David Adelman On His Success, And The Passion Of Philly Sports Fans l Out Of Office

0:01What's up, everybody? And welcome to another Boardroom out of office. Today, I'm in my office talking to somebody very close to my heart, please welcome to the show, my dear friend, entrepreneur, CEO, team sports owner, and Philly's own, Mr. David Eggelman. What's up, my man? What's up, brother? Thanks for having me. Thank you. We've been talking about this for quite some time. Long time. Yes. Long time. Thanks for fitting it in. Of course. The thing that I always enjoy when I'm able to interview somebody that I'm friends with is I do like a tiny bit of research. It's like a gloss over quick right before.

0:37And then I'll pick like one or two things out. And the first thing that kind of like stuck out to me was how early your hustle and this like thought process of trying to make money kicked in. And then also thought about the fact that you and Michael Rubin are best of friends and in some ways very similar in when in your life you guys both started thinking in that mindset. What was it for you that triggered that at a young age? And then with that question, talk to me a bit about this famous mentor that you had as a young person as well, who I've had a chance to meet, Alan Horowitz. Because I know that a lot of times people ask me if there was a mentor or someone that I had as a young person.

1:23And there really wasn't one. It was like observing a ton of people. But it feels like this early hustle that was ingrained in you, you did have a mentor of sorts. I did. And then as far as Ruben and I go, I think it must've been the Philly water, you know, right? Definitely. Um, so yeah, so my hustle, you know, the story for me is, uh, I was about a 10 years old family friend, Alan Horwitz, uh, the guy you call your uncle, who's not really your uncle. Um, I'm playing basketball with him one day and I guess I, I'm 10 years old. I said, I bet I can beat you. He said, I'm going to teach you about betting.

1:57And he, most people let a kid win. He kicked my ass, right? Like who, I don't know, like who does that, right? But he literally didn't let me win. And I wound up losing my basketball, my football, my baseball glove, and my bank book, your little savings bank book. This is a ruthless man. He is. And he's still, he's almost 80 now and he is still really fucking competitive. Okay. And so I had to go down to his office, campus apartments, and stack lumber every week to earn one of the items back. And my parents, I'm like 11 years old. Yeah, I'm 10 or 11. And my parents are like, this is good character building.

2:27And he's into it. So literally like I'm sweeping sawdust as a little kid I'm moving shit around and I'd earned something back you know two years later for my bar mitzvah I have two thousand dollars and my parents like oh do you want to give it to your uncle or someone else or cousin who's a stockbroker and I'm like no I want to give it to Uncle Alan and do what he does and my parents thought I was out of my fucking mind like you want to do what like yeah I want to do what he does and so literally I got in the car with him drove around his properties around the University of Pennsylvania where he started the business and he's like well which building do you want to invest in I'm like, drive around.

3:00And I finally say, stop. I said, that one. And he's like, well, why that one? It was the biggest building. So I didn't know. I was like, I want to own the biggest one he had. Literally, I hand him$2 ,000 in cash. And that started my career in real estate. I literally, yeah, he just put me to work and taught me the business. And yeah, I do want you to have my gambling problems in check now. I'm good. So we don't have any issues there. That's an amazing story. And I think you'll hear a story like that. At least I've heard a story similar to that from every successful entrepreneur I've spoken to.

3:36It's like the desire that a young athlete or a young artist may have to just follow that dream. It's tough to channel that as a young person. So you wanted to bet because that was a way to get your ROI quickly. I sadly followed that for a long time, way too long. But the ability to decipher and decide at that point in your life that you wanted to invest money in a real estate property is probably what alone made you a tiny bit different than your peers, right? Similar to Michael. It's like the adrenaline you got from that feeling you probably weren't getting from something else. But a lot of times, you know, when entrepreneurs now think about businesses, they want to start the idea of doing a business.

4:24That's not flashy at first is like, nah, let me, I want to be in film. I want to be in music. I want to be in sports, but then you'll be out in the mix and you'll meet somebody and you'll say like, who's this guy? And they'll be like, Oh, guys worth$10 billion selling office furniture. And you'll be like, well, it seems pretty fresh when you get to, to be worth$10 billion. Was real estate something that was attractive to you as a kid? Or was it about this connection with Alan, the idea that there was a roadmap to making money and you just followed that? You know, he broke it down. Alan was the kind of guy, he started buying properties when he was in high school, never went to college.

