WNBA Plans Expansion; Rich Paul's New Masterclass

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1:36This is the Bloomberg Business of Sports. We explore the big money issues in the world of sports. I'm Michael Barr along with Vanessa Perdomo. Damian Sassauer is off this week. Up next on the show, we are all in on basketball. ball. We talk with super agent Rich Paul. We'll talk with him about his latest project, Masterclass. You know, most kids dream of getting to the NBA. Most kids don't dream of getting to the NBA and then being successful in the NBA and having a consistent work happening in the NBA and understanding how to be a professional in everything I do while being in the NBA. And the WNBA announced its adding team soon.

2:18We'll talk through the league's growth on the way as well. And that is all on the way on Bloomberg Business of Sports. But first, with all this talk on the hardwood, we're going to start in the sneaker world, where we've gotten a lot of headlines lately. Nike delivered an upbeat forecast lately, which could suggest the CEO, Elliot Hill's plans could be working. and NBA top draft choice Cooper Flagg is planning to rock new balance sneakers, which could be a major boost for that company. To take us through all of this and more, we welcome Bloomberg News senior reporter Kim Bessine. Hello, old friend of the show.

3:01It's Kim Bessine. How you doing, man? What? I'm so happy to be here, of course, of course. Man, we got Vanessa here and you're here. Man, I'm just, I'm tickled. It's a great summer day, isn't it? I'm saying. Yeah. We got a lot to talk about. Cooper Flagg. Oh, yeah. Number one, which was, you know, pretty dang on obvious. But, you know, he has turned this already into, like, you know, a lot of ambitions. And he can make a lot of coin out of this, Kim. Oh, yeah. So before he got drafted, right after he declared that he was going to Duke a while back, he got signed to a shoe endorsement deal, right?

3:46And it wasn't Nike. It wasn't Jordan. It wasn't Adidas. It was New Balance out of Boston, Massachusetts. So do you know any reasons behind what was the thrill for him to choose New Balance? What was it? Did they offer him sort of a Michael Jordan, Nike deal, you make us cool vibe? I don't think it's particularly special in terms of how it can be compared to the rest of the deals out there. Right. But what I think what seemed to attract Cooper to New Balance was a couple of things. One, it's like it's like his hometown ish brand. Right. He used to he grew up near a New Balance factory in Maine.

4:37New Balance has been involved in New England sports of all kinds over the over decades and decades. Right. And there's something I've talked to other athletes about, not Cooper in particular, about about being at Nike or. one of the big companies, and that is you sometimes get lost in it, right? You're their 10th biggest star or something. At New Balance, he's going to be their face of men's basketball. And they have Kawhi Leonard as well, but obviously he's nearing the end of his career. Cooper will be their face going forward, assuming he pans out in the way that everyone hopes he will, right?

5:13Yeah, that's the thing. When you're the new kid on the block and you are – I don't want to use the phrase startup because that's wrong about New Balance. $7 billion in sales. Yeah, I was going to say, just a tiny bit. But compared to Nike or Adidas, hey, you can have a guy carve out his own way with your shoe brand to make it identifiable. And New Balance is closely held, right? They're trying to become the third largest athletic wear company in the world behind Nike and Adidas. The problem is there's Puma standing in their way here. And Puma has been working on their basketball division also.

5:56They have LaMelo Ball, whose shoe does quite well. So New Balance requires that strong basketball business to get there, right? Basketball is such an important market for sneakers now, not just on court, but that halo effect to get people to buy your shoes, the lifestyle shoes, and everything else that you wear on the street. But that's the interesting thing, I think, there, because I feel like when we've talked about it before and you kind of told me just when we were talking about sneakerheads in general, that sneakerheads have like slowed on like Jordans and things like that in the past like year or two.

