll present a couple thousand
different proposals over the course of the year and then
debate them during this period. So it's a kind of
(03:38):
interesting moment, But fundamentally this is about assessing how successful
has the Chinese government been and what do they need
to do moving forward.
Speaker 1 (03:47):
Put us in the seats of some of the delegates,
what are the challenges do you think that they are
looking at right now?
Speaker 4 (03:52):
And there's no doubt that the Chinese economy, I think
from COVID until now has faced a pretty significant set
of challenge. Is at the same time, you know, January
was not so bad. You had the breakthrough of China's
ai company Deep Seek, you had some good news in
the property sector, some good news in lending. So I
(04:15):
think there there's enough that sigen Ping and the sort
of Chinese leadership can speak to that's reasonably positive. And
they'll try to make the case that right now they're
going through some challenges, but they see the path forward
and ultimately they will succeed. So the delegates know the
reality of the economy on the ground. But they're going
to be also, you know, caught in the middle of
(04:37):
some pretty positive propaganda that the leadership is going to
try to feed to.
Speaker 1 (04:41):
Them as they come together with a plan for the future.
What levers could they pull? I mean, and let me
be specific, how much fiscal headspace do they have, because
I've read a lot of things at the level of
debt that actually may be underestimated. I'm part of the
Chinese government, right.
Speaker 4 (04:58):
So, you know, they put forward an number of steps
fiscal stimulus back in September, and again it seemed to
have some some positive have some positive implications for the economy.
Speaker 1 (05:07):
How would you describe the overall economic goals of China
of the Chinese government right now?
Speaker 4 (05:14):
I mean, China has a number of goals, I think,
you know, one goal certainly is to prompt proof the economy.
Uh you know, she didn't Ping, you know, announced his
theory of dual circulation, which is basically the idea that
China can innovate, manufacture, and consume largely within itself. He says,
you know, the Chinese economy is incomparable in terms of
(05:36):
its size and its ingenuity. It wants to continue to
export to continuing to have you know, foreign manufacturers depend
on China for parts of their supply chains. But you know,
for the most part, he wants to insulate China from
the pressures of the global economy. I think that's one
big goal. Again, I think number two, they want to
you know, make China the leading innovation power in the world.
(05:58):
They want to increase GDP per capita that's really slowed
down in the past couple of years. You know, they
want consumer spending to be rebooted.
Speaker 5 (06:07):
So I think they have a lot.
Speaker 4 (06:09):
Of different kinds of goals for their economy. Fundamentally, Xi Jinping,
i think, is saying this is a difficult period for us,
but it's part of our industrial upgrading. These are sort
of normal bumps in the road. Once we get through these,
you know, challenges, it's you know, we're going to see
the Chinese economy take off. So I think there are
a lot of different elements to this. In terms of
(06:31):
what Chi Jinping wants to see moving forward.
Speaker 1 (06:34):
Let me ask about two specific sectors. One is I
call it green green energy. It can be ev solar panels,
things like that. The other is tech does Jijimping need
to win on those or is flourishing enough, and he
need to beat the United States.
Speaker 4 (06:49):
Now, I think at this point this is a zero
sum game in Chi Jinping's mind. And I think if
you listen and if you've listened to his rhetoric over
the past, you know, more than decades since he came
to power about the East is rising and the West
is declining, We're going to have the triumph of socialism
over capitalism, and all the targets that he's put in place.
(07:10):
He wants China to be the number one innovation power
in the world, and that does mean supplanting the United States.
So I do think that this is to some extent,
you know, China beating the United States just to look at.
One of the things that they're going to be looking
at in the two sessions is how successful China has
(07:30):
been with it's Made in China twenty twenty five program.
And this was a plan that was put in place
Undersigen Ping in twenty fifteen to ensure that Chinese companies
would become the dominant manufacturers in China across ten critical
cutting edge technologies like clean tech, like new materials, like
semiconductors like medical devices, they'd become domestic champions and then
(07:54):
become global champions, so they would dominate the global economy.
And we've already seen this happen, I think to some
extent in the sectors that you mentioned, or at least
in the clean tech sector. I think we should expect
to see China in the low end semiconductors, in new
materials in AI do exactly what it's done in the
clean tech sector for those sectors as well. So we're
(08:15):
going to be facing an enormous amount of overcapacity, an
enormous amount of competition from Chinese companies moving forward.
Speaker 1 (08:21):
President Trump seems to have a somewhat different goal in mind.
