Scarce Human Experiences

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1:09The comments made by me now has been made by him and him and himself and nobody else and not indicative of basketball, a little bit out of time, how to throw Anthony Maze or any guest incorporated. Oh, this is good. The Sacramento Kings have signed Ben Simmons. Welcome back. Oh, man. Ben Simmons to the NBA. I thought he was fishing. What happened to the fishing? They want a championship. Oh, well, there you go. Nothing left to prove. Nothing left to prove in the fishing game. The Ben Simmons team won his first ring, his first title and now he's a king from the ring to the king. Laumery has a great tweet about this. Laumery who covers the NBA for the athletic, specifically the clippers and the kings and basically every California team. In case there was any confusion about Ben Simmons's role, the Sacramento Kings followed Simmons tradition announced him as a guard. He is the backup point guard. Nice. If Terious A. Cough Jr. sits in the second paragraph of the press release says the six foot ten guard has appeared in 383 career regular season games with Philadelphia,

2:09Brooklyn and the clippers six ten guard. Is he still a guard? I feel like he's a center at this point. No, he should be. He should be a center. That's probably the best role he can play in today's NBA. I'm reminded of sitting next to Ethan at summer league. And he was chanting six ten rondo at Ben Simmons. Rondo is going to be a whole favor. I feel like he's going to be close to it. If not, I'll be close. He might be the line, right? He talked about two championships and however many assist records and all that stuff. I don't know, but Ben Simmons back in the NBA. They fell for the hype videos summer hype videos. Yeah, we missed them so much. It had to be the Kings, right? Like it wasn't going to be anyone else. Well, let's try and gillate this. You have to keep your third eye open about the Kings. Laumery bring him up because he also pointed out this very interesting coincidence. There are no mistakes. No coincidences. 2023, 24 season, Russell Westbrook, LA Clippers, 2024, 25 season Ben Simmons on the LA Clippers.

3:17Okay. Now what happens in the following two years, Russell Westbrook goes from the Clippers to the Sacramento Kings. And then Ben Simmons goes from the Clippers to the Sacramento Kings. We talk about the Camden connection here on this show. The whole runson worldwide West. What would this be? The Kent Shoot connection. The Kent Shoot connection. Right up by five, about 10 hours. It's not in the Clippers to Sacramento. It's down the street through that connection. Well, now I guess we got to come up with who's next? I mean, how many incredibly athletic former lottery picks technically listed at point guard that can't shoot do we have left. They're an endangered species in the NBA. It's not going to be James Harden. I don't think he's going to retire in two years. He was on the Clippers last year. It's not Chris Paul. I don't think Chris Paul is going to come out of retirement.

4:19Oh, I think I've got it. Bradley Beale feels right. Oh, Beale's a good one. Because it's got to be someone teetering at the end, right? It can't be someone young. Three time all star all NBA player feel like Bradley Beale. We can book it, right? I can hear them talk themselves into it. Say we need shooting. Yeah, forget how to shoot. I like this. I'm going to go a little bit of a longer path here. Not a Clipper yet. So maybe he'll go Clippers next. Then become a king. Hmm. John Marant. Whoa. Yeah. Pinching your tent a little further upstream. But yeah, Jummerant athletic can't shoot here. Might not workout in Portland. Kind of a crowd of back court. And we know that there was interest in the past, right? Between them and Jummerant. Yeah. So we just got to get John to the Clippers first, though. That's the problem for the audition. Yeah. And then the Kings. Oh, last year when the, and we'll talk about this later, when the Kauai News broke from Publatory in Amino, Hassan and Dave Samson a year ago,

5:21I said, maybe the Clippers should take their first round picks, trade them away before Adam Silver comes and snatches them in the punishment for a one Zion Williamson. Zion to the Clippers. Then in two years, a non-shooting guy with jet engines. Yeah. Feel like maybe he'll end up with the Kings in three years. I could definitely see Zion and the Kings for sure. How do we get him to the Clippers? See that? That would have been great. Have they listened to you, Tom? They would have been docked all those picks, but they would have had a Zion to show for it. I don't think that's getting played enough is that they were so emboldened in their, they were completely innocent in all this that they went in the opposite direction. They had a deal to send Kauai to Golden State and they turned it down at the trade deadline because they wanted to just fuck with the warriors. They had no intention of playing them anything. They just wanted to fuck with the warriors. How crazy is that? You're staring on the

6:23barrels as massive investigation and you found time. Let's tweak the guys up north a little bit. Unbelievable. Hey, maybe the Kings are going to try to tweak the warriors next because we see this Sacramento connection to the Clippers. Well, when Aaron Turner was talking to Koc about Jonathan Caminga's deal with the T-wolves. Oh boy. His third eye was so wide open that he was thinking about how the Bulls and the Kings have all this cap space next summer. It's great. And that that will finally be the deal that works out. So can we somehow get Caminga to the Clippers? To the Clippers first. And then to the Kings. That's the path for Caminga. T-wolves, Clippers, Kings. We almost got them to the Lakers almost. This feels like that came. What's that came called the NBA grid thing that was so popular a couple years ago. Oh, yeah. The players that play for these two franchises, these two teams. There's hoop grids. And then there was the basketball

7:24reference one which I can't remember its name. Yeah, it does feel like that. It's going to get so much deeper. That's going to be tough to have a deep pull on the Kings and Clippers because there's just going to be so many of them in future years. But shouts to Lomory for keeping his third eye open. I think the candidates are very strong. We got Jomerant. We got Zion Williamson Bradley Beale. I don't know. Brooke Lopez fits in this definition. I think he does. I think Brooke Lopez is on the radar for sure. Congratulations. Again, we go back to when you're shooting. You just have to say it in their voice. Right. That's all it is. You say it in their voice and you're like, oh, yeah, I could see them doing that. My assignment uncover why the association inspires more conspiracy theories in volume and salience than any other US sport. Are you hurt or be a lumbin audience? The truth is out there, but so are lies. Your eyes can deceive you. Don't trust them. The NBA has always been controlled by about eight people. Denial is the most predictable of all human responses.

8:26If you're only using 10% of your brain, you don't even know that you're using 10% of your brain. The NBA, a lumbin audience. Of course, that's just coincidence. This is why they feel so contrived. The aluminum. But you start to follow the money and you don't know where the is going to take you. It is unspoken. They have influence among other players. The NBA over my head. I don't have time for your convenient ignorance. Maybe I'm a conspiracy now as well. That's all it took. Oh, you got books. We got schools. You saw a video on you. You know. My lifestyle. You've never used your rice. This is basketball women. This is basketball illuminati. I am Tom Haberstrow, Dr. Tom Haberstrow to some. We are always

9:34joined here by the five star illuminati generals, Pulitzer Prize winning podcaster, Mina L. Hassan, and validated not by the NBA, but by the Pulitzer and the Morrow, Amino Hassan. Mace, you're also on the show. You gave him two introductions. I got two. That's right. Well, that's a new rule. I was like, wait, not validated. Yeah. Yeah. For a second, you're trying to talk about me, but no. No, Mace, you see, when you win an Edward R. Morrow award, you get a second, a second validation. That's what happened there. You're mad. I know. It just keeps piling up. We're one of these awards. Wachtell, Lipton, endorsed Amino Hassan. Yeah. First line of the report. The very first sentence they shouted us out. Wow. How about that? We did do an episode last week. That's funny. All this stuff happened, but the all this stuff happened after our episode would happen anyway. Yeah. It's kind of a blessing in disguise. We would have had an episode about something else. And then Wednesday, it would have been blown off the map by the Clippers are going to be punished.

10:40And here's a 36 page document showing just how shady they are. But we did do an emergency pod on the Minnesota Timber Wolf selling Mark Laurie shares. We sure did. So if people think we're sleeping at the wheel for this summer, Al Contrero, Mo Freire, right? Isn't that what we say in France? Uh huh. Definitely test that out on your upcoming trip to Paris. See how that goes. Well, if I see Rudy, I'll tell him. It's good seeing him again after you podcasted yesterday. Tell him I say, what's up? My good friend Rudy. Go back to tell you this week. Joe Paupliato of the huddle up newsletter sports finance guru. Go subscribe. He's got so much intel. Man, the number of entities and teams and stories about how the financialization of pro sports is happening right in front of us. It's an incredible, incredible roll of decks of sports teams and entities that are all being swept up in this one giant story. We're going to talk to him about the Steve Balmer punishment where the Clippers go from here. Mark Walter and the Lakers. The US open.