5:00Like just, you know, really like, but you give him a pencil and paper and what he can do with numbers, even at almost 80 is amazing. And so for me, he taught me a real simple fact about real estate, like the power of leverage. And I mean it like in two ways. One, like bank leverage where you're borrowing money. But two, the fact that your customers are paying your debt. Like a real simple notion, right? Like, you know, you're getting handed rent. You're paying the bank down. You know, you're lowering your cost. You're increasing value of the property. I'm like, this makes so much sense. So it just clicked for me.

5:29Like I was like, you know, for some reason. So like, and he was smart. He had me on some, you know, when I was high school, college, maintenance, accounting. Like he had me learn every part of the business to like figure out if it was a fit. you know I thought I was going to go to law school and then like do the business I never went to law school I was like I just want to work yeah and I think the thing about real estate is it allows you to be both an entrepreneur hands-on operator and kind of a visionary all at the same time and like the truth is and you could say this about Ruben too you know I've known for over 25 years like I'm not I don't I'm not employable like I know that yeah okay like and so like I had to figure out a path where I could like, you know, I have like this unique mix of like ADD and OCD.

6:11Like I'm really good at things for a short period of time. You know what I mean? And so I needed kind of an environment to be able to float in that. I'm going to start using that. I think that's like something that someone should be able to say and be able to say at some point in their journey without it sounding like you're completely lost, which is that you may not be employable. And it's like the same way that, at least for me, I have two girls that are 14 and 10. I didn't go to college. My wife went to Brown. So the idea of having a consistent message to them just on what we did would be confusing, right?

6:44Here's someone that prioritized schoolwork. Here's someone that didn't. But we both feel like it's more about understanding who you are. So if they believe that school's the route for them and they have a real plan for what they want to do in school or what they want to do outside of school, I'm open to it. The idea of saying early, like I may be unemployed, that's probably the perfect description now for myself. Like I would have said that at a young age now. I know you can't hire me. You won't like me if you hire me. How do you approach people you hire knowing that now? Like if you see that in them, because you want young entrepreneurs around you, but you don't want people around you that believe that they're not employable.

7:27Yeah, I think you want people that are willing to work hard, right? And so depending on what business we're talking about in my world, you know, if it's the real estate business, I might need someone who's employable, who really likes, you know, is good with numbers, focused, can do these things, right? Or really good at construction and project management, really organized. But you know, on my Darko Capital, my family office side, like the stuff we're doing there, like, I'm okay with that entrepreneurial spirit. Let's harvest it. Either you're going to do it with me, or maybe me and some of my friends are going to back you to do something else, right?

7:55And you'll figure that out. Yeah. So the person you look for when you're investing is a completely different skillset than like the workers, the executors that you may hire for the real estate business. Yeah. I think it has to be. And look, it depends on the business, right? Is it an operating company where you need like a, you know, a guy who's just a girl, who's just a really great operator, or do you need a visionary where someone's doing something that hasn't been done before? Yeah. Depends. Campus apartments, I guess, you know, we're calling it real estate, but it was a brand as well that you and Alan built.

8:25And it was a brand that like, I wasn't too familiar with it until we became friends. It was one of those things where it's like we had all heard of it through someone that went to college and you just heard it in the background. But the building of the brand Campus Apartments was something different than even the real estate. So where were you in that process when you started with Alan? What was Campus Apartments. And when you look at it today, what do you think the special quality was in building that brand that you guys were able to achieve? Yeah. So when I joined Allen, Campus Apartments was just Philadelphia around the University of Pennsylvania.

9:03And I joke, I had this kind of vision. And I sat down, I said, like, I think this could be a national business. And at the time, no one had done that. And he's like, I don't know if you want to do that. Go ahead. And he was great. Like literally at 26, 27 years old, he's like, you should be the CEO, go do it. And he, you know, to have somebody stand behind you like that is amazing. But I was like, you know, I joke, I'd go to real estate conferences, you'd have the hotel guys, the retail guys, and the office guys, and they wouldn't let me sit at their lunch table because I was just the student housing guy, right?

9:32Everyone thought it was like, oh, animal house and all that stuff. And I'm like, keep thinking that that's great, right? Because, you know, everyone's going to college, you need a place to live. And I was like, you know, real estate's the best get rich, slow business I've ever seen, right? Slow and steady wins the race. Okay, It's not like Bitcoin. It's not like anything else. But for me, I thought the brand of campus apartments was really the promise to three constituents. The student who's your renter. But that was their first experience renting an apartment. You know, you'll see I'm going through that now with my kids in college, signing a lease for them.

