Kohler CEO David Kohler on Family's Golf Ties; Unrivaled $120 Million Funding Round

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 Scarlett Fu and Vanessa Perdomo. Damian Sassauer will be back next week. Coming up on the show, we talk golf and the PGA Works Collegiate Championship with Kohler Chair and CEO David Kohler. The Kohler family owns Whistling Straits in Wisconsin, host of that tournament. We'll talk with him about his family and company's long relationship with golf.

1:07We've been really good partners with the PGA of America for decades. All that and more is on the way on the Bloomberg Business of Sports. But first, Unrivaled Sports, which runs a bunch of youth sports venues and events, is raising$120 million in a funding round led by Dick's Sporting Goods. Here to talk to us about Unrivaled's latest plans is Bloomberg News senior reporter covering celebrities and athletes, Kim Bessine. Kim, welcome back to the Bloomberg Business of Sports. Always, always happy to be here. Another great article, you mentioned that Dick Sporting is leading a$120 million funding round for Unrivaled.

1:49Tell us about that. Yeah, so Unrivaled Sports is a youth sports company. They own a bunch of venues and do all these tournaments programming for kids. And Dick's Sporting Goods has been pretty active in this space. They haven't done events themselves, but they do have a company called Game Changer, which they bought back in 2016. It's a streaming service. It started as like a scoreboard. You can watch your kids' scores live as they're playing on some field somewhere. But now it's a whole streaming service where you can watch them play their games. Wow, I never knew that. That's a great idea that you have a scoreboard for your kids.

2:25I'm sorry, Scarlett, but it's a great idea, man. It's all about how youth sports is becoming much more professionalized than it ever was. It was kind of a grab bag before of parents volunteering their time, and now it's becoming something that rivals college sports, something that is really streamlined and easy for people to use. The user experience is high. Kim, tell us a little bit more about Unrivaled because it's got some hefty PE titans behind it. It does. So Josh Harris and David Blitzer founded this thing last year and they hired Andy Campion, a former Nike and Disney executive, to run it.

3:01And the big takeaway there is that this is national. This is not just a little thing where they buy a couple properties. They operate in 30 states now and have grown from starting with baseball and softball. Flag football is now a big focus for them. They started to work in lacrosse, and basketball seems like it's going to be another big expansion point for them. Just a natural expansion from where they're coming from. And obviously Josh Harris and David Blitzer know many people in the world of sports themselves. They do. They know everybody in the world of sports themselves. They know everyone in the world of sports themselves.

3:42They're massive in this industry. So tell us about the strategic strategy behind bringing in Dix in this way, because they obviously, beyond just raising the capital. Yeah, Dix has like 850 stores across the country, but they also have this thing called House of Sport. Have you heard of that? Yes. Yeah? Oh, my God. It's a venue for birthday parties. I've gone there so many times. Yeah, House of Sport. So they have all the, it's like, yeah, you do community events in there. You have all the kids in and basically have a sports-related party, right? Organized gym class. Yes, an organized gym class.

4:17And when you pair that up with what Unrivaled offers, like, this, it just makes a lot of sense, right? Wow. Well, I didn't know. I don't know anything. But can you do the new weddings? Nothing. Anyway. I mean. If you pay them, I'm sure they'll let you do it. We can look into that, Michael. Now, Dick's Sporting Goods, they are also going to have a big influence on the company's board of directors, correct? Yeah, and that's how they're going to explore partnership opportunities between these two companies, right? So Dick's has been, again, really active in this space. Think about how much business goes through youth sports into Dick's Sporting Goods, where you buy all your soccer balls and your baseball bats and anything you could possibly need for your kids to play sports.

5:08They're going to be there and they're going to be involved. And in a lot of ways, it's like that's as important as the flashier parts of their business, like running shoes and Nikes and things like that. Is the idea of them to be at these events that Unrivaled is hosting? They haven't revealed anything about how they're going to work this out, and I think that's something they are still figuring out how to approach. They should have pop-up stores, because I don't know how many tournaments I used to go to and forget my cleats. I had to have a separate pair of cleats in each of my parents' cars.