11:46Why not? Let's do some penis talk live. Stan Cronkey. Oh, yeah. And sub stack the people that DM him privately when he writes about them all coming up right now. There's no better way to overpower a trickle of doubt than with a flood of naked truth. But the complexity in the gray line not in the truth. What you do with the truth once you have it. What is true and right is true in my form. You and I both know that that's just not the truth. You can't handle the truth. To messy keeps my mind. I'm here because in the end the truth is worth the risk.

12:48I think a little truth when people lose their mind. I'm a grown man, you can tell me the truth. Why is it people want to choose never believe in one thing here? So you know what I'm going to do. I'm going to do something really outrageous. I'm going to tell the truth. All right, Joe of the HuttleUp newsletter. He is the guy when it comes to sports finance as far as I'm concerned. Your newsletter has how many subscribers now over 100,000 but what's the number of these days? 135, 136 somewhere around there. Do you think that Steve Balmer and Mark Walters are two of those subscribers? I checked and they're not. Unless they're using some fake alias. Because it isn't always funny when on substack you know I get we have portions free and then some paid subscribers so I get emails whenever someone paid signs up. And it's always funny when I send out a newsletter on like a specific topic or issue. Seeing the people that sign up because sometimes it is you know like I wrote something about Rudra Gadell's contract this morning

13:52and sort of like pettling out if the money is worth it. And one of the owners of the giant signed up. And I'm like no, it makes sense. I always check to make sure you know like hey if I wrote about Steve Balmer, Steve Balmer reading this and critiquing it. But no, I don't think he reads it. I love the idea of that guy being one of the guys like I think we're paying too much for Roger. Man, I don't know. You know, man, you don't be ridiculous. It's a good place. It's a fine price. And then the news that it goes up is like, well hold on, let me see for real. He's printing it out and he comes back to, aha, aha, I told you. People that don't do content are always I think surprised to see how thin skin some of these people are too. Like when I write things, the amount of DMs and messages I get from people that are either the individual that I was talking about or someone associated with them, whether it's PR people or people that work for them. It happens much more frequently than I would expect it before I started this. But yeah, who knows? At this point, Balmer and then probably have so much stuff written about them that it's hard to track what is what has come from where? Well, I think it's even the opposite

14:56issue with the Clippers is that there weren't a lot of national media covering this story and digging up more details, which is part of the reason why that's Pulitzer winning podcaster under a mean, a means face there is because I do feel like there was kind of, we can talk hours about the sports media dynamics of the Clippers story, but there seem to be a vacuum of media covering this story. You were covering this story. And to the point where I had to laugh this summer in the month of August, Joe, that's when it's quiet in the NBA. That's when the NBA is everyone in media goes on vacation, a mean got influenza and then had to be called into duty to cover the emergency podcast when Steve Balmer, the penalty came down. But Joe, you cover everything from Savannah bananas to the NFL to unrivaled. And yet

15:58in the downtime of the NBA offseason, in the month of August, you had nine straight stories about the NBA. Did you know that? No, I didn't count. But it's not surprising to be honest. I mean, it's just been, it's been a crazy month or two in sports in general. I mean, between what happened with the Clippers and then Mark Walter, who obviously, many people think of the Dodgers and some of his other assets now, but it was really a Lakers story, right? And then it's expanded from there, but I, you know, it's just been a crazy month or two. Which story, Dealer's Choice? Which story, Joe, do you find most interesting as someone who covers sports finances? Is it the Steve Balmer, the SEC investigation into Dectronics? Now five first round picks, the NBA has penalized the stifist penalty and NBA history to a guy who's worth the ninth richest guy in the world. Now you have that on one side. And then you have Walter, who's liquidating. It seems like a bunch of his sports assets in order to fund a payback for a lot of

17:03these, what seems to be shady, self-dealing on his insurance companies. All of this seems like ripe fruit for Joe Pompley on, but which one do you find that when the news breaks, you're like, oh, I can't wait to read what's next. So both of them really, but I think for different reasons, if you think about the, the NBA story with Steve Balmer, Kauai, the Clippers, etc. That one is fascinating to me because it's so straightforward, right? It's like these sponsors came in, they paid money, that went to Kauai, like easy to circumvent the cap. This guy's rich, he's worth a ton of money, like he has an incentive to go do this. All fans can understand that, but I also think it was really interesting. Still to this day, like I don't consider myself a traditional journalist in the sense where I'll go out and I'll get sources and I'll report things and I'll use quotes and context and all that. I'm more just talking about the news and my opinion on it and analyzing things like that. But I have people from the Clippers who have reached out numerous times over the last few months and still within the last like two to three weeks, then and then lead denying the

18:06fact that this happened. They still claim that this did not happen. Up until the report came out, they were claiming that it was not happened. In fact, I was getting calls from people literally days before, you know, ESPN came out with their version of the story, which ultimately I think everyone understands probably came from the Clippers saying, I was getting calls from people around the Clippers, basically saying, we're ready to go on the offensive here. We know that this is not true. The NBA is not going to find anything and we are going to start getting our version of the truth out and be basically going the offensive around Pablo team, etc. And so I think that's sort of fascinating because anyone who reads through that 36-page document, like it's very obvious that something happened here, whether you want to, you know, you can analyze who knew what was being determined, whatever, but you know, these not only was communication seen and received by the investigators showing that these deals happened, but the way that the deals happened, anyone who has any knowledge of sports or sports business in general understands that this is not how these deals typically work. Yes, it is completely common for team sponsors to work with athletes, especially superstar athletes

19:11on teams, but those deals, especially not with a guy like Kauai, who has essentially no marketing value outside of being a basketball player, do not come together for them in the matter of days during the middle of COVID, when the season is shut down, multi-million dollar agreements that are then filled with consulting agreements back to the company who signed that deal. So it's obvious to me that this happened, the fact that they're still denying it is sort of weird and strange, but not totally surprising. To me, that's interesting because like what does Steve Balmer do? Maybe he just goes sports earth and tries to sue the NBA and other people. I don't think he ultimately goes that route because it opens up the door to a bunch of other things. But the Mark Walter investigation is interesting for a different reason because it's essentially the exact opposite where it's not easy to understand. It's incredibly complex, yeah, he was doing. And I think it has a much larger impact on sports in general because if you look at sports ownership like Mark Walter, he owns close to five to ten teams or interesting different sports properties at this point between Guggenheim and his holding company. But then you have Magic Johnson, who I know Pablo and team have dug into

20:13as well. And that was something that I wrote about when this first happened. I said, let's all look into Magic Johnson a little bit here because Magic Johnson has a very interesting story where the theory I always believed when I first started working on this was he got rich off Starbucks and movie theaters and all these different things. But if you actually look at Magic Johnson's career, he didn't make a ton of money, right? He actually has notoriously one of the worst contracts in NBA history where he wasn't making a lot of money. And then all of a sudden he's a billionaire and it's like, okay, how does that happen? The average person just assumes professional athlete, super rich, very well known. As all these other businesses, he makes a lot of money. But becoming a billionaire is not easy. It's very difficult. And ultimately what really happened in Forbes has written about this in the past, they actually credited his life insurance copy as the primary source of his income to make him a billionaire. When he acquired that business from Mark Walter, he didn't have the money to acquire that business at the equity value that he purchased it. So that was a little concerning to me. And ultimately it's really difficult to determine how that business was purchased because it's not available in the public findings. But the fact that it was then, you know, he acquired

