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00:00The Yankees, they are one of the most valuable franchises in all of sports,
00:04and now they've struck a massive $2.6 billion financing deal with Apollo Sports Capital.
00:09But what does that actually mean for the Steinbrenner family?
00:12The Yankees' growing sports empire, maybe most importantly to fans.
00:16Does any of that money eventually impact what happens on the field?
00:19To help us break down the deal and what comes next,
00:21we're joined by Bloomberg senior reporter and SportsCity host,
00:25the one and only Randall Williams joins me now.
00:27Randall, what's going on, my guy?
00:30I appreciate you all for having me.
00:32Glad to have you here, man.
00:33I thought you were a perfect person to talk about this.
00:35Randall, let's start with this, with the simplest version of this,
00:38because $2.6 billion, it's an enormous number.
00:41We both know that.
00:42But if I'm a Yankees fan sitting at home and I hear Apollo Sports Capital
00:46is putting $2.6 billion into Yankee Global Enterprises,
00:49what actually just happened here?
00:51What did the Yankees get and what did Apollo get in return?
00:56So, this deal is a mix of both debt and equity,
00:59and I thought it was interesting that neither party disclosed the valuation
01:03on what the Yankees Global Enterprises value is,
01:07but it has to be absolutely massive.
01:09Who knows the split between debt and equity,
01:12but it is, as far as the publicly disclosed deals that I've seen,
01:16one of the largest private equity deals in all of sports.
01:19And that's what makes it so interesting there, right,
01:22is just the money of it all and what's been disclosed and not disclosed.
01:25And the Yankees, we know this,
01:27they're one of the most valuable sports franchises on earth.
01:29So, I think the natural reaction here is,
01:31why does a business this valuable need to raise $2.6 billion?
01:36So, what does this deal tell us about the difference between
01:38being worth billions on paper
01:40and actually having capital available to run and grow the business?
01:45Well, I think there were some minority limited partners
01:49who were getting out of the Yankees as well,
01:51and that was part of this.
01:53This was, you know, as I said, this is going to debt.
01:55And so, because this isn't a public company,
01:58we can't see how much they are in debt.
02:00But obviously, what Apollo is providing
02:02is going to provide some relief,
02:05and then they'll get some equity in return.
02:07And I believe Apollo CEO Al Talis or Al Talis
02:10is going to be joining the Yankees Board of Directors.
02:13And so, he'll have some sort of input.
02:15But private equity across sports are not control owners.
02:19And what that means is they're not going to be making decisions
02:22about rosters, free agencies.
02:24A lot of times, they are just equity holders
02:26who stay on for a long time.
02:28Now, why the Steinbrenner family decided to sell specifically to them
02:34is, I don't think we know that just yet.
02:37It's possible that they had a series of conversations
02:40with individuals, and they landed on private equity
02:43because they were looking for a long-term partner.
02:45Could be that indeed.
02:47Let me ask this directly, Randall,
02:49because I think every Yankees fan would ask this question.
02:53And I will say this.
02:54I understand that I'm asking this with a potential lockout
02:57looming for baseball and calls for salary.
02:59Great point.
03:00Right?
03:00So, I just want to put that out there.
03:03Does any of this $2.6 billion mean that Hal Steinbrenner can now say,
03:08he goes to Brian Cashman and says, hey, go get this player, Player X?
03:12Or would it be a mistake for fans to look at this deal
03:14and assume it means a bigger Major League payroll?
03:18That's not – I don't think that's an ideal way of looking at it
03:22because everything that has been described to me about private equity
03:24in sports is that they fill a couple different buckets.
03:27Stadium renovation is one of them.
03:29Liquidity is another.
03:31Debt relief.
03:32And then they also provide capital for families who –
03:35you know, family partners who are trying to get out of this.
03:38So, let's say there are six shareholders of a specific team.
03:43Members four, five, and six are trying to get out.
03:45Private equity can purchase those stakes.
03:47I don't know of any private equity firm across American sports
03:51that is making decisions for teams,
03:54whether that be on the free agency side or on the business side as well.
03:58And the money often is not going to the free agency.
04:04That's not the way the business is used.
04:05Otherwise, it would create an imbalance across sports
04:08because as we just saw, this is a $2.6 billion deal.
04:12Imagine how much money they could pay free agents with that sort of capital.
