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- [00:00]
Apollo Representative
The global industrial renaissance is transforming our world. Over the next decade, industries like energy, infrastructure and technology will need an estimated 75 to $100 trillion to modernize and meet demand. Long term projects need long duration capital. That's where Apollo steps in. With scale, flexibility and a focus on growth, Apollo partners with companies to drive the future one innovation at a time. Learn more@thinkitnew.com Renaissance how is Microsoft Security.
- [00:32]
Microsoft Security Representative
Helping customers stay ahead of 600 million attacks without slowing down business? From automakers to sports organizations and digital banks, Microsoft Security delivers deeper insights, scanning trillions of signals daily to help you see around corners and protect your business. Security is your job, and it's theirs too. With Microsoft Security, you have a partner that helps your business move forward confidently. To learn more, visit Microsoft.com CISO that's Microsoft.com CISO this is an ad by BetterHelp.
- [01:04]
BetterHelp Representative
Think about your mentors and idols, the people who inspire you most. While it may look like they have all the answers, they don't. But they do know when to ask questions and seek the support they need. In a world that glorifies hyper independence, it's easy to forget that we're all better with the support system behind us. Therapy is a great way to invest in yourself and find a consistent source of support in your life so you can break free from the outdated belief that seeking help is a sign of weakness. BetterHelp has experienced therapists ready to help you with challenges ranging from anxiety and depression to relationships to stress. It's convenient, too. You can join a session with the click of a button, helping you fit therapy into your busy life, and you deserve that. You can even send your therapist a message anytime something comes up. Build your support system with BetterHelp. Visit betterhelp.com podbusiness today to get 10% off your first month. That's BetterHelp. H E L p.com podbusiness Bloomberg Audio Studios Podcasts Radio News what if Matt.
- [02:12]
Matt Levine
And I talked super fast, but then you slowed it down to make the podcast longer?
- [02:16]
Katie Greifeld
You could pitch me down so I sounded like this. God, wouldn't that be good?
- [02:22]
Matt Levine
You sound like a fancy man.
- [02:24]
Katie Greifeld
I am a fancy man.
- [02:25]
Matt Levine
Wow.
- [02:27]
Katie Greifeld
Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.
- [02:37]
Matt Levine
And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.
- [02:43]
Katie Greifeld
What are we talking about today, Katie?
- [02:44]
Matt Levine
We're going to talk about wrestling and fighting. And fighting and we're going to talk about private credit, ETF liquidity, a frequently topic on this podcast. And then we're going to talk about the mirage of the American dream.
- [02:58]
Katie Greifeld
Yes, exactly.
- [03:02]
Matt Levine
So let's get right into it. This is complicated. We're talking about Endeavor. We're talking about tko. We're talking about Silverlake. Can you explain, first of all, the ownership structure of what we're talking about?
- [03:12]
Katie Greifeld
Okay, so Endeavor is like a talent agency slash media behemoth. It's like Ari Emanuel's talent agency that became a giant thing. And one reason it's a giant thing is that it owned WWE World Wrestling Entertainment, which then merged with UFC Ultimate Fighting Championship to form a giant fighting complex. And that fighting complex is called. TKO is the name of the company, and it's now a public company, and Endeavor owns a little more than half of it. So Endeavor is a company that owns a little bit more than half of another company. They're both public. Endeavor is public. TKO is public. Endeavor is, like, 70% owned by Silverlake, the private equity firm.
- [03:48]
Matt Levine
Right.
- [03:49]
Katie Greifeld
Silverlake has decided it wants to take Endeavor private. It wants to buy the shares that it doesn't already own, and it negotiated a merger with the board of directors, and it agreed to pay 2,750 per share for the remainder of Endeavor. That happened, like, a year ago. They're working to get closing. And what has happened in the interim is that the stock price of TKO has gone way up. So what that means is that Endeavor owns more than half of tko. TKO has become a lot more valuable. That means that Endeavor has become a lot more valuable, or you would think that would be the case. And so all the shareholders of Endeavor who are not Silver Lake, say, well, you agreed to pay $27.50 a year ago. The company is more valuable now. We want more money. Silver Lake has said, no. We agreed to the deal 27:50, and that's what we're doing. And the shareholders are revolting. They're saying they're going to demand appraisal, which is like in Delaware, if you don't like a merger price, you can go to a judge and say, this was an unfair, too low price. I'd like more. And the judge can say, yes, here you go. In recent years, it has been tough to win appraisal cases, because usually the judges are like, no, for complicated reasons we can get into. But here, it's an unusually easy case because they're like, look, most of this company's assets are this public company. The shares have Gone up. So we know it's worth more than the agreed deal, so you should give us more money.
