THE BREAKDOWN: Are Leicester in REAL Trouble, The Glazer’s Billion $ IPL Move, & The NBA’s European Dream (E06)

28:16That's very generous of you. So effectively, Top takes over. And then very soon after Top takes over, and he's still relatively speaking a young man at this point, still is now, COVID hits. And COVID hits the King Power native business pretty hard, right? because it's a travel-related business. Bear in mind also that their main market are Chinese. And there was no country that had fiercer and longer-lasting lockdowns than China. So King Power was already, you know, badly struggling financially and the Thai government had to step in and basically subsidize it to keep it afloat. But after the end of COVID, the Chinese tourists did not return in the same numbers that they had previously been coming.

28:58and the company started to struggle and struggle and struggle until eventually last summer, summer 2025, King Power effectively got put into administration. Effectively. I don't know what the actual time mechanism is, but it could not satisfy its rents. It couldn't pay its rents. At this point, we have some major alarm bells going. So there's some big alarm bells going at this point, knowing that Leicester City is losing dump loads of money that has been subsidized by King Power and King Power itself is in big difficulties. So effectively what happens is the former head of the Thai airline airport authority gets put as emergency chief executive of King Power and top gets shunted to one side.

29:43Okay, you're not running this business anymore. And over the following six months, the former chief executive of the Thai airport authority and his former colleagues at the Thai airport authority come to a negotiated settlement in terms of the future of King Power's relationship. And the long and the short of it is, is that they've gone into a sort of restructuring, effectively, which is to say that they're allowed to pay less money in leases, guaranteed leases in the short run, but they have to fork over a large chunk of their profits to replace that money as the profits come. So it's just going to be a much less profitable business.

30:18And if it survives at all. Profits which previously could have been used. Well, not could have been used. were being used to support the football club because we're talking about a football club here that has been losing on average 50 million pounds a year and one of the things that is hardest for me to explain to fans is when they hear what you you know we've got a billionaire owner so why is this a problem if i had a billion i would spend 50 million pounds a year on the football club and i explained them actually they wouldn't because being a billionaire doesn't mean to say you have a billion pounds in cash in your bank account this is not the way it works right you'll have a you know certain amount tied up in equity in the in your main business you'll have properties you have all sorts of things going on you have a family office which oversees trusts on behalf of your broader family so effectively just to jump in I think it's business it's one of the reasons why you've seen such a rise in consortiums having to purchase major assets because liquid cash versus billionaire wealth status absolutely it's a completely different piece and sports now really noticing that well as the ticket size gets bigger than the number of single individuals who can afford it comes smaller.

31:25And that's for the acquisition price. The problem with the football club at Leicester City is that there's the acquisition price, but then there's the ongoing cost on an annual basis. You know, it's often described as the world's most expensive season ticket. Every month, the finance director comes and says, by the way, Mr. Top, I need an extra 5 million from you this month. I need an extra 7 million for me this month. And that's how it works, right? It's quite scary. And if at any point, the King Power business is not kicking off the dividends, which enable that money to be transferred to Leicester City, then Leicester City has a problem.

32:00Now, so that's the King Power background as to why I've got a red flashing light on my dashboard saying this could be a really big problem as opposed to a bit of a problem. Now let's look at where they are in the championship so we've already spoken about their problems in the premier league and it is true to say that they have been trimming their sales i mean they have to they you know that's just the way it goes i mean that they've finally realized that they can't keep on breaking the rules and they don't have the cash to spend anymore so they've now in they're in the championship and their wage bill now is down to by my estimations about 55 to 60 million which is still enormous in a division where the average wage bill is half that but here's the other problem because your wages you can reduce it might take you a year or two but you can reduce them the other costs in the business are at north of 40 million and that's things like looking after the training ground and that's things like having a category one academy and that seems like having a professional women's team and all these types of things those things are much harder to get rid of When we took over Sunderland, Sunderland was probably the big club that has experienced the most similar problem to this, which is to say it got relegated from the Premier League to Championship and the Championship to League One in successive seasons, finishing bottom both times.

