Marc Lasry Talks Private Equity in Sports

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Let's move on to our top story this hour, because private equity is making a big splash in pro sports with two major deals in basketball and baseball this week. The Boston Celtics today reaching agreement to be a sold to a consortium for six point one billion dollars, making it the largest sports takeover deal ever, while two days earlier, the San Francisco Giants announced they sold a ten percent

Great to see you, my pleasure, Thank you for having me.

So let's talk about that six point one billion dollar price tag for the Celtics. The Washington commanders of fetch what six point oh five billions, So.

This is the biggest deal.

The Celtics might be raining inions on the court, but they don't own their own court at TD gardens. So I'm curious what you make of this price tag.

Look, I think it's a great price for the league, and you had four people who wanted to buy it, so it was a competitive process. The fact that they got six point one billion, it's it's great for the holders, for the folks who own the Celtics today.

But I think it's it's a high price. But it seems that's where teams are selling for today.

Back in the day, you had said that you paid too much for the Bucks, and at least at the time you thought you did. I guess when it comes to wondering whether they paid too much for the Celtics this time around, because of real estate was not part of that component, I got wonder, you know, how much more should it have been if there was real estate involved.

It probably would have been more because you would have made more on the team because of owning the owning TD or the garden. Yeah, and you know the question is, well, they try to build their own arena, and they may do that, but at the end of the day, like when we bought the Bucks, we had paid the most for any NBA team, and that was about five hundred and fifty million today.

That's funny now, I know.

I no, it does. It sounds funny.

And when I sold, I thought that was a great price around you know, three and a half. So look, I knew at the time that when we sold, prices would probably go up. I think because of the new media deal that got done, price have gone up a lot more. I thought Adam Silver had done a phenomenal job in getting that new media deal, and I think that's what's spurring these new prices.

All Right, we just have us some breaking news for us here is Nike just gonna give out the earnings Here. Nike third quarter earnings comes in and fifty four cents a share, well below estimates, about seventy seven cents of share. Revenue a little better than estimated, though, coming in eleven point is two seven billion dollars. We were looking for

Yeah?

You know, look I think.

I think there's a lot of growth that's still going to happen. I think part of it is going to be, hopefully when they end up having an expansion team. We've been looking at Vegas, so we'll end up seeing what happens.

What do you think that, like the froth is done at some point. I'm just trying to understand how you can suck more value out of something that doesn't have the real estate yet.

Like, how do you how do you get more value from them?

Well, I think the way you'll get more value.

Look, you only make money in sports three ways, so it's ticket sales, sponsorship, and media. So if the Celtics win again, they'll be able to ticket prices anywhere between ten to twenty percent. If you have a team that's the worst in the league, that team is still raising prices five ten percent. Nobody stops giving up on their team. It's actually one of the great little secrets about pro sports. Every year, you know, the whole mantra in sports is next.

Year is our year, right, and everybody believes that.

So I think you're always going to see that teams are going to keep on growing at sort of anywhere between you know ten percent, fifteen percent.

I think if you own the real estate, you'll.

End up growing faster because you can end up having concerts, you can do everything within your own arena, and so I wouldn't be surprised if ultimately the Celtics end up building their own arena.

When it comes to the Vegas franchise that you're considering that you're weighing, have you thought about where that franchise would play.

Yeah, we've been looking at a bunch of areas in Vegas. I don't want to talk about it, becau if I do, then those guys will raise the price.

Of where it usually works.

Yeah, that's yours. It works.

But I think for everybody who does something in Vegas, it'll be at the T Mobile Arena at least for the next few years, until people are able to figure out where they want to move the team to.

All the sports franchises are looking overseas to expand their brand and their market. The LA Dodgers would show Hayes a perfect example. Right, They've got this built in Asian fan base. What's the single best way of doing that? For teams that maybe aren't obvious candidates for international fans, Well, I think first.

If you win, people love that, right.

So for us, we had Yannis, and because we had Yannis, you wanted to play games in Greece. We never did, but we ended up playing in Europe. We ended up playing in Paris, we played in London. So part of when you have international players wherever they are, you want to try to end up playing there because it just feeds that popularity. So I think for every team, what you want to do is you want to grow outside

Or even regional or even regional. I agree with that.

What are you most excited about right now?

For US?

Yeah, I think our.

Sports fund is very exciting.

We've invested in a number of new leagues that are doing exceptionally well.

We ended up investing in the Orioles, and you know, we're very excited about that.

But in a number of the investments we've made, we've already seen prices that have gone up already about fifty percent plus. So what you find in new leagues and new teams is if.

You're right, it's going to grow exponentially. Right.

So the whole key in the nice thing about that is you see the ratings the next day, so I can tell you if it's grown. Like we've invested in PBR and Professional bull Riding, that league is growing thirty percent plus a year.

We have professional bull Riding.

Yes, do you want to get on a ball? You'll let up if you could say eight seconds?

This sounds awesome. Do you have to go? I don't want to go to rodeo for that's.

No, No, you could do it. We are here in New York.

We owned the New York Mavericks, so you can come anytime you want to go.

Okay, yeah, well.

So would you own little bits and then it grows exponentially? What area would you not touch right now?

In sports?

I don't want to touch leagues or teams where we think you've got flat growth. Okay, right, So when you're doing a new league or new team like TGL.

We ended up doing that. The golf league that Tiger.

