Jerry Cardinol built Redbird Capital into a powerhouse at the crossroads of sports, media, and private equity. From AC Milan to Paramount to partnerships with LeBron James and Dwayne Johnson, his deals fuse business with cultural momentum. Cardinol embodies a new breed of investor, transforming passion assets into lasting platforms of influence and growth.
Jerry, thank you so much. You are the first—yeah, clap. I believe you're not just one of the first repeat BFD guests. You were actually the first guest at the first BFD in New York City, in Chelsea.
Look at this crowd. It grew.
Yeah, it grew. And so one of the things you said, we were in part talking about—you guys were about to relaunch the XFL at that point. And we were talking about sports and private equity and all the things that private equity is investing in. And we talked about the NHL and NBA, etc. You said at the time you thought that the NFL would be potentially the holdout. It would be the one that didn't need private equity, wouldn't take it. It is now, including in my beloved Patriots. What changed?
Well, look, I always go back when I hear that question to the definition of private equity. But you know, what changed is I think there's been this massive escalation in valuations and there's a need for liquidity. And so, you know, given the ownership rules, you can actually, you know, sell minority stakes at control premium-like valuations and still control the team. And so, you know, I think the NFL—I think maybe the way we would modify that statement from last time is that the NFL was going to be the last. They were going to see what everyone else does and then they were going to do it uniquely their way. I think they accomplished that.
You, your firm, Redbird, has refocused—might be the wrong word, but at least narrowed. You're no longer, or I believe no longer, investing or buying teams, more sports adjacencies. Is that accurate? And if so, why that switch?
I know you were always doing adjacencies. That's—
Yeah, adjacencies. What he means by that is that, you know, my model, which we really started when we created the S network 25 years ago, was partnering with teams and leagues and building terminal value businesses around those rights, right? And I still contend that basically is still the model. I think during COVID and over the last five or six years, we decided to vertically integrate and buy into teams, become the rights holder ourselves. And we did that with teams, we did it with leagues. And so, you know, at this point, I have what I consider to be the 10 pole positions that I want to build on. So we have a great investment in Fenway Sports Group. That's the only investment where I decided to make an investment where we were the junior partner to that team. But it was really in recognition of what John and Tom and Mike and Sam Kennedy and those guys are doing. I think they're top of class, you know, in terms of sports management and ownership.
They're not winning any playoff games. Go on.
But then, you know, look, we really became a control owner in a big way with AC Milan. And you know, we did relaunch the XFL as you said and then merged it with Fox's property to become the UFL. So we have our 10 pole positions in terms of sports vertical ownership. But what I'm more interested in, you know, frankly, is using those platforms to do a version of what we typically do, which is build businesses around those. And then obviously our core model, which is things like Everpass with the NFL, On Location, Legends, One Team, where we'll build terminal value businesses.
If LeBron retires and does get a team in Vegas, do you want to be part of that?
Well, you know, we looked at that and I'd just say that right now my focus is more on what the NBA is doing in Europe. And so, given now as that has evolved. When we first started looking at it, we didn't own AC Milan. Now we own AC Milan. So I think my focus is going to be on continuing to build out that part of the world and that portfolio, if you will.
One constant of pro sports is that the valuations keep climbing. It seems that every successive sale is higher. The Celtics get sold for a record, the Lakers get sold for a record right after that. We've seen it in the NFL. From your perspective, are these teams currently being valued properly or is there no such thing because of the supply-demand?
Look, beauty is in the eye of the beholder. So, and it's a market. I'd say my commentary I've made around that gets mischaracterized. I'm long sports rights. I'm a sports owner. So I'm very aligned and long price escalation. I think the financials have to catch up to the valuations. So it's less about are the valuations right? You know, somebody's willing to pay those prices. So by definition, you know, the market—
But does it surprise you that we're seeing so many private equity firms, either ones get formed for this purpose or maybe practices within ones? It's one thing for an individual who's, you know, wants to buy their hometown team, right? Value's in the eye of the beholder. It's a toy to some extent. That's different for private equity, right? Because private equity is doing it. You said the financials have to catch up. Private equity shouldn't be waiting for the financials to catch up. It should be doing it because the financials make sense.
Well, this is the difference. You know, with the one exception, as I said, of Fenway, you know, I will never be a passive minority investor in something. I will only invest where I can control or share control. And so, you know, Redbird could launch one of these funds, but the difference if we launch one of these funds is that the stakes that we will contribute into these funds are going to be where we have the hand on the ability to drive the financials catching up to the valuations. Right now, you know, from what I can see, it's just beta. It's just passive investing and that's okay for a certain—it's just not what I do and it's not what I'm interested in. I want to go into these ecosystems and I want to partner with rights holders and help them, you know, professionalize their business. And frankly, you know, these things trade on a multiple of revenue. And look, I mean, I bought AC Milan on a multiple of revenue. But all throughout that, I said to myself, you know what, I'm going to buy it as a multiple of revenue and I'm going to exit as a multiple of cash flow. And in the first three years that we've owned AC Milan, we've been cash flow positive. It's the first time in the history of AC Milan that you've had three consecutive years of cash flow positive. It's the first time—the first year that we went cash flow positive, or our first year of ownership, was the first time in 17 years they were ever cash flow positive. And so that's—and that is not just a financial guy's view of this. In there implicit is the professionalization of these things. That these valuations, you know, these are multi-billion dollar live event entertainment companies and they should be driving cash flow and the revenue flywheel around that core IP.