21:15that business, the assets remain with Duganheim, which gives them all financial control of the assets. So he was basically just a figurehead for that business. And then eventually it grows so big that he becomes a billionaire. Like that makes no sense. Unless Mark Walter has some incentive to essentially, I don't want to say gift, but give him that business at either a essentially free price or a steep discount relative to what it was worth for his relationship with him. So I think that's part of the other part of it is the insurance industry. This has become like sort of one of the key themes of the insurance business over the last decade or two, which is the idea that these premiums are being invested in private credit investments, which private credit is sort of a catch-all. But that can mean everything from, you know, a bond to a private to a private company, you know, to give them money to operate their business and grow to what we saw he was doing with the Dodgers from other businesses like that. And a lot of MLB people will come out and they'll say, well, what rules did he break? And maybe he didn't break a rule in the traditional sense. In fact, MLB actually

22:17approved the purchase. It was known at the time that these funds were coming from Duganheim, and it was approved by state regulators, it was approved by major baseball, and he purchased the team. So like, fine, that's okay. I'm not saying that he doesn't deserve to own the team. And we can argue whether that should or shouldn't happen with people's retirement money. Ultimately, my guess since he's actually probably going to be okay with it because the return was so good that regulators may say, okay, as long as you clean up your books, that's okay. But ultimately, his affiliation with that and the ability to basically use or leverage an infinite balance sheet of retirement money, multiples of billions of dollars, that no other owner had access to is a massive advantage that no one else in the league had. So I think like the NBA story with the Clippers and Balmers is interesting because everyone can understand that it's so simple and so straight forward, which ultimately ends up being like a huge story. The Balmer, the Walter situation is a little bit more difficult to understand, which is challenging for people like us because we have to basically explain in the simplest terms to educate people on why it's important. But I think that the Walter story could ultimately have a much bigger impact on sports because of his ownership

23:21stake in a bunch of these other sports teams. And other people are doing similar things with insurance companies, right? Like the idea that you could go and buy an insurance company, and it basically automatically feeds your investment products for Guggenheim or someone else's businesses, has been a key theme in financial markets over the last two decades. And it's one of those things that insurance companies are now trying to tighten up over the last few years. But it certainly impact a sports valuations. And I think that if we saw that some of these funds had to go sell some of these teams because of it, it could impact valuations long term too. Well, I mean, I wanted to get back to Balmer here for a sec is, do you mention what does Steve Balmer do now, Joe? You said, what does he do now? I think that's everyone is kind of wondering, where does this lead to the next chapter of this story? And I think we're going to hit 20 episodes. I mean, right? Like where I think there's 16 as of today. And we still don't know what Steve Balmer is going to do here. And there's as Pablo and Henry Abbott talked about in Wednesday's episode on public.

24:23Story finds out is that the board of governors meetings coming up. And Steve Balmer being banned from team activities and the CFO or Gillian Zucker is alternate governor. She can't be there. So it moves to Dennis Wong who is also educated in all of this and will remains to be seen. What happens? I asked the exact question when we were doing our review with David Samson and Pablo, which is, wait a second, if your governor suspended and your alternate governor suspended. And if Dennis Wong had been, I guess the next guy on the list of he had been suspended as well. And which by the way, remains to be seen because, as I said, he's all tied up in this. Then who becomes the representative? What's the name of that show? Designated survivor. Who's a designated survivor in that case for a franchise who represents the president of basketball office? He's out the door as well. Because typically that would be a guy

25:27who would be the person who'd be the alternate governor. Well, you know, Lawrence Frank, he's out for six months. So who will represent the clippers? It'll be like some manager. Like some middle manager somewhere like, I don't know, whatever you guys say, like just on all the votes. Yeah, what a shitty role that is. You get to become the the fact of governor of the team and all you do is get bitch fat for the mistakes of your, your billionaire owner. I just think like, like the NBA sort of put him in a difficult spot. And I know you guys have probably talked about this in the past with the whole, you know, they agreed to basically a settlement with Kauai in the players association, which effectively boxed deep all meraine. But even if he wants to go to the lawsuit route, there's really nothing he can do because all of these CBAs, whether it's the NBA NFL, whatever, they basically force you into arbitration. So they would say, you know, they would effectively go to a judge and say, no, these agreements can't be litigated in public court. And we have to do this behind closed doors. This agreement needs to be thrown out because we assigns all the owners essentially agreed to give the league final say. So I don't really know

26:31what he's going to do here other than accept this punishment. But everyone's kind of on the end of their seat because that doesn't seem very steep on our S to just sit there and accept your punishment when you're worth all this money. And you've shown basically not only how much the team means to you, but what you're willing to do for the team and to potentially put the team in a place to succeed. Joe, I want to go back to Mark Walter, not maybe Mark Walter specifically, but a bigger thing. And you wrote about this, the financialization of sports, of pro sports. And when that week, the Walter news happened and then later that week, we got the Marks dad deal in Minnesota. I lamented that the NBA franchises had turned into a condo on South Beach. You buy it. Oh, I got a good price. And then some, it's like, it's going to a great location. And someone comes up and I'll pay you double. You're like, yeah, I sold it. And there's no attachment to it as a home as something that is supposed to be here forever, not just here

27:37physically, but here with my family, under my control, and then my kids one day will run this. That is dissipating tremendously. And it seems to have been exacerbated by the relaxed approach towards private equity and sovereign wealth funds as being avenues for for being able to purchase teams of financing this. I did not realize it at the time when I was talking about it, but reading your piece, it makes total sense. All of these new owners come from a world are like, what do you do? Well, I take some money here. And then I make it more money. Like I don't, I don't build things. I don't have restaurants. I don't have casinos or whatever. It's just about taking some money that I made here. And then I'm going to make that money into more money and that more money, more money. And so obviously, they're going to use all of these financial tools that maybe I don't know whether they didn't occur to the old guard or what have you.

28:37In my soul, I know this is bad. But I know also anybody who's working for either the league office or anyone of the 30 owners will just point to the bottom line and say, well, how can this be bad? So I need you, Joe, to tell me that there is something bad about this, that there's a dark side, that there's a slippery something, that there's something. And I'm not just some old man yelling into the voice. I don't like this. Well, I think you're fair to feel that way. And I just looked it up because I wanted to get some of the names right and not just off the top of my head. If you think about the people that have bought teams over the last few years, right, David Tepper, Josh Harris, Bill Chism, Gabe Plocken, Benoed Koishala, Steve Cohen, David Rubinstein, the list goes on and on. What do all those people have in common? They're not, they didn't own local car dealerships, to your point. They didn't build casinos. They're not the typical people that were buying sports teams 20, 30, 40 years ago. It was always the richest guy in town that bought the team because it was a cool thing to do. And you could win and become famous. And maybe it was a good investment. But now

29:38the investment is the main piece. These are financial guys that come from venture capital funds, asset management firms, etc. And to your point about taking this money, using it to make more money over here, sports teams have all become about leverage, right? And I think part of that is understanding how they can make more money. And it's not just about valuations going up. Like I think that's the most obvious thing and what most people think of. But this filters down to everything about the fan experience. Think about dynamic ticket prices. Think about even what the Falcons have done, right? Like everyone loves to talk about how cheap their contestants are. Like, yeah, they're cheap. That's great. That's awesome for fans. I love the fact that you can go in and get a hot dog for a dollar. But the fact is they ran the numbers and they figured out that if you're buying food and the contestants were so cheap, people came in the venue at some out of time beforehand. They built, they spent more money on merchandise, which has higher margins than any other products, right? So they can make more money in the long term by reducing the food prices. Like, yeah, sure, maybe that's a positive, but ultimately fans are spending more money than they were before. So I think that's sort of the thought process that has come part of professional sports. And then the other aspect of

30:38this is like valuations. What happens to valuations long term? Everyone's been talking about whether sports are in a bubble, right? Valuations keep going so high. And I think there's really two parts of this. One that I've seen specifically that has become paramount over the last few years is something that Aurea Manu has been discussing, which is he calls it the anti-AI thesis, which is essentially just a bet on top of AI in my opinion. And part of the reason why Josh Kuschen bought the lakeers, if you think about all the best investments over the last few years, all of these guys have been investing heavily in AI artificial intelligence, whether that is the models like open AI and ThroPik, whatever, or its data centers, energy providers, memory, whatever it might be. But what they're seeing is they're envisioning a world where AI basically becomes so relevant and so productive that frees up all of this leisure time, specifically for high income skilled workers, right? So people that are making six bidders a year, they now all of a sudden have more free time. The weekend starts on Thursday. We've seen this in hotel bookings. We've seen this in traffic data on highways and things like that where the weekends are starting earlier, people are leaving week

