Private Money Flex for Lakers, Yankees; President of DAZN US on Regional Broadcasts

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1:58Bloomberg 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 Vanessa Perdomo-Maglione. And I'm Randall Williams. Michael Barr is off this week. Coming up today, we will be discussing the state of regional sports networks and why sports streaming platform DAZN feels it could be their key to unlocking success in the U.S. And then later we will be joined in the studio by the CEO of New Jersey Youth Soccer to give us his insights on how the World Cup boom struck all the way down to the youth level. But first, let's run through some headlines taking over the world of sports.

2:34One of the biggest things that happened this week, the Lakers sold again for$12 billion this time. Randall, this is the second time they've sold in about a year, right? Tell us what happened. It is truly remarkable and one of the most insane things that I've seen in the sports business just to see a signature franchise that typically is held for 30, 40, 50, sometimes 60 years flip over in a year and add two and a half billion dollars in value. It's just insane. You were monitoring them, this group, for the Vegas expansion? This is true. Bob Iger and Joshua Kushner were interested in the expansion team potentially in Las Vegas.

3:18And so they were a leading candidate. I think they would have been up against stiff competition with a Walmart family, a Walton family specifically involved because, you know, Walton family money is endless. However, when they just completely pulled out of the race altogether, and Bob Iger later told us that the price in Vegas just got to a point where they were like, let's just check around. And then a little birdie chirped in his ear to go check in Los Angeles. And shortly after that, they had a deal. It's crazy. And I wonder what the Lakers would have gone on the open market. Which means that, one, Vegas is going to go for over$12 billion.

3:55I think it's going to go for over$10. I think$12 would be remarkable. I would be shocked if it was 12. So meaning the reason why that was getting too much was because that's just the expansion. Right. I think the reason why Vegas was getting high in particular is because of the competition there. It isn't just a Walton family that's involved. There is a group known as the Las Vegas Jacks. Who knows how complicated they're making it. Mark Lasry has told me that he has interest. And then, of course, you have Bill Foley, who's the owner of the Vegas Golden Knights. And that's just the groups that we know.

4:25There could be two, three, four other groups that are raising their hand with legitimate capital that is like, you know, potentially putting this at maybe 10 plus billion dollars. I think Seattle, everybody considers Samantha Holloway the favorite. We'll see who else shows up to challenge her. But Vegas, I've heard, is always going to be very, very competitive. Why did Mark Walters want to sell so quickly? Other than the fact that, yes, it went up in valuation a lot since he bought it. So obviously you get quick money out of it. But what was it that he was like, yeah, I want to sell right now already?

4:59Bloomberg has reported that Mark Walter was under or is under the investigation by the Department of Justice for loan fraud, you know, billions of dollars and that this could help relieve some of that. I'd say the follow-up question to that is like, what else else? Everybody in sports is now circling the Mark Walters sports empire that doesn't just include the Lakers. It includes the Dodgers. It includes the professional women's hockey league. It includes Chelsea. It includes the Cadillac F1 team and so many other things for a billionaire who has one of the more impressive catalogs of sports teams across the industry.

5:36For you to just flip the Lakers in a year is remarkable. And the crazy thing is Mark Walter is an incredible owner for the Dodgers. So the Lakers, I think, and Lakers fans should have been very, very excited. Now you have Joshua Kushner and Bob Iger. Bob Iger's resume speaks for himself. There's less known about Joshua Kushner and the type of owners that they'll be. Bob Iger was very excited when Natasha and I spoke with him. But there's just a lot of questions about what sort of precedent this sets for NBA ownership period because there might be some people out there who might want to buy and flip these teams if they can add$2.5 billion in value in a year.

6:16For some of the other headlines we got this week, we're joined by Bloomberg media reporter Hannah Miller. So, Randall, Apollo has officially inked a$2.6 billion financing deal with the New York Yankees. What does this deal mean for the Yankees? So, the question about this whole thing is what is the valuation on this deal? And nobody has quite, the Yankees haven't said it. Nobody's figured it out. They haven't said what percentage this is. They haven't said the percentage of what is going to be debt and what is going to be equity. So that split is to be determined. And what is the overall value of the Yankees?

