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- [00:00]
Michael Barr
The FIFA World Cup 26 is coming to North America. Get closer to where business meets the beautiful game with a hospitality package featuring premium seats and entertainment. Get closer to wins on and off the pitch. Register interest@hospitality dota.com interest when you own.
- [00:20]
Damian Sassauer
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- [01:40]
Harold Reynolds
The business of sports can be intimidating or hard for a starter to break into.
- [01:44]
Vanessa Perdomo
We really appreciate when our owners are actually there, you know, with us through the journey.
- [01:48]
Damian Sassauer
Teams, ours especially, have been very intentional to diversify at all levels of the company.
- [01:53]
Xavier Gutierrez
I think we're in the golden years.
- [01:54]
Damian Sassauer
For the NFL and college football.
- [01:56]
Vanessa Perdomo
Our demographic reach has continued to expand.
- [02:00]
Damian Sassauer
This is going to be really unlocking.
- [02:02]
Harold Reynolds
The streaming platform for sports fans.
- [02:04]
Michael Barr
Sports valuations are rising. We'll see when they peak.
- [02:07]
Harold Reynolds
You don't have to be the best in your sport to make a whole ton of money.
- [02:12]
Damian Sassauer
Bloomberg Business of Sports From Bloomberg Radio.
- [02:17]
Michael Barr
This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Mike Lamar along with my colleagues Damian Sassauer and Vanessa Perdomo. Scarlet Fu would join us later in the show. Coming up, March Madness rolls on. We get the latest research from our friends at Bloomberg Intelligence about the value the NCAA tournament is providing the networks carrying it. Plus we check in with an old friend of the show, Impact X Sports Group Chairman and CEO Xavier Gutierrez, for his thoughts on some of the Latest headlines in sports investing and private equity's growth in sports.
- [02:49]
Xavier Gutierrez
There are limitations when you invest in a team in terms of the percentage of ownership, the structure, the debt. When you're looking at these opportunities for the hold COD team co a lot more flexibility, a lot more exit opportunities, a lot more structuring. I believe that private equity is looking at that opportunity and that valuation increase. I think we're barely at the first inning.
- [03:14]
Michael Barr
All that is straight ahead on the Bloomberg Business of sports. But first, baseball is officially back. This weekend is the first full weekend of baseball. And here now to talk about all the big storylines heading into the year is MLB Network's lead studio analyst, Harold. First of all, congratulations on your new time slot, 5pm for your new show.
- [03:37]
Vanessa Perdomo
There we go.
- [03:38]
Harold Reynolds
Yeah, no, thank you guys. Thanks for having me. This is like an annual yearly thing. I love it. But the new studio time, five o', clock, Greg Amsinger, Dan Plisak, myself, you know, the uniqueness of it is we're usually on late at night and we're reacting in and out of games with live look ins and that's the the bulk of that show. At late night. This year from 5 to 7, we'll be able to have a lot more scripted stuff because there won't be a lot of games going at that time. So we're excited to have people know exactly where we are and when we are every day, when we'll be on and and we can craft a lot of things directly to the sport. So it's going to be a lot of fun.
- [04:18]
Vanessa Perdomo
Well, Harold, you were just in Tokyo and I guess I have to ask the, the elephant in the room the question here. Will the Los Angeles Dodgers go 162 and 0 this season? I mean, listen to me, the record of 116 regular season, I think what's at the 1906 Cubs, the 2001 Mariners, you got to believe that, you know, there's a real chance here that they can break that.
- [04:37]
Harold Reynolds
No, there's a real chance they're gonna, they could pass that number. No doubt. And 162, what they play every other week. Yeah, they can do that. It's like high school schedule. Right. But no, I tell you what, when you said the word let's talk about Japan, I mean that statement, unbelievable. I hadn't been there since really 1988 when I went and played for the US All Star series over there. And it was just spectacular. The fan engagement, Ohtani, obviously with Ohtani, Yamamoto and Sasaki on the Dodgers. And then Imanaga with the Cubs and just all the five Japanese players. So they were crazy about it in their country, but they love baseball. It was so fun. So fun. Last thing, and I'll let you guys get back at it. This. I've never seen this. I saw it a little bit when Aaron judge was chasing 62. What I'm getting ready to tell you, but every time Shohei Ohtani came to the plate, he could step his toe out the dugout. That went crazy. Okay. But as soon as he got in the batter's box and the pitcher got his sign shook.
- [05:46]
Michael Barr
No.
