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- [00:00]
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- [00:49]
Paul
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Scott Sosnik
As they launch products.
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Paul
That's metronome.com.
- [01:21]
Podcast Host
Bloomberg Audio Studios podcasts Radio news. You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern. Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [01:42]
Paul
And one of the really interesting stories out today on the Bloomberg Terminals about the Boston Celtics consortium, including STG Partners co founder Bill Chisholm, who was actually originally an investment banker. Payne Weber, My old shop reached a deal to buy the Boston Celtics for $6.1 billion. Just extraordinary. You want to talk about the valuation of sports franchises, there's one place you have to go and that's Sportico. These folks do some outstanding work there. Eben Novi Williams and his partner Scott Sosnik. Scott Sachnik joins us here. He is Editor Chief of Sportico. Hey Scott, this is I'm a Knicks fan but I recognize value and boy, this Boston Celtics, they're getting a rich valuation, aren't they?
- [02:25]
Scott Sosnik
Yeah, they certainly are. It's the most ever paid for a professional sports franchise, topping Josh Harris's $6 billion purchase of the Commanders. And we all know the difference between the NFL and everybody else. So for this to happen in the NBA is quite extraordinary. And it's actually going to be a two tranche deal. So this first tranche, we understand, is at a $6.1 billion valuation three years from now. The second tranche, I think the rest of the 49% of the franchise that wasn't sold now is going to be at a $7 billion valuation. So perhaps accounting for inflation, but at a blended 6, 6, you can bet that Adam, Sil and the NBA's other owners are very happy with this transaction.
- [02:59]
Co-Host or Interviewer
All right, so done this one down for me, right? I would assume I can do that. Yeah, yeah. No, please do. All right. You got football and you got soccer, which they call football in Europe. But like, I didn't know that basketball was this valuable versus those other two sports.
- [03:12]
Scott Sosnik
Yeah, I mean, look at the media deal. First of all, they just re up with, you know, with Turner and ESPN a almost 3x deal from the last time. So the media rights are incredibly valuable. What you normally look at with these transactions are what's the media and what's the real estate. What really is surprising about the Celtics is all the ownership has is the team, albeit a tremendous brand. I mean, the Celtics brand in sports is premium platinum, top tier. I get it. But they do not own the building. They are tenants in the building. It's owned by the Jacobs and which own the family that owns the Boston Bruins. So you're really just getting the team. It's going to be really interesting to see. Now, how do you squeeze further value out of a roster that, yes, is a championship team, but is projected to lose about 70 billion. $70 million this year. So it's a high price to pay. It's. It remains to be seen how they can squeeze some more value out of it.
- [04:06]
Paul
What do we know about this Bill Chisholm? What do we know about this new buyer here?
- [04:12]
Scott Sosnik
Yeah, we don't know much about Chisholm. I mean, he grew up in the area. Grew up a Celtics fan. Watched them put the banners up. Larry Bird was his favorite player, went to Dartmouth. These are the things the growth specs sort of pointed out in their letter that we saw that he sent out to the ownership group announcing the transaction. But from a sports perspective, we don't have anything. Now, he was one of four parties interested. Another one of the parties, of course, was Steve Paliqa, who's a limited partner in the group now Pags. You know, early on he had made it clear he thought what a fair valuation was and I don't think over $6 billion was it? So he did bid on the franchise, but he didn't approach this number. Thus he's, he's happy to sit it out at this point.
- [04:52]
Co-Host or Interviewer
So no bidding war we're going to resume or anything like that.
- [04:56]
Scott Sosnik
Once you got to six, there was an early feeling during the transaction that the NBA really wanted this to begin with. Six, twofold. You always want the price to be going up. Your franchise keep the owners happy. But the NBA is also about to embark on an expansion process, whether it be Seattle and Las Vegas and or more. This sets a very high number for, for those two new markets. So everybody happy across the board if you're interested in NBA valuations.
- [05:23]
Paul
And Scott, we know that for a lot of these sports teams, the real value or much of the value is in their media rights. And if you're a national sport like the NFL, you're in a great, great shape. If you're a regional sport like baseball, like hockey, those regional sports networks and the, and the challenges they're facing because of cord cutting, that's an issue. How do you factor that in for some of these regional sports? You know, the kind of the weakness in the regional sports business, how do you factor that into valuation?
