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They told us to expect change. They warned us about the transition, but honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the
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Discover Bali iShares Large Cap Premium Income Active ETF iShares the market is yours. Visit www.ishares.com to view perspectives for investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed.
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Prepared by BlackRock Investments ll
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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Massar and Tim Stenbeck on Bloomberg Radio.
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B
Want to get right to our first guest. Connor Teske is Chief Executive Officer of Brookfield Asset Management. They've got over a trillion dollars in assets under management, touching into many different parts of the investment universe. And he joins us here at Bloomberg Invest. Nice to have you here with us.
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G
Thanks for having me.
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B
It's been a while and you now officially are CEO of Brookfield Asset Management. What's changed in your life?
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G
Very little. At Brookfield, we run a lot of businesses around the world. We like to run those businesses well. We like to run our own business quite well. And for full credit to Bruce and the other senior leadership team, this was a very thoughtful, methodical, incremental transition. Nice to get the announcement out of the way and just back to business as usual.
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B
All right, so that went as expected, but the world is kind of crazy to say the least, and I Think about the volatility we see as a result. We see it playing out to some extent in the markets today, but we do have an environment macro where things can change pretty dramatically. As we saw this this past weekend with us and Israel, the attacks on Iran. So I'm just curious for you, is it too soon to rethink kind of strategies at this point? Like what will it take to maybe say we've got to start rethinking differently about the macro?
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G
We're very long term investors. We focus on long duration assets that are essential and critical in the communities and businesses that they operate in around the world. And these are assets that produce cash across a cycle. They're down protected, they're inflation linked. So we will take a very, very long term view. And despite the headlines over the last weekend, our focus is on our people who are safe and our assets that are operating. So we continue to look forward and the fundamentals for the key themes we're investing in continue to be positive.
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D
Does the, does the geography change at all? And I bring that up because data centers, energy, infrastructure, big investment play for you guys. You teamed up with Qatar Investment authority on a $20 billion venture to invest in AI infrastructure. How does the war with Iran, the instability in the region, does it change that specific investment at all?
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G
It does not. And again, when something like the past weekend happens, the focus is on our people who are safe, both at Brookfield and our portfolio companies. And then our focuses are on the assets and those are all performing. When you think longer term about our focus on the region, it's an incredible region. It's got very significant growth. It's got an increasing presence on the, on the world scene. Those are the light, those are the types of asset classes and geographies that we want to be investing in long term.
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D
Could this make the region even more attractive? Is there an idea? I mean, look, we don't. The President spoke from the Oval Office today. It's obvious that there's not a clear person who is going to take over for the Supreme Leader or with regard to Iran's leadership at all. Nobody knows what's going to happen. But is there a chance that Iran becomes a more stable force in the world and that opens up opportunities for you in the region?
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G
I would say when we think about Brookfield and the types of things we invest in, they tend to have durations far beyond single administrations, political parties, individual leaders. And therefore we focus on the fundamentals. And when you think about things like data centers, like energy, the two you Just mentioned, the fundamentals today are better than ever before. And that's what's going to drive our investment decisions.
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B
Kind of one of the things that we love talking with you guys specifically is, I mean, I think about Brookfield asset management. You've got 273 billion in assets under management. When it comes to real estate infrastructure, 247 billion. Renewable power transition. This is something that you have been overseeing for a while at the company. 143 billion in assets under management. Credit, 363 billion. Where are you seeing though, any signs of stress? Are you going to tell me the whole portfolio is fine?
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G
So I think the topical one today is credit. And the first thing we would say is everyone needs to take a step back. Credit, private credit and direct lending are almost used synonymously in today's market. And they represent very different things. Our view is credit markets are actually in very good shape. Corporate balance sheets are strong, banks are great. Capital markets are incredibly liquid today. Then you can move to private credit. Our private credit focus is on three things. Asset backed lending, real asset lending and opportunistic credit. All of those are seeing very strong fundamentals. And then there are some concerns in direct lending today. And there are concerns about tightening credit spreads, corporate credit quality deterioration, maybe some concerns about liquidity. It's important to recognize that direct lending is available. Very small component of the broader credit market.