So let's flip over to the other side here. As
we look at a new Trump administration that is imposing
and threatening various sorts of tariffs, how big a risk
is that for China.
Speaker 4 (08:34):
I think China has spent the past eight years preparing
for the eventuality of more tariffs. There hasn't been a
moment since the first Trump administration that there haven't been
more tariffs placed on goods from China and various kinds
of goods. So I think this is nothing new for them.
I think they've taken several steps proactively to reduce the
(08:56):
share of Chinese exports that over all that go to
the United States. They've relocated some of their manufacturing to
third countries to try to avoid the tariffs. They've tried
to make progress in that idea of creating you know,
fortress China to become less dependent on the global economy,
including the United States. And I think critically, they've developed
(09:18):
their own retaliatory toolkit. Right, So, when when we put
tariffs on China, you know, China responds by putting you know,
teriffs back on on US goods. They you know, will
single out US companies like Google or like Micron for investigations.
And even if those investigations don't amount to much, the
(09:38):
mere threat, the mere statement that they're going to do
that can often spook suppliers and consumers inside China and
make it very difficult for those companies. They've taken up
export controls, right. So, we've seen arrange now of critical
minerals that China has placed new licensing requirements on, and
those are minerals that we need and metals that we
need for our you know, defense industry. For our own
(10:01):
clean tech industry. So China has a lot of tools
at its disposal that is prepared to deploy.
Speaker 1 (10:09):
Coming up. Will the money follow the momentum of women's sports?
That's next on Wall Street Week. This is a story
about perseverance and the women who are laying the foundation
(10:30):
for what looks to 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 6 (10:41):
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 7 (10:55):
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 8 (11:04):
You're finally putting this product in the right spotlight, and
it is exploding in popularity.
Speaker 1 (11:10):
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
(11:31):
billion dollars in the next three years.
Speaker 2 (11:33):
Number one, don't live it up.
Speaker 1 (11:36):
There is no question that women are fueling fandoms across stadiums,
fields and arenas, but is it sustainable.
Speaker 7 (11:45):
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 form, more sponsorship their form,
more merchandise being sold, and that all leads to more
external dollars coming into the ecosystem saying I believe that
this is an economy that we can support and that
(12:07):
also will have great returns.
Speaker 1 (12:10):
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 7 (12:26):
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 1 (12:42):
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 rights for the
(13:06):
NWSL jumped from one point five million dollars to sixty
million dollars in the most recent deal.
Speaker 9 (13:12):
What it's.
Speaker 1 (13:17):
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 opportunities that women's sport provide.
Speaker 7 (13:29):
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
(13:51):
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 leads in
the United States, and really looked at very specific variables,
(14:12):
particularly the revenue drivers.
Speaker 8 (14:14):
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 an incredible amount of fans.
Speaker 1 (14:27):
Chris and Angie Long are among those who have become investors,
leading the group that bought the NWSLS Kansas City Current give.
Speaker 10 (14:35):
It 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 on the field. When you
have a product that's as fantastic as women's sports, there's
(14:56):
no doubt it's going to be successful.
Speaker 8 (14:58):
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 you know our experience
in twenty nineteen being in Paris at the Women's World
Cup really was enlightening to see the opportunity from an
investment side, especially in light of the tremendous amount of
(15:21):
global growth in the women's game.
Speaker 1 (15:25):
In building their franchise in Kansas City, the Lungs are
focused on their brand.
Speaker 10 (15:30):
One of the leading jersey sales.
Speaker 1 (15:32):
And one of the things that has limited the growth
of women's professional sports franchises, a dedicated place to practice.
Speaker 11 (15:39):
And play this whole space is the Kanti 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. I think one of
the things that is harder to put a value on,
(16:00):
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 5 (16:09):
Now to the point.
Speaker 8 (16:10):
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.
Speaker 5 (16:26):
There's not a person.
Speaker 8 (16:26):
In Kansasity, the Midwest and a lot of the country
that doesn't know about the Kansas City Current and the
state and they play in.
Speaker 10 (16:34):
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 8 (16:56):
From a revenue growth perspective, we're doing fantastic. I think
it is north of a twenty million dollars swing in
revenue being in your own facilities. From a asset appreciation perspective,
we're doing fantastic.
Speaker 10 (17:16):
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 whack. 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
(17:38):
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 1 (17:53):
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 6 (18:10):
We are the first expansion team since two thousand and eight.
