December 6, 2024 • 38 mins
Join hosts Michael Barr and Damian Sassower for a look at some of the latest headlines and stories in the business of sports.
Lebron James' media company, SpringHill, has never made money. Bloomberg News media and entertainment team leader Chris Palmeri joins to discuss why the basketball star's media business is on pace to lose million again this year after losing $28 million dollars in 2023.
Nike and Foot Locker are mending fences and partnering together on new projects as both sportswear companies try to win back consumers. Bloomberg News reporter covering celebrity and athlete business deals Kim Bhasin details how Nike and Foot Locker's relationship frayed and what they're doing to rekindle it.
And Goulston & Storrs Sports Law Practice co-chair and Columbia University adjunct professor of law Marty Edel joins to discuss the legal ramifications of key issues in college athletics.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business
of Sports.
Speaker 2 (00:10):
Business of sports can be intimidating for hard for a
start to break into.
Speaker 3 (00:14):
We really appreciate when our owners are actually there, you know,
with us through the journey.
Speaker 4 (00:18):
Teams ours especially been very intentional to diversify at all
levels of the company. Maybe we're in the golden years
for the NFL and college football.
Speaker 5 (00:26):
Our demographic reach has continued to explode.
Speaker 4 (00:29):
This is going to be really unlocking the streaming platform
for sports fans.
Speaker 1 (00:34):
Sports evaluations arising. We'll see when they peak.
Speaker 3 (00:36):
You don't have to be the best in your sport
to make a whole ton of money.
Speaker 2 (00:42):
Bloomberg Business of Sports from Bloomberg Radio, don't you This
is the Bloomberg Business of Sports. We explore the big
money issues in the world of sports.
Speaker 6 (00:52):
I'm Michael Black and I'm Danian sas hour.
Speaker 2 (00:54):
Scarletfu is on assignment. Coming up on the show, We
talked to our friend of the show, Marty Eatle. He
is co chair of Gulston and Stores, Sports Law practice
and adjunct professor of law at Columbia University.
Speaker 4 (01:09):
Yes, Michael will get his take on the latest in
college sports as nil and sports betting continued to grow.
Speaker 7 (01:15):
Maybe you have the Power five as a place where
perspective professional athletes go, and you have the other schools
as having a vigorous athletic program, but perhaps not as
vigorous as the Power fives.
Speaker 2 (01:30):
We'll also talk footwear. We'll find out why Nike and
Footlocker are partnering up. That's right, you heard it, they
kissed him made up sort of. All that is on
the way on the Bloomberg Business of Sports. But first,
Lebron James Media company spring Hill is still looking to
turn a profit, even with a lot of popular products.
(01:51):
For more on what's going on with spring Hill and more,
we welcome Bloomberg News, Media and Entertainment team leader Chris Palmery. Chris,
Welcome to the Bloomberg Business of Sports. Thanks, let's start this. Well,
it's not good news for Lebron james is Media company.
Speaker 6 (02:10):
Oh, come on, it's Lebron James. It's all goodness.
Speaker 1 (02:12):
You ever?
Speaker 2 (02:13):
Yeah, have you ever had a good day of losing
thirty million dollars a year?
Speaker 6 (02:16):
Fair enough?
Speaker 2 (02:19):
What happened here, Chris.
Speaker 5 (02:21):
Well, what's what's happened to Levon Is happening to a
lot of people in the entertainment business. There's a lot
of hype about streaming and all the opportunities that folks
could do creating movies and TV shows for this new
generation of services like Netflix.
Speaker 2 (02:36):
You know.
Speaker 5 (02:37):
Part of it is also a bit of a bubble
in sports programming in particular, and it's all ties into
this whole idea of celebrities starting their own businesses and
it's and it all is about, you know, when a
few people have a hit, then everybody tries to do
the same thing, and it's a bubble, and bubbles often.
Speaker 4 (02:59):
I hope you not calling it a bubble. I mean,
there's some big investors in spring Hill, right, Googenheim. I mean,
talk to us a little bit about you know, these
fundraising rounds, right, and what the value of the company
I guess was before we just got this release.
Speaker 5 (03:13):
Yeah, I mean in the last round, which is a
couple of years ago now, but it was it was
a seven hundred and fifty million dollars for what is
essentially a startup.
Speaker 8 (03:22):
I meant, granted tied.
Speaker 5 (03:24):
To the you know, one of the best sports celebrities
in the world right now, but still you know, a
risky business making entertainment. And but as we've seen so
many cases, I mean, if you think about like Vice
Media and BuzzFeed, and you know, there have been so
many instances that we're seemingly smart big media companies even
(03:46):
invest in these startups and it.
Speaker 8 (03:49):
Doesn't pay off.
Speaker 5 (03:50):
And you know what's unusual about this case is that
Lucashaw was able to get some real numbers behind the company.
And we could talk about some of their projects, but
you know, this is a lineup of shows that is
not unimpressive.
Speaker 8 (04:06):
I mean, they were diversified. They were working with.
Speaker 5 (04:09):
HBO, Warner Brothers, they did movies, they did TV shows,
they did docs, Wefflix.
Speaker 4 (04:15):
Well, I mean, let's take a step back, you know,
I mean, and you're absolutely right, right, I mean, you know, Lebron,
James Gougenheim Partners, Elizabeth Murdoch, Redbird, Nike, the owners of
the Red Sox are all invested in this business that
is valued at or it was valued at seven hundred
and twenty five million dollars, right, Chris, And I mean,
let's talk about Maverick Carter for a second. He runs
the business, if I'm not mistaken, and Spring Hill employed.
What I mean, Michael bought two hundred people at one point, So,
(04:37):
you know, did they kind of lean in over their
skis just a bit here, I mean what happened, Yeah.
Speaker 8 (04:44):
They did.
Speaker 5 (04:45):
And the business to be fair, and I think Maverick
said this in a statement, the business had changed dramatically
since they really launched this. You know, first of all,
you had the pandemic and then which froze up a
lot of production. Then you had the twin strikes in
Hollywood last year by actors and writers that that also
shut down production and more importantly sort of changed the business.
(05:10):
The streaming companies, there was a huge boom trying to
get the idea was going to create as much movies
and TV shows as possible. That's going to lure people
to the streaming services. And never mind the profits. And
I'm talking about companies like Disney, Warner Brothers, Netflix, Paramounts
all spending a lot of money, NBC and Peacock to
(05:32):
just you know, produce shows regardless of whether there was
a payoff. And that changed with all that happened with
the pandemic, the strikes, the Wall Street changed its opinion.
It was no longer about just signing up subscribers for
your streaming service. It was about actually showing profits. So
(05:53):
we've seen this across the board in Hollywood, cutbacks in
spending on new projects, and so spring Hill was caught
up in that well, which.
Speaker 2 (06:05):
Brings me to the next one. You talked about some
of the projects spring Hill. They just recently merged with
Fullwell seventy three and with that because they are behind
the Kardashians and then the Grammy Awards. So I mean,
this isn't like they merged with me and Michael Barr's
favorite board games. I mean we're talking to some big
projects here.
Speaker 7 (06:25):
Yeah.
Speaker 5 (06:25):
Well, they're both sort of companies in a similar position,
relatively new companies and entertainment with some high profile partners,
and so I mean what's interesting is that their content
is very different. The new company has done James Gordon's
(06:45):
TV show The Grammys has mentioned that the Kardashians these
are kind of more long lived projects in music and entertainment,
where spring Hills weren't focused course on sport, and so
they complement each other in that fashion.
Speaker 8 (07:03):
I think.
Speaker 5 (07:05):
What this other company was able to deliver was sort
of a more diversified business. They did a lot of
music videos, they did commercial work, and so full was
got that kind of body of work that maybe could
they can help, you know, stave off some of the
slower times you know in the business.
Speaker 4 (07:27):
Well, Chris, in terms of content, what were they selling
their investors on? And here's my question, right, I mean,
you have Mowana. I mean, what twenty one million in
the US and Canada during the holiday weekend? Right, I mean,
were they trying to make movies like Mowana? Were they
trying to build content and compete with Netflix and just
crank stuff out? I mean in sports, for example, Lebron
James lends his name to the franchise. You think that
they're trying to tell stories that haven't yet been told
(07:47):
in the world of sports. But I mean, I mean,
I'm just curious what was their strategy here?
Speaker 8 (07:53):
It was?
Speaker 5 (07:54):
It was it was not entirely to be dependent on Lebron.