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H
So.
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B
But are there any situations that your guys are concerned about or. No, I understand it's a small in
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G
proportion, but we've positioned the business really well over the last few years and we've been very cautious and incremental about our exposure to the headlines. The themes that are dominating headlines today, whether it be software or retail funds. Well, we have some. It's de minimis. What's more important is we've positioned our entire business to be a net beneficiary from AI penetration. And then the other exciting thing for us is we've recently announced our full partnership with Oaktree, a very contrarian credit investor that's extremely well placed to go to work in this environment.
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D
We'll get to Oaktree in just a second. One more on credit though, outside of your portfolio. And what, when you look across the credit landscape, what gives you pause? Not Brookfield's assets, but you know, out
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G
there in the environment, in the environment today. I think the thing that we look at is sometimes there is issues with underlying credit quality and sometimes there is issues about liquidity in which these credit investments are held. And those two things are very different. And in today's environment, they're sometimes being conflated. There's a lot of talk about perpetual credit vehicles. We think these vehicles long term are great. They offer a unique private market exposure to a wider spectrum of investors that can offer diversification, that can offer growth. But those vehicles are perpetual in nature. They need to be managed, they need to be invested appropriately and they. They need to be executed in a way that is thoughtful given the liquidity requirements they will have over time.
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B
Your understanding and Brookfield's understanding of like the financial markets, this push to kind of spread those things like private credit to a wider investment pool, if you will. Do you think that still makes sense?
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G
Absolutely. Yeah, absolutely. Private markets offer an incredible opportunity for investors of all type. It gives them diversification versus what they can get in the public markets. It can give them exposure to some of the most exciting growth themes that are sometimes difficult to get in public stocks and bonds and historically, private markets have offered a premium return. It comes down to a very simple fact that when they are offered to the individual investor, it needs to be through a structure that is well understood on both sides and is managed appropriately from both an investment and a liquidity standpoint.
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B
And so understand it's not liquid. So understand what you're investing in.
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G
Understand. And there is an onus on the manager to, to appropriately manage those vehicles. I'll tell you, from the Brookfield standpoint, we've been very incremental and thoughtful of our growth in this space, at times restricting capital to, to avoid any situations that there could be a liquidity crunch.
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B
Can we squeeze in one real quick one? About 45 seconds or 60 seconds on AI in terms of the data center build, what do you continue to see? And has anything changed versus what we've seen in the last six to 12 months? You're starting to smile, so I'm assuming no.
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G
It's exciting. And the reality here is the demand is being driven by the largest, highest quality credit counterparties, the best corporates in the world and the best sovereigns in the world. And this is creating what is going to be a productivity enhancement for economies and businesses going forward. It needs large scale capital. It needs operating expertise across energy, real estate and digital infrastructure. We're excited because we think there's a big role for us to play.
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B
So nothing slowing down.
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G
Nothing slowing down.
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D
Stay with us. More from Bloomberg Businessweek Daily. Coming up after this.
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A
They told us to expect change. They warned us about the transition, but honestly, they forgot the best part. This is the chapter where we finally focus on us LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the
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best years of your life.
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A
LifeMD it's just getting good. Visit LifeMD.com GoodLife the thing about AI
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for business it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
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A
You're listening to the Bloomberg BusinessWeek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
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D
Lynn Martin is with us. She's president of the New York Stock Exchange. She joins us here at Bloomberg Invest in Downtown Manhattan. It's interesting because it seems like there's been this sudden change in sentiment. We saw an IPO pulled this week already. Is this conflict enough to materially change how companies are thinking about ipoing?
