Money Stuff: The Podcast
Episode: American Dream: EDR, BIS, PILOT
Release Date: March 14, 2025
Hosts: Matt Levine and Katie Greifeld
Description: Money Stuff: The Podcast serves as the audio companion to Bloomberg Opinion’s Money Stuff column. Hosted by Matt Levine and Bloomberg News reporter Katie Greifeld, the podcast delves into Wall Street, finance, and a variety of other engaging topics every Friday.

1. Introduction

The episode kicks off with light-hearted banter between Matt Levine and Katie Greifeld before diving into the episode's primary topics: the intricate dynamics of the Endeavor-Silver Lake merger, concerns surrounding private credit liquidity in ETFs, and an in-depth look at the American Dream Mall in New Jersey. The conversation is marked by a blend of technical financial analysis and engaging anecdotes, maintaining the hosts' signature deadpan style.

2. Endeavor, TKO, and Silver Lake Merger Saga

Ownership Structure and Merger Details

Katie Greifeld begins by outlining the complex ownership landscape of Endeavor and TKO. Endeavor, a formidable talent agency and media conglomerate led by Ari Emanuel, owns over half of TKO, a public company formed from the merger of WWE (World Wrestling Entertainment) and UFC (Ultimate Fighting Championship). Silver Lake, a prominent private equity firm, holds a 70% stake in Endeavor and has initiated a move to take Endeavor private by acquiring the remaining shares at $27.50 per share—a deal agreed upon a year prior.

Katie Greifeld [03:11]: "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."

Stock Price Surge and Shareholder Dissent

Since the agreement, TKO's stock price has surged, enhancing the value of Endeavor's holdings. This unexpected increase has spurred dissent among Endeavor's shareholders, particularly those not aligned with Silver Lake, who are now demanding a higher buyout price through Delaware's appraisal rights.

Katie Greifeld [04:57]: "Silver Lake has decided it wants to take Endeavor private. It wants to buy the shares that it doesn't already own...And what has happened in the interim is that the stock price of TKO has gone way up."

Appraisal Rights and Legal Implications

Matt Levine probes into the appraisal crisis, questioning the shift in Delaware judges' stance since 2017 regarding merger valuations. Katie explains that a landmark case involving Dell in 2017 set a precedent where Delaware courts began favoring objective market values over subjective valuations presented by shareholders, making appraisal cases harder to win.

Matt Levine [05:09]: "I have two questions here. One is that... you wrote that it changed in 2017, which seemed. I can't think of a catalyst. Why did it change in 2017?"

Katie Greifeld [05:25]: "Since Dell's buyout...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."

Current Status and Future Prospects

The hosts discuss the likelihood of an appraisal case materializing, with Katie noting that technical requirements must be met before shareholders can pursue appraisal. The tension remains as Silver Lake stands firm on the agreed deal price despite the market-driven increase in TKO's value.

Katie Greifeld [09:50]: "If you're a private credit issuer, you're like, okay, the right funding model is a permanent capital closed-end funding model."

3. Private Credit Liquidity and ETF Concerns

BIS's Concerns and the Rise of Private Credit ETFs

The conversation shifts to private credit liquidity, particularly the Bank for International Settlements' (BIS) apprehensions about the liquidity risks posed by private credit ETFs. Historically, Business Development Companies (BDCs) have served as retail-accessible private credit vehicles without significant liquidity issues. However, the emergence of ETFs in this space presents new challenges.

Matt Levine [16:06]: "And that is private credit liquidity, specifically in ETFs."

Katie Greifeld [16:40]: "Retail private credit vehicles have been a thing for years...But 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."

Comparing BDCs and ETFs

BDCs operate as closed-end funds, allowing trading on stock exchanges without enabling direct redemptions, thereby mitigating immediate liquidity risks. In contrast, ETFs allow for redemption, which might compel private credit funds to liquidate assets rapidly in the event of mass withdrawals, potentially destabilizing the market.

Katie Greifeld [17:39]: "The BIS is worried because there's one ETF."

Matt Levine [17:58]: "Does the world need private credit ETFs? I don't know."