- [05:51]
Scott Sosnik
Certainly if you rank them top to bottom, NFL, NBA and then hockey and baseball. Hockey and baseball. Certainly they really need that local money, that local TV money, which has been disappearing on the regional sports networks, which we refer to over here as melting glaciers. So the national number is so high for the NFL, and that's just pool. So there is no local. You know, you don't air it that way. The NBA does rely some on local media money, but that national number is also so high. And the NBA, if you've been paying attention over the last few years, you'll notice they've been doing some micro transactions. You can buy the last five minutes of a game, you can buy pieces of games. They are very strong on social, they are very strong globally. These are really dominant brands around the world. Baseball just did a great job in Japan. Well, the NBA has a great market in China, Europe. So there might be something coming in Europe from the NBA in the near future. So if you look at the aggregation of eyeballs, it might not be people sitting down in front of the TV watching Quarters 1 through 4, but you've got people's attentions. Now the challenge for Adam Silver and his owners is I've got the eyeballs. How do I monetize it in a new media world?
- [07:03]
Co-Host or Interviewer
Actually, that's a great question because I was going to wonder like, how do you squeeze value? And you mentioned the Celtics in terms of the real estate and how do you then squeeze more value? So in general, how do you do that?
- [07:13]
Scott Sosnik
Excellent question. I mean, I can't answer that question. So I know what the new ownership group group is going to do. I would say that a global audience would be the place I would start. For the NBA. You have new markets in the U.S. we mentioned Vegas, we mentioned Seattle. That will bring a high price point. Then you talk about maybe a European league. And then your eyeballs outside the United States, basketball, unlike football. And you see the NFL and is trying awfully hard to broaden its fan base outside of the US Borders. It is not happening as fast as the NBA. That is a big advantage. Go. I'm not one that looks at the Twitter followers and the Instagram so much, but if you go check out the NBA, they lead the sports leagues in global eyeballs. That is certainly an area of. Of focus for, for all basketball teams.
- [07:59]
Paul
Scott, are you still a crazy hockey dad?
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Scott Sosnik
Oh, you know about this? Yes, I am. I am off to Madison, Wisconsin. Thanks for asking. I'm off to Madison, Wisconsin in early April for the Nationals. My son's team qualified. If I am not sitting in this office, which you see behind me, I will be in a ring somewhere in North America.
- [08:17]
Paul
See, folks, Scott and his partner Eben used to work here at Bloomberg. And I'd see Scott in the hallways and every weekend I'm like, where you going, dude? And it's like seriously low. I mean, just come on.
- [08:28]
Scott Sosnik
And we should do. Josh Harris and David Blitzer, as you know, are focused on investing in youth sports right now with their unrivaled platform. Good, right? Because the two places I see people spending money irrationally, their pets and. Exactly.
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Co-Host or Interviewer
Scott. Scott, we got to go.
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Scott Sosnik
We got to.
- [08:42]
Paul
Scott, sonic, editor in chief, Sportico former Bloomberg talking about this Celtics $6.1 billion. How about that?
- [08:50]
Podcast Host
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [09:04]
Co-Host or Interviewer
Let'S take a look at the market. Kind of what you. We are going to be in a stagflationary environment for a little bit. If you believe that. How do you manage it? Sandy Bragger is chief client officer at Experian. She joins us now from California. So if we kind of flirt with this stagflation scenario, a little lower growth, little higher inflation, how do you manage that?
- [09:23]
Sandy Bragger
Alex? We're not totally worried about stagflation at this point. We think the economy has been very strong for the last couple of years and sure it looks like it is going to slow in terms of its growth. So far, inflation has been stickier than anyone would like, but it should be in check. But in terms of portfolios and how we're working with our clients who are corporate executives, family, family business owners and entrepreneurs, we're, we're still thinking diversification is really important. Volatility, regardless of stagflation or not, we think is here to stay. And having a very diversified portfolio makes a lot of sense, not only for the near term but for the years ahead. And that's been a very different situation than has what has worked best over the last 15 years. Actually, if you go back and look back over your shoulder.