- [05:10]
Matt Levine
I have two questions here. One is that, I mean, you write, and you just said that it used to be easier to win. Appraisal crisis. You wrote that it changed in 2017, which seemed. I can't think of a catalyst. Why did it change in 2017?
- [05:25]
Katie Greifeld
There's kind of two points here. So one is like, Delaware judges are experts in corporate law and banking and mergers and see themselves as being expert in knowing how companies work. And so it used to be you'd go to a Delaware judge and say, this company is worth more than the acquirer paid for it. And you'd present, like, your discounted cash flow model, and the acquirer would present their model and there'd be an argument, and the judge would think about all this and be like, you're right, it's worth more. And people got kind of annoyed with that and said, why should a judge get to decide what the company is worth? And what happened is that 2017 is like the turning point that people point to because it's a big case. The Dell buyout, like Michael Dell, Bob Dell, a judge said, no, he underpaid for it, and he awarded more money. And then the Delaware Supreme Court reversed that on appeal and said, basically, you should give more weight to objective facts like the company ran a merger process and the highest bid was what it got, or the company's stock trades in the market, and you can sort of look at the stock price and say that's a pretty good indicator of what the company is worth. Basically, since Dow, there's been less of an emphasis on Delaware judges listening to arguments about what a company is worth and making their own decision, and more of an emphasis on what the market says the company is worth is most of the time pretty good evidence. It's not like you can never have appraisal anymore. It's just a little bit higher bar to prove that the company is worth something other than what the market says it's worth or what the merger says it's worth. And that's what makes this case unusual, because here the disgruntled shareholders aren't saying, oh, we want you to take our evidence of value rather than the market's evidence of value. They're saying, no, no. Like the market price says this company is worth more than Silver Lake is paying for it.
- [07:15]
Matt Levine
Yeah.
- [07:16]
Katie Greifeld
And Silver Lake is the one saying, no, the market price is fake. Don't look at it.
- [07:19]
Matt Levine
Well, you say that this is a pretty straightforward case of appraisal. But couldn't you make the case that Silver Lake just made a good deal here? That they saw that this company doesn't matter?
- [07:29]
Katie Greifeld
That doesn't matter. Yes, absolutely. In the ordinary course of things, they agreed this deal a year ago. If you're like, okay, you agreed on a deal a year ago, and since then the market has gone up, you should get the benefit of this. And. Right. As a matter of merger practice, Endeavor shouldn't be able to back out of the deal now because the market went up. Right. Yeah, but that's not how appraisal works. Appraisal is just a thing in the law. And the thing says the shareholders are entitled to the fair value of the company at the time of the closing of the merger. So technically, they're entitled to this.
- [07:59]
Matt Levine
Okay.
- [07:59]
Katie Greifeld
It's just like. It's just like a weird element of law that people, like, tend not to think that much about, like, the difference between signing and closing. But here, the company has gone up a lot between signing and closing.
- [08:08]
Matt Levine
Actually, it's gone up so much that I did some reporting for this podcast. Usually I just show up, but in this case, I asked Geetha Ranganathan of Bloomberg Intelligence, basically, why have TKO shares gone up so much since Endeavor agreed to that deal with Silver Lake? It was in April 2024. Her answer was, they have a big UFC media rights deal with Disney that is expiring at the end of 2025. There's reports that are suggesting that they're asking for a doubling of yearly fees to a billion dollars, which would be substantial. There's also a little bit of a Trump effect. Not terrible.
- [08:41]
Katie Greifeld
Sure. UFC seems like the sort of thing that would thrive.
- [08:45]
Matt Levine
Yeah. He's shown up at wrestling matches. I thought that was a little bit interesting because there's no one closer to Donald Trump right now than Elon Musk. And Elon Musk obviously has had the opposite experience. The public markets, at least with Tesla.
- [08:58]
Katie Greifeld
Yeah. Right. It's interesting. You think about the stereotypical Tesla buyer from three years ago and how they would feel about Elon Musk's ties to Elon Musk. Then you think about the stereotypical wrestling fan. It's slightly different demographic.