31:41earlier during the week, earlier during the week two. And they're basically having more free time. Now some of that may be just because the changing work culture around work from home, but I think more and more it's going to happen because of AI productivity increases. Then if you think about what they have to do with that free time, AI, their betting essentially, is going to reduce the cost of content so much, it's going to effectively drive the cost of content to zero, whether that's on social media, whether that's on streaming service, whatever it might be. So we're going to see this flood of content. There's going to be so much content to consume that you basically don't want to consume content, right? Because it's so artificial and synthetic, and there's just so much of it out there that you're going to turn to live events, things like sports. But it also impacts like Ari's buying culinary festivals. He's buying art ships. He's buying basically anything that concerts in here too. Yeah, anything that is live and is an experience where you can connect with other human beings around something that is important that you see in that moment. I think is going to be beneficial. So that's why we're seeing these valuations rise so quickly,

32:44so shortly, is because all these venture capitalists and all these people that invests so aggressively in AI are now seeing sports teams as that other piece of the barbell, right? If you're going to own a bunch of AI, you also probably want to own these landmark assets like the Lakers that have historical records of appreciation, their long term, they're almost like a Picasso, right? You can own them. But then you also have these immense tax benefits. And I think this is one thing that often gets lost in there is, and some listeners probably know about this, but you can amortize essentially 90% of the purchase price of a sports team. And it's completely legal. It's fair. And it's one of the reasons why they're doing this. If you look at Kushner, if you look at Koshla, they have these massive liquidity events coming in the next few years when open AI and other companies like that go public where they're going to be receiving hundreds of millions, if not billions of dollars in cash flow. And they're going to now going to be able to offset that with the purchase price of their sports teams. And when I talk about a bubble, people ask, how does this bubble burst? And sure, part of this is maybe fan pushing back, but ultimately, I assign probably a little probability to that. Like sports is such an important aspect of our society. And there's all these other factors that come into play with the socialism of

33:47socialism of stadiums and things like that. Where valuations will probably continue to rise. I think the one thing that can impact valuations long term is removing or reducing that amortization deduction long term. And we actually saw this with Trump's one big, beautiful bill, I guess last summer. There was a provision in that that would have reduced the amortization schedule or the amount you could amortize from 90% down to, I think it was like 50% or something like that. And basically the way this was pitched was that this was going to be beneficial because rather than the average taxpayer subsidizing billionaires, which is essentially what that is, right? Because if they don't pay the taxes, someone else asks to, so your money is now going to fund schools and roadways and buses and things like that, where their money should theoretically be used for that. That deduction was going to be reduced to 50%. It could raise, like I think they said like 10 or 12 billion dollars over the next five years. Ultimately, of course, there was like a laundry list of NFL owners. It was like hash, butter, and our dash hair is all day one down, all of a sudden started showing up at the White House, talking to Trump. Next thing you know,

34:49that provision gets removed at the last minute before the bill goes up for a vote. And I think that the important part to understand here is that they didn't do that because it was going to hurt them financially, at least in the offset. The provision was actually only going to be impacted for new owners, right? So there are a lot of these guys have owned these teams for more than 15 years, anyways, which means they've already used that amortization schedule. But ultimately, they did that because it hurts future valuations, right? If someone else comes in to go buy a team and that amortization schedule now goes from 90% to 50%, the valuation of that team should theoretically drop because the value to the owner from a tax benefit gets greatly reduced. So I think that's a huge thing that people need to think about long-term is that we get new administration whatever and actually goes and implements that. That's something that could drive valuations lower. Well, not to mention also the desire to buy more of these things. And as you're saying that these experiential kind of products and services become more valuable in this AI enhanced world that

35:51we live in. This is from the letter that Josh Kushner sent to the partners over at Thrive saying, quote, in a world of abundant intelligence, certain scarce human experiences may matter more. In a world of fragmented distribution, trusted institutions may matter, may matter more in a world where content and software become easier to create assets through the identity culture community, history, and physical experience may become more valuable. Ladies and gentlemen, you talk about the Los Angeles Lakers basically right there. That was the only way to say what I was saying. But yeah, but it's like, so I keep going back to like I see why they're interested in it. I guess how can I legitimately argue that this is bad or that there is a downside to this? That's not based on legislation or whatever that just basically that erodes the brand value, I guess, of the

36:55support property by allowing again, I mean, I the guy I was actually thinking of the most was Mark Laurie because Mark Laurie is like, why are you selling? I want to focus on this other thing. Like what? So this was just a way for you to triple your money or triple your valuation, take the money out and then go out and do some other things that you find to be interesting, which is something that I could never imagine. Look for as reviled of owner as he is. I could never imagine Jim Dullin saying, yeah, I'm going to sell the next because I want to focus on this fear thing. Like, no, the guy fucking loves the next. And as as misguided and terrible as he is as an owner, I find a certain level of like comfort and knowing, but I know he cares. In a way that Mark Laurie just, I kind of felt like we were like the flavor of the month for him. I was like, yeah, I want to look at his phone has like quietly approved his reputation because of that, right? Like he does care. And he wants to win. And he may not, you know, he may do things like facial recognition in the

38:00stadium and like absurd things. But ultimately, people understand that he's going to win the team for a long time and he cares about it. And it's not all about a financial return because that's what it may not come for a long time. But to answer your question directly, like if we think about the financialization of professional sports, the reason people should care is not because these billionaires are making two to three times of money in a matter of years. It's because they're making that money because they're leveraging fans, right? Fans are ultimately the ones that are paying for that return. So if you think about the financialization of a sports team, the idea there is that they're basically finding new ways, more aggressive ways and more unique ways to leverage their asset to make more money for the team than they have previously. So dynamic pricing was the example I used earlier, but like the socialism of stadiums is another great example. Like if you look at what the Buffalo bills did where they got all this money to go build the stadium from taxpayers that live in New York City or Long Island that are never going to go visit that stadium. Obviously, that seems absurd. Now Buffalo can claim that it gives them this huge economic advantage. A lot of

39:03those studies, obviously we know are inaccurate at best and intensely misleading probably at worse, but if you think about what they're able to do with that return, they're basically getting this massive amount of money in return. And the stadium is effectively paid off before it even opens because they can go and raise a little bit of money from private equity by selling 5% of the team, which has no control or anything like that. They can also sell naming rights to the stadium. They can sell PSLs, which are quite frankly this dumbest thing in professional sports. They can also sell luxury suites, which are usually like three to four to five year agreements for millions of dollars of corporations. Washington did the same thing, Levi Stadium did the same thing in San Francisco. That's basically the new playbooks. I think that's part of it. Are those on the decline though, the publicly funded stadium? Because I remember lots of fun of time. It felt like every stadium was either because the county controls it and you get the operating rights or straight up like they're paying for us to give us money to build the building. And I feel like we had like an inflexion point. I know bomber paid out of pocket. I know

40:10the goober and lake up paid out of pocket for chase. I just feel like there's more of the privately financed. And I know there's all sorts of reasons why they get money in different ways. Because of financialization of it, right? If you think about like what's a good example, the Atlanta breaks. Everyone talks about how they have the battering Atlanta surrounds a stadium. It's mixed use development. Now they own that. But the reason why they own it and they felt comfortable doing it was because the city and the state paid for some of the stadium in the infrastructure there. Then they went out and built this thing. They now make more money off of the retail stores there than some quarters they do on the baseball team, right? So from a profit standpoint, it's a billion dollar mixed use development around the stadium. Stan Pranky is doing this in LA with the Rams. He also just bought the angels, which you know, this isn't publicly confirmed at this point, but I imagine there's probably more about the land surrounding the stadium that it is the team itself because you're basically, you know, getting 150 acres of prime real estate in Orange County for pennies on the dollar, if you're able to strike a deal with the mayor there.