And Rory started, a lot of that was how many people are going to watch it, and what you've seen is they've had great growth over the course of the year. Just had the semifinals and finals are going to be this Tuesday. It's actually been going great and you've had more people tuning in than you thought. Originally, we thought it'd be two fifty to five hundred and it's been about seven to fifty to one million. So that's letting you know that people love it and people want to be a part of it.

When it comes to TGL, it's a new simulator golf League. It feels like the ticket sales might be capped right because it's in this arena, So then you have to really rely on those other two legs of the soul that you were talking about, media and sponsorship is to really really grow that business. How is that looking right now? I mean, this is the first season, so you've just gotten started.

We've gone started. What's happening is you've had more people watching it. It has more people watching it, you end up having more sponsors who want to be a part of that. So it's actually gone far better than we thought. And you know the only problem with it, I would tell you is we lost our match a couple of days ago. Yeah, I thought it would have been nice.

To would make it to the playoffs.

So we did.

We did, but Stevie Cohenes in the playoffs, Arthur Blanks in the playoffs.

So we'll see who ends up winning.

That'll be a pretty nice championship for either one of them.

I'm just really into the fact that you can watch it in two hours, like that's huge.

But that was the whole key to it.

That's a game changer.

No, it is, and that's exactly it, because the problem I think that TV or media had with golf was it was three or four or five hours. It was long, it was fever So now that it's two hours, you've got a lot more people watching, and they love it and they love the interaction.

Between the players.

You've also invested in women's sports, and I know that you're looking at that very carefully. Where are we in the trajectory of the valuation of those teams?

Are we in like the second inning? The sixth inning?

I think you're in the first inning first, I really do.

If you think about it, five years ago, you could have bought a women's soccer team for a million dollars. Today they're trading around one hundred, one hundred and fifty million. We've ended up starting to buy women's soccer teams in Europe, and part of the reason for that is we think right now they're under value, but we've invested in unrivaled. You want to invest in women's sports, and the reason you do so here's.

A nice little tidbit of information.

When Kaitlyn Clark played in the women's final in college, you had close to nineteen million people who watch that. By the way, that is more that I've ever watched a Stanley Cup finals game, more that I've watched the World Series game, right, And it's pretty much almost as much as washing NBA finals.

So that that's great.

The fact that you ended up having a woman's NCAA basketball game and you had all those people come, what is telling you is there really is a change that's happening.

And that change is very simple.

When I was a kid, if I went to a baseball game or a football game, my.

Dad didn't bring my sisters. It was him and I.

Today, the idea that you would not bring your daughters is inconceivable to someone. And so because of that, your daughters are going to games they're playing, so it's actually been great.

Oh sorry the Stanley Cup that was her final scarlet. But anyway, this is where I'm going to pair sports with the macro environment. A lot of uncertainty. CEOs are on the pause button all the way. How does that and all the uncertainty in DC affects sports, Like, how do you view through that lens?

I think it's the one thing that people it's immune.

I would never tell you something's immune, but I would tell you for the short term, I think it is. But part of that is because people want to be part of something. They love sports, they love going so I think you're always going to have that look. During COVID, it was actually kind of interesting. During COVID, people wouldn't come into the office, but they would.

Go to a stadium, they'd go to an arena.

They'd go to you know, it was outside, so you still had thirty forty fifty thousand people showing up. What that tells you is people want to be part of that, and they're always going.

To want to be part of their sports team.

Do you find better value in sports assets right now than in the conventional markets of public markets or private assets?

You know, debt anything else.

I think depending on where you're investing in sports, So I think in our core business we're able to make about ten to fifteen percent a year because really what we're doing.

Is lending money.

I think in sports, especially in sort of emerging leagues, you can make multiples of that.

You can make sort of ten twenty times for money.

And I think in sort of the Big Four, over twenty years, the ir of that's been about eleven percent. So if I think over the course next ten years, I'm still going to make ten to fifteen in sort of the Big Four, I would.

Do that interesting broadering out because for broader viewers, what do you like in the non sports market right now?

Well, really what we love.

Is lending, yeah, and the recent we love lending and a lot of other people right now.

Yeah.

But the reason for that is you're not taking the equity risk, right, and if you can make in today's environment, if you can make ten to fifteen percent, people want that, right.

It's very safe, you're not.

Taking as much risk, and when people are nervous, what they want to do is take less risk. So for us, we're able to lend and sort of generate those returns, So that's really positive.

What do you need to see for people to be on you to be more willing to take on risk?

Then at this point, I think what.

You want to see is you want to see positive GDP growth. You want to sort of see an excess of two percent. Part of it is really what's going to happen to interest rates?

Yeah?

Right.

The lower rates are, the more people are going to take risk because there's just more capital. The higher rates are, the more people are just waiting. And that's sort of what you're seeing today.

I love you just as we wrap up, get your perspective on the uncertainty that we're seeing in the markets and the economy today versus any other time.

Like you've lived through a lot of cycles. How does this compare? Oh I don't think this is that big of adeo.

No, I really do.

You've had real recessions. You've had real issues in my career. I think what you're looking at today is little bit of what you said. People are nervous, So people are waiting. The real question is how long do they wait? Do they wait three months, six months, a year, two years. If you're waiting a long time, then you've got a real recession. If it's three to six months, then what you've got is sort of GDP that's flat up one percent.

So that's what I would try.

To do, and of course it all depends on what this guy on the screen says and does to get us to that.

Six months suck and we're obviously going back now in six months. So thank you for a three Thank you, Thank you so much, a pledgure spending time with you.

Mark Lasri is chairman and CEO of Avenue Capital