Gerard Pique on Kings League; New Look Intuit Dome

0:28This is the business of sports. You have to be the best in your sport to make a whole ton of money. Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr along with my colleagues Damian Sassauer and Vanessa Perdomo. Coming up on the show with the NBA Finals right around the corner, we'll talk some basketball with Gillian Zucker. She's president of business operations for the LA Clippers and CEO of Halo Sports and Entertainment. We'll also talk about all the bells and whistles at the Intuit Dome after its first full NBA season hosting games.

1:11I'm going to let you say it. Venue of the year. Is that what you wanted to say? Venue of the year? We'll also hear from former FC Barcelona star Gerard Piquet. All that and more is on the way on the Bloomberg Business of Sports. But first, we need to cover some big old money moves in the world of sports. The NFL San Francisco 49ers are the latest team that jump on private equity, reaching a deal to sell stakes in its team at a valuation of about$8.5 billion. And that's just one deal that's happening recently. Here to get us all up speed is Bloomberg U.S. sports business reporter Randall Williams.

1:52Randall, welcome to the Bloomberg Business of Sports. You know, anytime you say NFL, those three letters, man, I always perk up. NFL owners, they've approved the 49ers and Chargers sale of a minority state. Tell us more about that. Yeah, the 49ers sold to three new limited partners. They reached a world record, an$8.6 billion valuation in those transactions. And then the Chargers sold another 8 % to ARK, those partners, which was a bit surprising because if you remember last year, the Chargers sold off 27%. to Tom Gores, who's the Pistons owner. Now they're selling another 8%. So in less than a year, they've shed 35 % of the team.

2:33The 49ers have been shopping this on the market for a while. They had a lot of conversations. And it's San Francisco. I wasn't surprised that they broke the Eagles record of$8.3 billion valuation. There's a Giants stake on the sale. That'll be sold, I think, at some point this year. I think that they have a good chance of breaking the 49ers record. Let's talk about the Giants sale, like you just mentioned. So if the 49ers go on sale for 8.6, about then, do the Giants then break 10? Do they become the highest, you know, like valuation in the NFL? Like, can they pass the Cowboys, do you think? If I ask for our audience, let me just jump in here.

3:05You're absolutely right. I mean, the Cowboys are 10.3 billion last look. The Rams are 7.8 and the Giants are 7.7 billion as of what? End of this year, according to Sportico. Now you get the 49ers at an 8.5 or 6 billion dollar valuation. That's almost$2 billion more than what I'm looking at here. Does everyone jump by$2 billion? I think there's a good chance that everyone jumps something. The 49ers, I think you said 6 '8", right? Yeah. So about a billion, almost$2 billion jump. I think the Giants are the second most valuable team in large part because of brand and market and everything else they have going.

3:37I don't know if they reach 10. It depends on who they sell to. Right. Because the richer the party, so if you go to private equity, and private equity has the ability to write huge checks, but also there's CNBC reported that the coach family's interested. and they have no shortage of cash. So if the coach family said, hey, we'll take the entire stake off the market and here's a billion dollars, then yeah, they can reach$10 billion. Do they want to? Is it going to be a 10 % stake as opposed to a 7 % stake? Or I think the 49ers ended up at a 6.2 % stake. So it can get smaller. It really all depends on what the Merriantish families want to do.

4:09But if it reached$10 billion, I would be shocked. But you never know. You never know. These sports franchise valuations are rising very quickly. How are they selling themselves to pay these kinds of exorbitant sums for these teams? All of these deals look different depending on the firm. There are some that are based in payments over time. There are some that are written in a blank check. And where that money goes is up to the team. Like with the Chargers in particular, I think it's interesting because, you know, they don't have, from my vantage point, they are renting their stadium, the SoFi Stadium out for a dollar a year.

4:39Right. And they just built a training facility. So maybe it's liquidity. Maybe it's debt. There's a lot of things that this private equity and these stake sales, this money can help with owners. So it's on a case-by-case basis. I think that each private equity group is looking to provide solutions in a different capacity, and they all have different strategies. I want to talk about the New York Giants again because one of the players in there trying to maybe get up to 10 % is former Giants player and television host Michael Strahan. So I guess Good Morning America and the$100 ,000 pyramid are helping him out big time.