I mean, they've did some projects, you know, you know,
the Space Jam, the movie, the reboot of the movie
Shooting Star. I think there's a Lebron bio for Peacock,
but they were broader than that. But there was definitely
a sports theme to it all, which makes sense that
(08:15):
that's an area they know, you're probably not gonna like
hearing this, but sports has been a kind of an
iffy business from entertainment standpoint.
Speaker 7 (08:24):
Uh.
Speaker 5 (08:24):
There was you know, we all know and love our
sort of classic you know sports movies, but they were
never huge, right, not like Mohana or Mowana too, And
so that business was one that Hollywood was generally sort
of pulling away from those kind of mid two small
(08:46):
budget movies, and so there they saw an opportunity, particularly to.
Speaker 8 (08:51):
Do this for streaming. Uh.
Speaker 5 (08:53):
There was also a bit getting back to the whole
bubble concept. You know, there was an early success in
sports docks, you know, thirty for thirty ESPN and Chris
the Last Dance that Michael Jordan won, And you know,
when people saw the numbers that were in the awards
were coming to shows like that, then everybody had to
have one, right and so then you have you know,
(09:16):
they you know, I'm looking at the line of Spring
Hills shows, the Black Ice, Red Ball, Hustle, the Adam.
Speaker 8 (09:23):
Sandler movie for Naturally.
Speaker 5 (09:24):
I mean, these are all you know, worthy projects, but
it's the kind of stuff that you know, Hollywood was
kind of moving away for from in general, so and
that there seemed to be a lot of I mean,
right now the sports stock category is just sort of
really blown up and so so so that's again sort
(09:46):
of the trap that spring Hill caught itself in.
Speaker 2 (09:49):
I thought a show that they were involved in was
a talk show called The Shop, and I thought that
was going to get over big time. It has it
been an asset for spring Hill.
Speaker 5 (10:05):
You know, I don't think it any of these things
have really popped to the degree they would have loved.
All of this stuff is good, but it's just a
it's just a very competitive world.
Speaker 8 (10:18):
If you think about the competition just to get.
Speaker 5 (10:21):
That kind of one top spot on Netflix when you know,
when you turn on your Netflix and and granted, if
you're a sports fan and you watch these things, it's
they're going to recommend them through the whole algorithm, but
to get to that broader audience is it's just a challenge.
And so that's one of the things that that all
(10:41):
of these production companies are facing in this new streaming era.
Speaker 4 (10:45):
I mean, Michael Barr I got to say, I mean,
it's just it's such a it's such a challenging market.
Right Netflix is eating everyone's lunch right now.
Speaker 6 (10:52):
I mean my.
Speaker 4 (10:52):
Wife, she goes to it first. I mean, we haven't
cut the cord yet, but we may as well. I
mean I'm starting to even go over to the dark side.
Speaker 2 (10:59):
Yeah, yeah, I have to admit now I am watching
an old geezer bar saying this a lot of the
streaming channels like Netflix and Max. I mean, I'm I'm
max teaming. Oh yeah, I mean I'm deep into this.
So I'm wondering if part of the problem, also Chris,
is we're kind of in an unknown we don't know
(11:21):
where the market is going. And maybe why a lot
of companies like Lebron James with spring Hill, where should
they Where should they go?
Speaker 5 (11:30):
Well, I think we're at a point now where things
are starting to stabilize. So by putting themselves in this
position where they have kind of a more diversified body
of work and so they got some new financing out
of this merger, uh, they'll be in a position to
continue to make shows, the really good ones that they're doing.
And and and maybe we've sort of hit bottom in
(11:53):
terms of the big media companies cutting back on spending.
We're definitely seeing a trend where thanks to all these cutbacks. Now,
Disney and Paramount and Warner Brothers, they're streaming businesses.
Speaker 4 (12:04):
You're just hitting the nail on the head these streaming businesses.
I mean they had Warner Brothers, you know, as one
of their investors early on. I mean, and they aren't
a streamer, right, I mean, it's all about the transmission
of this content. So maybe that's the deal. Is that
what's coming next? Is that what we can expect?
Speaker 8 (12:16):
Oh yeah, there's no doubt that, you know the future
of how we watch entertainment is going to be on
a streaming service.
Speaker 2 (12:24):
Bloomberg's Chris Paul Murray, we love you man, thanks for
coming and joying them as buddy anytime. He is Bloomberg News,
Media and Entertainment team leader. Up next week, turn to
Nike and foot Locker and why they're joining for us
is again for Damian Sasaur. I'm Michael Barr. You're listening
to the Bloomberg Business of Sports Bloomberg Radio.
Speaker 1 (12:44):
Around the world, you're listening to Bloomberg Business of Sports
from Bloomberg Radio.
Speaker 2 (13:01):
This is the Bloomberg Business of Sports, where we explored
the big money issues in the world of sports. I'm
Michael Barr, along with Damien Sassawer Scarlett Fuo is on assignment.
Speaker 4 (13:09):
Nike's hit on tough times lately, Michael Barr. They replaced
CEO John Donahoe with veteran Zach Elliott Hill in October.
Speaker 2 (13:17):
And now we're learning a little more about what is
the strategy going forward, including a new partnership with foot Locker.
To take us through the latest, we bring in Kim Bessin.
You are an old friend of the show. He covers
celebrity and athlete business deals for Bloomberg News. Kim, welcome
back to the Bloomberg Business of Sports.
Speaker 1 (13:38):
Hello, always so happy to be here.
Speaker 2 (13:41):
Well, see, and we talked about this several months ago
when John Donahoe decided he was going to make these
decisions and branch away from foot Locker, and then Nike
was going to do it's thing and this and that whatever,
and finally they admitted not too long ago, So you know,
(14:01):
maybe we didn't think this through.
Speaker 3 (14:03):
Yeah, this whole thing started back in twenty twenty one.
It really started when Mark Parker, the previous previous CEO,
was in charge over there at Nike. They wanted to
refocus their sales on Nike dot Com, the Nike apps
and lately sneakers and s n.
Speaker 6 (14:20):
How do you how do you spell that sneaker?
Speaker 1 (14:22):
Is this no vowels?
Speaker 3 (14:25):
Yeah, that's their Like the hottest drops are up on
that app that you keep getting l on because you
can never beat all the bots who are out bidding you. Okay,
So like that's what they were trying to do, And
in twenty twenty one they ramped it up a whole lot.
They cut half of their retail partners out and just
stopped sending these Nike shoes there. Foot Locker was affected
(14:47):
by this too. It used to make up Nike used
to make up seventy five percent of purchases at foot Locker,
and that went all the way down below sixty percent
a couple of years later.
Speaker 6 (14:59):
So, Kim, talk to me a little bit about you know,
who needs you more?
Speaker 8 (15:02):
Right?
Speaker 4 (15:02):
I mean I just saw a Footlocker slash. It's full
of your guidance after reporting a rough set of quarterly results.
You know, is that a warning sign for Nike? I mean,
does Nike even care? I mean, like talk to us
about this partnership. So in inverted comments, I mean, you
know what comes next.
Speaker 3 (15:18):
Yeah, Footlocker has been around for fifty years and Nike's
always been their most important partner. The thing is, it's
the same the other way around. Footlocker sells tons and
tons and tons of Nike shoes. They're the most important
channel for them, I suppose, besides their own in the
United States. So they've been a critical part of each
other's sales. And these two companies have had problems in
(15:42):
the past. Back in two thousand and three, they had
this feud over sneaker prices where Nike was pulling back
some of their shoes over those over those prices. But they,
you know, they managed to work it out over time,
and they've had partnerships in the past as well. The
House of Hoops is a whole line of stores that
foot Locker opened that has exclusive Nike products in it. Uh,
(16:07):
and that's been a long time tie up for them.
So lately what they've what they've been rolling out is
something called Home Court.
Speaker 6 (16:14):
This debut it's about Home Court. What is Home Court?
Speaker 3 (16:17):
Yeah, Home Court debuted at the Footlocker flagship here in
New York over on thirty four Street, across the street
from the big old Macy's there.
Speaker 6 (16:27):
Yeah, and and.
Speaker 3 (16:29):
It's a it's a basketball section that the Nike executives
alongside foot Locker developed together. But what's different this time
is that Nike is allowing its competitors to be in there.
Speaker 6 (16:42):
They're going to let new balance in, the new balances
in there in there.
Speaker 3 (16:48):
In there as well.
Speaker 6 (16:51):
Wow, I mean wow, that's pretty MC.
Speaker 1 (16:53):
I got LaMelo ball.
Speaker 3 (16:54):
I mean, LaMelo's in there. Anthony Edwards his shoes are
also in this section now, grant Okay, the big walls
in there. It got a big Nike swoosh on it,
and there's a whole bunch of Lebron's and Giannies and
everything too.