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H
I don't think so. I mean, there's always going to be geopolitical events happening. And the political framework is always going to continue to evolve. And if you're a global good company, you can always go public. I mean, you look at the volatility we saw in 2022, 2023, 2024, we had some amazing companies go public and do really well, raise a ton of capital to fund their operations, to build R and D capabilities. And they're trading at levels that are multiples of where they ipo. You look at a company like Reddit, for example, that IPO'd around this time in 2024, it's done extraordinarily well. So I think companies need to be mindful of how anything that's occurring on the geopolitical landscape is going to affect their businesses in the short term, medium term.
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B
What's. What's more difficult land or what's the thing that kind of makes you kind of want to pull your hair out? Is it the geopolitical. Is it stuff out of Washington or is it the constant and increasing growth of private markets that allow companies to stay private longer? Like, it's pretty staggering.
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H
You know, I think the thing that makes me want to pull my hair out is, you know, the narrative around what we could do to fix the fact that companies don't necessarily see a quick exit in the public markets. If you take a couple of steps back, yeah, our public markets are the envy of the world. You look at the amount of capital that gets raised, their secondaries, IPOs, whatever the case may be, it's extraordinary. It is why more and more companies are looking towards the US as the most desirable geography from a capital formation standpoint. When you think about why a company isn't going public, a lot of times it is the areas that Chair Atkinson covered In his Make IPOs Great Again speech, simpler disclosure frameworks, looking at mitigating some of the litigation risks that face public companies, those types of things, significant shareholder reform, proxy reform, things of that nature, that's really what keeps companies off to the sidelines.
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B
Is there something that Lynn, to be said that by having though a pretty deep private market and allowing companies to stay private a little bit longer, that when they finally go public, they're a much healthier company?
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H
Absolutely. Absolutely. I've been saying this for years. Companies being private for longer, that's a great thing because to your point, when they come out to market, they have refined their strategy, they have a very clear path towards profitability, or they're already profitable and they're ready to take that next step in diversification of shareholders.
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D
What about ending quarterly reporting. Does that, does that prevent blasphemy? Well, I mean the president pushed for that.
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B
Yeah, I know, I know.
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D
The SEC chairs looking to fast track it is. What would that do in your view?
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H
It's a bit of a two edged sword because what does eliminate in quarterly reporting necessary necessarily mean? You don't want to give people less transparency around financials.
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D
Oh, we, we, we hear you there. That's like our job.
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H
But if you're a newly public company, should you have to report your first earnings call 45 days, within 45 days after you've IPO, you've just given investors a very clear forward guidance and a clear look at your financial what really changed over those 45 days. So there, I think there's probably a path forward that makes it less punitive but doesn't sacrifice the transparency. And potentially something we've advocated for is if you're a newly public company, maybe you don't fall into the quarterly reporting cycle immediately.
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D
So it sounds like you are a fan of quarterly reports. I am. And I think I don't want to speak for you, Carol.
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A
I do.
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B
I mean, you know, I, I often think about how it sometimes is frustrating for companies because you know, look at the build out or different things that might be transformative or are transformative that in order to spend money it's going to impact you, you know, in terms of your balance sheet. So where do we kind of give some leeway for people to do this?
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D
Right.
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B
But I also do think we have seen things go wrong. And so I love like you say, the US market. It's deep, it's liquid, it's incredibly transparent.
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D
And that's why it's the envy of the world.
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B
It's the envy of the world because I think of that.
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H
Right. But a silver bullet is not necessarily okay, decrease the amount of transparency you're given to investors. Although I do think there is a role for less, less frequent reporting for the newly public companies. But then also what are you reporting? How are you reporting it and does it look like a quarterly earnings call or does it look like just a simple financial update?
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D
Can we talk prediction markets?
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E
Please do.
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D
Okay, so the Nasdaq, NASDAQ is working on. Yes. No contracts. We saw this news break yesterday. Our colleague Cat Doherty reporting this. You have a polymarket investment.
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H
Yeah.
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D
Give us an update on how that partnership is going. And, and I'm curious if you would consider just doing prediction markets yourself.