5:18Strahan and Mark Lazzari, the coach family, I had heard Eli Manning was interested. He has since opted not to continue, at least at the current moment. There's a lot of different parties that are interested in the Giants' stake. And the reason is because it's the New York Giants. I mean, even though they haven't been as good for the last 15 years, it's still New York. And there aren't that many pieces of a New York sports franchise that go up for sale that often. I mean, Liberty just had a transaction recently, and that put them at$450 million. You think about what a 5 % stake of the Giants will go for it.

5:49It's probably going to go for that exact same price for no control, no suite, no team playing, no anything like that. And so I think when investors like Strahan, and he's not the only player who's bought into teams. Of course, we have Tom Brady, Richard Seymour, and the late Jerry Richardson, who used to own the Carolina Panthers. When they're looking at these things, the NFL is a bulletproof business. And so if you can get in at a 2%, at a 1%, or even like a Charles Woodson at a 0.1%, that investment is going to topple itself over time and you're going to continue to make money even if it is a tiny stake.

6:20That's an interesting part, though, that you brought up about the Liberty and how it's now basically doubled the valuation of any other women's sports franchise. That's why I asked the idea of$10 billion for the Giants, because it feels like if you're getting$8.6 billion for the 49ers and all the other sales we've seen recently, that maybe market doesn't matter as much, but shouldn't New York matter more? It does. If you think about it from the angle you just said with the WNBA and that the Liberty are based in New York, the Giants are based in New York. And the reason that the Cowboys, of course, are over the Giants is the real estate component.

6:55And I think the 49ers could build that over time. The L.A. Rams are basically going to be building a city, which I think is going to rival the Cowboys valuation at some point when they get that city built. And New York in particular, the real estate, as we all know, is at a minimum. them. And so if you're able to get something like that, and then you build a training facility, you build a practice facility or whatever it is that can then be a multi-purpose facility that can hold different events, different things, such as you hosting an NFL draft or a Pro Bowl or whatever else it is. Whoever else wants to come in and Fanatics wants to have something there.

7:28That helps bring in so much more money. I mean, Beyonce is at MetLife right now. The NFL in 2023 generated$18.7 billion in annual revenue, and that was 2020. Their media rights alone are$12.5 billion of that, right? So it's two-thirds of the pie. But here's the interesting thing. Two-thirds of that are national media rights, which has already been negotiated out, and we know where that's going. It's the non-media revenue for these teams compared to Major League Baseball, the NBA. It's a very small percentage in the NFL. So it can, I imagine, grow exponentially, or am I wrong, Randall? No, no, you're right.

8:00But you haven't mentioned the scariest part to me, which is that the NFL's media deal right now is$111 billion. That was five years ago, right? The Super Bowl was 40 to 6 at one point and 127 million people watched. So when the NFL's media deal, the opt-out is in four years or so and it expires in 2031. Let's say in 2029 or 2031, it doesn't really matter the year, but if they continue on this trajectory and YouTube wants in and the NFL adds an international package, what in the world is going to be the media rights agreement then? Is it going to be$150 billion? And then what happens to valuations?

8:36We're in a world right now with valuations where buying a 5 % stake in the Giants could very well be$500 million. Now, add$50 billion to the media deal, as you just said, which makes up the most of the team's revenue. So then what? Is$500 million going to be a 2 % stake, a 3 % stake? I don't know who's going to buy these franchises when they get to a point of$12 billion total, and you need to have 30 % of that in cash up front. I tell you a family, though, that could do it, the middle family. Absolutely. Now, they are loaded, and they're talking about investing a billion dollars in the Celtics.

9:10Yes, they did. Of course, Bill Chisholm, he's made a bunch of headlines for buying the Boston Celtics. There's been a bunch of speculation as to if he had the money. If he didn't have the money, he had a billion dollars from Sixth Street. Now he gets another billion dollars from the middle family, and this is going to help him get across the finish line. So that Celtics deal, I think if someone were to say it's done, it's just about done. All it needs is NBA Board of Governors approval, and we will have a new Celtics owner pretty soon. The original deal was supposed to be broken up into two parts, right?