33:15So by the time that we eventually acquired the club in League One, it was losing upwards of£30 million a year on an operational basis. Now, when you leave the Premier League, you get what's called parachute payments, which are meant to be there to help you adjust as you go. and the idea is is that you come into the championship and whilst you're in the championship you're able to reduce your costs on a gradual basis with the parachute payments filling in the gaps over a two to three year period three years if you've been in the premier league more than one season two years if you've been in the premier league for only one season here's the problem leicester were only in the premier league last time for one season right so two parachute payments and this is their first year of parachute payments they get about 55 million and then next year is their second year they get about 40 million the problem is where do they find themselves in year three because that will govern whether this massive cost base that they've built up is anywhere near affordable and therefore whether their liabilities are greater than the value of the club now if they get relegated to league one for next season the parachute payment will cover their losses in league one for that season the second parachute payment if they then do not get promoted from League One next season, and they find themselves in League One in season 2027, 2028, so that's in 18 months time, in 18 months time, their native revenues without parachute payments will be about 20 million quid a year, with a fixed overhead of running the thing pre-player wages of about 40 million pounds a year.

34:48And at this point, you're running into the problem that I described about 10 minutes ago, which is your overall liabilities and the costs of running you are bigger than the value of the club itself. And that's when you've got a big problem. And they will then need to adhere to League One financial regulations as well, which are going to be slightly tighter on how much you can spend. Not slightly tighter, unbelievably tight. So really, we're just looking, that's another issue. Huge issue. They're probably going to fail to meet because they'll be so far over it. They can keep on downsizing the playing wage bill, which is what League One cost controls are targeted at.

35:20The problem is that that then means you're totally changing the nature of yourself as a club, right? So you're having to switch everything you do and saying, well, we're going to need to go and acquire some League One journeymen on 250 grand a year. And then they're all swimming around in this enormous training complex. It was exactly the same as we had at Sunderland, where a training complex had been built to accommodate elite footballers and lots of them. And suddenly you've got a squad of 23 League One journeymen and youngsters in a five-star hotel, which is not good from a cultural point of view or a performance point of view.

35:52and keeping that five-star hotel going is draining the club of cash, which then makes it much harder for you to compete with the other clubs in your own division. So I'm looking at things like their professional women's team. They're currently in WSL1. Just signed Alicia Lehman, I saw. Did they? Yeah. They're in WSL1, but they are bottom. Now, if I was Top and his advisors, I'd be praying that they get relegated. Because maintaining a women's team in WSL1 is very, very expensive compared to in the division below. So you're probably talking about a loss of 5 million going down to a loss of 1 or 2 million, right?

36:25So I'd be hoping for that. I'd already be looking at the academy. The cost of having a Cat 1 academy, a Category 1 academy, which Leicester currently has, probably about 5 million a year. I'd be having a keen look at that and seeing if I could potentially take it down to a Cat 2 academy. At Sunderland, we managed to keep it at a Cat 1 academy, but my God, it was tough. Unbelievably tough when you're in League 1 and you're spending 3.5 million quid a year on your academy when some of your rival teams are barely smelling out on our entire first team squads, right? So there's a lot of stuff that needs to be done.

36:56Now, here's just looking at it. Who's going to do all this work? They don't have a chief executive. There is no chief executive. The last chief executive was a lady called Susan Whelan, who said that having a wage bill that was 110 % of turnover was, in her own words, entirely reasonable. That was their last chief executive, was somebody who thinks it's reasonable to have wages at 110 % of revenues. But they haven't actually had a chief executive since then. I am concerned. I am worried. I hate to see football clubs in financial difficulties. I grew up supporting Oxford United, which after the death of Robert Maxwell, went through a succession of financial difficulties.

37:34And ever since then, I've had a sort of real passion for footballing sustainability. And indeed, as has been the case at Sunderland and Charlton, turning round clubs that have been unsustainable. And I'm looking at Leicester thinking this could be worse than the previous two worst cases I saw, which were Derby County and Bolton, both of which came within a very short, I mean, in Bolton's case, a matter of hours, actually, of liquidation. Can I ask you, when you're the EFL here or the Premier League, this is a very bad image for broader football when you have clubs and severe financial difficulty.

38:08No matter how they got there, it's a bad image. You're then having to balance upholding your rules versus the broader impact something like this could have on football as an attractive asset class, as a good business. Do you think they become compromised? How do they look at the situation where they're going, we have to give them the six-point penalty. It's going to put them just above the relegation zone. It could be a nail in a... Dare I say it, Charlie, I think that might be why they got six points, not 12 points. Because for me, the offence looks like a 12-point offence. It was an egregious breach.

38:38It was not a small breach. It was a large breach. That's the other piece, actually. I said 20.8 million, but the reality is it was much bigger than it was now. It was more like 40. When you actually change it to allow for the accounting period changing, which is a technicality I don't want to talk, we don't have time to go into. But basically, in my view, it was a 40 million pound breach, which is a vast miss, right? Because the majority of these misses, if you think about what certain clubs have been done for over the last few years, you're arguing right up to the last moment about whether this million or that million here or there, or this transfer happened on this date, but not that date.