Speaker 1 (17:07):
Well.
Speaker 2 (17:07):
This is part because Mary Dylan, who is now the
current chief executive officer of Footlocker, she said, hey, you know,
the basketball culture is a really key part of our
overall strategic history. She has now changed the direction from Dunahoe.
Speaker 3 (17:26):
Yeah, and with Nike's new CEO in place, Elliot Hill,
who started just back in October, he had had better
relationships with retailers. He was a longtime Nike executive who
retired and came all the way out of retirement to
replace John Donaho and take the lead at Nike. One
(17:46):
of his big initiatives is to rebuild these relationships with
retail It's not just footlocker, but across the board. And
they brought in this guy, Tom Petty out of retirement
even before Elli loved his music.
Speaker 1 (17:59):
Yeah, I knew that was going to G D I E.
Speaker 3 (18:05):
And he He's been working on this as well. They've
been holding hosting, you know, summits with the retailers to
show what's what products are in the pipeline coming up
in twenty twenty five and things like that, to increase
transparency and work with them a little bit more.
Speaker 6 (18:19):
Well, Kam, let's go there.
Speaker 4 (18:19):
I mean, we're spending so much time talking about the
actual business of selling sneakers. We're not talking about what
those what the content looks like, right, I mean, like
talk to us a little bit about what comes next
for Nike.
Speaker 6 (18:29):
What's in the hop?
Speaker 4 (18:30):
You know, are there any interesting new designs, any interesting
you know, new things going on.
Speaker 2 (18:34):
Actually, what you're trying to say, Damien is a old
man bar where some of the footwear while I look stupid.
Speaker 1 (18:42):
No, you're good.
Speaker 3 (18:45):
Look Lifestyle sneakers have been decreasing in sales lately. It's
been one of Nike's biggest problems. So the air Force one,
the Dunk and the Jordan one. We're three enormous product
lines and still are for Nike, but that has slowed significantly.
Nike's also lagging in running and they're trying to fix
(19:06):
that as well. I went to an event that they
hosted earlier this year in Paris where they unveiled the
Pegasus Premium, which is a more expensive running shoe that's
coming out sometime next year. The thing is, that's kind
of all we know. Nike keeps this stuff under wraps
so that they can debut these new shoes in these big,
surprising fun ways. And I mean, the new CEO, Elliott Hill,
(19:30):
has yet to outline a turnaround plan for Nike. It's
only been a couple months. They postponed an investor day
to give him more time to work out that plan.
But Nike does report earnings in December.
Speaker 6 (19:43):
Nike swayed low top. You know, cool going out at night.
Speaker 1 (19:48):
I could get into that.
Speaker 4 (19:49):
Yeah, you know, that's what I'm looking for, you know,
I mean, that's that's the but you know, what do
I know?
Speaker 6 (19:53):
I mean, you know, but you're right. The Nike Field General,
the Nike kill shot, you know, all these kind of
kill show. Yeah, all these brands.
Speaker 4 (19:59):
But you know, I guess you know, for me, you know,
I'm just curious, like, is this really gonna have a
definitive impact on on the bottom line, on shareholders, on
the equity price? I mean, like, do we really think
that just you know, repairing the relationship between foot Locker
and Nike is going to be meaningful in terms of
the stock price.
Speaker 6 (20:15):
What are your thoughts there, Kim.
Speaker 3 (20:16):
It's a piece of the puzzle, but they still need
theysolve themselves compelling product to keep shoppers coming back and
wanting to wear Nikes everywhere. I mean, sneakers are everyday shoes. Now,
we wear it to work, we we we wear these
things everywhere. So that's where that's what That's what the
bar is. It's got to be something that you want
to wear all.
Speaker 4 (20:35):
The time or real performance performance like I could use
a few inches on my you know, my jump shot
or something like that.
Speaker 1 (20:41):
Oh you're good, you know me?
Speaker 3 (20:43):
You know, I mean, get some insols. Maybe I'll help
you done check that.
Speaker 2 (20:51):
I get have they thought? I don't want to slam
John Dunnaho the previous CEO of Night No please do,
but you're but I'm about to Yeah, it's I don't know.
I never understood why would you get away from foot
Locker at the time when foot Locker was one of
(21:13):
your biggest partners to sell your product and then just
go Nike dot Com.
Speaker 3 (21:20):
Nike is kind of a king maker, right, They're the
the most important brand for for most of these retailers
who had been working with them, and the thought was they,
you know, the premiumization of how their brand is portrayed.
And I heard, you know, from sources that in a
lot of ways, the Nike executives didn't like how foot
(21:42):
Locker was presenting the shoes. You know, this new home
court that you're seeing. If you look up a photo
of this court, it's a it's a beautiful space, right,
It's it looks it looks a lot nicer than just
one big wall shoes. And that's what happened with with Nike.
They were out of you know, discount stores and things
like that, and they selected a few retailers to bring
(22:06):
them forward, and that was JD Sports in Europe and
Dick's Sporting Goods in the US. They felt like they
had a really good presence in dix'porting goods, so they
sent them more stuff instead. It just depended on who
they selected as the winners here.
Speaker 4 (22:19):
Okay, one last question, is this all about sneakers or
I mean what about wardrobe? What about clothing? I mean,
are they working more? Are they trying to you know,
this this new endeavor, this new collaboration between Nike and
foot Locker doesn't span all products or is it really
just focused on footwear?
Speaker 3 (22:35):
This is focused on footwear, and foot Locker overall is
focused on footwear. But the apparel this past quarter did
not perform nearly as well as the footwear business at
foot Locker, and it was a down quarter anyway. So yeah,
there's concerns around athletic apparel right now as well.
Speaker 2 (22:52):
And they before all this happened, before down a Hold
was shown, Hey, best luck in his retirement, that's what.
Speaker 1 (23:00):
They best of. Yeah, that's that's the that's.
Speaker 2 (23:04):
You know, that was showing you know what what they
were talking about with mister Donahoe. And again, you know,
I'm not slamming him because he could. I can't even
manage my check book, which shows you how old I am.
Because first time I'm going to a checkbook and then
you know, but you know, it happens, and.
Speaker 4 (23:19):
I think it worked for a while, right, if I'm
not mistaking Kim. You know, Nike's results are actually pretty
strong for a while after the back of it, but
then when they really needed to sell some more inventory
and they didn't have those relationships.
Speaker 3 (23:29):
And I really think when when you look back on
Donahoe's tenure at Nike, you'll, you'll, we'll see those first
two years as being hugely successful for that company, but
you know, flew too close to the sun there and eventually.
Speaker 2 (23:45):
Bloomberg's Kim Bessen, thank you, my man, for again joining
us on the Bloomberg Business of Sports. We appreciate it
man anytime. By the way, if you don't know who
Kim Beissine is, we'll shame on you. He covers celebrity
and athlete business deals for Bloomberg News. Sticking with those brands,
Footlocker released earnings this past week, and it disappointed traders.
(24:08):
Shares sunk as much as twenty percent after the announcement.
On the earnings call, Footlockers CEO Mary Dylan talked about
how partnering with Nike is a big part of Footlocker's
strategy going forward.
Speaker 9 (24:21):
Stepping back, we feel really great about our partnership with
Nike and our key areas of strategic focus together around basketball,
secret culture and kids. And you know we've heard us
talk about most recently the Clinic, which is a program
in conjunction with Nike and Jordan Brand, as well as
the Home Court are just two good examples. Does that
really come into life through our lace up plan? And
(24:42):
you know, Ellen and Estimar I think are absolutely taking
the right actions for the brand and the overall marketplace
and very confident in their actions that will benefit the
Nike brand as well as our overall industry and partnership.
So you know, and we continue as a brand as
a wholesaler to make the right investments we think for
our brand partners to showcase their brands and make us
(25:03):
is the strongest. I'm the channel retailer that we can be.
Speaker 2 (25:06):
That's foot and Locker CEO Mary Dylon speaking on the
sneaker chain's earnings call after releasing results that sunk shares up. Next,
we turned to college sports with Gulston and Stores Sports
law practice co chair Marty Eedle, Damien Sassaur. I'm Michael Barr.
You're listening to the Bloomberg Business of Sports from Bloomberg Radio.
(25:28):
Around the world, you're.
Speaker 1 (25:45):
Listening to Bloomberg Business of Sports from Bloomberg Radio.
Speaker 2 (25:50):
Thanks for joining us on the Bloomberg Business of Sports,
where we explore the big money issues in the world
of sports. Michael Barr, along with Damien Sasaur Scarlett fu
is on assignment. There's always a lot to go over
in the world of college sports with the rise of
sports betting and nil and to help us break down
some of the latest headlines, we welcome back an old
(26:13):
friend of the show, Marty Eedle. He's co chair of
Gholston and Stories Sports Law practice and adjunct professor of
law at Columbia University. Welcome back to the Bloomberg Business
of Sports, old friend.
