00:00Kind of an interesting matchup here, not necessarily on the field, Rashawn, but really kind of, I guess, in the bank accounts, if you will.
00:06We know the Patriots already one of the most valuable teams in the NFL.
00:10And I know the Seahawks are somewhere like 14th, 15th ranked.
00:13But everyone's saying that if they actually strike a deal, this is actually probably going to be the biggest the NFL has seen.
00:18And it's kind of interesting that it's coming right after the Super Bowl, potentially.
00:22So does a win potentially help the valuation there?
00:25Well, whether they win or not, this is still going to be the biggest deal.
00:30And whoever buys this team is clearly going to be a winner.
00:33And whoever sold it, the estate, is clearly going to be a winner as well.
00:36I mean, you never really see two major things happening like this at the same time.
00:40But I was listening to you. I'm getting fired up about it.
00:42I wish I had an extra seven billion dollars to buy it myself.
00:45I'm excited about it, man.
00:47Well, that's what I'm curious about, too.
00:48I mean, typically in the old days when a team like this went on sale for a high value,
00:53you know, there were usually a very small group of people who can afford it.
00:56Obviously, with the NFL loosening some of the ownership rules to allow private investors to come in and take smaller shares here,
01:03I assume that's probably going to lift this valuation probably more so than if just one single or one single collective had to buy it.
01:10You know, not really, because the rules stipulate that private equity firms can't be majority owners.
01:15Oh, OK.
01:16So I don't care how many private equity firms are in the mix.
01:18They can't buy the majority stake of this team.
01:20It has to be a family owned business and it's going to be an individual who maybe has a consortium of individuals behind them and private equity.
01:28But that individual is really going to strike the price, be the lead investor and take this thing across the finish line.
01:32So it's not private equity driving this price increase.
01:36It's really the core fundamentals of these teams and of this league.
01:41And I'm talking about the biggest viewership of all time, the biggest sport and the biggest game of the year.
01:47I mean, it's just perfect timing for them to put it on the market.
01:49Yeah, absolutely.
01:50What a showcase, the Super Bowl, right before the sale.
01:54I do want to talk about what we're seeing in the NFL when it comes to valuations there.
01:57When it compares to other sports, for example, which we know draw a lot of eyeballs, you think about basketball, for example, you think about Major League Baseball.
02:07Can pass and contraria what you're seeing there?
02:09Yeah, well, I can't speak in too much detail about the NFL because of my ownership in the Atlanta Falcons.
02:15But I can tell you, it's actually very simple.
02:18And I want to draw a comparison to an industry that you guys know pretty well, software.
02:23So the reason why software companies trade at an average of 10 times revenue multiple is because of the annual reoccurring revenue stream that's growing at a pretty high CAGR against long-term contracts and has a moat around the business.
02:36Well, there's another industry that has a very similar revenue profile as software companies that trades around the same multiple as software companies and its professional sports teams.
02:45Sometimes two-thirds to 80% of the revenue stream is from big media and big sponsorships.
02:50So when you have that already baked out for 10 to 15 years and that revenue stream is growing and are diversifying into real estate, that makes this asset class very attractive to not just retail high-net-worth individuals, but to institutional investors who are over-indexing in sports today and asking for more and more of it.
03:09But it's really about the moat they have around the business, the annual reoccurring revenue stream, and the product that they're putting out on the field or the court.
03:16It's just spectacular.
03:18Well, forgive me if this is a dumb question, but you touch on something that I always wonder about when it comes to investing in sports, because I can get my mind around a software stock.
03:26I can think about the dividends that they throw off, buybacks, et cetera, and the stock itself going up.
03:32When it comes to investing in a sports team, you mentioned recurring revenue.
03:37What form does that take, and what are you receiving piecemeal versus just being eventually able to sell this steak?
03:45Well, thanks to the Atlanta Braves, which are a publicly traded company, you can actually go right through the P&L on the balance sheet of a professional sports team that is absolutely crushing it and see exactly what they're doing.
03:57So, for example, the Atlanta Braves went from $250 million in revenue to $650 million in revenue by transitioning their business model from just getting money from the league, media, revenue, and sponsorship revenue to also diversifying into real estate.
04:13So, they own the stadium, they own the parking lots, they own the commercial and residential real estate, and they grew their revenue 250%.
04:21So, when you buy into a team, you're buying into a holding company that is becoming a media company that has a live event component of it, but they also have a real estate component of it.
04:31How many different ways can you monetize this IP that you have, and how can you monetize it 365 days a year instead of 10 days a year of your NFL team or 100 and something days a year if you're a baseball team?
04:43So, Rashawn, I mean, the excitement that you have and obviously just the growth that we've seen in sports, I mean, it raises a big question just about investor access to this.
04:50And by that, I don't mean like the gigantic folks who can afford to spend billions of dollars on a team.
04:54It's one of the reasons why you have Harbinger Sports.
04:56I saw just, was it last week or so, you announced this deal with iCapital to sort of get into that wealth channel here.
05:03Are you seeing more individual investors and more for that matter, the investment advisors pushing stakes, small stakes, either in the teams themselves or through some of the products that you yourself have through your business?
05:16Yeah, great question.
05:17Sports today is where tech was 10 years ago from a liquidity standpoint.
05:22So, just like 10 years ago, no one was calling you to advertise a $200,000 position in SpaceX or Anthropic, no one was doing that 10 years ago.
05:31How many of your viewers have gotten phone calls and emails about Anthropic and SpaceX and OpenAI, you know, over the last 6 to 12 months?
05:39That market in tech secondaries is very liquid.
05:43In fact, 10 years ago when I started doing late-stage tech, there was no way to get into these things.
05:48Sports is going in the same direction.
05:50It starts out by opening the aperture to folks like private equity firms who then had thousands of investors underneath them who also want access.
05:58But you have to create the ecosystem that was already created like in the tech marketplace.
06:03We have these private marketplaces like Forge and Equities Inn and NASDAQ private markets and all of these brokers out here.
06:09And I think sports is well on its way, except sports has more price transparency.
06:13Everyone understands what the Yankees do for a living.
06:17Everyone knows the valuation of the Yankees, right?
06:19And there's already a built-in fan base.
06:21So, I think the sports ecosystem for secondary liquidities will do better than even tech.
06:26So, let's take a look.
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