Market Behavior and Investor Preferences

The discussion highlights the preference among retail investors for ETFs due to their familiarity and ease of trading compared to more specialized products like BDCs. This muscle memory in trading ETFs could inadvertently contribute to liquidity risks if private credit ETFs become widespread.

Katie Greifeld [18:46]: "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."

Future Prospects and Mitigation Strategies

The hosts speculate on the future of private credit trading platforms as a potential solution to liquidity concerns, suggesting that developing robust secondary markets could alleviate fears of an illiquidity "doom loop."

Katie Greifeld [22:49]: "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."

4. The American Dream Mall: A Case Study

Historical Context and Development Challenges

Katie Greifeld introduces the American Dream Mall in New Jersey, detailing its tumultuous development history, legal battles, and financial struggles. Originally named Meadowlands Xanadu, the mall faced multiple delays and controversies, leading to a notorious reputation as a "boondoggle."

Katie Greifeld [28:03]: "American Dream is a mall in New Jersey. 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."

Tax Agreements and Legal Disputes

The mall's developers secured land from the state with an agreement to make payments in lieu of taxes (PILOT). However, the mall failed to commence full operations, leading local governments to sue for the owed payments. A recent court ruling mandated that the mall must begin making these payments, acknowledging that it is operational even if not at full capacity.

Katie Greifeld [28:16]: "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."

Matt Levine [29:05]: "There's a roller coaster. There's a Ferris Wheel."

Operational Highlights and Public Perception

Despite its legal battles, the American Dream Mall boasts attractions like an indoor water park, ski slope, and various entertainment venues. The hosts share personal anecdotes and humorously express their fascination and disbelief at the mall's existence and scale.

Matt Levine [27:37]: "I drive to New Jersey all the time to go horseback riding. So I pass the American Dream Mall probably four to six times a week."

Katie Greifeld [30:06]: "We had Carson Block on Bloomberg Television... he said, is he doing irreplaceable damage to the Tesla brand?"

Future Outlook and Community Impact

The discussion touches upon ongoing and potential future legal disputes, such as challenges to the mall's Sunday operations against local blue laws. The hosts humorously speculate on the mall's future and its place as a unique American landmark.

Katie Greifeld [31:00]: "That is truly the American Dream."

Matt Levine [33:12]: "Do I truly believe it exists...maybe in another couple of decades I'll believe it truly that it's open."

5. Conclusion

The episode wraps up with the hosts teasing future content and encouraging listener engagement through emails and subscriptions. They reflect on the week's discussions, highlighting the blend of complex financial topics and quirky cultural phenomena that characterize Money Stuff: The Podcast.

Katie Greifeld [33:49]: "The Money Stuff podcast is produced by Anna Mazarakis and Moses Andam."

Notable Quotes with Timestamps

• Katie Greifeld [03:11]: "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."

• Katie Greifeld [05:25]: "Since Dell's buyout... 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."

• Matt Levine [16:06]: "And that is private credit liquidity, specifically in ETFs."

• Katie Greifeld [18:46]: "There's a desire among a lot of these issuers and a lot of these private market folks wanting to tap into this new source of demand."

• Matt Levine [27:37]: "I drive to New Jersey all the time to go horseback riding... I can't believe it exists."

Key Takeaways

• Endeavor-Silver Lake Merger: The attempted privatization of Endeavor by Silver Lake has sparked shareholder dissent due to a significant increase in TKO's stock value post-agreement, highlighting the complexities of appraisal rights in Delaware.

• Private Credit ETFs: The introduction of ETFs in the private credit space has raised liquidity concerns among regulators like the BIS, emphasizing the need for stable secondary markets to prevent potential financial instability.

• American Dream Mall: Serving as a microcosm of ambitious yet troubled large-scale projects, the American Dream Mall's ongoing legal and operational challenges underscore the difficulties in balancing development promises with practical execution.

Money Stuff: The Podcast continues to provide insightful analysis and engaging discussions on the intricate dance between finance, law, and cultural phenomena, making complex topics accessible and entertaining for its audience.