39:08These are very, like clubs like Forest and these other, these were very tight considerations. In Leicester's case, it's like the entire industry knew that they'd missed by miles, miles. And therefore, for them to get six points, I would almost say is almost setting a slightly concerning precedent that other clubs might go, well, if it's only a six-point deduction, we might swing the bat here. We might give it a good go. So I think they've tried to, I don't want to cast aspersions against the independent panel who came to this conclusion, but most of us in the industry assumed it would be nine to 12 points.

39:41So six points looks generous. And it looks like a number of points that gives them a chance of staying in the championship. And if they do stay in the championship, then they have a chance of getting through as a solvent football club if they go into league one they're they're in the emergency ward they are in the emergency ward i think it's um very concerning but very interesting situation to keep an eye on and i think you've laid it out very very well and of course this is why the independent football regulator has been put in place by the government is because of what you said which is sometimes the leagues have a difficult time regulating clubs that are after all their own shareholders and it kept those types of considerations you mentioned right i won't repeat them become considerations when you're a member organization and you're regulating your own members the independent football regulator will be regulating these situations in real time not in retrospect so in other words they will be saying to susan wheelan when susan wheelan says a few years ago oh we're planning by the way we're planning on signing a whole bunch of players and pushing up our wage spending to 110 % of revenue, which I think is entirely reasonable, the independent football regulator will say, I'm stopping you doing that.

40:54We don't think it's reasonable. It's against our rules. Don't do it. Right. And that is why we need an IFR, because fundamentally the Premier League and the Football League aren't able to regulate their own members. I've learned a lot. Which is what we all want, isn't it well I don't know I feel almost sad you know going into a post-mortem on a club that's on you know on death row because there are things that can get out that can get out of it but they are currently only outside the relegation zone on points on goal difference and that does start to loom as being a likely eventuality anyhow moving on moving on moving on the next topic dips into a couple of things we love to talk about almost seems like we have an obsession but I'm going to say at the start this is positive for Indian cricket okay this is we like you please don't get too upset Charlie's obsessed with Indian cricket Charlie can't get enough I can't put it away is it genuine interest or is it the fact that you just love that when we do get Indian cricket on the show that we just get hundreds and hundreds and hundreds of comments I know I'm just cheap I'm so easy to so easy to see through no in all seriousness the reason we're going back into it we're not talking about international game we're actually going to look at the IPL and some broader franchise value that we talk about regularly now on the show because it has come out recently that a couple of franchises, RCB, Royal Challengers, Bengaluru and the Rajasthan Royals are on the market if you want.

42:15They are open to investment and it is a very rare thing for an IPL team to be open to investment or available and therefore it has encouraged a number of bids and attractive investment propositions for various individuals. Notably our friends the Glazers from Manchester United. In a world where we regularly sit here and talk about you know the size of franchise values and emerging sports and new IP. I thought you were about to say the size of something else there. Well, no, I mean, it's only a new week thing, and I can't get back onto that, or I won't make it through the rest of the show. So the size...

42:47It's going to be like that Agnew and Brian Johnson moment, isn't it? We're getting a great set of clips out of this. But yes, you know, the price that has been put on these now is only going up. And when we've talked about emerging IP in shows and criticized it, we have referenced the fact that we think the IPL is the only one that really at this scale and level has worked. This is in terms of a disruption of a major sport. Correct. Correct. That has worked on a mega level. Correct. So, you know, just for a bit of the information, the estimated bid for RCB is likely to be anywhere between$1.2 to$1.8 billion.

43:26And for Rajasthan Royals,$1.2 to$1.4 billion. The ranges have derived from people that have actually partaken in this and not been successful. So it's come from relatively reputable sources. When you say partake, these are people who've tried to buy franchises in the past, have failed, and then... Actually, in this process. In this process. So the ranges have been derived from non-binding bids investors made in the initial round, which was in January for Rajasthan Royals and on February the 2nd for RCB. Interestingly, it's understood that RCB and Rajasthan Royals are open to 100 % sale. I mentioned scarcity value.

44:01I mean, you know, this is a very rare opportunity to investors. so it's no surprise that there's great interest. But we're looking at over$1 billion in valuation here for a tournament or competition that competes for six to seven weeks of the year. What are the revenues, Charlie? So the average revenue will range between$60 million to$80 million for a franchise, and that's pretty consistent. Media has played a huge part in it recently. They sold the latest round of rights over a four-year cycle for$6.2 billion. But if we're talking about revenue multiples on valuation, That's a tech multiple. This is a tech.

