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What gets me up in the morning?
What do I love?
And I love playing shadow entrepreneur, and I like solving problems with capital. And it just so happens, you know, luck in people's career. I happen to hit an inflection point with sports that I couldn't possibly have seen coming back in two thousand, two thousand and one. Right, you look back on the last twenty years and you're like, you know, Luck's Greg. You really hit an air pocket where you took off. Now the challenge is navigating that.
This week on the show, Alex Jerry Cardinal, this is a guy who you and I both know. He's the founder of Redbird Capital. He's a former partner at Goldman Sachs. He's had a hand in some of the most important moments in sports history over the last last thirty years, including some teams you are quite.
Familiar with, very much so the New York Yankees.
And he was one of the founding partners for the great George Steinbrenner, who when he was in his early thirties, trusted him with this incredible project to leave MSG and create his own network with the Goldman Sachs and the New York Yankee brand that today exists as the most successful regional sports network of all time.
This is one of those things that I think we take for granted these days. It's like, yeah, you want to watch the Yankees, you turn on the S Network. This was a radical, controversial to say the least idea back in the day. People were mad about this, and yet George Steinbrenner, as was often the case, saw something that other people didn't. I think what's so interesting about Jerry Cardinel too, is you take the S Network, cool, amazing,
Then you start Redbird Capital. That's pretty great. But then you start to list out the things that Redbird has been involved in the creation of the next look and maybe most successful version ever of the XFL with Dwayne Johnson aka The Rock and Danny Garcia. That's a massive bet and a really big investment. And then he goes into the business you're in now, which is owning a sports team. And he doesn't just own any sports team.
He doesn't go by just anything. He goes for ac Milan arguably one of the top ten franchises on the planet, and one of the things that totally caught me off guard candidly going into the city. You had given me just a little bit of a teaser about this. He had a hand in a couple of the most important moments in your life. One getting to the New York Yankees and maybe even more importantly, winning a world series.
That's what makes Jerry so special. I mean to think that he had a big hand in bringing me here in zero four from the Rangers when George Steinbrenner came calling, and then more importantly keeping me as a Yankee when I opted out. And then it was a famous lunch with Randy Levigne, myself and Jerry that led to the two thousand and nine title on this episode of The Deal, Jerry Cardinal.
Let's get started with this jam. So introduce yourself for us. Tell us who you are, what you do.
Jerry Cardinal, Founder and managing partner of Redbird Capital.
And what does Redbird do look.
Redbird is an investment platform that enables me to invest the way I invested most successfully at my twenty year career at Goldman Sachs. So it's meant to be an investment business that solves problems with capital. I'm really a big believer in legitimacy, and I think you know, today everybody's got capital, everybody's running around. There's just too few
deals for the amount of capital chasing it. And you know, my style has always been to start not with the deal, but start with the problem, and if you can solve the problem inevitably. Capital is a great way to solve a lot of problems, not all of them, but if you can start with that, you have a great foundation for legitimacy for what you're doing. And that's what Redbird's meant to be.
All right, So we are going to start with the deal, because it's a show called the Deal.
I think we should start with Yes, you weren't there. That's a big one, all right.
It's revolutionary. Take us back to the creation of the Yes Network. How did it get started?
Look, it was a hugely radical concept and we didn't even know it was radical at the time. I mean, this was truly monetizing intellectual property at a time in the late nineties early two thousands when mostly investing in media and entertainment was around distribution. It was cable systems, it was outdoor billboards, radio stations, TV stations. No one really had ever invested in intellectual property, and today that would be just a no brainer and everyone.
Would get it.
George Steinbrenner came calling, and he had just broken away from Cablevision and MSG, and the story he told was fascinating, And what he basically said was, I don't understand how I can be putting all the risk capital in to put these players on the field year in and year out to win a championship, and I just get paid a fee for the monetization of those games, and my counterparty gets the appreciation in a stock price. That doesn't seem fair to me. When he put it that way,
I mean, you know, George was such a visionary. The light bulbs went off in our head and we were like, wow, I never really thought about it that way. I think this was like February of two thousand and one, and we started sort of looking at, well, could we create our own network? And so, make a long story short, I was a thirty three year old vice president at the time, and I started building the model. I knew nothing about sports. I was from Philadelphia, so I only
kN about the Phillies. I don't think i'd ever seen a Yankee game, And you know, by September, coming out of Labor Day, we basically had the outlines of what would become the S Network, and we signed that deal and handshook on that September tenth, two thousand and one.
Wow.
And then I'll never forget. You know. The next day I was driving down the FDR to come into the office to you know, start the next phases of this, and you know, saw that the plane hit the tower. And by the end of the week, you know, Goldman Sachs did what you would expect Goldman Sachs to do. At the end of the week of nine to eleven, Goldman Sachs came in and backstopped what then was the largest private equity check ever written, three hundred and thirty
five million dollars. And all we had was a piece of paper that said, you now own forty percent of the electual property of the New York Yankees and the New Jersey Nets, and you need to be on the are April first, when you talk about, you know, a crucible of having to really forge your way, and I say, George, you know, George is the kind of person if you're there for him in a moment like that, he will
he will reciprocate and be loyal to you forever. And that really was sort of the career moment for me. And I haven't looked back, and you've really had that partnership with the Yankee organization, the Steinbergner family has been instrumental and everything I do.