41:12So I think that's sort of part of it where the more experienced operators that come in have experienced with residential commercial mixed use developments and they're finding unique ways to build and monetize those assets more than they had in the past where an owner like Terri Pagula doesn't necessarily have the experience or the infrastructure in Buffalo to be able to go do that. So he's still realizing some of that. And to your point like we've seen certainly, I think a lot of it comes down to sort of the structure of the local government. So some of these bills when they go up can just be approved unilaterally by the governor or mayor or people like that. They just go up for basically recommendation, they get approved and their funds get transferred. Other ones have to be put up to a vote. We saw this in Kansas City with the chiefs, which is ultimately why they moved. That got put up for a vote. It got the client. We saw this in Arizona with the coyotes. That got put up for a vote. It got the client. So we're seeing much more now that taxpayers themselves went put up for a vote are pushing back. Now every city, every state does not operate in that capacity. So I think that it'll take some time for that to sort of play out. But ultimately,

42:15I think that part of this is important or also in this, right? Like Tampa Bay and Portland are trying to figure out how much public financing or how much of the tax bear should be putting on the table to help this local sports team in the arena situation. So the elected officials, the elected officials don't want to be the person that forces the team to leave, right? If you think about Chicago, the bears are another good example. When Johnson came out the mayor, he basically like, it was the weirdest thing ever. They called like an emergency press conference one afternoon for the next morning. Everyone was like, what the hell is this about? And they had this whole presentation about how the city of Chicago was going to give all this money and they were going to build this lakefront stadium basically where Chicago, where soldier field was. And once you start to run it through the numbers, you're like, this makes absolutely no sense. Not only is this a terrible deal for the city, but they quite literally can't afford it. And it started to be like, why would they do this? And literally the reason was Johnson's approval rating was so bad that he wanted to be able to say that I got the Chicago bears to stay in Chicago, in downtown Chicago. And

43:19ultimately that deal fell apart for all the reasons I just mentioned, which it's become commonplace now for these elected officials to basically be like, no, I saved the day because they're only there for a select number of years. They want to get reelected. There's a massive incentive for them to figure out deals with these sports teams rather than getting them to leave. But ultimately when it gets put up tax payers, that's where we're seeing a little bit of pushback. One of the fascinating things about the space that you're covering is it's happening so fast, these franchise sales, the loosening of sovereign wealth rules, investing in sports franchises. You have all these competitive leagues sprouting up. And it's offering us lessons in real time of why private equity is not this great savior of franchises that there's a reason why there's a 10% cap or a 20% cap on private equity owners and investments in these franchises.

44:21And I look at live, which you're covering also as, wait, we had this rival league to the PGA tour that was bankrolled by a sovereign wealth fund. And it just went under in a matter of a few years. Can you explain to people what the lesson there is for all the other sports leagues that are opening up the coffers and saying like, let's bring in this institutional money that previously was not allowed. It was banned. But now the floodgates are open. What can we learn from live? And what that got wrong and how what seemed like a bottomless bankroll ended up not working out. Yeah, well, sports watching human rights abuses is probably part of it. And I think that ultimately, the lesson there is that money's not enough to be able to go get an audience. I saw the bankruptcy filing the other day. Live says that they were generating about 5% of their total revenue from TV rights, which is the same as merchandise. Like you're not going to build a big sports property

45:24that way. But I think like from a larger picture, the MBA NFL Acceler will tell you that private equity money is allowed now. And the reason it's allowed is because it enhances the experience. You can go and build mixed-use development. That money gets reinvested in the team. But that's not really true. The only reason, literally the only reason why private equity money was allowed was because sports valuations were getting so high that individuals could not afford teams anymore. And existing owners wanted liquidity without losing control. That's the only reason. These funds are now coming in. They're giving billions of dollars for minority stakes, which is an incredible deal for them too, right? Because if you think about the business model of these private equity funds and asset managers and sovereign wealth funds, they take investor capital and they go invest that money, right? They take money from individuals, corporations, countries, whatever it might be, and they go invest that money. That money, they're able to then charge a fee. The incentive for them is to lock that money up for a long period of time in something that is a safe, predictable, historically appreciating asset. That's sports teams, right? So they're able to charge these fees on money. They're going to go lock up for 10, 20, 30 years with no

46:27involvement. They don't want to do anything for these sports teams. So it's great for them. It's great for owners because owners are now able to sell 5, 10% of their team get billions of dollars, which theoretically they were telling us they were to go invest in the sports team, but a lot of times we've just seen they take that money off the table. And it's sort of a win-win. So the other problem I would say with the institutional money though is that the rules in my opinion were almost intentionally designed to be so loose that they could be sort of navigated around, right? And the example that I love to give about this is what just happened with Mark Walt, right? It's been well-reported at this point that Abu Dhabi, their sovereign wealth owner, sort of their alternative fund for their sovereign wealth fund, invested $10 billion in his holding company before he went and purchased the Lakers for $10 billion, right? Like maybe that's a coincidence, maybe not, but I think most people at this point understand that there's probably some alignment there where they wanted exposure to the MBA. That was the way to get around. And if you're telling me that there's a cap on sort of what institutions can do with sports teams at 10 or 20% whatever it is depending

47:28on the league, but all you have to do is get that sovereign wealth fund to invest in your holding company and then you can go by the team like that seems like it's almost too easy to get around to where these leagues had to know that was going to happen and are okay with it to some degree because valuation is getting so high and the only way to increase valuations long term is not through individuals. It's through institutions. And I think that's sort of what we've seen in the lesson that we've been able to learn, which is that it's only going to happen more frequently. And the rules are going to expand it over time. Like when this started, it was just private equity funds. Then it became okay, roll out some sovereign wealth funds. Now it's, you know, Harvard's endowment can go invest in a sports team, which is sort of ridiculous and absurd on its face, but makes sense because they have billions of dollars that are sitting there. This was probably really not liquidity. They could have owned a sports team through Harvard and that's not going to happen anymore. Yeah. Is there a more stable place to park money and say in that it's of course, of course, but is it flashy and does it give your, you know, your ability to go

48:28lock up the fund and say, I can't get the money out of you even if I wanted to, right? So my point is that you're able to charge, you know, a lot of these funds charge two and 20 on investments, right? They charge two percent management fees. So every year they're taking two percent to run the operation to pay their employees, to do research, do deals, pay lawyers, whatever. And then they're taking 20 percent of the profit. Now those investments in most cases, those fees are a lot lower for sports teams because they are passive. They don't require a lot of work. There's nothing you can do from a control standpoint. But ultimately, you're still charging something. And now you're able to go lock up that money for 10, 20 years at the time where that becomes sort of a manuity going back to Mark Walter, where you're able to sort of know and forecast how much money you're going to get from that management fee over two decades rather than having someone come to you and say, let's pull this money out of the S&P 500. Like that's much more liquid. It's easy to pull out. You're able to change that. But when you start doing these private credit or these private equity investments, the scenario changes now, we're able to lock up that money for a long period of time. You're able to see exactly how much cash flow you're going to have coming in from fees. And the investment

49:28is relatively stable. Like I think we would all agree that valuations have been historically good investments over the last couple of decades and probably will be for the next decade or two as well. I guess I'm curious when you say, Park it for 10, 20, 30 years, but we're seeing Mark Walter sell it in a year and we're seeing Mark Laurie flip his money in a few years. If that time window is getting shorter and shorter, what's the long-term parking that you're talking about? So I would say that Mark Laurie has an incentive to be able to. One, there's a massive incentive for owners to either sell and re-acquire teams every 15 years because of that Mortization deduction, right? You can only use that for 15 years. So if you own a team for 16, 17, 20, 30, 40 years, all of a sudden that tax benefit is no longer useful to you, which is why we've seen a lot of these holding companies now where owners go out and they buy multiple sports teams because they basically want to restart that clock every few years to get another 15 years of tax advantages. So I think that's one thing. The other thing is Mark Laurie has a controlling stake. So he's able to go and sell

