When you let people that have expertise do something, you're probably better off. In my case, I wouldn't have the ability to tell our players that they should be traded at this point, or tell our back office we should trade for this player or we should draft this player. I don't have that expertise. Fortunately, we have people that do. All teams in Major League Baseball and football and basketball have large teams that do that. If you actually have people that are good, you should probably let them make the decisions. Now, some people have been very successful doing things themselves. George Steinbrenner, when he owned the Yankees, there he made decisions without telling a general manager. Sometimes he would sign up a player at a certain price and he would tell them, 'General manager, this is what we're going to do.' Those kind of personalities don't generally exist as much as they used to. And the kind of people that now run baseball teams or own teams are generally people that have made money elsewhere by delegating things to people actually know what they're doing.
Welcome to Open Book. I am your host, Anthony Scaramucci. Joining us today is New York Times best-selling author. He's also the owner of the Baltimore Orioles, David Rubenstein. He's the author of a new book, Inside the Owner's Box: Conversations on Power and Leadership in Sports. David, great to have you. We're friends a long time. You've interviewed presidents, investors, historians, business leaders throughout your career. What made you decide to switch your attention to sports, other than the fact that you're an MLB baseball owner?
Well, I grew up in Baltimore, and the Baltimore Orioles were always an important part of my fabric growing up. And then I moved away to college and law school, and then a professional career. But I felt Baltimore could use some revitalization, and I thought if I could buy a team, revitalize it would help Baltimore. Baltimore's had some real challenges over the last 50 years or so, but I haven't yet been able to revitalize a team. It was in first place in the American League East when I bought it. Now it's in last place. So I've got work to do. But I did it as a philanthropic kind of gesture. I thought I would be able to help Baltimore because Baltimore was a city my parents grew up in, my parents were married in, they raised me in, my parents are buried there, I'm going to be buried there. And I just felt I owed more to Baltimore than I had already given.
Well, listen, listen, it's an amazing story, and obviously your philanthropy is wide ranging from a lot of different things that you do. But this seems like a labor of love, though. Is this something like you were manifesting as a child? I mean, we all have these childhood fantasies. Someday we can own the team that we love.
Well, as a child, my fantasy was to play baseball when I was seven or eight. I thought I would be, you know, a great shortstop for the Baltimore Orioles. And then when I got to be nine or 10, I realized my athletic career had peaked. I did well in Little League, but it was a Jewish Little League, and probably, you know, there weren't going to be that many Sandy Koufaxes in that Little League. So probably, you know, everybody has all of life is about realizing when you can't do certain things. You know, you realize you met the limit of your abilities. And I kind of realized I met the limit of my baseball abilities at about eight or nine.
What about the dream, though? What about the ownership dream? When did...
The ownership dream? Well, when I was growing up, both you and I had blue-collar backgrounds. And growing up in a blue-collar setting, you don't really think you're going to own a baseball team because in the days when I was growing up, baseball teams were owned by what I thought to be really, really wealthy people. They were called millionaires. Of course, a millionaire isn't what it used to be, but the millionaires that brought the Baltimore Orioles to Baltimore in 1954 paid $2.2 million. That's all it cost to buy the team. And I didn't really think I'd ever be an owner. And over the years, as I built my private equity firm, I had lots of opportunities to buy sports teams, but I always was afraid that my investors would say, 'Wait a second, you're supposed to be managing my money. What are you doing buying a sports team?' And focusing on that. So, not until I gave up being the CEO of Carlyle or the co-CEO did I really think I could at least justify buying a team if one came along. And because Baltimore is my hometown and an opportunity came along, I did it. But, you know, I obviously have a long way to go before I've achieved the success I want, which is a World Series championship. Baltimore hasn't been in the World Series as a World Series champion since 1983. Been a long time.
Anthony, you're going to buy a sports team, Anthony?
No, I am not going to buy a sports team because I don't have a B in front of my name or my last name. Not yet, David. We'll have to see.
But you will. You never know.
You know, I owned a piece of the Mets there for a period of time, and I'll tell you what, there was one capital call after the next during that. You know, when Steve Cohen took us out of the thing, it was during COVID, I think there was a little bit of a relief in the limited partnership. Of course, you know, one of the more famous lines that I heard in sports ownership was from a limited partner of the Yankees. He said, 'There's nothing more limited than being a limited partner.' This was from Mr. Milstein, I remember him, but he said there was nothing more limited than being a limited partner of George Steinbrenner. But speaking of limited partners, you put quite a list together here. I've got some of the names: Grant Hill, Cal Ripken Jr., Mike Bloomberg. I think my friend Rick Reilly is one of your LPs.