- [05:46]
Harold Reynolds
Yes. Okay, here's my pitch. As soon as he got ready to deliver, the place was dead silent, like 50,000 whispers. It was incredible. Everybody had their cameras and they didn't say a word. And then he foul the ball. Off they go. It was incredible. You're sitting at home watching on tv, you're hitting your clicker like, did the volume break? What's going on here? Crazy.
- [06:12]
Scarlet Fu
Well, we got to talk about that, Harold. I mean, it's so interesting, obviously, with Ohtani, obviously, we know he's, you know, the best show in the game, and it's really. We're seeing something we haven't seen before. And he's supposedly supposed to get back on the mound this year. What do you think about that? Should he really try and get back on the mound this year? I mean, one MVP without getting on the mound, do we see it again? Do we stop giving him the MVP at some point, even though we know he could get it every single season?
- [06:38]
Harold Reynolds
Absolutely. He gets back on the mound, and if he wins the MVP every year, it's okay with me. I mean, look, we're coming across something you will never, ever see again. And I grew up on the West Coast. I grew up in Oregon. And when John Wooden had his teams coming through and they were winning those 88 straight and all that stuff, one of my brothers would say to me, you better recognize greatness when it's upon you. You'll never see it again. The 01 is hit high and deep right field. If it's fair, it's gone. And that one is fair. And a home run, a towering home run into the second deck for SH Otani. And I believe that we will never see anybody like Ohtani again. Just recognize it and enjoy it.
- [07:24]
Vanessa Perdomo
Well, yeah, Harold, I mean, I couldn't agree more. And I mean, certainly, you know, if. If you're Michael Barr and, you know, you just got paid your bonus here at Bloomberg and you're firing up your FanDuel account plus 275. I don't remember a team coming into the season at plus 275 to win the World Series. And that's where the Dodgers are today. And a lot of it has to do with the fact that the Yankees lost Garrett Cole. The race, you know, that kind of skewed the betting lines. Talk to us about some of the other teams. The Braves, the Yankees, the Mets, the Phillies, the Orioles, those. The teams that have the next best shot of potentially getting a win against the Dodgers this season.
- [07:56]
Harold Reynolds
Well, what the Dodgers have done, they have such great pitching depth. So that's beyond all the Freddie Freeman, Mookie Betts and Shohei and all that skill they're pitching. But teams that can contend. I think the National League east is loaded. The Phillies are still a team that's going to be really good. The Braves are very young and they continue to do things excellent. And then obviously the Mets have jumped in the fray. But I think the one thing that, as I look down the stretch, it's not how you start, it's who can add when they need it. And all those teams I just talked about can add because they have a minor league system or they have young players that they can trade, they can go do. Those are the things that I would. I would look at who has the cachet that can go trade a player. Seattle has six pitchers. They can go get a player if they need it. Not saying that that's the team to beat. I like the Rangers for that fact. There's a few teams I think that can, in a. In a series, knock off anybody. That's the beauty of our sport. But the Dodgers are clearly loaded. I would not bet against them. But if there's a way to look at maybe another club stepping up, that would be it. And I think there's one pitcher out there, Sandy Alcantara with the Marlins. I've been saying it from all winter when he threw his first pitch at 100 miles an hour, back healthy again. In spring training, the first game, every team gravitated to him. And I think he's a division changer. He's a playoff pitcher, and he's a guy that could take you over the top. You know, he's a guy that the Yankees can go get, and now you're back in the fold again. Those are the type he's. He's that kind of a pitcher. So I'd keep my eyes on him, and then I'd keep my eyes on the Dodgers. And if anybody can Add to beat him.
- [09:37]
Michael Barr
Well, we've talked about the best, now we got to talk about the rest. And I'm going to Compare it to i80. There's a big sinkhole in New Jersey where I travel and I got a detour. And the poor team that is in that sinkhole, the Chicago White Sox, what is it going to take to get that team at least put something on the board?
- [09:59]
Harold Reynolds
Fellas, I don't think they're going to lose 120 or whatever it was last year again. And that will affect the whole division. You know, it was easy for them to have. You know what they have two or three teams out of central last year make the playoffs because they beat up on the White Sox. Every day they'll be better. How do they turn around? They've got some young prospects coming, but it's going to come down to eventually they have to sign some free agents. And you can't just say our farm system is going to be better than everybody else. And the disadvantage of today is now you have a draft lottery. You have more of a slotted draft. You can't sit there and say I'll wait for this guy, I'll pay him more money and we'll get him in the fifth round. That doesn't happen anymore. So it's a little harder to turn it around than it was maybe 10 or 15 years ago when the Astros were able to. To turn it all around and get things going in Houston.