44:35This is a 10 plus X multiple, of course. So we're talking about assets here which are relatively new, where the revenue is relatively modest, but which are actively trading at 10X plus. Yeah, correct. Now, the last price that these franchises were bought for combined two were sold, one for Lucknow, one for Ahmedabad. And the total for that was 1.6, 1.7 billion. So if you look at that dollars, so if you look at that, they were trading at high hundreds of millions of pounds. So in other words, effectively, the franchise value over the last four years has doubled. Is it any wonder that some franchise owners want to sell?

45:18It's a good question. You've got this asset. It's not really making you anything in terms of profit. But people come along and say to you, I'll give you a billion for it. But Charlie, we're going back into here then. Where's value derived from? Correct. Because if we're just looking financially, I think a lot of them are profitable. Yes, they are. But marginally so. You know, we're not looking at massive loss-making entities where you're having a personal money. No, but marginally so. But the social value, the broader value, the soft power. But do you think that's what Avram Glazer wants? Well, it's interesting.

45:47And I thought you may ask about value. So I thought, you know, they've actually publicly or at least there is some public information around some of the people that have put the bids in. So you can look at the different motivations that these individuals may have. Let's use an Avram Glazer. You know, you'd imagine they're looking at it as a traditional franchise league value and they're thinking that this is an underappreciated league, even at that scale. You know, if I had offered you the chance to buy into the NBA or the NFL 20 years ago where the NBA franchise is maybe two to three hundred million, You may have at the time seen something that was expensive and didn't have huge opportunity because media hadn't been fully exploited and the market wasn't anywhere near what it is now.

46:22Now they're trading on average at$4 billion. So there's a piece of value being closed leagues, no relegation risk, central revenue sharing, salary caps, all of that exists in the IPL as it does in a lot of the American franchises. So it's an economy that they understand. They could also, you know, you could see it as a bit of a hedge against stagnating Western in sporting growth and looking at it going, okay. So let's say they currently do 80 million, right? And I don't think anyone would claim that they've underexploited their potential within the Indian market, would they? No. No. Well, no, but it's growing.

46:56Okay, so they haven't underexploited it, but India is a massively fast-growing economy. It's got a huge elevation of the money available, of what you would call the Indian middle class. I've been relatively recently. One way that came through was the quality of airline, domestic airline in India. And so that wasn't what I expected. And they said, oh, this has actually become a major form of travel because the Indian middle class has risen so much that airfares, air travel is now affordable to many. And that was a way they were explaining how the money in India is now starting to pump through the population as much as it is just being held at the top.

47:30So the IPL, I think, has been growing with India domestically. and and what you're probably looking at right now is some of these owners going that is only going to continue this market is a is a the fastest developing economy it's the fastest developing sports market from a media perspective as well domestically because you're now speaking to more people who can access this media if you look at if you're an indian businessman if you're an indian company there is still immense value domestically in being a part of this so munipil group uh which is owned by ranjan pai an indian strategic uh capital group um they have you know education healthcare investments, IPL ownership for them.

48:07You know, it's like, it's the elite status that comes with it. But also, it's a credibility on a global scale if you're looking at a global expansion. I totally get all that. The potential buyer that I'm interested in are the Glazers. Because the Glazers don't give a damn about all that. I mean, they don't even give a damn about that in their own market, let alone in a different market, right? They are, as is well known, purely financially motivated people who have made a series of winning bets. So these are guys who get it right. For them to spot or to believe that$1.5 billion on an Indian cricket franchise is a good bet, that tells me that there's something going on.

48:49I don't know enough about it. There's something going on in terms of the growth prospects, which are so dynamic that a financially motivated buyer who doesn't have a lifestyle or other reason to buy it, like the Glazers is thinking, rather like they do with Man U when they bought it all those years ago for peanuts back then, they're thinking there is an absolutely huge growth trajectory here. I reckon with the Glazers, it will be actually taking a strong view on the other thing you said, which is what the actual revenues are going to do. And if they see what you said, which is the absolute mushrooming of an Indian middle class who can not just buy into the teams, but their own spending power then begets sponsorship levels, which start to get towards the types of sponsorship levels that we've seen in America and Europe, etc.

49:38And then the TV rights deals become more valuable because more people are able to pay for subscription channels and all this type of stuff. So if they're actually taking a really medium-term view and saying, hang on a second, you know, India's population is 1.4 billion. 1.4 billion. America's population is 270 million. 350 million. So we're talking about a country four times the size of America. If their growth trajectory and the trajectory of their spending classes increases, as we believe it's going to over the next 25 years, and if the biggest show in town, their equivalent of the NFL or the Premier League, is the IPL, which clearly it is, right?