Tell us a little bit about that configuration.
Well, when I was buying the team, I, you know, really didn't tell people I was doing it until I kind of knew I had the deal. And then I basically decided I wanted to have partners who actually were able to help me or were Baltimore connected or had other virtues. So, for example, I wanted to have a real partner, and I picked Mike Arougheti. Mike is a person who knows baseball. He's a gigantic baseball fan. Played baseball in high school, followed it closely. He had once called me and said if you ever buy a baseball team, he'd heard that I was thinking about it, include him if I could, and I did, and he's a terrific person. He's built a firm called Ares. And then I wanted to have some people from Baltimore. So there were some existing investors from Baltimore. I asked him to stay. I asked Bill Miller, who had been one of the very famous investment people based in Baltimore from Legg Mason. I asked him to invest. Grant Hill's father grew up in Baltimore, and Grant and I are friends from Duke University, and Grant's, you know, on behalf of his father, really wanted to invest. Kurt Schmoke, former mayor of Baltimore, a friend of mine for 60 years. I asked him to invest, an African-American leader in Baltimore as mayor for 12 years. And then Mike Bloomberg is somebody who's given more to Baltimore financially than anybody in history. He's given about seven to eight billion dollars to Johns Hopkins University. Obviously has a real affection for Baltimore. So, and Cal Ripken is somebody who was the most famous Oriole probably ever, and he is a person I got to know, and I thought I wanted to involve him. He had been kind of not involved in the team in recent years, but I thought if I could involve him, it would be good. So that's how I put it together.
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You know, when you buy one of these teams, there's a lot of fanfare and there's excitement, and then you transition into the operational struggle of owning a team. And I think all of us have found that it's a little harder than it looks right from the outside, right? Tell us a little bit about the chasm between the dream and the operational reality.
Well, you're never so happy as the day you close the deal, but then everything goes downhill in some extent because you realize you've got to, you're in charge now. And you know, you've got to deal with the payroll of the players, all the labor issues that are associated with baseball. You've got to deal with a business operation. You know, baseball is not just operating a good team on the field. You've got to sell the tickets. You got to sell suites. You got to sell season tickets. You've got to have promotions to get people into the stadium beyond just the ability to see a good baseball team. There are many different aspects, and so we hired a lot of people who had experience in this. We took the person who was in charge of baseball operations and let him stay. He's very good. Mike Elias, I'd say executive of the year a couple years ago, and we recruited from Seattle the woman that was running the business side of the Seattle Mariners, Katie Griggs, and she came in. And so we hired a lot of new people. We increased the payroll by at least double from what baseball payroll from what it had been. So we did a lot of things, but it hasn't yet proven out on the field to work out. Now, you're a New Yorker and you were a Mets person. You know that we were able to sign a person named Pete Alonso. Pete Alonso has done a terrifically well for us. Hits 30 home runs so far, and he plays every single game. But you know, we still haven't made a winning team, so I'm still working on that.
Yeah, listen, he was a fan favorite in New York. I'm obviously a longtime diehard Met fan. It was sad for us to see him go, and I'm glad you picked him up, and I'm glad he's doing so well. And he's got a great personality, by the way. I got a chance to know him while he was in New York. We talk about some of these conversations, David. Jerry Jones, Robert Kraft, Jeff Lurie, Tom Ricketts, Ted Leonsis, Joe Tsai, et cetera, Tony, Tony Reali. Every one of them, like you, have been to the SALT Conference. And every one of them, I think, has a different personality for sports. I have found from my distance that owners do a much better job in terms of their success if they let the football, baseball, or basketball people run things. I feel like the owners that are meddling are the ones that, you know, if they think they're better or smarter than the GM, they probably fumble things. Am I right in thinking that, or what did you learn from these people that you talked to?
Well, I interviewed many of these famous owners, and I learned that they care more about winning than making money. Winning is everything, and they care about the local city, the community that they represent. They realize that they're only there temporarily. They're not going to be there forever, and their family may not own it forever, but they want to do the best job they can for the community and for the local city that they represent. Many owners are very close to the players. Some owners don't get that close because they recognize that they have to negotiate with them from time to time or trade them. But everybody who's an owner is happy they are an owner. Owners generally are happy even if they don't win championships. They all feel that they have a responsibility to their community and that it's beyond just making money. Of course, you want to make money, but that's one of the standards of success in business. But I think most of the owners, if not all, would rather win a championship than make money.