50:32this franchise for several billion dollars more than he previously will. He doesn't have an economic incentive to hold the team long-term because the team doesn't make a lot of money. Some teams actually lose money. The incentive is for you to go out and get a higher valuation because that's how you get liquidity. For the firms and the investment managers and the private equity funds, the incentive is essentially the exact opposite. Their gain is not necessarily coming from the valuation increase. Hopefully it does long-term, but they're making money on holding that investment, right? Because they get that 2% fee every year from that investment. Now, the reason why they do this is because minority stakes typically, like if I wanted to go buy a 2% stake in an MBAT, I would traditionally get a 20 to 30% discount on the valuation, right? So if I want to buy a 10% stake in a billion dollar team, you would assume that would sell for a hundred million dollars. But really, it's only selling for 50, 60, 70 million dollars because you don't get any control. Really, all you get is maybe a couple of season tickets, parking passes, etc. So you get a little bit of a discount. Institutions are insensitive to that, so they're able to pay the full amount, which is 100% great for the owners. They don't care because they charge higher

51:34management fees. And then there is no reason why they would want to take the money out because they get to get those fees every year, right? So if that money is sitting with the team, they can essentially tell their investor base, we don't have any liquidity. We don't have someone that wants to buy a 10% stake in this team because they're going to charge us much less than we would get at the market rate. The only way for them to really be able to go out and monetize that that stake at the right present value is for them to have a control sale of the team where they sell along with their rights with the control owner. So I think that we're seeing sort of this dissociation between controlling owners and the minority investors where as you get more institutional, the minority investors want to hold it. They don't want to sell their stakes. The controlling owners, as the valuation increases, the only way for them to get liquidity is either sell more of the team to minority investors or sell the entire team to another controlling owner. What's interesting to me is that the opposite ends of the spectrum, you have Walter and then you have Balmer in the sense that Walter seems like this is a financial instrument that he was buying the Lakers as a way to increase the value of Guggenheim or the other assets

52:40that he wasn't court side every game beating his chest and Rawa Raiing like Steve Balmer is. Steve Balmer is way more wealthy than Walter is, but yet he's the one who seems to really care about the NBA and really care about the Clippers and really care about being the face of the franchise. And so on one hand, you have the richest guy in sports who really cares. There's a psychic value in owning the Clippers and doesn't want to give up the team it seems like and is fighting like hell and trying to figure out what every avenue entails when he says in a letter that the Clippers will fight this with every avenue. I think people in their minds, they're thinking okay, he really wants to keep the Clippers and really wants to stay in the NBA and so he's going to fight this. Well, how can he or does he, the scorched earth look a little bit different? Henry Abbott is the coach. Yeah, I was going to say the scorched earth might just be spending

53:43a billion dollars on luxury taxes. I like that theory. Yeah, I've heard this a few places. Now, like what if he just goes and he just spends as much money as he possibly wants to on players and luxury taxes and says, screw all the other owners, I'll pay whatever it is. Now, other owners, especially small market owners, would probably be okay with that because they get a lot of that part of the term. Yeah, so that's part of the two, but as a part of the revenue share, the luxury tax payments are being dispersed among the teams that don't have high revenues. So they would be like, yeah, bomber, go ahead and spend a billion dollars on your payroll because we're going to be able to cash checks just by virtue of being in the league. So I think that's actually a reason why a lot of MLB owners are upset with what the Dodgers have been doing is because everyone looks at the Dodgers and they say they're spending all this money. They're reinvesting. That is what we want ownership groups to be looked and other owners shouldn't be complaining because if they spend more money, like Steve Cohen is doing with the Metz, a portion of that through the CBA and luxury tax sharing goes to the smaller market teams who are having a more difficult time making money on a consistent

54:44basis. That is normally true, but the Dodgers have found ways to get around that, right? Which is almost sort of makes the situation even worse because they weren't even using their own money to do this. They were using millions of Americans retirement money, but ultimately, like the best example is Otono. If you think about Otono's contract, they pay him $2 million is the $700 million contract. They pay him $2 million of a year in cash and then 68 million is the bird basically sorting 10 years out. There's a couple of benefits to that. The biggest benefit is that you don't owe that money up front. Now, you do have to fund an escrow account within two years of when that money is due to Otono. So say year one, they owe him $70 million, they pay $2 million in cash, they have to fund an escrow account with the other 68 million. It's actually less because they're counting the investment gains. But it's like, I think it's $44 million to have to take within an escrow account within two years. But Otono made the team $100 million in additional income so by the time that two year comes, you have $200 million of additional income versus 46 that you have to go put in a escrow account like, okay, easy. I'll think that deal every day. But then

55:45the bird contracts are only valued for luxury tax purposes at their net present value. So M.O.B essentially looks at Otono's contract, not as a $700 million contract, but as a $400 million contract. As today's value. So that means that they only have to pay luxury taxes on that amount. So that's one huge benefit. Then the TV situation is another where basically they have this deal locked in. It's been well reported at this point that basically they have this sweetheart agreement with Major the baseball. That was determined to the courts and the bankruptcy proceeding with why on the court in 2012 where they basically only have to share up to I think it's like $120 million of revenue each year through their TV contract, but they get like $330 or something like that. So that's another $220 million that they do not have to share through luxury tax purposes with other owners. So I think other owners probably feel like they're getting screwed at it. They should be getting tens of millions of dollars more per year in distributions just from the dollars that they're not getting. Not only are the doctors not willing to give that money to them, they've come up with intelligent ways to continue to reduce that taxable amount with other owners. And they've also used other people's money to do it, which I think is this dynamic that is

56:49hard to grasp for the average fan, but certainly matters a lot to other owners. So little bits. The average fan. I mean, you hit it on the head about what these owners are banking on is that fan interest is inelastic. Yep. That if we we can't quit fantasy football. We can't quit fandall. We can't quit watching the red socks. There is there is a risk of it. And I'm going to tell you why I think there's a risk of it. This news came out of the US open the other day. Or I got to remember which one of the players was complaining that they had a bunch of people making noise and spoken with. And so smoking we went that's just New York right. That's in New York. That's a byproduct of the relax of marijuana laws in New York. But like but the idea of like a bunch of people making noise and it turns out the people making noise were these influencers who were credentialed by the US open and they were making content like

57:53like the thing and they were doing that but in the middle of a match. And I'm like get these people to fuck out of here. But the reason they're there is because all of these sports properties are terrified because the same thing all start weekend. You walk around and you see like who the fuck are these people. They're all influencers. They're all huge on TikTok or on YouTube streamers or Twitch or whatever. But like in our sphere of like you know I like this sport. I like this sport. I paid money to go to the games or whatever. They are irrelevant. But in terms of the next generation of I guess customers they are the massive conduits. They are the ESPN or the NBC's of the next generation. So that essence that tells me hold on. There is a risk. Because this is what everyone always thought with the Super Bowl right like the Super Bowl has become way too corporate. It's like tickets are insane. I went to the Super Bowl a few years ago.

58:58It was my first time going to the Super Bowl in when it was in LA it was the Rams and the Bengals. And I got invited by Soapby who has the name and rights of the state. Awesome. Great. Really appreciate it. Whatever. We went in this suite for them. Besides the fact that I sat down you know like I wanted to see the game of course. I'm sitting in the front. I get there like literally when the stadium opens I sit in the front row this week because when you go to a suite everyone knows they have a hole down. There are seats. So I held down the seat. My brother sitting there. We're holding down the seats for like two three hours before the game starts. I don't get up. I got a pay. It doesn't matter. I'm sitting there halfway through the second quarter. You know one of the Soapby people is like Reggie Bush is here in his back first. He might have he takes your seat. I'm like yes but no I guess. No. I mean whatever. That's fine. But the part that really annoyed me was the people in the suite were to your point all influxes. They were invited by Soapby to basically post about the game and say thank you so far for inviting. Which is fine. Whatever. I don't really care that much. The part that annoyed me was they didn't care about the game at all.

