Bloomberg Money: Credit Card Indicators and Golf's Changing Fanbase

13:07David Kelly:balance off of. That's exactly right. The charge plate. Right. But that's also why all these big banks are chasing the higher income consumer. Everyone's coming out with their own premium credit card because the fees are so lucrative. I mean, there's an underserved population here of people who actually need credit cards, but can't actually get it.

13:24Brian Rolapp:Can't get it. And so what they're doing is they're going outside of the banking system, which means it's incredibly expensive. I say that people aren't living paycheck to paycheck, but payday to payday. So the fastest growing industry within FinTech and financial services is advanced wage pay. So if you've worked two days, you can access for a fee your wages for those two days. And what happens is people are using this service multiple times. Now, it was Dave and Chime that reported yesterday that it was their fastest growing product. And so while on a two-week basis, it looks like a 6.5 % interest rate, but annualized, that's over 160%.

14:04Brian Rolapp:People aren't using this product one time. They're using it multiple times.

14:07Meredith Whitney:That harkens back to our grandparents. It feels like it's almost, you know, depression kind of. It's not about fancy personal finance and retirement. It's about a tough time out there. We're trying to get to the next paycheck.

14:18Brian Rolapp:That's exactly right. So there was a study done in February that two thirds of people working are living paycheck to paycheck. And a quarter of labor force participants are struggling to pay their bills. And so what they're doing is they're going to pawn shops. They're doing payday earned wage access by borrowing. And they're or they're tapping into for the subprime and near prime. They can't even get home equity loans. So this is a feast.

14:52Meredith Whitney:Well, this is the courage yet over decades, you know, talking about the two Americas out there. Help me out as a stereotype of James Diamond of a small bank on Park Avenue and buy now and pay later. I mean, to me, it's almost a revolution where the kids aren't using the charge cards like they used to. In our personal finance, does Affirm and those kind of companies, do they win?

15:14Brian Rolapp:I think the buy now, pay later replaced the credit card. And what I never saw coming was the fact that the merchants are paying the fees, right? They're paying Affirm. They're paying. And so what happened in 2010, and not to get too technical, but the Card Act.

15:29Meredith Whitney:No, it's Friday. Don't get technical.

15:32Brian Rolapp:When we were in college, we got solicited by every credit card out there. So when we graduated, we had credit card debt. In 2010, that changed. So unless you got a co-sign by your parent, if you were under 21, you couldn't get a credit card. So this generation of Gen Z and younger millennials aren't used to revolving credit. So they're actually buy now, pay later is more appealing to them, even though sometimes it's the same thing.

15:57David Kelly:How do they set up a credit history then? If they eventually, when they want to start becoming consumers in this economy and be able to apply for loans, they don't have a credit history.

16:06Brian Rolapp:That's exactly that's exactly right. You're not even if they're even if it's the high end, high earners and they're taking American Express, they're paying down their balance. So you're exactly right. It's going to be harder for them to get.

16:15Meredith Whitney:I think of you in the clan. I'm going to pick on Mike Mayo. We all love to pick on Mike Mayo. Great analyst out there. You people said they get through the great financial crisis and that we should own the banks as part of our retirement. Give us an update now on where you think in the next 10 years, those successful investments, where do they go?

16:33Brian Rolapp:Well, it used to be the case that the banks paid rich dividends. That hasn't been the case. So banks have been buying back shares at really high valuations, which is not accretive for the banks. And they've been reticent to raise dividends because they don't know how long this great earnings bonanza that the banks are in is going to last. So I think there are better vehicles to buy outside of the banks that have rich dividend yields. In retirement, you can have both equities that have rich dividend yields. Bonds are less certain. The 60-40 portfolio hasn't been a great performer the last year.

17:16Brian Rolapp:But I think banks – sorry, JP Morgan is an absolute outlier. I mean, they've had, since 2010, they've just been a juggernaut. And that's been a great stock. But they bought back the most amount of shares of any of the banks.

17:33David Kelly:20 years ago, banks were what tech was in terms of concentration in the market. I mean, they were the giants. And then now it's all tech firms. And banks are kind of like, you know, middle of the road.

17:43Meredith Whitney:Can you see Meredith on the golf course? It'd be like a terror.