50:12Clearly it is. We want to own the beachfront property now. And in five to 10 years' time, people now will tell us it's expensive, just like they told us it was expensive when we bought Man United. But in 10 years' time, people will say that was cheap. I think that's what they're thinking, isn't it? I completely agree. And, you know, if you're looking at available sports assets at that level, an IPL franchise is a pretty good one, based on all of those things. The domestic market times the global, the reputation that comes with it, it does have a very positive image, despite all the critique we've been levelling at Indian cricket over the last few weeks.

50:42That you have been. Team effort. Team effort. You can't throw me under the bus at this point. But it does, you know, it's a hugely successful tournament. And it has been, ironically, again, it's been run very well. They have run it in a way that has seen incredible growth across this, that is in accordance with the broader economics of India improving at the same time. There was something I saw in the papers this week, and it was an argument being made by newspaper columnists, that effectively what cricket requires is a separation of 2020 from test cricket and 50 over cricket, right? So you actually have different cricketers playing the two different types of the game.

51:18If that were to become the case, just bear with me on this one, could we see a situation where instead of being a two to three month tournament that the IPL becomes an eight to nine month tournament actually becomes like a football season or a baseball season or whatever it might be that actually that it becomes a more conventional franchise led thing of nine months a year Charlie I think that's such a good and deep complex question I mean when when I spoke to Andrew Strauss good name drop good name drop well you know go and check out the show Straussie it's a very good show So, you know, he talked a lot about the separation of that when he was director of cricket at England and it was creating the white ball team and the test team.

52:02Broad and Anderson were told they weren't going to be playing short form cricket anymore. He believed categorization was important. Now, the development of cricket is so much based on that exciting short form that I would worry if you, at a young age, targeted or asked players to choose the value of your test match, your longer form products may be impacted by the best players of the game, the most naturally gifted, the ones that have been brilliant across both formats. Which is what's already happened in the West Indies. Exactly. And that's the very unfortunate situation of the financial distribution that we've talked about previously again.

52:32But I would worry that if you really did do that at this stage, the real impact would be on Test cricket. I don't believe that needs to happen because my view would be... I'm not saying that I want it to happen. No, no. I'm wondering if this is part of what people might be thinking and buying into. Let's drop one-day cricket and let's have T20 and Test match cricket. Yeah. And then we don't need to have this type of discussion. But if you see some of these EPL guys, the EPL owners, then also being parts of the groups that are buying franchises for the 100 as well, are we starting to see a situation where as they start to buy up other franchises and other T20 and short-form leagues around the world, and effectively then cricketers start getting contracted to the ownership group, which then has franchises in all the different leagues around the world, how difficult it will then be really to find the spaces within the calendar for those players to play or want to play test cricket which is already kind of happening I'm just looking down the road and imagining why some of these massive valuations are being paid and all I can see down the end of the road is a game cricket which is just dominated by T20 and to a degree the 100 may be if that takes off and that really that the test game in long form starts to really wither on the vine.

53:48Anyway, look. Charlie, I think it's everyone's concern and we should do a full thing on it because discussing where there could be room to free up time in that calendar to facilitate that inevitable outcome is a discussion point on its own. The interesting thing, you're right though, is there is certainly this move, this power move from a business sense where we want to create this multi-portfolio ownership piece around T20 assets. And you'd imagine that's commercial value because they can trade value for sponsors. They can do it for players that they bring in and get them to play in those different leagues.

54:19And the minute you start owning those multiple leagues in multiple geographies, your value and influence is significantly increased, as we've seen with a huge Indian involvement in the latest round of transactions for the 100 teams. So, yeah, I mean, we'll follow this one closely because it will obviously develop and emerge. But from that kind of very large value piece into where we believe there is some real value still to be had in Indian cricket. It's a case of new IP being done very well. Congratulations to India and everyone involved in creating the IPL because I'm a big fan. Just to make it clear, Charlie Stemmings is a big fan of Indian cricket.

54:57Huge fan. And as I said, having been to the country, watched cricket in the country, I'm a big fan as well. So this is an important point to make. And it actually feeds quite nicely in because I mentioned, to our next topic, I mentioned just that NBA IPL value piece and where that league has come and where we now see it and the power of the NBA. And this is something, Charlie, you've been really keen. You've been subtly dropping it into our chats for the last few weeks. I'm getting the feeling that it's not your favourite topic. No. Well, I'm not a massive American sports fan. Ah, now we come to it.