1:00:01Literally at all. There was no interest in the game whatsoever until the halftime show came up. Then they all ran to the front of the suite. At their cameras out video and the whole thing nonstop. And it just like totally ruined the experience because they were so much more interested in that in the game itself. And then they impacted the rest of the game because of taking up seats and being there and talking and doing all these different things. So I think that's part of it. But you mentioned the US Open and like I think that's actually a great example of the financialization of professional sports and why fans should care because I love tennis. I'm a big tennis fan. I've been at the US Open so many times. The US Open used to be one of my favorite sporting events to go to. It was just so great. You go by a grounds pass. You go into a stadium like it was just awesome. And I think that has been greatly reduced or diminished over the years because of what the USDA has prioritized. And that is really making money. If you think about what they're doing now, the USCA for those that don't know is currently undergoing an $800 million renovation. The USDA is a non-profit. They don't have a mandate where they have to distribute a certain

1:01:02amount of revenue to youth programs like Wimbledon does. I think Wimbledon has to give out 90% of all profits every year to youth programs. The US state doesn't have it. They can basically just take the money and reinvest. So honeydews are now $23, $24, whatever they are. They're pre-mixed, they're living the experience of course. But now we're doing this $800 million renovation where they're quite literally removing thousands of the cheaper seats in the upper deck to make the lower-level court-side seats to expand up by 2000 seats and build dozens of new luxury suites that are half-ways empty during these matches. So they're literally reducing the amount of seats that people can afford to sell more seats to corporations because they figured out that on a per-head basis they can make more money doing that. Then if you look at what happened last night, yeah, it's terrible, right? And then if you look at what happened last night, we're recording this on Wednesday. I don't know when it will go out, but the Alcoraz match was last night. I'm getting to that point where I'm like, NFL football season starts tomorrow. I'm getting a little tired. I don't want to stay up till three in the morning. I didn't have twins as we discussed

1:02:03earlier. So I was able to, you know, I'm in bed watching on YouTube TV, I didn't make noises. But like that was probably the best match of the entire tournament. And it ended at 3.30 in the morning. And everyone's like, well, that's what happens because tennis matches can take a little bit longer sometimes if they go five sets and the matches before that went longer and they're great. And you know, that's just what they could do. But that's not true. The reason why they do that is because they want all these quarter final matches to take place on Arthur Ratch because it has corporate suites. What Wimbledon does is they have matches on center court and they have matches on court number one quarter final match. You as open doesn't do that because Louis Armstrong doesn't have corporate suites. They don't have any corporate suites. So they make it drastically less revenue from matches being held there versus the matches on Arthur Ratch. And I think that's a huge part of the reason why they pulled so many matches there and why they're willing to go till 3.30 in the morning. Now I know that's the longest match in the US, the latest match in the US Open History. It doesn't happen all the time. But a match between an American like Ben Shelton with Alcarez who obviously

1:03:03draws his own crowd, potentially the biggest and best match up of the entire tournament happening and ending at 3.30 in the morning is the disservice tennis fans all the name of the financialization professional sports. Wow. Wow. I've got. And that's a non-profit we're talking about. That's not profit. Someone who runs a tournament on city-owned land that has a 99-year lease, I think it's for a dollar, right? Like this should be the organization that is prioritizing the fan. So if they're going out of their way to prioritize making more money over the average fan and boxing out everyone else, what are these professional sports teams doing today and going to do in the future that have a much bigger incentive to profit and make more money off these teams? Private equities who know everything and these corporate suites to everybody. And you'll be happy about it. You'll be happy about it. You'll be at home watching on YouTube TV in my bed. That's pretty much how it's going to go. How do you think the LA Clippers fans are going to respond? Because that's one of the takeaways from the punishment handed down by Adam Silver is like,

1:04:10all right, Kauai got off easy because of the players union. We know that. Palmer suspended for a year. He's obviously furious. But the real people that lost are anyone who is an LA Clippers fan because they are looking at... Paul Shier. 10 years of... Paul Shier. ...levelment. Unless Palmer decides to spend a billion dollars on the luxury tax and probably not even then. Could that kill? Is that possibly fan experience being elastic there? That's certainly for the Clippers. Now, I don't know if that has a wider impact on the NBA. But for the Clippers, I'd be furious. Imagine if you buy season tickets for multiple years in a row. And then all of a sudden you don't have any of these draft picks. The team's going to stink for a few years. That's terrible. They should get a discount or some money back or incentives whatever it is. But that's probably not going to happen. I do think that the harshest part of this punishment is twofold, which is like, it really felt from an outside of perspective. Like, I watched the NBA. I liked the NBA. But I don't follow LA teams that closely because I live

1:05:15in North Carolina now. And I've always been on the East Coast. But it really felt from an outside of perspective. Like, sort of the tide was turning from the public narrative perspective on the Clippers. Like, they were sort of seen as like this shiny new object in town, or other belacres who don't own their arena. We're family owned until recently. Like, didn't have enough money to pay for analytics staff and recovery. And see Balmer was coming in and doing whatever it took. And like, it was going to be the Clippers era. And that has totally changed overnight to where the later from now, the new shiny toy again. And the Clippers are going to be this dumpster fire and fans shouldn't care about them again. But I do think that sort of the harshest part of that punishment for Balmer at least was the fact that he can't go in the arena that he just built for $2 billion per year. Like, that's in the sort of a gut punch to someone who can afford and do whatever he wants and always has been able to to where now you're saying like, you care a lot about this team. You care a lot about this arena. I mean, there was that famous clip that him talking about the bathrooms and how many stalls they had and urinals and all that. And he obviously cares a lot about it. And he can't even enter the building now. I guess for a concert or something like that, but for an NBA game for a year. And that sort of seems like the biggest thing because

1:06:18ultimately the money is sort of fungible to him. Right? Like, I tweeted out like $30 million fine. He makes that in 10 days of dividends from Microsoft stock. Like, it's literally nothing to him. It doesn't matter. He already spent 50 million on lawyers for the defense and the investigation. So I think that's the loophole. That's the loophole. He just has to get musical acts at half time for pregame. And then it's no longer an NBA game. It's just a concert that I'm going to. The condo. And I'm still was going to send spies in there to be watching every every entrance to make sure he doesn't enter the arena. The Bob Valentine doesn't happen. Yeah. Yeah. I don't know. I mean, look, I think that's sort of the big punishment, right? It's like if you're the NBA, what can you do that actually hurts him and detours someone from him like doing this again and sort of taking away the one thing that he actually cares about is sort of that that ability. And it does speak to what you guys were mentioning earlier about like, if the sole goal is to make money, but Balmer seems to really care like where does that sort of divide work? And I think Balmer is

1:07:20unique in that aspect where he does have more money than he knows what to do with. But he's also a huge fan and wants the team to succeed. And those are the type of owners that you typically would want as a fan, right? Angel Spanzer. Angel Spanzer thrilled that they got Stan Kronkina by their team. One because Marano was sort of this disaster, but they think that he's going to come in and solve all their problems. But if you come in and you either destroy the franchise by sort of cheating and removing all of their draft picks, or you just treat it as a financial asset, that benefit of having an owner with deep pockets sort of goes what? What is the game theory that the NBA is playing here that a lot of us myself included thought the NBA was going to go soft on Steve Balmer because they need Steve Balmer in the NBA. They don't want to get him angry. They don't want him to be an enemy of the league office and the other teams. Can Joe, you explain why Adam Silver and the rest of the owners want Steve Balmer in their like what is the $150 billion owner? What is the benefit to having him in the NBA versus not in the NBA that they would want to keep him happy? They

1:08:20would want to keep him around. Well, one benefit for the league is you get new arenas like the $2 billion into a dome, right? Like that's a huge incentive. Like Roger Budell before he became commissioner, one of his main jobs was focusing on stadium renovations and development for the NFL. That was like sort of seen as the primary job in the NFL at the time because new stadiums are showing ported and that's why they have these deals where if you build a new stadium in sort of a warm weather climate, you're almost guaranteed to get a super bowl sort of number of years out and now they've used the NFL draft as a bargaining chip for stadiums that can't host super bowls because these venues are so important to sort of the health and the future of the league. So you have the into it dome where they rewarded the all-star game basically immediately because that's the NBA's bargaining chip but it's become this huge asset. The league and sort of a kind of their made chip is hidden as an owner. So I think the league wants him there but I imagine this punishment actually probably came from a lot of the other NBA owners too, right? Because one to the the league to the Dodgers point like there is a salary cap and you're now circumventing that

