Apollo Inks $2.6 Billion Financing Deal With NY Yankees

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1:39Ed Ludlow:Really cool story today out in the business of sports. This is another example of private equity or institutional capital in general. Investing in a professional sports in this one, it's Apollo. inks a$2.6 billion financing deal with the New York Yankees. How about that? Randall Williams, Bloomberg Business of Sports reporter, joins us here. Seems like a big number. What do we know about this investment? Well, the money is going to go, it's a mix of debt and equity. Now, the exact split isn't known, but you have to wonder what the valuation of this is because of the fact that MLB rules permit private equity firms to own up to 15%.

2:21OK, so if this is a let's say that it's half of equity, so one point three billion dollars and it's 10 percent. That's a 13 billion dollar valuation. Now, of course, I'm just doing that math off the top of my head. Nice math for a reporter. I like that for a journalist. That's like a banker. But we don't know. We don't know. This could be 15 billion. It could be 16. It could be lower. We don't know.

2:41Ed Ludlow:But at the end of the day, the Steinbrenner family still in control here of the New York Yankees. Very much in control. Private equity across sports is not they're not decision makers. They are cash providers for liquidity, for debt, for stadium financing, for all of those issues. That's what private equity is in sports for, for now. I guess what I've learned over my career, just looking at the business of sports, it's a great investment vehicle to create value over time. You buy your franchise today at X, you sell it in 20 years for 2X, 3X, 4X, whatever. It's a great return. It's not a good cash-flowing investment.

3:18Ed Ludlow:No. So these types of deals, it gives some liquidity to the family or whoever owns it. Well, you have to wonder, the timing of this deal is somewhat interesting because of the fact that the MLB-CBA negotiations are currently ongoing. A lot of people are saying there's going to be a strike, right? Exactly. A strike or a lockout. Probably a lockout more so than a strike. But in all likelihood, if that happens come March, there won't be a season. Teams won't be getting that revenue. And so maybe this money goes towards that. All of those possibilities come to mind. But in terms of what you're saying about, you know, this being low cash flow, the real question that remains to be seen across sports is how private equity exits these sports teams.

3:57Because the valuations, as we've all said dozens and dozens of times, they continue to rise. So who buys this stake if it's a$2.6 billion deal? What happens when this is$6 billion value? Who's the person that raises their hand?

4:09Ed Ludlow:To the New York Knicks, right? And the New York Rangers. Where do things stand with those spinoffs from MSG? I think they're still in progress based on, you know, what we've last heard. But of course, James Dolan has said these franchises are continuing to rise in value. This would potentially unlock some of that. You have to wonder what either one of these things would sell for and what billionaires are going to raise their hand to buy something that could potentially be worth$15 billion. And you were explaining to me just earlier during the surveillance show, this isn't the first time private equity.

4:42Ed Ludlow:I mean, we're starting to see this more and more, aren't we, where private equity or just institutional money is out there. And I think the reason for that is because there's just not a lot of people who want to. It's just not a lot of people who want to own 10 percent of something, but put a billion dollars into it. And the only thing that they get is to raise their hand and say, I'm an owner. And they might get a sweet. The cool factor, right? And they might get a sweet ticket from time to time that they can already afford. A billionaire who gets equity, the perks that come with that just aren't that great.

5:11Whereas private equity, generally speaking, is not going to be concerned with flying on the team plane and being in the locker room and all the things that may be.

5:18Ed Ludlow:And I think I read that it's this is the largest investment Apollo has made in terms of a sports team. I would say it's one of the largest investments across private equity in sports that I've seen. The number two point six billion dollars is humongous. What about just the fan hearing this? A New York Yankees fan goes, oh, boy, now private equity digging their heels in deeper with the New York Yankees. I mean, what might they expect? Any any changes at all? I highly doubt ticket prices are going to come down. No, Yankees prices are never going to come down, especially you take something away, a potential lockout games away.

5:51As soon as it comes back, the prices are going to rise. I wonder from a free agency standpoint, you know, a lot of times these things are put in escrow and then they paid out over time. And so I wonder if that affects how they're managing their payroll, not only within the team and salary, but also owners and executives and all those sorts of things. So it's all top of mind.

6:11Ed Ludlow:And Randall, there's no indication that the Yankees and the Steinbrenners need this money. Is there the most valuable team in baseball? Nobody needs any money until you need it the way that they're saying it. They're saying it's going to debt. But these are not public deals. So we don't know how much they're in debt. It's so funny, though, because it sounds like they want to be a leaner machine. It makes you wonder if they're setting themselves up to, you know, go public. Dare we say it? I think I think sports teams could. There's a future for that. But we're not I don't know that any league is looking at that and formatting it right now.

