Baltimore Orioles Owner David Rubenstein Goes 'Inside The Owner's Box'

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2:01This is the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barr. I'm Vanessa Perdomo-Magleone. And I'm Randall Williams. Coming up, we're breaking down hot-button issues in college athletics with former NFL player and college sports advocate Brandon Copeland. That's a story we'll definitely need to keep checking in on. But first, we have the honor of being joined in the studio by David Rubenstein, the owner of the Baltimore Orioles. Rubenstein is the host of the David Rubenstein show, Peer to Peer Conversations, which airs on Bloomberg Radio and television.

2:34He also has a new book, Inside the Owner's Box, based on a lifetime of conversations he's had with other sports owners. He tells a story of how he came into ownership, as well as the stories of his peers across different leagues. Here to tell us more about his book and his hopes for his Orioles is David Rubenstein, co-founder of the Carlyle Group and owner of the Baltimore Orioles. Thank you, sir, for joining us here on the Bloomberg Business of Sports. We really do appreciate you coming in. And I'm going to start because in case people don't know, and you just wrote a book about what it's like to own a sports team.

3:08Can you tell us more about that? Yes, I grew up in Baltimore. I never expected to be an owner of any sports team, let alone the Baltimore Orioles. When the opportunity came along, I decided it was a way to give back to Baltimore. And so I thought I could revive the team and maybe help revive Baltimore. So far, the team hasn't been revived. So far, we haven't done nearly as well as I would have liked. But I am very engaged with Baltimore Orioles and Baltimore and enjoy doing it now. And you talked about this in your book, the journey that it took for you to get there. and you had been interested as a kind of minority investor at first and then became the principal owner.

3:45Tell us a little bit about that journey and how it went from minority to principal. My friends in the private equity world had been buying sports teams for years, and I kind of made fun of them saying, how can you be doing this when you have a private equity investment business to operate? But they all seem to do it pretty well, and they all seem to be making money. So I thought maybe I made a mistake. But when an opportunity came along to buy a piece of the Baltimore Orioles, I tried to participate in it. Ultimately, that effort didn't fail, didn't work, and it failed. And then another effort came along where I could buy a minority stake, maybe 10%.

4:16And then I was thinking about whether I wanted to do that or not. And then ultimately, a chance came to buy the entire team, which I did. And with partners, we paid$1.7 billion for it. And now I'm in the middle of baseball. And that's complicated, much more complicated than I realized, but enjoyable. Now, I will say, I think anybody who is listening, you will want to read this book. not just for you, but you've talked to a lot of different owners out there, the Commanders, 76ers, and New Jersey Devils owner Josh Harris, Samantha Holloway, who owns the Seattle Kraken, and potentially the NBA expansion team there, Jeffrey Lurie, Tony Wrestler, Robert Kraft, and many more.

4:53Talk to me about how you curated that list of people together. Well, you might think it's more scientific than it really is. I know a lot of owners. I wrote letters to a lot of them. Some of them didn't respond. Some of them said yes. and so I took the ones that said yes and then I tried to have a cross section of different sports and different backgrounds and not have all men and I wanted to have some women as well and I wanted to have different sports and that's how it worked out. Some people who I know pretty well never actually responded to my letter saying can I interview you? People you know.

5:28Who didn't respond? Put them on the spot. I'm not going to say but sometimes people would say oh I wish you had put me in the book. I said well I wrote you five letters and I never got back from you. heard back from you. But, you know, I didn't want to embarrass him by telling them that. We're talking with David Rubenstein, co-founder of the Carlisle Group and majority owner of the Baltimore Orioles. Today's ownership world, do you think that people are spending too much money now for any kind of franchise? Well, in the old days of sports, people didn't pay these heroic prices. The New York Yankees were bought in 1972 by George Steinbrenner for $8.8 million.

6:07Today, they've just done a deal that values the team at being worth, you know, $11 or$12 billion, something like that. So these teams have seen an enormous amount of increase in value. Why is that? Population is much bigger than it used to be. There are more eyeballs watching sports. It's international. Betting has attracted a lot of fans, rightly or wrongly. And there's so many streaming and video services now that you can watch them anywhere and from any time of the day. So people are just much more interested in sports than they were before. And there are so many more teams. Think about this.