10:03To the parents, because they're paying for it. Yeah, you're signing a lease for them. Right. And well, and like, you know, as I said to everyone, I say this every year at our national meetings. People, parents are entrusting us with their most valuable possession, their kids. Yes. Like, you have to take that really fucking seriously. Okay? Like, their kids are, like, they're living in our buildings. We're responsible for their health, their safety, their well-being. Their first time living alone. Yeah. And then the next piece is the college and university. Okay? Like, they're a constituent in this.

10:31And so I thought a brand was really important. Yeah. I thought that was our promise to those three constituents. And so for me, as we scaled and, you know, we're across the country, we house about 25 ,000 college kids now. Um, I can't, you know, we can't, we don't stamp out the same product in every market because we think the real estate piece is, well, what are the demographics in that market? What are the competitions? What amenities does this property need to compete versus that property? So we still make it special, but you know, the branding, the customer service, the expectations of what the customer should get to me, that that's our promise.

11:03That's amazing, man. And do you, do you feel like the universities and colleges started to see the value in the buy-in? What I think, I think they appreciate us compared to the mom and pop slumlord that still exists in the market. And what's still interesting even today, and, you know, I've been at this almost 25 years, that it's still a highly fragmented business. Okay. You know, the top 10 to 15 operators maybe control less than 20 % of the supply in the country. It's wild. So it's wild. And so for me, you know, if you can go out there, treat people well, treat them with respect. And by the way, that includes your employees because I always say to everybody, you know, the difference between my business and another kind of customer facing businesses, the person who has the most interaction with our tenants isn't the leasing manager who rented you the apartment.

11:50It's the maintenance guy who comes in to fix stuff, right? He has more experience in seeing people. He's your front line of defense, right? It's kind of like servers in a restaurant, right? If you train them really well, people have a good experience. They'll come back. They don't care about the maitre d'. Yeah, 100%. It's all front of house. That's the optics. That's the presentation. So 25 years, 1996, right? You started in 1997? I started in the business full-time. I graduated in 94. So tell me the stats of campus departments today. Yeah, so a little bit about, you know, two, two and a half billion of assets, about 25 ,000 college kids beds across the country.

12:28It varies between buying and selling, you know, anywhere from 19 to 22 states. It kind of goes up and down. We're selling, we're buying, we're doing things like that. You know, we build our own product. We buy and renovate and rebrand and really look at it, you know, just from like a hands on perspective of how we can create value both for us. We do operate out of a series of private equity funds now. So how do we make sure our investors feel appreciated? And how do we make sure this, you know, the students feel like they're getting value? You've gone on and we'll touch on in a minute to do so many other what one would consider like sexier entrepreneurial endeavors.

13:04but you're still in it you're still in the grind which i respect and i just recently got to spend some time with the sun's owner with matt ishbia um and i asked him something similar because it's like you know for all of us sports fans growing up like the dream is oh my god one day you'll own a sports team right and then the last 20 some odd years i've watched like the mark cuban model where it's like if you buy it i guess he's on shark tank too but if you buy it you like sit on the end of the bench and you're in it. Jerry Jones, you're in it and you are in it, but you're also in your other business still.

13:37And you're still seem to be driven. And the same goes for Matt. I talked to Matt about his mortgage business and his eyes lit up. And I was like, Mike, it's unbelievable for someone that successful to still feel the passion about the business they built. That was not the sexy business, right? You still seem to have the passion for your core businesses. Is it just that it's yours, it's your baby, or is it just still motivating you to continue to build that? I think, one, I've been doing it a long time, so I do feel an attachment to it. Two, we've had employees that have been with us over 20 years plus.

14:11And so when you build a culture of people, and I said this earlier, the people in my business are the high touch for our customers. And so having a team and making sure they feel part of something is really important to me. So, like, I get up every day also just working, busting my ass for them, too. Like, you know, watching us be able to change their lives has been really meaningful to me. Also watching us, you know, create an industry. You know, when we were in this in the early 90s going national, there was like two or three of us doing this. You know, now there's a lot more. You get people coming from other parts of private equity into student housing now.