- [10:13]
Paul
Sandy, what's a diversified portfolio for? I guess your typical client. Stocks, bonds, all alternatives. Are they a part of that diversification?
- [10:22]
Sandy Bragger
They are, Paul? Yeah, we have a fair amount in stocks and within the stock portfolio we're tilting toward stocks that haven't done that well over the last couple of years. So we have a lot of value stocks, small cap stocks and a large tilt toward international, which we think is important. On the bond side, you know, that could be up to about a third of a client's portfolio. We're looking on the shorter end there because our clients are in the highest tax brackets. We like muni bonds a lot. It makes sense from an after tax perspective. And then we have anywhere from about 10 to 18% of client portfolios, mostly in alternative, alternative investments. And these are liquid alternatives and they might even include things like gold that have been doing really, really well this year.
- [11:07]
Co-Host or Interviewer
What about European equities and sort of expanding on that. Does that rotation have legs?
- [11:12]
Sandy Bragger
We, we think so. You know, it does look like Europe is about to spend a lot of money on defense. And you know, just like the United States, there's a lot of shocks that are kind of rippling through the global economy. But we do like Europe. Valuations are generally lower. Looks like some interesting things could be happening in Germany otherwise. You know, France and Switzerland are looking good from our perspective and they've been doing really well this year as the US Stocks have been correcting down about.
- [11:42]
Paul
On the fixed income side. Sandy, what are you advising your clients here? We're looking at the two year Treasury 3.95%. That's certainly a lot better than we've had over the last 15 years. Is that okay, or do you take some credit risk?
- [11:56]
Sandy Bragger
We're not taking a lot of credit risk right now, Paul. We think that, that staying on the shorter, shorter term side of the curve makes a lot of sense. There's not a lot of extra return available on the longer term side of the curve at this point. But we do, we do pay attention to the fixed income and we are a little, you know, wary with clients reminding them that there is risk in fixed income just like there is in stock. So as we've experienced the volatility so far this quarter, some clients have been asking if they should be rotating more to bonds. And we think, we don't think that's the case. We think having a fair amount of bonds in the portfolio with some interest rate exposure makes a lot of sense, but not going too far out on that curve.
- [12:41]
Paul
Sandy, thank you so much. We appreciate that. Sandy Bragger, Chief Client Officer for Aspirian, joining us via Zoom from San Francisco.
- [12:49]
Commercial Announcer
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- [13:16]
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- [14:17]
Craig Trudelle
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- [14:19]
Scott Sosnik
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Craig Trudelle
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Scott Sosnik
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- [14:36]
Craig Trudelle
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- [14:42]
Podcast Host
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [14:56]
Co-Host or Interviewer
All right, one story that we are watching, of course is Tesla. That stock is lower today as the company recalls the cybertruck after pieces of steel trim come loose. All right, joining us now is Craig, Bloomberg Global Audio's editor. All right, what happened here?
- [15:12]
Craig Trudelle
Yeah, so this is actually the second time that Tesla's had to do a recall for pieces of trim coming loose. And so it's maybe a little bit of a source of embarrassment because it's one thing to have an issue pop up that, you know, I think for all automakers, even the best ones, you know, they occasionally will have recalls that are a tad embarrassing in this case to have it happen twice. You know, granted it is a different part of the vehicle, but this truck, of course, was, was so sort of famous for Elon Musk's decision to clad it all in stainless steel. And apparently they're having trouble with the adhesives to keep that steel stuck to the vehicle.
- [15:56]
Paul
Craig, generally speaking, what's the, if I were to go to Consumer Reports, what's the general feeling out there in the auto world about the quality of a Tesla vehicle?