6:38In 1960, now you all are too young to know this. You weren't born, it looks like. 1960, the NBA had eight teams. That's it. The entire team was eight. The Honda League was eight. NHL was six. That's all they had. Six teams. That's all they had. And now each of these major leagues have 30 or 32 teams. So there's more people out there to kind of be available to root for local teams than they have. And people like to root for their local team. It's a very interesting phenomenon. Why should somebody root for the Baltimore Orioles if they live in Baltimore? And they're not going to make any more money.

7:11They're not going to be healthier if the Orioles win. So why do they care? Because people like to feel proud about themselves and feel good about themselves. And when their local team does well, they feel better about themselves. And that's the only explanation I can give. because logically, you know, whatever team you like the most, why do you like them? And if they do well, how are you financially or are they socially going to be better off? You're not really, you might feel better. You lose money when your team wins. You end up losing money when your team wins because you end up spending more on merchandise and tickets and everything else.

7:39So you gain experiences. People enjoy sports teams more than you might think. And it's just gotten even more than it used to be. In my own case, I liked baseball when I was a kid, but then I got involved in the business world. I didn't spend that much time on it. Now I'm more involved in it, and I'm reading the sports pages all the time. I'm talking to players about statistics, and it is amazing how you can get pulled back into whether somebody's better or not better than somebody else by measuring statistics that I didn't even know existed 10 years ago. We have a whole bunch of new statistics that didn't exist before to measure people's performance.

8:15So it's interesting when you break down the statistical part of it and how similar I would imagine it is to running a business on itself. Do you find that running Carlisle Group and other things that you've other endeavors you've done is similar or is it completely different? Completely different. And when I'm running a business organization like a private equity firm, we care about making money. Very, very important. Of course, we don't want to do bad things, but we want to make money. And we measure our success by how much money we make or the rate of return or the quantitative profits. In the sports world, you don't want to lose money, but day-to-day the owners are focused on how they're doing on the field, how they're winning games.

8:56Eventually the money will come if they win games, but they don't really talk about at owners' meetings how much money they're making. And it's not even public. In the case of Carlyle, virtually all of our companies are well-known about how they're doing, but we don't really know how the baseball teams or football teams are doing because they're privately owned. So you don't really know what their value is, their earnings, and so forth. It's a different phenomenon. When we have major league baseball owners' meetings, we don't talk about how profitable the business is, we talk about other things.

9:21profitability is not the major focus. We're talking with David Rubenstein, co-founder of the Carlisle Group and majority owner of the Baltimore Royals, and he has just written a new book, Inside the Owner's Box. Can you share any of the stories that maybe were kind of surprised you when you talked to some people in this book? I was surprised at how many people came into the sports world not anticipating that this is what they were going to do with their life. Many people bought teams later in life or mid-aig, middle-age, and they didn't think that they would ever do that. I never thought I would own a sports team.

9:56It just never occurred to me that I would really have the interest in it or the ability to get it done. And that's true of most owners. Most owners don't say when they're teenagers, you know, I want to own a sports team. You know, when you're a teenager, you say, I want to be a great athlete if you care about sports. Now people, interestingly, as I try to pull down the book, it used to be people focused on the great athletes. Now people focus on the owners. And the owners are sometimes better known than some of the athletes. Bob Kraft, for example, he's won six Super Bowls. I think he's better known than many of the players on his teams.

10:26And he can walk down the street and people say hello to him. And some of the athletes, they may not be as recognizable. It is interesting how owners have become figures unto themselves. Now, for a long time, there was an owner who was very well known, George Steinbrenner. But he was unique because he got a lot of attention for himself when most owners wanted to hide in the closet. They didn't want that kind of attention. He didn't mind it. Today, more and more owners recognize that if you're going to be an owner, you've got to be a public figure and you don't shy away from it quite as much. Do you think that it's changing now that even people who are growing up or in business school and everything like that, who maybe they wouldn't have thought about owning teams in the past, but now that's their main goal is to make a business, sell it, to be able to come into ownership?

11:09Well, think about it. In the old days, let's say 1960, 60, there might have been major league baseball, hockey, basketball, and football. How many opportunities were there? Maybe there were 50 opportunities or maybe 60 or so. Now there are like about 150 opportunities in those four major sports. So there's so many more opportunities. And today, the business has attracted really wealthy people. When George Steinbrenner bought the Yankees in 1972 for$8.8 million, he actually didn't have$8.8 million. He had$250 ,000. That's all he put in. He syndicated the rest. In those days, where were the Rockefellers or the Carnegies or the wealthiest people in the country?