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H
Yeah. I mean if there's a regulatory framework that allows for us to do it we absolutely would, would look at that as an opportunity. But our to your question, your initial question is our investment in Poly Market. The partnership's going incredibly well. We announced an investment in polymarket, about a billion dollars last fall. It was really focused more on the data side and giving transparency, particularly when you look at how the data is impacting your more traditional markets. Great example is, which I love to tell people is I was on the floor on election night and I remember looking up and you've been to the New York Stock Exchange. You see all the technology and market data that is, that is broadcast every day from there. And I saw the market starting to spike up. I said, well, what just happened? The S and P futures in particular started to spike up. I said, what just happened? And someone said, polly just called the election for President Trump. And that was more like a double click moment. Like, oh, interesting that the prediction markets are influencing what is occurring in your more traditional markets. You look at everything that's gone on this past weekend. The Strait of Hormuz, which we've all been focused on, how is that impacting energy markets? Our parent company is the leader in energy futures contracts. So what you see on polymarket around news and sentiment around the Strait of Hormuz is impacting what happens in our energy market.
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B
Just got about 30 seconds. Has become though more than just there's a lot of sports and sports gambling that still happens on these, these marketplaces. Does it change? How does it change? How quickly does it change?
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H
So poly, our interest in Poly was because it wasn't as focused on the sports betting market. It's more focused on the geopolitical. They were a little bit different when you look at the markets that they had operated.
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A
You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoon from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube telmaster.
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B
Tim Stanwick live here at Bloomberg Invest. It's all happening behind us. It's all happening next to us, which is why we want to bring in John Rogers, founder, chairman and co chief executive officer of Aerial Investments, joining us here at Bloomberg Invest. Thank you so much. We've got a lot going on. We appreciate your patience. I want to go back to something. How are you first of all doing
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I
okay, dealing with all this volatility and craziness?
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B
Well, is it crazy? John, I love talking to folks like you. You guys have been investing for a long time. You've seen a lot of market cycles like there are, you know, how do you kind of factor in this one and the stuff that feels like every morning we can wake up and there can either be something out of Washington that really impacts the trade and there are days it doesn't. So how do you kind of work all that in into strategy?
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G
Well, I think of the 42 noise, if you will.
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I
Yeah, I mean, the 43s of Ariel. We've had lots of ups and downs. 1987 crash course, 08 and 09 financial crisis. But this is the first time we're seeing like they're sort of, we're making this crisis happen, you know, making a conscious decision to make policy decisions, whether it's the tariffs or now, whether it's the war, and that's causing all this drama and all this angst. And that's something that's unusual and different for us.
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B
How do you trade that?
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I
Well, I think on the one hand you trade it is that we know that President Trump cares about the markets. He sees that as a scorecard. So the one positive thing you can pluck out is that eventually he figures out a way to adjust, to get things back to a calm state. Eventually. But you just hope he doesn't go too far, you know, one more time and stretch and do something that really, he can't pull it back.
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D
You know, I'm curious about your view on this, that as it does not relate to markets, it sounded like you were saying that we've entered a new paradigm, at least with the decisions that this administration is making. I'm wondering how you're looking at that. We understand that what the president wants to achieve with tariffs, I would not say I understand what he wants to achieve right now. Yet with Iran, we're still waiting to hear exactly what the US Wants to achieve there. But, but how do you view this? Not necessarily with regard to markets?
- [23:07]
I
Well, what I worry about is that Iran does something that's extraordinarily painful for America or another part of the world as they fight back and feel like they have to defend their honor. They'll just do something that will be. We'll all have a hard, hard time living with over the long run. So we all saw what happened when the World Trade center collapsed and all the trauma and drama and extraordinary heartbreak from that situation. And you just hope that nothing like that happens again ever in the United States or in our friendly countries.