5:38You had to buy cleats on site? I'd have to go to a store somewhere else and find someone, because I forgot them in my bag all the time. That makes a lot of sense, actually. So, Kim, you talked with Andy Campion, the CEO. Is there any sense that this is a company unrivaled that will at some point go public? Yeah, it's really, really early on, right? They've only been around for one year. And I believe they host about 1.4 million visitors a year, 15 properties so far, looking to expand. Again, they're going to spend some of this$120 million they just raised on more properties, more leagues. and they own Cooperstown All-Star Village, which is a family resort plus a baseball tournament for the kids where they stay in bunk rooms.

6:25Yeah, Ira Budwe wrote about it on Bloomberg Businessweek. Fantastic article, by the way. Wonderful story about private equity. Call back to a previous Business of Sports podcast episode. Yeah, Ira really dug deep into this about private equity getting involved in youth sports and, again, professionalizing this essentially, right? It's becoming more corporate than ever. Now they're talking about also getting into an opportunity, New England flag football. New England flag football. And they're rebranding it as Unrivaled Flag. Flag football is one of these areas in youth sports that everyone is paying attention to.

6:59You know, Nike, Under Armour. The NFL says that they're prioritizing this and trying to develop that so that they have more grassroots interaction with the sport in a way that's less dangerous for kids, right? So flag football, big focus, and Unrivaled thinks it's going to be their next big thing. I mean, everyone wants it to be their next big thing leading up to the Olympics. Is Unrivaled flag starting this year and leading up to the Olympics, or when is that getting off? It's just been rebranded, right? So it's been operating this whole time as New England flag football, but they'll still be going.

7:38And flag football, anyone here play flag football? Yes, Paterpuff. That makes sense. That also tracks Vanessa. Yep. That was amazing. You were. I was. I mean, I almost didn't go too much. What position, Vanessa? I was a receiver, and I also did play both ways, but I was mainly a receiver, and I remember going, I almost skipped an entire college showcase one time to play in the games. It was only once a year when I played in high school, and I wish I had this opportunity that the girls have now, right? Right. Because it's big for girls right now, right? Right, right. It's a big focus. Yeah. Were you like a slot receiver or you were just mossing people?

8:13I was just mossing people. I was just mossing people. I was getting the OBJ catches, actually, I would say. You guys are using terminology that Michael Barr and I are just shaking our heads at. The mossing. Wait, Kim, I want to ask you about another story you wrote recently about PepsiCo and how it now has a chief sports officer. Oh, yeah. What does that chief sports officer do? Brett O 'Brien was named chief sports officer at PepsiCo. When I say PepsiCo, I mean the whole thing, right? That's La Frito-Lay and Gatorade and Pepsi itself, Starry, all the stuff they own. And they've reorganized their marketing arm into one big marketing thing.

8:52So previously you'd be like the Gatorade guy and you do all the Gatorade marketing in sports. But now they've put it all into one division and are separating it by sports. So those experts will be the NFL person and the basketball one and so on. And that allows them to really focus in on individual sports with these big, like, anthemic campaigns. And the most recent one was the Gatorade campaign with Kendrick Lamar. His first one of these types of giant ad campaigns with a sports-related brand. And they used all the stops on that one, right? The athlete endorser list was, you know, Caitlin Clark.

9:33It was everybody. I mean, there's a lot to this with this PepsiCo thing, because I'm going to get a little more into this. Because, I mean, they're looking more into, I guess, rebranding is the best way I want to describe it. Because like you said, it used to be individual products. Now, it's the whole complete picture. Yeah, and if you look at it from Frito-Lay's standpoint, right, you have all these properties, Cheetos and Doritos and everything. And if you sign a deal like they have with the World Cup, right? So Frito-Lay is a sponsor of the World Cup next year, and they'll be running a bunch of programming around that.

