Carnival Cuts Profit Outlook as Iran War Pushes Up Fuel Cost

Summary

---

Bloomberg Intelligence Podcast

Episode: Carnival Cuts Profit Outlook as Iran War Pushes Up Fuel Cost
Date: March 27, 2026
Hosts: Paul Sweeney, Scarlet Fu
Guests/Analysts: Brian Egger, George Ferguson, Matthew Shelton Helm, Randall Williams

---

Overview

This episode dives into multiple headline themes impacting investors:

1. The cruise industry’s revised profit outlook due to soaring fuel costs caused by geopolitical unrest in Iran.
2. The emerging legal risk landscape for social media giants such as Meta and Alphabet.
3. Outlook and strategy for U.S. airlines in the wake of surging fuel prices.
4. Major League sports expansion and labor issues—focusing on the NBA and MLB.

---

1. Cruise Industry: How Iran War Impacts Carnival's Profit Guidance

Key Segment: [02:06–07:35]

Main Discussion Points

• Carnival’s Q2 results were strong on bookings and demand, but profit outlook was cut

  • Carnival raised revenue yield guidance but had to reduce its EBITDA forecast due to a substantial increase in fuel costs directly tied to the ongoing war in Iran.
  • Brian Egger: "They had to cut EBITDA guidance because the cost hit from fuel due to the war in Iran...Our concern is that [Carnival] assumes 80 to 90 [dollars per barrel] in the second half, and what if that's much higher? That’s the concern." ([02:29])

• Demand Remains Robust But Fuel is the Problem

  • 85% of Carnival’s bookings for the year are already sold; revenue visibility is high.
  • Fuel price increases are expected to take about $500 million off adjusted net income for the full year despite $150 million in offsetting cost savings.

• Can Cruise Lines Pass on Fuel Surcharges?

  • Cruise lines rarely add fuel surcharges, opting instead to absorb costs.
  • Egger: "You're not seeing so much in terms of a fuel cost surcharge." ([03:20])

• Inflation and Onboard Spending

  • Carnival and peers rely on significant onboard revenue (excursions, drinks, amenities).
  • Sustained high fuel costs could curb discretionary passenger spending, despite favorable yield outlooks.
  • Egger: "[Onboard and pre-cruise spending] could be subject to vulnerability if there is a major change in discretionary spending on fuel." ([05:05])

• Efforts Toward Fuel Efficiency

  • Increasing use of LNG and, in a few cases, even hydrogen-powered ships.
  • "The amount of metric tons of fuel consumed per passenger capacity day has over time gone down." ([05:37])

• Hedging Practices

  • Carnival historically does not hedge fuel; some competitors do.
  • Egger: "Carnival has not hedged historically... Norwegian and Royal Caribbean do hedge." ([06:30])

Notable Quotes

• Paul Sweeney: "The thing that people like about these cruise lines...is that they have a lot of visibility into their bookings because people book years in advance." ([02:57])
• Brian Egger: "...even with $150 million in offsetting cost savings from efficiencies... impact on adjusted net income from the fuel price increases... could be about $500 million." ([03:20])
• Host: "All I know is I'm sitting on the beach in Aruba and I can see the smokestack from the port there of Aruba as ships are docked and it's just billowing up..." ([06:14])

---

2. Social Media Litigation Risks

Key Segment: [07:56–13:16]

Main Discussion Points

• Litigation Landscape

  • Recent jury verdicts against Meta and Google (YouTube) for personal injury, with awards at $3–$6 million and a $375 million case in New Mexico.
  • These cases are signals (“bellwether cases”) that will shape industry settlement talks.

• Individual vs. Mass Claims

  • Individual lawsuits are likely immaterial for company finances (Meta, for instance, earned $60 billion last year).
  • Larger risk may come from state attorney general and school district lawsuits, which could aggregate claims.

• Corporate Defenses

  • Social media companies cite the First Amendment and Section 230 as major legal shields.
  • Expected to appeal jury verdicts aggressively.

• Stock Price Implications

  • So far, damages are minor, but the overhang of bad headlines and uncertainty is pressuring shares.
  • Ongoing litigation risk could push social media companies toward a global settlement.

