Private Equity in the NFL? & Gen Z Loves Their Sick Days

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best I do win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the NFL is poised to make big changes to its ownership rules.

0:40Jeffrey Lurie, I'm coming for you. Then Mr. Softies is having a hard go of it recently. Can the iconic ice cream truck survive another summer? It's Tuesday, August 27th. Let's ride.

0:56Huge music news out this morning. Oasis is getting back together. The British band responsible for the song, currently being strummed horribly in college dorms across the world, that would be Wonderwall, announced a reunion tour next year with 14 dates across the UK. This was a long time coming, but not totally unexpected. The brothers behind the band, Liam and Noel Gallagher, had teased an announcement on social media over the weekend, sending fans into a tizzy. The brothers hadn't played together since splitting up after a backstage brawl in 2009 and have been publicly feuding ever since. Guess they're not looking back in anger.

1:36I feel bad for two groups of people, actually. One is the audiences of those poorly strung renditions of Wonderwall. But then two, it's Ticketmaster execs because they are not prepared for the level of demand coming their way. If we go back to Oasis's heyday in the 90s, more than 4 % of the entire British population applied for tickets to see them play at a festival in 1996. To put that in a numbers perspective, 250 ,000 people got to see the band play over two nights, which was a record in itself. But Oasis could have sold out another 18 shows based on the level of demand. So the heiress tour ain't got nothing on the Gallaghers.

2:15Now let's take a moment to hear from our sponsor, Mass Mutual. Neil, ever find yourself daydreaming about that perfect vacation? Oh, believe me. I think about Kyle stepping in and subbing for me all the time. Got my eyes on a beach somewhere, sipping a pina colada. Don't get caught in the rain. But have you given any thought to how you'll fund that dream vacation? Other than daydreaming, no. That's where MassMutual comes in. They've got the financial professionals and tools that can help you plan for those future dreams, whether it's a vacation, retirement, or just peace of mind. So you're saying I can get back to my pina colada daydreaming while they help me with the financial stuff?

2:49Exactly. MassMutual's got your back no matter where you are in life. Visit MassMutual.com to get started on your future today. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

3:25One of the most exclusive clubs in the world is on the verge of admitting new members for the first time. No, it's not Toby and Neil's treehouse for it. No girls allowed. It's NFL owners. In a vote later today, the league is expected to allow private equity firms to gain equity ownership in NFL teams. It'd be the last of the major U.S. sports leagues to welcome PE firms and institutional investors to the ownership ranks. The NBA, MLB, NHL and others have allowed it for years. So why only now are Bob Craft, Jerry Jones and other mega billionaire owners inviting PE to get some pigskin in the football game?

4:04It really boils down to one thing. Team valuations have gotten so expensive that no one, not even the richest people in the country, can afford to buy a team. Investor Josh Harris, who is not lacking for money, needed to cobble together a group of 20 investors in order to buy the Washington Commanders last year for a record price of$6.05 billion. Even Jeff Bezos considered buying the team and thought better of it. The lack of people who can afford NFL teams presents a big problem because it's led to a liquidity crisis. If you're a current NFL owner who wants to cash out on your investment, even just a slice of it, you can't because there's just no one to sell it to.

4:44The league hopes that by adding more P.E. firms to the ownership mix, it'll solve these liquidity issues and help fund more transactions. Right. It's a problem for the NFL because you severely limit the number of possible owners out there in the world. And then it also ties up so much of the owner's existing money in the franchise that they can't spend it on things like improvements or a new stadium or something like that. So they do just want this new line of minority ownership to be very streamlined, to have this cash available for them. And the NFL did go about this very deliberately. There's only seven approved partners who have borderline unlimited money when you combine them all together, over$2 trillion in assets under management.

5:26so they can tap these P.E. fountains of cash to do stuff like make those stadium upgrades that a lot of owners want to do. Yeah, and this is not going to be majority ownership. We should say it's going to be capped likely, according to reports, at just 10 percent. But when you just look at the skyrocketing valuations, it is a bit astonishing about how valuable NFL teams have become. The NFL is one of the by far the biggest property on TV. They signed a media broadcast rights deal that's worth over$110 billion over 11 years. In TV, it's really the only game in town. Let's just go back to some recent transactions.

6:06In 2018, the Panthers sold for what was then a record price of$2.3 billion. Four years later, the Broncos sold for twice that amount,$4.65 billion. And then last year, the Commanders, which is certainly not even the most valuable franchise in the NFL, sold for$6 billion in all. Franchise values have almost tripled in the span of five years. And even the Jeff Bezos of the world are thinking about writing a$6 billion check for the Washington Commanders. And they're just saying, uh-uh, I can't do that. So the question is, what do PE firms want with the NFL? Because again, they have so many assets under management.

