Sports teams have become some of the world's most valuable assets. Over the past two decades, franchise values have soared, institutional investors have entered the market, and ownership has evolved from a passion project into a sophisticated business. But owning a team isn't like owning any other company. The product is emotional. Success isn't measured just in profits, but in championships, civic pride, and the connection between a city and its fans. Welcome to The Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
Today's guest has spent decades thinking about long-term investing and value creation. David Rubenstein is the co-founder and co-chairman of The Carlyle Group, one of the world's largest private equity investment firms. Over the course of his career, he's helped shape the modern private equity industry, interviewed presidents, CEOs, and global leaders, and become one of the most recognized voices on leadership and investing. More recently, he took on a very different role, leading the ownership group that purchased his hometown Baltimore Orioles. His latest book, Inside the Owner's Box, draws on that experience, as well as conversations with some of the most successful owners in sports, to explore what sports ownership can teach us about leadership, investing, and building institutions that last. David, thank you so much for joining us on The Bid.
My pleasure. Thank you very much for having me.
Well, David, when people hear your name, I think it's fair to say they think of The Carlyle Group, they think about the private equity industry that you have helped create. Most people don't realize that you're also an owner of a sports franchise, and that's really the topic of conversation that we want to have here today, which is about investing in the sports industry. So, I want to ask you, when you went about buying a sports team, how did you consider this as an investment opportunity? Were you looking at it as an entertainment business, a media business, or something entirely different?
Well, I did it for a reason that's unrelated to investment. I'm from Baltimore. I felt over the years I've been financially successful. I've given away a great deal of money. I was an original signer of the Giving Pledge, and I've tried to give away enormous amounts of my net worth. But, most of that has probably been the universities my family has been associated with or to the Washington, D.C. area where I've lived for the last 40-plus some years. I really didn't do as much for Baltimore as I thought I should. I grew up there. My parents grew up there. My parents were married there. They raised me there. They're buried there. I'm going to be buried there. And I thought, what have I really done for Baltimore? And I've been involved in Johns Hopkins and been on their boards, but I hadn't given staggering sums there. So, I viewed it more or less a philanthropic gesture. I didn't want to lose money, but I viewed it as a way to give back to Baltimore for the good fortune I've had from coming from Baltimore.
And you mentioned Baltimore, and in fact the sports team that you are the owner of are the Baltimore Orioles, which is a Major League Baseball team. You made that investment back in 2024, and as mentioned, most people know you from the private equity industry, so they know that you know how to evaluate an investment. But, what made this opportunity different from every other investment you've ever considered?
Well, in the private equity world, you're trying to make money, and you're always looking at certain rates of return. You know your investors are looking for double-digit rates of return and so forth. In this particular case, I didn't really focus on that quite the same way. I didn't want to lose money, as I mentioned, but I really viewed it as a civic gesture, and therefore I wanted people to come along with me who were involved in helping Baltimore to grow to be a more significant city, helping Baltimore to be revitalized, and they might like baseball, too. And so, it's a combination of factors. Now, the world has changed, and it was the case many years ago that people made sports investments because they really love the sports. There's no doubt today that a lot of people are attracted to it because the profitability seems to be pretty high if you get lucky and you get it at the right time.
And when you talk about the civic gesture, maybe say a little bit more about that. I'm familiar with the Baltimore Orioles and I know Camden Yards sits right in Baltimore Harbor. It's central to the community of Baltimore. But talk a little bit more about the importance that sports teams have to their local cities.
When I grew up in Baltimore, it was the ninth biggest city in the United States in the 1950s and 60s. Now, it's not even top 20 in terms of population. It's lost enormous population, had a lot of crime issues, a lot of drug-related issues, a lot of problems in the city and they've lost their corporate headquarters more or less. A very few large corporate headquarters. So, the city's tax base is going way down and therefore the city doesn't have the kind of resources that other cities might have. I should point out that in the entire United States, there are only two cities in the country that are not in a county. One is Baltimore and one is St. Louis, which means when you move out of Baltimore City or St. Louis, none of the tax revenues that you might give to a surrounding county go back to the city. In this particular case, I thought that Baltimore could be revitalized a bit if I bought the team and put more money into it and helped the city in that way. We tried to revitalize the downtown area where the stadium is built. The stadium is called Camden Yards. And when it opened in the early 90s, it was revolutionary for baseball because it was a downtown stadium arena which hadn't been built that way recent years. Recent years, you build things in the suburbs and this one was designed to look like an old park, Wrigley Field or Fenway Park. And it captured the imagination of fans. Enormous amount of number of people came out to the games, but also people who began building stadiums from 1991 on all wanted to have a model like Camden Yards.
And even if people don't follow baseball or not familiar with it, globally sports are very relevant. And I think people can relate to the fact of going to an arena or a stadium, a site that is the home of their sports team. And as you mentioned, Camden Yards has been around since the early '90s. I must profess to having been there recently. We were talking about that a little bit beforehand. And it looks like what I remember when I went for the first time 20 or 25 years ago. So, it seems like you've already been making some investments there.
Well, the state of Maryland actually owns Camden Yards, the Maryland Stadium Authority, and they gave us money to refurbish it. And we've done a bigger scoreboard, better sound system, better dugouts and play and clubhouses, more restaurant-related facilities, better food facilities, and many different things. And we made it a better experience. Remember, in baseball, what you're doing, in all sports, you're trying to get people to come to the stadium. And you want them to have a pleasurable experience. So, you want to have a good winning team, which will always bring fans to the stadium, but you want to have the food be good, the amenities be good, the whole experience be something that they think is worth the price that they pay.