Notable Quotes

• Matthew Shelton Helm: "These are just the tip of the iceberg. There are a number of other cases lined up to go to juries this year." ([08:43])
• Helm: "These individual personal injury suits are lower down the line because of their individualized nature. Meta made $60 billion in profit last year, and a $6 million loss isn't a huge deal." ([11:21])
• Helm: "It's going to be a lingering and ongoing risk that helps drive a global settlement here to make this litigation go away." ([12:31])

---

3. Airlines: M&A and Fuel Price Pass-Through

Key Segment: [13:37–18:37]

Main Discussion Points

• JetBlue’s M&A Hopes

  • JetBlue’s failed Spirit deal left it vulnerable.
  • With fuel costs doubled and weak post-pandemic financials, M&A or new partnerships could help the carrier weather a tough summer.

• Passing on Fuel Costs

  • Airlines generally pass increased fuel costs along to customers, with a time lag.
  • Most U.S. airlines no longer hedge fuel (once common, but hurt many during past shocks).

• Will Ticket Prices Rise Permanently or Temporarily?

  • Fare hikes are likely, and surcharges may occur but are less common than in sectors like parcel/package delivery.
  • Intense competition keeps fares dynamic; prices could fall if fuel pulls back or if some airlines try to seize market share.

• Capacity Discipline

  • So far, airlines have not cut back summer capacity, but this could change if high fuel prices persist.
  • Lower-tier carriers (JetBlue, Spirit, Frontier) may be most exposed if budget travelers cut back.
  • Large carriers (Delta, United, American) with more premium passengers can weather fare hikes better.

Notable Quotes

• George Ferguson: "Nobody hedges inside the business anymore...That means everybody has to increase ticket prices so they can remain profitable." ([15:08])
• Ferguson: "If these higher fuel prices persist... they'll have to start to cut capacity to keep fares higher. And that becomes part of the risk as well for the companies like JetBlue, Spirit, Frontier..." ([17:13])
• Paul Sweeney: "So when they increase ticket prices, is that something that's kind of static? You know, once it goes up, it goes up, it doesn't come back down?" ([15:55])

---

4. Sports Business Update: NBA Expansion and MLB Labor Outlook

Key Segment: [18:56–24:36]

Main Discussion Points

• NBA Expansion

  • League owners are evaluating bids targeting Las Vegas and Seattle.
  • Entry price could be $7–10 billion, with strong local investor interest in both cities.
  • Arena ownership is a key factor for winning a franchise.

• MLB Labor and Expansion

  • Strong likelihood of a work stoppage in MLB next year over salary caps versus minimum spending floors.
  • Paralysis is rooted in a gap between big- and small-market teams on spending.
  • MLB expansion likely to be addressed only after next CBA is reached; Nashville seen as a leading candidate for a new team.

Notable Quotes

• Randall Williams: "I would guesstimate [an NBA expansion franchise] is going to cost you at least $8 billion. They're saying 7 to 10 is the range." ([19:56])
• Williams: "Absolutely, I think [an MLB work stoppage] so. Everyone that I've talked to around sports has said that is the prelude to what is coming with baseball, which is really a war of do they want to have the owners have a salary cap or do the players who are probably going to be negotiating for a minimum floor spending..." ([21:07])
• Williams: "[The MLBPA] scored probably the biggest win of any players association ever with not having a salary cap. Because that's how you get a $700 million deal or a $500 million deal." ([23:04])
• Williams: "I think baseball will probably expand to Nashville...and they'll find another city, slash location, and they'll go from there." ([24:03])

---

Key Timestamps

• 02:06: Carnival cruise outlook—the impact of Iran war on fuel costs
• 03:20: Fuel price impact on Carnival’s net income quantified
• 05:05: Onboard/passenger spending and risks
• 06:30: Hedging practices at major cruise lines
• 08:43: Social media litigation overview and financial impact
• 11:21: Attorney general lawsuits as the bigger risk to social media giants
• 15:08: Airlines’ approach to fuel prices post-pandemic
• 17:13: How airlines might adjust capacity amid high costs
• 19:56: NBA expansion financials
• 21:07: MLB work stoppage likelihood and drivers
• 23:04: The salary cap debate in MLB