- [10:55]
Scarlet Fu
Carol, do you think one of those reasons, you know where we. Michael said it there, it's the best and then the rest. Do you think one of those reasons it really is, it goes back to the owners who are willing to. To spend. I mean I feel like they've sort of broken the system again. That their Yankees are almost getting beat at their own game at this point by the Dodgers and by the Mets obviously stealing. Soto, does that actually have this cachet that is it worse now than it ever has been before, do you think between teams that are willing to spend, teams are willing, that aren't willing to.
- [11:26]
Harold Reynolds
Well, I think what is the challenge is the system has changed. You don't have young players signing long term contracts when offered. You look at the Braves even four or five years ago, right. You get Albies, signs a long term deal. Acuna does all these young players took 100 million, 30 million, 50 million. Now they're Vlad Jr saying 500 is not enough. You know, and so how the Blue Jays gonna sign a guy like that comes out of your system I think that's been more of an effect on, on how the sport is being played than necessarily ownership trying to spend big money on free agents. If you can't lock up guys that you've had in your system for six years before they're a free agent, then how are you going to be able to compete? And that was always something that the guardians, who were the Indians back in the day, were able to do. They locked up all their young players, Alomar and Lofton and Tomi and all those guys, and they could make a run. Even the Yankees back in the day, you know, they get the moniker for the evil empire. But you locked up Jeter, Posada, Rivera, guys that were in your minor league system to long term deals. That doesn't happen today because players are not taking those long term deals. And that's why the Braves are where they're at in the position they're in. And so I think that's been more of a problem than necessarily the owners not spending. Hard to say owners aren't spending. When you got over $5 billion in salaries out in baseball, you know, that's, that's, it's hard to say.
- [12:56]
Scarlet Fu
It's just the Dodgers and the Mets alone, honestly.
- [12:59]
Vanessa Perdomo
Well, you know, I mean, Harold, we're talking big numbers here. We're talking big money. And I'm going to give you a number here. 6.1 billion. That's what the Celtics just went for. And they don't even own their own Stadium. That's 16 times total revenue. That's the price. That's the ticket. Now if you look at Major League Baseball, on average, teams in Major League Baseball are trading at 6.6 times revenue, significantly less than that. It's actually the lowest of the major sports. Plus Major League Soccer, which trades at a 9.4x. What I need to know is just how much higher can the value of the New York Yankees at 8.4 billion or the Dodgers at 7.7 billion go? Are we capped here now finally, or is it really just anyone's guess? Can these valuations continue to explode from here?
- [13:41]
Harold Reynolds
I think they can continue to explode because there's only 30 of them.
- [13:44]
Vanessa Perdomo
Right.
- [13:44]
Harold Reynolds
It's a rare gym. You know, that's, that's the uniqueness of it. And even the other sports we're starting to see, more soccer franchises are going to come along. You're going to see even football is expanding. Baseball eventually will probably expand as well. But right now you got 30 teams. So that is like a jewel.
- [14:03]
Michael Barr
Our thanks to Harold Reynolds for joining us. He's MLB Network Network's lead studio analyst and of course a 12 year MLB Pro and two time Al All Star. Up next we turn to March Madness and all the businesses looking to make big money this year. During the tournament, my colleagues Damian Sassauer and Vanessa Perdomo. I'm Michael Barr. You're listening to the Bloomberg Business of Sports and Bloomberg Radio around the world. The FIFA World Cup 26 is coming to North America next summer. It's the ultimate celebration of sports and culture and an opportunity to elevate your company. Get closer to where business meets the beautiful game with a premium hospitality package. Build partnerships in the best seats and suites. Achieve goals over world class food and beverage. Get closer to wins on and off the pitch. Register interest@hospitality.FIFA.com interest join Bloomberg in Houston or via livestream on November 4th. For the future investor finding the opportunities, this 2025 event series will examine how companies are investing in their businesses to create efficiencies, innovating their products and services and improving the customer experience. This series is Presented by Invesco Q. Q. Q. Register@BloombergLive.com FutureInvestorHouston that's BloombergLive.com FutureInvestorHouston this is.
- [15:32]
Damian Sassauer
Bloomberg Business of Sports From Bloomberg Radio.