And David, you're giving us a little bit of a peek into what it means to be the owner of a sports franchise. And I want to ask you a little bit more about that. I think when people picture a sports owner, they picture somebody sitting in the box watching the game or maybe close to the field watching the game. What surprised you the most about what the job actually entails? And how is this similar or different from running another business?
Well, Carlyle owns lots of companies, and virtually nobody ever comes up to me on the street and says, "Hey, how's your company doing in the chemistry industry? Or how many people are really employed by you in the aerospace industry? Or how's your aerospace company doing?" Nobody cares about that. This is a business where people come up to you all the time and talk about it. They want to know how the team is going, what are you going to do, how you going to improve it, and so forth and so on. And the level of interest is staggering. When you think about it, baseball teams, for example, are relatively modest revenue organizations, 200, 300 million dollars or something like that in revenue annually. And that's modest compared to the kind of companies that Carlyle or other large firms like ours own. So, it is something that people have a real pride and it's a very interesting phenomenon. Why do people care about their local team? Why? They don't own it. If I do extremely well financially, they're not going to get any money out of it. Why do they care? Because people want to feel that they have some attachment to success. People want to be successful. And if their local team is successful, they feel like they're successful. Why do people root for their college team so much? Because they feel if the team does well, it makes them feel like their college is better and then they're better. So, people root for their local teams because they really want to say, "I'm somebody important, my team is important, I'm successful, and I really am happy."
Well, and I can attest to that here in New York City this summer. I know you spend a fair amount of time in New York, but when the New York Knicks won the NBA championship, I think you could definitely feel that in New York City. That feeling of success was shared by many millions of people across the five boroughs.
There's no doubt. This weekend I interviewed James Dolan in a panel, and I asked him, "What does it feel like to win a championship after 50 years compared to some of the criticism you've had before?" And obviously he's very happy. So, there's no doubt that fans really take enormous pride in their local team doing well, even though, as I mentioned, they don't own the team, and if the team does well, they're not going to be putting money in their pocket necessarily.
So, you mentioned James Dolan, who's another owner of a sports franchise. And I should have mentioned at the outset that part of the reason we're having this discussion is your new book, which is called Inside the Owner's Box, where you take us through what it means to own a professional sports franchise. And in there, you talk to other owners of other sports teams, and you really talk about that owning a sports franchise is really an exercise in leadership. So, I'm just curious when you talk to some of these other sports owners, what were some of the common threads, the common things that you heard from them when you interviewed them?
They care more about winning than making money. Winning is everything. Making money, it's nice. You want to make money, you don't want to lose money, but they take much greater pride in the success on the field. Of all the owners I've talked to, and I interviewed a number of them from different sports, nobody ever said to me, "You know how much money I made out of this? Or you know how we're doing so well financially?" They all talked about what they had to do on the team to make the team better. And that's owners taking enormous pride. Also this weekend I interviewed Bob Kraft, who's won six Super Bowls. And he never mentioned how much money the team has become worth as a result of that. He paid, I think, $172 million years ago. Now it's worth about eight or nine billion. He never mentioned that. It's something that owners, they know that the teams go up in value, but that's not their main focus. It's winning, winning and being good to the community. Everybody wants to be good to the community that they represent, and all people want to win.
Has that taken a little bit of an adjustment for you with the long history in finance of obviously focusing on making money, return on capital? And when you own a sports franchise, you still have that goal over the long term, but is it an adjustment to think about the time frame a little bit different over which that return on investment pays off?
Sure, it's much different than a typical private equity investment. In five to seven years you're going to exit, and you know that in advance, and everybody knows that in advance. In baseball or other professional sports, you have people owning these things sometimes for 10, 20, 30 years or more. The Steinbrenners have owned it since 1972, the Yankees. So you don't really look at it in quite that way. You also look at it as an investment, and you want to have some kind of discipline. You don't want to lose staggering sums of money, but you really want to make the team better. As we talk today, the Orioles have just signed a player from the New York Mets who was put on waivers, which means he's available to be purchased, but doing so would cost a fair amount of money, and we only have 30 games left in the season, but we thought it was worth it to spend that fair amount of money because we really want to win and get to the World Series and get to the championships and get to the playoffs if possible.
And these are things that you have to consider, not just the stadium and what's around the stadium, what's in the stadium, but also some of the day-to-day details around the players and the contracts and things like that.
In sports, you have two parts to it. You have the people that run the team, and that's generally overseen by somebody who might be called a head of baseball operations or a general manager, and they have somebody that oversees the business side, selling tickets, selling corporate suites, selling sponsorships, advertising, all that kind of thing. And so, they're kind of separate. Very rarely do you see somebody in charge of both areas, although there are some people that do that. So, generally, they both report to me, and I have a co-owner, Mike Arougheti, who is the CEO of Ares. We did this together. I'm the control partner, because I'm a little bit older, and I have more time to maybe do this, but he eventually will probably be the control owner. I hope so. And so, together, we kind of make these decisions and approve what goes on. But, if you're overturning your baseball person or you're overturning your business person all the time, you probably should get somebody else. So, generally, we know what they're doing. We consent to it unless we have some violent objection, which rarely happens. So, today, they were letting me know about this player they wanted to get, and I thought it made sense, so we went ahead with it.
It sounds like you're setting strategic direction as an owner, but you hire a good team to help you in many facets of the business.
That's the theory, but you know, obviously, there are owners like George Steinbrenner, who like to get in the middle of these things himself, recruit the players, sign the players, fire the players, do all the things he wanted. He was a different character. We don't have owners quite like that today, but he made an incredible investment. He paid $8.8 million in 1972. He put in 250,000 of his own money. That's all he had to put in. And he syndicated the rest, and the team is now worth about $10 billion.
