Clara Wu Tsai

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0:37Traditionally, sports teams in the professional world have been owned by men. But now, increasingly, women are owning these teams as well. One of the most influential of these owners is Clara Wu Tsai, who is a co-owner of the Brooklyn Nets and a co-owner of the New York Liberty. And she helped the New York Liberty get to a championship, the WNBA, not long ago. I had a chance to sit down with Clara recently to talk about her journey from Kansas to the professional sports world. We are in Brooklyn doing this, and we're at a Brooklyn basketball center. What is this center? I think it's so important what sports can teach you.

1:12Teamwork, discipline for kids, for their own physical and mental well-being, and also for learning leadership skills to be able to have a place. And it should be equitable. And so we have this here and we make it available to everybody in the community. And, you know, it's also a way to develop a pipeline of fans, of course. Did you ever expect growing up in Kansas as the daughter of academics in Kansas, at the University of Kansas, that one day you would be a major sports owner? Absolutely not. It was could never have dreamed it. Well, first of all, whoever thinks that they're going to have enough money to, you know, to buy an NBA team.

1:52But especially me, because I was the daughter of immigrants professors from Taiwan. So it never crossed my mind. What is the life of a sports owner like? I mean, is it more fun than you thought it would be? Or is it more aggravation than you thought it would be? I can't think of anything more fun than owning a sports team when your team is winning. People come up to you. They thank you. They tell you how much the team means to them and their family. And they're really grateful. And you realize when they do that, that you're bringing people together and you're helping people create memories that are going to last a long time.

2:27There's nothing more gratifying than that. How did you compare the challenges of being in the business world with the challenges of being a sports owner? You know, in a traditional business, you're focused on quarterly earnings. And I think for sports team owners, you're thinking about decades and you're thinking about generations. And instead of thinking about earnings, you're really thinking about increasing the value of this institution. The Brooklyn Nets were owned at the time, your husband and you bought it by a Russian businessman. Right. And he, I guess, decided to maybe sell a piece of it.

3:02Ultimately, you have a chance to maybe buy a sports team. And one that came available was a partial interest in the Brooklyn Nets basketball team in the NBA. and why did he want to sell a partial interest to the owner? I don't know how much of it was his own decisions or decisions that he felt were inevitable, but the fact that there was a path to majority control and a path to be able to own an arena made the Brooklyn Nets particularly attractive to us. Let me tell you why it was so important to us to have majority control. It goes back to being a decision maker and I think that you know for us when you have majority control you can make decisions and you can set the direction and set a vision for the company and for us that meant you know like how it played out was we were able to get into women's sports and buy a WNBA team.

4:03Now at some point the NBA came to you and your husband and said we have a WNBA team called the New York Liberty and languishing a bit. Why don't you buy that? Did you consider that from the start as a good idea or not? I think we were a little wary because we knew that it had somewhat been orphaned in a way. It had been moved to Westchester County. We knew that the numbers had been, all the business metrics were declining naturally since it moved out to Westchester and lost a lot of the fan base. You know, as I started to get to know the players and I also produced a movie, a documentary called Unfinished Business, which looked back at that time, the 25-year history of the WNBA, and then it followed the young players of 2021 in their first year at Barclays Center.

4:53And through that experience of making the documentary, I learned a lot about these women and found them really impressive. And I realized that the talent was there and the heart was there, The competitive fire was there, but there really wasn't enough visibility. Now, did you say to your husband, look, you can focus more on the Brooklyn Nets. Let me focus more on the New York Liberty. Is that how you divide it up or not? No, I think at one point it just naturally seemed that I would take the lead on the New York Liberty. There was a point when I realized that owning the team, it meant to me it was more than basketball.

5:32It was also about increasing the visibility of women and giving women more opportunity. And so it was something that I felt a personal connection to, and I could tell that story authentically. So we just decided that was a pretty good division of labor. Now, when you bought the New York Liberty, you personally got involved in helping to turn the team around. What were the steps you took to really enhance the team? People do ask, what were the moves we made to improve the team and to take it to a championship level? Because it happened pretty quickly. Like within five years, we won a championship.