- [15:37]
Michael Barr
This is the Bloomberg Business of Sports where we explore the big issues in the world of sports. I'm Michael Barr along with my colleagues Damian Sassauer and Vanessa Bernomo. March Madness is well underway and our colleagues at Bloomberg Intelligence have been tracking how a lot of businesses are looking to earn big with all the interest in the games. The men's tournament alone could draw over a billion dollars in ad money. To take a deep dive into who's looking to win big and how cord cutting is factoring in, we bring in Bloomberg Intelligence senior media analysts Geetha Raghanathan and B.L. bloomberg Intelligence equities analyst Kevin Near Geitha. Kevin, welcome to the Bloomberg Business of Sports. I'm going to start this one with Giza Geetha and this is about March Madness Paramount. Yeah, they seem to be enjoying March Madness so far at least maybe ratings wise.
- [16:33]
Geetha Raghanathan
Yes, they are. So you know, again we come back to this point over and over again. Michael so sports tends to be the most resilient genre on linear tv. If you just kind of look at it big picture, it makes up about 30% of all linear TV viewing. But what's even more important is that it makes up 45% of total ad sales. So really, really important for all of the media companies and definitely for Paramount as well, which along with Warner Brothers Discovery, has the rights to the NCAA March Madness and of course, majority of the games this time around. So it keeps alternating between CBS and the Turner Networks. And of course CBS this year will have the semis and the finals. And so they're going to have a big, big ad haul, as you just pointed out.
- [17:18]
Vanessa Perdomo
Yeah, but Geeth, aren't fees getting higher? I mean, isn't it getting more and more expensive to pay for these, you know, for these slots, to pay for these sports and to pay for these sponsorship rights and then to make money off of them and sell those ads? I mean, talk to us a little bit about the margins.
- [17:32]
Geetha Raghanathan
Yeah, you bring up an excellent point, Damien. So sports, yes, they are definitely very lucrative in terms of ad dollars, but at the same time, they're, you know, all of these media companies are dealing with rights fees escalating at astronomical rates. Right. We've seen rights fees go up 30, 40% in every renewal cycle. And actually this is really timely because even for the NCAA men's March Madness tournament, we're actually seeing rights fees step up pretty significantly this year. So this is when, you know, in 2025 is when the new extension goes into effect. And so we're seeing, you know, both of these companies pay the NCAA about over or close to about $1 billion in rights fees. That's up from about 800 million. Wow. So, yes, SP expensive proposition. And sometimes in some cases, as you rightly mentioned, Damien, it is a loss leader. In this case, we actually think they're able to attract just about enough ad dollars to cover the rights fees. So hopefully it will not be a loss making proposition. But you're absolutely right, this is a very, very tricky game because rights fees continue to keep going up in every renewal cycle.
- [18:42]
Scarlet Fu
Interesting to me that it's going to be continued even this year. Obviously you said they're going to have a big hole for, for the semifinals and for, for the rest of the tournament. Even though this year is the first time that we don't really have any Cinderella stories going into the sweet 16 and beyond, really, there won't be as big of a draw. Is that not halting the idea that there's going to be a drop off in viewership or anything like that for advertisers?
- [19:09]
Geetha Raghanathan
Yeah. So that's a great observation. So, Vanessa, ratings so far, despite the fact that there have been no dramatic upsets, ratings have actually been really strong. So in games we've seen men's games averaging about 9.5 million viewers. That's actually the highest in about 30 years. Sports betting tends to be a key reason, but we are continuing to see really, really strong numbers across the board. I think it's up about 8 to 9% from last year. So I don't necessarily think we're anticipating a big drop off. And remember, most of these ad spots, they've already been committed to and spoken for. So that's all good money at this point.
- [19:49]
Vanessa Perdomo
Let's bring in Kevin near here. Kevin near for our audience is the senior associate analyst on Geeta's team, but he focuses on tickets. He focuses on StubHub, Live Nation, all that fun stuff. Kevin, I just got to ask you, where are ticket prices coming in this year? Look, we've asked a lot of people on the show, where are we in the business cycle? Are people willing to pay? Are households willing to pay these higher prices? I guess our question for you is, are they?
- [20:11]
Kevin Near
Yeah, they are. So far ticket prices have been at record levels. Coming out of the pandemic, we saw just incredible pent up demand, explosive demand for live events. People want to get out of their house. They wanted to go see these must see events. Ticket prices are already at record highs. And now looking out into this year, really the question is demand. On the supply side, if you look at the concert pipeline, you have a lot of stadium activity, which is Sleepa, Metallica, Coldplay, there's tons of stuff on the concert side, that's all good. Then on the sports side, obviously, again, it just really comes down to demand. You're seeing a big tailwind that the venues themselves are pushing deeper and deeper into VIP clubs, luxury boxes really driving up those prices. Just recently the Florida Panthers raised their season ticket prices. Recently the Buffalo Bills raised their season ticket prices. It's all going up, especially on the resale market. What matters most is demand. We're going to be taking a close look at consumer confidence and seeing how.