04:17There's no – the Baltimore Orioles could not strike that exact same deal.
04:21And so, private equity dollars are not being spent on players directly.
04:25Now, you could argue that, you know,
04:28renovating a stadium might persuade a free agent to come and play there,
04:34but that's not money that's going directly into a player's pockets.
04:37Right.
04:37You could invest in the things around the team that might entice guys to come here.
04:42You could invest in facilities, things of that nature.
04:44But, right, in terms of just going towards signing players,
04:47that is not going to happen there.
04:49And here's where I think this gets really interesting because, Apollo,
04:53they're not just partnering with a baseball team.
04:55It's not just that.
04:56You know this, right?
04:56Yankee Global Enterprises.
04:58They've got interest in Yes Network, Legends Hospitality,
05:01New York City Football Club, AC Milan.
05:03So, when they talk about strategic opportunities,
05:07should we be thinking less about a $300 million shortstop, as you just mentioned,
05:11or a player you can get,
05:12and more about the Yankees building an even bigger global sports business?
05:16Is that the way we should be looking at it?
05:18I think that's the proper way to look at this,
05:21is that the Yankees Global Enterprises, of course, has the Yankees,
05:24but some of those franchises you named are on the come up.
05:28NYCFC, I believe, is building a stadium out in Queens.
05:31That's going to increase in value.
05:34You have AC Milan.
05:34You have, I believe, Yes Network and Legends.
05:37All of those entities are, you know,
05:40the Yankees Global Enterprises, they're shareholders in them.
05:43And so, that money that Apollo is providing, it could go into that.
05:47I'm not saying it is, because we don't know where, you know,
05:51Al Tillis and the Steinbrenner family is going to place that money.
05:55But it can go anywhere in their portfolio.
05:58Yeah, it really can.
05:59Now, when we talk about private equity,
06:02and I know you know this, Randall, very well,
06:05it could be a four-letter word to some sports fans,
06:08because they hear it and they think, all right, costs will be cut.
06:13Profits are going to be maximized, right?
06:15Prices are going to get raised.
06:17The Yankees are saying the Steinbrenners remain in control.
06:19So, is that fear that some fans may have misplaced in this case?
06:23Or are there still legitimate questions that fans should ask about
06:26what happens when institutional capital becomes a bigger part of their team?
06:31It's twofold.
06:33One, I don't think that fans feel private equity dollars
06:36immediately with this deal.
06:38Now, you take, for example, some of the other deals
06:42that are out there across sports,
06:44such as the Browns deal with Arctos partners.
06:47Arctos is also partnered with the Buffalo Bills.
06:49And you can go across leagues,
06:51whether that be the Cleveland Guardians deal with Sixth Street, I believe.
06:57No, excuse me, Cleveland Cavaliers deal with Sixth Street.
07:01All of these deals, the money is going somewhere.
07:04If it's going towards a stadium,
07:05then, of course, fans will feel that impact
07:07because of the fact that a new stadium
07:09is going to mean new luxury suites, new seats,
07:12and new hospitality providers
07:14that eventually those costs are passed down to the consumer.
07:17But with this one in particular,
07:19I'm not aware of the Yankees
07:22undergoing a renovation project at the Yankee Stadium.
07:25And so I think long-term,
07:28we'll see if something like that happens
07:30where the cost will be passed down to Yankees fans.
07:33But right now, I'm not sure that fans will feel it.
07:36Yeah, and that's the thing.
07:37Fans are always looking at the money,
07:39and they're like, hey, are we feeling this?
07:41Are we seeing this immediate impact from this?
07:43And that's not always the case here when it comes to private equity.
07:45What I'd say is, what I'd also say is
07:46that these conspiracy theories are going to exist nonetheless.
07:49Like, we see it with the Celtics deal.
07:52Sixth Street is also a partner in the Celtics.
07:54What did the Celtics just do?
07:55They just traded Jalen Brown.
07:57And there are people in Reddit threads and on Twitter
08:00who are just saying, oh, this is Sixth Street's influence on the Celtics.
08:04Bill Chisholm, the new owner of the Celtics,
08:06doesn't want to pay Jalen Brown that price.
08:10Now, Paul George has a massive deal as well.
08:12So I don't think that this is an apples-to-apples comparison.
08:15That trade happened the way that it did.