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Craig Trudelle
I mean, I think, I think for the cybertruck, it's really interesting that this is the eighth recall that they've done. Okay, that answers, you know, and to know some of them have been, you know, for minor issues. My favorite one last year, they violated a font size rule in the US where, you know, when, when you warn a driver that you know, of safety critical data, you've got to do it in a large enough font. And Tesla, you know, violated that. So, you know, that of course, is not a particularly, you know, I guess it's, it's not unserious, but it's, you know, a relatively minor thing. Some of these fixes that they've made, they've been able handle them via over the air software updates. But an issue like this trim defect, you know, they will have to, you know, have, have customers come into the stores or into the service centers, have a look at the vehicles and in some cases have to do some repairs that will cost the company some money. And you know, I think generally the reputation, I think early on for Tesla, there was a lot of you know, you know, noise within the auto industry about all this. You know, this company makes vehicles with, you know, big panel gaps. A lot of people didn't really necessarily care about that. And I do think to Tesla's credit, they've gotten better on quality. But you know, recalls like this don't, don't really help that reputation.
- [17:28]
Co-Host or Interviewer
So Tesla stock down at almost 2%, but it's not like it's been smooth sailing. It's been a really terrible few months for Tesla. What do you, what provides a bottom for this stock?
- [17:40]
Craig Trudelle
I think, you know, the cybertruck, you know, has been something of a letdown for them. Right. It's the one new vehicle that they've had, you know, really since the Model Y came out back in 2020. And so I think there were some hopes that this, this would be a big hit and I think it's, it's not really sort of delivered. I think the thing to look forward to if you're an investor is, is the redesign Model Y that earlier this year the company sort of released a look at the Model Y. It interestingly has, on the front end, it looks a little bit more like a cybertruck in that it's got a light beam, you know, running across, across it the way the cybertruck does. There's some improvements on the interior. But I think there are some real questions about, you know, is this enough in terms of, you know, real significant updates and upgrades to keep up with with a company like byd, say in China, you know, they made a lot of noise this week and turned a lot of heads with these claims about, you know, being able to charge your EV in five minutes. And I think there's, you know, a sort of creeping, you know, sense among investors that, you know, if you want to see sort of innovation in EVs, you really look to China and look to companies like BYD or Xiaomi as opposed to Tesla.
- [18:59]
Paul
And that in and of itself, Craig, is a subject of discussion here. When you, when you talk to the western auto companies that you speak with, whether it's a Volkswagen or even a Ford or whatever, are they prepared to cede the EV market to China?
- [19:14]
Craig Trudelle
I mean, I think the, the, the fact of the matter is, you know, it's already been ceded. You know, if you, if you count, you know, battery electric vehicles and plug in hybrid electric vehicles together, you know, it's roughly two in three electric vehicles that are sold, are sold in China. And you know, I think Tesla to its is, is a player to be reckoned. With in that market. But you know, in terms of who's the leader, it's far and away byd I think Zhao me, you know, is, is really getting a lot of attention, you know, not just among media types like me, but you know, Ford CEO Jim Farley has really sung that company's praises and, and he's not alone. There are other executives in the industry who I know really are watching what they're up to closely. It's sort of the Apple car that Apple, you know, didn't manage to pull off, didn't manage to make. And I think there's a concern within the industry about, you know, just how much of a lead Chinese manufacturers, and in Jamie's case a tech company, just how much of a lead they built.
- [20:17]
Co-Host or Interviewer
When we take a look quickly at the valuations for all these automakers, particularly in the market, like have we rerated enough for the decline in demand and for the tariff risks?
- [20:26]
Craig Trudelle
It's a good question. I think, you know, a lot of, a lot of the manufacturers have really been beaten down by the tariff uncertainty and that's been a global story. I think Tesla is still after this pretty significant decline since, since mid December is still an anomaly in the industry where they are valued at many multiples of anybody else. And so you know, I think there's still hope among some investors and a belief that there's a reason to treat this stock differently that Musk will eventually deliver on his claims about self driving vehicles. And he's also I think emphasized the potential for Tesla to become, you know, and robotics company even more so than a carmaker. But I think, you know, in terms of what this company does in the here and now and what it makes its money on its cars and that business is really slowing down.
- [21:24]
Paul
All right, Craig, thanks so much for joining us. Craig Trudelle, global autos editor for Bloomberg News, joining us from London.
- [21:29]
Podcast Host
This is the Bloomberg Intelligence podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon 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.
- [21:55]
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- [22:24]
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