Okay, but let me rephrase the question then. Somebody like Jerry Jones, as an example, he fired his best friend, he won two Super Bowls, fired his best friend Jimmy Johnson, and then he became the general manager of the Dallas Cowboys.
Yeah, I got your point. Well, he was a football player at the University of Arkansas. He knows football better than I know baseball. So I'm not going to second-guess his ability to do that. But as a general rule of thumb, it appears that when you let people that have expertise do something, you're probably better off as a general rule of thumb. So in my case, I wouldn't have the ability to tell our players that they should be traded at this point or tell our back office we should trade for this player or we should draft this player. I don't have that expertise. Fortunately, we have people that do, and all teams in Major League Baseball and football and basketball have large teams that do that. I concede your point though that if you actually have people that are good, you should probably let them make the decisions. Now, some people have been very successful doing things themselves. George Steinbrenner, when he owned the Yankees, and the Steinbrenner family still owns the team, but when George Steinbrenner was there, he made decisions without telling a general manager. Sometimes he would, you know, sign up a player at a certain price and he would tell them, 'General manager, this is what we're going to do.' Those kind of personalities don't generally exist as much as they used to. And the kind of people that now run baseball teams or own teams are generally people that have made money elsewhere by delegating things to people that actually know what they're doing.
I think one of the things I got out of your book was that there's some luck involved with this stuff, right? Like, which owner in the book made the best trade of their life, and yet they didn't even know it at the time.
Yes. Trades are a crapshoot. You know, you don't know what's really going to happen. The best trade the Baltimore Orioles ever made was heavily criticized at the time. They traded Milt Pappas, a good pitcher for the Orioles, for a guy named Frank Robinson who was said to be too old at 30 years old. And he was traded. He then won the Triple Crown the next year, and the Baltimore Orioles won the World Series. So when you do trades, we did a trade recently at the Orioles where we traded our catcher Rutschman for four prospective players or prospects. And you know, some people weren't that happy with it because we traded a major leaguer who'd been an All-Star three times for four potential good major leaguers. But you know, who knows what's going to happen. You never really know how these trades are going to work out.
Yeah, I mean, that's one of the things about the game, you know, there's a little bit of capriciousness there. We traded a guy named Nolan Ryan in 1973 for Jim Fregosi. It didn't work out for us, but it did work out for the California Angels. I want to talk about quarterly letters and nightly returns. I feel like you went from quarterly letters where people were grading you quarterly to now they're grading you nightly. How's that affected you, if at all?
Well, it's different. In the world of private equity, when you're publicly traded, we do have quarterly letters and we have to every quarter try to show that we're doing better than the previous quarter. In baseball, the financial bottom line every quarter is not as important as how the price might be affected at the end of your ownership. So you don't operate baseball teams to get increased quarterly earnings. It's a different phenomenon. In terms of every day, yes, every day people pay attention to how you're doing, and every day somebody's calling you a bum, and so every day somebody's, you know, not happy with you. That's if you don't have a thick enough skin to deal with that, you shouldn't buy a baseball team. When I first bought the Orioles, people were very happy because the previous owners had had it for 30-some years and people were getting tired of them. Rightly or wrongly, I think they did a good job, but rightly or wrongly, people wanted a change. When I came in, people wanted my autographs. People wanted my selfies. And I kind of said to these little eight-year-old boys who wanted my autograph, 'Look, I'm not a player. I'm really not that important.' But rather than try to persuade them that it wasn't worth their time, I would sign the autographs or do the selfies. And now, when I walk around the stadium, I don't notice that people are asking for my selfie as much or my autograph because the team hasn't done so well. So maybe people are being polite. They're not booing me, but you know, right now they're suspended judgment about how we're going to do this year. We're very hopeful of getting to the playoffs, but we're not there yet.
Guys, thank you so much for listening and subscribing to Open Book. You know, we've had 200 authors on this show. It's been a lot of fun for me, but I'm also an author now, too. And I've got All the Wrong Moves available. Go to scaramucci.net/allthewrongmoves. You can buy your copy today. It's a lot of fun and lots of commentary about what's gone on in the US over the last three decades. You're being hard on yourself, David. You're one of the fan favorites. I saw you out in the bleachers there doing the selfies and the autographs. I admire that in you, your ability to self-deprecate, but you're a fan favorite. I want to ask you about these owners. You interviewed many of them. Anyone ring your bell with an answer to a question where you said, 'Okay, that's informing my thinking in terms of the way I'm going to organize and run the Orioles'?
