September 6, 2024 • 38 mins
Join host Michael Barr, Scarlet Fu and Damian Sassower for a look at some of the latest headlines and stories in the business of sports.
We celebrate the start of the NFL's regular season with an inside look at arguably the league's top team: the Kansas City Chiefs. We listen to portions of a conversation with Chiefs co-owners Dan and Clark Hunt as they sit down with Bloomberg Originals chief correspondent Jason Kelly for a look at the brothers' $6.5 billion sports portfolio.
Then, Damian, along with Jason Kelly and Bloomberg Originals sports correspondent Vanessa Perdomo chat with Chiefs president Mark Donovan to talk about how his team is looking to engage with fans around the world and grow its footprint - all while the team seeks what would be an unprecedented third straight Super Bowl win.
Plus, Goldman Sachs executive Nicole Pullen Ross provides insight into the NFL's decision to allow private equity stakes in teams and discusses her firm's growing interest in sports-related finance.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:07):
This is Bloomberg Business of Sports.
Speaker 3 (00:10):
Business of Sports can be intimidating for hard for a
start to break into.
Speaker 4 (00:14):
We really appreciate where our owners are actually there, you know,
with us through the journey.
Speaker 1 (00:18):
Teams ours especially then very intentional to diversify at all
levels of the company. Bye Wing.
Speaker 5 (00:23):
In golden years for the NFL and college football.
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Our demographic reach has continued to expande.
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This is going to be really unlocking the streaming platform
for sports fans.
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Sports evaluations are rising.
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We'll see when they peak.
Speaker 6 (00:36):
You don't have to be the best in your sports
and make a whole ton of money.
Speaker 2 (00:42):
Bloomberg Business of Sports from Bloomberg Radio.
Speaker 3 (00:46):
Hello, this is the Bloomberg Business of Sports Show. Will
we explore the big money issues the world of sports?
Michael Barr along with my colleague Scarlett fo and Damian Sassauer.
We have a big show today. The NFL's regular season
and is getting underway this weekend. We'll check in on
the team everyone in the league is chasing, the Kansas
(01:07):
City Chiefs. We'll hear from Chiefs President Mark Donovan as
the team seeks out another Super Bowl win.
Speaker 4 (01:14):
It's amazing the knowledge that our fan base across the
world has of our franchise and of our experience at Arrowhead.
And you know, I've heard from so many fans who
you know, the bucket list is to get to DJ Field.
They have to do that and it's because of the experience.
Speaker 3 (01:33):
We'll also hear from Clark and Dan Hunt, co owners
of the Chiefs. It's from one of the latest features
from Bloomberg Big Take.
Speaker 5 (01:41):
There's been so much new wealth generation across the globe
and the NFL for so long traditionally was just an
American ownership and an American game, if you will. But
you know, the market and how the NFL has thought
about growing its businesses is targeted, you know, football globally.
Speaker 3 (02:00):
All that and more is on the way on the
Bloomberg Business of Sports. But first, after going back and
forth for a while, NFL owners finally voted to allow
private equity firms to buy stakes in teams. To take
us deeper into what the move means and how it
could shape the league, we welcome Goldman Sachs executive Nicole
poland Ross. She's regional head of Goldman's New York private
(02:23):
wealth management unit and PWM Sports and Entertainment Solutions Leader, Nicole,
Welcome to the Bloomberg Business of Sports. I wish I
had some money to invest now for the Lions.
Speaker 7 (02:37):
It's a process. It's a process, sounds like there's something
to look forward to. But it's a pleasure to be
here with you all. Thank you for having me.
Speaker 3 (02:44):
Thank you now. First, I should add that only a
few private equity firms are involved in this because the
league had to sign.
Speaker 7 (02:52):
Off on There is a short list of private equity
firms that have been identified to participate at the beginning.
That's a bit different than the approach that other leagues
have taken, but you're absolutely right. There are a few
organizations with experience and size that have been identified as
they begin this journey.
Speaker 1 (03:12):
And these investors can buy stakes and as many as
six teams at once, although their stakes are capped at
ten percent versus say thirty percent in the NBA. Nicole.
We spoke with the NFL's executive vice president, Joseph Clair,
and he made clear that discussions on allowing private equity
to invest in teams actually began in twenty eighteen, about
six years ago. From your perspective, how has demand from
(03:35):
institutional investors to invest in the NFL teams evolved during
that time.
Speaker 7 (03:40):
It's really happened pretty rapidly, and just again as to
orient the perspective that I have, in addition to the
perspective that our colleagues and investment banking have as they
work with clients around financing stadiums and other strategic priorities
from a private wealth management perspective, over the past several years,
(04:04):
the interest that our clients have had and getting exposure
to the space has increased meaningfully. We work with more
than one hundred team owners and so importantly we've heard
from many of them how excited they were to have
additional capital coming into the league. As you know, valuations
(04:27):
have increased meaningfully, and the ability to have additional liquidity,
particularly as it relates to the limited partners, is something
that many team owners have been looking forward to over
the past several years.
Speaker 8 (04:40):
Nicole, if you could just walk me through this, I
understand that NFL franchises would vote in favor of having
private equity investors. Number One, it increases the valuation of
their franchises so they can raise more money for liquidity purposes.
They could cash out, etc. Yes, they can also raise
more money to help renovate or build stadiums. I get that,
But talk to me about of state planning. I mean,
(05:01):
let's talk about Virginia McCaskey, the one hundred and one
year old owner of the Chicago Bears. She has one
living child, the tax burden that that would place if
she were to pass the estate. So is that the
real reason that the NFL is making this change.
Speaker 4 (05:15):
I think that.
Speaker 9 (05:16):
There certainly if you look at the ownership interest within
this space and in some families, the generations that are
investors and owners of the teams, it has certainly been a.
Speaker 7 (05:34):
Factor as it relates to some of the transactions we've
seen across leagues and across teams, as well as a
factor in terms of one of the ways that we
help our clients in terms of thinking about structures that
can be put in place when thinking about tax planning
and truck and estate planning. So I certainly think that
(05:56):
it is a consideration, and many clients will think about
out liquidity, tax considerations, et cetera as it relates to
the tax state and a state planning considerations that they'll have,
particularly across generations. I think one of the big drivers though,
is really around the liquidity for minority stakes. If you
(06:19):
think about it today, with the average valuation in the
NFL approaching six billion dollars double where it was just
five years ago, the number of individuals who are able
to be a sole owner it's a pretty short list.
It's a pretty short list of folks who can have
that majority stake, and so the ability to have greater
(06:43):
access and greater ownership diversification, I think is a catalyst
as well as the valuations have continued to increase.
Speaker 1 (06:51):
One thing we should mention that in addition to the
three PE firms who are pre approved to participate in investments,
there's also a consortium comprised of Blackstone, Carlisle, CBC, Dynasty Equity,
and Loutis, which is a platform founded and led by
Pro Football Hall of Famer Curtis Martin Nicole. I know
that your division, you work with athletes who have clearly
(07:13):
significantly increasing levels of wealth, whether they are you know,
athletes just starting out or athletes who have been at
it for a long time. What kind of demand is
there from former players or current players about investing in
the NFL or in any sports league for that matter.
Speaker 7 (07:31):
It's really been interesting. It's you know, if you think
about our clients in general, they often like to invest
in the thing that they know well, and that certainly
translates to our clients who are athletes, and I would
say the trend that we've seen from those clients over
the past several years has been to gradually get exposure
(07:52):
and so for some clients that means the local soccer
league that allows them to get connected to the community
and to have a presence in a growing and a
growing sport. For other clients, it has meant thinking about
opportunities more globally, looking at international trends, and for some
(08:16):
as you have seen, the interest in investing in women's sports,
particularly the in the w NBA has been an area
of interest and focus there as well, and so it's
really great to see the athletes wanting to both support
and trends translate the passion that they have for sports
(08:38):
into investment, both to help grow in industry, the industry
that they're passionate about, and also support communities that they
care deeply about as well.