9:39Does this help this just get done now, or is it still going to be two parts? It's still two parts. The first valuation is 6-1, as reported, and then when they close on the second part, it's supposed to be 7-3 for a blended valuation of about 6-6. So it's still going to be a massive number. I think what's interesting about this is the upcoming summer for the Boston Celtics and who's going to be calling the shots is probably still going to be Wick Grusbeck, who has said he wants to stay on board and see things until that 2028 finish line. But I don't think he anticipated the Celtics season ending the way that it did, of course, with now having to pay Jalen Brown, Jason Tatum, Derek White, Drew Holiday, and all these other players that Shams Charani has reported that the Celtics are going to be in the deal-making this summer, the deal-making market this summer.

10:25And so when you keep that in mind, where do the Celtics go? Do they get below the luxury tax? Do they decide to build their own stadium? There's a lot of interesting things happening in Boston right now, but the deal market for them is going to close. And Randall, the NBA, as we know, is a very different animal, right? It does about$11,$12 billion in revenue per year. And their media deal, which is, I believe, with Disney, NBC, and Amazon Prime, is about$7 billion a year. So roughly 40 % of the league revenue comes from its media deal. What's interesting there, though, is to your point, concessions, parking, ticketing makes up another healthy 30%.

10:57The Boston Celtics don't own their own stadium, right? So for them to command that$6.2 billion valuation, that's a little interesting to me. You're right. I think the most interesting thing about it is the Trailblazers just went up for sale recently. And so if you're an interested buyer in the Trailblazers, what do they go for? And then if you're an interested buyer in an NBA expansion, do you want the Trailblazers? Do you want Vegas? Do you want Seattle? All of these things are now in the mix. And the question is, what is valuable to these investors? Because if you buy the Vegas team, everyone wants the Vegas team because the luxury suites are going to sell like popcorn at one of these games.

11:37But with that in mind, is the Vegas team worth more than Boston because they could own their own stadium, or is it worth less? That's going to be determined on the market. But you're right. I think it's shocking that the Celtics got to 6-1, but I can tell you NBA owners are happy. Randall, I know we're out of time, but I remember, and I was just saying this one year ago. I said, well, when does an owner make money on the team? Well, when they sell it. Well, that was a year ago. Now private equity came in, Randall, and just blew it out all the blazes. It's helping out a ton. I mean, one of the things that I've always said is that all of these people are rich.

12:13All these people are wealthy. Not all of them are rich. Some people, this is truly a family-run business. and then there's some people who this is a business that their family inherited. And there's a difference. Just because it's a family-run business doesn't mean you're making money. It could just be that mom and dad tossed this on you, and this is how you're rich, so now you have to figure out how to operate it. Well, if you sell a little bit to Arctos, you sell a little bit to Aries, you find five different people who want to buy 2 % of your team, guess what? Now you have liquidity where you can go and buy your yacht.

12:40Our thanks to Bloomberg U.S. sports reporter Randall Williams for joining us. Up next, we hear from former FC Barcelona star Gerard Piquet. From my colleagues Damien Sassauer and Vanessa Berdomo, I'm Michael Barr. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

13:01This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports. We explore the big money issues in the world of sports. I'm Michael Barr. Vanessa Perdomo is our resident expert on all things soccer. And recently, she got a chance to sit down with former FC Barcelona and Spanish defenseman Gerard Piquet. Piquet co-founded the 7-on-7 soccer league known as the Kings League. He joined Vanessa alongside Kings League CEO Jamel Agama. Let's listen in on that conversation. Break us down a little bit about Kings League. We know it's not the style of soccer you were playing in your career.

13:40So tell us about how it's different and why you started this league. Well, we started this league. The first idea was mid-2022. Then we executed and started the league January 2023. It's a format. It's a very dynamic, quick format. Seven versus seven. So the pitch is smaller. 20 minutes each half. So it's a 40-minute game where we use most of the traditional soccer rules. But also we introduce different rules that it's more like a video game. For example, Goldobel, all of a sudden in the middle of the game, it's three versus three or two versus two. So people really get pretty wild when they're watching it live.

14:22And yeah, and we like to play this role of half real life soccer, half video game that I think all this new generation, they love that. We have 85 % of our audience less than 35 years, and they really love to interact with all our products. So since the beginning, we put the audience in the center. We asked them absolutely everything regarding rules, regarding the times of the game, what time they want the game to be. Even the grass, the color of the grass, which was green and now is black. It's because the audience want that. So for us, it's very important to do that because traditional football is the other way around.