Speaker 7 (26:26):
Michael, so nice to be back with you and Damien today.
Speaker 2 (26:30):
I'm going to start with the again. I know we
always bring this up, Well, where are we now with
student athletes, students or employees? What the heck are we
in this arena here?
Speaker 7 (26:42):
So let me use this three words to describe it.
What a mess. Since we last spoke about this, there
have been new developments. We've had the settlement provisionally approved
in what was called the House case, which is an
antitrust case that now has provisionally settled to pay student
(27:05):
athletes approximately two point eight billion dollars, which will be
funded by the NCAA and member conferences. To the member
conferences will pick up now about will pay approximately twenty
two percent of media revenues to student athletes. Scholarships no
(27:27):
longer will be capped at prior numbers, so that schools
can now offer scholarships and whole or in part to
any number of student athletes. There are lots of other
provisions to the House settlement, but the question here becomes,
if you're paying student athletes a share of media revenue,
(27:48):
if you're giving them grant in aids, tuition, room and board,
if you're allowing them to receive nil dollars name, image
and likeness, and we know from a federal court in
Tennessee earlier this year, you can now offer student athletes
sign on bonuses in order to enroll in schools and
(28:11):
guarantee them an il dollars. Are student athletes really students
or have we pushed the envelope over into making them
employees and what will this mean for school. So those
are the new developments since we last spoke, which raises
that question.
Speaker 4 (28:31):
You know, you know, Marty, I'm sitting here and you know,
I've been, you know, analyzing everything that's going on with
a president of Trump's, you know, cabinet and his administration
and you know, the spots that he's feeling for it,
and you know, and all my research and analysis, I
haven't done really much on what where he stands on
an il And you know, the one thing I have
seen is where he stands if you look at his website,
(28:52):
he's got like this list of twenty, you know, things
that he core promises, and one of them is keep
men out of women's sports. So I imagine he's talking
about transgender and so what impacts do you think Trump
and a Trump administration might have on college sports?
Speaker 7 (29:07):
So great question. Let me segue slightly to transgender and
then come back to the issue that we were just discussing.
On transgender sports, we know there's been a big push
in the Biden administration to give lots of opportunities to
transgender athletes to compete in there in a sport in
(29:29):
their gender of choice. And there have been several decisions
by federal courts saying that under the Equal Protection Amendment,
transgender athletes ought to be able to choose. I suspect
that the new Department of Education, for however long it lasts,
under Linda McMahon, if she's accepted as the nominee to
(29:52):
head that department, they're going to rescind a lot of
the Biden executive orders and Department of Education executive orders
that permitted transgender.
Speaker 1 (30:02):
Athletes to compete.
Speaker 7 (30:05):
So there'll be a push to keep sports men's sports
as men's sports, women's sports as women's sports. Whether that
will pass constitutional muster is a different question with respect
to college athletes as students or athletes. The President elect
(30:26):
has some involvement in sports. You may remember he was
an owner of the now defunct USFL Football League tried
to buy the Bills right and with the USFL. What
I'd like telling my class at Columbia Law School is
that he was part of a successful anti trust case
(30:48):
against the NFL, for which he and the other owners
in the UFFL were awarded the grand sum of one
dollar in damages, which under our anti trust laws gets troubled.
So if he got three dollars. It seems, at least
from some of his statements, that the President elect seems
(31:12):
to view athletes through the uni dimensional view as being professionals.
If they're professionals, that distinction between college and professional athletes
will disappear even more quickly than it's been going at
this point, and nothing will be done to impact that.
(31:34):
The new head of the NCAA, of the NCAA, Charlie Baker,
so new anymore, I've been told, has been lobbying in
Congress for various exemptions for the colleges and universities from
some of our laws, the antitrust laws, some of the
labor laws, to allow them to do the things that
(31:57):
professional athletes do. Is going to create a phenomenal crisis
in college sports and college education for schools outside the
power five.
Speaker 4 (32:11):
Well, you know, Marty, here's where my question comes down to, right.
I mean, you're mentioning the wild West, of which that's
where we are, right because nobody can agree. Lawmakers can't
agree be at the House, the Senate, the President, et cetera.
And where and how to you know, regulate the payments
that are going to student athletes. But you know, if
you just look at some of you know, Trump's other policies, right,
easier financial sector regulations, and you read through that into
(32:31):
you know, I guess you know the business of college sports,
because it is a business. Maybe it's just going to
leave the status quo as is. I mean, is that possible.
Speaker 7 (32:41):
Sure, you can let the marketplace work things out, which
is the general philosophy of the president elect. How it
will work it out. This is something that I know
we have discussed a little bit in the past, which
is what role will colleges taken in this new environment.
(33:02):
For example, let's take Vanderbilt. It's in the SEC.
Speaker 6 (33:09):
I'm an alumnus. Okay, please, okay, let's go through.
Speaker 7 (33:12):
That, and congratulations on your victory over Alabama.
Speaker 4 (33:16):
Anchor down, my friend, anchor down.
Speaker 7 (33:21):
But if we get past that part, Vanderbilt has a
reckoning to be made. It's the only I think it's
the only private school, private university in the SEC. If
the schools go towards the position of student athletes as employees,
National Labor Relations Board can step in and as they
(33:45):
have with Dartmouth for example, and recognize bargaining units that
will not apply to the state schools because state employees
are exempt from the scriptures of the National Labor Relations Act.
So right away you have an unequal or uneven playing
field between Vanderbilt and its competitors in the SEC. Its
(34:08):
competitors in the SEC seem to have a lot more
money that they are throwing at prospective athletes, that is,
athletes who are coming in either as freshmen or as
portal athletes transferring from other schools. I mean, if you
promise somebody over a million dollars, it's hard to turn
it down. In fact, you may find some of these
(34:29):
athletes deciding they don't want to go pro because they
may have to take a cut and pay to turn pro.
There used to be, by way of history, there used
to be a reference to athletes who went from school
to school, playing week to week as quote tramp athletes
close quote. That's from the eighteen seventies, when athletes were
(34:51):
paid to play for whoever wanted to pay them the most.
That is likely to happen. How will Vanderbilt compete in
that environment or will it? Does it want to compete
in that environment? Maybe it reaffirms its commitment to being
a school of higher learning.
Speaker 6 (35:13):
Two words for you, Michael Barr, J.
Speaker 4 (35:15):
Cutler, Jay Cutler, the Vandy alumni, you know, I mean,
there's not many of us out there football talking. Just
one last question for you here, Marty. You know we
had Adam Greenblatt, CEO BETEMGM on not long a though,
and you know he was talking about Missouri, you now
Missouri and Alberta, Canada. He's talking about sports gambling and
where it's being legalized. I mean, what can we expect
on the sports gambling front? Is there any interesting developments
(35:37):
on that side?
Speaker 7 (35:39):
Well, there are a couple of interesting developments, and we've
seen penalties at the professional level tossed down for John d.
Porter and a couple of players in baseball and a
bunch of players in professional football eve for aging in gambling.
(36:01):
And this is both what we call prop betting as
well as regular betting. I mean, can you imagine now
players betting on individual statistics. You're back to an era
college sports. The thought they got rid of it from
the nineteen fifties, where a player might not score a
(36:23):
basket at the end of the game in order to
make the spread. There has to be ways of regulating it.
I think the professional leagues from what I understand have
vigorous investigative units, and that's how they can ferre it
out who gambles, whether that person is passing on tips
to friends and family. And the leagues, though, have different rules.
(36:48):
The NBA, for example, prohibits any player, and I think
it's players, coaches, owners, person nail and family from placing
a bet on any professional sports contest. I think the NFL,
and I'm not one hundred percent sure of this, limits
(37:10):
it to NFL games. And of course college sports is
entering this field and trying to figure out what to
do while players are engaging in sports betting, fanduels and
drafting is a huge phenomenon in this country and a
big money maker. How do you tell all How do
(37:30):
you tell a college student you can't engage in fan
duels and we're going to have some secret means of
checking your computer to see that you're not doing it
when his roommate or her roommate is doing the same thing.
Colleges aren't. In other words, colleges aren't asdvanced as pros
(37:51):
in trying to deal with the issue of sports betting.
Speaker 2 (37:55):
Our thanks to Marty Eedel for joining us. He is
code hare at Gulston and Stores, sports Law practice and
adjunct Professor of Law at Columbia University. And that does
it for this edition of The Bloomberg Business of Sports
for Damian Sasaur. I'm Michael Barr. Thank you for joining us.