Last was Atlanta and then following us we have Portland
in Toronto next year. So growth of WMBA has been
a long time coming and it's taken many years to
get here. This building has actually always been here for
the Golden State Warriors, and now it's our Valkyrie's Performance Center.
So this is the area that you know, the championships
(18:32):
were one 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 1 (18:41):
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 6 (18:58):
When you look back during COVID, WNBA actually got together
and played.
Speaker 5 (19:03):
They were the first league to do this.
Speaker 6 (19:04):
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, and there was an unlock
that began to happen with consumers and women's sports.
Speaker 5 (19:21):
So as consumers.
Speaker 6 (19:22):
Began to unlock giving those ratings, began to unlock buying 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 that is equated to the growth.
Speaker 1 (19:44):
When we talk about growth, how do you measure it?
What are the metrics you pay attention to?
Speaker 6 (19:49):
There's two things. One is money and revenue. Right, are
your revenue lines growing? Are you investing 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 eye
(20:11):
on both every single day.
Speaker 1 (20:13):
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
(20:36):
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 6 (20:51):
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
(21:12):
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, well, 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
(21:34):
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 was an untapped opportunity. How do we create
the most robust partnership portfolio and assets, How do we
(21:54):
have the best content? And then you saw the market respond.
And now you've seen that effectie and certainly within the
different leagues and teams. You know, but that's that's only
just getting started.
Speaker 7 (22:06):
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 1 (22:20):
Hey, Fever fans is Caitlin Clark.
Speaker 5 (22:22):
I can't wait to get to Indianapolis. I know you
guys are excited.
Speaker 1 (22:25):
I am to go Fever.
Speaker 6 (22:27):
There's often been so many misconceptions about audience in women's sports.
So long people have said an NBA 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
(22:50):
incredible product for everybody.
Speaker 1 (22:52):
With all the success of the WNBA, it's still less
than the NBA in terms of dollars, in terms of audiences,
but it's growing faster the NBA. Can you see a
day that actually the WNBA overtakes the NBA.
Speaker 6 (23:05):
I don't think it's about overtaking. I think there's this
limiting mindset that there can only be one like can
there only be one NFL versus NBA? The answer is no.
What I believe in what we're already seeing is that
this league will be one of the most successful sports
leagues in the world, regardless of gender. It's already the
fifth most watched sport here in North America and we
are only thirty years old. We have the best talent
(23:26):
globally coming to this league, playing in this league, with
an upward trajectory of expansion and growth and viewership and games,
that's going to be unstoppable. But there's not a this
or that. I do believe that this league will be
amongst the greats globally. When we think of viewership and engagement.
Speaker 1 (23:45):
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 where weturn next on Wall Street Week. If the
(24:08):
story of women's sports is one of dramatic growth, it
comes against the backdrop of sports overall growing into a
major asset class that has become an important alternative investment
for many portfolios.
Speaker 12 (24:26):
The rate of change has been pretty incredible.
Speaker 1 (24:29):
Nicole Pullen Ross leads sports and entertainment solutions in private
wealth for Golden Sacks.
Speaker 12 (24:36):
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,
(24:59):
both from a past perspective but also from a profitability perspective.
Speaker 1 (25:04):
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 watched
the private equity business grow around it.
Speaker 13 (25:21):
When you kind of take a step back and you
look at sports, it's primarily been run by governing bodies
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
(25:41):
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 14 (25:54):
Early in my career I was involved in one of
the sort of archetypal sport businesses, IMG Worldwide, my mentor
Ted Forsman, acquired in the early part of the Oughts.
Speaker 1 (26:07):
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 14 (26:22):
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,
(26:45):
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 parody. 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
(27:07):
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 1 (27:19):
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 including 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,
(27:39):
and sponsorships.
Speaker 13 (27:41):
So sports aggregates millions of people in a way that
nothing else does. As a Super Bowl at one hundred and
twenty 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
(28:02):
and have a passion for. That's what makes sports unique
and then being more global, so for all of those reasons.
Sports is becoming more and more attractive, and it wasn't
that complex or sophisticated twenty years ago. In terms of
capital markets.
Speaker 1 (28:19):
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.
Speaker 5 (28:27):
It really ranges.
Speaker 12 (28:28):
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
(28:48):
to the sport that they may have started with, but
look at multiple sports, potentially in the same city or
potentially across the world. And we see new investors 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.
Speaker 5 (29:09):
Who have exposure to the space.
Speaker 12 (29:11):
Or they're doing it through a minority interest.