08:17And that's why it's important you don't look at this as a player's thing
08:21is because player contracts are massive nonetheless.
08:24And the Yankees and the Celtics' franchise values are equally massive.
08:28Right.
08:28They're two of the bigger brands, you could say, in North American sports,
08:31even some globally to some degree, right?
08:33And it is what it is.
08:34I guess last thing for me here, Randall,
08:36if we're having this conversation again,
08:39maybe two or three years from now,
08:41what would say to you that this deal was a success?
08:44Would it be the Yankees have a bigger business empire?
08:48Was it more investment around Yankee Stadium?
08:49And yes, is it more financial firepower on the baseball side?
08:53Or is there just another move that you think fans should be watching for
08:56that would show us what this $2.6 billion was really all about?
09:01To be honest with you,
09:02I don't think that this is a deal that you can look at in that short term.
09:05I think that this is a deal that, you know,
09:08you look at in 15 years down the line.
09:10What we haven't seen in private equity in sports is a lot of exits.
09:15There have been a lot of acquisitions.
09:17There haven't been a lot of private equity firms that have said,
09:21all right, you know, I've done my two years.
09:23I'm ready to get out.
09:24It just hasn't happened yet because private equity likes to hold on to things,
09:28hold on to things, hold on to things, and then get out.
09:31Now, I think that because sports franchise values are continuing to rise,
09:36it's less likely that we will see exits in the next two to three years unless team sales happen.
09:41And the private equity firms, of course, will have an option to get out of these deals.
09:46But you look across sports, you look at the Yankees deal.
09:49Again, we don't know the valuation of the Yankees.
09:52I believe Sportico values them at probably over $10 billion,
09:55but I'm not sure if that includes all of their other enterprises.
10:01And so I would not be surprised if the Yankees are collectively valued at near $13 or $14 billion.
10:10Of course, Apollo is now into that.
10:12If the Yankees' valuation continues to rise, why would Apollo want out?
10:16And does Apollo view this as the peak of valuations?
10:20Probably not.
10:21They probably want to look at this.
10:23It's 2026.
10:24They probably want to look at this in 2040 and say,
10:26let's see if we can get to $40 billion and that $2.6 billion we invested may turn into $8
10:32or $9 billion.
10:33Then you find another buyer.
10:34So I think that we'll see.
10:37But the success level, I think, will be measured in maybe a decade and a half or so.
10:41Yeah.
10:41Listen, private equity are in it for a longer game.
10:44It's very rare you see a quick sale.
10:47We just saw this, though, with the Lakers, right?
10:50But that is a rarity.
10:51And there's special circumstances around that that we don't want to turn into.
10:55But yes.
10:56Real quick, I just say that one of the private equity transactions or exits that I do remember,
11:02I believe, is Blue Owl and the Phoenix Suns when Robert Sarver sold the team to Matt Ishvia.
11:08And I believe that Blue Owl got in at a little over $1 billion and exited at $4 billion,
11:14which is what Matt Ishvia bought the team for.
11:18That is probably, or maybe it was $1.8 or $1.9 billion, somewhere around that $1 billion
11:23to $2 billion range is what Blue Owl got in at.
11:26And that exit is tremendous within a short amount of time.
11:30But a good portion of this time, unlike this Lakers sale that we just saw,
11:34teams and their owners hold on to them for a long time because they've just become so valuable.
11:39And if you don't know the peak, then you have to ride it all the way to the top.
11:43Yeah.
11:43They're going to ride it out.
11:45And the devaluation of these sports franchises, especially one as iconic as the Yankees,
11:49you would think it's only going to go up.
11:51That's what you're going to see from there.
11:53That is Randall Williams, senior reporter from Bloomberg.
11:56Fantastic job.
11:57Also the host of SportsCity.
11:59Check him out there.
12:00Randall, I appreciate the time breaking this down.
12:02I think Yankee fans will appreciate understanding a little bit more about this
12:06and what this is about.
12:07Thank you, my friend.
12:07Appreciate it.
12:08Absolutely.
12:09I'm not sure that I can provide Yankees fans any relief if we head into October,
12:12but I can tell you that Apollo is not going to have a super impact of what happens on the
12:16field.
12:17There you go.
12:18There's some clarity on that.
12:19Thank you, brother.
12:19Appreciate you.
12:21Appreciate you.
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