17:47David Kelly:You've made some big calls on banks, on munis, in your career on Wall Street. What's your personal approach to investing these days?

17:54Brian Rolapp:I've always been thematic with my approach. I didn't own the banks back then, thank goodness, because I was covering them. And I just felt there was always a conflict of interest. But I always take long-term thematic approaches to my investing. So I'll give you a couple of examples, the winners and the losers. With the housing bill, the affordable housing, 21st century road to housing, I bought Sky, which is Champion Homes, which is a manufactured home builder. And the idea is they repealed a chassis law. Things would change that production would increase dramatically. And manufactured homes are really nice.

18:37Brian Rolapp:They're not the manufactured homes of yesteryear. So I buy that. I do some frontier investing in terms of with... Certain markets, geographical markets, you mean? Well, a lot of the Stans, which have very rich rare earth minerals. So a lot of that is going SOEs, private to public companies. So I know that's sort of esoteric, but those have been good plays. And the emerging will be bigger plays. All right.

19:12David Kelly:So a commodity play there from Meredith Whitney. Thank you so much for joining us, by the way. Really appreciate it. Meredith Whitney, CEO of Meredith Whitney Advisory Group. Coming up, a conversation with David Kelly with a focus on personal finance, retirement, and wealth management. This is Bloomberg Money. Salary. Bonus. 401k. Stock options. Investment accounts. At a certain wealth level, your financial life is anything but simple. If your wealth manager only sees one piece of the puzzle, who's connecting the rest? Creative Planning's integrated team looks at the whole picture. They coordinate your investments, tax strategy, and estate plan to form a complete view of your financial life so everything fits together.

19:50David Kelly:Creative Planning, where wealth works together. Learn more at creativeplanning.com slash BSP. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work, I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares.

20:30David Kelly:Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower demand routes. 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 ChachiPT.com today by selecting Work Mode, available on Plus and Pro Plans.

21:13David Kelly:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

21:51David Kelly:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

22:16Meredith Whitney:Bloomberg on a, well, Bloomberg Money on a Friday. And I'll tell you, it's hot out there. Is it 90 today? It feels like it. Yesterday was brutal.

22:23David Kelly:I know. I mean, these are the dog days of August.

22:25Meredith Whitney:It's truly the dog days of August. And what we're going to try to do is have some good conversation here about personal finance, about retirement, and about everything out there in wealth management. Here's what you need to know. Meredith Whitney knows it's about baseball. In baseball, you go up to the plate, and two-thirds of the time, you go back to the dugout. She has enjoyed over the years a few times of putting the ball in play, definitive in finance, in banking. still Meredith Whitney's advisory group today. What was it like, the acclaim you had, I'm going to call it 15 or 20 years ago, how did you handle just the day-to-day va-voom of Meredith Whitney municipal finance and banking?

23:10Meredith Whitney:How did you handle it day-to-day?

23:12Brian Rolapp:It was really awkward because my world had been really small covering banks and financials, and I loved it. So people within the industry knew who I was, and I had great relationships. and then all of a sudden there was so much more attention focused on me. And it's very, it's uncomfortable. I wasn't used to it. I can't imagine how you guys get used to it. You know, it was a long time ago.

23:37Meredith Whitney:But you perfectly decided what you and Sally Krawchuk were pathbreaking on, which is actually doing securities analysis. And then it got so much bigger than that. Let's show one of the huge Meredith Whitney successes. You've got to play. You've got to put the ball in play. and then you have to have the courage to hold on. I was in a meeting with Meredith ages ago. I could barely shave at the time. And, you know, there we were. And she says, this company Visa, it'll work out. When did you sell Visa? When did you get out? How did you not sell Visa?

24:07Brian Rolapp:I mean, it's just been, you know, back then it was just, you know, cash to credit. There was this huge tailwind to it. And also it was like, I call it a demutualization from the bank. So it was a straight arrow. It was one of the easier ones. And I call it the OG of fintech because it was really one of the first fintechs. Now, after the financial crisis, the fintechs became a real thing and disintermediated a lot of the things that banks weren't willing to do because they had PTSD from the financial crisis.