6:08The most important and first move that we made was to move the team from Westchester County Center to Barclays Center. After that, we started to invest. And we invested in player health and performance. We invested in management talent. And we invested in facilities. Then we recruited a team that could compete. And that started with recruiting the top free agent in 2023, Brianna Stewart. And at the same time that this was happening, the marketing team was busy thinking about the fan experience. And so we built an experience in the arena that was, frankly, rooted in the culture of Brooklyn. So all of the fan experience and the music and the dance and the art around what goes on in the fan experience was really Brooklyn related.

6:57And since Brooklyn is so artsy, it naturally sort of had a cool factor. And the players themselves are not obviously as highly compensated as I think the men's teams are. But there's been a challenge about that. And has that been resolved in terms of compensation and so forth? Yes, we just signed a historic collective bargaining agreement. a really large step change in player compensation. And the WNBA salary cap went from$1.4 million to$7 million in one year, with a path to$10 million by the end of the term of the agreement. So now the players are well paid, as they should be, because it's what they do on the court that makes fans want to buy tickets and why sponsors want to invest and why media companies want to acquire rights.

7:51So they got a big step change. And what that means is WNBA players can now make a career out of playing in the WNBA and they won't have to go overseas to make a living. I think this agreement is so important is it reflects an incredible confidence in the commercial potential of this business. And the story isn't written, right? We know that there's a lot to do. The economics need to mature. But if things continue to proceed along the trajectory that we think that it will, it could be a really powerful proof of concept for other women's sports. Meaning, you know, you can sustain a business and you can also sustain player compensation at a rate that allows them to make a good living.

8:39So you put a lot of time and energy into it. You got to know the players pretty well. And you won a championship. Yeah. So what was it like winning a championship? I think a joy that makes any other business success that I've had, you know, pale in comparison. I think you experience, you taste it. It is so sweet that you automatically feel like you want. Our sponsor Wells Fargo is focused on the next horizon. Wells Fargo is fundamental to our business model. Leveraging deep industry expertise, Wells Fargo corporate and investment banking is built to provide specialized solutions, helping leading companies drive results and prepare for what comes next.

9:19We've needed some unique types of financing structures, and Wells Fargo has been really innovative. Wells Fargo works with us to find new ways to satisfy our needs in a very rapidly growing market. Discover how Wells Fargo is helping its clients reach the next horizon at Bloomberg.com slash The Next Horizon. I do it again. Now, the WNBA players sometimes, like the NBA players, are very public about their positions on political or other economic issues. Has that been a challenge for you as a WNBA owner to kind of deal with players who are publicly visible on certain issues that may or may not be similar to yours?

9:55We've been very clear that we support our players and their ability to express themselves. But we do in New York, you know, that we live in a very diverse community with very many different points of view. We want players to be able to express themselves, but we also want to set an environment where that there's, you know, we encourage dialogue, conversation, and really respectful conversation if there are differing points of view. You are pretty involved in player selection or other kinds of things now with the team? It's very important when you're an owner to hire the best executive talent that you can on the business side and also on the business operations side.

10:43So your CEO and your general manager. I think for an owner, it's really important to create an environment where players want to be. And players want to be at a place where they feel valued and where they think they can win. So that's my job is to just create an environment where players can be the best basketball players they can be. And how close do you get to the players? I know it is said that sometimes owners think they shouldn't get too close because they might trade these players and it's difficult to become too close to them socially. Do you get to know the players or how close do you get to these players on your WNBA team?

11:16You know, in sports, it is true. Your roster is always changing, so it actually limits how close you can get to a player. We're very fortunate that in this last year, our core team decided to stay together with us. So it's just, it's a blessing and a joy for, you know, our staff, but also our fans to be able to have that continuity because we know them and love those players so much. You know, I think you want to make sure that they know that you value them and you are there to support them. But you also aren't there to be a part of every aspect of their daily lives. So let's talk about your background for a moment.