---

Memorable Moments

• Hosts joke about finally "taking the plunge" on a cruise, while analyst Brian Egger has been on "double-digit" cruises—most as an analyst! ([07:02])
• Paul Sweeney lightheartedly refers to the visibility of cruise ships from Aruba’s beach: "All I know is I'm sitting on the beach in Aruba and I can see the smokestack..." ([06:14])
• Quick, candid call from Randall Williams: "Absolutely [we'll have an MLB work stoppage], I think so." ([21:07])

---

This episode gives investors a multifaceted update on travel, big tech, and sports—all through the lens of cost pressures, litigation risks, and competitive strategy.

Transcript

[Brian Egger]

So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Lets create smarter business IBM Being a

[Paul Sweeney]

small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances, from banking to payments to credit cards, all in one place with Chase's digital tools. Plus access online resources designed to help your business thrive. Learn [e-mail] business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JP Morgan Chase Bank NA Member FDIC Copyright 2026 JPMorgan Chase Co. Find home wherever

[Matthew Shelton Helm]

you roam at Sinesta Es and Simply suites, where longer stays feel comfortable, flexible and easy. Stretch out and enjoy spacious accommodations and homelike amenities designed to help you settle in and stay productive or relaxed for however long you need. And when you're a Sonesta TravelPass member, staying at Sonesta Es and simply Suites means earning points toward free nights, upgrades and more with every eligible stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta Travel. Pass here today, roam tomorrow. Join [e-mail] terms and conditions apply.

[Podcast Announcer]

Bloomberg Audio Studios Podcasts Radio news. 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.

[Host]

Let's turn our gaze to the cruising business. I know nothing about the cruising business. That will change in October when I take my first cruise.

[Paul Sweeney]

I know he's finally taking the plunge.

[Host]

Finally taking the plunge. But with the guy we have here now, our next guest is an expert on all this stuff, Brian Egger. He covers all the fun stuff gaming, casinos, hotels and cruises for Bloomberg Intelligence Carnival. What's going on in Carnival here?

[Brian Egger]

So they came out with what otherwise would have been a very good quarter in terms of bookings demand, 85% of the year sold actually raised revenue yield guidance. But they had to cut Ebitda guidance because the Cost hit from fuel due to the war in Iran. And so the underlying demand part of the business is quite good. You know, the concern would be if that war persists. They are modeling in a level of fuel cost assumption for the second half that might not be conservative enough.

[Paul Sweeney]

The thing that people like about these cruise lines and cruise line operators is that they have a lot of visibility into their bookings because people book years in advance or months in advance, as in the case of Paul Sweeney and his upcoming cruise. But that also locks in the revenue that they brought in. Do cruise lines add a fuel surcharge later on because, you know, oil prices have gone up so much or is it something they just have to eat?

[Brian Egger]

Well, I think the revenue yield management part of it is always the science behind it. Because 85% of bookings sold, if you oversell too much and demand goes up, you're left with inventory that could have been sold at a higher price or you're missing inventory. You're not seeing so much in terms of a fuel cost surcharge. But I mean the reality is even with $150 million in offsetting cost savings from efficiencies, their estimate is that the full year impact on their adjusted net income from the fuel price increases we've seen since December could be about $500 million. And our concern is that assumes 80 to 90 rents in the second half. And what if that's much higher? That's the concern.

[Host]

What's, what are these cruise lines saying about their underlying demand at some point, some of these inflation pressures, if they do remain here a little bit longer than maybe we initially thought, fuel in particular, but other areas as well, what does that typically impact the top line for those guys?

[Brian Egger]

So I think generally speaking, cost inflation can have an impact. The assertion of the industry would be that they are relatively affordable as per day compared to other forms of vacationing and travel. And so that's been a big underpinning behind their assumption. They continue to get more consumer penetration

[Paul Sweeney]

and you know, people might have pre booked their cruises, but the amount that they spend is also another big, big revenue increase for these cruise line operators. I mean, that's where they make up a lot of ground. How do you expect that to play out if oil prices stay high? I mean, people are still going to go on their cruises, but they're not going to spend the all you can drink package.