11:45Why weren't they buying sports teams? In those days, the wealthiest people kind of thought it was de classe to own a sports team. That was not the kind of thing that they would do. Proper people were doing other things with their money. They were doing philanthropic things. They weren't buying sports teams. Today, the wealthiest people in the country are buying sports teams. We just noticed that Jeff Bezos, one of the wealthiest men in the world, just bought a big stake in a soccer team in England. And he put a billion dollars into it. And, you know, he wouldn't have done that or the equivalent of him if he wouldn't have done that, you know, 30, 40 years ago.

12:14I do wonder from your perspective, I had a source I was speaking with. What they told me was that private equity is sort of making its way for tech investors in sports, that we'll see more. You think of Vinod Kassla, who just bought the Seahawks. And I wonder what your thoughts are on that, considering that before you became a sports center, that private equity was your focus. And who sort of buys these things when valuations, as you've mentioned, Seahawks 9.6, Lakers 12, Yankees 12. Who buys these things long term? Well, it's not the guy working for a living, honestly. Thanks. I should disclose the fact that my team, my private equity firm, Carlisle, is an investor now in the new Seahawks deal.

12:55I think we put in a fair amount of money. A 3 % stake. Benoad Khosla led the deal. He's the guy that was a very famous and is a very famous venture capitalist. Private equity firms have gotten in because private equity firms like to make money, and they sense that the values are going up, and they can get in and get out and make a profit. In the NFL now, a number of private equity firms can buy teams up to 10%, but you have to be very passive. But I suspect in the next 5, 10, 15 years, you will see larger stakes being owned by private equity firms, and you'll see sovereign wealth funds being investors as well.

13:28Some leagues do not allow sovereign wealth funds in. Some leagues do. I think the NHL and the NBA do let sovereign wealth funds invest. Major League Baseball has not yet done that. But these things will change. And in the end, you know, people who sell these teams want to get the highest price possible when they sell. And the people who have the most money are going to be large private equity firms or sovereign wealth funds are the equivalent. That was Carlisle Group co-founder and Baltimore Orioles primary owner David Rubenstein. In the interest of transparency, we should note that Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent of Bloomberg Radio, is part of the group that owns the Baltimore Orioles.

14:02Up next, more with Rubenstein as we discuss sports ownership and his new book, Inside the Owner's Box. For Vanessa Perdomo-Megleone and Randall Williams, I'm Michael Barr. You are listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

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16:54This is the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barr. I'm Vanessa Perdomo Maglione. And I'm Miranda Williams. David Rubenstein is still with us. He's the co-founder of the Carlyle Group, owner of the Baltimore Orioles, and hosts a peer-to-peer conversations, which airs on Bloomberg TV and radio. We're here discussing his new book about the experience of owning a pro sports team inside the owner's box. Let's get back to that conversation. Can we avoid a work stoppage next year in baseball? Because I'm a huge, I remember what happened was 83 or 84 and I was shattered.

17:34I'm like, I love this sport. And it just kaboom, just stop. Can we avoid that? I've been trained by the commissioner of baseball not to answer that question. The commissioner of baseball and his people are working on a negotiation. I'm hopeful it will come to pass and we won't have any work stoppage. Nobody really wants a work stoppage. But at this point, I really don't have anything to say beyond I hope it doesn't happen. But we'll see. It's just early stages of negotiation process. Real quick, going to your personal investments. Of course, you're an investor in the Orioles. What else are you interested in?

18:07Is there other things in Baltimore or beyond that you would like to buy into across sports? Well, I've looked at other sports teams, but I haven't yet decided. But it's interesting. I get opportunities now to buy teams in sports I barely knew existed. Beach volleyball, Paddle, pickleball, women's ice hockey. I mean, the sports I didn't even know existed. Now they have leagues and so forth. And I've looked at a lot of these things. Everybody hopes that the next big sport will be the one that they invest in. Take Paddle. Padel has become very, very popular, and now there's lots of leagues, and people want to meet and others to invest in it.