12:01You grew up in Kansas. Your parents were both academics at the University of Kansas? No, my dad was a professor of econometrics at the University of Kansas. My mom got a master's in math at the University of Wisconsin, but she sacrificed her career for the family. So you grew up in what city then? I grew up in Lawrence, Kansas, home of the Kansas Jayhawks. And were you a basketball fan as a girl? A huge fan. And that was also what brought the community together. So early on, I recognized the impact that sports can have on a community. And I think that influences the way that I think about what it means to be a sports owner today.

12:40But yeah, I think you remember because your alma mater, Duke, is also a perennial contender in the championships for the NCAA basketball tournament. But Kansas, when I was growing up, was making it to the Final Four pretty regularly. I went to school with Danny Manning and just was such a great fan of the Jayhawk. So when you were growing up, I assume you were a reasonably good student. Your parents were academics. You did well enough to go to Stanford. What did you major in? I majored in international relations because it was an interdisciplinary degree, and it gave me the flexibility to study politics and economics, history, international affairs, and I could pretty much create my own course of study.

13:25And what did you do after you graduated? So I went to a consulting firm called Windermere Associates. It was in San Francisco, and it was started by a McKinsey partner. and this consulting firm specialized in consulting to companies in industries in overcapacity. And then? And then I went to Harvard Business School. When I graduated, I went to New York and I worked for the New York Times and then I worked for American Express. It felt like another good place to be a training ground. And I quickly learned, though, that corporate culture wasn't really that interesting to me and that I was a lot happier when I was building something and creating something new even within the organization.

14:08So I just felt like I was a lot more entrepreneurial and that led me to go work for Taobao, which is the C2C e-commerce site that was started by Alibaba. And when I went there, I started the first cross-border sales channel and enlisted Hong Kong sellers to sell to mainland consumers. And that was highly entrepreneurial. And you could see your results in real time because if you made a single change, you could see what the result was on your gross merchandise volume. And I found that really liberating and exciting. Now, did your parents live to see your success? I realize your father passed away not too long ago, but for a while, both of them saw your success.

14:50What did they tell you? My father was alive when we won the championship and he watched the finals on TV. and I know he saw me hoist that trophy. And so I think they're very proud. So are you interested in buying other sports teams? I would say yes, but selectively. As you know, sports has become a legitimate asset class and they've become very good investments. And who knew that we needed to develop an anti-AI? And who knew that live experiences would become so valuable? Who knew that something that was unscripted and unpredictable and was something that caused people to come together in a shared experience would be something that was monetizable and also really valued?

15:43But that, in fact, has happened. And live sports is a place where that can all be manifested. And did your children say to you, mom and dad, don't do anything bad to the team because we want to inherit the team and we want to run it ourselves and make sure you keep it for a long time and make sure you keep it successful? So you intend to keep it in your family? Yeah, we intend to have this asset be with our family, yes, for generations. And so we are stewards of it and we try to take care of it and we tell them that they need to take care of it as well. But, you know, what I say to them, if they want to be a part of the sports organization, that they need to learn a skill that's valued in the sports business.

16:32So whether that's data analytics or media rights or negotiation or deal structuring, they should learn that because sports is an emotional business. It is for fans, at least. But on the business side, it really requires and rewards expertise. Can you explain what you've done to Barclays Arena? Well, it's really the software. The hardware, it's the same arena where the nets play and where, you know, other events are held. It's sort of a black box in that way. You know, it can be configured in many, multiple different ways. Let me first step back and tell you why the arena was important. It's an operating company, right?

17:21And it generates cash flow because there are hundreds of events going on a year. And so it was attractive from that standpoint. If you don't own an arena and you have a team, then you're a tenant. And if you own the arena, you can control scheduling. You can oversee hospitality, including developing premium hospitality. So we felt that owning the team and the arena together, the combination of the two were more valuable than them standalone. When you think about fans and what brings fans to a game, but then also what makes fans come back, it's now, whereas before you might think, well, they're just coming to watch the competition on the court.