Tune in again next week for the latest on the
stories moving big old money in the world of sports.
(38:18):
You're listening to Bloomberg Business of Sports from Bloomberger Radio
around the world, and don't forget the catch our podcast
on all your podcast platforms.
Bloomberg Audio Studios, Podcasts, Radio News. This is Bloomberg Business
of Sports.
Speaker 2 (00:10):
Business of sports can be intimidating for hard for a
start to break into.
Speaker 3 (00:14):
We really appreciate when our owners are actually there, you know,
with us through the journey.
Speaker 4 (00:18):
Teams ours especially been very intentional to diversify at all
levels of the company. Maybe we're in the golden years
for the NFL and college football.
Speaker 5 (00:26):
Our demographic reach has continued to explode.
Speaker 4 (00:29):
This is going to be really unlocking the streaming platform
for sports fans.
Speaker 1 (00:34):
Sports evaluations arising. We'll see when they peak.
Speaker 3 (00:36):
You don't have to be the best in your sport
to make a whole ton of money.
Speaker 2 (00:42):
Bloomberg Business of Sports from Bloomberg Radio, don't you This
is the Bloomberg Business of Sports. We explore the big
money issues in the world of sports.
Speaker 6 (00:52):
I'm Michael Black and I'm Danian sas hour.
Speaker 2 (00:54):
Scarletfu is on assignment. Coming up on the show, We
talked to our friend of the show, Marty Eatle. He
is co chair of Gulston and Stores, Sports Law practice
and adjunct professor of law at Columbia University.
Speaker 4 (01:09):
Yes, Michael will get his take on the latest in
college sports as nil and sports betting continued to grow.
Speaker 7 (01:15):
Maybe you have the Power five as a place where
perspective professional athletes go, and you have the other schools
as having a vigorous athletic program, but perhaps not as
vigorous as the Power fives.
Speaker 2 (01:30):
We'll also talk footwear. We'll find out why Nike and
Footlocker are partnering up. That's right, you heard it, they
kissed him made up sort of. All that is on
the way on the Bloomberg Business of Sports. But first,
Lebron James Media company spring Hill is still looking to
turn a profit, even with a lot of popular products.
(01:51):
For more on what's going on with spring Hill and more,
we welcome Bloomberg News, Media and Entertainment team leader Chris Palmery. Chris,
Welcome to the Bloomberg Business of Sports. Thanks, let's start this. Well,
it's not good news for Lebron james is Media company.
Speaker 6 (02:10):
Oh, come on, it's Lebron James. It's all goodness.
Speaker 1 (02:12):
You ever?
Speaker 2 (02:13):
Yeah, have you ever had a good day of losing
thirty million dollars a year?
Speaker 6 (02:16):
Fair enough?
Speaker 2 (02:19):
What happened here, Chris.
Speaker 5 (02:21):
Well, what's what's happened to Levon Is happening to a
lot of people in the entertainment business. There's a lot
of hype about streaming and all the opportunities that folks
could do creating movies and TV shows for this new
generation of services like Netflix.
Speaker 2 (02:36):
You know.
Speaker 5 (02:37):
Part of it is also a bit of a bubble
in sports programming in particular, and it's all ties into
this whole idea of celebrities starting their own businesses and
it's and it all is about, you know, when a
few people have a hit, then everybody tries to do
the same thing, and it's a bubble, and bubbles often.
Speaker 4 (02:59):
I hope you not calling it a bubble. I mean,
there's some big investors in spring Hill, right, Googenheim. I mean,
talk to us a little bit about you know, these
fundraising rounds, right, and what the value of the company
I guess was before we just got this release.
Speaker 5 (03:13):
Yeah, I mean in the last round, which is a
couple of years ago now, but it was it was
a seven hundred and fifty million dollars for what is
essentially a startup.
Speaker 8 (03:22):
I meant, granted tied.
Speaker 5 (03:24):
To the you know, one of the best sports celebrities
in the world right now, but still you know, a
risky business making entertainment. And but as we've seen so
many cases, I mean, if you think about like Vice
Media and BuzzFeed, and you know, there have been so
many instances that we're seemingly smart big media companies even
(03:46):
invest in these startups and it.
Speaker 8 (03:49):
Doesn't pay off.
Speaker 5 (03:50):
And you know what's unusual about this case is that
Lucashaw was able to get some real numbers behind the company.
And we could talk about some of their projects, but
you know, this is a lineup of shows that is
not unimpressive.
Speaker 8 (04:06):
I mean, they were diversified. They were working with.
Speaker 5 (04:09):
HBO, Warner Brothers, they did movies, they did TV shows,
they did docs, Wefflix.
Speaker 4 (04:15):
Well, I mean, let's take a step back, you know,
I mean, and you're absolutely right, right, I mean, you know, Lebron,
James Gougenheim Partners, Elizabeth Murdoch, Redbird, Nike, the owners of
the Red Sox are all invested in this business that
is valued at or it was valued at seven hundred
and twenty five million dollars, right, Chris, And I mean,
let's talk about Maverick Carter for a second. He runs
the business, if I'm not mistaken, and Spring Hill employed.
What I mean, Michael bought two hundred people at one point, So,
(04:37):
you know, did they kind of lean in over their
skis just a bit here, I mean what happened, Yeah.
Speaker 8 (04:44):
They did.
Speaker 5 (04:45):
And the business to be fair, and I think Maverick
said this in a statement, the business had changed dramatically
since they really launched this. You know, first of all,
you had the pandemic and then which froze up a
lot of production. Then you had the twin strikes in
Hollywood last year by actors and writers that that also
shut down production and more importantly sort of changed the business.
(05:10):
The streaming companies, there was a huge boom trying to
get the idea was going to create as much movies
and TV shows as possible. That's going to lure people
to the streaming services. And never mind the profits. And
I'm talking about companies like Disney, Warner Brothers, Netflix, Paramounts
all spending a lot of money, NBC and Peacock to
(05:32):
just you know, produce shows regardless of whether there was
a payoff. And that changed with all that happened with
the pandemic, the strikes, the Wall Street changed its opinion.
It was no longer about just signing up subscribers for
your streaming service. It was about actually showing profits. So
(05:53):
we've seen this across the board in Hollywood, cutbacks in
spending on new projects, and so spring Hill was caught
up in that well, which.
Speaker 2 (06:05):
Brings me to the next one. You talked about some
of the projects spring Hill. They just recently merged with
Fullwell seventy three and with that because they are behind
the Kardashians and then the Grammy Awards. So I mean,
this isn't like they merged with me and Michael Barr's
favorite board games. I mean we're talking to some big
projects here.
Speaker 7 (06:25):
Yeah.
Speaker 5 (06:25):
Well, they're both sort of companies in a similar position,
relatively new companies and entertainment with some high profile partners,
and so I mean what's interesting is that their content
is very different. The new company has done James Gordon's
(06:45):
TV show The Grammys has mentioned that the Kardashians these
are kind of more long lived projects in music and entertainment,
where spring Hills weren't focused course on sport, and so
they complement each other in that fashion.
Speaker 8 (07:03):
I think.
Speaker 5 (07:05):
What this other company was able to deliver was sort
of a more diversified business. They did a lot of
music videos, they did commercial work, and so full was
got that kind of body of work that maybe could
they can help, you know, stave off some of the
slower times you know in the business.
Speaker 4 (07:27):
Well, Chris, in terms of content, what were they selling
their investors on? And here's my question, right, I mean,
you have Mowana. I mean, what twenty one million in
the US and Canada during the holiday weekend? Right, I mean,
were they trying to make movies like Mowana? Were they
trying to build content and compete with Netflix and just
crank stuff out? I mean in sports, for example, Lebron
James lends his name to the franchise. You think that
they're trying to tell stories that haven't yet been told
(07:47):
in the world of sports. But I mean, I mean,
I'm just curious what was their strategy here?
Speaker 8 (07:53):
It was?
Speaker 5 (07:54):
It was it was not entirely to be dependent on Lebron.
I mean, they've did some projects, you know, you know,
the Space Jam, the movie, the reboot of the movie
Shooting Star. I think there's a Lebron bio for Peacock,
but they were broader than that. But there was definitely
a sports theme to it all, which makes sense that
(08:15):
that's an area they know, you're probably not gonna like
hearing this, but sports has been a kind of an
iffy business from entertainment standpoint.
Speaker 7 (08:24):
Uh.