If you take a step back, going back to MSG, how far away was MSG from the Yankees and finally said, George said enough, Jerry, let's go do this.
Yeah, good question. You know, it wasn't so much a bid ask. The bid ask was not numeric. The bid ask was philosophical. George, he didn't articulate it in terms of equity. George wanted equity. George was a principal. You know, he's a maverick, he's an entrepreneur, and so that was the fundamental difference. Now, the world's changed dramatically, but you know, that model of being a rights holder yourself and monetizing
those rights and creating these terminal value businesses. Literally, I say to everybody that you know, everything I've done, you know, over the last thirty years, is really based on that moment. That model hasn't changed. That model where we partner with the rights holder in this case the Yankees, they put in their intellectual property and we come in with scalable capital and a company building mentality, which is important, integrating a lot of operating skills in addition to your typical
private equity skills. You know, that sort of ven diagramming has never let me down. And it's sports, sports, media and media and entertainment. Fans are evolving in the way they want to consume this content. And you know, my view in investing is no one has a crystal ball, but if you start with great intellectual property, you will be able to navigate the cyclicality and the volatility in the way technology is disintermediating the way these things are monetized.
So, speaking of Goldman, like if we could do a beat on Goldman, because it is the Yankees of investment, banking, Wall Street, it's all of those things. I mean, if George Steinbrenner is not for the faint of heart, nor is Goldman Sachs at that point which you alluded to, this idea of like you're struggling for a seat at the table, take us back to Goldman in the nineties. What was it like back then trying to sort of
find your way it's private. It's still private at that point, right in the nineties.
Yeah, I went public in ninety nine. It was interesting, you know, I joined Goldman Sachs out of Oxford and then I did a stint for a year at a think tank in Tokyo. So when I joined, you know, I wasn't one of these Wharton kids, you know, who knew that I wanted to go to Wall Street from day one, you know, And I joined, and I did a year in New York and then shipped out to Asia.
And that's probably the best thing that happened to me, because I was able to find my setting working with these you know, just iconic families and entrepreneurs in Asia that were building their countries, and that you know, as a twenty six, twenty seven year old kid, you know, you're not going to get away from the analytics. You're not going to get away from actually doing the work, which was very important. But to also add that exposure was huge and it really opened my eyes to Goldman
Sachs there. It really was a privilege to work there. And as I said, you know, we went from when I joined, a very client relationship based culture to a counterparty culture and you know, the firm always has to reinvent itself every year in multi years. In the terms of the way Wall Street's evolving, I was watching an interview with Tom Brady and Belichick, and you know these guys that mentality is Brady never looked at having won six Super Bowls when he went for the seventh, right,
he was like, well, that's in the past. I'm only focused on And that's the way Gold was. It's that same mentality. I mean today, you know, the virtue is scale. You know, back then the virtue wasn't scale. If anything, the virtue was a little bit less is more, And that's you know, the world's changed and so that and and you can't just not evolve, but that makes it more challenging.
I love that philosophy, not wide and shallow, but narrow and deep. And sometimes you mentioned ninety nine. You go public, all of a sudden, the scoreboard changes and you got to just throw more shots. Not quality shots, but is more shots. And obviously that's what I love what you do in Redbird. You know, when I think about Redbird Capital, and you've been so far ahead of the curve, you might be maybe you and Michael Rubin, maybe the only two people on Earth right that can do a partnership
with the Yankees and the Red Sox. And then you corral one of the greatest two owners of all time in Jerry Jones with Legends and George Steinberner. How and why.
I appreciate what you said. You know, Jerry is iconic as they get. And I was lucky. I didn't know it at the time, but I was lucky to spend five days on a boat with him. This was two thousand and seven. I use as an opportunity to tell him, you know what one of my you know, stretch for the stars moment would be. And I said to him, you know, if I could do it, I said, I would love to merge the Yankees, the Cowboys and the Lakers. And I said, you know, if you did that, I said,
I think you'll have Disney Wow. And I said, I would leave Goldman to go run that. And you know, if you know Jerry, which you do, I mean, he just loved that. I mean, Jerry's just one of those guys that wants to you know, Jerry looks at things with three D glasses.
Right at that time, how old are you?
I'm thirty thirty four, thirty five, thirty five, thirty six.
You know.
So basically we started going at it, you know, for lunch and breakfast and cocktails, and you know, with this five day boat trip, and we came up for all the reasons why it couldn't be done, you know, with all the different league rules and everything else. But at the end of it, I said to him, look, Jerry, this has been unbelievable, incredibly inspirational. I said, I can't leave this boat unless you and I have an agreement
that we've got something to do together. And one of the things we had come up with was that both the Yankees and the Cowboys were building these state of the arts stadiums that had never been built before at the same time, right, and this was going in This was two thousand and eight, two thousand and nine. Economy apart, economy is falling apart. And I said, well, if we can't merge the Yankees and the Cowboys, why don't we merge some of the economic streams between the Yankees and
the Cowboys. And what I said to him was that, look, you know, he was fascinated by the Yes model, because I think he was asked by the NFL to look at what became the NFL Network and he was one of the guys taking the lead on that, and so he was asking me like, how did you do yes, And he was trying to learn from that. I said, well, let's just keep it simple. I said, if Yes was about capturing the intellectual property of the Yankees and finding
a way to put a multiple on that. And the Yankees and the Cowboys are both building these iconic stadiums at the same time, why don't we find a way to capture the intellectual property quote unquote of the two stadiums and find a pathway to put a multiple on that. And that became Legends Hospitality. So we basically created the
economic engine of those two stadiums. And you know, at the time, you know, you a big piece of building stadiums was selling forward these seat licenses basically for premium seats and suites.