6:44Blackstone, Carlisle, and Aries alone have$1.9 trillion in assets under management. so the NFL even though as big as it is is a drop in the bucket but still they're in the business of finding outsized returns and the NFL has definitely provided that I mean its total valuation of the league has risen 710 percent over the past 20 years the S &P 500 is only up 660 percent over the past 20 years so it's been a very good deal plus team valuations tend to be a little less volatile than maybe stocks you can ride the roller coaster of the S &P 500 or you can park it in a team like the Commanders and just have it go up.

7:21It's a very non-correlated asset. It's pretty decoupled from the broader market in general. So those are some of the reasons why PE is zooming in on the NFL. And yeah, so any guesses on who maybe the first team will be pending the approval of this to tap into this PE fountain of cash? It's looking like the Bills, potentially, they want to build a new stadium. So that has been the owner Terry Pagula has reportedly wants to sell a stake in his club. There are also some rumors are that the Los Angeles Chargers owner, Dean Spanos, could sell the team as well. So those two teams look to be first. But if we're looking at what happened in previous leagues when they allowed PE ownership to come in, it took a few months for things to shake out.

8:06The NFL is restricting the amount of buyers here. They're just going to tap like six or seven PE firms who have experience buying teams or have been in the sports game. But there are a lot of PE firms in the sports game across U.S. sports. According to PitchBook, 62 major U.S. sports teams do have connections to private equity money. That includes 20 NBA teams, 18 MLB teams, 14 MLS teams, and 10 NHL teams. So there is a lot of PE money swashing around the U.S. sports landscape. And then when you look overseas, it's completely different because you look at you look at sports teams, soccer teams, and they're just completely owned by sovereign wealth funds like Abu Dhabi and Saudi Arabia and things like that.

8:50So it's completely different over there. They are awash in money. And the NFL just for so long has been this very, very, very exclusive club of owners. And then don't forget the NWSL as well, because Carlisle's only sports investment is in the Seattle Reign. And then Sixth Street, another one of those PE firms that are tapped to provide liquidity to the NFL, they are majority owners of NWSL's Bay FC. So that's another place where PE firms are parking their cash. Now let's take a look across the country at some interesting stories happening at a city level. Up first, Philly, the home of Neil Fryman's extended family, just made a new process known as eviction diversion permanent in the city.

9:30Fresh off a successful trial period, eviction diversion requires landlords to go through out-of-court negotiations with tenants before they can sue to remove them. The goal is to reduce legal actions landlords take towards tenants while helping people avoid losing their places to stay. And it's worked so far. Court filings to remove tenants are down 42 % in the last 12 months compared to the annual average. Just 35 % of renter households make enough money to afford a median price apartment in the city, according to Redfin. So there are lots of Philly tenants interested and enrolled in this program.

10:03And nationwide evictions have jumped back to pre-pandemic levels after lots of federal tenant protection programs expired. But Philly is bucking this trend. Totally. I mean, the country, mayors across the city are looking at what Philly is doing here with this diversion program. And they're saying, wow, this is really the gold standard for keeping people in their house and from being evicted. And preventing evictions is so critical to avoiding this cycle of poverty, because when you get evicted, it goes on your record permanently. And when you try to apply for housing in the future, it makes it that much tougher.

10:37So housing advocates look at keeping people in their houses just by any means possible. And this is one super effective program that is so important for sort of keeping people in their houses and not on the streets. And this this Philly program has been doing so well. They made it permanent. There's also been pilot programs across the country in Michigan, in Durham, North Carolina, in other places. And housing advocates say, let's look at what they're doing in Philly and keep it up. Meanwhile, landlords, they don't, you know, you'd think that they would push back against this, but they are getting money as well through a hundred million dollar program that will pay them back rent and one month's rent if they try to negotiate in good faith with tenants.

11:21So that's these two programs going hand in hand. And when they go to an eviction court that oftentimes they don't get that back rent. So they say this is, you know, at least a positive step in that direction. And then part of the program to these diversion programs is you get appointed a counselor that can help you build a plan to bring to your landlord to say like, hey, I can pay off the back rent. I can also make rent payments going forward. And they get creative doing stuff like tapping into your tax returns or maybe putting some of your security deposit towards rent. So it is not only just cash from a city program.

11:52They also are just trying to work with renters at an individual level to try to make sure that these don't all have to go to court because usually no one ends up happy there. Someone ends up without a home and the renter and the landlord may not even receive the rent payment. So this is trying to do the best of both worlds and it's looked very successful so far. Now let's head to Houston, Texas, a city that had been on the cusp of reinvention, long known for its highways and driving culture. Houston had been changing course, constructing bicycle infrastructure projects and spending billions of dollars on public transit.