6:48Ed Ludlow:Yeah, I think I think that I think it's probably what's happening is obviously they've got many of the leagues you mentioned have allowed institutional money to come into these. You know, so like private equity. Because there's not many. It used to be a toy for millionaires. Right. And then it became a toy for billionaires, Steve Cohen. Yes. And now a lot of these major sports leagues, you got to be institutional. Last thing I say is what I expect to happen is the private equity cap across leagues to increase per firm. So individually in the NBA, it's 20 percent. In baseball, it's 15. In the NFL, it's 10.

7:19I expect the NFL to maybe move to 15 and so on and so forth.

7:23Ed Ludlow:Stay with us. More from Bloomberg Intelligence coming up after this. When your options are limited, so are your opportunities. At SIBO, the global exchange that pioneered options trading, we offer more ways to move with the market. From VIX and SPX options to global market data solutions, SIBO helps investors diversify, manage risk, and stay ahead of whatever the market does next. SIBO. Life is better with options. Your investments could be too. There are risks associated with SIBO company products. Review the disclosures and disclaimers at sebo.com slash US underscore disclaimers. This is the Bloomberg Tech Minute brought to you by ChatGPT.

8:04Now with ChatGPT work. I'm Carol Masser. DoorDash, the largest food delivery company in the U.S., is building its own delivery drones and has gained the necessary FAA approvals to operate them commercially. The latest in its effort to delegate more orders to robots as a way of cutting delivery times. Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants, some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business.

8:42Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode. Available on Plus and Pro Plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same. The thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment.

9:21It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

9:54Ed Ludlow:Let's get right to Ed Ludlow. He's a Bloomberg Tech co-host. He's out there in Silicon Valley. We don't know what the heck he's doing out there. We have great offices out there in San Francisco, by the way. Ed, there are literally countless number of tech-related headlines that we could talk to you about today, but I'm just going to go to the biggest number I can find, and that is U.S. investment giants, including Apollo, Blackstone, BlackRock, Brookfield Asset Management, are partnering with NVIDIA Corp, another name drop, to source$500 billion in financing for artificial intelligence infrastructure.

10:28Ed Ludlow:Can you explain what's going on? I don't know what it means to source$500 billion in financing. Well, to source$500 billion is to go to those big Wall Street firms, investment managers, and say, find us the capital, find the investors. And we know the profile of the investors yet. But the pitch for NVIDIA is to take NVIDIA's compute platform, literally rows and rows of servers, and make them an investable infrastructure asset class of their own. So those six groups from Wall Street go out, find the funds or the investors. Then what Bloomberg's reporting is you take a special purpose vehicle, some kind of entity, that entity is the one that raises the money, pays for the NVIDIA compute, The compute acts as collateral.

11:12Ed Ludlow:And then you rent it out to an NVIDIA customer. And it literally greases the wheels. There's no barrier to somebody being able to finance the project. You know what? I have to admit, from a banker's perspective, that's genius, I think. I think. It's kind of interesting. Ed, just to you and to others out there, does that raise the old circular financing interest kind of concern out there? Well, what NVIDIA would say is that in the first instance, this is third-party capital. Again, the six Wall Street firms go out and source the capital from investors. And we don't have a good sense of whether that's pension funds or sovereign wealth funds.

11:52Ed Ludlow:But the money does not come from NVIDIA. And so there's a degree of separation from the idea that NVIDIA is literally financing its own customers' purchases of the gear. But it is one of a multifaceted concern, right? which is there are loads of other examples where NVIDIA is on the hook to either backstop or finance the purchase of its own technology. This would just be a separate mechanism. Yeah. Shares of NVIDIA, I'm just taking a look up a little more than 1 % right now. But I want to move over to Intel, Ed, because if you're looking for confirmation of investor demand for stocks sort of along the AI supply chain, you don't need to look further than Intel raised$20 billion in an upside share sale.

12:31Ed Ludlow:Tell us more about this. Yeah, initially it offered to go to market for$15 billion. So$20 billion is also kind of a response to the outsized demand. You know, Bloomberg's reporting that there was$100 billion of demand on this deal. $95 a share is where it seems to have priced, which is a bit of a discount. 6 % or so from Friday's close, they offered this Monday morning. So, you know, this is a stock that's tripled, more than tripled year to date, and is finding its feet in the world of AI. They sell CPUs with data center. And like on the Intel side, the corporate side, the company side, it's not that much new of a story.

13:11Ed Ludlow:It is the first time they've done a public share sale since they listed in 1971. Can you believe that? But the whole point for them has been to sort the balance sheet out, get their house in order. Just to underscore, you said that Intel stock has tripled, more than tripled so far this year. Yeah. Yeah. And so, like, you know, why would they go to market? Opportunistic, right? You know, if the stock goes up 160%, then you say, well, what can we do with our stock here? And, you know, already people are asking, you know, who's next? So I would just go on the NASDAQ 100 or the S &P 500 and look at the biggest percentage gainers so far year to date.