6:30And that New Balance is pretty popular with like the young kids. It is. Yeah. A bunch of like collabs over the past year, a few years have really, really hit. They've gotten a lot, a lot cooler, frankly, in the last like three, four or five years. It's been really fascinating to see. And now you can leverage all of that to get yourself into sports and then use it the other way around, too. Like, if they can attract these big, big athletes to compete on court in their shoes, like, that's a big deal. And it's a big deal because they're infringing on, like, someone's turf, right? This is Nike's spot.

7:06They dominate this industry. Yeah. I want to take us into the past here, just to show exactly how much Nike has dominated this and how lucky New Balance got. And I guess they're skilled negotiators, right? How lucky and how well they pulled this off. If you go back, every number one overall draft pick, Wemby, Paolo, Cade, Ant, or not Ant. Ant is Adidas, sorry. Zion, DeAndre Ayton went to Puma. And then the old Philly guys, Markel Fultz and Ben Simmons, also got signed by Nike right before the draft. So it's been every single year. They dominate. But here we have New Balance. But I think it's an interesting thing.

7:55When you think of those people who are still on top, when you think of those last 10 years, and Adidas, I mean, he's trying to make it cool, right? I mean, he's doing a really good job, but Nike is Nike. And they can really use his platform to build still. Yeah, Nike is Nike. And they're waiting for Kaitlin Clark right now. We have to talk about one of the other things I want to talk about really quick as we're talking about New Balance. In your story, you also said that they kind of said they're still going to push to do more in the NIL space, but pointed out that Cooper Flagg wasn't allowed to wear New Balances in college.

8:33He wore Nikes. Yeah, because of their relationship with Duke's relationship, right? So why even get into the space if they can't wear shoes in games? Yeah, it's tough in college, right? College is its own beast where brands can sign deals with entire universities and everyone's required to wear those shoes. So maybe we'll see New Balance get into more of that. Are their contracts up for big schools, do you think? There's always contracts up. So if they're really looking around, there should be some opportunities available to them. But yeah, Cooper wore Nike's throughout that whole March Madness run.

9:14Nike's Nike. There was some drama during that, too. And New Balance is paying him money. And New Balance is paying him money. There was drama during that, too, because he had a game winner, and Nike posted something on Twitter that said, powered by the swoosh. Ooh. Ooh. And does that actually get into sort of... Speaking of Nike, they have said that, you know what? We're done losing money. We've hit the bottom. This is... We are going to make money from this point forward. Be positive, Kim. Be positive. Yeah. They did say that. They've declared the bottom, right? They're saying that this last quarter is going to be their worst.

9:57And it's all going up from here. And investors bought it, right? When they said that, shares jumped like 15%. It was the biggest jump since 2022 in a single day. Like, there's enthusiasm now for Nike's turnaround effort because it's been such a difficult past year, year and a half. There were layoffs. Sales have been slumping this whole time. they've lost traction in the places where like they really shouldn't have and places where they it's hard to get it back like the the running industry as they they pulled back from shelf space at all these different retailers and then everyone else swooped in and was like okay you you want to sell us cool that sounds that sounds like a great deal and uh but but nike's reversing most of those decisions and and really refocusing on sports and performance products and things like Yeah, Vanessa, Nike sounds like my kid when he broke my favorite glass.

10:55Dad, dad, mistakes were made. Don't get me wrong. But I tried to glue it back together. But I tried to glue it back together. And everything's fine now. So are those, you know, those strategies, is it going to be propelled when, I mean, Caitlin Clark's, like, is she going to be propelling this next quarter of growth for Nike? I mean, she just dropped her version of the Kobe's, right? They're not even her own signature shoes and they still sold out. And they still immediately, they're not even her own. They use, Wemby had one of these, for example, after he came in the league. It was just one colorway of someone else's shoe that's branded after you.

11:33But this is really, it's a good sign for the eventual release of Caitlin Clark's signature shoes. And that's going to be one of the most important shoe releases, in my opinion, for Nike in years. Many, many years. This is going to be such a big deal for them, and they need to get it right. It's one of the most important things they're going to do in 2025. And, yeah, with the WNBA really making their footprints, forgive the pun, yeah, they're going to— Okay, that was good. That was an accident. That was pretty good. But they're going to need a Kaitlin Clark, and they're going to need some other WNBA players as well.