24:40David Kelly:You say, Visa, I think about credit cards. And I know, Meredith, you track consumer credit as a way to gauge the health of consumer spending and therefore the broader economy. Your view is that it's become increasingly more valuable because of the way that people use credit cards or visas now as opposed to five or ten years ago.

24:58Brian Rolapp:What does that look like? Well, what's happened is post-financial crisis, the banks pulled back dramatically from near-prime and subprime. So they had all sorts of exposure. Wells was a big subprime lender. And so all of that has moved into the shadow banking system. Even companies that were famously subprime, like Capital One, has pulled way back and is focused on prime. So instead of revolving balances, people are spending and paying back monthly. Now, the balances don't reflect that. They grow, but they're growing at the pace of inflation. And so what I look at is being a very good guide for where inflation is.

25:36Brian Rolapp:And when gas prices peaked in mid-early May, credit card spending had already peaked in early April. And you've seen credit card spending decelerate from that time. And so these are just people spending, absorbing the higher prices, and then just spending accordingly. So I think the Fed should look at their own data. This is data that comes out weekly, so you can see credit card balances. And it's really helpful. So I think inflation is in a rearview mirror. So it's like a charge card as opposed to a credit card that you pay the balance off of.

26:14David Kelly:That's exactly right. The charge plate. Right.

26:16Brian Rolapp:You can't get it yourself.

26:17David Kelly:But that's also why all these big banks are chasing the higher income consumer. Everyone's coming out with their own premium credit card because the fees are so lucrative. I mean, there's an underserved population here of people who actually need credit cards but can't actually get it.

26:29Brian Rolapp:Can't get it. And so what they're doing is they're going outside of the banking system, which means it's incredibly expensive. I say that people aren't living paycheck to paycheck, but payday to payday. So the fastest growing industry within fintech and financial services is advanced wage pay. So if you've worked two days, you can access for a fee your wages for those two days. And what happens is people are using this service multiple times. Now, it was Dave and Chime that reported yesterday that was their fastest growing product. And so while on a two-week basis, it looks like a 6.5 % interest rate, but annualized, that's over 160%.

27:10Brian Rolapp:People aren't using this product one time. They're using it multiple times.

27:13Meredith Whitney:It harkens back to our grandparents. It feels like it's almost, you know, depression kind of. It's not about fancy personal finance and retirement. It's about a tough time out there. We're trying to get to the next paycheck.

27:24Brian Rolapp:That's exactly right. So there was a study done in February that two-thirds of people working are living paycheck to paycheck. And a quarter of labor force participants are struggling to pay their bills. And so what they're doing is they're going to pawn shops. They're doing payday earned wage access borrowing. or they're tapping into... For the subprime and near prime, they can't even get home equity loans. So this is a feast for...

27:58Meredith Whitney:Well, this is the courage you had over decades, talking about the two Americas out there. Help me out as a stereotype of James Diamond of a small bank on Park Avenue and buy now and pay later. I mean, to me, it's almost a revolution where the kids aren't using the charge cards like they used to. In our personal finance, Does Affirm and those kind of companies, do they win?

28:19Brian Rolapp:I think the buy now, pay later replaced the credit card. And what I never saw coming was the fact that the merchants are paying the fees, right? They're paying Affirm. They're paying. And so what happened in 2010, and not to get too technical, but the card act.

28:34Meredith Whitney:That's Friday. Don't get technical.

28:37Brian Rolapp:When we were in college, we got solicited by every credit card out there. So when we graduated, we had credit card debt. In 2010, that changed. So unless you got a cosign by your parent, if you were under 21, you couldn't get a credit card. So this generation of Gen Z and younger millennials aren't used to revolving credit. So they're actually buy now, pay later is more appealing to them, even though sometimes it's the same thing.

29:03David Kelly:How do they set up a credit history then? Eventually, when they want to start becoming consumers in this economy and be able to apply for loans, they don't have a credit history then.

29:11Brian Rolapp:That's exactly right. Even if it's the high-end, high earners, and they're taking American Express, they're paying down their balance. So you're exactly right. It's going to be harder for them to get a credit card.