6:46Because$2.6 billion of private equity dollars is a lot of money in the world of sports. And so that remains to be seen. But I think the timing of this is interesting, especially in light of the CBA negotiations that are going on with the MLB union and the league itself. And where is this money going to go? Is it going to go towards stadium renovations? Is it going to go towards liquidity? And of course, they've already said that it's going to go towards debt. If you look at this in terms of just math perspective, if half of the money, it's$2.6 billion in financing, if half of it is debt and half of it is equity, that's$1.3 billion in equity.

7:21If that's a 10 % stake, then that's$13 billion. But that's just my math off the top of my head. It could be far more than that. It could be more equity. It could be less equity. We just don't know. The other news I want to get to, and this is just something that won't really go away, is the situation with FIFA and FIFA President Gianni Infantino. President Trump has now come out and given his support saying that FIFA should not remove him as president. Hannah, do you think that could have any impact on what actually happens with Gianni Infantino's position? I mean, what he was trying to do caused a lot of concern and a lot of anger in the soccer world.

8:00I don't know if Trump's endorsement will hurt or help. And we have to remember Trump is the FIFA Peace Prize winner. I don't think his endorsement is that surprising. Right. But yeah, I mean, he was in super hot water, you know, over his plans. And I don't know if this could be a good comeback for him. It's important to note that football federations around the globe were uncomfortable with Gianni Infantino's cozying up with President Trump to begin with. And now that they don't have to directly deal with President Trump anymore, you know, the World Cup is not going to be back for the U.S. into the Women's World Cup.

8:35Let's assume that President Trump will not be in office then. Which would be 2031, not the next Women's World Cup. Yes. But in any case, you won't have to deal with President Trump. So his commentary, while it is substantial, we don't know if UEFA cares. Why would UEFA have said we are going to continue saying we don't trust you, we don't trust that deal, and your future going forward is in question? The other thing we will get to today, which is regional sports and DAZN buying up these regional sports. Hannah, you are the expert on this, so tell us the landscape of what regional sports look like right now.

9:08It's very bleak. More and more people are cutting the cord. They're switching from cable to streaming, and that has significantly hurt RSNs, which are often included in people's cable packages. So when you're mixing and matching with streaming services, you might not be getting any of the RSN content when you're doing that. And DAZN has really come in and tried to change that. And we've seen this series of RSN deals that they've made, starting with the New York sports teams and then the Timberwolves. I don't know. I think their appetite is pretty aggressive. I think they're going to be a leading force in changing the RSN landscape, making RSNs more accessible on streaming.

9:49That could help boost that content. We've also seen leagues themselves step up and create regional sports networks for different teams, especially in Major League Baseball. How do you stabilize this landscape? Is it the DAZN way or is it up to the leagues or is it something that should even be stable is? Yeah, I mean, I think it would be interesting to see if DAZN ends up partnering with the leagues themselves versus the companies that are offering these regional sports networks, because ultimately the leagues have more sway over this. The big question here, too, is are they going to get enough ad dollars from streaming these games?

10:24Is there going to be enough ad demand? Because that is really the main way that they're going to monetize off of this. Just from DAZN's perspective, it's going to be very important for them to snap up these regional sports networks because it's helping them expand their presence in the U.S. I do wonder, we've seen sort of the impact of this in the MLB and the NBA. Does this affect the NFL at all? The NFL is a whole different beast. And, you know, a lot is happening right now in terms of their media negotiations. You know, we know that Paramount, they're the main partner that was negotiating with them.

10:58They've put those talks on ice as they deal with an antitrust lawsuit. But yeah, the NFL, because of its viewership, because of the demand, because of the dominance it has over television, they're just in a different category. This is not applicable to them. And so what is the impact on the NBA and the MLB? We hear of, I'd say, MLB fans and sometimes MLB owners complaining about the spending and how the Dodgers, RSN deal in particular, enables them, and also Mark Walter is willing to spend. And the Yankees also are willing to spend astronomical dollars in comparison to, let's say, the smaller market teams.

11:34On the NBA side, the salary cap has been impacted by some of this. Talk to us about the ramifications of not having RSN versus having them. Yeah, I mean, it does help with local fan markets, especially for successful teams like the NBA championship going to the Knicks. People are going to be tuning in, and that's a much more valuable property. But we've seen fans get angrier and angrier over the mounting costs that they have to pay every month for whatever streaming services that they have. And that has caught the attention of the federal government. We have the DOJ and the FCC looking into mounting costs for people if they have to buy streaming services to watch games.