Today, it's a.
Little more challenging to do that because of technology, you know, as StubHub and other ticketing platforms you know, have enabled a la carte just like in streaming and cable, same thing in the stadium. But back then that was an incredibly important economic you know touch point for building these stadiums, and then of course you could wrap around at merchandising and hospitality and everything else that we do.
Sarry How much capital do you need and what's Legends approximately worth today?
Yeah, you know, great question on a lot of the companies that we create. That sounds just that statement right there, that sounds like venture capital. But what's so interesting is that because I'm rooting it in intellectual property and we're solving a need for something. In the case of the Yankees, brought casting where they can own equity in the broadcast. In the case of Legends, the same thing. For the stadiums. We're cash flow positive day one. Yes, was different because
we bought forty percent of the electual property. Right, Legends was different. Legends, you didn't really need a ton of capital because day one we were cash flow positive because you were Now there's a bit of a J curve to get to those stadiums coming online. While you may have a bit of a J curve, it's very manageable risk, it's really not venture because you're rooted intellectual property, so you have a pathway to non binary risk terminal value.
And then I looked to use these as platforms and then put more money behind it and build it out from there. So today Legends is a two to three billion dollar company. Wow, you know. Yes, we started in oh one. By two thousand and eight we had taken three and a half times our money out just by leveraging the cash flow. And then we sold it to Murdoch in thirteen for roughly four billion dollars.
And then you bought it back, and then I bought it back.
As Redbird in twenty nineteen with the Yankees Amazon, with a view that when we started, Yes, it was a growth equity, very play, and when we bought it back, it was in transition, and we knew that we were going to have to transition it from linear cable to direct a consumer. But we knew going into what everyone's dealing with today, and with the RSN model being challenged, we knew what we had in that intellectual property. It's the same story.
Let me ask you a very specific question about Yes, which is this is literally born on September tenth, going into September eleventh. So yes, there's all of those assumptions are absolutely correct, except for a massive black swan event that at the moment. I think we can all agree we didn't know what was going to happen in the world. How worried were you in that moment of especially having convinced your partners at Goldman Sachs to backstop this thing.
Was there a moment where you thought, well, this has been fun, but this isn't going to work now.
I'll tell you about that's interesting. You know, Dick Parsons was the first to sign up with us. He was the CEO of Time Warner at the time, and he said, look, you know, I hate the concept of Yes, he said, but it's the right thing to do for New York City. Wow and so, and that's the reason he jumped in. And it was hugely important that he did that. I've got to give credit to Leo Hendriy to Leo, you know.
Leo uh was our CEO and had a great relationship with all the cable guys in Dick and then I didn't have that oops moment that you talk about, because once Dick came in, then we everyone.
Started to follow. How soon did that happen?
That was pretty quick by Thanksgiving. But then we had a problem with cablevision. We couldn't get to an agreement with Cable Vision in our first year, and when you know, Giuliani stepped in to try to help his mayor. Then he handed the reins to Bloomberg, and Mike stepped in to try to help us. Spitzer was Attorney general time. He jumped in to try to help us, really just try to bridge the gap. Could not get it bridged.
And you know, Cablevision represented three eighths of our subscriber base. Wow, even with them not coming on board the first year, going back to my earlier point, we were still cash flow, meaningfully cash flow positive, but it wasn't anywhere that close to what I had underwritten in my model. And we
won a very important case after a year. And that's when I you know, when when you came on board and you were on the cover of the New York Post, and I put it on every I put on all the judges and everybody on all the lawyers chairs to make the point about how important this intellectual property was.
And the important case was that we got yes to stay on basic, the basic tier in cable and one of our one of our non legalistic arguments was that a low income subscriber in the Bronx living next to Yankee Stadium should be able to see all their Yankee
games without having to necessarily buy a ticket. That may be too much for them, but they should be able to get it from There is a there is a public private partnership between the cable industry and the community, and Yankee games in New York City deserve the people deserve that. And we won, and we won the right
to stay on Basic or expanded Basic. This was a national thing because you know, McCain and other in Congress were starting to push back on ESPN, and even back then, this is twenty something years ago, people were talking about tiering sports all the cart and I also, I'll never forget. You know, my model that I built had this at a buck seventy five per subscriber per month, and ultimately through arbitration, we had a buck sixty seven. Wow. So
we were pretty much right there on terms. And then you know, a moment that kicked in the next year. You know, this thing was off to the races.
And Jason full disclosure. I've never told this to anyone, but back then, Jerry had to talk about full alignment. He has the Yankees, he has Goldman Sachs. He brings in the best people to run it. But he allowed me to invest a few bucks in the yesdal So I put a few million dollars. I did extraordinary well, and to this day I'm grateful. But he's one of the principles that passes the hat around and it's always about we, not I.