Speaker 5 (08:24):
There was you know, we all know and love our
sort of classic you know sports movies, but they were
never huge, right, not like Mohana or Mowana too, And
so that business was one that Hollywood was generally sort
of pulling away from those kind of mid two small
(08:46):
budget movies, and so there they saw an opportunity, particularly to.
Speaker 8 (08:51):
Do this for streaming. Uh.
Speaker 5 (08:53):
There was also a bit getting back to the whole
bubble concept. You know, there was an early success in
sports docks, you know, thirty for thirty ESPN and Chris
the Last Dance that Michael Jordan won, And you know,
when people saw the numbers that were in the awards
were coming to shows like that, then everybody had to
have one, right and so then you have you know,
(09:16):
they you know, I'm looking at the line of Spring
Hills shows, the Black Ice, Red Ball, Hustle, the Adam.
Speaker 8 (09:23):
Sandler movie for Naturally.
Speaker 5 (09:24):
I mean, these are all you know, worthy projects, but
it's the kind of stuff that you know, Hollywood was
kind of moving away for from in general, so and
that there seemed to be a lot of I mean,
right now the sports stock category is just sort of
really blown up and so so so that's again sort
(09:46):
of the trap that spring Hill caught itself in.
Speaker 2 (09:49):
I thought a show that they were involved in was
a talk show called The Shop, and I thought that
was going to get over big time. It has it
been an asset for spring Hill.
Speaker 5 (10:05):
You know, I don't think it any of these things
have really popped to the degree they would have loved.
All of this stuff is good, but it's just a
it's just a very competitive world.
Speaker 8 (10:18):
If you think about the competition just to get.
Speaker 5 (10:21):
That kind of one top spot on Netflix when you know,
when you turn on your Netflix and and granted, if
you're a sports fan and you watch these things, it's
they're going to recommend them through the whole algorithm, but
to get to that broader audience is it's just a challenge.
And so that's one of the things that that all
(10:41):
of these production companies are facing in this new streaming era.
Speaker 4 (10:45):
I mean, Michael Barr I got to say, I mean,
it's just it's such a it's such a challenging market.
Right Netflix is eating everyone's lunch right now.
Speaker 6 (10:52):
I mean my.
Speaker 4 (10:52):
Wife, she goes to it first. I mean, we haven't
cut the cord yet, but we may as well. I
mean I'm starting to even go over to the dark side.
Speaker 2 (10:59):
Yeah, yeah, I have to admit now I am watching
an old geezer bar saying this a lot of the
streaming channels like Netflix and Max. I mean, I'm I'm
max teaming. Oh yeah, I mean I'm deep into this.
So I'm wondering if part of the problem, also Chris,
is we're kind of in an unknown we don't know
(11:21):
where the market is going. And maybe why a lot
of companies like Lebron James with spring Hill, where should
they Where should they go?
Speaker 5 (11:30):
Well, I think we're at a point now where things
are starting to stabilize. So by putting themselves in this
position where they have kind of a more diversified body
of work and so they got some new financing out
of this merger, uh, they'll be in a position to
continue to make shows, the really good ones that they're doing.
And and and maybe we've sort of hit bottom in
(11:53):
terms of the big media companies cutting back on spending.
We're definitely seeing a trend where thanks to all these cutbacks. Now,
Disney and Paramount and Warner Brothers, they're streaming businesses.
Speaker 4 (12:04):
You're just hitting the nail on the head these streaming businesses.
I mean they had Warner Brothers, you know, as one
of their investors early on. I mean, and they aren't
a streamer, right, I mean, it's all about the transmission
of this content. So maybe that's the deal. Is that
what's coming next? Is that what we can expect?
Speaker 8 (12:16):
Oh yeah, there's no doubt that, you know the future
of how we watch entertainment is going to be on
a streaming service.
Speaker 2 (12:24):
Bloomberg's Chris Paul Murray, we love you man, thanks for
coming and joying them as buddy anytime. He is Bloomberg News,
Media and Entertainment team leader. Up next week, turn to
Nike and foot Locker and why they're joining for us
is again for Damian Sasaur. I'm Michael Barr. You're listening
to the Bloomberg Business of Sports Bloomberg Radio.
Speaker 1 (12:44):
Around the world, you're listening to Bloomberg Business of Sports
from Bloomberg Radio.
Speaker 2 (13:01):
This is the Bloomberg Business of Sports, where we explored
the big money issues in the world of sports. I'm
Michael Barr, along with Damien Sassawer Scarlett Fuo is on assignment.
Speaker 4 (13:09):
Nike's hit on tough times lately, Michael Barr. They replaced
CEO John Donahoe with veteran Zach Elliott Hill in October.
Speaker 2 (13:17):
And now we're learning a little more about what is
the strategy going forward, including a new partnership with foot Locker.
To take us through the latest, we bring in Kim Bessin.
You are an old friend of the show. He covers
celebrity and athlete business deals for Bloomberg News. Kim, welcome
back to the Bloomberg Business of Sports.
Speaker 1 (13:38):
Hello, always so happy to be here.
Speaker 2 (13:41):
Well, see, and we talked about this several months ago
when John Donahoe decided he was going to make these
decisions and branch away from foot Locker, and then Nike
was going to do it's thing and this and that whatever,
and finally they admitted not too long ago, So you know,
(14:01):
maybe we didn't think this through.
Speaker 3 (14:03):
Yeah, this whole thing started back in twenty twenty one.
It really started when Mark Parker, the previous previous CEO,
was in charge over there at Nike. They wanted to
refocus their sales on Nike dot Com, the Nike apps
and lately sneakers and s n.
Speaker 6 (14:20):
How do you how do you spell that sneaker?
Speaker 1 (14:22):
Is this no vowels?
Speaker 3 (14:25):
Yeah, that's their Like the hottest drops are up on
that app that you keep getting l on because you
can never beat all the bots who are out bidding you. Okay,
So like that's what they were trying to do, And
in twenty twenty one they ramped it up a whole lot.
They cut half of their retail partners out and just
stopped sending these Nike shoes there. Foot Locker was affected
(14:47):
by this too. It used to make up Nike used
to make up seventy five percent of purchases at foot Locker,
and that went all the way down below sixty percent
a couple of years later.
Speaker 6 (14:59):
So, Kim, talk to me a little bit about you know,
who needs you more?
Speaker 8 (15:02):
Right?
Speaker 4 (15:02):
I mean I just saw a Footlocker slash. It's full
of your guidance after reporting a rough set of quarterly results.
You know, is that a warning sign for Nike? I mean,
does Nike even care? I mean, like talk to us
about this partnership. So in inverted comments, I mean, you
know what comes next.
Speaker 3 (15:18):
Yeah, Footlocker has been around for fifty years and Nike's
always been their most important partner. The thing is, it's
the same the other way around. Footlocker sells tons and
tons and tons of Nike shoes. They're the most important
channel for them, I suppose, besides their own in the
United States. So they've been a critical part of each
other's sales. And these two companies have had problems in
(15:42):
the past. Back in two thousand and three, they had
this feud over sneaker prices where Nike was pulling back
some of their shoes over those over those prices. But they,
you know, they managed to work it out over time,
and they've had partnerships in the past as well. The
House of Hoops is a whole line of stores that
foot Locker opened that has exclusive Nike products in it. Uh,
(16:07):
and that's been a long time tie up for them.
So lately what they've what they've been rolling out is
something called Home Court.
Speaker 6 (16:14):
This debut it's about Home Court. What is Home Court?
Speaker 3 (16:17):
Yeah, Home Court debuted at the Footlocker flagship here in
New York over on thirty four Street, across the street
from the big old Macy's there.
Speaker 6 (16:27):
Yeah, and and.
Speaker 3 (16:29):
It's a it's a basketball section that the Nike executives
alongside foot Locker developed together. But what's different this time
is that Nike is allowing its competitors to be in there.
Speaker 6 (16:42):
They're going to let new balance in, the new balances
in there in there.
Speaker 3 (16:48):
In there as well.
Speaker 6 (16:51):
Wow, I mean wow, that's pretty MC.
Speaker 1 (16:53):
I got LaMelo ball.
Speaker 3 (16:54):
I mean, LaMelo's in there. Anthony Edwards his shoes are
also in this section now, grant Okay, the big walls
in there. It got a big Nike swoosh on it,
and there's a whole bunch of Lebron's and Giannies and
everything too.
Speaker 1 (17:07):
Well.
Speaker 2 (17:07):
This is part because Mary Dylan, who is now the
current chief executive officer of Footlocker, she said, hey, you know,
the basketball culture is a really key part of our
overall strategic history. She has now changed the direction from Dunahoe.