- [09:11]
Matt Levine
That's true. It's totally different markets. I was thinking about that, too. We had Carson Block on Bloomberg Television. This is a non sequitur. We had him on television this week, and I asked him, would you bet against Tesla? It's gone down a ton. You said a month ago that you wouldn't and he said, is he doing.
- [09:31]
Microsoft Security Representative
Irreparable damage to the Tesla brand? I mean, maybe. But again, this guy, for years and years and years, has done nothing but pull rabbits out of the hat.
- [09:41]
Matt Levine
So we'll see how long this Tesla drawdown continues.
- [09:45]
Katie Greifeld
I would never shorten Elon Musk. Suicide, but not investment advice.
- [09:51]
Matt Levine
So how does this end up, this Endeavor Silver Lake deal? You wrote that it. It closes in the next two weeks or so. Has an appraisal case actually materialized yet?
- [10:00]
Katie Greifeld
No, no. You have to wait until it closes.
- [10:02]
Matt Levine
Okay.
- [10:02]
Katie Greifeld
There's a lot of technical requirements, one of which is that in this case, you need to have held your shares continuously from February 4th. So a weird thing is that Endeavor is now trading, like, more than a dollar above the deal price. And if you're buying the stock now, hoping to get more money in appraisal, that won't work. You have to have owned the stock.
- [10:23]
Matt Levine
Well, I wish you would have told me that an hour ago.
- [10:26]
Katie Greifeld
So I don't really know why the stock is trading that high. I think one answer is there is some expectation that possibly Silver Lake will raise the deal price. But they've said they won't. And they've said not only have they said they won't raise the deal price, they've said, if you demand appraisal, and I read one estimate that two thirds of shares are going to demand appraisal. They say, if you demand appraisal, we will not pay you anything at closing. We'll wait until years later when the appraisal case is finished. And that's a little unusual. It used to be that that was the norm. If you demanded appraisal, you didn't get any money when the deal closed. You waited until you went through your appraisal case. But one thing that happened is that when you brought an appraisal case, years later, the judge might say, okay, the deal price was actually fair. You only get the deal price you get, in this case, 2,750. But you also get interest, and the interest is at a very high rate, like, it's at 500 basis points over fed funds. And so people would do appraisal cases thinking, well, if I win, I get more money than the deal price, and even if I lose, I get the deal price plus, like, extremely high interest. So it's great. For me, that became annoying enough that it's now become kind of the norm for buyers to just give you the deal price day one and say, we won't pay you interest on that if you later, win the case, we'll give you the extra money. But like day one, you get the deal price. And Silverlich has said they won't do that in this case, which I think people perceive as trying to smoke out weak hands. Because if you're like an arbitrageur and you have to finance the position for years, you might be like, yeah, never mind. But here they're kind of insisting they're not going to raise the deal price. They're going to fight the appraisal case. They say that the price of TKO is artificial and it has to do with arbitrage activity and it's not a real price, which not a lot of evidence for. And Endeavor has itself been buying TKO shares. So there's some reason to think it's not a completely artificial price and it has to do more with like TKO's business has been doing well.
- [12:24]
Matt Levine
Fundamentals, perhaps. Fundamentals, I don't know. I find myself sympathetic to this private equity company.
- [12:29]
Katie Greifeld
Oh yeah, me too, me too. It's weird that they made a good. It's weird that you don't get the benefit of that. Right?
- [12:35]
Matt Levine
Yeah.
- [12:35]
Katie Greifeld
And like, Right. And again, like in the context of like if Endeavor was trying to back out of the deal, you'd be like, no, you signed a deal, TKO gone down, Silver Lake couldn't get out of the deal, TKO went up, you can't get out of the deal. It's totally a reasonable thing for Silver Lake to be like, look, we got the benefit of our bargain, but it's not how appraisal works.
- [12:54]
Matt Levine
I feel like we're going to be talking about this again.
- [12:56]
Katie Greifeld
Yeah, I don't know. I mean, one possibility is they will bump the deal price a little bit, but there's kind of a big gap between what the arbitrageurs think this company is worth and what Silver Lake wanted to pay. So they may just fight it for years.
- [13:12]
Matt Levine
Years of content.
- [13:22]
Apollo Representative
The global industrial renaissance is transforming industries and reshaping our world. Over the next decade, sectors like energy, infrastructure and technology will require an estimated $75 to $100 trillion in CapEx to modernize and meet the growing demand. This unprecedented level of investment is beyond the scope of public markets alone. Long term projects need long duration capital. That's where private capital comes in and that's where Apollo leads with significant scale. The flexibility to adapt to evolving capex needs and a steadfast focus on enabling economic growth. Apollo is partnering with companies to provide the financing solutions that fuel the future.