So clearly, you guys start a business relationship at some point, and a friendship and a friend chip. And I mean my sense from talking to you, Alex and preparing for this is that going to him, you, Alex, start going to Jerry for all sorts of advice.
Oh yeah, well, I'll give you one of the stories. And I'll never forget this because in eight we did not make the postseason, and that was incredibly embarrassed. Jeter was embarrassed, Mariana, we were all very upset. And at that point I started talking to Jerry. I said, Jerry, we got to do something. This is not the way we closed down the greatest stadium of all time to open a new one. And again, this is eighth nine. So the economy is not doing well. There's tremendous amount
of internal pressure on how Steinbrenner or General partner. He says, okay, so how do we fix it? And I start going back and forth. He says, I'm going to set up a lunch with Randy Levine, the Yankee President and really one of the unsung heroes in the Yankee universe. Doesn't like the spotlight. But Randy is a great leader of people and knows how to run a great business. So we set up this lunch at the Core Club in Midtown, and I remember it was about a ninety min at lunch.
I remember, I think Jerry came from his office in Goldman Sachs. Randy comes from the Bronx and come from my apartment and we meet there and I order a chicken Caesar Shalad shrimp cocktail on a die Coke. And the reason I remember that is because it went untouched for And Randy is a very intimidating person and a great guy. And I remember I'm sitting here across from Randy and Jerry's to my left. I don't know how honest I can be. I don't know if I can be as honest with Randy as I am with Jerry.
And I'm kind of he's your boss, yeah, and you know he's a lot like George Steinbroner, right. And I start kind of mumbling and fumbling my words, and Jerry's like, come on, come on, you can be honest, you can
take it. We created an architect in a napkin, Cesar Sabathia, Martik Schera, and the one that I really pushed for was aj Burnett and Randy to his credits, literally taking notes notes, Long story short, Randy goes to work how Steinberner, to his credit, spends almost of a billion dollars in acquisitions. So now we cut to uh spring training. I have to go get hip surgery. We're not drawing one in April. We're off to a poor start. I'm in Vail, Colorado
getting rehabbed. Mark tic Share is getting booed. Sabbathi is not off to a great start. I'm coming back and I called Jerry. I said, Jerry, I feel bad. Is there any anything I can do for the organization? Should I give money back? Should I defer money? Jerry says, stop, we don't need your money back. We need you to lead us to a world championship. We need you to be a clean up hitter and be the best baseball
player you can. I don't know if you remember that with that, And sure enough about six months later, we're all on the field celebrating a world championship.
All right, hold on, I remember we've got to unpack this. We got to unpack this big times for true. So how are you at that table, like, like, what's your role at that point that you can be this connective tissue between this guy and the Steinberg like and Randy Levy?
Like?
How does that happen? Look if you remember that story.
Like my verbatim and it's one hundred percent accurate, you know, it's just one of those things I think when you came out of nine to eleven. Our relationship with Steinbrenners and Randy and the anchorganization was formed out of nine to eleven. And so what happened is, you know, I was always and I was always a quirky guy at Goldman, and so I didn't really fit into these roles that they want you to fit in. And so I didn't look at it as you know, my banker in this
case and I an investor in this case. I just I just was their guy, and I knew one thing in the same way. It was a privilege to work at Goldman Sachs. I didn't know I was going to have this career in sports the way it's become, but I certainly knew what a privilege it was to be apprenticing at that table, because you know what's happened over the last you know, twenty five years is you know, I've seen everything you know sports as very much as
you know. It's a closed ecosystem. And really I owe so much of my career to the Steinbrenners into Randy, because they are incredibly loyal and they and they see everything they think like mavericks, and they demand loyalty and they demand world class and I love those ingredients. I can live with that. And the one thing I know is and never let them down. So when they ask for something, I don't even think about, you know, am
I gonna make money on this? Everything else? I just do it because it's a privilege to be asked and then inevitably, guess what happens because we're all like minded the same way, it leads to something and it's gone on to this day. And the Yankees came in with me when we bought a CI Milan. I'm all about arbitraging you know things, and so all arbitrage at dislocation
in an ecosystem, all arbitrage in competence and inefficiency. You know, sports is interesting because you've had this massive escalation in these valuations and frankly, none of the people and none of the infrastructures kept pace. And so what I do at Redbirds, I go in, I close that gap, and in the process of closing that gap, I create these terminal value businesses. That's a win for the rights holder,
and it's a win for us as the capital. Only recently, you know, I decided to vertically integrate and become the rights holder ourself, right, right, And so that's an evolution.
All right. We got to talk about Steinbrenner.
I mean, you know, so you said your thirty three year old guy come from the philm but you know who George Steinbrenner is. I mean, do you know enough that when that call comes in, you're like, holy cow, it's George Stein, Like what's your mindset when he comes to you?
The first time, it.
Was the first time I had ever interacted with a celebrity or someone of that stature. And the good thing is I was a kid, So I didn't know better, right, And so I'll never forget walking into his boardroom at the Regency Hotel in New York and there he was at the end of the table with the white turtleneck and the rings, and that was. That was a moment where I took a deep breath and I say, oh wow. I said, Okay, George is very sort of disarming. And
he said to me, your cardinal. I said, you're a lot younger than I thought you'd and so, you know, it's a little bit of oh geez, you know, I'm under the gun here. And the great thing, George and I had a wonderful relationship. I think it is because I grew up with a very tough, old school Italian father, and you know, my dad basically put me on the witness stand every night at dinner, just grilled.