- [21:07]
Michael Barr
That trends this year while Damien is crowd surfing at the concert. I remember, take this from an old man here and help me understand what's happening today. When you wanted a ticket to go see the Detroit Tigers, you had to go to the ticket office at Michigan and Trumbull. Okay, I want these tickets, blah, blah, blah, blah, blah. And if you were really fancy, you buy the season tickets there. And that was it, right? And then it all changed, man.
- [21:36]
Kevin Near
It all changed.
- [21:37]
Michael Barr
StubHub and everything going secondary ticket markets with. But explain that evolution.
- [21:43]
Kevin Near
Yeah, absolutely. We are in the Internet age of Course, right now, ticketing is just dominated by Ticketmaster, especially the primary market or the original issuance market. A big part of that is these exclusive contracts that Ticketmaster has with some of the biggest venues, the stadiums, the arenas. That's really been locked up for the most part. On the secondary side, what we've been seeing is that StubHub has been taking a lot of share because they've just been spending so aggressively on marketing the past few years. We've seen their gross order volume really explode, which has been great for them. If you look outside of the US Though, you're absolutely right. Resale markets are predominantly offline. They are heavily regulated in a lot of markets. StubHub will have an uphill climb under their Viagogo brand internationally. They'll have a very significant uphill climb internationally. But it's a big market. There's a lot of open field out there.
- [22:33]
Michael Barr
Vanessa. If I wanted tickets back in the old days at Tiger Stadium, I'd see Benny right outside and he'd give the second level. That's the way the secondary market used to work.
- [22:43]
Kevin Near
Right.
- [22:44]
Scarlet Fu
You know, but you still have to stand outside sometimes.
- [22:46]
Harold Reynolds
You can go to Broadway if you.
- [22:47]
Scarlet Fu
Want to see Broadway play. You go in person to avoid fees. Because that's the biggest problem with some of these. With some of these platforms. Right. It's. It's the. It's the extra fees and everything that people seem not willing to pay. But it seems like, I guess if. If they're still. If the ticket market's going up, then I guess it's no problem. Must. Must be fine. Yeah, but one of the things I wanted to ask you about, Kevin, is like in before when we were talking about March Madness, you know, ratings are going up, even though with cord cutting. And we were talking about how you said it's saying that $1.1 billion we're bringing in just from the men's side of March Madness. What about the women's side? Because last year, the championship for the women out drew the men by 4 million viewers. So what are we seeing on that side? And did we see more advertising, you know, fever for the women's side this year?
- [23:35]
Kevin Near
Yeah, there's definitely a little bit of lagging going on with the women's side. You're seeing just this, you know, unbelievable explosion in engagement across that side. Now, for the women's March Madness tournament this year, ratings are down a little bit against those just incredible record numbers that you just mentioned. We'll have to see for the next few rounds. Kind of what happens again on the TV rating side, just with juju Watkins going down with the injury. But again, the women's sports side is a huge amount of upside, right? I mean, just look at what's happening in the wnba. And yes, this is the Caton Clark effect. But, but we're seeing almost on the daily basis announcements of teams that are playing against the Indiana Fever. They're moving those games to bigger venues. They're moving those games to arena sized venues because there's just so much interest in the women's side.
- [24:18]
Vanessa Perdomo
Gaieth, I'd love to bring you back in here and Kevin as well, I'd love to hear your thoughts because I know you both live in a world where it's quarter to quarter, but just how far ahead are you looking? Are you guys paying attention to the FIFA World cup and the run up to that? We're a little more than a year out here. I for one, my wife just kind of ping me down. She's like, Listen, StubHub, we can get tickets for the champion at the Meadowlands. And so, you know, I mean, is that real? Are we really seeing the beginnings of this FIFA World cup build up?
- [24:48]
Kevin Near
Not yet. Not yet. In fact, FIFA actually put out a warning saying be very careful about speculative buying on any of these resale sites. They mentioned StubHub, they mentioned Vivid. So keep an eye out. Tammy, you got to be careful.
- [24:58]
Vanessa Perdomo
I haven't bought anything yet. Right? I mean, Geeta told me not to buy.
- [25:00]
Kevin Near
I'm not buying those World cup tickets. Those World cup tickets are going to be sold directly on FIFA's website. Yes, it's a huge opportunity for StubHub in 2026. There's a lot of upside, obviously, big demand for an event like that. A lot of those tickets will be hitting the resale markets eventually. That's a big part of why we think they're launching this IPO now, even with these, let's call them, tumultuous market conditions, they want to get ahead of that big event. Looking out even further, there's the Olympics in 28 as well.