- [14:06]
Stifel Representative
Learn more@thinkitnew.com Renaissance deep domain expertise, Strong relationships, broad capabilities. It's what makes Stifel one of the industry's leading providers of M and A and capital raising services in the middle market. But don't just take anyone's word for it. IFR has named Stifel US Mid Market Equity House of the Year five times in the last 10 years. When it comes to investment banking, Stifel is the name you should know. To learn more about how Stifel can help you address your most complex investment banking needs, visit stifelinstitutional.com Stifel Nicholas & Co. Inc. Member SIPC and New York Stock Exchange.
- [14:50]
Sierra AI Representative
Your customers are important to you, but they won't feel that way if they're stuck messaging a clunky chatbot or waiting on hold for a representative.
- [15:00]
Katie Greifeld
Estimated wait time is 25 minutes.
- [15:08]
Sierra AI Representative
With Sierra, your company can deploy a branded AI agent that engages and delights customers anytime, anywhere. Sierra agents pick up every phone call and personalize every interaction. No more menus, no more hold times. And if you have an issue, Sierra's AI agents solve tough problems, whether they're helping your customer pick out the perfect mattress, update a subscription plan, or even troubleshoot a new device. Always friendly, always helpful, always ready. Visit Sierra AI to learn more. That's Sierra AI.
- [15:59]
Matt Levine
Well, let's return to something that we have already talked about.
- [16:02]
Katie Greifeld
Sure.
- [16:03]
Matt Levine
And that is private credit liquidity, specifically in ETFs.
- [16:07]
Katie Greifeld
I feel like I spent years writing people are worried about bond market liquidity and making a big joke of it. And now I feel like I've spent one year of this podcast talking every week about people being worried about private credit liquidity. And here we are talking about private credit liquidity.
- [16:19]
Matt Levine
That's true. Well, the BIS bank of International Settlements is worried about the official worriers. Yeah, they're coming out with a lot of concerns basically about exactly that liquidity. You have this rush for retail cash among just the asset management world and they're worried that that's going to create vulnerabilities.
- [16:37]
Katie Greifeld
I feel like we've talked about this on the podcast before, but I wanted to ask you.
- [16:40]
Matt Levine
Yeah, okay.
- [16:42]
Katie Greifeld
Retail private credit vehicles have been a thing for years.
- [16:46]
Matt Levine
Right.
- [16:46]
Katie Greifeld
Uncontroversially, there is a thing that's called a business development company or bdc. Yeah, it is a retail private credit vehicle. There are lots of them. They trade on the stock exchange, they have tickers. They're effectively a closed end fund for like direct lending, often middle market, like direct lending. And so you can Buy a retail private credit fund in your brokerage account. And that's not a liquidity worry. I mean, it is a little bit like the BS, a little bit worried about BDCs because they're levered. But fundamentally a BDC is a closed end fund. Right? Like you can put money in, you can't take money out. You can trade shares on the stock exchange, but you can't go to the BDC and say, I want my money back. And so the liquidity worry people have is like investors in liquid exchange traded private credit funds will go to the private credit fund and say, I want my money back. And the private credit fund will say, we have all these illiquid loans. We can't give you your money back. They're all tied up in loans. And then the world will come crashing down. But BDCs just don't have that problem.
- [17:39]
Matt Levine
Yeah, go on.
- [17:41]
Katie Greifeld
The BIS is worried because there's one ETF.
- [17:45]
Matt Levine
There's one ETF where an ETF you.
- [17:47]
Katie Greifeld
Can go to the issuer and say, I want my money back. My question for you is why do we need the etf? I understand that in your world, the best of all things is the etf.
- [17:58]
Matt Levine
Yeah, for sure.
- [17:58]
Katie Greifeld
And I understand obviously a marketing benefit. But if you're a private credit issuer, you're like, okay, the right funding model is a permanent capital closed end funding model. That technology exists, we have billions of dollars in it. Why do we need to go to the etf?
- [18:15]
Matt Levine
You also have interval funds. You have had ways for retail to access private markets and like interval funds.
- [18:22]
Katie Greifeld
Like you might be a little worried about liquidity as opposed to like a fully closed end fund. But like, you're right, you have a lot of things that are not ETFs.