Grilled me.
And so I was used to a George personality. I was used to someone really giving me a run for my money, being in my face, and I didn't back down. I knew that you had to be intelligent in the way you responded. You couldn't shoot from the hip, and it wasn't always easy. But you know, he was very tough, but you know you'd stand your ground, and he respected you if you stood your ground.
Jerry, I have my own experiences with George and I love the man. He was unbelievable. You mentioned a visionary, a numbers guy, courageous. How would you describe him?
You know he has old school values and I can say that today twenty years later, when you know a lot of those old school values, you know you can't find him anymore. Right, George wanted to make money, George wanted to win. George was all about the bottom line. But also it was great about George. It was how he did it that was important to him. And George, you know, was as hard driving as anybody, but he also had integrity in a way that I miss.
Here's my George story.
Yeah, I died to hear this, Okay, go.
So brought me in two thousand and four and it was a thrill of my life to put on pinstripes. And Brian Cashman asked me when I received my MVP award, as I almost got a deal done with the Red Sox that fell apart. I was upset because I thought the deal would be a perfect deal for me for baseball Jeter against a eight Rod Yankees Red Sox. Long story short. I sit next to Brian Cashman. He says, well, if you're willing to move to third base, maybe there's
a move for us. Well, I'm not a drinker. I had a couple of cocktails and by the third cocktail, I go, are you serious about that? So that's circulated with Raindey Levine and the Boss. A couple of weeks later, I become a Yankee. I get off to a little bit of a slow start. Like most Yankees, is a lot going in. You have to adjust fan base, media, all of that, and I get off to a struggling start, and I'll never forget. Is around May fifth and I have a letter and it says Alex from GMS. GMS
is George Steinberner. Literally my heart stopped. I started sweating. I go, oh man, this is not going to be good. I'm off to a bad start. And he writes me the nicest letter. He goes, hey, I brought you here just like I brought Redggie Jackson. Trust your talent. I believe in you. I'm counting on you. Was how he would it was. End every letter, I am counting on you.
All the best GMS. I sat down on my chair and I said, I went out that night, two home runs the next night, four RBIs the next night, and the rest is history, and I'm off to the races. And to Jerry's point, he's a handshake guy, he's a code guy. And him believing in you, believing in Jerry's a thirty three year old believing in Alex Me as a twenty eight year old, just meant the world to me. And the rest is history.
You know, that's such a great story. And that day I walked into that boardroom and saw him for the first time. After he he you know, he digged me a little bit about my age. He said to me, do you know why I called you in Goldman Sechs. I said no, And he said, you know, when I was a kid and I came to New York for the first time, there were very few people who would give me the time of day. And he said, Gus Levy,
who was this iconic CEO of Goldman Sacks. He said, he was one of the few people who gave me the time of day. And he brought me in and he introduced me to people, and he really helped me you know, get my feet under me in New York City and he said, I've always been loyal to Goldman. As a result, today he's a very loyal guy. And then it was like this moment out of a few
good men. Do you remember that scene when Tom Cruise meets Jack Nicholson and Nicholson realizes that Tom Cruise's father was this very famous you know judge, And he said, you know, your dad is a Lionel Caffey, your dad is a legend.
How is your dad?
And Tom Cruse looks at he goes, well, he died twenty five years ago, sir. So like George said to me, how is Gus? And I said, well, actually he died twenty five.
Year Others.
Coming up, We talk about Jerry's transition from working with an owner to becoming an owner himself, the Redbird Capital's one point to billion dollar purchase of ac Milan, plus restarting the XFL now the UFL with Dwayne the Rock Johnson.
Let's talk about a really important transition for you, which is you leave Goldman, you go to Redbird, and you know, before too long you consummate what is you know, arguably the most important modern deal that you've done, which is a seam A lot really want to want to get into that. But let's talk about that decision to leave Goldman.
Yeah. Look, you know it was that was the toughest, toughest thing I've ever experienced and the best thing. But the irony is it was all self imposed. I just I had an entrepreneurial itch that I needed to scratch, and it was just, you know, the kind of stuff that we do at Redbird. More and more the way institutionalized financial on Wall Street has evolved, Well, you're just not really getting compensated for that amount of activity and that amount of rolling up your sleeves and really grinding
it out and everything else. And I say compensated not just in terms of money, but just in terms of the overall effort. And so I guess I had a very philosophical moment where I said, you know what gets me up in the morning?
What do I love?
And I love playing shadow entrepreneur and I like solving problems with capital And it just so happens, you know, luck in people's career. I happen to hit an inflection point with sports that I couldn't possibly have seen coming back in two thousand, two thousand and one. Right, you look back on that the last twenty years and you're like, you know, look's great. You really hit an air pocket
that you know you could where you took off. Now the challenge is navigating that because now everybody's discovered sports. Sports is now an asset class. That scares me When I start to hear about things like sports being an asset class, my initial reaction is to run any other way. And so, you know, but I say, look, you can't make money if you don't put money to.