Speaker 1 (29:15):
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 12 (29:24):
They cost a lot more, that's for sure. 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, that's a much smaller
list today than it was twenty years ago. And so
(29:46):
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, increased engagement with the team, But in many
cases it's not control. It's not the ability to direct
(30:07):
where the team is going. So there's a very big
difference between majority shares and minority shares.
Speaker 1 (30:15):
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 13 (30:32):
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 illiquid 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 and
(30:54):
creates a software so we can predict on the pitch
or the field whether the moss is going to grow
with the conditions are and you know, as the media
rights go up and the team valuations. The pitch is
the quality of your product and the safety of product.
Speaker 12 (31:08):
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 investors to participate
(31:29):
in the revenue in the surrounding area has certainly been important.
We have seen a community impact. 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 1 (31:48):
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 they're 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 13 (32:06):
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. Look how popular that is today.
So there are sports that can break in in ways
that nobody have an envisioned. And of course women's sports
as attraction today that it's never had before.
Speaker 1 (32:26):
Is expansion your enemy as an investor?
Speaker 14 (32:30):
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 5 (32:45):
Probably not.
Speaker 14 (32:46):
Is Las Vegas or Nashville now a pretty enthusiastic hockey market.
Speaker 9 (32:51):
Yeah.
Speaker 14 (32:51):
If you look at the historical 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
(33:12):
such large fan bases. A fan is the value and
if you come in and you're not investing in a
way that's going to grow the value proposition for the fan,
and that can be through upgrading the venue, it can
be allowing the team to be more competitive.
Speaker 1 (33:31):
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
(33:53):
an asset class, how does it differ from other alternative
asset investing.
Speaker 14 (33:58):
Nobody's ever asked me that. It's a great question. 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
(34:21):
has needs and ambitions that you're trying to support. 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,
(34:46):
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 and the owners. And it 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
(35:07):
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 every Sunday, that you can
come together with your family and sort of share what
you're trying to do. I mean, it was pretty nice
(35:29):
to be able to have that day where, you know,
my son sort of said, what do you do? And
I sort of could point to, you know, what we
do together on a Sunday. The Super Bowl this year
was held in a venue that just had an almost
six hundred million dollar upgrade to make for a better
fan experience also help it deal with things like modern
demands for a stadium around climate change. That's not a
(35:51):
costless proposition. You've got to invest to do that, and
in some cases this can be billions of dollars.
Speaker 8 (35:57):
So far.
Speaker 14 (35:58):
Stadium, you know in Los Angeles was a multi billion
dollar project. And as you start to think about this
going from the actual stadium to the area around the
stadium and really creating a neighborhood around the stadium, you know,
the capital demand is just increasing, but so too is
the opportunity to profit from it.
Speaker 1 (36:19):
Alternative investing may be different when it's not your sports team.
To what extent are your investors we are looking for
psychic benefits in addition to monetary benefits.
Speaker 12 (36:28):
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.
Speaker 5 (36:51):
Be at a higher higher on the.
Speaker 12 (36:54):
List of things that are important in the return and
for others. For institutional investors, it's 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 that we feel is our opportunity to do
(37:16):
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
lean in and look at this as a primier investment.
Speaker 1 (37:39):
Faith based activist investing told through the eyes of Robbie Starbuck,
who has put American corporations on the defense over their
DEI policies, and why he says he is doing the
Lord's will. That's next on Wall Street Week. This is
(38:05):
a story about putting your money where your faith is,
something that Americans have been doing since colonial days, but
that recently has become a powerful tool for activist shareholders.
Speaker 15 (38:17):
The greatest savior beyond Jesus, in my view of the
human race, has been capitalism.
Speaker 5 (38:24):
Nothing has saved lives the way capitalism.
Speaker 16 (38:25):
Has for faith investors' investment decisions and shareholder advocacy is
religious practice.
Speaker 17 (38:33):
The Bible is our core tenet that we're seeking to
try to hew closely to.
Speaker 1 (38:38):
There is a long history in the United States of
investors merging their religious beliefs with their personal wealth.
Speaker 16 (38:44):
This is a movement inspired by faith.
Speaker 1 (38:46):
As Amelia Miazad, acting Professor at UC Davis School of Law,
laid out in a New Law Review article.