[Brian Egger]

Yeah, I mean that may be a concern right now. The yield outlook is quite favorable. Still solid low single digits over time. An increasing portion of the overall Revenue has come from either onboard ticket spending or pre cruise purchases of excursions and other amenities and all that could be subject to vulnerability if there is a major change in discretionary spending on fuel

[Host]

for these big cruise. They don't use a lot of the alternative fuels, do they? They're just burning that big bunker fuel kind of stuff.

[Brian Egger]

The mixes over time increased more more towards LNG and other, other forms of I guess more efficient fuel and cleaner fuel. I think one of the cruise line just announced its first hydrogen powered ship so they are looking at alternative uses. And a big offset to these cost increases has been fuel cost efficiencies. You know the amount of metric tons of fuel consumed per passenger capacity day has over time gone down. So they've tried to get some offset and have gotten some offset from increased efficiencies both from just the general way they operate but as well as more efficient ships.

[Host]

All I know is I'm sitting on the beach in Aruba and I can see the smokestack from the port there of Aruba and as it shops are docked and it's just billowing up the

[Paul Sweeney]

black and you're thinking well I'm going to join those people one day.

[Host]

Exactly. But boy I could just. That's. And they don't hedge, do they? Or do they?

[Brian Egger]

Carnival has not hedged historically. They've had over in past years have had some callers. Norwegian and Royal Caribbean do hedge and so you know there's, there's a cost benefit analysis to whether or not you put hedges in place.

[Host]

Yeah, because George Ferguson was just telling us that the airlines don't hedge.

[Paul Sweeney]

Well, they got messed up during the pandemic Right. And they, they all came out worse for it. So.

[Host]

Yep. All right Brian, thanks so much. Brian Nagar, appreciate that. Senior Gaming Logic Analyst, Bloomberg Intelligence joining us live here in our Bloomberg.

[Paul Sweeney]

I have a cool question. How many cruises do you go on a year?

[Brian Egger]

A year? Oh that's, that's over time. I've gone on a number of cruises.

[Paul Sweeney]

Double digit.

[Brian Egger]

Well it may be. Of course I've been covering this sector for longer than. Yeah, as long as Paul's been doing this too. So. Yes, long time, long time.

[Host]

Yeah. So I've been out on the Disney cruise a couple times when they have a new ship we'd fly out to la, hop in the thing, they take us out overnight.

[Paul Sweeney]

Oh yeah, but that's, that's as an analyst.

[Host]

Exactly as an analyst. So yeah, yes, I have taken a

[Brian Egger]

vacation cruise separate from my role as an analyst.

[Matthew Shelton Helm]

There you go.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Podcast Announcer]

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.

[Host]

Well, if you're anything like me, you probably feel like you spend too much time on your phone, particularly with the social scrolling through the social media sites. New Year's resolutions every year usually include, you know, let's spend some less time on the personal device. But that doesn't always work. It's tough to do. There's actually been the subject of a lot of litigation against some of these social media platforms, Meta Alphabet, those types of folks. And there's been some cases coming down against these companies as well. So let's see what it means for a lot of these social media companies and tech companies in general. Matthew Shelton Helm joins us here. He's media litigation analyst of Bloomberg Intelligence. Hey, Matt, it seems like we've had a couple of court rulings come down against some of these social media companies. Summarize what's going on out there and does it pose a risk to these companies?

[Matthew Shelton Helm]

Yeah. So this is litigation that has been developing for the past three to four years and it's finally in the first couple cases in line reached the stage of juries making decisions. So Meta had a loss in New Mexico State court when a jury announced a verdict of $375 million. We also, as you said, had this California jury come down with a personal injury suit on behalf of a woman who claimed that she was harmed by the social media's features there. The jury came down with an initial $3 million award against Meta and Google's YouTube and then added $3 million of punitive damages on top of that. These are just the very tip of the iceberg. There are a number of other cases lined up to go to juries this year. And the whole goal here is to try to shape a settlement. Potentially. These are bellwether cases to try to give information about, okay, do these cases have legs or not? How should everyone think about trying to quantify them to settle them?