29:21Meredith Whitney:I think of you and the Klan. I'm going to pick on Mike Mayo. We all love to pick on Mike Mayo, great analyst out there. You people said they'd get through the great financial crisis and that we should own the banks as part of our retirement. Give us an update now on where you think in the next 10 years, those successful investments, where do they go?

29:39Brian Rolapp:Well, it used to be the case that the banks paid rich dividends. That hasn't been the case. So banks have been buying back shares at really high valuations, which is not accretive for the banks. And they've been reticent to raise dividends because they don't know how long this great earnings bonanza that the banks are in is going to last. So I think there are better vehicles to buy outside of the banks that have rich dividend yields. In retirement, you can have both equities that have rich dividend yields. Bonds are less certain. The 60-40 portfolio hasn't been a great performer the last year.

30:22Brian Rolapp:But I think banks – sorry, JP Morgan is an absolute outlier. I mean, they've had, since 2010, they've just been a juggernaut. And that's been a great stock. But they bought back the most amount of shares of any of the banks.

30:39David Kelly:20 years ago, banks were what tech was in terms of concentration in the market. I mean, they were the giants. And then now it's all tech firms. And banks are kind of like, you know, middle of the road.

30:48Meredith Whitney:Can you see Meredith on the golf course? It'd be like a terror.

30:53David Kelly:You've made some big calls on banks, on munis, in your career on Wall Street. What's your personal approach to investing these days?

31:00Brian Rolapp:I've always been thematic with my approach. I didn't own the banks back then, thank goodness, because I was covering them. And I just felt there was always a conflict of interest. But I always take long-term thematic approaches to my investing. So I'll give you a couple of examples, the winners and the losers. With the housing bill, the affordable housing, 21st century road to housing, I bought Sky, which is Champion Homes, which is a manufactured home builder. And the idea is they repealed a chassis law. Things would change that production would increase dramatically. And manufactured homes are really nice.

31:43Brian Rolapp:They're not the manufactured homes of yesteryear. So I buy that. I do some frontier investing in terms of with... Sort of markets, geographical markets, you mean? Well, a lot of the Stans, which have very rich rare earth minerals. So a lot of that is going, SOEs, private to public companies. So I know that's sort of esoteric, but those have been good plays. And the emerging will be bigger plays.

32:18David Kelly:All right. So a commodity play there from Meredith Whitney. Thank you so much for joining us, by the way. Thank you. Really appreciate it. Meredith Whitney, CEO of Meredith Whitney Advisory Group. Coming up, a conversation with David Kelly with a focus on personal finance, retirement, and wealth management. This is Bloomberg Money. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares.

33:06David Kelly:Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. 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 ChachiPT.com today by selecting Work Mode, available on Plus and Pro plans.

33:48David Kelly:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

34:27David Kelly:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options. from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget.

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35:47David Kelly:Bloomberg Money is about making and investing your money, but it's also about spending it. And a lot of people like spending it on golf, both watching and playing it. professional golf only caught the attention of golfers for decades but over the last five years it's become kind of a soap opera bloomberg senior business of sports reporter randall williams joins us now and randall i go to the idea that for people in the u.s professional golf was equal to the pga tour but then you had live golf which was funded by the saudi arabians popping up as a competitor and then at some point the two decided on a merger but then i don't think anything happened?

36:20David Kelly:What's the latest or what has happened? Well, it's been on an indefinite pause, but the PGA Tour has evolved since then. Of course, Live Golf entered. It caused a lot of chaos. But then you had the Strategic Sports Group. That's backed by Fenway Sports Group. It's backed by Steve Cohen, who's the Mets owner. And then you have Arthur Blank, who's the Falcons owner. Them and a lot more people put up to$3 billion into the PGA Tour, which created a for-profit arm called the PGA Tour enterprises. Since then, the PGA Tour has been slowly trying to, I'd say, recalibrate itself to get on the right track, to evolve, to fill in some of the holes that maybe live golf exposed.

36:57David Kelly:What were some of the holes that live golf exposed? Because golf had a bit of a renaissance during the pandemic. Up until that point, a lot of people criticized it for being hard, elitist, expensive, but then golf found itself during the pandemic. Well, I'd say that golf is very a traditionalist sport. And so with tradition, there's always tradition versus innovation. And so, of course, you had some people complaining about player pay. You had people complaining about the tournament schedule. And so now we have a bunch of innovations that are happening in regards to the system of golf. There's going to be a championship series and a challenger series.