14:45You know, you were on CNBC this morning. You know, John Gray from Blackstone was on after you. and he started talking about student housing as an asset class because they bought the largest public company in the space. Wow. You know, so it's just interesting how things go full circle. Is that company the biggest in the space? Yeah. Do you think one day you guys will go public? No. And I'll tell you, you know, what I say is, you know, it goes back earlier, I'm not employable, right? So, you know, do I want to be a public company CEO at this stage of my life? No. No. Right? I could answer that one for you.

15:17Yeah, you know. And going public, it has to be for the right reason for the right businesses. So there are other businesses that I'm involved in that have gone public or will go public, and I think it makes sense. Maybe I'll stay more board level, not CEO. But I also think it depends on your capital structure, what your goals are financially. For campus apartments, we enjoy it being a private company. So 2007, I read, and I'm sure it was before this, but probably on the early side of this boom in entrepreneurship and boom in investing and venture. But in 2007, I read that you started to venture on your own as more of just an entrepreneur and business mind.

15:59What was the early objective in going out? Or was it just that you now had made money and you wanted to continue to see good deals and make money? Because now I see you as someone who's obviously very thoughtful in everything you've done, your investment approach, your team sports approach. But at that point, was it just let me get into this world now and learn new? Yeah, I think for me, and I still feel this way today, I love hearing about other people's businesses. So I have like this voracious appetite to learn. And so like someone will come to me about a business they're doing, and it could be anything, you know.

16:33And I'm like, well, how's that work? Right. And I generally get interested in it. So I think for me, and it comes back to that ADD piece where I was like, hey, I kind of like this apartment thing. It's going great. But what else we got? And so I think I just have a wide aperture to kind of get involved in a lot of stuff. Yeah. And team sports, was that something? I mean, I know you're a big sports fan and you grew up in Philly. And as a New Yorker, I have a lot of respect for Philly sports fans. I always have. I don't know what Philly sports fans feel about New York. But in general, I've always felt like you could see a Philly sports fan from like a mile away.

17:09And you guys love your team so hard. You're unapologetically like hate everyone else. And it feels like everyone in Philly loves at least one team. Like one of the teams is their baby. Were the Sixers, Phillies, Flyers, were you one of those kids growing up? I was. I was. I would say, A, you know, I think Philly fans, you can't replicate them anywhere. Okay. And the passion. I think when it comes to New York, I think there's an appreciation for New York fans, the intensity. We probably give, particularly Giants fans, a ton of shit when they come to the Eagles games. I mean, that's probably the worst of it.

17:43Second, probably Rangers fans when they come to Philly, right? Not so much like the Knicks-Sixers. I don't see that rivalry in the same way. But so for me, I grew up, I would say Eagles and Sixers were kind of where I really focused the most. I went to Phillies games, went to Flyers games. but I would say those were kind of my two buckets. And when did you first meet Michael? Michael and I met when we were 25, okay? Literally, you know, we both lived in Philly, both entrepreneurs. Michael and I are literally, well, you know, he's, I'm three months older than him, so he likes to say that I'm older than him.

18:19You look younger. I agree, so let's make sure your audience agrees with that. We should cut that out and put it out there for him. And, you know, so I look younger and better hair. Yeah, well, I might get better than everyone. And so, you know, literally we had heard of each other. You know, Philly's not an incredibly big place when you kind of break it down. And, like, just two entrepreneurs grinding. And then we met and, like, you know, we were, like, you know, just doing the same thing. You know, just. You guys ever look at each other now like, what the fuck just happened? Went fast. Yeah. You know, like, you think about, like, you know, he's been around me for, like, seminal transactions in my career.

18:57I've been there for him when he sold GSI and then he took Fanatics back and then he did all these add-on things. I mean, what he's done is just absolutely unbelievable. Yeah. It's like generational. It is. It's pretty incredible. It is. So one of the big things in your life the last few years has been when you turn to your good friend of 25 years and was able to acquire his stake in the Sixers. a was it just the stickers you acquired his stake from and be like talk to me a bit about that process must have been an interesting one I know it was probably bittersweet for Michael but made him feel a whole lot better that it was going to you and for you was this one of those things where like you even had to like pause for a sec and realize that you were now an owner of your hometown basketball team yeah so so I'd answer your question um I bought a stake in Harris Blitzer Sports Entertainment, you know, Josh and David's company.