Speaker 8 (08:46):
Nicole, I wonder if you could help me better understand,
you know, we have a lot of very wealthy former
NFL players like Tom Brady and Chris Collins, where people
who have a voice, people who are either sports commentators,
they're you know, you know, they they're visible, and I'm
curious what the rules around their ability to participate as
(09:06):
an owner of a franchise are if you follow what
I'm saying. Are there restrictions against people who are I
guess are in the public eye who can kind of
sway opinions towards their franchisees, you know? I mean, is
that a consideration now, Like, is that something that the
NFL is looking at, Like, oh, Tom Brady camp by
a team because he works for Fox? Is that is
that something that's been addressed.
Speaker 7 (09:25):
I don't know specifically how that's been addressed in recent changes.
I know that there are considerations for sure in terms
of whether athletes can have ownership stakes in their existing league. Again,
whether they're active or former players certainly play a role
in that. There's certainly much more flexibility than former players
(09:48):
having the opportunity to invest, and we see many, many
examples of that. As it relates to the ability for
a former player to leverage their platform. I think that's
very hard to manage. If you think about some of
the former athletes who have platforms in media, whether it's
through broadcast, etc. It's hard for them to limit the
(10:11):
passion they have for their home team, and so I
do think that's a consideration in terms of how that
translates to the team owners or the considerations that the
teams will have. As you know, for the NFL, they
have included language and their agreement where they'll be looking
through to individual investors and have a voice there, which
(10:34):
it's definitely something I don't believe we've seen in other leagues.
So that will be a factor that will be interesting
to see how that evolves as well.
Speaker 1 (10:44):
Increasingly you have individual investors as well as institutional investors
seeing sports as an asset class part of their portfolio.
And one thing the NFL made clear is that there's
a six year time limit or I should say minimum
six year investment in at teams. When pe firms tend
to work on three to four year timelines. I'm curious
(11:05):
for the client's you serve, Nicole, what is your time
horizon when they're looking at investing in sports.
Speaker 7 (11:10):
It really depends on the investor, and it's a great
question because I do think there is a distinction that's important.
So historically you've had family offices, family ownership interest of teams,
and they tend to have a very long investment horizon.
And increasingly you are seeing diversification in that ownership group
(11:32):
where you're seeing, yes, that same passion and wanting to invest,
but also the ability to potentially take advantage of valuations
that are changing much more rapidly. So we all know
about dial and the investment that they had made in
the Phoenix Sun Phoenix Suns in twenty twenty one at
(11:53):
billion and a half dollars for just eighteen months later.
The valuation, I'm sorry, the valuation at that time was
at billion point five. The valuation when the team was
sold just eighteen months later was at four billion dollars.
And so there is certainly a shift in how rapidly
valuations are changing. But generally speaking, when our clients are
(12:17):
looking at getting investing, getting invested in the space, if
they are investing passively through a fund as an example,
it is the expectation typically that that fun life is
ten years. Generally speaking, when we're thinking about private equity investing, our.
Speaker 3 (12:33):
Thanks to Nicole Poland Ross of Goldman Sachs. She is
the regional head of the firm's New York Private Wealth
Management unit and PWM Sports and Entertainment Solutions Leader. Next,
we stick with football, and here from Kansas City Chiefs
owner Dan and Clara Hunt, plus a conversation with Kansas
City Chiefs team president Mark Donovan. You're listening to the
(12:55):
Bloomberg Business of Sports from Bloomberg Radio of ground the world.
Speaker 2 (13:01):
You're listening to Bloomberg Business of Sports from the Bloomberg Radio.
Thanks for joining us on the Bloomberg Business of Sports show.
But we explore the big money issues in the world
of sports Michael Barr along with my colleagues Scarlett fu
and Damian Sasseur. We've got another NFL season getting underway
with a full slate of games over this weekend and
(13:24):
the New York Jets and San Francisco forty nine Ers
capping off week one on Monday night. But the season
started with the Kansas City Chiefs on Thursday Night football
against the Baltimore Ravens. The Chiefs won by the way,
twenty seven to twenty over the Ravens. The game ended
with a video review after Lamar Jackson appeared to hit
Isaiah Likely in the back of the end zone with
(13:45):
no time left for a touchdown.
Speaker 3 (13:47):
Comar make Magic, having way to the video, showed Likely's
toe on the line, though, and the call was overturned
and the past ruled incompletely.
Speaker 2 (14:01):
Runners told get out of bounds.
Speaker 3 (14:04):
It's an interprete.
Speaker 10 (14:07):
The game is over.
Speaker 2 (14:08):
Here's the city of Learning.
Speaker 3 (14:10):
The Chiefs are the reigning NFL dynasty and they're looking
to add another Super Bowl title this year, looking to
go three in a row. No team has ever done that.
Bloomberg Original's chief correspondent Jason Kelly and Bloomberg Dallas Bureau
chief Julie Fine spoke with Chiefs co owner Dan and
Clark Hunt recently for Bloomberg Big Take. They covered a
(14:32):
lot of ground in the conversation, including their reaction to
the NFL allowing private equity firms to have stakes in teams.
Let's listen to that portion of the conversation, starting with
Clark Hunt's thoughts on what stood out most to him
following the NFL's decision.
Speaker 10 (14:48):
Probably the biggest surprise has been the breadth of the
interest in the NFL. I knew that there would be
a lot of interest, But it's probably been even broader
than I thought it would be. It goes beyond the
funds that have been raised to focus specifically on professional sports.
So I think it's going to give the NFL a
(15:09):
great opportunity to have a significant group of very interested
investors who can support the league's capital needs on a
go forward basis.
Speaker 6 (15:18):
Dan, you've been around it, you know, all of these
sports for a long time. This broad interest. Where's it
coming from in your estimation in terms of the potential
value going forward?
Speaker 5 (15:30):
Yeah, I mean there's been so much new wealth generation
across the globe, and the NFL for so long traditionally
was just an American ownership and an American game, if
you will. But you know, the market and how the
NFL has thought about growing its businesses is targeted, you know,
football globally speaking, and I mean you've got games coming
(15:51):
up in Brazil the first time, and I just think
so many more people are interested in it, and soccer
is the global game, right and so we have internet
national owners in that business in Major League Soccer. I've
been surprised, I feel like his assistant sometimes with the
amount of phone calls I receive with people wanting to
talk about the private equity opportunity in the NFL, and
(16:13):
I would always say, well, if you're calling about that,
I'm not even gonna bother connecting you. But it's been
really great to see. But I just think there's been
so much new wealth generation globally, and sports teams are prizes,
and you've seen this unbelievable escalation asset valuations, and you know,
been so fun to be part of it. And you
(16:33):
think back to our history and our investment in these teams.
I believe our investment in the Kansas City Chiefs is
twenty five thousand dollars, our investment in the Chicago Bulls
is sixty, you know, sixty seven thousand dollars, and now
what these franchises are worth today.
Speaker 3 (16:48):
That's Kansas City Chiefs co owner Dan Hunt, along with
his brother and fellow co owner Clark Hunt, speaking with
our Jason Kelly and Julie Fine. It's part of a
larger conversation for Bloomberg Big Take with the billionaire sports
family that dove into their aspirations not only for the
Chiefs in the NFL, but how they're looking to expand
(17:09):
globally and how they're planning for the World Cup coming
up in twenty twenty six. They also spoke about soaring
team valuations. Here's that portion of the conversation, starting with
where Clark Hunt sees valuations going.
Speaker 10 (17:24):
I don't think we've peaked. I think there's still a
lot of growth in front of both leagues. Certainly Major
League Soccer as the younger, newer entrant is probably going
to grow faster. There's a lot of upside from a
revenue standpoint for Major League Soccer, and if you look
at some of the valuations around the world in the
sport of soccer, there's a lot of room to run.
(17:47):
But I also think the NFL has a very bright
future as well, not only in terms of growth domestically,
but we talked a little bit about internationally and there's
a big opportunity for the NFL to grow. It's brand
that's following internationally and that should help lif valuations.
Speaker 3 (18:04):
That's Kansas City Chiefs co owner Clark Hunt, along with
his brother and fellow co owner, Dan Hunt, speaking with
our colleagues Jason Kelly and Julie Fine for Bloomberg Big Take.
You can hear more on the Hunt brothers in the
latest edition of The Big Tech Podcast. Find that and
subscribe on Apple, Spotify, or wherever you get your podcasts. Now,
(18:25):
we stick with football and the Chiefs and turn to
a conversation from earlier this week with Mark Donovan, president
of the Kansas City Chiefs. He spoke with our colleagues
Jason Kelly and Vanessa Perdomo of Bloomberg Originals, as well
as our pal Damian sass Hour. Let's take a listen
to that conversation.
Speaker 8 (18:44):
So, the world's largest tailgate. I mean, look, you know
I'm a skinny guy, but I mean I love to eat,
and we all know about the Owhead Stadium crazies. Talk
to us about the world's largest tailgate.
Speaker 3 (18:54):
What's it all about.
Speaker 4 (18:55):
You're the world's largest tailgate. Game for our marketing team,
try to find a way to help us accomplish our
goal of being the world's team with the expansive international rights.
We really have invested in that aggressively to try to
expand what we call Chiefs Kingdom in terms of our
fan base and the international game. Last year helped us
(19:19):
do that. We played here in National London and played
in Mexico City. We've seen the success of that So
what we're trying to do is find a way to
bring the world to one of the coolest experiences in
all of professional sports, which is tailgating at Arrowhead Stadium
and GAHA Field. And our creative team worked with a
lot of really talented people in the entertainment world and
(19:40):
came up with the idea of a live simulcast basically
that gives everyone around the world the opportunity to be
live with us at tailgate prior to the kickoff of
the NFL season. It's a great way to bring the
world to Arrowhead as we kick off the NFL season.
Speaker 11 (20:01):
That's really you know, it's really interesting. I think when
you think about being the world's team and bringing in
this international audience into the NFL fandom, a tailgate and
the NFL really around the culture is very American, right,
So how do you bring that into the international audience
and what other people in other countries think about this
coming into what is a tailgate? What is cornhole?
Speaker 7 (20:24):
You know?
Speaker 11 (20:24):
How do how do you bring that into the world audience?
Speaker 4 (20:27):
You know, it's really interesting. I'll go back to the
experiences we've had in London, in Mexico City, and in
Frankfurt last year. It's amazing the knowledge that our fan
base across the world has of our franchise and of
our experience at Arrowhead. And you know, I've heard from
(20:48):
so many fans who you know, the bucket list is
to get to DH field, They have to do that
and it's because of the experience. So how do you
export that, right? How do you create it so that
millions and millions can participate? I think the other thing
you think about from a strategic standpoint for us as
a business is this is a step in that direct
(21:12):
to consumer strategy. Right, So this is a way of
creating that relationship with another either fan or potential fan.
And then once you have that connection, how do you
utilize that to continue to grow those relationships. The other
thing we've found with things like world's largest tailgate is
(21:32):
the demographics are a little bit different than you would
see at a typical in attendance stadium. Not only limited
in our case to seventy seventy two thousand people, but
you have no limitation of a number of people. But
also you have a different demo that's taken part today
in a live stream versus something you know, being live
in person. So both of those things play into it.
(21:55):
And then it's just capitalizing on what we're known for,
which is and sometimes we're introducing tailigating to new fans
in some kinds. Sometimes it's just letting them be part
of the experience that they already know very well.
Speaker 6 (22:09):
So, Mark, we're catching you at a fascinating moment in
the history of the NFL, and it's a league you're
very familiar with. You came to Kansas City from the Eagles,
another you know, incredibly well known and successful franchise with
long term ownership just like you have there in Kansas City.
There's a new entrant, as it were, from the money side,
(22:30):
coming in in private equity. Your boss, Clark Hunt, led
the committee on the NFL that ultimately sort of approved
this next step. How do you think, as someone who
understands the business of not just the team but the
league so intimately, how does that affect things in the
short and medium term in terms of competitiveness, in terms
(22:50):
of investment, Like what's the bottom line for you?
Speaker 4 (22:53):
Well, Number one, it's a transformational policy. As much as
we modelated off after other sports leagues and tried to
learn from those experiences, this one is truly modeled to
take advantage and augment the strength of our league model
(23:15):
as well as create opportunities to bring diverse investment into
that atmosphere. It's interesting that you post the question we
did and cited my experience in Philly and Kansas City.
I think those are two good models to look at
from the standpoint of every franchise is going to look
(23:35):
at this opportunity a little differently, and every franchise owner
is going to look at it as their own objectives
in utilizing this or not utilizing it. And I think
in the case of both Philadelphia and knowing Jeffrey Leuriy
and his management team really really well, I think they'll
take a different look at this. They'll take a different
perspective on it. Then Clark and his family and the
(23:57):
siblings will take their own perspective on it. I think
when you look across the ownership group of the National
Football League, you see a pretty diverse and wide mix
of individuals and organizations and how they approach these things.
So one of the biggest challenges that Clerk and the
policy team to put this together, who deserve, by the way,
(24:19):
a lot of credit. They've been working on this for
multiple years, and I witnessed it firsthand to see just
how much time and effort to Clerk was putting into
getting this right because they understood just how transformation of
this policy change would be. So they deserve a lot
of credit for that. But I think it's very interesting
to see how each one of these franchises and each
(24:40):
ownership group will look at it differently, and look, the
reality is that they're also going to utilize it differently.
You know, we've got certain people who are like, you know,
this is a great opportunity to capitalize on the value
of my franchise. We get other opportunities where like we
need capital infusion for this, So here's an opportunity to
do that which we didn't have before. So it's an
exciting time time. It will be very interesting, I think
(25:02):
as an industry to see sort of who comes to
the table, who takes evangelist and how they take advantage
of it. Obviously it's going to have some say into valuations. Yeah,
you've got a different group looking at valuations. This isn't
a perspective owner of a franchise who may have other
reasons to purchase a team. This is a true you know,
(25:24):
analytics driven investment group that is looking for a return
on investment, So evaluations are going to be interesting for
us to watch too.
Speaker 3 (25:32):
That's Kansas City Chiefs President Mark Donovan speaking with Jason
Kelly and Vanessa Perdomo, Bloomberg Originals, and our very own
Damien sass Hour. Coming up, we'll hear more of that conversation.
You're listening to the Bloomberg Business of Sports Bloomberger Radio.
Around the world.
Speaker 2 (25:52):
You're listening to Bloomberg Business of Sports from Bloomberg Radio.
Speaker 3 (25:57):
Thanks for joining us on the Bloomberg Business of Show,
where we explore the big money issues in the world
of sports. I Michael Barr, along with Scarlett fou and
Damian Sasaur. We're listening in on a conversation with Kansas
City Chiefs President Mark Donovan. He spoke with my colleagues
Jason Kelly, Vanessa Perdomo, and Damian earlier this week. Let's
dive back into their conversation.
Speaker 8 (26:19):
You know, Mark, I may look young, but I was
actually born in nineteen seventy four, so I'm fifty years old.
But Arrowhead Stadium built in nineteen seventy two, third oldest
stadium in the NFL. And yet here we go fast
forward to twenty twenty six. You're going to be hosting
the World Cup and you're planning eight hundred million dollars
worth of renovations of some crazy number seating bowld luxury amenities.
(26:39):
I mean, what a time to be alive. I mean, Mark,
talk to us about what's going on in Arrowhead. How
are you going to get all this done in time
for the World Cup.
Speaker 4 (26:47):
Yeah, So it's an exciting time to be part of
this organization. It's an exciting time to be a fan
of this franchise, and exciting tiny part of this region.
And you cited two very good examples the first World Cup.
We'll do about a forty two million dollar renovation actually
(27:08):
adjustment to our building to be able to host World Cup,
and that investment is strictly to be able to host
the games. Really proud of our Sports Commission, our city
political leaders on both sides of the state line who
came together with us to and the soccer franchises are
in the in the region with the Sporting k C
(27:29):
team and also the Kansas City Current who all came
together to put a bid together that I think puts
Kansassey on a map that's never been before. If you
think about the cities that won the right to host
the World Cup were definitely the smallest. And then the
fact that FIFA looked at us from a venue standpoint,
(27:49):
from the long history of Lamar Hunt's commitment to soccer,
and they gave us a quarterfinal game. That's that's a
really impressive accomplishment for this market size and for this
region and for the individuals who are part of that.
For us from an operational standpoint, you know, we have
to get ready to host that event and do it
(28:10):
better than anybody else does it, but also make all
this adjustments to host fee for World Cup soccer and
then be able to adjust modularly back to NFL over
four seasons. Construction actually started on that project this past
offseason with putting in some of the infrastructure below the field,
and now next season we'll do some of the seating
(28:30):
bowl adjustments. We'll put the stadium back the way it
is today for our game for our NFL games, and
then we'll make that adjustment again going into the twenty
six season and then put it back together after that.
So that's a huge project in itself and it really
benefits the region. And then the second, the eight hundred
million dollar renovation of Arrowhead is one of the options
we're looking at right now. Our lease expires at Arrowhead
(28:53):
in twenty thirty one, so if you look at the
timeline we're on, it's time to consider, you know, should
we build a brand news stadium, Should we build a
new stadium somewhere else? Should we renovate Arrowhead? And the
first thing we looked at last April was what would
it cause? Could we number one renovated stadium that, as
you said, open in nineteen seventy two, but also what
(29:13):
would that allow us to do? What a minute is
can we bring into this iconic building? And is that
the best decision moving forward for our fans, for this
franchise and for the future.
Speaker 11 (29:23):
I think that's really interesting when you're talking about the
different options you have, what's the best for the fans?
You know, when you speak with fans and you guys
are talking about that, how do you engage with them
about what they would want? You know, I think a
lot of the times when we're seeing let's say, in
European football or soccer, that people are fans are very
dedicated to keep their stadiums that have all this all
(29:45):
this history, and here it's almost we want the nicest,
the biggest, the most innovative stadiums. So when you're thinking
about that, what do you think about Arrowhead keeping the
history or just having this massive, life, big, innovative, tech
driven stadium.
Speaker 4 (30:03):
Yeah, I think that it's a great question, and the
generic answer is yes, because all of those discussions are
happening and all those opinions are being shared. I think
that the unique situation that we are in, which is
one that we're embracing, is we have an opportunity to
(30:25):
upgrade and renovate one of the most iconic buildings in sports.
I mentioned earlier. You know, in discussions with people in Frankfurt, Germany, London,
Mexico City. You know how many times I hear I've
got to get to Gjfield. I have to experience the
Eraline experience. So when you think about that perspective, it's
how do we renovate this thing to number one, make
(30:49):
it functionally and foundationally strong to get through the next
twenty five or thirty years. And then number two, how
do we expand on the fan experience? How do we
create the things that are in the newest and coolest
buildings that are being built brand new today versus the
opportunity to build a brand new building. You know, in
(31:09):
the obvious and most easy example from comparison standpoint is
if we're able to build a brand new dome stadium,
what does that open up for this region in terms
of opportunity Super Bowls, your Big Twelve Championships, Final Fours,
expanding concert series, as well as creating a new and
(31:31):
you know, from an amenity standpoint, stadium that really competes
with the best in the world. And I would say
to your initial question, I get feedback that is almost
directly fifty to fifty. I get a lot of like
hardcore fans and companies like, don't leave our life. We
need to keep this traditional love. We want you to stay.
(31:53):
And I get a lot of fans who come up
to me and say, build a dome so we can
bring even more exciting stuff here. And so it's an
evaluation we're going through. We have the additional opportunity that
we have multiple states where our market really sits. We
sit on the state line of Kansas and Missouri, so
there's opportunities in both sides of the state line, and
(32:14):
it's one of the things that we've committed to do
the proper due diligence to make sure we're making the
right decision going forward.
Speaker 11 (32:20):
Sounds like the fans are really making it easy for
you there.
Speaker 4 (32:25):
Yeah, it's not an easy decision, but we're going to
make the right Yeah.
Speaker 6 (32:29):
NFL fans are known for not being very opinionated, Mark,
I mean, they're just like, go with the flow, especially
chief sentence. They're just like, whatever whatever works for you.
I did have one question as we as we start
to wrap up, which is, you know, I've spent some
time of late and there's this story out in the
Bloomberg terminal right now about the Hunt family and this
you know, massive sports portfolio that this you know, historic
(32:52):
family has built up over time, which obviously includes your franchise.
Also FC Dallas taking the Chicago Bulls, so they've they've
got their hands in a lot of things. You're deeply
involved with the family. You sit on the board, I
believe of the strategic ventures arm of the Hunt family.
(33:13):
Put yourself in the investor mindset in a Bloomberg way
here like where are you looking? Where are the investment
opportunities in sports at this moment, because you sit at
such an interesting perch to see that. What are you
looking at?
Speaker 4 (33:27):
Yeah, I would answer that question a couple of ways.
One is, I think it's hard to argue the value
of the National Football League as an entity, and then
the individual franchises that make up the value. So that's
number one. You're starting in a very very strong base.
And then you look at the individual franchises and how
(33:49):
they're operating and the things they're doing. And if you
look at our business track record over the last decade,
we've been one of the most successful franchises from a
business operations standpoint entire league. And that's speaking from a
market that's probably thirty of thirty third DMA in the country,
So you know that's over indexing pretty significantly. I think
(34:12):
more importantly the insider perspective there I would provide from
a value of the Chiefs franchise is the Hunt family
and the stability that they provide number one. But number two,
and I don't think Clark and his siblings got enough
credit for it, but they are following in the footsteps
(34:35):
of one of the most amazing innovators in all of sport.
When you look at the impact that Lamar Hunt has
had on football, soccer, tennis, and the fact that he's
in multiple Hall of Fames across multiple sports shows that impact.
They are following that lead. And I think when you
look at from an investment standpoint, it's investing in an
(34:59):
organization that is going to be innovative, that is going
to take advantage of opportunities like we are with the
international opportunity, and be willing to take risk, but also
do it in a methodical way, so you're taking good risk.
And you know, I'll go back to the international piece
as the most interesting example recently, and that is that
(35:20):
you know, we looked at, hey, we've got to take
advantage of this German opportunity. We invested for two and
a half years prior to even getting a game, and
that investment was with the hope of getting a game,
and that investment paid off significantly when we did get
the game, So it proved the model when we had
to take the risk and be innovative on the front end.
(35:41):
Just to bring that story full circle, we had our
game last year in Frankfurt. It was a huge success
for us. We invested a ton of people with resources
and money against that game. We had four or five
international partners, German based companies that were sponsors of US,
our organization and our game. This year we don't have
(36:03):
a game, we probably won't have a game again in
Germany for a number of years. And this year following that,
we just signed our largest international deal in our history.
Speaker 3 (36:13):
Wow.
Speaker 4 (36:13):
So it proves to that the model. But I think
the model doesn't work without that commitment to being methodical
but also being innovative and how you look at these
kind of investments.
Speaker 2 (36:25):
Mark.
Speaker 8 (36:25):
The term three peat is a registered trademark owned by
one pat Riley heat President, former Lakers Hall of Fame coach.
It's a term that's associated with teams like the Yankees,
the Bulls, the Lakers, Real Madrid. Not a lot of
teams have done it in professional sports, but the twenty
twenty four Kansas City Chiefs. I mean, my goodness, you
have an opportunity to do it. Talk to me, Xavier Worthy,
(36:46):
Rashi Rice, who should I draft for my fantasy team
this year?
Speaker 4 (36:50):
Again the same way, Yes, the opportunity is pretty amazing.
We know what we know the stage we're on, we
know the opportunity. That's in front of us. I've been
sharing this perspective all preseason. You know, Brett Veach, our
general manager, has done an amazing job of putting together
(37:12):
a roster and really an organization that is operating at
a very, very high level. You got a Hall of
Fame coach and Andy Reid, who is you know, he
gets giddy when Brett gives him new toys to play
with in terms of athletes and players and ways that
coach can take advantage of their special skills. And then
(37:34):
you've got, you know, leadership on the player's side that
you know, it's it's really tough to match, and their
experience together is something that I think makes it uniquely valuable.
Having said all that, you know, these guys are taking
the approach which I'm really proud of, which is they
understand how hard they've worked over the past two years
(37:56):
to be on this stage and to have this opportunity
and their whole just go take advantage of this, do
things the way we do things, and take advantage in
this opportunity.
Speaker 3 (38:06):
That's Kansas City Chiefs President Mark Donovan speaking with special
guest hosts Jason Kelly and Veranessa Pernomo of Bloomberg Originals
and of course our pal Damian sasaur Our thanks to
them and our thanks to you for joining us on
another edition of The Bloomberg Business of Sports. For my
colleagues Damien Sassauur and Scarlett Fou, I'm Michael Barr. Tune
(38:28):
in again next week for the latest on the stories
moving big money in the world of sports. You're listening
to The Bloomberg Business of Sports from Bloomberg Radio around
the world.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:07):
This is Bloomberg Business of Sports.
Speaker 3 (00:10):
Business of Sports can be intimidating for hard for a
start to break into.
Speaker 4 (00:14):
We really appreciate where our owners are actually there, you know,
with us through the journey.
Speaker 1 (00:18):
Teams ours especially then very intentional to diversify at all
levels of the company. Bye Wing.
Speaker 5 (00:23):
In golden years for the NFL and college football.
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Our demographic reach has continued to expande.
Speaker 1 (00:29):
This is going to be really unlocking the streaming platform
for sports fans.
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Sports evaluations are rising.
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We'll see when they peak.
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You don't have to be the best in your sports
and make a whole ton of money.
Speaker 2 (00:42):
Bloomberg Business of Sports from Bloomberg Radio.
Speaker 3 (00:46):
Hello, this is the Bloomberg Business of Sports Show. Will
we explore the big money issues the world of sports?
Michael Barr along with my colleague Scarlett fo and Damian Sassauer.
We have a big show today. The NFL's regular season
and is getting underway this weekend. We'll check in on
the team everyone in the league is chasing, the Kansas
(01:07):
City Chiefs. We'll hear from Chiefs President Mark Donovan as
the team seeks out another Super Bowl win.
Speaker 4 (01:14):
It's amazing the knowledge that our fan base across the
world has of our franchise and of our experience at Arrowhead.
And you know, I've heard from so many fans who
you know, the bucket list is to get to DJ Field.
They have to do that and it's because of the experience.
Speaker 3 (01:33):
We'll also hear from Clark and Dan Hunt, co owners
of the Chiefs. It's from one of the latest features
from Bloomberg Big Take.
Speaker 5 (01:41):
There's been so much new wealth generation across the globe
and the NFL for so long traditionally was just an
American ownership and an American game, if you will. But
you know, the market and how the NFL has thought
about growing its businesses is targeted, you know, football globally.
Speaker 3 (02:00):
All that and more is on the way on the
Bloomberg Business of Sports. But first, after going back and
forth for a while, NFL owners finally voted to allow
private equity firms to buy stakes in teams. To take
us deeper into what the move means and how it
could shape the league, we welcome Goldman Sachs executive Nicole
poland Ross. She's regional head of Goldman's New York private
(02:23):
wealth management unit and PWM Sports and Entertainment Solutions Leader, Nicole,
Welcome to the Bloomberg Business of Sports. I wish I
had some money to invest now for the Lions.
Speaker 7 (02:37):
It's a process. It's a process, sounds like there's something
to look forward to. But it's a pleasure to be
here with you all. Thank you for having me.
Speaker 3 (02:44):
Thank you now. First, I should add that only a
few private equity firms are involved in this because the
league had to sign.
Speaker 7 (02:52):
Off on There is a short list of private equity
firms that have been identified to participate at the beginning.
That's a bit different than the approach that other leagues
have taken, but you're absolutely right. There are a few
organizations with experience and size that have been identified as
they begin this journey.
Speaker 1 (03:12):
And these investors can buy stakes and as many as
six teams at once, although their stakes are capped at
ten percent versus say thirty percent in the NBA. Nicole.
We spoke with the NFL's executive vice president, Joseph Clair,
and he made clear that discussions on allowing private equity
to invest in teams actually began in twenty eighteen, about
six years ago. From your perspective, how has demand from
(03:35):
institutional investors to invest in the NFL teams evolved during
that time.
Speaker 7 (03:40):
It's really happened pretty rapidly, and just again as to
orient the perspective that I have, in addition to the
perspective that our colleagues and investment banking have as they
work with clients around financing stadiums and other strategic priorities
from a private wealth management perspective, over the past several years,
(04:04):
the interest that our clients have had and getting exposure
to the space has increased meaningfully. We work with more
than one hundred team owners and so importantly we've heard
from many of them how excited they were to have
additional capital coming into the league. As you know, valuations
(04:27):
have increased meaningfully, and the ability to have additional liquidity,
particularly as it relates to the limited partners, is something
that many team owners have been looking forward to over
the past several years.
Speaker 8 (04:40):
Nicole, if you could just walk me through this, I
understand that NFL franchises would vote in favor of having
private equity investors. Number One, it increases the valuation of
their franchises so they can raise more money for liquidity purposes.
They could cash out, etc. Yes, they can also raise
more money to help renovate or build stadiums. I get that,
But talk to me about of state planning. I mean,
(05:01):
let's talk about Virginia McCaskey, the one hundred and one
year old owner of the Chicago Bears. She has one
living child, the tax burden that that would place if
she were to pass the estate. So is that the
real reason that the NFL is making this change.
Speaker 4 (05:15):
I think that.
Speaker 9 (05:16):
There certainly if you look at the ownership interest within
this space and in some families, the generations that are
investors and owners of the teams, it has certainly been a.
Speaker 7 (05:34):
Factor as it relates to some of the transactions we've
seen across leagues and across teams, as well as a
factor in terms of one of the ways that we
help our clients in terms of thinking about structures that
can be put in place when thinking about tax planning
and truck and estate planning. So I certainly think that
(05:56):
it is a consideration, and many clients will think about
out liquidity, tax considerations, et cetera as it relates to
the tax state and a state planning considerations that they'll have,
particularly across generations. I think one of the big drivers though,
is really around the liquidity for minority stakes. If you
(06:19):
think about it today, with the average valuation in the
NFL approaching six billion dollars double where it was just
five years ago, the number of individuals who are able
to be a sole owner it's a pretty short list.
It's a pretty short list of folks who can have
that majority stake, and so the ability to have greater
(06:43):
access and greater ownership diversification, I think is a catalyst
as well as the valuations have continued to increase.
Speaker 1 (06:51):
One thing we should mention that in addition to the
three PE firms who are pre approved to participate in investments,
there's also a consortium comprised of Blackstone, Carlisle, CBC, Dynasty Equity,
and Loutis, which is a platform founded and led by
Pro Football Hall of Famer Curtis Martin Nicole. I know
that your division, you work with athletes who have clearly
(07:13):
significantly increasing levels of wealth, whether they are you know,
athletes just starting out or athletes who have been at
it for a long time. What kind of demand is
there from former players or current players about investing in
the NFL or in any sports league for that matter.
Speaker 7 (07:31):
It's really been interesting. It's you know, if you think
about our clients in general, they often like to invest
in the thing that they know well, and that certainly
translates to our clients who are athletes, and I would
say the trend that we've seen from those clients over
the past several years has been to gradually get exposure
(07:52):
and so for some clients that means the local soccer
league that allows them to get connected to the community
and to have a presence in a growing and a
growing sport. For other clients, it has meant thinking about
opportunities more globally, looking at international trends, and for some
(08:16):
as you have seen, the interest in investing in women's sports,
particularly the in the w NBA has been an area
of interest and focus there as well, and so it's
really great to see the athletes wanting to both support
and trends translate the passion that they have for sports
(08:38):
into investment, both to help grow in industry, the industry
that they're passionate about, and also support communities that they
care deeply about as well.
Speaker 8 (08:46):
Nicole, I wonder if you could help me better understand,
you know, we have a lot of very wealthy former
NFL players like Tom Brady and Chris Collins, where people
who have a voice, people who are either sports commentators,
they're you know, you know, they they're visible, and I'm
curious what the rules around their ability to participate as
(09:06):
an owner of a franchise are if you follow what
I'm saying. Are there restrictions against people who are I
guess are in the public eye who can kind of
sway opinions towards their franchisees, you know? I mean, is
that a consideration now, Like, is that something that the
NFL is looking at, Like, oh, Tom Brady camp by
a team because he works for Fox? Is that is
that something that's been addressed.
Speaker 7 (09:25):
I don't know specifically how that's been addressed in recent changes.
I know that there are considerations for sure in terms
of whether athletes can have ownership stakes in their existing league. Again,
whether they're active or former players certainly play a role
in that. There's certainly much more flexibility than former players
(09:48):
having the opportunity to invest, and we see many, many
examples of that. As it relates to the ability for
a former player to leverage their platform. I think that's
very hard to manage. If you think about some of
the former athletes who have platforms in media, whether it's
through broadcast, etc. It's hard for them to limit the
(10:11):
passion they have for their home team, and so I
do think that's a consideration in terms of how that
translates to the team owners or the considerations that the
teams will have. As you know, for the NFL, they
have included language and their agreement where they'll be looking
through to individual investors and have a voice there, which
(10:34):
it's definitely something I don't believe we've seen in other leagues.
So that will be a factor that will be interesting
to see how that evolves as well.
Speaker 1 (10:44):
Increasingly you have individual investors as well as institutional investors
seeing sports as an asset class part of their portfolio.
And one thing the NFL made clear is that there's
a six year time limit or I should say minimum
six year investment in at teams. When pe firms tend
to work on three to four year timelines. I'm curious
(11:05):
for the client's you serve, Nicole, what is your time
horizon when they're looking at investing in sports.
Speaker 7 (11:10):
It really depends on the investor, and it's a great
question because I do think there is a distinction that's important.
So historically you've had family offices, family ownership interest of teams,
and they tend to have a very long investment horizon.
And increasingly you are seeing diversification in that ownership group
(11:32):
where you're seeing, yes, that same passion and wanting to invest,
but also the ability to potentially take advantage of valuations
that are changing much more rapidly. So we all know
about dial and the investment that they had made in
the Phoenix Sun Phoenix Suns in twenty twenty one at
(11:53):
billion and a half dollars for just eighteen months later.
The valuation, I'm sorry, the valuation at that time was
at billion point five. The valuation when the team was
sold just eighteen months later was at four billion dollars.
And so there is certainly a shift in how rapidly
valuations are changing. But generally speaking, when our clients are
(12:17):
looking at getting investing, getting invested in the space, if
they are investing passively through a fund as an example,
it is the expectation typically that that fun life is
ten years. Generally speaking, when we're thinking about private equity investing, our.
Speaker 3 (12:33):
Thanks to Nicole Poland Ross of Goldman Sachs. She is
the regional head of the firm's New York Private Wealth
Management unit and PWM Sports and Entertainment Solutions Leader. Next,
we stick with football, and here from Kansas City Chiefs
owner Dan and Clara Hunt, plus a conversation with Kansas
City Chiefs team president Mark Donovan. You're listening to the
(12:55):
Bloomberg Business of Sports from Bloomberg Radio of ground the world.
Speaker 2 (13:01):
You're listening to Bloomberg Business of Sports from the Bloomberg Radio.
Thanks for joining us on the Bloomberg Business of Sports show.
But we explore the big money issues in the world
of sports Michael Barr along with my colleagues Scarlett fu
and Damian Sasseur. We've got another NFL season getting underway
with a full slate of games over this weekend and
(13:24):
the New York Jets and San Francisco forty nine Ers
capping off week one on Monday night. But the season
started with the Kansas City Chiefs on Thursday Night football
against the Baltimore Ravens. The Chiefs won by the way,
twenty seven to twenty over the Ravens. The game ended
with a video review after Lamar Jackson appeared to hit
Isaiah Likely in the back of the end zone with
(13:45):
no time left for a touchdown.
Speaker 3 (13:47):
Comar make Magic, having way to the video, showed Likely's
toe on the line, though, and the call was overturned
and the past ruled incompletely.
Speaker 2 (14:01):
Runners told get out of bounds.
Speaker 3 (14:04):
It's an interprete.
Speaker 10 (14:07):
The game is over.
Speaker 2 (14:08):
Here's the city of Learning.
Speaker 3 (14:10):
The Chiefs are the reigning NFL dynasty and they're looking
to add another Super Bowl title this year, looking to
go three in a row. No team has ever done that.
Bloomberg Original's chief correspondent Jason Kelly and Bloomberg Dallas Bureau
chief Julie Fine spoke with Chiefs co owner Dan and
Clark Hunt recently for Bloomberg Big Take. They covered a
(14:32):
lot of ground in the conversation, including their reaction to
the NFL allowing private equity firms to have stakes in teams.
Let's listen to that portion of the conversation, starting with
Clark Hunt's thoughts on what stood out most to him
following the NFL's decision.
Speaker 10 (14:48):
Probably the biggest surprise has been the breadth of the
interest in the NFL. I knew that there would be
a lot of interest, But it's probably been even broader
than I thought it would be. It goes beyond the
funds that have been raised to focus specifically on professional sports.
So I think it's going to give the NFL a
(15:09):
great opportunity to have a significant group of very interested
investors who can support the league's capital needs on a
go forward basis.
Speaker 6 (15:18):
Dan, you've been around it, you know, all of these
sports for a long time. This broad interest. Where's it
coming from in your estimation in terms of the potential
value going forward?
Speaker 5 (15:30):
Yeah, I mean there's been so much new wealth generation
across the globe, and the NFL for so long traditionally
was just an American ownership and an American game, if
you will. But you know, the market and how the
NFL has thought about growing its businesses is targeted, you know,
football globally speaking, and I mean you've got games coming
(15:51):
up in Brazil the first time, and I just think
so many more people are interested in it, and soccer
is the global game, right and so we have internet
national owners in that business in Major League Soccer. I've
been surprised, I feel like his assistant sometimes with the
amount of phone calls I receive with people wanting to
talk about the private equity opportunity in the NFL, and
(16:13):
I would always say, well, if you're calling about that,
I'm not even gonna bother connecting you. But it's been
really great to see. But I just think there's been
so much new wealth generation globally, and sports teams are prizes,
and you've seen this unbelievable escalation asset valuations, and you know,
been so fun to be part of it. And you
(16:33):
think back to our history and our investment in these teams.
I believe our investment in the Kansas City Chiefs is
twenty five thousand dollars, our investment in the Chicago Bulls
is sixty, you know, sixty seven thousand dollars, and now
what these franchises are worth today.
Speaker 3 (16:48):
That's Kansas City Chiefs co owner Dan Hunt, along with
his brother and fellow co owner Clark Hunt, speaking with
our Jason Kelly and Julie Fine. It's part of a
larger conversation for Bloomberg Big Take with the billionaire sports
family that dove into their aspirations not only for the
Chiefs in the NFL, but how they're looking to expand
(17:09):
globally and how they're planning for the World Cup coming
up in twenty twenty six. They also spoke about soaring
team valuations. Here's that portion of the conversation, starting with
where Clark Hunt sees valuations going.
Speaker 10 (17:24):
I don't think we've peaked. I think there's still a
lot of growth in front of both leagues. Certainly Major
League Soccer as the younger, newer entrant is probably going
to grow faster. There's a lot of upside from a
revenue standpoint for Major League Soccer, and if you look
at some of the valuations around the world in the
sport of soccer, there's a lot of room to run.
(17:47):
But I also think the NFL has a very bright
future as well, not only in terms of growth domestically,
but we talked a little bit about internationally and there's
a big opportunity for the NFL to grow. It's brand
that's following internationally and that should help lif valuations.
Speaker 3 (18:04):
That's Kansas City Chiefs co owner Clark Hunt, along with
his brother and fellow co owner, Dan Hunt, speaking with
our colleagues Jason Kelly and Julie Fine for Bloomberg Big Take.
You can hear more on the Hunt brothers in the
latest edition of The Big Tech Podcast. Find that and
subscribe on Apple, Spotify, or wherever you get your podcasts. Now,
(18:25):
we stick with football and the Chiefs and turn to
a conversation from earlier this week with Mark Donovan, president
of the Kansas City Chiefs. He spoke with our colleagues
Jason Kelly and Vanessa Perdomo of Bloomberg Originals, as well
as our pal Damian sass Hour. Let's take a listen
to that conversation.
Speaker 8 (18:44):
So, the world's largest tailgate. I mean, look, you know
I'm a skinny guy, but I mean I love to eat,
and we all know about the Owhead Stadium crazies. Talk
to us about the world's largest tailgate.
Speaker 3 (18:54):
What's it all about.
Speaker 4 (18:55):
You're the world's largest tailgate. Game for our marketing team,
try to find a way to help us accomplish our
goal of being the world's team with the expansive international rights.
We really have invested in that aggressively to try to
expand what we call Chiefs Kingdom in terms of our
fan base and the international game. Last year helped us
(19:19):
do that. We played here in National London and played
in Mexico City. We've seen the success of that So
what we're trying to do is find a way to
bring the world to one of the coolest experiences in
all of professional sports, which is tailgating at Arrowhead Stadium
and GAHA Field. And our creative team worked with a
lot of really talented people in the entertainment world and
(19:40):
came up with the idea of a live simulcast basically
that gives everyone around the world the opportunity to be
live with us at tailgate prior to the kickoff of
the NFL season. It's a great way to bring the
world to Arrowhead as we kick off the NFL season.
Speaker 11 (20:01):
That's really you know, it's really interesting. I think when
you think about being the world's team and bringing in
this international audience into the NFL fandom, a tailgate and
the NFL really around the culture is very American, right,
So how do you bring that into the international audience
and what other people in other countries think about this
coming into what is a tailgate? What is cornhole?
Speaker 7 (20:24):
You know?
Speaker 11 (20:24):
How do how do you bring that into the world audience?
Speaker 4 (20:27):
You know, it's really interesting. I'll go back to the
experiences we've had in London, in Mexico City, and in
Frankfurt last year. It's amazing the knowledge that our fan
base across the world has of our franchise and of
our experience at Arrowhead. And you know, I've heard from
(20:48):
so many fans who you know, the bucket list is
to get to DH field, They have to do that
and it's because of the experience. So how do you
export that, right? How do you create it so that
millions and millions can participate? I think the other thing
you think about from a strategic standpoint for us as
a business is this is a step in that direct
(21:12):
to consumer strategy. Right, So this is a way of
creating that relationship with another either fan or potential fan.
And then once you have that connection, how do you
utilize that to continue to grow those relationships. The other
thing we've found with things like world's largest tailgate is
(21:32):
the demographics are a little bit different than you would
see at a typical in attendance stadium. Not only limited
in our case to seventy seventy two thousand people, but
you have no limitation of a number of people. But
also you have a different demo that's taken part today
in a live stream versus something you know, being live
in person. So both of those things play into it.
(21:55):
And then it's just capitalizing on what we're known for,
which is and sometimes we're introducing tailigating to new fans
in some kinds. Sometimes it's just letting them be part
of the experience that they already know very well.
Speaker 6 (22:09):
So, Mark, we're catching you at a fascinating moment in
the history of the NFL, and it's a league you're
very familiar with. You came to Kansas City from the Eagles,
another you know, incredibly well known and successful franchise with
long term ownership just like you have there in Kansas City.
There's a new entrant, as it were, from the money side,
(22:30):
coming in in private equity. Your boss, Clark Hunt, led
the committee on the NFL that ultimately sort of approved
this next step. How do you think, as someone who
understands the business of not just the team but the
league so intimately, how does that affect things in the
short and medium term in terms of competitiveness, in terms
(22:50):
of investment, Like what's the bottom line for you?
Speaker 4 (22:53):
Well, Number one, it's a transformational policy. As much as
we modelated off after other sports leagues and tried to
learn from those experiences, this one is truly modeled to
take advantage and augment the strength of our league model
(23:15):
as well as create opportunities to bring diverse investment into
that atmosphere. It's interesting that you post the question we
did and cited my experience in Philly and Kansas City.
I think those are two good models to look at
from the standpoint of every franchise is going to look
(23:35):
at this opportunity a little differently, and every franchise owner
is going to look at it as their own objectives
in utilizing this or not utilizing it. And I think
in the case of both Philadelphia and knowing Jeffrey Leuriy
and his management team really really well, I think they'll
take a different look at this. They'll take a different
perspective on it. Then Clark and his family and the
(23:57):
siblings will take their own perspective on it. I think
when you look across the ownership group of the National
Football League, you see a pretty diverse and wide mix
of individuals and organizations and how they approach these things.
So one of the biggest challenges that Clerk and the
policy team to put this together, who deserve, by the way,
(24:19):
a lot of credit. They've been working on this for
multiple years, and I witnessed it firsthand to see just
how much time and effort to Clerk was putting into
getting this right because they understood just how transformation of
this policy change would be. So they deserve a lot
of credit for that. But I think it's very interesting
to see how each one of these franchises and each
(24:40):
ownership group will look at it differently, and look, the
reality is that they're also going to utilize it differently.
You know, we've got certain people who are like, you know,
this is a great opportunity to capitalize on the value
of my franchise. We get other opportunities where like we
need capital infusion for this, So here's an opportunity to
do that which we didn't have before. So it's an
exciting time time. It will be very interesting, I think
(25:02):
as an industry to see sort of who comes to
the table, who takes evangelist and how they take advantage
of it. Obviously it's going to have some say into valuations. Yeah,
you've got a different group looking at valuations. This isn't
a perspective owner of a franchise who may have other
reasons to purchase a team. This is a true you know,
(25:24):
analytics driven investment group that is looking for a return
on investment, So evaluations are going to be interesting for
us to watch too.
Speaker 3 (25:32):
That's Kansas City Chiefs President Mark Donovan speaking with Jason
Kelly and Vanessa Perdomo, Bloomberg Originals, and our very own
Damien sass Hour. Coming up, we'll hear more of that conversation.
You're listening to the Bloomberg Business of Sports Bloomberger Radio.
Around the world.
Speaker 2 (25:52):
You're listening to Bloomberg Business of Sports from Bloomberg Radio.
Speaker 3 (25:57):
Thanks for joining us on the Bloomberg Business of Show,
where we explore the big money issues in the world
of sports. I Michael Barr, along with Scarlett fou and
Damian Sasaur. We're listening in on a conversation with Kansas
City Chiefs President Mark Donovan. He spoke with my colleagues
Jason Kelly, Vanessa Perdomo, and Damian earlier this week. Let's
dive back into their conversation.
Speaker 8 (26:19):
You know, Mark, I may look young, but I was
actually born in nineteen seventy four, so I'm fifty years old.
But Arrowhead Stadium built in nineteen seventy two, third oldest
stadium in the NFL. And yet here we go fast
forward to twenty twenty six. You're going to be hosting
the World Cup and you're planning eight hundred million dollars
worth of renovations of some crazy number seating bowld luxury amenities.
(26:39):
I mean, what a time to be alive. I mean, Mark,
talk to us about what's going on in Arrowhead. How
are you going to get all this done in time
for the World Cup.
Speaker 4 (26:47):
Yeah, So it's an exciting time to be part of
this organization. It's an exciting time to be a fan
of this franchise, and exciting tiny part of this region.
And you cited two very good examples the first World Cup.
We'll do about a forty two million dollar renovation actually
(27:08):
adjustment to our building to be able to host World Cup,
and that investment is strictly to be able to host
the games. Really proud of our Sports Commission, our city
political leaders on both sides of the state line who
came together with us to and the soccer franchises are
in the in the region with the Sporting k C
(27:29):
team and also the Kansas City Current who all came
together to put a bid together that I think puts
Kansassey on a map that's never been before. If you
think about the cities that won the right to host
the World Cup were definitely the smallest. And then the
fact that FIFA looked at us from a venue standpoint,
(27:49):
from the long history of Lamar Hunt's commitment to soccer,
and they gave us a quarterfinal game. That's that's a
really impressive accomplishment for this market size and for this
region and for the individuals who are part of that.
For us from an operational standpoint, you know, we have
to get ready to host that event and do it
(28:10):
better than anybody else does it, but also make all
this adjustments to host fee for World Cup soccer and
then be able to adjust modularly back to NFL over
four seasons. Construction actually started on that project this past
offseason with putting in some of the infrastructure below the field,
and now next season we'll do some of the seating
(28:30):
bowl adjustments. We'll put the stadium back the way it
is today for our game for our NFL games, and
then we'll make that adjustment again going into the twenty
six season and then put it back together after that.
So that's a huge project in itself and it really
benefits the region. And then the second, the eight hundred
million dollar renovation of Arrowhead is one of the options
we're looking at right now. Our lease expires at Arrowhead
(28:53):
in twenty thirty one, so if you look at the
timeline we're on, it's time to consider, you know, should
we build a brand news stadium, Should we build a
new stadium somewhere else? Should we renovate Arrowhead? And the
first thing we looked at last April was what would
it cause? Could we number one renovated stadium that, as
you said, open in nineteen seventy two, but also what
(29:13):
would that allow us to do? What a minute is
can we bring into this iconic building? And is that
the best decision moving forward for our fans, for this
franchise and for the future.
Speaker 11 (29:23):
I think that's really interesting when you're talking about the
different options you have, what's the best for the fans?
You know, when you speak with fans and you guys
are talking about that, how do you engage with them
about what they would want? You know, I think a
lot of the times when we're seeing let's say, in
European football or soccer, that people are fans are very
dedicated to keep their stadiums that have all this all
(29:45):
this history, and here it's almost we want the nicest,
the biggest, the most innovative stadiums. So when you're thinking
about that, what do you think about Arrowhead keeping the
history or just having this massive, life, big, innovative, tech
driven stadium.
Speaker 4 (30:03):
Yeah, I think that it's a great question, and the
generic answer is yes, because all of those discussions are
happening and all those opinions are being shared. I think
that the unique situation that we are in, which is
one that we're embracing, is we have an opportunity to
(30:25):
upgrade and renovate one of the most iconic buildings in sports.
I mentioned earlier. You know, in discussions with people in Frankfurt, Germany, London,
Mexico City. You know how many times I hear I've
got to get to Gjfield. I have to experience the
Eraline experience. So when you think about that perspective, it's
how do we renovate this thing to number one, make
(30:49):
it functionally and foundationally strong to get through the next
twenty five or thirty years. And then number two, how
do we expand on the fan experience? How do we
create the things that are in the newest and coolest
buildings that are being built brand new today versus the
opportunity to build a brand new building. You know, in
(31:09):
the obvious and most easy example from comparison standpoint is
if we're able to build a brand new dome stadium,
what does that open up for this region in terms
of opportunity Super Bowls, your Big Twelve Championships, Final Fours,
expanding concert series, as well as creating a new and
(31:31):
you know, from an amenity standpoint, stadium that really competes
with the best in the world. And I would say
to your initial question, I get feedback that is almost
directly fifty to fifty. I get a lot of like
hardcore fans and companies like, don't leave our life. We
need to keep this traditional love. We want you to stay.
(31:53):
And I get a lot of fans who come up
to me and say, build a dome so we can
bring even more exciting stuff here. And so it's an
evaluation we're going through. We have the additional opportunity that
we have multiple states where our market really sits. We
sit on the state line of Kansas and Missouri, so
there's opportunities in both sides of the state line, and
(32:14):
it's one of the things that we've committed to do
the proper due diligence to make sure we're making the
right decision going forward.
Speaker 11 (32:20):
Sounds like the fans are really making it easy for
you there.
Speaker 4 (32:25):
Yeah, it's not an easy decision, but we're going to
make the right Yeah.
Speaker 6 (32:29):
NFL fans are known for not being very opinionated, Mark,
I mean, they're just like, go with the flow, especially
chief sentence. They're just like, whatever whatever works for you.
I did have one question as we as we start
to wrap up, which is, you know, I've spent some
time of late and there's this story out in the
Bloomberg terminal right now about the Hunt family and this
you know, massive sports portfolio that this you know, historic
(32:52):
family has built up over time, which obviously includes your franchise.
Also FC Dallas taking the Chicago Bulls, so they've they've
got their hands in a lot of things. You're deeply
involved with the family. You sit on the board, I
believe of the strategic ventures arm of the Hunt family.
(33:13):
Put yourself in the investor mindset in a Bloomberg way
here like where are you looking? Where are the investment
opportunities in sports at this moment, because you sit at
such an interesting perch to see that. What are you
looking at?
Speaker 4 (33:27):
Yeah, I would answer that question a couple of ways.
One is, I think it's hard to argue the value
of the National Football League as an entity, and then
the individual franchises that make up the value. So that's
number one. You're starting in a very very strong base.
And then you look at the individual franchises and how
(33:49):
they're operating and the things they're doing. And if you
look at our business track record over the last decade,
we've been one of the most successful franchises from a
business operations standpoint entire league. And that's speaking from a
market that's probably thirty of thirty third DMA in the country,
So you know that's over indexing pretty significantly. I think
(34:12):
more importantly the insider perspective there I would provide from
a value of the Chiefs franchise is the Hunt family
and the stability that they provide number one. But number two,
and I don't think Clark and his siblings got enough
credit for it, but they are following in the footsteps
(34:35):
of one of the most amazing innovators in all of sport.
When you look at the impact that Lamar Hunt has
had on football, soccer, tennis, and the fact that he's
in multiple Hall of Fames across multiple sports shows that impact.
They are following that lead. And I think when you
look at from an investment standpoint, it's investing in an
(34:59):
organization that is going to be innovative, that is going
to take advantage of opportunities like we are with the
international opportunity, and be willing to take risk, but also
do it in a methodical way, so you're taking good risk.
And you know, I'll go back to the international piece
as the most interesting example recently, and that is that
(35:20):
you know, we looked at, hey, we've got to take
advantage of this German opportunity. We invested for two and
a half years prior to even getting a game, and
that investment was with the hope of getting a game,
and that investment paid off significantly when we did get
the game, So it proved the model when we had
to take the risk and be innovative on the front end.
(35:41):
Just to bring that story full circle, we had our
game last year in Frankfurt. It was a huge success
for us. We invested a ton of people with resources
and money against that game. We had four or five
international partners, German based companies that were sponsors of US,
our organization and our game. This year we don't have
(36:03):
a game, we probably won't have a game again in
Germany for a number of years. And this year following that,
we just signed our largest international deal in our history.
Speaker 3 (36:13):
Wow.
Speaker 4 (36:13):
So it proves to that the model. But I think
the model doesn't work without that commitment to being methodical
but also being innovative and how you look at these
kind of investments.
Speaker 2 (36:25):
Mark.
Speaker 8 (36:25):
The term three peat is a registered trademark owned by
one pat Riley heat President, former Lakers Hall of Fame coach.
It's a term that's associated with teams like the Yankees,
the Bulls, the Lakers, Real Madrid. Not a lot of
teams have done it in professional sports, but the twenty
twenty four Kansas City Chiefs. I mean, my goodness, you
have an opportunity to do it. Talk to me, Xavier Worthy,
(36:46):
Rashi Rice, who should I draft for my fantasy team
this year?
Speaker 4 (36:50):
Again the same way, Yes, the opportunity is pretty amazing.
We know what we know the stage we're on, we
know the opportunity. That's in front of us. I've been
sharing this perspective all preseason. You know, Brett Veach, our
general manager, has done an amazing job of putting together
(37:12):
a roster and really an organization that is operating at
a very, very high level. You got a Hall of
Fame coach and Andy Reid, who is you know, he
gets giddy when Brett gives him new toys to play
with in terms of athletes and players and ways that
coach can take advantage of their special skills. And then
(37:34):
you've got, you know, leadership on the player's side that
you know, it's it's really tough to match, and their
experience together is something that I think makes it uniquely valuable.
Having said all that, you know, these guys are taking
the approach which I'm really proud of, which is they
understand how hard they've worked over the past two years
(37:56):
to be on this stage and to have this opportunity
and their whole just go take advantage of this, do
things the way we do things, and take advantage in
this opportunity.
Speaker 3 (38:06):
That's Kansas City Chiefs President Mark Donovan speaking with special
guest hosts Jason Kelly and Veranessa Pernomo of Bloomberg Originals
and of course our pal Damian sasaur Our thanks to
them and our thanks to you for joining us on
another edition of The Bloomberg Business of Sports. For my
colleagues Damien Sassauur and Scarlett Fou, I'm Michael Barr. Tune
(38:28):
in again next week for the latest on the stories
moving big money in the world of sports. You're listening
to The Bloomberg Business of Sports from Bloomberg Radio around
the world.
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