13:46Ed Ludlow:They also happen to be those in the AI game. It's kind of interesting. Ed, I know you're out there at ground zero in Silicon Valley for a number of years. My question is, do the folks in the Valley recognize that this is truly a unique time and space? I've been schlepping out the Sand Hill Road in Silicon Valley for 40 years, including the dot-com bubble. This is nowhere near anything I've ever seen before. The dollar amounts are just extraordinary. It's affecting all parts of the economy. Do people out there know that they are in a very unique time and place? that they do you know it is a tectonic shift and it's happening right now you know 2026 is is the moment and i i say that based on on so many discussions with venture capitalists ceos on the infrastructure side um the those that are like at the coalface of developing next-gen technologies and the only thing i would reflect on is like when i moved here in 2018 i kind of felt i've missed the boat a little bit think about like the social media wave the kind of obsession with iPhones, I was so wrong.

14:50Ed Ludlow:You know, AI is just completely different. It's next level. And it's astonishing the numbers involved. As you know, the big difference this time around is the balance sheets of these companies are just eons away from where they were in 2000, right? So that's why everyone's kind of chill about it. Stay with us. More from Bloomberg Intelligence coming up after this.

15:13This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work, I'm Carol Masser. DoorDash, the largest food delivery company in the U.S., is building its own delivery drones and has gained the necessary FAA approvals to operate them commercially, the latest in its effort to delegate more orders to robots as a way of cutting delivery times. Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants, some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business.

15:56Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode. Available on Plus and Pro Plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same. The thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment.

16:35It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Amazon Health AI presents Painful Thoughts. I, um, I can't stop scratching my downtown.

17:01Ed Ludlow:Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24-7. Healthcare just got less painful.

17:24You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

17:39Ed Ludlow:Here's a story that gets you. Chipotle. I'm a huge fan of Chipotle. 3rd Avenue, 62nd Street. Oh, I know that one. They know me. They know me. Apparently they had some issues with salmonella. Not good. No bueno. Daniela Satori joins us here. Restaurant reporter for Bloomberg News joins us from our Chicago. if you reviewed that Zoom technology. Daniela, thanks so much for joining us. Talk to us about Chipotle and what's going on with our jalapenos. So the jalapenos had been linked by public health authorities to some salmonella cases. I should say, you know, right off the bat for yours and everyone's sort of peace of mind that Chipotle pulled the jalapenos pretty quickly.

18:18And health authorities have said that they don't have ongoing concerns about people eating at the restaurants. But I think what really stands out here, and I can share more if you want, is just basically how quickly the company was able to really zero in on jalapenos as the culprit here.

18:32Ed Ludlow:Did that result in positivity for the stock? Because I'm looking here year to date down 14 percent, one year return down about 24 percent. Look, like some of this information has come out very, you know, slowly over the past week. It's still pretty recent. And so basically last week, we were first to report that Chipotle had pulled the jalapenos because of the salmonella outbreak. By then, they had already done it a few days ago and public health authorities were like, yeah, we don't have ongoing concerns. But of course, when headlines like that come out, people do get spooked. And when we published that story, the stock dropped as much as 9.7 % that day.

19:15I mean, it's recovered a little bit, but, you know, sometimes this information takes a little bit to sort of, you know, spread in terms of people and health authorities feeling comfortable saying we don't have any more concerns. Go back to the restaurant, basically.

19:31Ed Ludlow:Daniela, this is a big topic, big issue, big risk for restaurants in general, chains, particularly publicly owned chains, that being food safety systems protocols. Talk to us about what Chipotle does there. Of course. So, you know, you might all remember that, you know, between 2015, 2018, Chipotle had a series of issues with mostly with food handling. And so really they've stepped up their game and they've invested a lot of money basically into technology that acts as almost like a digital map of their supply chain. So basically the company can go into this system and really look up like where every ingredient has been, like, you know, where it moved from the distributor to a distribution center to the restaurant.

20:10And so what the company was able to do in this case is they heard from the state of Minnesota like, hey, we think that something in your guacamole is making people sick. And based on the pattern of where the illnesses were happening and the restaurants that were affected, the company was able to say like, we think that the problem is the jalapenos in the guacamole. And then they were able to pull them. And so, you know, it's an example of, you know, many large restaurant chains have invested in these types of systems because, you know, as we were discussing, it's just it's a big issue. You know, the second that an outbreak comes out, people just get spooked and just don't go to the restaurant.

20:46And that has huge revenue and profitability implications.