- [18:28]
Matt Levine
Yeah, you do have ETFs. Does the world need private credit ETFs? I don't know. I'm not qualified to answer that question. But it just speaks to the desire among a lot of these issuers and a lot of these private market folks wanting to tap into this new source of demand.
- [18:47]
Katie Greifeld
I know, but why is it a new source of. To me, it speaks to the desire of retail investors to have specifically an ETF and not a btc. Right. I guess I get the ETF technology is a little nicer, but it's like.
- [18:57]
Matt Levine
I think this is just one woman's suspicion. I think that's the driving force is that the muscle memory is there. People know how to get their hands on ETFs. That muscle memory might not exist or be developed. When it comes to BDCs, when it.
- [19:10]
Katie Greifeld
Comes to stock, it's just the same thing.
- [19:12]
Matt Levine
I know, but it's just, it's not.
- [19:13]
Katie Greifeld
Like there's a lot of stuff that's like more bespoke but like there's like publicly traded.
- [19:17]
Matt Levine
Well, I talk to a lot of asset managers and a lot of asset C suites at asset management firms and they always tell me we're rapper agnostic, we will pick the product that fits best with the asset class that we're talking about. And I have this suspicion that for a lot of retail investors or folks who started investing in the last five years or so, basically the post pandemic period, it's single stocks or it's ETFs. Like people know how to do that. They know how to go to Robinhood or Fidelity or whatever platform they use and buy an etf. It's simple.
- [19:49]
Katie Greifeld
It's just as simple to buy a btc.
- [19:51]
Matt Levine
I know, but I feel like the familiarity isn't there. If you have an ETF that says I am a private credit etf, give me a name of a bdc. It doesn't read as cleanly. There's so many examples.
- [20:02]
Katie Greifeld
It is true that the words BDC make it sound like something other than a closed end private equity fund or private credit fund. So. Right. You could be confused by that.
- [20:11]
Matt Levine
Yeah, there's so many examples of tickers that tend to outperform even though there's a fund that offers the same exposure and it's priced lower. But it's just this fund has a nicer name and it has a more intuitive ticker and that's why it tends to get.
- [20:28]
Katie Greifeld
Plus if you launch a private credit etf, then like people read articles about like oh, the first private credit etf.
- [20:34]
Matt Levine
Whereas like the Biscuit and the SEC might write a letter basically saying how upset it is that this private credit ETF that they allowed to launch actually launched.
- [20:43]
Katie Greifeld
Right. Or the BIS might write a report.
- [20:46]
Matt Levine
Something that I thought was interesting in the BIS report is that it's talking about basically it's worried that you're going, if you introduce retail into this marketplace, that you're going to one day see this exodus and then you see the illiquidity doom loop that people like to talk about.
- [21:00]
Katie Greifeld
Retail, redeemable retail.
- [21:02]
Matt Levine
Right, yeah.
- [21:03]
Katie Greifeld
Like right, you can have locked up retail, but Right, yeah.
- [21:05]
Matt Levine
I think that maybe they're worrying about the wrong cohort of investors because I don't know, I think about products that are really popular with Retail and I think about the average vanguard investor, for example, that sort of self directed mom and pop sort of set or people who are working with financial advisors. There's a lot of sticky retail cash out there. It's more these ETFs that are used as like trading vehicles or liquidity sleeves, what have you. That's where you tend to see more panicky outflows than you do with ETFs that are straight up retail products.
- [21:40]
Katie Greifeld
Yeah, I think like in general that people are worried about whatever. Liquidity worries are always like a little bit overblown, particularly comes to retail. Now ETFs are not a purely retail product. Right. And you can imagine if private credit ETFs became a bigger thing, like some more institutional people allocating money to them for whatever reason as like, you know, indexy private credit exposure and then taking money out in a downturn. You can also just imagine retail panicking. Like I agree with you that like, it's often stickier than like the worries that people have. But like it's still a possibility. To me, like the solution to this worry is like the reason I was never that worried about bond market liquidity is because you can trade your bonds, the price will go down. It's not a big deal. That's not really true in private credit. It's not as true because you can't trade your private credit. But one thing we've talked about a lot on this podcast is that's going to change. There's going to be a private credit market. You'll be able to trade your private credit and so there'll be some outlet for it where if everyone does take their money out of the etf, there's some way to monetize the underlying holdings so that the system doesn't freeze.
- [22:50]
Matt Levine
Won't it be fun to find out though?