12:11And it's been working so far that the WNBA stars with shoes, right? The Sabrina, too, is like the second most worn basketball shoe in the NBA on court, which is a huge deal. And then Asia Wilson's shoes have sold out as well since she released them earlier this year. So here comes Caitlyn. And then therefore Paige, right? And therefore Nike's also signed Paige. They have not announced anything around her yet. We'll just have to. Right. Well, they'll have to get through Kaitlyn Clark first. Obviously, they're not going to downplay that at all. But in terms of looking forward to the future, it seems like it'd be bright if you're releasing Kaitlyn and then Paige literally a year or so after.

12:58Oh, yeah. It's quite a lineup. And we've yet to see anyone else try to match that vigor in the WNBA thus far. Our thanks to Kim Bessine for joining us. Up next, we stick with basketball and turn to the WNBA and the new teams it's planning to add. For Vanessa Perdomo, I'm Michael Barr. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.

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14:54The WNBA just announced it's adding three new teams in Cleveland, Detroit, and Philadelphia with a massive expansion fee. Here to talk to us about the league's growth and more about the new teams is Bloomberg U.S. sports business reporter and friend of the show, Randall Williams. Randall, welcome to the Bloomberg Business of Sports. Thank you for having me as always. I am a big story that I think about the WNBA. They're going to expand to 18 teams. Now, that means three more teams will be added. That's Cleveland, Detroit, and Philadelphia by the year 2030. That's a great impact for the league.

15:38Yeah, I think so. I think it shows that something that we've already known in a sense is that, you know, basketball, women's basketball in particular, is continuing to grow. This is something that Commissioner Kathy Engelbert had set her sights on. I believe she wanted 16 teams by 2028. She'll have 30 by 2030. So that's, I mean, not 30, 18 by 2030. 30. So that's a good sign. I think it's healthy for the league. Oh my God. Could you imagine if it was 30 already? I mean, that would be some growth for sure. It's interesting though, that these three teams were all, are all going to be added to existing NBA franchises with ownership groups.

16:20Talk to us about that and why, you know, that makes sense for the league and why you think they chose those particular ownership groups. Yeah, I think from here on out, it's going to be very difficult for any new WNBA franchise that isn't connected to an NBA franchise to get up and running or to win one of these highly competitive bidding processes because of the fact that when you have an NBA owner in place and they have an arena and they have all this other stuff set up, all they essentially have to do is build a practice facility and be a good owner and put some promotion behind the team, make people excited about it and it's up and running that's not the exact same say let's let's say kansas city or nashville for example which don't have the exact same things i'm sure they have arenas downtown but for the wnba if you're looking at it from their point of view you want experience you don't want someone to come in and have to learn the ropes and and go through learning uh learning curves you want someone who's experienced with this and that's what we've seen the last three teams of course as you said are connected to nba franchises i believe the last three before that were too so no surprise there but if you want the team in kansas city or nashville it's going to be tough portland is separate though i mean they have an nba team right but their ownership group is not exactly portland trailblazers ownership group now i'm going to clarify this with everybody is entitled to their opinion and i think you all know where i'm going with this uh indiana guard sophie cunningham has concerns about the new locations for the three teams cleveland detroit and philadelphia she said i don't know how excited people are to be going to detroit or to the other ohio city she made a mistake and said cincinnati it's cleveland she spoke during practice she said you want to listen to your players adding where are they going to get excited to play and draw fans now everybody knows that i am a native detroiter and love the city of detroit and of course the city of detroit responded noting on social media that it has had a previous wnba team the shock uh and according to what the city was saying is that it attracted a lot of fan enthusiasm now there's a debate about that uh until they moved to Tulsa in 2010 I mean you took it really personal Michael well yeah because it's like come on you I understand what you're saying you you're trying to grow the league you know you don't you know you worried about it going too fast but at the same time too it's like and you said it randall detroit has had the experience from 1998 to like 2009 the shock played in detroit randall it just yeah i think that her comments uh were definitely disrespectful to the franchises but what i hear from wmba players who were speaking about expansion yesterday and not just her is that they want to be heard by the league.