55:38Yeah. I find it hard to really back a sport where you could miss the first three quarters and literally everything seems to be done in that final quarter. We don't have time to go into your eccentric views on American sport. But what we do have time to do is to discuss what I think is going to be an absolute blockbuster of a sports business story over the next few years, which is the attempt by the NBA to create a European NBA league, despite the fact that there is already a professional European basketball, very successful professional European basketball. It's called the EuroLeague. And it was founded in 1958.

56:21And it has a mixture of historic basketball clubs. And I'll come on to some of those in a moment. And then major European soccer clubs who have a basketball arm like Real Madrid and Barcelona, PSG, Bayern, etc. And then in Italy, you've got Virtus Bologna, founded in 1927, and Olympia Milano, founded in 1930, which is owned by the late Giorgio Armani and his family, who have plowed in the thick end of 250 million euros over the last 20 years. This is big business, Charlie. We don't have it here in the UK, but in continental Europe, this is big business. And outside of America, the EuroLeague is the highest revenue and most attended indoor sports series in the world.

57:13Okay? Right? So their average attendance is around 12 ,000 per match. Right? So this is significant. TV contracts, everything. Players are paid really well. it's a big big deal because I'm running a club in Belgium there is a secondary league covering the Benelux countries for instance and near where my Belgian club is there's a professional basketball club there and they regularly get more fans at the basketball than we do at the football right so in Europe basketball is a big thing now yeah now I just please I do appreciate it I understand and also from a grassroots perspective which is where I think this becomes quite interesting as well and where it'd be hard to implement a similar thing for the NFL you've actually got that foundation already established very nicely.

57:58Yeah, so let's go back to what we said about Live Golf. What Live Golf should have done is before they took on the USPGA they should have done a deal with the struggling European tour the DP World Tour and they should have made the offer to make that league much stronger and then effectively start to pressurise the USPGA tour from a position of strength. They didn't. They went straight at the USPGA Tour, and that's what's been their undoing, ultimately. There are echoes of that here with the NBA's attempt to take on the EuroLeague, right? And since we love quotes and statements, we love statements.

58:37I love it. We love statements. The exchange of statements between Adam Silva, the commissioner of the NBA, and let me get his name. I've got to get this right. The EuroLeague CEO, Paulius Mottie Unis. I have butchered that. And I actually want somebody to tell me how badly I've butchered it. But there we go. We'll come back to it. So Adam Silva basically says... Are we HP or are we Belgian League here? Is it that kind of... No, it's Belgian League. Belgian League. It's Belgian League on both sides. Sorry. So Adam Silva's idea here is to persuade football clubs, both the existing football clubs who have teams in the EuroLeague, but also other football clubs who don't have teams, basketball teams that is, to persuade them effectively to fund and effectively buy, acquire franchises for NBA Europe.

59:25And here's why. As an American, as Adam Silver, I see that religious fervour around people's football clubs and we want to tap into that. We don't come into the market thinking we're going to take it away from football. What we see is a large opportunity and that all over the world, people are turning to live sports and this is a massive opportunity for us. We're talking big numbers here. They're hoping that the franchise values are going to be$1 billion. Off the bat. Off the bat. Now, that number seems to have been gradually edging downwards. right and one of the reasons it's edging downwards is that the teams the euro league itself and the teams in the euro league are not chomping at the bit to join or to welcome nba to europe as much as one might think now i want to i want i want to quote here paulius moti unis the euro league CEO you think so yeah not that you know i see i assume he's lithuanian or something anyway i'll come back on there right so this is his opening quote we've only heard the fireworks of how amazing it's going to be and how much potential there is but having a theory is one thing making it work something totally different i mean yeah right so he then he then slapped in a legal letter to the nba to adam silver a cease and desist saying that he had to stop contacting clubs that are contracted to play in the EuroLeague, right?

1:00:51And we're right in the middle of this whole thing right now. Silva then hit back, basically against the idea that the EuroLeague is sufficient in itself and doing a great job. If I thought the ceiling was the existing EuroLeague and their level of fan interest, we wouldn't be spending the kind of time and attention that we are on this project. So in other words, basically he's saying to the EuroLeague, you're doing a crap job. You're nowhere near exploiting the potential of basketball in Europe. You don't know what you're doing. You're absolutely hopeless. Is that a fair statement? Well, I mean, beauty is in the eye of the beholder.