12:26There was a sense that Houston could chart a future not focused only on cars until a new mayor entered City Hall in January. According to a report from The Washington Post, Mayor John Whitmere and his administration have stopped work on those bike lanes and delayed parts of a$7.5 billion public transit expansion. The mayor's office says they're more focused on improving the transit networks that currently exist and making roads safer instead of adding costly new routes. But it's not that the money isn't there. Biden's Inflation Reduction Act and the bipartisan infrastructure bill is dangling billions of dollars to local governments to build out greener transportation options.

13:04And cities and states around the country are taking advantage. For example, Rhode Island now$55 million to improve its public transit fleet. California and Nevada got$3 billion for high-speed rail. And with the help of federal money, Los Angeles pledged to make the 2028 Olympics car-free. But it seems like the new Houston leadership is going in a different direction than much of the rest of the country, which has left transit and bike advocates fuming. Right. You're feeling whiplash if you are a bike advocate, a transit advocate, because you are on this path towards public transportation, towards safer streets, and now you're back to maybe a more car-centric, a more oil and gas-centric pathway.

13:42It is just confusing too because this is just totally the time to do it with so many federal funds available. But Houston is just such a car city. It always has been. Roughly 90 % of Houston residents own a car. It's a huge city, 665 square miles. I mean you hear everything is bigger in Texas. That's certainly true in Houston. It's the fourth largest city, but it also has the widest freeway in the country. It's downtown. If you've ever been to downtown Cluson, it's really encircled on all sides by highway. So it's just very much a car-centric city. And when you have this potential hope to maybe get away from that and then right back to more car-centric, it's a little tough if you're a Houston resident.

14:24Our final story takes us to New York City, home of Morning Brew Daily, and also the worst fare evasion of any major city in the world. According to the New York Times, every weekday around 2 million people board an MTA bus and about half of them don't pay. The Transit Authority puts the figure at 48 % through the first three months of the year. And it's mainly a bus issue, but subway fare evasion is also big as well. About 14 % of subway riders hop the turnstile, though roughly twice the number of people ride subways compared to buses. It's led to a remarkable amount of lost revenue for the MTA.

15:00In 2022, the Manhattan Transit Authority attributed$315 million in losses to bus fare evasion and$285 million to subway jumpers. Neil,$600 million, over half a billion in lost revenue. That is huge. Why are there so many fare dodgers in FNC? I don't know. It's a very unique problem. Look at fare evasion across the world. Just go back to 2018 because this is the most recent data we have on global cities. The evasion rate was 18 percent in New York in 2018. Now we know it's much higher. But around that time, the rate was 11 percent in Paris, 5 percent in Toronto and then in London, where you can get fined up to a thousand dollars for not paying when you're boarding transit.

15:43The evasion rate on buses was only one point five percent. So it appears that there is a big enforcement issue in New York City. the Union for Bus Drivers, says they tell their drivers not to just drive, like don't even don't confront people, whether they're paying or they're not paying, because your job is to drive. And if you confront a passenger, it could lead to violence, harassment, things like that. So they're just saying, just drive, don't even think about it. So there's clearly a major enforcement issue. The MTA says they need to get more enforcers there to make people pay. So they don't have this massive budget shortfall, which is going to be$1 billion by 2028.

16:21And all of this funding that was supposed to come from this congestion pricing plan that was axed at the last minute by the governor is also setting them short$15 billion. So there is a huge, huge shortfall here. And it appears like a significant amount of that comes from fair evasion. Up next, the Chinese video game that is breaking records.

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17:27See a Lowe's Red Vest Associate or visit lowes.com slash holiday install to get started. Lowe's. We help you save. Basic install only. Date restrictions apply. Subject to availability. Install by independent contractors. See associate for details. contiguous US only. China has got its video game mojo back in a big way. The new game Black Myth Wukong from small Chinese studio Game Science has been out for a week and is already one of the fastest selling video games ever. In three days, the game sold 10 million copies, a faster pace than Blockbuster's Elden Ring and Hogwarts Legacy. On its first day, it became the most popular single player title on the PC platform Steam, beating out other famous titles like Cyberpunk 2077.

18:16This is, without a doubt, a smash hit and a historic breakthrough for Chinese video game companies to show they can develop a game with global appeal. So, what is Wukong about anyway? It's an action-adventure game centered around the mythology of the Monkey King, a celebrated literary character that has provided inspiration for many pop culture retellings. In fact, Monkey King in Japanese is Son Goku. Yup, the main protagonist in the manga Dragon Ball. But beyond the rich source material, maybe the reason the video game is flying off the shelves is that it's just really good. As one reviewer from The Verge said, it goes incredibly hard.