18:05That's true. That's the main draw. But what keeps fans coming back, which what really creates loyalty, is you need your fans to feel like they're a part of it, that they're a part of the game and a part of the whole experience. As you look back on your life, what are you most amazed at? that all of this happened. I could never have imagined it. You have to be very curious. You have to be very open to opportunities. You have to see things in front of you and think where you might be able to make your own individual difference in the opportunity set that's presented to you. Yeah, you and your husband, who I also know, you know, seem to retain your humility, which is often when you have the kind of wealth that you have and the success, very often you see people in that situation not be that humble.

18:50So how do you retain humility? Is that part because of your background and the way you were raised by your parents? Absolutely. My parents, it was pretty hard. You know, they left Taiwan to come to a country where they didn't speak the language very well. And back in the 60s, just imagine the kind of perhaps discrimination that they might have faced. Because the kids grew up in San Diego, we were living in quite close proximity to my parents. And so my kids were very aware of the way my parents lived and still live. Talk about your own, I'd say, philanthropic activities. Which are the principal ones?

19:25Well, there's three main pillars, I would say. Science, art and culture, and social justice. And my general approach across the board is to find some sort of unmet need and apply an innovative, evidence-based solution that's very impact-oriented. And do you do it in the New York metropolitan area or all parts of the country? The social justice work is concentrated in Brooklyn. And by the way, that was one of the reasons that Brooklyn was attractive to us. Soon after we bought the teams, we committed to a social justice fund, which was a$50 million 10-year commitment to economic mobility in Brooklyn.

20:10And now we're five years through that 10-year commitment, and we've supported hundreds of businesses, small businesses and entrepreneurs, through access to capital. So grants, loans, tech accelerators, equity investments. We've used every form of, you know, every tool of capital that's available to support these entrepreneurs and founders. And we've also, you know, we run, we've refurbished basketball courts in areas with high rates of gun violence. So in your philanthropy, you've done a lot of work with human performance. What are you interested in and why do you give money to that area? So the Human Performance Alliance is a scientific research initiative that is focused on understanding performance.

21:05So how the body moves, adapts, fatigues and recovers over time. And, you know, the reason that we started this is because, you know, as sports team owners, we realize that there is so little that we understand about the human body. even at the highest levels. Most health research is focused on disease, and we study performance, and that is how the body operates when it's at its very best. So the goal is not just scientific discovery, but it's also translation. So what can the science tell us, and what kind of tools and therapies and techniques and training protocols can we learn from the science that will not only help athletes perform better and recover faster and extend their careers, but what can we learn that will help them but will also help all of us eventually.

22:04The main opportunities that we are focused on right now in the Human Performance Alliance are injury prevention, so preventing injuries before they happen, and personalized training and recovery, so personalized according to your individual biology, and also closing the data gap on female athlete physiology, because for the past few decades, most of the research in sports science has been conducted on men. Prevention, prediction, and women's health, those are the frontiers of human performance. What gives you the greatest pleasure now? Being a successful parent, owning a successful sports team, being a successful philanthropist.

22:47What gives you the greatest pleasure and what's the greatest challenge in life for you now? I can't choose one of the three because they all give me immense joy. And I do think variety is the spice of life. And I think it's wonderful to have a breadth of things in your life that are giving you joy. I would say for the New York Liberty, we won one championship, but I would like the team to have some enduring success. So I would like to win another championship and set a culture of excellence that will withstand the test of time. More broadly, for women's sports, I think we are at an inflection point.

23:32And I would really like to see women's sports teams become a scaled, sustainable, durable and profitable business. So as you look back on your career, which has been very successful, is there anything you wish you would have done differently? I just want to make sure that, you know, I show and express my appreciation to all the people and all the opportunities. Because you can work hard, but there's also a lot of luck involved, a lot of things that are outside of your control that need to go your way. And so I think being very grateful for when luck comes your way, I think that's part of it, is working hard and making most of your opportunities, but knowing that a lot of it was not in your control.

24:26Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.

24:40Good night.