10:11You want to get all these different brands involved. And by centralizing it, it gives you a better, you're putting the mindset where everyone's working toward one goal. And so we're going to see a messy hot Cheeto from this, is what I'm assuming. Oh, man. Will they be shaped like messy? Well, LeBron and Jason Tatum and all these stars have their own flavors of chips. Yeah, that is true. But I'm thinking the messy shape would really hit it here. That Charizard shape. Just in time for World Cup, right? Sold for like a million dollars. It was crazy. I feel like this is kind of, it opens the door to other consumer packaged food companies to do something similar.

10:51Coca-Cola perhaps might look into a chief sports officer as well because it makes sense from that point of view. Yeah, I think it does. And when you think about how involved these giant brands are with sports now, I mean, the sponsorship deals are just growing and growing and growing. More endorsements, athletes earlier in their careers and their lives are getting signed. It's essential. It's become an essential part to the advertising ecosystem. them all right what happens to when you get like you're going to see it and that was a great question that you that you brought up scarlet because when you put coca-cola and pepsi together you're going to see all this going on here here's going for the world cup here's going for the super bowl this is this is going to continue on and like old man bar has got to remember you know just like they used to advertise gillette in the 1972 super bowl that's all going to change.

11:46This is going to be the wave of the future. Hey, Gillette's still around. They're doing something. I think the best way to look at it is the sneaker wars that have been going on forever. Nike, Adidas, all the Puma, all the teams around the world, they're just hopscotching from place to place trying to win over leagues, trying to win over teams, trying to win over athletes. And, you know, Nike signed what the German soccer national team was. That is quite something. It gets you get all up in there. Our thanks to Kim Bessine for joining us. He covers celebrities and athletes for Bloomberg News. Up next, we go behind the scenes at KPMG Sports Business.

12:27For my colleagues Scarlett Fu and Vanessa Burnomo, I'm Michael Barr. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

12:39This is 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 Scarlett Fu and Vanessa Burnomo. Damian Sassauer will be back next week. KPMG U.S. has a sports division that focuses on helping leagues, franchises, and venues run their businesses. Joining us now is Sean Quill. He's KPMG's sports industry leader and also heads up the sports sponsorship strategy. He is here now to take us through how his firm is looking at the current sports landscape, the rise of private equity, and more.

13:21Sean, welcome to the Bloomberg Business of Sports. Great. Thanks for having me. Well, let's talk about KPMG US and the firm that you are behind. Tell us about this firm. Yeah, KPMG is one of the big four accounting firms here in the US and globally. here in the U.S. we have 36 ,000 people and are in every major city. And I have the privilege of serving as their national sports industry leader. So I look after our sports practice, which serves the leagues, teams, facilities, does sports deals and things like that. So it's a great place to be a part of. So let me ask you, Sean, at KPMG, your group helped advise on Bill Chisholm's$6.1 billion purchase of the Celtics back in March.

14:06What surprised a lot of people is how the team was even up for sale, given the Celtics had just won the NBA championship, and then it happened fairly quickly. I'm curious what your firm did in the process and what surprised you most about this process. Yeah, it was a really interesting deal to be a part of, and it was a privilege to advise Mr. Kism on it. We provided financial due diligence and tax advice on the deal to Mr. Kism in his purchase. And yeah, it is interesting that the Celtics were up. I think that a number of owners are considering investment more so than they have in the past. You know, the inflection of private equity, rising valuations, the need for capital are all driving interest in either investors, both from a minority interest, but also in this case, a controlling sale.

14:58And the Celtics certainly are one of the premier franchises within the NBA, such an amazing legacy, and again are in the playoffs this year. And so it is one of those scarce, amazing assets. So we were fortunate to be part of it. Sean, what do you think it is about the current landscape of sports, of ownership, that is making more owners, you know, get more interest from investors, be more open to private equity and that sort of thing? Yeah. I mean, for the owners, there's a lot of benefits, you know, from private equity and other investors. And so a number of owners that we're working with, we advise more than 50 of the sports franchises around the U.S.

15:42across the five major men's sports. And, you know, they're looking for liquidity in some cases. There's changes to family ownership structures, people that are looking to no longer be involved. They're looking for investment capital. I think the number one trend right now in sports is around facility renovation or new builds. So stadiums and arenas coming online and significant cost of investing in those new facilities. So, you know, private equity in particular offers a lot in that space in terms of not just the capital, but the business acumen to come alongside of it. And it does create a marketplace for valuations, you know, all of this additional support.