[Host]

So I think pretty much every parent out there would say, boy, my kids are spending way, way too much time on their devices here. What do these companies say? I mean, otherwise they're just going to be in litigation forever.

[Matthew Shelton Helm]

Absolutely. I mean, I think you're looking at a lot of tough headlines here because you have a lot of parents on these juries and maybe these, you Know, social media isn't the most popular thing right now, so it's going to be sort of an assault of headlines for the companies here. Now the companies say, look, you know, there are lots of problems in the world. We're not responsible for it. In fact, we add a lot of value to the world as well. And there are real legal problems that the companies say with these cases. One is that the companies say, look, we have a First Amendment right to, to speak and to develop our product. We have a liability shield under Federal Law, Section 230. All of that sort of looms behind these jury decisions. And you can, you can guarantee that the companies are going to appeal these initial decisions to higher courts on those tough legal questions.

[Host]

So, you know, the amounts being awarded here are immaterial to these companies. $6 million here, $300 million there, $375 million there. I mean, they're just not material to the finances of these companies. Is there a scenario where we could get really, really multibillion dollar type things that might get these, the attention of these guys?

[Matthew Shelton Helm]

So these personal injury lawsuits, probably not. You know, this California case was brought by a single person, and there's no vehicle really to bring it as a class action because damages are so individualized. The thing to watch here are the state attorneys general lawsuits, and also slightly behind that, lawsuits brought by school districts because they both offer opportunities to pool a number of supposed victims and to bring claims on their behalf. So I think Meta has been sued by 30 to 40 different state attorneys general, and a number of those cases are consolidated in federal court in California. That's a bigger ticket item. And so that, that's the one to watch. I think these individual personal injury suits are lower down the line because of their individualized nature. Metta made 60 billion in profit last year, and a $6 million loss isn't a huge deal.

[Host]

Has it been a deal for the stocks at all? Is this, is this an overhang at all for these stocks thinking that, or is it, could it be like the tobacco industry where investors are like, it's just, it's just cost of doing business kind of thing?

[Matthew Shelton Helm]

Well, you know, it's been a tough couple of days for Meta stock and there's just been a barrage of headlines on this. And as I said, this is just the beginning. But there are a lot of people that don't feel that great about social media right now and use these decisions as an opportunity to jump on top of it. And so in that sense, I think it's going to be a lingering and ongoing risk that helps drive a global settlement here to make this litigation go away. And I think that's the decision the company's going to have to make is is do we have to make this go away sooner rather than later, or do we test these legal theories, which might be pretty strong, to make this stuff go away, but it's going to take a long time for those appeals to play out.

[Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Podcast Announcer]

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10 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.

[Paul Sweeney]

All right, let's bring in George Ferguson. He is our senior aerospace, defense and airlines analyst. And George, there was a headline earlier this week that got my attention, which is JetBlue looking to team up with someone looking for a partner in some capacity. It was reported from semaphore. And JetBlue has tried this before. It tried to merge with Spirit Airlines or tried to buy Spirit Airlines and it failed in that quest. What do we know about JetBlue's M&A ambitions?

[George Ferguson]

Yeah, so, I mean, we haven't heard anything out of JetBlue. Right. But when you look at JetBlue, you know, I think that one sort of their financial performance hasn't been great since the pandemic, partly due to this failed merger with Spirit Airlines. And so you could see as they're looking out at the US Market right now, fuel prices have doubled. They probably think a demand is going to come down pretty hard. It's going to be hard to turn around financial improvement in that environment. I'm not sure who Semaphore talked to inside, but I don't think it's hard to see how JetBlue would be starting to think about what might be different permutations of how they could get the carrier through what I think is going to be a difficult summer for the business.

[Host]

George, typically can airlines pass along fuel increases like we're seeing here, these huge jumps in fuel prices, can they pass that along to consumers or do they that goes into their bottom line.