- [25:31]
Michael Barr
And Geetha, by the way, look out for the fake sites and talk more about it. Don't buy from Stumphub.
- [25:38]
Geetha Raghanathan
Okay, got it.
- [25:42]
Michael Barr
There is a problem, though. I mean, you got crooks is the best way I can describe it that will try to cheat people of their money with a fake website or this or that, whatever. And, and you have to be careful out there.
- [25:56]
Vanessa Perdomo
Well, I mean, here's my other question, Michael Barnes. I just have to Jump in here. Taylor Swift's ERAS tour, we're still feeling the reverberations from that. We have Beyonce this year. But I gotta believe you guys are expecting a year over year decrease in terms of just top line because wasn't Taylor Swift just such an incredible force of nature? Nothing can possibly compete. Or am I wrong?
- [26:16]
Kevin Near
Kevin, let's look at it in two different ways. On the primary side, Live Nation says no tour is ever going to be more than 1% of their revenue. That part aside, yes, StubHub absolutely caught some tailwinds from the resale pricing. You saw some ludicrous prices on those tickets. Again, there's still healthy demand. There's a lot more concerts in stadiums this year, which means bigger venues, more attendance, more seat capacity, and then higher average prices as well. You're not wrong. You're not wrong. It's really going to come down to ultimately where demand is shaking out.
- [26:50]
Michael Barr
Geetha, I want to talk about gross merchandise sales. And they did pretty strong, that $12.8 billion. Can you expand more into that?
- [26:59]
Geetha Raghanathan
Oh, absolutely. So, you know, across the board, what we're seeing for all of these leagues is, you know, meteorites, of course, makes up a huge part of their revenue. But we also see a lot of revenue coming in from ticket sales, as you pointed out, and then from merchandise sales. And of course, everything kind of feeds into everything, right? This is this whole flywheel effect. So as we see interest build for the sports, as we see kind of ratings go up, we see all these other ancillary streams also kind of really do well. And that's exactly where we are kind of seeing merchandise. And we're seeing that kind of across the board, you know, we see, we track merchandise sales even for some of the big companies, you know, whether it's a Disney or, you know, toy sales, things like that. And across the board, you know, demand has been fairly strong.
- [27:48]
Michael Barr
Our thanks to Geetha Raghanathan and Kevin near of Bloomberg Intelligence for joining us. Up next, we take a look at some of the latest big money moves in sports and talk a little about private equity with my colleagues Damian Sassour and Vanessa Perdomo. I'm Michael Barr. You're listening to the Bloomberg Business of Sports from Bloomberg Radio. Around the world.
- [28:20]
Kevin Near
There are two kinds of people in the world. People who think about climate change and people who are doing something about it. On the Zero Podcast, we talk to both kinds of people. People you've heard of, like Bill Gates. I'm looking at what the world has.
- [28:32]
Harold Reynolds
To do to get to Zero, not.
- [28:35]
Kevin Near
Using climate as a moral crusade and the creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty listen to Zero every Thursday from Bloomberg Podcasts on Apple, Spotify or anywhere else you get your podcasts.
- [28:51]
Damian Sassauer
This is Bloomberg Business of Sports from Bloomberg Radio.
- [28:56]
Michael Barr
Thanks for joining us on the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr along with Scarlet Fu and Damien Sassour. We've got an old friend of the show joining us now. Xavier Gutierrez is chairman and CEO of Impact X Sports Group. That's a private investment and strategic advisory firm with a focus on the global sports industry. He's here now to take us through some of the latest developments in sports investing, including the growth of private equity in sports. Xavier, welcome back to the Bloomberg Business of Sports.
- [29:30]
Xavier Gutierrez
Thank you so much for having me. It's great to see you guys again. I always enjoy coming in, man.
- [29:34]
Michael Barr
Thank you. We love talking to you. And I'm just gonna come out and say it. I have nothing against Utah. Yes, you guys got the Utah hockey team. God bless. Blah, blah, blah, blah, blah, blah, blah. But look, I was really cool with, I know the guy who is with the Phoenix Coyotes and I'm like, heck yeah. And then it didn't happen.