1:01:24The EuroLeague is successful. It is powerful. It does. It's the biggest indoor sports league outside of America. So don't know. Coming back, Motta Yunus, after slapping the lawsuit on Silva's desk, we're going to be able to adapt. There's no doubt. And we're going to continue to fight. Right? So these are not... This is not HP. These are not HP things. Wow. Now, Barcelona, who are one of the top targets for the NBA, have reportedly just committed to another 10 years with EuroLeague. But meanwhile, Real Madrid, it seems, are still in talks with the NBA. Don't you love it? Yeah. Isn't this absolutely fantastic?

1:02:03Those guys aren't going to care about that agreement. A nice flashy new brand comes in saying we'll elevate your product and give you a new platform. Right. And that's basically what Silva's saying, right? What Silva's saying is, look, if we slap the NBA on it, then that'll make everything fly much harder. Now, the problem is this, is that fundamentally the players, it's the same player pool, right? Neither the EuroLeague nor NBA Europe are going to be paying enough money to attract stars from the NBA. So the question is, is when people are tuning in to watch the NBA, are they tuning in to watch it because of the NBA brand?

1:02:39Or are they tuning in to watch it because the big stars that play in the NBA, right? So we're literally with DP. World Tour kind of piece again, of going, if I can't get some of the players from the PGA to come and participate regularly on this tour, I'm not that enthused. The NBA is making a bet that basically just being the NBA is going to make a massive difference. If you pair the NBA with, say, Man City, who they've also had talks with, right? And you say, right, we are going to be Man City, NBA Europe team, right? That that in itself is going to be enough to create huge amounts of excitement amongst the Man City fan base.

1:03:15Doesn't this come right back to the thing we talk about all the time, though, is you can't just create these new things and expect fans to follow? Because to me, looking at this, and please tell me if I'm wrong, but from everything you've just said, we're talking about things, again, ingrained in cultural fabric. So Turkish, Greek, Eastern European in particular, right? Those communities are so passionate about their sports assets. So do they give a shit about the new shiny thing coming? No, they want the environment created by their basketball team that has existed for however many years. They don't need this person condescendingly coming in, telling them they're doing a crap job, sticking a US league on it and telling them the product's going to be better.

1:03:52And I can promise you here, if you just create a Manchester City associated basketball team or a London, which is what some of them were talking about, I don't think you're going to get many people that actually care either. Well, let's see, because I think five, 10 years ago, people were very sceptical about the power of American football to really energise people in London. And bringing the big NFL teams over here has done that. Now, interestingly, the NBA also already does that. So NBA teams do come to Europe and they do play main season games in Europe. But it's still NBA, right? So the followers of the NBA will like that because they're getting exposure to the top level product.

1:04:29But unless this product can elevate itself to something that can compete or sit alongside the NBA, America, you've got a secondary market. Which effectively is what the EuroLeague already is. because the very top players from the EuroLeague translate to the NBA. Can I ask you a question? Now, Silva, by the way, knows this, right? So Silva's not a dummy. Silva says that if we were to successfully launch the league, it's going to take a while before it's a viable commercial enterprise. You need a very long-term perspective. Now, he is hoping that the funding for this is not going to have to come from the NBA.

1:05:03It's going to come from the new franchise owners, effectively funding their own league by paying money for the franchises, right? so effectively they pay for the use of the NBA logo and to be part of an NBA logo league and that money is then used by that league to fund the promotion of that league so when you have a lot of these clubs being owned by football clubs Real Madrid, Barcelona, Bayern, Olympia Fenerbahce, Panathinaikos are they going to be wanting to spend massive value on franchise fees to get into the league? no, no, definitely not Barca need to have any money to spend on anything?

1:05:39definitely not and it would not go down well with their broader fan base. Because don't forget, a lot of these clubs are fan-owned. So if you think about Real and Barca and Bayern, they're all owned by the fans. So if, for instance, the leadership of those sporting organizations were to say, by the way, we're cutting back on our first team football budget for next season because we're investing into a new NBA shiny league, that's probably not going to work in terms of that president being re-elected. So I think where we're at now is that Adam Silver and the NBA are realizing that people aren't biting their hands off.

1:06:08I mean, so they have spoken to Man City, but there was a sort of off the record quote from within Man City saying they weren't going to take the conversations any further, which I saw. So people aren't biting their hands off. They're not willing to let go of the whole thing yet because that will give Paulius Mutayunas a big win. Right. If he's seen to be the guys who basically, you know, told the NBA to get lost and successful in that, that'd be so that there's ego and pride on the line here. The proposed amount that people pay for franchises is coming down. and I think reading between the lines there's a greater understanding within the NBA that actually to make this work the NBA itself is probably going to have to fund quite a lot of this and that then becomes a much harder call doesn't it that becomes a much bigger shout in terms of the politics of basketball in America to say right well we're actually going to spend a few billion on trying to create NBA Europe and you can imagine then some of the clubs and the franchises within the NBA saying, why?