[George Ferguson]

So I think the opportunity to pass it along is pretty good this time. And typically they do. Typically they pass it along at a lag. And so the airlines usually will go through a bumpy ride, you know, in their profits for a little period of time for, I don't know, a quarter or something like that as they're getting ticket prices up. If you look at the US Airline business right now, though. Nobody hedges inside the business anymore. It used to be there was, there was a smattering of airlines that hedged. Southwest is one of the bigger ones that hedged. And you might have some Alaska, some JetBlue hedging. Nobody really hedges anymore. And that means everybody has to increase ticket prices, so that can remain profitable. And I think that means the move to higher ticket prices goes faster this time.

[Paul Sweeney]

So when they increase ticket prices, is that something that's kind of static? You know, once it goes up, it goes up, it doesn't come back down. Or would any of them consider adding kind of a fuel surcharge the way a UPS or FedEx does?

[George Ferguson]

Yeah, I mean, look, I always think of a fuel surcharge as a way of reminding your customer that the reason you're increasing the cost of the product that you're delivering to them is because of fuel. And I think it's not your fault, in other words. Yeah, exactly. So FedEx goes, hey, look, sorry about it, you know, the world economic environment is such that I'm going to have to charge you more because fuel prices are higher. Look, I think at airlines, airlines are very competitive business. And so airlines see a lot of movement up and down in ticket prices. And so I think because of that competitiveness, yes, you could see where they would rise here. And as soon as you start to get decreases in the price of fuel, we typically see some of the airlines that want to take market share, they'll lower fares, they'll add to the airplane, add people to the airplane, and then the game starts over again. We start moving the wrong direction in fares. If you're a shareholder, George, what are

[Host]

the airlines doing in terms of capacity? Are they adding capacity to the system? Are they taking down. What are they doing?

[George Ferguson]

So we're not seeing much yet. My colleague Francois Duflo put out a report this week. It's on our airl and dashboard. We haven't seen much movement. And my guess is that the airlines are probably waiting to see if this war could end quickly. If it ends quickly, you know, maybe they don't have to take any capacity out for summer season. Summer is their peak season. They probably sold a lot of it already. But I think if these higher fuel prices persist, I think you'll have, you'll see as you get through summer, they'll have to start to cut capacity to keep fares higher. And that becomes part of the risk as well for the companies like JetBlue, Spirit Frontier that are, that, you know, cater to the lower, the lower tier of the traveling public. You know, the challenge is their customers are probably going to be their budgets to be stretched a little bit more. And I think, you know, if you're United and you're American, actually especially United in Delta and you've got a fair amount of premium travelers flying in your airplanes, they're going, they're not going to really be bothered. Right. By a 20 or 30% increase in their fare price. They're going to keep flying and those airlines are going to continue to subsidize the back of the airplane, that discount traveler and it's going to make it harder to fill airplanes, I think at the low cost carriers here for a bit.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Podcast Announcer]

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.

[Paul Sweeney]

YouTube, because it is Friday. Let's just take a step away from the market action, at least for a few minutes, the war in Iran and talk a little bit about the business of sports because the owners of NBA teams have voted to consider expanding their league and adding franchises in a couple of other cities. Let's bring in Randall Williams, our Bloomberg business of sports reporter on this story. And Randall, we're now looking at possibly a Las Vegas franchise, a Seattle franchise.

[Randall Williams]

Yep. And it was always going to be those two cities. The league was open to listening to more offers from other cities. You think Nashville, you think Kansas City, you think maybe Vancouver or Mexico City. But Seattle and Vegas are proven sports towns. Seattle used to have the SuperSonics and Las Vegas has a bunch of different sports teams. I would consider it the sports capital of the world right now. So they'll be listening to bidders over the course of many months. And if they find the right price and if the bidders get the right number, then we'll go from 30 to 32 NBA teams.

[Host]

All right. If I want an NBA team, what, what's it going to cost me to get in the door?

[Randall Williams]

I would guesstimate it is going to cost you at least $8 billion. They're saying 7 to 10 is the range. I think Seattle will go for probably between seven and eight and a half. And I think that Vegas team could easily reach 9 to 10.

[Paul Sweeney]

And who are the obvious bidders here? Who are, who are the people who are right away going to be putting together packages?