14:57Traditional football, the audience, they don't have any opinion, any vote on anything. There is FIFA, UEFA, the leagues that they decide whatever they want. In our case, we wanted really the audience to feel part of the product. And since the beginning, we went in that direction. Even the small things like the rules and all of that, like the three on three, two on two, all of those things were things you heard from fans that they wanted. Or how did those concepts come up? Exactly. I mean, from the beginning, we started with some rules that the audience wanted. But during that process, now it's already two years and a half that we've been with Kings League, the audience decided to change different things.

15:36And we've heard them. And now it's the product that they want, which I think that this is perfect because they are very engaged to everything what we do. Another example, we have the World Cup of Nations, which basically is like the FIFA World Cup, international soccer. And some of the players are chosen by the audience. So in Spain, they choose the best players of the Spanish league to represent their nation, their country in the competition. And it's the audience that are the ones voting and they really feel part, like they are choosing the team. So this creates a lot of engagement. A lot of leagues would kill to have this interaction with their fans and that demographic of 35 and under.

16:12Tell me how that makes you guys different, how it set you guys up for success. It starts by the audience. When you target the young generation, Gen Z, Gen Alpha, you have to take into consideration the three characteristics that define them. The first one, they consume most of their media on a mobile phone. So we design a product which is produced for the mobile phone first. everything is designed and produced in a way that it will work very well on a mobile phone second this is a generation which is which has billions of options in terms of content consumption and they have the technology to navigate these billions of options the algorithm allowed them to just swipe up and go from content to another content if they don't like it which means that if you want to keep them watching any kind of content you need to have something which is very intense.

16:57Something must happen every two, three minutes in a game. That's why we adjust the rules as much as we want or we can because we really want to maintain this excitement every two, three minutes. Something must happen on the Kings Geek pitch. It can be a goal or it can be a game changer with the induction of the number of the players or the rules are changing for a while. And the third characteristic is the interactivity. This generation is used to interact with their content creators. With their content creators. They like that. They want to comment. they want their content creators to read these comments comment on these comments and they have these interactions my generation, we didn't have this opportunity we were listening to all the same comments and there was nothing like that that's why we have integrated into our concept content creators that represent the teams they all are the face of a team and they interact with the audience with their fans in a way that you cannot find in other traditional sports and those three characteristics are really the three factors that explain the success We have basically built a product that fits perfectly with the generation of, you know, 13 years old to 30 years old that have this kind of need in terms of content consumption.

18:04Yeah. And I'm glad you brought that up about the content creators who are parts of the league and things like that. As a former player, you would think, you know, you would just talk to your other athlete friends and other athlete investors. And that's how a lot of other traditional leagues, you know, bring in athletes and things like that. I mean, you do have some, obviously, your former teammate, Iker Casillas, who I was a big fan of. I used to use his gloves because I used to be a goalkeeper. you have him as a part of it, but it's also the streamers and Twitch and all of these other people.

18:30Tell me why that was part of what you were thinking. And was it really the key, the content creators? Yeah, the content creators or streamers were key because they have a huge community, very loyal to everything what they do. Any project that they launch, they jump on it because they have a constant interaction live with the streamer. So, for example, the streamer is at home. For five hours, he's talking to his audience, and his audience in the chat can interact and ask questions, and they feel very connected, much more connected or engaged than my fans with me or any sports celebrity or artist or actor because they have this, on a daily basis, constant interaction.

19:12So at the moment that we gave that ownership to these streamers and they felt that it was his team, we knew that all their audience would jump in the project and if we put together all these communities with the streamers thanks to streamers the league started with a huge amount of people following the teams at the same time we wanted also to invest to involve legends like Iker Casillas Cunagüero now we have a bunch of I don't know 30, 40, 50 we have La Minha Mal that has a team which is the new big thing in Europe we have Neymar having a team in Brazil we have Kaká as the president of one league We have Zlatan Ibrahimovic as the president in Italy.

19:50So we wanted to involve all these legends because it gives, obviously, credibility to the project. At the same time, all these traditional media talks about it because they are part and they play a role inside the project. And this mix between the digital world with the streamers plus the traditional world with the legends, it's perfect. It's perfect. So all we have, we are mainstream. All the audience follow the competition. Did their excitement and their hunger for their streamers' content and stuff, did that surprise you at all? A lot. I mean, they are extremely committed. Very surprising for myself because I thought that Iker Castillo or Kuna Huero or this kind, they will be relaxed and, okay, I have a team, but I'm not very involved.