If you have a team that is cash flow positive and significantly—that all the financials look good and everyone says that that investment is great and the team doesn't win on the field, is that a good investment?
You know, I've had this conversation with sports team owners and I had one with a recent owner of an MLB team. And I said to him, which kind of owner are you going to be? Are you going to be an owner that wants to win the World Series or are you going to be an owner that's focused on improving the terminal value of your investment? And he said to me, 'I want to win the World Series.' This was the team that I grew up with. And I said, 'U'—and he said, 'If I win the World Series, that'll increase the terminal value.' And I said to him, I actually disagree with you. I think what will increase the terminal value of an MLB team is not winning a World Series. It's lowering the amplitude in the volatility of performance so that every year you're in the NLCS, the NLDS, you're always vying for a World Series. That consistency is what will drive terminal value appreciation. Winning a World Series one year and then the next year you go into rebuilding and you're last and everything else—that doesn't really move the needle.
There's been some scandals recently in pro sports when it comes to gambling. Obviously the NBA, Major League Baseball, UFC to some extent from an investment standpoint, and clearly these issues are pervasive throughout, including in European soccer. Does that change any of the investment math? In other words, is there potentially like kind of a rock underneath pro sports right now that could change? Because if it's not on the up and up, that's the one thing that could drive fans away if they don't believe that the product is actually a legitimate product.
Those are one-off examples. And I think, you know, the regulations and the oversight will make sure that those are just one-off examples. At the end of the day, you know, sports gambling, betting is great for fan engagement. You know, these predictive market models are really interesting. You know, it's all going to be about fan engagement. You're not going to have fan engagement if it's not on the up and up, as you say. So I look at those as one-offs, and you know, that happens as these things go through these learning curves in these growth sports. You're going to have stuff like that, but I don't worry about the integrity of the activity.
Last sports question for you. Last year, early last year, you guys formed a collegiate sports platform with Weatherford Capital. It was called Collegiate Athletic Solutions. Wanted to provide capital, operational expertise to schools in exchange for a cut of revenue. Is that still an active effort?
It's an active effort with not a lot of end in sight. I'd say that that ecosystem is continuing to evolve. They're continuing to educate themselves on capital and the needs for capital. I mean, it originally started because NIL got hijacked by the transfer portal and it created holes in balance sheets for athletic programs and universities. It's been a huge learning curve for us. The thing that excited me about the collegiate opportunity is, you know, the 25, 30 years that I've been doing this, I saw coming together all in one fell swoop with college. And the opportunity for me was to use the entry point of solving holes in balance sheets to then work in partnership with athletic departments and universities to build businesses around their IP. Familiar theme, right? It's what I do. I think it's too much right now for them. So I think right now we got to slow down and I think the immediate, you know, goal is to provide a shorter-term capital solution and then gradually work towards, you know, some form of evolution in the way they own and monetize their sports properties. College—you know, the thing about college is that it's highly fragmented. There is no college the way there is a Major League Baseball or an NFL. And there's some benefits to that. Some universities—it's few and far between. You've got like the big markets and the small markets. You've got, you know, the major universities and the other programs. They would benefit tremendously with some level of coming together holistically. If they did that, as you know, I mean, college football, if it came all together, would be as big as the NFL.
Let's go to media. Broader media. Your thesis seems to be in part that kind of Silicon Valley and Hollywood have operated separately for too long, and you guys got involved in the Paramount deal, the Skydance Paramount deal. How do you get involved in that in the first place? How do you and Ellison—
Yeah, look, you know, the way I invest is not to be transactionally driven. Most private equity guys, you know, get a call, they do it, they look at a deal, and they fill or kill. You know, we've known David Ellison for 15 years. We originally—
How so? What did you know—
Just from my Goldman days and then my partner at the time, Andy Gordon, who came over to Redbird and now is over at Paramount full-time, you know, really had a long-term banking relationship with David. So, you know, we really had a— I've been looking at that space in Hollywood for a long time and I could never get comfortable investing in core Hollywood like that. You know, it's a lot of other people's money. This thing on cash flow that I'm obsessed with—nobody talks about cash flow. And this is before technology—you know, this paradigm you just talked about really has come to the fore where, you know, you don't have Silicon Valley and Hollywood talking to each other, right? So it was long before that, but I just couldn't get comfortable with this other people's money type paradigm. And so, you know, Ellison was really the first one that opened my eyes and gave me the comfort to invest in that part of Hollywood. It's a family. They think about it the way we like to think about investing. They focus on cash flow and financial sophistication. But they also had obviously a technology background. And Netflix unleashed a supply-demand imbalance in Hollywood. So subscription video on demand, the underpinning of streaming, was music to a guy like my ear because, you know, you get your cost back the day you deliver a show to one of the streamers and then you get a contractual return. So, you know, that's not going to last forever, but, you know, right now, you know, it's kind of a seller's market. Fantastic. And so that got me off the dime. Both, you know, Ellison combined with, you know, the streaming wars, you know, meant that I could invest in a way that was risk-managed and the hits business, you know, was much more manageable. That gave us a footprint now—or a foundation stone. Skydance has been a tremendous home run for us. We didn't have to do anything, but, you know, we like to torture ourselves and, you know, the world's not going to stop. And for me, I like to build. And so, you know, clearly right now what's going on is that there is a virtue to scale and there is a need for content generation to partner with technology. Nobody in Hollywood right now does it. And what's interesting is I happen to think for the first time in my—
