If you pay 12 billion for the Lakers, as usual with all these kinds of assets, you have to buy it smart, buy it right, or else if you overpay, if you get into deal heat, which, you know, I have a feeling Bob Iger did, it's hard to get a return when you way overpay.
Happy Friday, everybody, and welcome to The Powers That Be. I'm joined today by my colleague Bill Cohan, author of Dry Powder, who's going to talk with me about a fascinating subject, perfect for Puck, the rise of private equity investments in sports teams. Obviously, sports teams have a pretty good return. We saw it just this week that the Lakers, the Los Angeles Lakers, were acquired by Josh Kushner of Thrive Capital and his business partner in this case, Bob Iger, buying the team for what, 12 billion dollars? Mark Walter, who also owns the Los Angeles Dodgers, bought the Lakers from the Buss family just a year ago, and is going to make a pretty penny off this deal, making about two billion dollars in just over a year. Not bad. Not bad for him. But, we also learned this week that Apollo is taking a huge stake in the New York Yankees. This all comes on the heels of news that the aforementioned Kushner tried to do a private equity deal with the World Cup, but that blew up in his face. All of the, you know, governing bodies of soccer around the world under FIFA raised an objection there. Bill, JP Morgan also has a has a little handy-dandy chart they released, and this was last year, not this year. 25% of Major League Baseball teams have some kind of private equity backing. Almost 30% of NBA teams, 20% of NHL teams, 10% of NFL teams. So, why is there so much interest from the private equity world in sports teams and leagues? Is it just that this is something that everyone cares about and then they're always going to get more profitable and more expensive over time?
It's so like oceanfront property, Peter. They're not making any more of it. And if you can afford to buy it, you want it cuz it's not going to lose value. These things have proven historically that they do not lose value. Historically, the rules have been that you couldn't have private equity ownership in there. You had to sort of have like individual owners. You couldn't have like a private equity firm own a stake. I was going to say that, you know, you couldn't really have corporate ownership, but, you know, that's not really true. I think that, you know, has like evolved in kind of weird ways. Like in my GE book, I wrote about how GE Capital at one point owned the Houston Astros because they'd made a loan to the Houston Astros and it was it was defaulted upon. That's, by the way, one of the few times when a team lost value. You know, sometimes even a dollar of debt is too much and sometimes if you put too much leverage on these things, it it doesn't necessarily work out. The guy who was the CEO of GE Capital, Gary Wendt, was like the guy who was the man the principal owner of the team there for the Houston Astros for a little while. But, I mean, all that has begun to change and I think now, at least in baseball, private equity firms are allowed to own 15% and I think that's what the Apollo now owns of the Yankees as well as making a very big loan to the Yankees to refinance their debt. These franchises, they rarely make any more of them. They're very valuable and they've proven they continue to go up in value. Most likely because of the TV contracts as we know, you know, 98 out of the top 100 shows on TV every year in terms of audience watching them are live sports. And so they're incredibly valuable. They have incredibly valuable lucrative TV contracts despite you know the machinations and the positioning that goes on in terms of whether or not to negotiate or not negotiate or as we found out with our buddy Zaz to get rid of those contracts cuz they're getting too expensive. But basically the franchise values continue to increase. And if you need any more examples of that, you you saw the Seattle Seahawks just got bought for what? 9 billion or something or even more. The Lakers again having just been bought for 10 billion or now being sold for 12 billion. I mean by the way, where does Bob Iger and Mr. Kushner get this 12 billion dollars from? That's what I'd like to know.
This gets to the second question which is what's the difference between a private equity firm and whoever's funding it, whoever the investors are, taking a majority ownership stake versus a rich guy, you know, or a rich family buying a team. You mentioned Apollo for example. And we'll talk more about the Yankees deal in a moment here. But Josh Harris, co-founder of Apollo, became the majority owner of the Commanders in 2023. By the way, for 6 billion dollars which just 3 years on actually seems like a deal for an NFL franchise when you consider
know, it doesn't matter whether they stink or they're or they're great.
Right. Well, there there is hope that Josh Harris and his management
No, he's already in the money. He's in he's hugely in the money with the Sixers even though they've stunk since he's owned them and well before since he's owned them. I think he paid like you know, whatever 250 million for it and now they're like worth 4 billion.
But if you're managing but if you're managing a a club or team like say you're the Hunt family, you own the Kansas City Chiefs. And everyone's like a different owner and manager and has different beliefs and strategies, but what's the difference between a team that's just owned by a rich guy or a rich family, maybe it's been in their family for generations versus some sort of management agreement where private equity is a huge part of it. Like Thrive Capital is going to be a huge part of managing the Lakers. Are they like is this going to be like a brake pad company that like some private equity person from Bain comes in and fires a bunch of people and streamlines operations? I mean, it doesn't seem like it cuz you want to create a product that the the fans want, but I'm just curious what you think the difference might be in these ownership structures.