- [22:51]
Katie Greifeld
Oh yeah. It'll be very fun to watch the development of private credit trading platforms.
- [22:57]
Matt Levine
I was speaking to Mark Lipschultz of Blue Owl a couple weeks ago at Bloomberg Invest and I kind of like his stance. I mean, you have the Apollos of the world saying that the private markets are going to become the new public markets. And that's a theme you've written about a lot. His stance is more private markets should be private markets. They're not trying to build out a trading desk like Apollo. I believe that they filed for an interval fund for private assets, but they're not on board with this. Private should be out in the public.
- [23:26]
Katie Greifeld
It is true that one attraction of private credit to a lot of borrowers is you will have a relationship with a small defined group of lenders rather than who knows who owns your debt Today that's an appeal to borrowers and that's undermined if you build out a trading desk and want private credit to be super liquid. So it makes sense that a lot of people would not want that. Yeah, but I sort of bet on everything becoming traded over time.
- [23:51]
Matt Levine
Yeah, that does seem to be the future that we are marching towards. Just a note on the State Street Apollo etf. There has been a ton of drama over it. Again, the SEC sent a strongly worded letter which was fun and unusual. It really hasn't attracted too many inflows.
- [24:09]
Katie Greifeld
Just yet which everyone's waiting to see if it's illegal.
- [24:14]
Matt Levine
Yeah, well, not. Also, it's not that private credited well that's true. I think it was CFRI did buy a bdc.
- [24:20]
Katie Greifeld
It's all private credit.
- [24:21]
Matt Levine
Geez Louise, I get it. You. You run a bdc marketing a bdc. Who. Who is paying you cfr. I did an analysis early in March so it wasn't quite fair because it hadn't been alive for that long. But they found that like 5% of its portfolio was private credit. But it says it can go up to 35%. We'll.
- [24:47]
Apollo Representative
The global industrial renaissance is transforming industries and reshaping our world. Over the next decade, sectors like energy, infrastructure and technology will require an estimated 75 to $100 trillion in CapEx to modernize and meet the growing demand. This unprecedented level of investment is beyond the scope of public market alone. Long term projects need long duration capital. That's where private capital comes in and that's where Apollo leads. With significant scale, the flexibility to adapt to evolving capex needs and a steadfast focus on enabling economic growth, Apollo is partnering with companies to provide the financing solutions that fuel the future.
- [25:31]
Stifel Representative
Learn more@thinkitnew.com Renaissance deep domain expertise, strong relationships, broad capabilities. It's what makes Stifel one of the industry's leading providers of M and A and capital raising services in the middle market. But don't just take anyone's word for it. IFR has named Stifel US Mid Market Equity House of the Year five times in the last 10 years. When it comes to investment banking, Stifel is the name you should know. To learn more about how Stifel can help you address your most complex investment banking needs, visit stifelinstitutional.com Stifel Nicholas & Co. Inc. Member SIPC and New York Stock Exchange.
- [26:15]
Sierra AI Representative
Your customers are important to you, but they won't feel that way if they're stuck messaging a clunky chatbot or waiting on hold for a representative.
- [26:25]
Katie Greifeld
Estimated wait time is 25 minutes.
- [26:33]
Sierra AI Representative
With Sierra, your company can deploy a branded AI agent that engages and delights customers anytime, anywhere. Sierra agents pick up every phone call and personalize every interaction. No more menus, no more hold times. And if you have an issue, Sierra's AI agents solve tough problems, whether they're helping your customer pick out the perfect mattress, update a subscription plan, or even troubleshoot a new device. Always friendly, always helpful, always ready. Visit Sierra AI to learn more. That's Sierra A.
- [27:25]
Matt Levine
The American Dream is a mall in New Jersey.
- [27:28]
Katie Greifeld
We barely have anything to talk about, but we both love malls in New Jersey.
- [27:31]
Matt Levine
And so we simultaneously have not that much to say, but also a lot to talk about.
- [27:36]
Katie Greifeld
Have you been to the American Dream Mall?
- [27:38]
Matt Levine
No, no. Which is crazy. So I drive to New Jersey all the time to go horseback riding. So I passed the American Dream Mall probably four to six times a week. And I always just look at it and I can't believe it exists. I can't believe it exists.
- [27:56]
Katie Greifeld
Neither can they.
- [27:57]
Matt Levine
So many times it almost arguably it.
- [27:59]
Katie Greifeld
Doesn'T exist for tax purposes.