19:34And in this particular instance, I do think that she was a little out of line. I think that what she should have said is that I want the players to be involved in the process. And if that's what you want, I think that's perfectly fine because, you know, the WNBA and the players, the women's, the WNBPA are in the middle of a CBA negotiation. And so often, I mean, if you listen to what the players are saying and how they're negotiating, like they are really stepping up to the plate and saying like we understand the business we know the business we want to be a part of the business and commissioner engelbert had said previously as it pertained to media rights that you would welcome having a player representative at the table and in the latest media negotiations that didn't happen and obviously in expansion which it shouldn't on the expansion front i'm not sure that any players have ever been involved on for any league, NFL, NBA, MLB, in bringing a team to a city.

20:33Obviously, you can rally, but I just think the players want to be involved a little bit more in the league's business as it's growing. Do you think that other players in the league feel similarly about the growth being too fast? Yes, I made some calls yesterday, and there were a number of players who were not fond of this announcement. I had someone tell me, a player tell me that it doesn't feel like the league is as focused on the CBA negotiations as they are on expansion. And I think like, listen, when I talk with the WNBA, they're not going to negotiate in the public. That's been their stance since the CBA window opened up.

21:13I'm sure that'll be their stance in three months from now or four months from now. However, the players, there are some players who are like, great, the league's growing, but it's in 2030. and these roster spots that will be added, there's going to be a portion of the league that's out of it, that's out of the league by then. There's going to be new players. And really, the players want to make sure that the incoming players are not inheriting issues that they dealt with. So in five years' time, Kalen Clark will be in her seventh season. I'm sure that whoever is the rookie in five years doesn't want to be dealing with some of the things that the current rookies are dealing with now.

21:47And again, I want to add, too, everybody's entitled to their opinion. and she is a very good, Cunningham is a very good WNBA player. And I want to go back to what you were saying about the players having more input. I think that is what she was trying to get at. Yeah, I just think that she didn't name any other cities. Like if she would have named some destination cities, okay. And now you're putting your flag in the ground and saying like the people, let's say she said salt lake city for example now you may get the the owners of the utah jazz who uh who may say like hey you know she's right i want to bid for a team but that didn't happen she didn't say like oh kansas city or houston or wherever she just said not these three cities and that's not i don't think that's the right mindset you want to have i think that there was a better way to say it and she just could have been a little bit more respectful to the cities the owners and the league.

22:46Right. She's having her moment right now, and she's speaking her mind. She's off her Kaitlyn Clark friendship, having that moment in spotlight, and she's speaking her mind, which we want the players to be able to speak their mind. Randall, I'm curious for this deal. We talked previously about how the Connecticut Sun are put up for sale, and they might look to move the team, but that doesn't impact these three teams, right? One of these new teams isn't going to absorb the Connecticut Sun. Is that right? Yeah, that's not going to happen. The Sun are still up for sale. They could go to anybody who's interested.

23:32And I think the expectation, depending on who's going to be buying and what their plans are, There have been a lot of rumors about will the Sun stay in Connecticut? Will they move? There's been rumors about people wanting to bring a WNBA team to Boston. Obviously, Boston isn't far from Connecticut, but you have a new owner in the Boston Celtics in Bill Chisholm. He's not connected or he would not be connected in all likelihood to the WNBA franchise. And it just gets complicated with that city in particular. But I think with the right owner and the right situation, the Sun will be perfectly fine.