Speaker 3 (17:26):
Yeah, and with Nike's new CEO in place, Elliot Hill,
who started just back in October, he had had better
relationships with retailers. He was a longtime Nike executive who
retired and came all the way out of retirement to
replace John Donaho and take the lead at Nike. One
(17:46):
of his big initiatives is to rebuild these relationships with
retail It's not just footlocker, but across the board. And
they brought in this guy, Tom Petty out of retirement
even before Elli loved his music.
Speaker 1 (17:59):
Yeah, I knew that was going to G D I E.
Speaker 3 (18:05):
And he He's been working on this as well. They've
been holding hosting, you know, summits with the retailers to
show what's what products are in the pipeline coming up
in twenty twenty five and things like that, to increase
transparency and work with them a little bit more.
Speaker 6 (18:19):
Well, Kam, let's go there.
Speaker 4 (18:19):
I mean, we're spending so much time talking about the
actual business of selling sneakers. We're not talking about what
those what the content looks like, right, I mean, like
talk to us a little bit about what comes next
for Nike.
Speaker 6 (18:29):
What's in the hop?
Speaker 4 (18:30):
You know, are there any interesting new designs, any interesting
you know, new things going on.
Speaker 2 (18:34):
Actually, what you're trying to say, Damien is a old
man bar where some of the footwear while I look stupid.
Speaker 1 (18:42):
No, you're good.
Speaker 3 (18:45):
Look Lifestyle sneakers have been decreasing in sales lately. It's
been one of Nike's biggest problems. So the air Force one,
the Dunk and the Jordan one. We're three enormous product
lines and still are for Nike, but that has slowed significantly.
Nike's also lagging in running and they're trying to fix
(19:06):
that as well. I went to an event that they
hosted earlier this year in Paris where they unveiled the
Pegasus Premium, which is a more expensive running shoe that's
coming out sometime next year. The thing is, that's kind
of all we know. Nike keeps this stuff under wraps
so that they can debut these new shoes in these big,
surprising fun ways. And I mean, the new CEO, Elliott Hill,
(19:30):
has yet to outline a turnaround plan for Nike. It's
only been a couple months. They postponed an investor day
to give him more time to work out that plan.
But Nike does report earnings in December.
Speaker 6 (19:43):
Nike swayed low top. You know, cool going out at night.
Speaker 1 (19:48):
I could get into that.
Speaker 4 (19:49):
Yeah, you know, that's what I'm looking for, you know,
I mean, that's that's the but you know, what do
I know?
Speaker 6 (19:53):
I mean, you know, but you're right. The Nike Field General,
the Nike kill shot, you know, all these kind of
kill show. Yeah, all these brands.
Speaker 4 (19:59):
But you know, I guess you know, for me, you know,
I'm just curious, like, is this really gonna have a
definitive impact on on the bottom line, on shareholders, on
the equity price? I mean, like, do we really think
that just you know, repairing the relationship between foot Locker
and Nike is going to be meaningful in terms of
the stock price.
Speaker 6 (20:15):
What are your thoughts there, Kim.
Speaker 3 (20:16):
It's a piece of the puzzle, but they still need
theysolve themselves compelling product to keep shoppers coming back and
wanting to wear Nikes everywhere. I mean, sneakers are everyday shoes. Now,
we wear it to work, we we we wear these
things everywhere. So that's where that's what That's what the
bar is. It's got to be something that you want
to wear all.
Speaker 4 (20:35):
The time or real performance performance like I could use
a few inches on my you know, my jump shot
or something like that.
Speaker 1 (20:41):
Oh you're good, you know me?
Speaker 3 (20:43):
You know, I mean, get some insols. Maybe I'll help
you done check that.
Speaker 2 (20:51):
I get have they thought? I don't want to slam
John Dunnaho the previous CEO of Night No please do,
but you're but I'm about to Yeah, it's I don't know.
I never understood why would you get away from foot
Locker at the time when foot Locker was one of
(21:13):
your biggest partners to sell your product and then just
go Nike dot Com.
Speaker 3 (21:20):
Nike is kind of a king maker, right, They're the
the most important brand for for most of these retailers
who had been working with them, and the thought was they,
you know, the premiumization of how their brand is portrayed.
And I heard, you know, from sources that in a
lot of ways, the Nike executives didn't like how foot
(21:42):
Locker was presenting the shoes. You know, this new home
court that you're seeing. If you look up a photo
of this court, it's a it's a beautiful space, right,
It's it looks it looks a lot nicer than just
one big wall shoes. And that's what happened with with Nike.
They were out of you know, discount stores and things
like that, and they selected a few retailers to bring
(22:06):
them forward, and that was JD Sports in Europe and
Dick's Sporting Goods in the US. They felt like they
had a really good presence in dix'porting goods, so they
sent them more stuff instead. It just depended on who
they selected as the winners here.
Speaker 4 (22:19):
Okay, one last question, is this all about sneakers or
I mean what about wardrobe? What about clothing? I mean,
are they working more? Are they trying to you know,
this this new endeavor, this new collaboration between Nike and
foot Locker doesn't span all products or is it really
just focused on footwear?
Speaker 3 (22:35):
This is focused on footwear, and foot Locker overall is
focused on footwear. But the apparel this past quarter did
not perform nearly as well as the footwear business at
foot Locker, and it was a down quarter anyway. So yeah,
there's concerns around athletic apparel right now as well.
Speaker 2 (22:52):
And they before all this happened, before down a Hold
was shown, Hey, best luck in his retirement, that's what.
Speaker 1 (23:00):
They best of. Yeah, that's that's the that's.
Speaker 2 (23:04):
You know, that was showing you know what what they
were talking about with mister Donahoe. And again, you know,
I'm not slamming him because he could. I can't even
manage my check book, which shows you how old I am.
Because first time I'm going to a checkbook and then
you know, but you know, it happens, and.
Speaker 4 (23:19):
I think it worked for a while, right, if I'm
not mistaking Kim. You know, Nike's results are actually pretty
strong for a while after the back of it, but
then when they really needed to sell some more inventory
and they didn't have those relationships.
Speaker 3 (23:29):
And I really think when when you look back on
Donahoe's tenure at Nike, you'll, you'll, we'll see those first
two years as being hugely successful for that company, but
you know, flew too close to the sun there and eventually.
Speaker 2 (23:45):
Bloomberg's Kim Bessen, thank you, my man, for again joining
us on the Bloomberg Business of Sports. We appreciate it
man anytime. By the way, if you don't know who
Kim Beissine is, we'll shame on you. He covers celebrity
and athlete business deals for Bloomberg News. Sticking with those brands,
Footlocker released earnings this past week, and it disappointed traders.
(24:08):
Shares sunk as much as twenty percent after the announcement.
On the earnings call, Footlockers CEO Mary Dylan talked about
how partnering with Nike is a big part of Footlocker's
strategy going forward.
Speaker 9 (24:21):
Stepping back, we feel really great about our partnership with
Nike and our key areas of strategic focus together around basketball,
secret culture and kids. And you know we've heard us
talk about most recently the Clinic, which is a program
in conjunction with Nike and Jordan Brand, as well as
the Home Court are just two good examples. Does that
really come into life through our lace up plan? And
(24:42):
you know, Ellen and Estimar I think are absolutely taking
the right actions for the brand and the overall marketplace
and very confident in their actions that will benefit the
Nike brand as well as our overall industry and partnership.
So you know, and we continue as a brand as
a wholesaler to make the right investments we think for
our brand partners to showcase their brands and make us
(25:03):
is the strongest. I'm the channel retailer that we can be.
Speaker 2 (25:06):
That's foot and Locker CEO Mary Dylon speaking on the
sneaker chain's earnings call after releasing results that sunk shares up. Next,
we turned to college sports with Gulston and Stores Sports
law practice co chair Marty Eedle, Damien Sassaur. I'm Michael Barr.
You're listening to the Bloomberg Business of Sports from Bloomberg Radio.
(25:28):
Around the world, you're.
Speaker 1 (25:45):
Listening to Bloomberg Business of Sports from Bloomberg Radio.
Speaker 2 (25:50):
Thanks for joining us on the Bloomberg Business of Sports,
where we explore the big money issues in the world
of sports. Michael Barr, along with Damien Sasaur Scarlett fu
is on assignment. There's always a lot to go over
in the world of college sports with the rise of
sports betting and nil and to help us break down
some of the latest headlines, we welcome back an old
(26:13):
friend of the show, Marty Eedle. He's co chair of
Gholston and Stories Sports Law practice and adjunct professor of
law at Columbia University. Welcome back to the Bloomberg Business
of Sports, old friend.
Speaker 7 (26:26):
Michael, so nice to be back with you and Damien today.