37:31David Kelly:And that's how the changes have come.

37:33Meredith Whitney:What do you see TV doing here? I mean, the Masters is iconic and all that. But in terms of the entertainment TV streaming battle, are there going to be a huge bidding war from where you sit?

37:42David Kelly:I think so. I think we're a couple of years away from that. But media rights are, of course, a huge part of the sports business. And if you're not in the media rights business, then your sport probably isn't going to last very long. And the PGA Tour is still the dominant presence in golf. I think the threat of live came from the Saudis who had seemingly limitless pockets. Now that that is not in existence anymore, the PGA Tour is, again, once again, the dominant franchise that I think broadcasters are going to be bidding on. Yeah, with Saudi Arabia pulling its funding from that other golf league.

38:11David Kelly:Thank you so much. Bloomberg Senior Business of Sports reporter Randall Williams. Joining us now, I'm pleased to say, is the CEO, the new CEO of the PGA Tour, Brian Rollap. Brian, great to see you here. Great to see you. So we just talked about how golf is for the traditionalists. A lot of people like to say it's the sport most like life because it's hard, but it's also kind of elitist and kind of expensive. Coming from the NFL, do you see those as features to be protected or barriers to growth that should be challenged? Well, I think any sport, professional sport that's worth its salt will always sort of challenge where it is.

38:46David Kelly:And I think there's one thing I learned at the NFL over two decades is, you know, if you're not going forward, you're going backwards and innovation matters. So when I first took the job, I was very clear that we're going to honor tradition, but we're not going to be overly bound by it. And you look at some of the trends of the game of golf, as you say, maybe it has this reputation as elitist. If you look at the growth since COVID, participation in golf in this country has grown 39 % since COVID. Now, you don't have to play a sport to watch it on television, but sure helps. Half of that growth is under the age of 35.

39:17David Kelly:The average age of a professional tour telecast, inclusive for the majors, is 66 years old. So there is a disconnect between where the sport is going and what professionals have been able to do. We are closing that gap in significant ways. And if you just close that gap to a minimum, you've got a bit of a rocket ship. You've talked about how Live Golf helped expose some of the weaknesses of the tour. Was the biggest lessons about the economics of professional golf or about the product itself? I think it's the product. I think, listen, there's something about the sports industry I don't understand if you look at the history.

39:48David Kelly:Huge innovation usually doesn't happen without a crisis. It could be a labor dispute with a collective bargaining agreement. Back in my old job, the USFL or the AFL-NFL, when I looked at this opportunity, I just saw the AFL-NFL, which essentially created a lot of systemic changes in professional football that started to accelerate the growth. I think we've had that moment here. So I think a lot of perhaps shortcomings in professional golf came with a little bit of competition. We're all Americans, competition's a good thing. So I think we've seen that, and we're trying to build something that outlives all of us here.

40:20Meredith Whitney:What did you learn from Pete Rozelle? I mean, it was before your time. If we say Pete Rozelle invented all of this, really best practices as well. If you're the Pete Rozelle of golf, what do you need to do to really jumpstart it?

40:32David Kelly:It's a really good question. Pete Rozelle, I think one thing he got, I mean, he was 34 years old when he did a good job. I don't think people realize that. But he was the first one who figured out media, I think, when it came to NFL. So the modern media model that I think you see in the NFL that I was part of, but then I think other sports have adopted, is if you get your media model right, you can build the sport. So when he started working in the NFL, it was probably the third most popular sport in the country behind professional baseball and college football. But because of a reach model using network television, he built the sport and told the stories.

41:05David Kelly:And so I think that's one thing I've learned is how we're concentrating on how do you increase the reach of the PGA Tour and how do you tell more stories about the athletes who play it.

41:13Meredith Whitney:Okay, so you've got Arnie from Altoona, Pennsylvania coming up the course, lighting it up decades, decades, decades ago. I was at Rochester in 1968 when Lee Trevino turned your sport upside down. Who's your new Lee Trevino?