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B
Gotta say, I went right there after this happened, and that's what I thought about retaliation. Any of us who were here in New York during 9, 11. Remember it like it was yesterday. And it does make me a little scared and I'm not an alarmist, but it did make me think, okay, what's the retaliation of all of this? We're going to set that aside.
- [24:02]
D
I can, we can shift back to markets. Carol, we can shift back to market.
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B
I want to go back to something you said actually in January and I was doing some read in on this and you said the US Will likely slide into a small recession at the end of the year. Stock market will drop as average income consumers struggle with high living costs. And this was I think at the Executive Club of Chicago's annual Outlook event. And you talked about the Dow may be declining 15 to 20% this year. But it, and it also got into this dichotomy which I think really increasingly. I know it bothers us wealthy consumers doing okay. So many other consumers are not. So talk to me about that. Do you still feel this way that maybe we see some kind of small recession?
- [24:42]
I
I still do. I've never seen anything quite like it. I know a lot of people have been talking about this, but we're right when people are still going and spending money on, on cruise ships or going to Las Vegas for experiences doing things that are really the wealthy people can do right. But the average American is really, really struggling. You know, I go to McDonald's pretty much every day and you see how much it costs to, you know, buy your drink and your French fries and what happens. And you realize that ordinary Americans are having a hard time covering the cost of just day to day life in America. I think that's a real challenge for our economy, a real challenge for certain industries.
- [25:20]
D
It's the case. The so called K shaped economy is something that we talk about a lot and we think about a lot. Are there policy proposals or are there policies that the US government could enact that would make the gap between the very wealthy and the poor or that would bring it bring back the middle class? I think is something that we talk about a lot too. Is it something that you think the free market can solve? How do we get out of this?
- [25:43]
I
I think the free market will solve it. You know, we, America always goes to extremes and things ultimately get back to back to normal. Warren Buffett says, you know, our capitalist democracy is the best system ever invented and so we'll ultimately put the right people in place. Governments will shift and change and people will be able to get to a place that I think will bring back a better, better life for folks from middle America. And I think that's really, really important. I think keeping interest rates reasonable, keeping inflation low is really, really important. Creating the other tax policies that are fair and equitable. So I think we'll get there. It takes a while, but we'll be on our way back. And I think we're in that process.
- [26:24]
D
So you're optimistic?
- [26:25]
I
I'm optimistic that we will create the wealth gap in our country will start to diminish over time.
- [26:31]
B
So when I look at, I talk a little bit about the investment environment we saw broadening out, certainly in terms of where investors were placing some bets here. Where do you see some mispricing within the market, where you think that that presents some opportunities for investors?
- [26:46]
I
Well, I think right now the financial services companies are what I think have gotten to be extremely cheap. They've gotten, you know, very, very worrisome about what's happening with private credit, as we all know, and you guys are reporting on and talking about all the time. But I think it's overdone. I saw David Rubenstein speak last week. He was interviewed by our chairman, Charlie Bobrinskoy.
- [27:05]
H
Yeah.
- [27:05]
I
You know, in his optimism around about Carlyle, I thought was. Was striking. And I think they've gotten sort of hit with what's happened in private credit everywhere. Even though they have a small exposure to private credit, there's also been this huge concern around private equity that people won't come back, that, you know, it's be harder and harder to raise funds. I think as interest rates get lower, companies that have the kind of brand that Carlyle has will be able to do extremely, extremely well. And then secondarily, a company like Lazard, you know, one of the world's best investment banking firms, Peter Orszag has done a great job in getting that company on track. It's moving in the right direction and being one of the best investment bankers, they're going to benefit from all the deals they're going to happen in this deregulated environment. It's a, it's a really a great opportunity for companies to buy, merge, do things that are right for shareholders.
- [27:53]
B
It's really kind of refreshing. I haven't heard you say I. Where does that fit in?
- [28:00]
D
Is that a. It's not a value? Right.