Speaker 16 (38:53):
Faith based investing has a very long history in the
United States. It dates back to the seventeenth century. Some
early examples include the Quakers, who screened out what was
known as sinstocks from their investment so for example, the
slave trade, alcohol, what not to invest in, what to
(39:15):
screen out with religious beliefs, and the beliefs were rooted
in biblical scripture. During the Civil Rights movement, faith investors
began to use their voice as shareholders through the shareholder
proposal process. Some of the very earliest social shareholder proposals
(39:35):
on issues ranging from apartheid to civil rights, to inclusion
to climate risk before it was called climate risk. These
things happened in late nineteen sixties and early nineteen seventies.
Speaker 1 (39:50):
More recently, faith based investing has grown past issues like
civil rights, apartheid, and the Vietnam War. Some funds have
embraced so called so responsible investing and the well known Environmental,
Social and governance or ESG investing. And as the issues
have grown, so have the total assets in faith friendly funds,
(40:11):
up by some ninety billion dollars over the last twenty
five years, with the pace of growth picking up even
more between twenty eighteen and twenty twenty four.
Speaker 5 (40:20):
We help those that serve the Lord.
Speaker 17 (40:22):
We want to make sure that we're helping people to
start well, stay well, and finish well.
Speaker 1 (40:27):
Brandon Pizzuro is the president of Guidestone, a faith based
investment firm tracing its roots back to nineteen eighteen when
it was started to support retired Southern Baptist ministers and
their families. Today it manages over twenty four billion dollars
in assets.
Speaker 5 (40:43):
So we leave out five key areas.
Speaker 17 (40:45):
That's abortion, alcohol, tobacco, sexual morality, and gambling. But there's
also other areas such as predatory lending, THHC or cannabis production,
even private prisons. So we're screening out several key areas
verticals that we see that are antithetic to our moral
and ethical posturing. But you're really only screening out a
couple of percentage points out of some of the major
indices the Bloombergaggregate Bond Index or even the SMP five hundred.
Speaker 1 (41:09):
Are you growing in the number and the size of
the investments you have.
Speaker 17 (41:12):
We're certainly growing. It's been a slow burn. I think
that's for all of us. In the faith based investing ecosystem,
there continues to be growth. We believe the ecosystem for
liquid security is in a faith aligned manner or about
one hundred billion dollars. Our mutual fund complex is about
twenty billion of that, but there certainly can be more
than multiples of that two to three times, but some
of the most current estimates are around one hundred billion
(41:32):
dollar mark. We're not activists. We do engage in corporate engagement,
certainly on the margin. We'd like to have our voice
heard where we can, but we're not going after companies,
so to speak. That's not the way in which we
are seeking to have change.
Speaker 15 (41:44):
I'm not arguing that corporations should never do anything good
for their community. What I'm arguing is they should engage
in ways they're not divisive. But about those so called
faith based investors who embrace DEI, I think that it's
based on false doctrine, and you know, Christians would call
it heresy. In many ways, we are now three for
three taking down will companies enforcing changes.
Speaker 1 (42:03):
Robbie Starbuck is every bit the activists that Bizzurro says
he is not. He's made big news by pushing companies
to abandon their diversity, equity and inclusion efforts, and he's
had more than his share of success.
Speaker 4 (42:16):
I push against DEI has spilled into corporate America, while
the legal assault and diversity initiatives has actually gathered some steam.
Speaker 18 (42:22):
McDonald is no longer setting aspirational representational goals. The company
is retiring its DEI pledge and its supply chain and
renaming its diversity team as a Global Inclusion team.
Speaker 9 (42:33):
Walmart is reversing course on diversity equity and inclusion initiatives,
joining a growing list of businesses retreating on DEI programs
targeted by conservative activists.
Speaker 15 (42:44):
I've had these conversations with CEOs at major companies where
they've asked, Okay, if we're getting rid of all these things,
what are things you do think are non divisive? And
I'll give them a list of things that I don't
see as devices that I think everybody could broadly accept
as good. Like look at JP Morgan, they spent thirty
billion dollars on racial equas and it's a very broad term,
but the way that they spent that money, in my view,
is terribly irresponsible and it didn't do a service to
(43:06):
the shareholders. It's like DEI in theory versus DEI in reality.
I'm the one holding up a mirror of what it
actually is in reality, because in theory, a lot of
people really like the theory because it made them feel good.
Speaker 5 (43:15):
It's like warm, fuzzy words.
Speaker 14 (43:16):
Right.
Speaker 16 (43:16):
There's been a surge of shareholder proposals by Christians who
believe that company should not embrace DEI and should not
embrace pride parades, for example. This is a relatively new phenomenon,
and there is a lot of ideological diversity even within
the Christian investor community in the United States. The Christian
(43:41):
investor community cannot be summarized on a bumper sticker.