Work, and so how does that manifest? Nacy Milan? I mean we could debate this since yes, like kind of the biggest swing you've taken. I mean, like you are not an advisor, You're an owner, Like you're a full on owner, you are a control owner of I think it's fair to say one of the most storied athletic clubs in the world, like name brand for sure.
How does that.
Deal come about? You've talked about doing all the work, you know, looking at hundreds of clubs. How does this one come to fruition?
Look, you know, the other theme in the way we invest is there is absolutely a virtue and continuity right, And so if you looked at our whiteboard, it's just
a series of ven diagram rings. And you know, and I've said this before, you know, I wouldn't have had on Location without Legends, and I wouldn't have had Legends without Yes, and I wouldn't have had one team without on Location, and I wouldn't have ever passed without you know, the NFL deals that I've done five years ago connected with Billy Bean, and I really got to give him a lot of credit, you know. He you know, obviously everyone knew him from Moneyball, but he encouraged us to
start to take a look at European football. And I said, you know, why would I look at European football. Any ecosystem that you have sovereign governments and you have Russian oligarchs cannot be an ecosystem that I should even contemplate. And he said, you know, you're missing the point. He said, you know, the transfer market in relegation, which are the fundamental pillars of economics in European football, is he had his tailor made for Moneyball. He is, because you build
and buy low and you sell high. So you know, we did a tutorial in European football met with you know, one hundred and fifty two hundred teams on every country on the continent and in England, and we made our first.
You and Billy sort of like taking on this bread, Like, how does that work?
What's the mechanics?
It's us, Billy, our team of guys at Redbird, and you know, it's just it's really just you know again, you know this was a little bit before this U four. I mean, we've been lucky in our timing because and it's maybe it's my contrarian nature. If I had just discovered this today, I wouldn't be doing it because there's way too much for you. But back then, there really wasn't a lot, you know, of our kind of people
are kind of capital chasing European football. Everyone is still focused on NBA teams and stuff in the States, but their ownership restrictions in the States. And so after doing all this work, we decided to make our first control by which was to loose in League One. And you know, it was great about that experience. I mean that was really a training wheels investment. As much as we knew about sports, we knew we didn't know anything about European football.
And obviously you're investing offshore, which I learned from my days at Goldman. You know you never want to invest off shore. You've got to be in the market, right, So there was all the red flags of why not to do this. I make a long story short. The price talk around toul Loose was around sixty million euros.
It got relegated down to the second tier. We bought it for fifteen million euros within within three months with Billy and Luke Bourne and our team, our data analytics team, we sold our first player for around fifteen million euros.
Wow.
And then within after the first year we got it promoted back to the first tier. Now Toulouse is sort of playing middle of League One and with a very reasonable payroll that would suggest you know that you know, we'd be you know that we'd be spending a lot more to be in the middle of the pack the way we are. European football is all about spending that incremental dollar of capital better than the next guy. Then we invested in Fenway Sports Group during COVID because of
my belief in this kind of intellectual property. We went Long Sports as a rights holder in COVID. We did the XFL with Dwayne and Danny did Fenway Sports Group. We did to Loose and you know, so Fenway I got exposure to the big boys with Liverpool, right, So that was the next step in the tutorial. That was one of the first deals that I've done in sports.
I think it's the only deal I've done in sports where I very much in being a junior partner because you know, I was so impressed with John Henry and Tom Warner and Mike Gordon and Sam Kennedy that you know, I said, my god, I think these guys are you know, some of the best in all of sports. And the
way they thought I thought it was fantastic. And you know, the conversation with them was could I come in and add value to them in terms of what they want to do in version two point zero Fenway and so you know, we bought Lebron's and Maverick's business spring Hill with a group of investors including Nike, and we bought the Pittsburgh Penguins. So you know, we're building that out and now hopefully we're going to partner with Lebron and
get an NBA team when he's ready to go. So that was that part of the tutorial, but obviously looking at Liverpool, getting into the Liverpool guys. Billy, to his credit, had been around ac Milan for several years, and we'd sort of been watching it Italy, you know. But you know, again, you think you know a lot about sports, but then
you realize you really don't. Because all the feedback every time I would raise the concept of ac Milan internally or back here in the States, everyone who said, you're crazy, don't ever think about investing in Italy. But you know, so the answer to your question is, you know, we we Ultimately we were hanging around the hoop. Elliott were the owners of ac Milan. They were in the debt.
Originally there was a Chinese owner and the Chinese owner hit the wall and Elliott came in foreclosed and became the equity owner.
And this is Paul Singer is very well Paul Singer, you know hedge fun activists, sort of exactly.
So at first, you know, it's not someone you would associate with owning a sports team. I think Paul would tell you that, But I have to tell you what The thing that really changed it for me was meeting Paul and Gordon Singer his son, who really led the investment in the team at Elliott. And you know, I
can't say enough good things about those guys. I'm very public about how you know, they did a phenomenal job in the four years that they owned ac Milan from twenty eighteen to when we bought it in twenty two of cleaning it up. And really it's impressive. Now, Gordon Singer has a tremendous expertise in soccer. I mean he just plays soccer himself and he knows.
It really well.