12:13So, yeah, I mean, this could add to that conversation, you know, and the impact it has on player salary and how many people are tuning in. I mean, that's always important to look at. It's interesting. So it seems like it's more expensive to be a fan of the NBA, be a fan of the MLB, particularly because of the 162 games. They're not all able to be on national broadcast. So to be a fan of the Yankees, you have to have a, or to be a fan of the Boston Red Sox or whatever it is, you have to have this regional sports network, which will be part of DAZN's package. You'll have to sign on specifically to it.

12:47It'll have its own subscription. And then you have to have all the other subscription platforms. So does that also hurt their popularity, do you think? This is one of the reasons why the NFL is so popular is because you can watch it on regular TV. Before you answer that, it's interesting that you make that point because Fox is sort of arguing and the DOJ is arguing right now that NFL games aren't accessible. And if you ask Hannah and I, I've had plenty of conversations with league officials. And they're the first thing that they say is I think it's 87 or 86 or 88 percent of games are available on cable.

13:19But that 12 percent is sort of what's being investigated by the DOJ to decide if the Sports Broadcasting Act should still be in existence in its current form. Yeah. And the NFL always defends it by saying, you know, if in our local markets, it's always going to be on just regular television and that you can watch. So, you know, even though they have that 87 percent available, their argument is that the remaining percentage you could still watch if you're a local fan on TuneIn on TV. But yeah, I mean, I feel like there's more talk that this is making the argument for cable and just going back to the way things were rather than spending a ton of money mixing and matching streaming services.

13:57And there have been, speaking to people, they have seen declines in people cutting the cord. Even though people are still interested in streaming, they've seen some slowdown in that cord cutting. Well, because the cord cutting then means buy 18 other things. Thanks so much, Hannah, Bloomberg News media reporter for joining us. Coming up, we are speaking with the chief revenue officer of DAZN to discuss their recent acquisitions of regional sports networks. That's straight ahead on the Bloomberg Business of Sports. For Randall Williams, I'm Vanessa Perdomo-Maglione. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

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16:54And he missed a good one because we are talking soccer again after the World Cup was played across the U.S. this summer. one of the things we knew we had to keep tabs on in the aftermath was how it impacted soccer at the youth level. International sports streaming platform DAZN sees this struggling market as an opportunity to be their breakthrough in the U.S. Here to tell us more about their strategy is Chief Revenue Officer of DAZN and President of DAZN U.S., Walker Jacobs. Walker, thanks so much for joining the Bloomberg Business and Sports. You guys have been making some deals recently. Tell us about this new foray for you guys in what seems like regional sports media rights is becoming, you know, a big thing.

17:35Yeah, thanks so much for having me. And that's exactly right. We've been working on this for many months, so it's it's with great pleasure that we're finally getting to share with the public some of what we've been working on. the regional sports space is a defining step in our u.s growth strategy and you know getting to getting to start with our first announcement working with most of the new york professional sports teams and and their rsn partners was you know as a as a person that's lived in new york most of my professional career it was a really thrilling announcement and we're incredibly excited to be partnering with Yes and MSG.

18:18And then shortly after that, we announced our Minnesota Timberwolves exclusive deal, which is a little bit of a different flavor deal. And before those two, we announced our acquisition of ViewLift, which is yet a different variety of deal, all in the regional sports space. So yeah, we're really excited about it. And And we think it's going to massively accelerate our ability to connect with fans in the U.S. marketplace and really accelerate DAZN's progress here. Well, Walker, selfishly for me, I am extremely excited about this, particularly the merger or the acquisition with Yes Network and me never having to use the Gotham app ever again, because it was truly one of the worst.

19:12This is just my personal opinion. It's not a great app. It was it was very glitchy. So tell me, you know, for Yankee fans who are listening for New York sports fans who are listening, what are you know, what can they expect? How how do you watch the games here in New York? well yeah we'll we'll be announcing um specific timing and and all of that in the future um but you know suffice to say you know at our core the zone is a as an engineering and product organization we're really a tech company at heart and you know we've spent the better part of 10 years investing in and developing what we believe is the best sports streaming app in the world.