20:34They really suffer when they lose. I mean, they really, when the referee is not doing the right job, they criticize the referee, they call me, listen, I mean, and what's happening here. So you can feel that the commitment they have is huge, much bigger than what we could expect. And the fact that they are involved with the streamers and they have contact with this new young generation that maybe they didn't see them play when they were football players, but now they can have that interaction. I think for them it's great. They really enjoy it. And there's no legend that have left the project or that is not involved.

21:12No, no, the other way around. They are very committed. Yeah, I love that. And so let's get back to the World Cup and the World Club Cup. So you have the World Cup of Nations in January, and then we'll have the Kings World Cup clubs in June. Jamal, tell me about adding those and why that was something. Was that something that came from the fans and you guys listened like immediately? I mean, this is two years in and we're already having all these things. You've already expanded to so many different countries. Yeah, that's the thing. When you work with these streamers, there's no border. They have fans everywhere in the world.

21:45We started in Spain, but we noticed very quickly that 40 % of the audience was coming from Latin America. So we said, well, let's bring the product there. And then we created the same league, the same two leagues, by the way. I want to insist on that. We have Kings League and Queens League in Spain. And we created the same two leagues in Mexico, Kings League and Queens League in Mexico, which is a Latin American league with 12 teams. But some teams are representing Mexico. Some other teams represent other countries of Latin America, Argentina, Chile, Peru, Colombia, etc. And then the success was about the same in Mexico.

22:21We said, well, we should continue to expand. And then we decided first to organize the first Champions League, the first World Cup of clubs last year in Mexico. At that time, we had only two leagues. So we invited the best clubs of those leagues to participate. Plus, we distributed some wild cards to a dozen of countries, one team per country to expose the product and we saw in countries like France, Italy, Brazil, Germany a lot of excitement around our product so we said okay let's go for it and we decided to open more countries so now we have six countries operational on top of Spain and Mexico we have leagues in France, Italy, Germany and Brazil for now it's only Kings League on those four countries but Queens will come absolutely it's important for us and we'll continue with our expansion the beauty about our sports soccer is played everywhere there is excitement everywhere about the sport and we receive a lot of inbound interest from a lot of countries in the world that see that the product is really exciting for all the young generation all over the world and we'll continue with this excitement World Cup of Nations it's because Gerard told us when I was a player, wearing the jersey of your country is something which has no equivalent we should do it and our calendar was pretty packed, but we found a way to squeeze it in in January and we did a crazy event from January 1st to January 12th.

23:45It was in Italy. 16 countries, national teams, the best player of each country competed. At the end, as often in football, Brazil won in a final that happened in Torino in the Allianz Arena of the Juventus. 45 ,000 fully sold out on January 12th for a final Brazil-Colombia in Italy. So it showed the interest and great success. In this competition, for example, we had 100 million viewers on 10 days of competition. Wow. I mean, it's clear that you're obviously getting success and everything there, and all the numbers are pointing upwards. But from a business perspective, is it hard to keep up with all of that growth in such a short amount of time?

24:30It is. Of course it is, because we have to execute events in the right way. We want our product to be the same everywhere, which requires us to be extremely strict in the way we implement the product everywhere. Kings League has some codes, and it's a unique brand, the same product. We are all part of the ecosystem, so it is. It's difficult to recruit talent to execute all that. But the project is so exciting. It's true that we have a lot of excitement around all of us. In all the stakeholders, the content creators want to work with us. the legend of the game. They call Gerard very often to ask him if they could squeeze them in a team.

25:07And the brands, the brands want to be associated to our product because it's a new, modern product targeting young generation. It's a challenge, but so far, so good, and we'll go on. Well, guys, thanks so much. I'm really excited about Kings League, about soccer, everything going on in the U.S. I'm really pumped. So thanks so much for joining us in the studio, guys. Thank you very much. Thank you, thank you. That's former FC Barcelona Gerard Piquet along with Kings League CEO Jamil Agawa speaking with our own Vanessa Birdomo. Up next, we turn to basketball and the NBA's newest arena coming off of its first full season.