- [28:04]
B
Where how does that factor in? Like, because I do think the AI trade has evolved over the last two, three years in terms of where investors want to place their bets. And now we're talking a lot more about inference and agentic AI and, and kind of where that's going. But I think we still don't know a lot.
- [28:21]
I
We still don't. And we're working really, really hard on it. At Ariel, we're using some of the top academic minds at the University of Chicago to help guide us as we think through which industries will be the most disrupted, which ones will not be disrupted and where. Maybe the fear is overdone. So like for us, one of our favorite stocks is Jones Lang LaSalle JLL. You know, real estate brokerage is still an important business. It's a complicated business. If you're a CEO trying to move hundreds of people from one office tower to another, one campus to another, you need a great broker who can help you see and have the insights that are there. So I think AI helps to make them more efficient and more effective. And AI is not going to replace that real estate broker the way some
- [29:03]
D
people are afraid of so much of the concentration, literally. And when it comes to coverage of the market has been mega cap tech names. And I'm wondering if it's possible in your view. I think I know what you're going to say, but if it's possible in your view to outperform mega cap tech or the S P500 by excluding those from a portfolio, by finding those value names.
- [29:29]
I
Well, I think so. As we, you know, I've been very public. I think the large cap growth stocks have gotten way, way, way too expensive. Everyone's fallen in love with that trade for quite a long time. But oh, I've seen this happen time and time again in my 43, three years at Ariel, but also saw it throughout history. The Nifty 50s, during the, you know, during the 70, the Nifty 50 stocks. You saw it during what happened in the go go twenties. People just fall in love with the sector and think it's just going to go up and up forever. And the small stocks get neglected, they get misunderstood, they're not as well followed. And so opportunities gets created because everyone's fallen in love with this hot, shiny, shiny dollar out there.
- [30:08]
D
And you think that's happening right now?
- [30:10]
I
I really, really do. Up until most recently, I mean I've seen the palantirs of the world and others have finally started to have some of their comeuppance. Reminds me of what happened during the turn of the century when the Internet bubble finally burst. So you start to see some signs that the world is coming back to rationality and people are realizing some opportunities in their smaller names.
- [30:29]
B
When it comes to the investment environment, are you anticipating that investors need to be thinking about it's going to be a higher rate rate environment going forward. And so you've got to think about that and what it means in terms of valuations.
- [30:40]
I
Well, I think I'm more optimistic about rates.
- [30:42]
B
I think they'll go lower.
- [30:44]
I
I mean, they'll go lower.
- [30:45]
H
Okay.
- [30:45]
I
I really do. I think that the new Fed chairman is clearly someone who's going to want to make the President happy. He's going to do everything he can to bend the will of the Federal Reserve.
- [30:56]
B
Doesn't that make you nervous, though? If it's not fundamentally based on long
- [31:01]
I
term, it makes me nervous. But I do think in the short to intermediate term, if we keep rates lower, it's always good. Low rates are always positive for the markets. And of course, there's some, some things will come back to haunt us because of it.
- [31:14]
H
Yeah.
- [31:14]
I
But I think that's more longer term. In the short term, I think this will be something that will be a. Help the market stay where it needs to be and be sort of a tailwind for the markets.
- [31:25]
B
It doesn't sound like when we, you know, one of the narratives it felt like we were coming into was, I mean, think about Biden before President Biden, before President Trump won the election, like the US Was the best place to invest when President Trump came in a year ago, again, like the US Market was the place to invest. And then we were just thinking about the US Being uninvestable. Like that became a narrative.
- [31:50]
D
And it, to a certain extent, even though the US Markets did well last year, there was a lot of underperformance compared to global markets for 2025.
- [31:57]
B
Is that, is that something you think a lot about or that we are seeing investors start to diversify away from the US Market, or that's impossible because of how deep and how liquid the US Market is.