19:55And, you know, it turns out building a great streaming app, to your point, is really hard to do well. And I can tell you that we've gone through many iterations and we've learned some lessons along the way and we've continued to improve and continue to invest in our product. And, you know, we're the only streaming product that I know of, at least it's at scale, that is really purpose-built for live sports. And so what that's allowed us to do is invest in features and functionality and really sort of learning how to delight fans and present a world-class viewing experience with really stable tech.

20:36And so I'm really confident that once this is up and running and live here in New York, that it'll be a product that delights fans and they'll be thrilled to use. Now, it couldn't have been a hard decision to partner with the New York and New Jersey teams. I imagine with that specific RSN that you're like, oh, absolutely. It's a great place to start. And then you go out to other ones. So tell me a little bit about why you targeted New York and New Jersey teams. Well, obviously, it's the media capital of the world. And in a very, very important sports marketplace. But, you know, this whole thing happened fairly organically, to be fully transparent with you.

21:25We've been really patiently waiting for the right moment to enter the U.S. marketplace. It's been incumbent upon us to enter the U.S., but to find a way to do that that is, you know, growth oriented and had a risk profile that made sense for our investors. And, you know, the last several years, it's been hard and those opportunities have been few and far between. And really the way this whole thing came about was, you know, the previous company that had a large portfolio of regional sports rights, you know, had some financial troubles. And it became obvious they weren't going to be a viable ongoing concern.

22:13And that created an opening for us to explore, you know, whether an acquisition made sense or whether some other approach to the U.S. market around regional rights made sense. And so that's really sort of what the original opening was. And so there was, you know, that was reported. And when that was reported, you know, I have a former colleague and friend that is, you know, in the organization over there at MSG that reached out and said, let's have lunch. and we just started a really organic conversation of what could something look like and that evolved over many months and we were able to structure a partnership that we think is a win-win.

23:00I think everything they've told us, they're really excited about it and they think it's going to be great for their fans. It fits into their business plan and their RSN model and it's a great deal for us. And to your point, you know, the opportunity for us to get the New York teams on the DAZN app for New York fans is it's really just an amazing time for our company and something we're really excited about. And as I said before, we really believe we're going to do a great job with it. And we think that, you know, this is what I would call sort of a first move for us in the U.S. But, you know, figuring out how to enter this marketplace and do so in a sustainable way was our top priority.

23:50And this opportunity around these great regional rights was just the perfect opening for us. I want to talk more broadly about RSNs and their impact on sports. I wonder, can you put it in layman's terms for anybody listening out there? How do RSNs impact sports in terms of the financial side of things? Sure. I mean, I think, you know, in particular for MLB and NBA and NHL, you know, historically, it's been a primary revenue stream for teams and they've been responsible for selling and monetizing their local regular season rights. So, you know, typically there are national packages, which, you know, everyone in the country is watching the games, you know, and that might be like a, you know, a particular weeknight.

24:39There might be a franchise that's on a national sports cable or national broadcast. And then there's the rest of the regular season games, which are, you know, sold locally. And, you know, sometimes those are sort of in the inner market, sort of the home team marketplace. So, you know, for example, like in the case of the Timberwolves, that would be the Minneapolis, St. Paul, DMA. But then they have outer market rights, which sort of are the sort of the way the country is divided up amongst the local franchises where they're able to broadcast their rights locally in sort of outer markets surrounding the city where they play.

25:25and those are typically either broadcast or streamed or both exclusively to fans in that market and so if you're a fan and that's where you live that's the primary way to enjoy your local sports team I mean you know you had said before Walker about this being the right way to enter the U.S. for you guys. Why, you know, was that and what is it about the RSNs that you felt was the right way for you to grow your footprint in the U.S.? Is it just because of national media rights are too high of a price tag right now or is just this the first step for you guys and it was the right first step? Well, I think that, you know, I don't think it's any secret that that, you know, this segment of the sports rights in the U.S.

26:18has been, you know, challenged and going through a tremendous amount of change over the past six or so years. And, you know, there have been now two companies that have really struggled with it. And I think that that kept, I think, some of the companies that would typically be involved in a process like this on the sidelines. And I think it created an opening for somebody who's entrepreneurial and future thinking and wanting to create new models like DAZN, it created an opening for us to find a partnership path forward with organizations that are wanting to build for the future. And so we think that our platform and our products are built for the next generation of sports fans.