But they did a great job getting this cleaning up all the brush and getting it playing defense and getting it to a place where they could hand the baton to us and then we could go on offense. And so you know, I made the determination to keep them involved, and so we own one hundred percent of the equity by converted them into a seller note. And you know,
we bought a seam Alan very attractively. You know, we I think we paid a fair price, but you know, relative to some of these other prices that you see, you know we pay I think we did. We bought it for under a four times revenue multiple. And when we bought it, it was just slightly south of cash flow positive or break even, and now we're meaningfully cash flow positive after our first year. Obviously, performance helps. We
made it to semi finals of Champions League. And when I took over, you know, it was challenging because they had just won the Scudetto, which is the championship in Syria. So really, you know, I took a different approach than I typically do, which is for the first year, I did nothing. Really wow, I just watched. But I'll tell you over there, the best thing you can do is don't go in guns play. Just watch absorb understand that. You know you're an American, so you got to prove yourself.
And there's a public private partnership in sports ownership over there you do not see in the US. Interesting, we made a lot of changes and we retooled the sporting director side, and we also turned over half the team from a players standpoint, and we got Captain America pooled the Stitch as well as some other great players. And so you know, the average age of our team is twenty three years old. We have room to grow. And you know, one of our inities also is building a
new stadium. It'll be the first stadium built in Italy since twenty eleven. Wow, it'll be an American like stadium, seventy thousand seats and you know, we're going to bring music to Milan and build something a big live event entertainment campus from Milan, really anchored by the team, something like AC Milan. I'll tell you it's interesting because we're going to need to find a way to crystallize value there. But I mean that's something that you should probably own forever.
I mean that is that is as iconic as they get, and the opportunities to I mean that as a platform, and we're going to build this new stadium. You know, when we're done building that stadium, I promise you we will have a company out of that that builds stadiums.
Right.
So interesting, I mean, speaking of these sort of connections and the and the echoes, I have to think that when you're looking at AC Milan, certainly as an owner, you're thinking back to owners you've known over the years, and one one person who's got to be sitting on your shoulder as Steinbrenner.
Look, you know, it's a really great point and you know the benefit of even though George's past, you know, bringing the Yankees in with us in owning a C Milan was meant to do a bunch of things, you know, I mean, it gives us a sounding board for exactly that it's meant to say to the world, especially in Italy. You know, we're going to bring a C Milan back to the world class seat at the table. How more world class can you get than the New York Yankees?
But you know, I mean, I've been around you know, Jerry Jones and his family. I've been around Robert and Jonathan Kraft. I've been around these owners and it's you know, I mean, it's these guys all do it the right way and it just sort of absorb you just absorb it. So I knew going into asum Milan. I don't make a lot of the amateur mistakes that you see sometimes, you know, I remember one thing Georgia always said to me. You'd appreciate this, Alex. He said, whatever you do, never
go into the locker room. Wow, don't fraternize with the players.
They have a job to do.
We have a job to do, and you know they're never going to be your friends. You like them, you have a beer with them, and everything else. But he said, you gotta and so you know I And so it's interesting because one of the first things that's come up in Asium Milan is, you know, people keep saying to me, you should come down into the locker room and see the players after the game. And I will not do that because of George. And you know, it served me
well because you know, I don't. I'm not There's no question about my motivations. I'm not hanging out with the players.
I'm not.
You know, this is there's no vanity in this. I'm completely unemotional about it. We have a job to do it, so I'm I'm more belichick in the sense that it's like, you know, everybody does their job, some of the parts will be greater than the whole, right, And so this is not some vanity play.
Jerry, I'm laughing my ass off because the irony is George had Jerry to be the bridge between Jeter, myself, Mariano and George going to the locker room.
Jerry was doing all the dirty.
Work, so funny or the good work. Yeah, well, I send our CEO down but to deal with them, Yeah, but that's you know, but that's really it. And then and then obviously, you know, it's it is interesting over there, the role of the fans. That's that's a new thing. Like I can't imagine like Jerry and the Cowboys having to, you know, having the fans, you know, question one of his moves or anything else. I mean, they could do it, but they do it in a nice respectfully.
Over there.
You know, your the fans are your partner and you have to treat them seriously and you have to and they they do not suffer fools. They expect performance. I made the changes earlier in the summer and it led to a very visceral reaction amongst the fan base. I think I'm starting to get the benefit of the doubt from the fans now because they see the new team. They see definitely that the team and the changes we
made have been an improvement the team. They see the potential of this team to really go far, both in Italy and in Europe. And so you know, it's a question of establishing yourself and getting credibility with the fans. You know. The only thing is, you know, could we do a better job of explaining our moves publicly? And you know, I've also taken the approach of not trying to do that.
You know, I haven't.
I haven't really interacted with the press and the media over there until recently, and so I'm trying to figure out how best to do that so they can at least understand what we bring to the game.
What's the opportunity for Italian football in that case, and specifically, how does it play into discussions around media rights, which obviously you know a little a little bit about where do you see that going in the short and mid term?
Yeah, look, I mean Acey Milan has the second most Champions League trophies in history, behind Real Madrid. I didn't know that when I started looking at AC Milanow. You know what's interesting is, you know talk about George Steinbrenner. You know, they want those championships under Silvio Berlosconi, Bertlasconi. I always say Berlisconi was the George Steinberner of European football.