19:56And so we have the Devils. We now have a piece of Joe Gibbs Racing in NASCAR, working on a few other things. Yeah, tell me the portfolio. Yeah, I mean, so, you know, you think about the stuff that we have here. So, you know, the Devils. We own the Prudential Center, right, which is like a great concert venue. Rock. Right? You know that, right? You know, so we have obviously Sixers. We have obviously, you know, the G League team. you know independently we have pieces of crystal palace you know so we have this whole platform that we're building to really just build you know a global sports entertainment business and so you know the stake i bought for michael was in the whole parent company um and yeah it was probably bittersweet but you know look michael still you know he comes to sixers game cheers the same way he did before he was an owner and after he's an owner like he's the best right so you know he's there for all of that and for me it was definitely like holy shit i own six right um Um, because I've been, I mean, you've come with me to games before, right?

20:53You know, it's like, I was always a fan. I loved it. I love the action. I love the energy. I love the team. Um, and so now to be like a hometown guy in your hometown is really, to me is next level versus just being an owner and you know, some other town. Yeah. It's, it's, it's gotta be like a daily reminder of just like how hard you worked being in your hometown. I mean, if I owned a piece of the Knicks, my God, man, I, there wouldn't be anyone that I ran into that I wouldn't tell. Yeah. how I got there. So the operating of sports teams, operating of campus apartments, totally different animal, right?

21:29The media attention, the media attention that comes to you, the politics that gets involved, just the stakes. Fans. The fans in Philly, especially. Tell me a little bit about what Josh and David are like as partners and kind of their compliment to one another because I'm fascinated by how these partnerships work where you find two people, three people. And the reason it works perfectly is because without knowing it, there's something that each one of them is missing that the other one is able to fulfill. So what is it about Josh and David that you've seen that they've been so successful and not in their private equity space, but as they've entered into the sports world?

22:08Yeah, but you got to give credit to what they features built in their own private, you know, kind of in their day, I'll call it the day job world of, you know, Josh, you know, what he did at Apollo and building that business into, you know, one of the handful of largest global asset managers is unbelievable. And, you know, David, the story career at Blackstone, and then, you know, starting this tech ops vertical that's grown into this monster. So, you know, just accomplished guys in the way they think as private equity investors, and then translate that into sports, right? And so how do you do, How do you kind of table the passion?

22:43Because they're both really passionate guys. You watch them cheering at games. Like they're in it, right? They're intense. And then two, like they're both wicked smart, right? So their ability to really process data and information very quickly. Like they see the field really fast. Like beautiful minds. I mean, these guys are really smart. And I learn from them both every day. And for them, they really come at it like, hey, and everyone needs to know this. like Josh and David just want to win. Okay. Like what do we need to do? Whether it's for the Sixers, the Devils, like how do we do it? And you look like the Devils had an unbelievable year this year.

23:20Right. And like based on where we, you know, kind of bought the team and kind of that rebuild and where they are. And then, you know, look, well, I'm sure we'll talk about the Sixers. Like we didn't get it done, but like it wasn't for a lack of effort, a lack of spending money, a lack of commitment to the team. Do you walk in the arena the first day you own the team and like just want them to win a little bit more than you did a hundred percent and what i've learned so everyone says what's it like being a sports owner and i'm like it's really great when you're winning yeah it's not good when you feel it yeah when you're winning in that energy walking through the concourse and people are like what's up you know like i love it yeah okay when you're not doing well and this is about philly fans you know because i appreciate the passion and my twitter's getting blown up with like you know different animals oh man there's no mercy even if you're even though I'm from Philly.

24:06Are Philly fans, like, so let's just like set this straight because you've been in every arena by this point. It feels like it's become unanimous, like the Philly fans are the most ruthless, right? Is that, is that the feeling? I mean, because the ruthless are passionate because like there's the energy they bring, okay? And I think people think they're, I mean, look, you know, people talk about the Eagles fans, you know, throwing snowballs at Santa's, you know, and like, look, like I remember as a kid being at an Eagles game at the old stadium, like veteran stadium and that thing was a piece of crap but like being in the bathroom and some guy walked in in a 49ers jersey and people were like let's beat the shit out of that guy i was in the bathroom and i was like a kid i'm like holy shit um but i i do think that our fans are just so passionate they want to win and what's interesting is even though they get pissed at our players they're really loyal to our players like in any given sport like they might give them a hard time at a moment.