1:09:21salary cap to pay a player tens of millions of dollars that doesn't help the health of the league and the financial pockets of other owners, right? Because that money is not going through luxury tax purposes but then the other part of it is like this guy's rich as he comes in here he does whatever he wants he's making this all look bad like we don't want that. So I think that this punishment was probably driven by other owners and then the league saying like this is sort of like the one thing we can as a league obviously betting on games and other things like that but having owners pay players under the table through sponsorship agreements is sort of seen as the one thing that you can't be doing as an owner and not only was he doing it but he's done it multiple times now and there was clearly nothing stopping him from potentially doing it again because he still to this day claims he did nothing wrong even after the report came out. So I think that other owners are essentially trying to say like what can we do to stop this guy from doing this again and where can we send a clear message that this is not going to be allowed in the league because other owners to see Bomber's point maybe doing something like this I think he said in his note like if you spent 50 million dollars investigating other T&G find similar things but I think they're probably

1:10:25doing it to a lesser degree right it's like we'll make an introduction to a title sponsor of the team like hopefully you guys can do a deal but we're not going to sign consulting agreements and funnel the money back to you and pay these okay that's that aspiration yeah I want to ask you Joe the SEC is investigating Dactronics and that deal at what point does this rise to the level of a bribe and it becomes fraud and not just a capture convention story this becomes the SEC and the DOJ they look at the some of these deals and say that actually these financial dealings are not just sports stuff this becomes actual criminal activity like when when when does that bar get reached that we've seen in other sports that this isn't this isn't just a capture convention story this is actually something that the SEC and the DOJ might be interested in well so with the clipper standpoint specifically it probably applies to Dactronics for sure I mean they essentially not

1:11:27essentially effectively misled investors based on Aronius reporting to determine that their revenue was higher than it was based on side deals that were being done with a company which is essentially the definition right like that is sort of true at this point I don't know what's going to happen of it politics aside we've seen with this administration like there's a little bit of deal making that goes on that sort of avoids some of these types of situations from becoming bigger situations but when it comes to ball more like I don't know if it's going to be criminal because ultimately the CBAs with a lot of these leagues have definitive agreements to basically negotiate everything in house and determine punishments and I don't know if anyone was necessarily hurt which is sort of the the I don't know if you guys saw the the press release at Mark Walter put out through his holy company twg but he essentially said I'm going to clear the air there is no fraud here no one got hurt no one knows that money etc like that's supposed to make it okay right like okay no one lost money so it's okay like yeah if you intentionally mislead people and buy them about what their money is being useful like if you're a retire if you're a random 65

1:12:29year old 70 year old couple in Indiana and you invested one of his annuities thinking that that money is being put in the S&P 500 or a standard investment like that that is super liquid and safe and historically appreciate over a long period of time like you should feel good about it and you should be certain that your money is going to come back to you when you need that money he was doing a sense of the opposite of that we're not only was he using it on riskier investments than he should have been using it on but he was intentionally deceiving public regulators doing it and he claims like I think their defense is ultimately going to come down to the affiliation rules are so okay detailed in some other cases to where we didn't know what to label is affiliated and what not to label is affiliated because yes we have a relationship with the Dodgers and yes we have a relationship with the company that owns the TV network but ultimately like that's not Mark Walter specifically and like we didn't know what to label it and that's why we didn't label it but that argument sort of falls apart when you have top bully who is a co-investor is essentially he used to work for Guggenheim now does his own thing but similar structure where he owns investment companies and insurance companies

1:13:29and sort of uses them to fund his products he owns part of the Dodgers he own part of the Lakers he owns Chelsea a bunch of other sports assets with Walter too he was reporting a lot of these deals as affiliate so he understood the assignment but Mark Walter didn't understand the assignment it makes no sense and I think regulators are ultimately going to have and they have had a problem with it and people that's me a lot like is Mark Walter going to get an legal trouble for this why is why are regulators essentially just letting him and the SEC just letting him pay back the money why is he allowed the salesports assets and just pay back the money and make the books good and be okay and that's a you know we don't know if that's going to happen I see it is two separate things like regulators their job is to make sure that retirement money is safe and that these products are regulated and they're in good hands so ultimately what they're trying to do is trying to get him to get that money in the right place the investigation federally is sort of a separate instance which is did you do anything legally wrong by not sending that these investments were were affiliated and putting them in companies the former I think is what is happening now the latter is sort of what

1:14:31is going to happen after that once the books get in order and again to my point previously I think there's probably a reason why he handed a championship ring to Trump at the White House I think that there's a reason why sort of he's been co-zing up to some other administration officials I think that they're sort of going to work out a deal where they're going to say this is just my guess but you know I think it's probably common at this point which is no one lost money the investments ended up working out really well we didn't understand the reporting guidelines we should have been more clear about that it's all fixed now the money's in safe places they got better returns and we promise and then would in the first place no harm no fat and maybe that's what ends up happening but that doesn't mean that something illegal or shady didn't occur during it eat right right I mean I've I feel I feel like Walter and Balmer if they haven't had dinner together at this point they could have a lot to talk about it is while that the two biggest stories are both LA sports team the NBA teams is the Lakers and the Clippers I saw what movie the other day it was like

1:15:37Pablo's going to kill LA sports that's the last thing he does and I I loved it because it's like you know to your point the two biggest stories are right now in LA and you know how the benefit of like it must be really weird to be like an angels fan a lippers fan and I guess a Dodgers fan because right now your whole life is turned upside down well no it's crashing down it's the Dodgers fan and the Lakers fan being because they're one in the same I I'd assume it's like it's like New York yeah that they're laughing at the Clippers and the angels and then it kind of flips all the way around where it's like oh no now the rabbit got the gun so it just feels it feels wild that the I mean you're you're writing the movie which is more Hollywood than the other like it feels that which clip is it the Clipper's story is more Hollywood as hell or is it the Lakers I mean the Genie bus side of the Lakers Lakers Lakers are always gonna have Hollywood's heart man you think about the bus that we haven't

1:16:44talked about the bus family role in all of this but yeah I can imagine a movie see now where Genie bus tells her brothers that they should have never been born and that's like the end cut credits like here we go we got the script we need yeah with the backlit kind of like that last scene in the godfather Michael is it Genie and she just spoke to the cigarette to never been born and then Jay Moore comes out and does a podcast so late Lakers fans I think they think they're sort of out of the woods now because you know Kushner and Bob Iger took over the team. Bob Iger's gonna say everything yeah yeah Bob Iger's gonna say everything and like the sort of the open in the room now is like who's paying for the team because those guys can't afford it on their own and you know you're gonna have a lot of either private equity or institutional money as well because they're gonna have to go out and raise funds now and then you know I think the other thing too is like Genie bus how far does she want to take this right like if she goes through with lawsuits and different things like that maybe it doesn't end up mattering for more Walter

1:17:45Jeigs at the business because they're technically two separate transactions but you know I'm not a lawyer so I throw around preliminary injunction like it's you know like I know what I'm talking about but my guess is there's some legal verbiage that you could apply that sort of delays that process too which could hurt Palmer Walter's ability to sort of liquidate the asset before the end of the year like yes for regulators well I know I know you're busy you've you've got a lot of hands or mouths to feed quite literally over there Joe so thanks so much for taking the time and breaking down all of this and again you can find it and huddle up the newsletter on substack I read every time it comes in because even I as someone who's you know an economics major in college and surrounded by a bunch of finance bros these stories are hard to disentangle and make sense of it so thanks so much for for doing that and joining us as a truth teller here on basketball luminati I'm sure

1:18:45it might not be nine stories in a row that you're going to be talking about the ever NBA and covering it but I'm sure there's a lot more down the pike that we're going to be talking about yeah we'll talk about we didn't even get to Matt ishpia and the money is the money that that being exsunds but that's that's for another time there's plenty of stories to talk about 10 said dividends every quarter for however many years that that one blew my mind because I was like yeah why is he in trouble like oh because he's got six billion dollars in cash and he's paid himself it's amazing he made me just hit screw my family business I want to do the 18 and just patch out and screw every investor on the way down through a spag on till next time Joe partly on thank you so much to will talk ishpia and the Phoenix sons and whatever financial scandal happens in the NBA circles so I appreciate you man thanks guys