Speaker 1 (43:46):
How did you first get started in Call it faith
based investing, call it faith based activism? What got you
into this?
Speaker 15 (43:53):
We think about our values, so it's not even necessarily
we start from the top line of Hey, we need
this to be Christian investing. Right, It's like what are
our values where do they align? And I think that's
something a lot of investors do. So when investors from
the outside look at it, if they're not familiar with
faith based investing, they are familiar with values based investing
because a lot of investors do it.
Speaker 1 (44:11):
What is your ultimate goal? I mean part of it
is the values of you and your family, your wife.
Is it to sleep better at night and feel better
that you're right with God? Or is it to change
the behavior of the corporation?
Speaker 15 (44:22):
Well, I would say I have fundamentally two different ones.
So from a faith based perspective, it's obviously my wife
and I want to sleep all night. Know we're not
investing in something that is diametrically opposed to our faith.
Secondary goal for me, just as somebody who wants to
see America win, is I want to see corporations get
out of the business of divisive everything.
Speaker 5 (44:41):
So if something you're.
Speaker 15 (44:42):
Doing is going to be extremely divisive in the marketplace
and it's going to divide your employees divide your consumers,
I think it's bad business. And I think that a
lot of the corporate world lost side of that, because
ultimately my thesis is many corporate executives lost side of
who their customer actually is. And so if you're embracing
policies that are going to divide people, your business is
(45:02):
going to suffer in the long run. On the side
of say the DEI and Well policy, I've been very
vocal because my desire there is to conform the companies
to my values, because at the end of the day,
I know, if they fully conform to my values, you're
going to divide this other group of people when it's
going to be incredibly unfair to them. So I'm not
advocating for a total theocracy here in corporate America. It's
more so I don't want to invest in companies that
(45:25):
are going to diametrically oppose everything I believe in in
such a visceral way that I would feel I'm doing
it as service not just to my country but to
my faith by investing in them.
Speaker 1 (45:34):
It raises a really fundamental question for me. At least,
there are other face based investing outfits, investment firms things
like that who have a very different view on diversity,
equity inclusion. They're all for it, yeah, you're all against it,
and they believe what they're doing is scriptural as well,
so is one right and the other wrong.
Speaker 15 (45:53):
You know, there'll be people who are mad at me
for this, but that's okay, that's not a new thing
for me. It's you know, they believe in something that
I would call comfortable christian which is one where you
want to attract the largest number of people, but it's
based off false doctrine. And so the idea for them
is that they'll take a cherry picked line and say
this line means that we need to behave this way.
Speaker 5 (46:12):
There is nothing in.
Speaker 15 (46:13):
The Bible that says we should you know, encapsulate our
corporate structure around the idea that racism is okay. I
don't think racism is ever okay and DEI. Ultimately, when
you break it down, it does not mean that you
love diversity.
Speaker 5 (46:25):
It doesn't mean that.
Speaker 15 (46:26):
You love inclusion, because if you look on the very
top line just rational thinking, you immediately find that they're
actually very much not inclusive of let's say Christians.
Speaker 1 (46:37):
No one should question the sincerity of anyone's faith, but
how far does it go? Are faith based investors willing
to give up returns for their true beliefs? Coming to
investments and value based Christian based religious based investment. Are
you willing to leave money on the table?
Speaker 15 (46:56):
Yes, that hasn't been the case, to be perfectly honest
with you, but I am willing to one hundred percent
because I look at it this way. I could die
with a pot of money that's bigger, or I could
die on my deathbed one day with my kids able
to look at me and know that their dad had integrity,
always lived by what he said.
Speaker 17 (47:11):
He was going to live by. We do have investment objectives.
We have to be adherent to indexes and benchmarks that
are well recognized. We have to compete versus the broad
group of peers that compete in a similar asset class space.
So while we might be willing to so called take
a hit in some areas, I wouldn't necessarily characterize it
as that.
Speaker 5 (47:29):
I think that we still have to have this.
Speaker 17 (47:31):
Values alignment as well as the return objective that are
coherent with each other.
Speaker 15 (47:35):
At the end of the day, the thing that matters
the most is that integrity, and so you've got to
stick to what you've believe in even if it hurts.
Speaker 1 (47:43):
That does it for us On Wall Street Week, I'm
David Weston. Join us next week for more stories of capitalism,
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