- [32:11]
I
I think it's really, really hard to diversify away from the US Markets in any meaningful way. We still have the deepest economic system, the most successful economic system, the best universities in the world. You know, we're the United States of America. And even though there's been all this drama and trauma right now, yeah, ultimately, people want to come back to the country where you can count on our currency, you can count on our democracy and our, the regulatory environment that we have, and just all the great success we've had, Wall street to Silicon Valley, I think that America is, is the best.
- [32:46]
B
So this is just a blip, I think so. It's just, it's, it's because it's interesting. I think we try to figure out the lasting impact of the last year or so.
- [32:56]
D
Well, one thing that we're trying to figure out is the impact that immigration or a lack thereof will have on the economy here. If we think about in recent years, Americans not having enough babies and one of the ways that has been supplemented and we've been able to avoid turning into Japan, for example, is because we have had people come to the United States and increase economic activity that we wouldn't have had had we not had that. And I'm wondering how we have to adjust our expectations for a world that is increasingly, I was going to say isolationist, but we're not necessarily seeing that right now, but one that looks inward toward itself more than looking outward.
- [33:34]
I
If you look out two to three or four years, we will be past this crisis, this isolationism, the challenges that we face one way or another. You're going to have a new president, you have a new government, and I think America will still be in a strong, strong place.
- [33:47]
D
Stay with us. More from Bloomberg businessweek Daily Coming up after this.
- [33:55]
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- [36:33]
A
For certain, you're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube killmaster.
- [36:49]
B
Tim Stenvic life here at Bloomberg Investor in downtown New York City. So happening just a while ago right here at Bloomberg Invest, a live taping of the hit podcast the Deal with Alex Rodriguez and Bloomberg's Jason Kelly. They were sitting down with Alex Waxman, the CEO of 6th Street. Alex Rodriguez, as you know of course chairman and CEO of a Rod Corp. He's also co owner of the NBA's Minnesota Timberwolves and the WNBA's Minnesota Links. And he's a former three time American League MVP. But we all know that. How are you?
- [37:17]
F
I'm doing great. Great to be here. Good to see you guys.
- [37:18]
B
Well, good to see you. Tell us a little bit about Alex Waxman and the taping for the deal.
- [37:23]
F
Incredible story. I mean his background and he spent 10 years at Goldman Sachs and he basically ran a $30 billion fund in which they can invest in any asset class which really gave him a competitive advantage. He's now brought that over when he co founded 6th Street 2009. They have over $100 billion in the AUM and he's really deep in sports. He's done investments with the with all major leagues. He's done the San Francisco Giants baseball, he's done the Celtics and San Antonio spurs in basketball. And he just bought a minority stake with Jonathan and Robert Kraft with the New England Patriots. Fascinating and great, great conversation.
- [38:02]
D
So I'm curious about the opportunities that he sees right now. And you know, obviously he's, he's taking advantage of the new rules about being able to buy into different leagues, which is a whole conversation that, that we could have. But what really excites him when he looks forward?
- [38:17]
F
I think a few things. I think markets, depending on what team, what leagues, what league, the leadership of the three leagues. Fortunately for us, we have, you know, Adam Silver, Roger Goodell in football, and Rob Manfred, all very established, very top tier commissioners. So all that's good for, for him. And I think when you look at the NFL, the combination of appreciation and cash flow is something that's very, very unique in sports. You don't have usually both of those so aggressively so. I think he's really concerned, not concerned. I would say this baseball's an interesting situation. I think baseball is the best opportunity to invest today. I'm a contrarian by nature, so I would invest right into the teeth of this collective bargaining agreement.
- [39:00]
G
Why?
- [39:00]
F
Why? Because I think you can buy a very, very attractive multiples and you're making, I think, two very safe bets. One that the CBA will get better, not worse. Right. And the second one is that Rob Manford would take a page from Roger Goodell and consolidate all the regional sports rights.
- [39:17]
H
Yeah.
- [39:18]
F
And make it more into national rights. And you get an expansion in multiples.
- [39:23]
D
So will there be a labor stoppage after this season?