16:21You know, there's, it's a, it's a fixed asset pool in terms of professional sports. There's only so many assets. They're not increasing. It's not like a housing market. Nobody's building more franchises. There's a few potential in the future as we have expansion, but you know, it's a fixed asset pool. And as the valuations rise, it gets harder and harder to, to purchase those assets. You know, there's rules in terms of how much the principal owner has to put up. And so fewer and fewer people can afford that. And so, you know, I think that that makes it really interesting when they come across the market.

16:51But, you know, from owners seeing those valuations rise, I think some of them are looking to cash out. I think there's changes in family dynamics in other cases and or dreams of doing other things and better to build a new facility with someone else's money than their own. As a sports guy, this is the only time I can say, especially in the NBA playoffs with the Knicks and the Celtics, that both teams are playing at the Garden. I can say that and I will not be wrong either way. Which has to be a big shot in the arm, especially from this big acquisition of the Celtics. And the team has just been super duper successful.

17:32Yeah, I mean, what an exciting series. There's a bunch of them going on right now, and they're thrilling to watch. And it was great to – I mean, for me, we have a relationship with Stephen Curry, so it was great to see the Warriors clinch in Game 7 and move on to the next round. And that's great for basketball. And, you know, you're right. It's an exciting time for the NBA. NHL playoffs, of course, going on at the same time. I mean, with the NBA, I think, you know, we've seen the belief in the reliability of the business in last year's media rights deal, a record deal for the NBA. $76 billion.

18:04It was 160 % per season increase in meteorites. So you think about how significant that is. And that is obviously something like that drives the valuation of the Celtics. Interestingly enough, though, in the Celtics deal for the$6.1 billion valuation, it doesn't even include TD Garden to your garden reference. The Celtics don't own the garden. So that is actually, to me, especially interesting that I think we're going to continue to see soaring valuations in sports. Even though the Celtics are one of the top franchises, it doesn't include the building, doesn't have their own media network. There's a lot of aspects to it that drive those valuations, and certainly those are part of it.

18:44So yeah, an exciting time right now in basketball and in hockey. Yeah, I'm glad you mentioned how that deal did not include the facilities. It just speaks to the brand value of something like the Celtics. You had mentioned, Sean, that it's better to build with someone else's money than your own as a reason for teams and franchises to take on institutional investors. If you look at the New York Giants, the Mara and Tisch families are looking to sell some of their stake in the New York Giants. They were looking to spread that stake around to two to three wealthy individuals and families as opposed to private equity.

19:19What is the argument for team owners wanting to keep P.E. out of the team for now? Hmm. That's a great question. I think that it's going to depend on each ownership group and their personal preferences. I do think that private equity is attractive to a lot of owners. It not only brings the capital, but it also brings the business acumen that I mentioned. Private equity is accustomed to running and operating businesses, making them more efficient, realizing the value of data and analytics. And sports is primed to have that kind of inflection of business acumen. In particular, data and analytics, like in terms of new facilities and new stadiums and just in terms of the loyal fan base, you're only at the tip of the iceberg in the industry in terms of leveraging data.

20:05There is so much potential. We know so little about the typical fan, about why they come, when they come, what they consume while they're there, what would bring them back, how you get them to come more frequently. And I think most franchises are not leveraging that data well. The infrastructure in terms of the technology is available, but it's not yet there or it's not integrated or they're not pulling the insights out of that data. And so, you know, in my mind, private equity really offers a lot of value to that mix. But yeah, in the case of certain owners, you know, some that have owned the team for a long time, they're not looking to, you know, have that much of a change in terms of the way that things are governed or structured or run.

20:47It may just be bringing in that capital. It may just be bringing in others that could add to their ownership group in a positive way. And I saw one of the rumored individuals we also have a relationship with, so I won't comment on it, but obviously adds to the further brand and the legacy of the franchise. And so there's other reasons to bring in investors. And, you know, I think we are seeing more and more of a trend of former athletes and celebrities getting interested and involved in sports. You know, we love to see athletes get involved in ownership. And I think it adds a lot to to them, to their capital, like you said, and to the brand as a whole, like we potentially will see with Eli Manning and the Giants one day, maybe.