[Randall Williams]

Sure. So Samantha Holloway, who is David Bonderman's daughter is the owner of the Seattle Kraken. She just formed this holding company called One Roof Sports and Entertainment. She owns the arena or that has partial ownership of the arena, which is Climate Pledge arena in Seattle. She's the heavy favorite in Seattle. In Vegas, you have Bill Foley, who is the Vegas Golden Knights owner. He controls alongside MGM and AEG T Mobile Arena. And so I think if you have arena ownership and you don't have to spend another billion and a half to $2 billion, then that's going to enable you to get a bit ahead. Now, who knows, maybe someone does come in and say, look, I'll build a stadium in Las Vegas or in Seattle. I think it would be difficult, but those two would be my leading favorites right now.

[Host]

All right, so we're just had opening day for Major League Baseball. Let me take it down to the dark side. Oh, are we going to get a work stoppage next year in Major League Baseball?

[Randall Williams]

Absolutely.

[Host]

You think so?

[Randall Williams]

I think absolutely, I think so. I mean, look, you think about the collective bargaining sessions that we just finished with the wnba. I think we talked about it last week. Everyone that I've talked to around sports has said that that is the prelude to what is coming with baseball, which is really a war of do they want to have the owners have a salary cap or do the players who are probably going to be negotiating for a minimum floor spending, because you have teams that are just content with not spending any money and being loser franchises. And then you have those same owners complaining about how you have franchises like the Yankees, the Dodgers, the Blue Jays who spend so much on players that there's nothing left. So it's gonna. It's really gonna be an argument for the heart of baseball.

[Paul Sweeney]

Feast or famine in the mlb, essentially. Is there parity in the mlb? I mean, are there changes they can make to create more parity?

[Randall Williams]

I'm in favor of having a minimum floor spending. And the reason for that is because you think about the NFL, and the NFL turns over playoff teams literally every single year. That doesn't mean that that team is able to win the Super Bowl. But we. We see a lot of turnover. Different teams make it, and in baseball, it does feel like the same teams are winning. Now I'm in. I'm definitely rooting for the Dodgers in terms of the dynasty effect. I think having a franchise to chase, having a franchise to beat then gives the hero and the villain side of things. The city of Los Angeles thinks they're the heroes, and everybody else thinks they're the villains. At the same time, there are other franchises out there. You think about the Pittsburgh Pirates, you think about the Florida, the Miami Marlins. Like these are franchises that no one really talks about. And it's because of the fact that we might not see the investment from their owners in terms of how, you know, you compare that to the Yankees, the Dodgers, and maybe they don't have the deep pockets, but, you know, do you want to be competitive? I would think. And that's not happening right now, but this will.

[Host]

If there is a work stoppage, it will be because the owners. Yes. Are bringing it because the owners, by and large. Is it fair to say the owners want a floor here or do the owners are going to take this work stoppage because they want a cap?

[Randall Williams]

They want to cap. I think the players. I mean, the MLB Players association scored probably the biggest win of any players association ever with not having a salary cap. Because that's how you get a $700 million deal or a $500 million deal. Like it's not out of the ordinary. If someone were to one day get a billion dollar contract, Shohei is going to top that right now in terms of, you know, we're not paying anyone more than Shohei. But for owners like you think about the Dodgers, they just retool every single year because they can. They don't have a spending limit. And if you have who's willing to pay tremendously more than another owner who might not have that, then there's going to be complaints and be like, listen, we need to get control of the spending because at the end of the day, this is going to become a game in which if you spend the most money, then you're going to win.

[Paul Sweeney]

Let me just bring this full circle. We're talking about NBA expansion to 32 teams from the current 30. The NFL already has 32 teams, as does the NHL. Baseball has 30 teams. I mean, are we going to potentially see expansion of MLB franchises?

[Randall Williams]

I think that baseball will consider expansion after collective bargaining when, if, slash. When that ever ends. All of these things seem very dire at the beginning because they are clashing. You think about the conversations we were having about the WNBA a year ago. It seemed like they were never going to come to a deal, but the reality is they will at some point. Right? Exactly. They. They both have a vested interest in playing. And I think baseball will probably expand to Nashville. I think Nashville's a. Could be a good baseball town. And they'll find another city, slash location, and they'll go from there.

[Podcast Announcer]

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.