41:28David Kelly:Well, listen, I think we have a lot of stars. I think there's a misconception about professional golf that a given competition or a given tournament only matters if one or two golfers are in it. When you actually look at professional golf, the difference in winning a tournament and losing a tournament is one stroke over four days. That type of competitive parity, it's that tight. The only other place I've seen that is in professional football. So the reality is we have a collection of some pretty amazing golfers. whether you take the established guys like Scotty Scheffler and Rory McIlroy, or you look at the Koivin kid who's just coming out of Auburn and some of these younger guys who are just really performing well, I think we have an amazing roster of veterans and young guys who are really, really competitive.

42:13David Kelly:It's our job to actually showcase them better. Randall was talking to us about the PGA Tour Enterprises, this commercial arm. Of course, FIFA wanted to follow the tour's lead and spin off its own business and seek outside investors, that ended up failing. I'm curious to hear more about the PGA Tour Enterprises and the role of it in the PGA Tour overall. Is this something that the players feel and experience? Is this something that the fans feel and experience? Yeah, I think the answer is both of them will. I think the players experience it. What PGA Tour Enterprises has allowed us to do is to evolve the PGA Tour where most professional sports have gotten.

42:48David Kelly:We've actually capitalized it and turned it into a commercial business. and the strength of that commercial business funds innovation. It funds player purses. It funds everything. I think the PGA Tour was locked in a bit of a legacy governance model. Now that the mission is clear, now that we're capitalized, we can do that. So I think the players will feel it in that you look at the new competitive model that we've announced. There's healthy purses across the board and they can actually earn equity in the tour. This is the only professional tour of scale that I can think of. Players can actually earn equity, which is a huge opportunity and also aligns investors, management, and players like no other sport in the world.

43:25David Kelly:I think the fans will feel it because of that commercial change to the tour. We have investment dollars to make the fan experience better, to make the competitive product better, to make the media product better. So I think that is, and I think that's one thing that came out of this live competition crisis is we got focused, we got capitalized. Now we know what the mission is. And I think fans and players are going to win because of it.

43:48Meredith Whitney:What are you personally going to do about slow play? There's no other, I mean, Meredith Whitney was just on with us, and she's standing on the golf course lining up a five-foot putt for

43:56David Kelly:20 minutes, and the answer is slow

43:58Meredith Whitney:I mean, the retires, we do personal finance, retirement, wealth management everybody in retirement wants to play your sport four days a week, but they can't, because of stupid slow play what do you do?

44:08David Kelly:Well, I don't stay up at night worrying about slow play among amateurs at their country club, I actually don't care about that. I only, when I think about the PGA Tour, professional golf I think it depends when we're talking about who you're talking to when you're talking about slow play on a Thursday or Friday round before the cut when we have 144 players and it's early in the year and we're racing against daylight to keep this on television we need to speak it up when you're talking about a Sunday round or a playoff and someone's taking extra time to line up a shot because it's the shot of their life that's different so I think context matters here I also think it's about how we produce the sport So if you're watching on television and somebody is actually standing over a putt a little longer, there's a thousand other shots going on on the golf course.

44:53David Kelly:It's our job and our broadcast partners produce it better. I come from the NFL where we produce the Red Zone Channel. The Red Zone Channel moved around. The fact of the matter is half the time when you go in to look at a Cleveland game, it's not live. It already happened. Roll it back. I think we can produce it better and actually tell a better story. So it's a complex issue, but I'm not really focused on your local club. That's the local club's problem. I'm really focused on the PGA Tour. Can you do a red zone version of the PGA Tour? I think we could. I think we're talking about a lot of innovation.

45:19David Kelly:But if you think about how golf is produced already, it is a little bit of a red zone. Here's Scarlett on the 18th green. Let's take a look. Let's go over here.

45:25Meredith Whitney:I've got to ask, do you need a hydration break? I mean, please, tell me. If the ninth hole of hydration break was a Jenny Kremel, but that's a story here. What are you going to do about a hydration break to bring in a marginal million?

