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00:00We just did our first close, $466 million to be exact, on our way to $750. We feel really,
00:06really good about it. Very strong traction and solid validation to the thesis that we broke here.
00:12So thanks for having me back. All right. Well, the next thing I ask you, of course, is, well,
00:16where are you going to invest that money? I mean, where do you look to first? NFL, MLB, NBA,
00:21something I haven't heard about? Where? Well, the most important thing is us to get our investors
00:28into the most stable asset classes that are non-correlated to equities, growing at a higher
00:32CAGR than the S&P that are household names. So we look at our universe of North American profitable
00:38sports teams, and we're actually closing an investment in the next week or so. You may
00:43have to have me back to talk about that investment. I can't spill it before the ink dries, you know?
00:48It's not the Seattle Seahawks, is it? I don't want to get you in trouble, but you can tell us.
00:54No comment. Okay. So we'll keep an eye out for that one. So that answers also the question
01:00of when you're targeting your first investment. Looking forward to that in the next
01:04week or so. But talk to us a little bit about what you make of valuations at this moment. Obviously,
01:10we live in public markets where we're seeing a lot of rethinking there. What's going on when it
01:15comes to sports as an asset class? Yeah, I know people think valuations are high,
01:21but they're not seeing the fundamental financials underneath those valuations. So what's happening
01:26is you're seeing an explosion of revenue and the multiples are pretty flat, range bound,
01:32let's say. But the valuations are high because revenue growth has been so high with new media
01:36deals, with teams transforming their business models to become landlords, monetizing that fan
01:42base 365 days a year instead of just 11 home games or just doing your home games. So you're seeing
01:48a
01:48diversification of revenue, an explosion of revenue, and some of the most valuable media
01:53assets are these games. So of course, the value of the media rights are worth more as well.
01:57I wouldn't say there's some bubble or there's some explosion in valuation. It's really just that
02:03revenue growth. And it is straight in line. And the revenue multiples are just kind of a straight
02:08line. It's really the revenue growth that we're seeing. And you make an interesting point that you
02:12think about, you know, a lot of these teams sort of rethinking and becoming landlords as well. Talk
02:18to us about, you know, what that means for you as an investor and how that sort of reshapes just
02:23the entire thinking. Yeah, we're at an inflection point that happens every 20 to 30 years in sports.
02:28And this is the reason, one of the reasons why we're so excited about it. We think there's a 300
02:33to
02:33$500 billion value creation story as teams go from the old business model that we call sports 1.0,
02:39where they're just relying on media rights and selling hot dogs and tickets and beer
02:43to sports 2.0, where they're doing those, they're doing those things. But now think I'm in Atlanta
02:48here. They own their stadium. They own the real estate around the stadium, the restaurants, bars,
02:54parking lots, commercial, residential, and are able to double. And in some cases, almost triple
02:59revenue by becoming landlords and operating in this new business model. So less than 20% of teams
03:05own and control their stadium and real estate now in the big three. And half of all stadiums need
03:10to replace. They're older than 15 or 20 years. So that replacement cycle is happening. And partners
03:15like us who have built stadiums and run teams before are right there to be strategic partners
03:21to help these guys make the right decisions.
03:23I am curious, though, too. I mean, obviously, a lot of this is built around the idea of secondary
03:26transactions. And as I'm sure you know, there's been a lot of discussion about the liquidity or lack
03:31thereof when it comes to these alternative assets. How do you sort of approach that,
03:36particularly with a lot of what I assume is a lot of sort of first time investors in the sports
03:40space
03:41understanding that? I saw you're on iCapital. So you're going after a whole different cohort of
03:45investors. Do they understand the potential lockups here, the idea that this is not something
03:51they can get in and out of quickly?
03:54They do. And my investors understand that I'm the guy that can get them out. That's my background.
03:59So secondaries are the new IPOs. I said that six years ago on TV when the IPO market started to
04:06dry
04:06up a little bit. And I was in the tech space and I was telling them, we're not beholden to
04:10an IPO
04:11market or an M&A market. You can go downstream and create liquidity at your fund level for all of
04:17your investors via secondaries. My background is I've done secondaries for 25 years. When I was on
04:22Wall Street in fixed income, I was doing secondaries. When I moved to Silicon Valley and started
04:27investing in tech companies, I'm buying from existing shareholders. I'm selling in the secondary
04:31market. I wasn't waiting for IPOs. And now for sports, I'm bringing that same playbook 25 years
04:37in the making into an asset class that is safer, that is less correlated, that has been around for
04:43100 years, that everyone understands what they do.
04:45Well, you certainly have the pedigree and you're referring to your time at Goldman doing fixed income
04:49secondaries. But I mean, that was a much more transparent market, I would think, compared to
04:54dealing with sports teams where you just don't have that transparency, certainly in a couple of
04:59leagues here in the U.S.