- [28:00]
Matt Levine
Well, bring us on in to this.
- [28:03]
Katie Greifeld
American Dream is a mall. It's so much more than a mall. We'll get to that. But it's a mall in New Jersey. And it took a very long time to develop and its development was filled with trauma, some of which I was involved in as a young lawyer.
- [28:16]
Matt Levine
Yeah, I want to get into that, too.
- [28:18]
Katie Greifeld
But so as part of the development, they got some land from the state and they agreed to make payments in lieu of taxes. Just kind of like taxes to the local government. And basically the way it works is you develop the mall and you're not making payments because it's like you're spending all your money developing the mall and then you're running the mall. You're making money and you start making the payments and lower taxes. And that was the deal. And the company has been running the mall for some number of years now. It opened in 2019, which is an.
- [28:48]
Matt Levine
Amazing time to open a mall, such a good mall.
- [28:52]
Katie Greifeld
And they have not been making the payments in lieu of taxes because they said, no, we're not officially open to the public for business. Sure, some stores are open, the ski slope, the water park, some other things.
- [29:06]
Matt Levine
There's a roller coaster.
- [29:07]
Katie Greifeld
There's a roller coaster. There's a Ferris Wheel. But we are not at 100% occupancy, which no mall is ever at 100% occupancy. We're not at 100% occupancy, so we're not technically open to the general public, and so we don't have to make the payments yet. And the local government sued, and this past week, the mall lost. And the judge was like, come on, you're open for business. And so they have to make all the payments.
- [29:27]
Matt Levine
I want to believe that the judge specifically went to the mall just to check it out. You know, if you went to this mall, which you have.
- [29:34]
Katie Greifeld
Which I have, you would think it's open for business. It's like a little bit of a weird mall because it's so big.
- [29:39]
Matt Levine
Yeah.
- [29:39]
Katie Greifeld
It's like you kind of feel like there must be thousands of people elsewhere and not here. But no, I've been to this mall a couple of times and walked through it on the way to the giant indoor water park that is at the mall.
- [29:49]
Matt Levine
Amazing.
- [29:50]
Katie Greifeld
It's so good.
- [29:51]
Matt Levine
You've shown me photos of this water park, and it looks like you're on a cruise ship, like it is.
- [29:55]
Katie Greifeld
So it's about the size of a cruise ship. I've also recently saw an Instagram video from a friend of mine who took her kids skiing at the American Dream Mall.
- [30:07]
Matt Levine
So did Kim Kardashian.
- [30:08]
Katie Greifeld
Yeah.
- [30:08]
Matt Levine
Big indoor ski slope being relative.
- [30:12]
Katie Greifeld
Sure. I don't have a great sample size. Right. It's not like Aspen.
- [30:18]
Matt Levine
True, true.
- [30:19]
Katie Greifeld
It's bigger than the indoor ski slope at my house.
- [30:21]
Matt Levine
Yeah. Fair. Probably bigger than the ski slope at most indoor malls.
- [30:26]
Katie Greifeld
Yes. I don't know the world record for.
- [30:29]
Matt Levine
I feel like it's in Dubai or something.
- [30:31]
Katie Greifeld
Oh, yeah. I think there is a big indoor ski slope in Dubai. Anyway, it's a big one for a mall. It's a big mall, and it's very much in operation. You know, it's so in operation that it's open on Sundays, which violates, like, the local blue laws. And, like, there's some reporting that, like, the city of Paramus or somebody is going to sue to make them close on Sundays.
- [30:53]
Matt Levine
I love that the American Dream is not paying taxes. And also it's open on Sundays. It just. And it's in New Jersey. It just feels all of it.
- [31:01]
Katie Greifeld
That is. That is truly the American Dream.
- [31:02]
Matt Levine
It stitches together so deliciously and mug flumes. I'm just so grateful that it exists. I haven't been so. I drive past it all the time, and usually I'm Alone. I'm not going to go by myself.
- [31:15]
Katie Greifeld
You have your horse on the car?
- [31:16]
Matt Levine
I don't have my horse. I don't have my husband's.
- [31:18]
Katie Greifeld
Your horse would like the mall?
- [31:19]
Matt Levine
Probably. I mean, he probably has like a paddock. I mean, hopefully someone is listening and getting ideas of how to build out the mall further. I can't believe it exists.
- [31:30]
Katie Greifeld
You and your horse are on the Ferris wheel.