- [39:25]
F
I hope not. I don't know. But I've talked to members of both sides of the aisle and they have said, meaning owners and players, and they're both dug in pretty, pretty strong.
- [39:37]
I
So.
- [39:37]
D
So maybe is what you're saying.
- [39:39]
F
So I don't know.
- [39:40]
D
Would that change your view on where, on, on investing in baseball?
- [39:44]
F
No, I would invest even heavily into it because as you have more noise, as we've seen in the public markets the last couple days, you have volatility.
- [39:52]
B
Yeah.
- [39:52]
F
Where you have apprehension. I think you have opportunity. And the multiples, if you can buy a baseball team in four or five multiple versus other sports that are trading in mid teens, I think that's an opportunity.
- [40:05]
B
Would the players ever agree to a salary cap, you think?
- [40:08]
F
I don't think so. I don't think so.
- [40:10]
B
So they are.
- [40:10]
F
No, I think. I don't want to comment into that because I have friends on both sides. But here's what I would say. It should Be a mentality about grow the process, pie as big as possible. How you guys divide it, that's a separate conversation.
- [40:23]
H
Yeah.
- [40:23]
F
But, you know, going back to Marvin Miller, when he started the union for Major League Baseball, which has always been very, very strong and highly regarded.
- [40:29]
H
Yeah.
- [40:30]
F
And the owners, there's been a lot of conflict over the last five decades. So how do you bring it together to say, let's work together to grow the pie as big as possible?
- [40:38]
D
Why does it seem like baseball has the most issues with labor?
- [40:41]
F
I think it has a lot.
- [40:42]
D
Am I right with that?
- [40:43]
F
Yeah, yeah. I mean, the history is very strong. Marvin Miller was the head of the union. He started it. Then that went to Don Fear for many years, who's a great, great leader. And then Michael Weiner, Tony Clark. And now they have a different situation right now. But it's been that way, Tim, since I was involved. I remember that every time CBA came, it was. It was a battle, and somehow or another you figured out. But I will say that this is the most important year for baseball and labor talks in the history of the sport because of how many attractions we have out there between Netflix, YouTube, Bloomberg, you name it. There's just more assets that everyone's fighting for the consumer.
- [41:27]
D
So do you think about. Do you think about the collective bargaining differently now that you're an owner of a. Of a sports team?
- [41:36]
F
That's a great question. I think overall, like 90% of my thoughts still the same is you want the sport to be healthy, you want it to grow, you want it to collect more fan base, and you want millions of people watching every day because it is a great sport. And the World Series this year showed us that when you have the right product, you have the right market, you have the right superstars in Vladimir Guerrero Jr. In Shohei Ohtani, that you have 53 million people watching. When you include the U.S. canada and Japan, which is pretty. Baseball still works.
- [42:08]
I
Yeah.
- [42:08]
F
And when there's a lot of noise, there's a lot of opportunity.
- [42:12]
B
So, you know, you talked about. You're right. Sports is vying for all of our attention with so many other things. So when you think about investing, how do you think about, like, how does that play into where you want to commit some. Some money?
- [42:25]
F
Well, you want to moat. Right. Think about this. Take the NBA. If you're a real estate investor and there's only 30 beachfront properties in the entire world. Yeah, boy, you would do anything to own one of those. So scarcity is a big deal. When you look at the TV deal that just was signed 11 years, won the first year of 11 years for 77 billion. That's something that is easy to underwrite, easy to understand. So you like to invest into that, you know. And then when you think about the global growth in the NBA, you know, 20 years ago there's probably less than 3% of the league was global athletes meaning born outside of the US. Today that number's balloon to 35% right? When you look at Europe, second most popular sport in Europe, the NBA basketball and is a 45 billion annual business and we only own 1% of that. At the same time you have 400 million people playing basketball in China, 300 million playing in India. So the global scope you can say from the American sports NBA could be number one.
- [43:31]
A
This is the Bloomberg Business Week daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.
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