1:07:02Why are you doing that? We ourselves are running franchise in the US. And we ourselves are trying to attract European fans to follow our franchise in the US and buy our merch and buy into the whole thing. You're now using money from the league that otherwise could be distributed to the franchises. And you are using that to create a new league that is effectively going to compete against us for the European market. Why is that working? Is this to add fuel to the discussion we just had, another example of American sports recognizing that they've now pretty much maxed out the value on what they can do domestically.

1:07:37And therefore, something like RCB, Euro Basketball League, you know, a different type of emerging sports asset is where the new money will be spent. I think that's definitely true. And there's also an element of understanding that there is what we call a wall of money out there, which is designated for sport, and which doesn't have many homes to find in the US market. So if you look at a lot of the big priority funds, are raising billions, billions and billions and billions to invest in sport. They are either not allowed to invest in various bits of the US sports ecosystem or else only allowed to invest so much.

1:08:11They're only allowed one franchise, etc. And when you come out of those top clubs, the top franchises in the top sports in the US, there's not that much underneath it that you can get involved in. They suddenly look at Europe and other parts of the world and go, well, if we've got all these billions to invest in sport, it's probably going to have to head there because there's only so much that we can put here. So I think there's an element. This is why I think Adam Silver's initial instinct is correct. But dare I say it because he's obviously a very expert sports businessman, much more senior than me and much more accomplished than me.

1:08:44And if he was sat here right now, he'd clip my ear and tell me I just didn't understand what was going on. My instinct is that this is an overreach. My instinct is that actually if he'd gone to the EuroLeague and had said, hey, guys, look, you're doing a great job. we love what you're doing but we do think that with a bit more money behind you you could probably grow the profile of basketball in Europe as a whole we still think there's room there there's room for growth how about if we partner together how about if we buy a bit of a stake in EuroLeague and in return give a lot of money into your marketing and a lot of money into your arena developments and all that type of stuff learn from the mistakes Charlie learn from the mistakes of Liv and DP this is your moment you should front the movement unfortunately you're always in the unfortunate situation of bringing news that people don't want to hear right which is you know you're not wonderful moments when dr evil goes one million pounds it's like who's the person who says dr evil no it's one pound it was ten pounds this is where some consultants are much smarter than me is understanding that actually the easiest way to make money out these consultancies is to agree with the original premise because why would you disagree with somebody who is about to pay you a lot of money and then try and find ways of of taking that project forward whereas i'm afraid in this situation i'd be saying i think that the original premise is that the euro league is doing a bad job and given its historic roots and given that it is actually quite successful you are taking on perhaps a slightly bigger tiger than you thought you were yeah um certainly from the fan base if you could be correct commercially and financially by the looks of it you know there's probably more that could be done but you cannot underestimate the power of fans in europe again And that's where if there's an overstretch where we've seen Americans not translate well into Europe, it has been an under appreciation of the communities and the fan groups that really run the clubs.

1:10:31I would love, I'm sure there's lots of basketball fans out there. I'd love to hear your thoughts on this. This is something that I'm relatively new to. Charlie's done a great piece of work on it. And as I said, it's been very keen to talk through it for a number of weeks. I think he's done a great job. But for those of you that do, you know, live and breathe this sport, it'd be great to hear your thoughts. So please do get back to us. not least Mrs. Methven who used to play international basketball that's why did she? wow yes she did and I am therefore in a household with a degree of basketball in in-house knowledge so that's where the notes came from well I wouldn't say that's where the notes came from the encouragement to look at the sport of basketball may have been somewhere around the household so finally I get off the hook oh yeah it's gone into the schedule Charlie that's a lot of ground we covered today and I think more of those stories we'll probably come back to so thank you as always I really enjoyed it that was great fun Charlie, really enjoyed that thank you as ever for tuning into another breakdown, it was a little hard to get through most of that show after Charlie gave us his thoughts on the future selection policy of ski jumping teams but hopefully you thought the rest of the show went without a hitch, some big topics in there and I'm very conscious that we're talking about some sensitive and hugely impactful things when looking at the potential liquidation of a club in particular.

1:11:53Please keep letting us know your thoughts on all that we talk through. Keep the comments and feedback flowing. We'll see you next week.