- [31:32]
Matt Levine
I'm worried though, it'll be too crowded. Every time I drive past and think about going in, I'm worried that, you know, it just wouldn't even be fun because there's going to be lines for the indoor ski slope.
- [31:40]
Katie Greifeld
I don't know. I've only been on weekdays during school breaks and it's not that crowded. The water park gets busy.
- [31:46]
Matt Levine
Yeah, I'm sure it's popping.
- [31:48]
Katie Greifeld
Yeah. But like the mall feels like, you know, it's like a mall.
- [31:50]
Matt Levine
Why did they change the name from Xanadu, though? Xanadu is such a cool name.
- [31:55]
Katie Greifeld
I don't know actually, but like when I was a young lawyer, I worked in the sale of this troubled company that among other things owned Meadowlands Xanadu, as it was then called. This was like 15 years before the mall actually opened. The mall opened in 2019. This is like I was like doing this in like 202005 or something. And it became, it became so famously troubled that it's like there's a picture of it on the Wikipedia page for the word boondoggle.
- [32:19]
Matt Levine
Incredible.
- [32:20]
Katie Greifeld
So I think maybe they were like, this is cursed. We need to change the name so like people will.
- [32:27]
Matt Levine
We need to make people forget.
- [32:28]
Katie Greifeld
Yeah, yeah. If you like went to like a retailer and were like, hey, would you like to open our store in our mall? They're like, what mall? And you're like, meadowland Xanative. They're like, ah, no, Right. So you have to change the name. I think that might be it. Also just like, you know, it's like different companies took it over and like, you want to put your own branding on it.
- [32:43]
Matt Levine
Yeah, yeah, fair enough.
- [32:44]
Katie Greifeld
Xanadu is a pretty good name for them all.
- [32:46]
Matt Levine
Yeah, pretty good. I don't know, maybe I'll name a child Xanadu. But also part of the reason I can't believe it exists is because I've been traveling the well worn path between Manhattan and New Jersey for my entire life. And for a lot of my life, this thing was just on the side of the highway, not open. Famous boondoggle under construction.
- [33:06]
Katie Greifeld
Amazing.
- [33:06]
Matt Levine
Yeah. So I feel like in a way. Like I'm not sure it exists.
- [33:11]
Katie Greifeld
Right, right.
- [33:12]
Matt Levine
Like, do I truly believe you sort.
- [33:14]
Katie Greifeld
Of get the benefit of the doubt being like, oh, our mall isn't open because it's like it wasn't open for 20 years. Like, who would believe it open?
- [33:19]
Matt Levine
Yeah, it's only been open for five to six years.
- [33:23]
Katie Greifeld
A lot of it's like 25 year history.
- [33:24]
Matt Levine
Exactly. So I don't know, maybe in another couple of decades I'll believe it truly that it's open.
- [33:30]
Katie Greifeld
Largest indoor skiing resort is in Shanghai, our producer tells us.
- [33:34]
Matt Levine
Wow, I knew it wasn't here in New Jersey. Also, thank you to everyone who's been emailing into the Money Stuff mailbag. Next week we're going to be doing a mailbag episode. So Kitty will be off skiing at.
- [33:49]
Katie Greifeld
An indoor ski slope.
- [33:51]
Matt Levine
Yeah. At an undisclosed location Outdoors. Yeah. An indoor outdoor ski slope.
- [33:57]
Katie Greifeld
And that was the Money Stuff podcast. I'm Matt Levine.
- [33:59]
Matt Levine
And I'm Katie Greifeld.
- [34:01]
Katie Greifeld
You can find my work by subscribing to the Money stuff newsletter on Bloomberg.com.
- [34:05]
Matt Levine
And you can find me on Bloomberg TV every day on Open Interest between 9 to 11am Eastern.
- [34:11]
Katie Greifeld
We'd love to hear from you. You can send an email to moneypodloomburg.net Ask us a question and we might answer it on air.
- [34:18]
Matt Levine
You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.
- [34:24]
Katie Greifeld
The Money Stuff podcast is produced by Anna Mazarakis and Moses Andam.
- [34:28]
Matt Levine
Our theme music was composed by Blake Maples.
- [34:30]
Katie Greifeld
Brendan Francis Newnham is our executive producer.
- [34:32]
Matt Levine
And Sage Bauman is Bloomberg's head of podcasts.
- [34:35]
Katie Greifeld
Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.
- [34:43]
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Hes Yu Jo
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BetterHelp Representative
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