- [29:57]
Xavier Gutierrez
No, it didn't. It was very, very disappointing. So let me talk about Utah. Utah has been phenomenal. I mean, if you look at the embrace of that community, of the fans, Ryan Smith is an amazing owner. Obviously has done some incredible things with the Jazz and now obviously with the hockey club and you. Absolutely. A market that's going to be very successful for many, many years. Unfortunately, we had a plan and the plan was to build a privately funded arena entertainment district. It was very disappointing. That is a hockey market. I've said this from day one. It's the second largest Canadian snowbird market and it's been a hockey market for 30 plus years and it will remain to be a hockey market and hopefully the NHL will be back there in the future.
- [30:44]
Michael Barr
I thought Scarlin, it was a done deal. I'm like, just like you see the blackjack dealers and they slap the hands coming up next.
- [30:52]
Damian Sassauer
So close. It was close. So, Javier, you make really good points about Arizona being hockey market. Certainly it's successful at the collegiate level. What will it take for hockey, pro hockey to be viable in Arizona?
- [31:04]
Xavier Gutierrez
A facility. It stops and starts with a facility. I think that when the team first moved there From Winnipeg in 1996, if you recall, they actually played where the Suns currently played, and they had obstructed seats. Then ultimately they moved out to Glendale, Arizona, which is a very vibrant and growing market. It has this massive sports and entertainment center. But it wasn't the right location for a sport that you need to bring people in midweek. Obviously, the Cardinals do quite well. It's one game a week. It's typically on the weekends. But for us, it was quite challenging. It was a little bit frustrating further away from sort of the core corporate center. And so ultimately, it really, really undermined the attendance for many, many years. And we tried to rectify that. We tried to bring this vision of an entertainment district out in the East Valley, in Tempe first, and then in North Scottsdale, or North Phoenix, rather, next to Scottsdale. And it really is a facility.
- [32:09]
Damian Sassauer
Have you given up on the dream of pro hockey in Arizona? If there is. If the NHL returns to Arizona, would you be a part of it?
- [32:16]
Xavier Gutierrez
I mean, obviously, you never say never. I do believe that the NHL will be back in Arizona. I believe that the fan base is there, the corporate base is there, the growth. It's the fifth largest DMA in the country. And so you see all the momentum for sports there. You need a facility. And in talking with folks at the NHL, they'll tell you that, that it needs to. You need to actually physically see it, or you need to see the land being owned, the approvals having already been granted, and the capital being assigned. I do believe that that is a market that the NHL would love to be back in at some point in the future.
- [32:57]
Michael Barr
Javier was the first Latino CEO in NHL history. And you were one of the few real estate executives also in pro sports altogether. And that's like I'm saying, my man. All right, but you know what? You have something that is kicking butt here. The Impact X Sports Group. And more importantly, let's just say it involves the Giants. And I'm not talking about the football Giants.
- [33:28]
Xavier Gutierrez
Yeah, well, you know, we sold the team last year and I took some time off. I traveled with my wife, Jerrica, my son Javi, who's now a junior in high school until we went to visit schools. Then I started feeling a lot of phone calls from the private equity firms really targeting sports. Not only was I honored to be the first Latino CEO in the history of the NHL, I was one of the few real estate and private equity guys to run a team. As sports has become this institutional asset class, a lot of folks were interested in talking to Me, what I realized was, you know what? I would love to take your money, but I actually have a slightly different take as to the opportunities that exist. And that is, the core asset is the team or the league or the university. They have things right in front of them that they have to deal with, whether that's media facilities, players, or the sporting side. Then to the side of them are all of these amazing strategic ventures that if they had a capital partner and an operator, that they would love to go and take advantage of and it would be accretive to the value. So people think immediately, real estate. But there's so much more. This is the most valuable intellectual property in the world. And there are so many other businesses that you can leverage this intellectual property. And that's what I'm looking to do. So on one hand, partner with these large private equity funds to be my capital partner. On the other hand, create joint ventures with teams and leads and universities and say, how do we continue to explore leveraging new opportunities, strategic ventures?
- [35:06]
Damian Sassauer
Let's talk a little bit about private equity's roles in different teams. There was the news, of course, that Sixth Street Partners has bought a 10% stake in the San Francisco Giants. The MLB club, of course, it's the latest PE firm to enter pro sports, already has stakes in a number of pro sports teams. But just beyond providing funding for some of those other opportunities that you talked about, how do you see private equity's role changing the operations of some of these clubs and how they think about their growth potential?