21:25But as we talk about facilities, you know, I want to get a little bit more into that and why. I mean, you said we don't know a lot about the fans that are coming, what brings them back and things like that. But then we see places like Capital One Arena where the Washington Wizards and Washington Capitals play. And they added a whole new immersive art exhibit to the arena, which is not necessarily a sports thing, but it is something to add to the arena. Tell us about why something like that adds to the facility. Why maybe it brings in, does it bring in new fans? You know, why do it? Sure. Well, monumental sports and entertainment.

22:00So the Capitals, the Wizards, the Mystics. So in the heart of our nation's capital in Washington, D.C. is actually a client of KPMG's. We're advising them on their fan experience. They're embarking on a billion dollar project to basically rebuild that arena in the heart of the city and adding a lot to it in terms of mixed use real estate and technology. And your question is a really interesting one. And I think if you think about the fact that most of these owners own their own buildings, it's sort of akin to having a vacation house and not using it much. You know, they only have the lights on mostly in the evenings around games.

22:34You know, in the case of Monumental Sports and Capital One Arena, they've got at least two teams. They've got an NBA and NHL team from the men's. They now are putting more of the Mystics games in that arena, given the surge of popularity of the WNBA. And so they're able to fill that building. But if you're not using the building, you're not generating revenue. It's just sitting there unused, unutilized. And so they are looking for all sorts of creative ways to keep the doors open more frequently. A few years ago, they were the first arena put in an arena sports book with Caesars. That keeps the doors open 24-7, 365 days a year.

23:11KPMG actually put in a new business suite inside of the arena about two years ago. we actually use it as an office where we meet with our clients during game days or non-game days, but off of game day hours. So we'll go in there, have a client meeting with our clients, and then maybe transition and watch a hockey game or a basketball game inside the arena. So for the arena and for the owners, it means new revenue. It means using the building more frequently. And that's the game, right? They want concerts, other non-sporting events in the arena as much as possible. And they want it to be a center point in the community as well, you know, to bring people together and have a place where everybody meets there and is part of the experience there.

23:53I know we're running short on time, but I have two letters, A-I, which if you're a poker player stands for all in if you have pocket aces. That's old school. That's the old school. But we're not, artificial intelligence is here to stay. It's not going to go anywhere. And how does that incorporate into your business model when you are doing sports deals? Absolutely. Well, I mean, whether we're auditing a team or providing tax compliance or advising on the fan experience, AI is a critical part of all of it. You know, we leverage that within our own systems and processes for how we serve our clients and in those first two areas like audit and tax.

24:35And, you know, from a consulting standpoint, what we're doing at Monumental Sports, as a continued example in the fan experience, AI is central to that. I mean, that is how you derive the insights from the technology. If you think about, like, say, frictionless concessions, how you come into the arena or how you buy merchandise or buy food and beverage, it's not just for efficiency. It's not just for convenience. But the arena owners or the technology is able to derive insights from your behavior from seeing that. And AI helps make that more efficient. We're only starting to crack the code in terms of how to leverage that in sports.

25:07And, you know, there's a lot of great tools that are emerging and are available where you can then take those insights and then change the way that you design your fan experience to better leverage those insights. Our thanks to KPMG US's sports industry leader, Sean Quill. Up next, we turn to golf and the Kohler family's long history with the sport. For my colleagues, Scarlett Fu and Vanessa Perdomo, I'm Michael Barr. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

25:41This is Bloomberg Business of Sports from Bloomberg Radio. Thanks for joining us on the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr along with Scarlett Fu and Vanessa Berdomo. Damian Sassauer is off. This week, PGA of America held the PGA Works Collegiate Championship presented by Chase and Kohler. The venue was Whistling Straits, which is owned by the Kohler family, which has a longstanding relationship with golf. Here to talk to us about the Kohler family's golf ties, the tournament, and its future is Kohler chair and CEO David Kohler.