18:49I've looked at that. I've looked at pickleball. I've looked at a lot of these sports. I haven't yet decided to do any of them yet, but maybe I will do one or two more. Do you think it's an engaging investment to invest in those sports like Padel and pickleball that have a high participation rate, but maybe the league hasn't gotten there yet in terms of viewership and popularity? Well, in the investment world, you're always trying to figure out where the future is going to be. And so when you have a new sport, Padel or pickleball, you say, okay, can this grow into the NFL? I mean, the NFL, when it first started, the franchises were$1 ,000, I believe it was.

19:23George Hallis was one of the original owners, and he paid, I think,$1 ,000 for it. Either$1 ,000 or$100. He didn't pay that much. Maybe it was either. It was very low. And today, his family, 100 years later, is still an owner of it. So the values of these things have gone up dramatically. Now, nothing is going to go up as dramatically or as quickly as, let's say, an artificial intelligence company. They have been skyrocketing. But sports teams have done quite well for their owners. And it's very difficult to think of a sports owner in a major sport who managed to sell his or her team at a loss.

19:56There are a couple, but very rarely. Generally, that doesn't happen. In fact, when the Yankees were bought by George Steinbrenner, he paid less than CBS had paid when they bought it. But that's very rare. Rupert Murdoch, I think, probably didn't. When he sold the L.A. Dodgers, Fox owned it, I guess it was, and Rupert, I don't think he made a profit on it, and he basically helped finance the deal. But generally, today, people are making profits when they sell these things, or they don't have to sell. We're talking with David Rubenstein, co-founder of the Carlyle Group, majority owner of the Baltimore Royals, out with his new book, Inside the Owner's Box.

20:33I want to talk a little bit about what you had said about baseball being complicated and all of those things. And you had mentioned, obviously, before George Steinbrenner owned the Yankees, they were owned by broadcasting. And broadcasting in baseball right now is very fragmented, as it has been, and fragmented across all sports, really. What do you think about the current state of broadcast for baseball? Well, it's complicated. In baseball, you've had regional sports networks, the most famous of which is one in New York, probably, Yes Network for the Yankees. Some of them are profitable. Some of them are unprofitable.

21:08Some of them are really, really unprofitable. I think what Major League Baseball would like to do is ultimately have a nationwide TV contract apparatus like the NBA and the NFL has. Therefore, we won't have all these regional sports networks. I think that will probably happen in a couple years, but it takes time to get there. Going back to your book, what is the biggest takeaway that you think readers will have after they're done, finish reading it? then owning a sports team is not as easy as it might seem. It's not a question of just throwing money at it. Here's a lot of money, go buy some players, and all of a sudden you're going to be a champion.

21:42It doesn't work quite that way. In the Orioles' case, we've more than doubled, almost two and a half times increased the salary of the players that we inherited and the ones we've traded for. And the result is we still haven't done as well as I would like. So I think the most important thing is that people that buy sports teams enjoy doing it. Winning to them is everything. Making money is secondary. And there's a lot of pleasure in owning these sports teams, but it's not as easy as you might think to own a sports team. Quick follow-up to that is, like, how do you maintain your relationship with fans who, you know, you're not the only owner who has bought a franchise in which the city has been starved of a championship.

22:23They're waiting for this moment. I mean, you think about the Knicks this season where they have a very contentious relationship and now the whole city is in celebration. How do you maintain a relationship with fans and keep hope alive in the city when they're like, oh, it doesn't really matter who owns the team? We're never in a good spot. Well, I try to be visible when going to the games. I make a lot of speeches in Baltimore to philanthropic organizations. I try to participate in philanthropies in the area. I also have historically gone out and thrown out hats to the fans and baseballs. I make myself accessible.

22:57I sign an enormous number of baseballs. I keep telling these eight-year-old boys and girls, my signature isn't really worth that very much, and you shouldn't want it. But their parents must tell them to get my signature. So I sign a lot of signatures, and I'm not really good at it. Signing a baseball is not that easy because it's curved. You win a championship, and it'll be worth something. I hope so, but I think mine are going on eBay for like a dollar. I don't believe that. David, right before you wrap, one of the things that stood out to me in your book was a quote that you had said, and it was, I hope that I can do something in my time as an owner to help address one of the baseball's biggest business challenges, the inevitable tension between large town teams and small town teams.