05:02It's become more transparent. When I started in fixed income, there was no trace. We all got on our
05:07Bloomberg terminals. And if you wanted to know who owned four 10-year bonds, you typed in the four
05:1110-year bond, you typed in HDS for holders, you saw the 10 holders, you picked up the phone and
05:15you
05:15called those guys, whether you had a relationship or not. Later, it became a little more transparent
05:20with trace and reporting software and price transparency increased. But in the beginning,
05:24there was no transparency at all. Bloomberg was actually one of the groundbreaking technologies
05:30that helped create transparency in fixed income by having the Bloomberg terminal with all the
05:35information handy. But in sports, you're right. That is not the case today. And a part of it,
05:40you know, we're taking advantage of that and we're helping to build that transparency and that
05:43liquidity. Well, first of all, thank you for being a customer, Rashawn. Always a pleasure when someone
05:47big ups Bloomberg. But in all seriousness, though, has there actually been a successful secondary
05:51exit from like the NFL or the NBA? I know we had the Phoenix Suns sale, but that was a
05:56little bit
05:56different because of obviously the ownership transfer. Have we seen anything yet? I have a
06:02little breaking news for you. All transfers are secondaries in the NFL and NBA. They're all there's
06:07no primary. Actually, there are some primaries. You mentioned Seattle. When you do an expansion team
06:12and issue new shares, that's a primary. But every time someone sells an existing piece they own
06:18to a new person, that is a secondary. It's not being broadcasted. They're not going all around
06:23the world marketing it. But all of these are secondaries. The secondary world is calling us.
06:29Everyone's going to be screaming secondaries in the next few years. I'm just telling you,
06:32you heard it here first. Secondaries are here to stay.
06:35All right. You heard it here first. That's true. But I am curious. I mean, does that
06:39secondaries being here to stay, does it just lend itself more naturally to certain sports versus
06:44other sports? I mean, you think about the NFL, NBA, I have to imagine it's not the case for
06:49everything. You are correct. Let's just go to the tech playbook again. There are hundreds of late
06:56stage billion dollar tech unicorns out there. Only like the top 50 really trade and do secondaries.
07:03They're large enough. They have a large enough LP base. People want to sell. They've been in for more
07:07than five or 10 years. But you're not doing secondaries in startups or early stage or growth
07:13stage technology companies, just like you wouldn't really do a secondary in a new sports league or
07:17team. You need established, sophisticated infrastructure, huge revenue, household names,
07:24and for it to be institutional ready in order for that playbook to work. So you are absolutely
07:29correct. Secondaries is not for all stages, really just for late stage.
07:32Yeah, and certainly a lot of parallels there between sports and, of course, the tech industry.
07:37I want to talk a little bit about the institutionalization of sports as an asset class.
07:43It's something that you've spoken about before, you know, the shift from really being a family-owned
07:48business. You think about a lot of these big sports franchises out there. Now you're seeing the
07:53shift to, you know, a lot of institutional investors coming in. And I wonder where you think we are
07:58in that story, in that handoff. Yeah. Well, now you're speaking my language. This is why we started
08:05Harbinger. Harbinger is the institutionalization of all of the intellectual property from Mark Cuban,
08:12Jonathan Mariner, who's a former CFO of Major League Baseball, Steve Cannon, former CEO of
08:17OptorBlank Sports, and myself, a secondaries guy, put in one platform with all of our relationships
08:22and our value creation strategies that we've implemented over the last 30 years. That is
08:28what institutionalization of an asset class actually means. It's the individuals coming
08:33in, bringing strategic value, knowledge from other leagues, knowledge from other industries. How is
08:39liquidity created in other private industries and bringing it to an asset class that was largely
08:44family-owned? So that is Harbinger's entire talking point. And that's why we saw so much demand in our
08:50first close and why institutional investors and private wealth partners are all interested in
08:55working with us because of that actual fact. In fact, thank you for asking. Well, I am curious. I
09:00mean, obviously, we focus a lot on the big three leagues here in the U.S., NFL, NBA, MLB, mature
09:05leagues. And there has been some concerns that with the rising valuations, maybe you're bumping up
09:10against the ceiling sometime soon. Have you looked into other sports leagues, maybe ones that are
09:16smaller, burgeoning ones that maybe could offer more upside value, if you will? Not to say you
09:21won't get any value out of the NFL, but the idea that you might be starting more at the ground
09:25floor
09:25with a league that's just kind of getting off the ground? Look at it all the time. Slippery stair
09:31racing, slap boxing, pickleball, sale GP bull riding. But what if I told you you can get the same returns
09:36with less risk? Would you be interested, right? So our focus is being the best risk-adjusted returns.
09:42You guys already know, I'm an early stage startup guy. My first fund, I invested in 130 companies,
09:47Coinbase, Robinhood, Dropbox, the first 90 went to zero. I don't have the stomach for that. And most
09:53of my investors don't have the stomach for that. You can even see what just happened with the Saudis
09:57pulling out of their sports league that they just invested in. This was like less than a few years ago,
10:03right? So early stage leagues, teams, companies, nine out of 10 go out of business. It takes seven
10:10to 10 years to make a return on it. Growth stage is probably a 50-50 chance, right? And that's
10:15a
10:16four to six year time horizon. But what if you can make the same or similar returns with much less
10:21risk investing in leagues that have been around for a hundred years, where the majority of their
10:25revenue is mature, long-term contracts. And that's what we're really focused on. We don't have the need
10:31to go up in risk when we can get the same returns from the safer leagues.
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