Well, I talked to a lot of them after I actually bought the team, though I knew some of them before. And one of them I knew before was Ted Leonsis. Ted owns the Washington Capitals and the Washington Wizards. And he and I, as I said in the book, were thinking about together buying the Orioles at one point. That didn't work out. But Ted is somebody that's for 30 years has owned those two teams, and he's really made it his full-time occupation practically, and he's there almost every night there's a home game. He spends a lot of time trying to cultivate the fans, and he really enjoys it. You have to enjoy the sport and you have to enjoy ownership of it, otherwise you're not going to be very good at it. And you know, some owners of teams, you know, probably got there because their family got them involved and not that interested in the sport. Other owners really, this is what they do full-time. I mean, in Major League Baseball there are 30 owners, and I'd say, you know, more than probably a third of them, this is their full-time occupation now. They do this full-time, and those owners are ones that, you know, go to every game and are very, very familiar with everything that's going on. I have some still other jobs I'm doing. So I don't go to every game and I'm not full-time in owning the Orioles, but I do try to go to as many games as I can and try to talk to the fans, see the fans, open up the owner's box and talk to the players when I can.
David, I want you to talk for a second about the future of ownership. You know, we've seen some sovereign wealth funds own some of the European soccer teams. We've seen some of our billionaires go into the Premier League in the United Kingdom. There's been an opening, it feels like there's been a little bit of an opening into the world where private equity can own some of these teams. Obviously, corporates like John Malone have owned the Atlanta Braves, et cetera. MSG owns the Knicks and the... What is the future of sports ownership? Is it going to be less family-centric like it was when you and I were growing up and more corporate, or how do you envision that in the ensuing years?
Well, in the early days of baseball, the wealthiest people in the United States were not owners. They were people who were very modest business people who basically their net worth was mostly tied up in the baseball team. And then later on, people who made a little bit of money would buy baseball teams, but they were not the wealthiest people in the country. When George Steinbrenner bought the New York Yankees in 1972 for, I think, a net price of about $8.8 million, he only put in two and a quarter million dollars of his own money. The rest he had to syndicate. And you should say to yourself today, why didn't the wealthiest people in the United States show up to buy the New York Yankees for sale? Because in those days, sports ownership was not considered the profit-making kind of enterprise it has since become. And therefore George Steinbrenner had very little competition relatively speaking. Today, the price for these teams has skyrocketed so much so we just saw recently that the LA Lakers sold for $12.5 billion, the Seattle SuperSonics for $9.6 billion, the Boston Celtics for $6.1 billion. Well, very few people can afford those prices, and therefore you have to bring in more people, and you also have to get different sources of capital. In the NFL, they now allow private equity firms to buy up to 10% on a passive basis. Increasingly, I think you'll have more funds that are private equity-oriented funds raised for the purpose of investing in sports. I know there are a number of them that exist already. And increasingly, I think you'll have sovereign wealth funds be allowed to invest in some of... I think Major League Baseball doesn't have the right to have sovereign wealth funds invest yet, but the NBA allows it, and I think the NHL allows it.
I want to talk about your collectibles for a second. It's well known that you've purchased the Magna Carta, the Emancipation Proclamation, Declaration of Independence. Of course, you're someone that's sharing those with the public by putting them in museums and so forth. But is the Baltimore Orioles a collectible in the sense that, I mean, that it's a scarce asset? It's tied to a city that you love. And you know, somebody said to me at Allen & Company, I think it was Hank Greenberg's son said it to me, that the team is always worth 10% of whoever the richest person is in the city. It was a great axiomatic fact, but I'm just wondering how you juxtapose your collectibles and the things that you're buying that have the scarcity to the Baltimore Orioles. Is there something similar in these assets?
They're different in the sense that I bought these documents and put them on display so Americans can see them and learn more about American history. That's an effort to kind of educate people more about history on the theory that if you see original documents, you're more likely to learn more about American history. And that's been a major part of my life in recent years. The Orioles, I wouldn't say as a collectible, but interestingly, there are a lot of collectibles because they have bobbleheads. And there was a bobblehead of me, even. Fortunately, you know, people recognized that wasn't so valuable. So it's probably selling for less than a penny or so on eBay. But some of these bobbleheads are incredibly popular, and it's amazing how many people like collectibles around the team. People, when I was a boy, I used to collect autographs of baseball players. It's a collectible, and now young people still want autographs. And you have to say to yourself, what do these people do with these autographs? Because I don't know what I did with mine. I can't find them anymore. But, you know, I wouldn't say the team itself is a collectible. I view it as a community asset that I'm a temporary custodian for, because when I'm dead and gone, somebody else will own the team, and they'll continue hopefully to promote Baltimore.