He really was the first oligarch of European sports. I mean, some of the players from that era are advisors to us at Asi Milana, and they tell me these stories about how Bertlosconi bought the team and then he went to the locker room and he sat down with the players and he basically said, I'm running for Prime minister and so I need you to win. And he said, not only win the Scudetto, which is the challenge, I
need you to win Champions League. And sure enough that year they went out and they won the Champions League and Berlisconi became Prime Minister. Right, So one of those things, and it's a true story in some form. And so you know what the ultimate arbitrage here, I think is that ACE Mulan is truly one of the I think it's one of the top four brands globally in football.
And now with the barriers coming down with streaming and the fact that you can get these games broadcast to the States live, and the younger kids today all know, not just the Premier League. They I can't tell you that I got more or shout outs from people people I know, people I didn't know when we bought Assumlan out of New York.
Wow in the US.
Then I got out of Europe, no kidding. And so the media rights is going to be an evolution as well. You know, there's not a lot of competition for this METEA rights in Europe.
All right, before we wrap up, I have to ask you about American football, gridiron football, of which you have now invested in in more of a startup ish kind of way.
Give us the investment case for XFL.
I think that there is a demand for quality NFL football in America twenty four to seven. I think if you could have it, you know, if you didn't have just seventeen games, and you had the ability to do this a year round, I think there would be an audience for that. So when I first started looking at the XFL, I was looking at it with the NFL and Fox, and both of those guys educated me that there is a legitimate need, legitimate demand for spring football. So I go back to my point about binary risk.
You know, when you look at the history of the USFL and the XFL, you know they come and go, come and go, and so it doesn't really suggest a track record of longevity. So I got comfortable on that basis that there is enough interest in these local markets. And then I look at, you know, the MLS model, and I say, well, if we're putting NFL quality football in these local markets, you know what I really want to do. If MLS is a local content and local
content in a local market. I kind of look at the NFL the XFL and I say, well, if I can do a national quality product in a local market, that's going to be compelling. And that's what we're trying to do.
One one more thing again is like everything else you've done, I know how much respect and what a great relationship you have with Roger Goodell and the NFL. You're not doing it to go up against it, but you're doing it to complement because I miss football that springtime. The scarcity a little bit like UFC. The NFL is an ultimate scarce act at only seventeen games plus playoffs in Super Bowl. But then what and I love the way you do able with respect to the NFL.
One hundred percent. Look, you know, the first thing we did when we bought the XFL at a bankruptcy with Dwayne and Danny as we got rid of the commissioner title because my view is there's only one commissioner in football, and that's that's Roger.
Yeah.
And then the second thing we did is is and I I am grateful to Roger and his team for this is you know, I brought Dwayne and Danny in and we sat down with Roger and what we basically said is, you know, how can we be a worthy participant in the NFL ecosystem. The guys in the past, you know, they tried to compete with the NFL. There's no competing with the NFL. So if we can you know, if you look at one metric for success that we have eighty of our players from this past season, eighty
of our players made the NFL this year. Wow, that's a great metric for success because what does that tell you synthetically? You know, we can be we can be the development league, the minor league for the NFL, and
it's a great transition from college. The thing that Dwayne really educated me on is, you know, there's only fifty three players on an NFL team or an XFL team, But if you look at the quality of players coming out of college as well as the other players that are around out of college that didn't make the NFL, you could go eighty ninety and so you can field NFL quality football. That's what's so interesting, and it rejuvenates
itself every year. And then you have a relationship with the NFL, and you know, in the NFL is collaborating with us on rules, innovation, health and safety for the players things that it's easier for us to innovate on, see how it goes, and then they can see whether they want to adopt it or not. So you know, we're trying our best to be a worthy participant in the NFL ecosystem.
What advice can you give a young viewers of how to be a great entrepreneur and do what you're doing.
It's an evolution and you don't just as a young person show up and be that. I think you have to determine. The first thing is and I give a lot of advice to a lot of young people. You know, figure out your DNA. You know, are you a natural investor or not a natural investor? And you can invest
being one or the other. It's nature nurture. But I'm always intrigued by young people who just haven't an innate smell for making money for risk and and that know how to invest, because you can't teach that right And so that's that's one thing. Second thing is I would definitely say I think the pendulum is going to swing back, and I think it's it can't just be about the money. And I know that sounds, you know, a little lofty
coming from me. So what I'd say too, if you know, to young people today is obviously follow your passion and don't worry about the money. The money will come, but it's the passion and figuring out you know, do you have a nose for investing that really will serve you well if you in the in the as you're you know, first starting out.
Love that my man delivered.
Now, I mean right, this was great, a great thank thank you so much for coming in. This is fun and this is the side of him I've never seen, you know, bouncing back and forth.
That's great. Thank thank you so much.
Who would have thought twenty years ago whatever we'd be here. So congrats on all that you're doing.
Thank you.
I'm proud of you.
Thanks Jery.
Awesome.
Since our talk with Cardinal, Bloomberg has reported that an Italian is probing whether Elliott Management continues to maintain control of Acy Milan, despite club officials informing the Italian Football Federation that ownership had changed. Elliott has denied the allegations. Redbird has said it's cooperating with the inquiry and said quote the notion that Redbird doesn't own and control. Ac Milan is just false and contradicts all the evidence and facts.
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