Speaker 2 (26:30):
I'm going to start with the again. I know we
always bring this up, Well, where are we now with
student athletes, students or employees? What the heck are we
in this arena here?
Speaker 7 (26:42):
So let me use this three words to describe it.
What a mess. Since we last spoke about this, there
have been new developments. We've had the settlement provisionally approved
in what was called the House case, which is an
antitrust case that now has provisionally settled to pay student
(27:05):
athletes approximately two point eight billion dollars, which will be
funded by the NCAA and member conferences. To the member
conferences will pick up now about will pay approximately twenty
two percent of media revenues to student athletes. Scholarships no
(27:27):
longer will be capped at prior numbers, so that schools
can now offer scholarships and whole or in part to
any number of student athletes. There are lots of other
provisions to the House settlement, but the question here becomes,
if you're paying student athletes a share of media revenue,
(27:48):
if you're giving them grant in aids, tuition, room and board,
if you're allowing them to receive nil dollars name, image
and likeness, and we know from a federal court in
Tennessee earlier this year, you can now offer student athletes
sign on bonuses in order to enroll in schools and
(28:11):
guarantee them an il dollars. Are student athletes really students
or have we pushed the envelope over into making them
employees and what will this mean for school. So those
are the new developments since we last spoke, which raises
that question.
Speaker 4 (28:31):
You know, you know, Marty, I'm sitting here and you know,
I've been, you know, analyzing everything that's going on with
a president of Trump's, you know, cabinet and his administration
and you know, the spots that he's feeling for it,
and you know, and all my research and analysis, I
haven't done really much on what where he stands on
an il And you know, the one thing I have
seen is where he stands if you look at his website,
(28:52):
he's got like this list of twenty, you know, things
that he core promises, and one of them is keep
men out of women's sports. So I imagine he's talking
about transgender and so what impacts do you think Trump
and a Trump administration might have on college sports?
Speaker 7 (29:07):
So great question. Let me segue slightly to transgender and
then come back to the issue that we were just discussing.
On transgender sports, we know there's been a big push
in the Biden administration to give lots of opportunities to
transgender athletes to compete in there in a sport in
(29:29):
their gender of choice. And there have been several decisions
by federal courts saying that under the Equal Protection Amendment,
transgender athletes ought to be able to choose. I suspect
that the new Department of Education, for however long it lasts,
under Linda McMahon, if she's accepted as the nominee to
(29:52):
head that department, they're going to rescind a lot of
the Biden executive orders and Department of Education executive orders
that permitted transgender.
Speaker 1 (30:02):
Athletes to compete.
Speaker 7 (30:05):
So there'll be a push to keep sports men's sports
as men's sports, women's sports as women's sports. Whether that
will pass constitutional muster is a different question with respect
to college athletes as students or athletes. The President elect
(30:26):
has some involvement in sports. You may remember he was
an owner of the now defunct USFL Football League tried
to buy the Bills right and with the USFL. What
I'd like telling my class at Columbia Law School is
that he was part of a successful anti trust case
(30:48):
against the NFL, for which he and the other owners
in the UFFL were awarded the grand sum of one
dollar in damages, which under our anti trust laws gets troubled.
So if he got three dollars. It seems, at least
from some of his statements, that the President elect seems
(31:12):
to view athletes through the uni dimensional view as being professionals.
If they're professionals, that distinction between college and professional athletes
will disappear even more quickly than it's been going at
this point, and nothing will be done to impact that.
(31:34):
The new head of the NCAA, of the NCAA, Charlie Baker,
so new anymore, I've been told, has been lobbying in
Congress for various exemptions for the colleges and universities from
some of our laws, the antitrust laws, some of the
labor laws, to allow them to do the things that
(31:57):
professional athletes do. Is going to create a phenomenal crisis
in college sports and college education for schools outside the
power five.
Speaker 4 (32:11):
Well, you know, Marty, here's where my question comes down to, right.
I mean, you're mentioning the wild West, of which that's
where we are, right because nobody can agree. Lawmakers can't
agree be at the House, the Senate, the President, et cetera.
And where and how to you know, regulate the payments
that are going to student athletes. But you know, if
you just look at some of you know, Trump's other policies, right,
easier financial sector regulations, and you read through that into
(32:31):
you know, I guess you know the business of college sports,
because it is a business. Maybe it's just going to
leave the status quo as is. I mean, is that possible.
Speaker 7 (32:41):
Sure, you can let the marketplace work things out, which
is the general philosophy of the president elect. How it
will work it out. This is something that I know
we have discussed a little bit in the past, which
is what role will colleges taken in this new environment.
(33:02):
For example, let's take Vanderbilt. It's in the SEC.
Speaker 6 (33:09):
I'm an alumnus. Okay, please, okay, let's go through.
Speaker 7 (33:12):
That, and congratulations on your victory over Alabama.
Speaker 4 (33:16):
Anchor down, my friend, anchor down.
Speaker 7 (33:21):
But if we get past that part, Vanderbilt has a
reckoning to be made. It's the only I think it's
the only private school, private university in the SEC. If
the schools go towards the position of student athletes as employees,
National Labor Relations Board can step in and as they
(33:45):
have with Dartmouth for example, and recognize bargaining units that
will not apply to the state schools because state employees
are exempt from the scriptures of the National Labor Relations Act.
So right away you have an unequal or uneven playing
field between Vanderbilt and its competitors in the SEC. Its
(34:08):
competitors in the SEC seem to have a lot more
money that they are throwing at prospective athletes, that is,
athletes who are coming in either as freshmen or as
portal athletes transferring from other schools. I mean, if you
promise somebody over a million dollars, it's hard to turn
it down. In fact, you may find some of these
(34:29):
athletes deciding they don't want to go pro because they
may have to take a cut and pay to turn pro.
There used to be, by way of history, there used
to be a reference to athletes who went from school
to school, playing week to week as quote tramp athletes
close quote. That's from the eighteen seventies, when athletes were
(34:51):
paid to play for whoever wanted to pay them the most.
That is likely to happen. How will Vanderbilt compete in
that environment or will it? Does it want to compete
in that environment? Maybe it reaffirms its commitment to being
a school of higher learning.
Speaker 6 (35:13):
Two words for you, Michael Barr, J.
Speaker 4 (35:15):
Cutler, Jay Cutler, the Vandy alumni, you know, I mean,
there's not many of us out there football talking. Just
one last question for you here, Marty. You know we
had Adam Greenblatt, CEO BETEMGM on not long a though,
and you know he was talking about Missouri, you now
Missouri and Alberta, Canada. He's talking about sports gambling and
where it's being legalized. I mean, what can we expect
on the sports gambling front? Is there any interesting developments
(35:37):
on that side?
Speaker 7 (35:39):
Well, there are a couple of interesting developments, and we've
seen penalties at the professional level tossed down for John d.
Porter and a couple of players in baseball and a
bunch of players in professional football eve for aging in gambling.
(36:01):
And this is both what we call prop betting as
well as regular betting. I mean, can you imagine now
players betting on individual statistics. You're back to an era
college sports. The thought they got rid of it from
the nineteen fifties, where a player might not score a
(36:23):
basket at the end of the game in order to
make the spread. There has to be ways of regulating it.
I think the professional leagues from what I understand have
vigorous investigative units, and that's how they can ferre it
out who gambles, whether that person is passing on tips
to friends and family. And the leagues, though, have different rules.
(36:48):
The NBA, for example, prohibits any player, and I think
it's players, coaches, owners, person nail and family from placing
a bet on any professional sports contest. I think the NFL,
and I'm not one hundred percent sure of this, limits
(37:10):
it to NFL games. And of course college sports is
entering this field and trying to figure out what to
do while players are engaging in sports betting, fanduels and
drafting is a huge phenomenon in this country and a
big money maker. How do you tell all How do
(37:30):
you tell a college student you can't engage in fan
duels and we're going to have some secret means of
checking your computer to see that you're not doing it
when his roommate or her roommate is doing the same thing.
Colleges aren't. In other words, colleges aren't asdvanced as pros
(37:51):
in trying to deal with the issue of sports betting.
Speaker 2 (37:55):
Our thanks to Marty Eedel for joining us. He is
code hare at Gulston and Stores, sports Law practice and
adjunct Professor of Law at Columbia University. And that does
it for this edition of The Bloomberg Business of Sports
for Damian Sasaur. I'm Michael Barr. Thank you for joining us.
Tune in again next week for the latest on the
stories moving big old money in the world of sports.
(38:18):
You're listening to Bloomberg Business of Sports from Bloomberger Radio
around the world, and don't forget the catch our podcast
on all your podcast platforms.
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