24:08I just think you have to find the right buyer. I also want to talk about the fee because each team is paying$250 million each to become a part of the WNBA, according to the word that's out there on the street. It was back in 2023 about$50 million, and now it's$250 million. My goodness, that's a lot of money for the league. Quite. Yeah, it is. It is. They drove that up in large part because people are watching heavily. I think that another part of this is media deals. And there's just an increased number of eyes. The WNBA was growing before Caitlin Clark got here. But she turned what was like a rising wave into a tidal wave.

24:59Now, eventually, that tidal wave will reach the shore and they'll have to figure out what life looks like and what the league looks like without her. But, you know, that could be 15 years down the line. And in regards to this valuation that we're seeing, it's rising in large part because media deals and there's an increase of interest in the league. And so with that in mind, you're going to have people who want to get in at this lower price. Obviously, 50 million a couple of years ago, 250 million now. But the Valkyries, who are in year one, Sportico had them at 500 million, I believe, as the most valuable team in the WNBA.

25:33So you get the right owner, the right ownership group, and someone who really wants to put a lot of dollars into this thing and invest in a winning team. You can make this a profitable business in due time so long as the league continues to get the media deals right and negotiate a healthy CBA. Yeah, I think that$500 million number was even surprising for me to see because we just saw the size sell off a piece of the Liberty. That was about a$400,$450 million valuation for that piece of the New York Liberty with the current WNBA champions. And this is a brand new team coming on$500 million and they're the most valuable team in the league.

26:15That was a little surprising to me. But I think, like, to your point, it shows that it's it's because of everything new and the specific owners and all that. So that being said, I mean, we're really close to that billion dollar, the first billion dollar franchise. Definitely. I think it'll be a race between the Valkyries and the Liberty. The Valkyries in particular, they've just done a magnificent job on all facets of the business side, on the court, with the coaching staff and, of course, the Liberty of the Liberty. They're based in New York. They're the reigning champion. They're a title contender this year.

26:49And I think that they're setting the precedent for teams who are coming behind them. If you want to be in the business of women's basketball, and this is why I also think that the WNBA is is choosing to select bidders who are connected to NBA franchises just because they have the experience. and when you look at those two franchises, it's Joe Lacob and the Golden State Warriors, it's Joe Psy and the Brooklyn Nets, and they run A-class organizations, and you would want that in women's basketball as well. Randall Williams, thank you, man, for joining us, buddy. We appreciate it, my man. Up next, we talk with Super Agent Rich Paul about his latest project, Masterclass.

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28:15This is Bloomberg Business of Sports from Bloomberg Radio. Thanks for joining us on the Bloomberg Business of Sports. We explore the big money issues in the world of sports. Michael Barr along with Vanessa Perdomo. Damian Sassauer is off this week. Our next guest doesn't need an introduction. He's Clutch Sports founder and CEO and sports super agent, Rich Paul. He is here now to take us through some of his latest projects. Rich, welcome back to the Bloomberg Business of Sports. Thanks for having me. Masterclass, I love this thing because if you looked at my life, I need lessons that are in Masterclass.

28:58In fact, everybody can use the lessons in Masterclass. Can you tell us about that? Yeah, you know, Masterclass is something that, you know, obviously from a brand perspective is at the highest level as it pertains to finding out what's behind the walls of business and operations and things of that nature. And when I was asked to do it, you know, from my perspective, there's never been somebody in sports representation that were asked to do it. And I wanted to make sure that I found a balance and not just talking about what happens in the business of sports, because everyone isn't in that business.

29:45But giving people what I would say would be a very relatable and understandable perspective on how to evolve, how to grow a business, how to evolve within the internal infrastructure at your job and even, you know, just the basic simple things in life. And so I really enjoyed Masterclass. They had an unbelievable staff and team. We really pushed the details of it was something that we wanted to make sure we did not ignore. And I had a lot of fun doing it. That's something I want to get more into because, like you mentioned, not everyone's in that business of sports. You're using these examples of negotiating these huge million-dollar contracts in the NBA, but you use the language so that it can pertain across industries and things like that.