45:38David Kelly:Well, no comment on that. Ask the FIFA guys on that. I don't have a view on that. Well, having said that, I mean, I'm sure you watched the World Cup. Are there any learnings from the World Cup, the spectacle that was the World Cup, that you can apply to pro golf? I just think, in general, I think the World Cup or what we're doing, what other sports are doing, it's a reminder that the value of sports is increasing. In a world that is continually fragmented, whether it's by media, so much competition for your attention, there's a handful of things that are standing out that can aggregate tens of millions of people at one time doing one thing and i think it's it's sports and maybe some news so i think that is encouraging if you're in the sports business now you know it doesn't mean you can rest on your laurels it means you need to innovate and keep up with the changing demographics of the sports fan but i think if the world cup or anything has taught us is that sports is a pretty strong investment class okay when you innovate um especially when it comes to media distribution you guess a point where fans are left confused.

46:40David Kelly:We have a Bloomberg News story about how sports fans are looking at$2 ,000 streaming bills in order to follow their favorite team. Has it gone too far to the point where fans will start rebelling and it won't work anymore and we have to kind of rethink this? Well, if fans are rebelling in sports, we haven't seen it yet. But I think the larger question is, while I'm a big believer that in order to build a sport and the value proposition of sports and media is reach, how many people can you reach? How can you aggregate audiences? That is still true. Pete Roselle got that right. That is still the case.

47:11David Kelly:The difference is Reach is much more complicated because of where the media world is.

47:15Meredith Whitney:I've got to slip this in. You have a gift. He's at Florida State. I think he's 14. I don't think he can drive a car. Miles Russell? Okay. What do you do with a property like Miles Russell who's 15, I think 15, 16 years old?

47:27David Kelly:Well, I think what you're going to see is when we announce our new competitive model, which if you study it, what we've done is we've opened up the meritocracy of the PGA Tour. We've created a championship series, which is the top 23 events or so, where the top 120 golfers are going to compete together week in and week out. They can't play down into the Challenger Series, which is for everybody else. They will compete for a regular season title that will be the most prestigious thing in golf. There will also be promotion relegation. So at the end of that, you're going to be relegated down. My point is we've opened up the meritocracy.

48:01David Kelly:So if he's that good, we've now created a system where he will work his way in to be into the top. No more sponsor exemptions, no more of the stuff that hit in the meritocracy. Where you play is based on how you earned it in the play. So I think that's important. Brian, at some point, LeBron James will have a lot of free time. And we know that he's been playing a lot of golf. And he is an investor in PGA Tour Enterprises. Have you talked to Mr. James about some kind of role for him in professional golf? I don't know, some kind of ambassadorial role? No, I haven't, but I think LeBron James is an example of the growth of the sport.

48:35David Kelly:When people get the bug, they get the bug. And it's a great competitive sport to play, but also to watch. And so we'd love LeBron to be more involved. We'd love everyone to be more involved. And I think you're going to see more of that over time. Brian, thank you so much for your time today. Thank you. Great to have you in with us. Brian Rollap, the new CEO of the PGA Tour.

48:54Meredith Whitney:Can you see LeBron in a sand trap and nobody else can see the tee? Sure. And he's just looking right over and he can see the tee.

49:01David Kelly:And those steep bunkers on the Lynx course, he can see over. Yeah, it's an advantage. It's very cool to say the least. That would make a very interesting red zone version of PGA Tour if you put that all together.

49:11Meredith Whitney:I'm excited about what I heard here. I mean, I think, you know, they're really, with the adversity of the last couple of years, really getting their act together.

49:19David Kelly:Yeah, absolutely. Absolutely. You know, it's a big subject in terms of everyone spending all their time playing golf, watching golf and spending money streaming golf and other sports.

49:29Meredith Whitney:It was an honor here to interview Lee Trevino a number of years ago, but just seared in my memory. You were talking about caddying and how you made a lot of money.

49:36David Kelly:I caddied.

49:36Meredith Whitney:It was like four bags a day. Really? Yeah. I caddied Oak Hill where you had a wonderful tournament a couple years ago. It was great. It was a real learning experience, to say the least. This is the Bloomberg Money Podcast, bringing you a smart look at the forces shaping your financial life. I'm Tom Keen with Scarlet Fu. You can watch the show live on Bloomberg TV every Friday at noon Wall Street time. Subscribe to the podcast on Apple, Spotify, or wherever you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.

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