18:55It looks incredibly hard, too. I was just looking at some gameplay on YouTube and it looks beyond my capabilities. But yeah, this is a big win for China's gaming industry because previously China has mostly been a smartphone juggernaut. Tencent churns out just these massive mobile titles that do really well. But until Black Myth Wukong, they really haven't had what they consider like a triple A game with those really high fidelity graphics. this really intricate gameplay, kind of like the Dark Souls Elden Ring variety where it's just really hard to beat. So people are falling in love with just the entire story of it.

19:31They love the graphics and they love the gameplay. And it's just a first out of China. And China's really pushing it hard too because it does celebrate like a pretty key myth from Chinese culture. And it sparked like an actual in real life tourism boom as well. Videos posted on social media show, a ton of people streaming to the temples and shrines that are depicted in the game itself. And they're saying this is a moment of cultural discovery for Chinese people to see part of their history because the Monkey King was first introduced in a 16th century novel. So it goes back centuries and it's been retold in so many different ways ever since.

20:12So people are going to these actual places depicted in the game and sort of rediscovering their history. But the controversy around the game is tied to how China is trying to push that cultural expansion and trying to push it in a positive light because some streamers have reported that they've received a list of topics that they weren't supposed to talk about while playing the game. Some of those topics include feminist propaganda, COVID-19 quarantine. So streamers have, some of them have just stopped playing the game because they don't want to be censored in that way. And actually one stream, This was an eight hour Twitch stream where the name of it was COVID-19 isolation.

20:50Taiwan is a real country. Feminism propaganda. That got more than 300 ,000 views. So even though this is a big win for China culture, some feel like they're overstepping and trying to craft the narrative too much. So there's been a little bit of pushback for streamers in that regard. You feel a tickle in your throat. A palm to the forehead comes back a little hotter than usual. Do you tough it out and show up to work anyways or do you call in sick? Your answer probably depends on what generation you hail from, and it's what I want to talk about on today's edition of Toby's Trends, where I take a deep dive into the internet and emerge with the trend you should keep your eye on.

21:26Gen Z is racking up sick days at a rate much higher than other generations. As the youths steadily filter into the workforce, the amount of time people take off from work has also steadily risen. Sick leave was up 55 % in 2023 compared to 2019 among companies on Dayforce's HR platform, while Gusto's data from 300 ,000 businesses show a 42 % jump. And it's young people that are the ones driving the increase. The 35 and under bracket on day force had a 29 % jump in sick time from 2019 compared to just 16 % for the older crowd. Now, there's no one answer for why the youths are taking time away from the deaths, but experts have some thoughts.

22:09The pandemic made people more conscious of their health. Mental health days are becoming more and more common. And waves of layoff might just have workers less inclined to sacrifice their well-being for an employer. But, Neil, it's clear that the calculus is changing when it comes to sick days. Totally. I think those numbers are absolutely insane. 55 % increase in sick days from before the pandemic till now. It's clear that COVID somehow rejiggered our relationship with work where it's far more acceptable or people feel far more comfortable taking off. I think the rise of remote work also has a lot to do with it.

22:44Remote workers are more likely to use sick time than in-person workers. That may just speak to a broader flexible culture at your company. I think the universe of possible ways you can call in sick and for possible reasons has also expanded. As you mentioned, mental health-related leaves of absence increased by 300 % from 2017 to 2023. So it's far more acceptable now to be like, I am so burnt out. Like, let me just take, you know, sort of a mental health day. Let me reset. Let me recharge. That is far more acceptable. I don't know. I don't remember 2019 at all. But if you were to say something like that, your boss might have like raised an eyebrow a little bit.

23:23And now it's just like, OK, take your time. And if you have a little tickle in your throat, I think after COVID, just physically people fees, people being physically ill. I think everyone at the office is like, yeah, please don't come in. Right. And a lot of HR experts are saying presenteeism, where you're just pushing employees to show up no matter what, it's just bad for everyone involved. You're not going to be productive at work. You probably aren't giving your best. You're maybe making other people around you, putting their health at risk as well. But then, obviously, the calculus changes depending on what job you have.

23:55If you have a remote, white-collar job, it's much easier to call in sick. But say you work retail or something, you are losing hours. You are losing money as a result of it. So it's just different, whatever industry you're in as well. But then a lot of experts have pushed back and say, hey, setting boundaries is great, but you can almost set boundaries so much so that you can damage your prospects at work. Like if you really push it to the limit, then maybe your boss, maybe some people will, you can boundary yourself into unemployment, as people say. And they also advocate, don't just actually take a vacation if you're going to take a vacation.

24:27Don't take these quiet vacations where you half work, half don't. And so there's just a whole new dialogue, a whole new discourse around the place of sick days in our culture. And it's definitely young people who are changing the most. All right. So I apologize for what's coming next. But I have to sing a little song to introduce this next story. Oh, my. Toby's already his hand is in his face is in his hand.