- [35:38]
Xavier Gutierrez
I think this is a fantastic example of this. If you ask 6th street and they've made a public statement about this and the Giants have as well, what are they using the money for? It's not simply just for the team. It's for these of the extensions of the sports enterprise that is the San Francisco Giants, there's the team and then there's the enterprise. And that enterprise entails their massive real estate project that surrounds the stadium, Oracle Park. That is what I see the role of private equity is saying, what are these other components of the enterprise, of the holding company that we can go and take advantage of and we can invest in? And that there are no limitations. There are limitations when you invest in a team in terms of the percentage of ownership, the structure, the debt. When you're looking at these opportunities for the holdco not the team co a lot more flexibility, a lot more exit opportunities, a lot more structuring, I believe that private equity is looking at that opportunity and that valuation increase. I think we're barely at the first inning of looking at that as an investment opportunity.
- [36:52]
Michael Barr
I used to say that in order how does an owner make money when he or she sells the team? Now, with private equity they can make some coin because let's think about it, maybe there are some folks out there way back, you know, that bought a team for $34 in a six pack and now this team is like in the billions. So all you could just put up, like you said 10% and man, you made your money back.
- [37:22]
Xavier Gutierrez
Absolutely. Obviously the valuation increases are based on so many things. You have certain contracted and growing revenue for the teams, whether it's media rights, whether it's sponsorships, which are multi year even. There's been studies done that the renewal rates for season ticket members are fairly consistent. You have this revenue stream. The other opportunity is very similar. Take the team and look at everything else around it. I've said from day one, these teams are health and wellness businesses, they're technology businesses, they're consumer businesses, they're real estate businesses.
- [37:59]
Damian Sassauer
That's a lot of different industries.
- [38:00]
Xavier Gutierrez
100%. And so when you think of the valuation, because I get asked all the time, are we at peak valuations? I said, well, number one, most teams haven't tapped into their international markets. Number two, they haven't tapped into these enterprises that are extensions of the core asset. Plenty of people have talked about it. I know George Pyne at Brewing Capital had an extensive conversation very early on about these are enterprises, not teams. What you're seeing now is the investment thesis really pursuing that playing itself out.
- [38:34]
Damian Sassauer
Absolutely. Talk a little bit about your role as a Latino owner of a major sports team and with your movement to impact X Sports Group and your efforts to get private equity and think through building at the enterprise value. We're in a very different cultural moment right now. The Trump administration has been very vocal opposing anything DEI related. I'm wondering how that changes how you market what you're doing.
- [39:02]
Xavier Gutierrez
I don't think it changes at all. I think one of the areas that you see an emphasis on leaning into the growth cohorts, which are young, female, diverse, tech savvy and purpose driven, is actually in sports. This is a business imperative. These are consumer businesses. So what does the consumer look like in America? Where is it growing when you think of where these professional sports teams are? I've been asked a lot about, well, the backlash against dei. I said this isn't a dei.
- [39:37]
Damian Sassauer
This is not a feel good thing.
- [39:38]
Xavier Gutierrez
This is not a feel good thing. This is a business imperative. When you think of what, what the giants and where they're located and who they're targeting as ticket goers, as social media followers, as people buying merchandise. It's a very diverse community. They're leaning into that. I haven't heard a single team or league saying, oh, we're backing away from where the growth is coming in from.
- [40:03]
Damian Sassauer
They're recognizing their market.
- [40:04]
Xavier Gutierrez
They're absolutely recognizing their market and they're trying to be creative and innovative in terms of how do we capture them being where they're at and being in unexpected places. You're seeing collaborations across fashion brands that you've never seen before. The omnipresence of sports across multiple industries is a very concerted effort to go after this growth cohort. For me, when people talk to me about, oh, what's your reaction to this backlog? I go, I'm here to pursue a business imperative of capturing growth. And this is where I'm going after it.
- [40:42]
Michael Barr
Our thanks to Impact X Sports Group Chairman and CEO Xavier Gutierrez for joining us. And thank you for joining us. For my colleagues Scarlet Fu, Damien Sassauer and Vanessa Perdomo, I'm Michael Barr. Tune in again next week for the latest on the stories moving big money in the world of sports. And don't forget to catch our podcast and all your podcast platforms. Platforms. You're listening to the Bloomberg Business of sports from Bloomberg Radio around the world.
- [41:25]
Tom Keene
This is Tom Keene inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter. Each and every business day, we bring you a recap of what happened overnight in Europe and Asia. The day's economic data and complete coverage of the US Market open. We cover stocks, bonds, commodities, currencies, even crypto. All the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investments and international relations. We do all this live each and every weekday, then bring you the best analysis in our daily podcast search for Bloomberg surveillance on YouTube, Apple, Spotify or anywhere else you listen on the east coast. Listen at lunch and on the west coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keene, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts.