00:00Joining us live now from Citadel's Future of Global Markets Conference in downtown Manhattan Avenue Capital co-founder and CEO Mark Lasry, alongside Bloomberg Open Interest co-host Danny Berger. Danny, take it away.
00:15Katie, thank you so much. That's right. I am here with Avenue Capital's Mark Lasry. Mark, thank you so much for joining.
00:20My pleasure.
00:21First of all, congratulations. You've made the announcement. You closed your $1 billion sports investing fund. I think there's a lot of excitement around it.
00:28So now with this close in hand, what's the strategy of the fund? What are you using at the moment to identify opportunities?
00:35Well, we have a pretty large team, but really what we're doing is just investing in sports.
00:40And the question is, do you want to do emerging leagues? Do you want to do women's sports? Do you want to do the big four?
00:46And we're trying to do a mixture of all of them. Things that we think over the next, you know, sort of five years are going to double or triple.
00:55You're far from alone, I should say. It feels like there's been just a spat of announcements recently.
01:01Apollo announced that they had a sports platform. Aries has been talking to investors about their sports fund.
01:06You already have the likes of CVC, ArcDose already existing in sports.
01:12It's a small asset class comparative to the rest of private equity.
01:16Are we reaching a point of potential saturation?
01:18Not even close. First of all, I've never heard of those groups, just so you know.
01:27I'm sure our viewers have never heard of them.
01:29Never at all.
01:30Never heard of them.
01:30All right. You've got to look at this.
01:34Everybody you mentioned, they're actually great firms, but the amount of capital that's in is actually very small relative to the amount of supply.
01:42So the market is a trillion-dollar market. It's this massive market, and you're talking about maybe $10 to $15 billion of capital that's been raised or that's looking to invest.
01:55So the opportunity set is huge. I mean, that's really what it is, and that's why you're finding more and more firms like ours and more and more private equity firms that want to come in, because you're literally in the first inning.
02:08And I think this is something that's going to last for a long time.
02:11So what do you make of those who say the big four, especially now that you have P.E. in that market, too, it's overvalued, it's frothy, it's bubbly.
02:19Is there any validity to those comments?
02:21I think people have been saying that for the last 20 years.
02:24Like, when I bought the Bucs, I paid $550 million.
02:28At the time, this was 12 years ago.
02:31At the time, believe it or not, we had paid the most for any team in the NBA.
02:36All right, 12 years later, the Lakers sell for $10 billion.
02:42So the Celtics sold for $6 billion.
02:45What you're seeing is that there's just the demand for live sports is the one thing that keeps on growing.
02:54So nobody records a basketball game or a football.
02:58Nobody records the Super Bowl and says, hey, let me watch the last 10 Super Bowls.
03:02So it's unique, it's different, that's why the value keeps going up, and I think that's the reason why it's going to keep going up.
03:10Yeah, well, to your point, you've participated in the big four.
03:12You are currently.
03:13I know you also own the Orioles alongside my boss, Mike Bloomberg.
03:16But you're also very much so focused on emerging sports and women's sports.
03:21Just how much does the value proposition differ between the two?
03:25Oh, I think it's where you can make fortunes of money.
03:28So if you sort of think about women's soccer, NWSL, five, six years ago, you could have bought a women's soccer team for around $1 to $2 million.
03:37Today, those teams, I think, are around $150 million.
03:40We've invested in a group called Mercury 13 in Europe where we're investing in women's soccer teams.
03:47We've bought a few and we're under contract to buy a few more.
03:51We're buying those teams around 5 million pounds or 5 million euros, however you want to look at it.
03:57We think in the next 5, 10 years, those teams are going to be worth anywhere between $25 million to $100 million.
04:05So where you can make sort of 5, 10, 20 times your money.
04:09So for those who have been, and we won't name them, for those that are just concentrating on the big four leagues, do you think that that's a losing strategy?
04:16No, not at all.
04:16I think they're going to do very well.
04:18I think what you've seen in the big four is that the returns have been somewhere around sort of 10 to 15 percent.
04:25I think that's a great return.
04:26I mean, it's not correlated.
04:28You're going to do exceptionally well.
04:30I don't think you're going to make five times your money, but I think what it is is a safe return.
04:35And we're looking at investing in those.
04:37I think it's very safe.
04:39You're going to do well, but you're not going to have the huge growth that you would in something else.
04:42Well, speaking of huge growth opportunities and changing sports, what about college sports?
04:48Is there any opportunity to get involved there?
04:50I think that is one of the biggest opportunities out there.
04:53It really is.
04:55And, you know, we've been close to getting a couple of deals done, just hasn't gotten done.
05:01But I think over the course of the next two or three years, you're going to start seeing that there's going to be a number of private equity firms.
05:08Hopefully we'll be the first.
05:09But that people are going to be doing this because because of the NIL issue, because of all these other issues, schools need capital and they're going to need that money.
05:22And so the question is, did they take that capital from us or did they take it from their chemistry department?
05:27How close have you gotten to reaching some of these deals?
05:30Might we expect any announcements from you anytime soon?
05:32If you want to make an announcement here, we're also very happy for you, too.
05:35Really? I could.
05:36I'd love to make an announcement, but I think I've got to wait until we actually get it done.
05:42I think we are probably three to six months away.
05:46But the issue is always subject to board approval or the trustees.
05:52And I find that people don't like being first.
05:56They're always first to be second.
05:58They never want to be the first.
05:59Mark, I'd be remiss if I let you go without asking about this wider moment we're in in private equity.
06:04There's been this argument that the industry was overinvested in 2021, 2022.
06:10Now they're having a hard time finding exits, hard time with distributions.
06:14Fundraising has been difficult, too.
06:16Do you think that this is an existential moment for the industry as a whole?
06:20No, not at all.
06:21Look, I think what people forget is you're supposed to look at this over a five or ten year horizon.
06:30If you're going to look at it over a yearly horizon, it's never going to make sense.
06:36Right.
06:37So, yes.
06:38Is it harder to raise capital?
06:39Yes.
06:40So who's getting that capital?
06:41People who are making money.
06:43Right.
06:43I think that's that's the big difference.
06:45Is it hard to sell?
06:47Yes, it is.
06:48Why?
06:48Because as a seller, you want the highest price and as a buyer, you want the lowest price.
06:54And today, both sides feel they have the leverage.
06:57Sooner or later, somebody breaks.
06:59And the reason you've got this nervousness around the market and in the industry today is because nobody knows what's happening with the economy.
07:08Is the Fed lowering rates?
07:09Is the Fed going to stay where it is?
07:12Are we going into a recession?
07:13What's happening?
07:14So when you're nervous about what's going on, what do you do?
07:17You wait.
07:18You wait and see.
07:19And that's what's happening right now in our industry.
Be the first to comment