Josh Harris

0:00Okay, I have 30 seconds to explain Canva. That's impossible, but here's a glimpse. Canva can take your presentations to another level. With Canva Video, you can generate awesome videos with one prompt. Canva Docs lets you create stunning visual documents, reports, plans, whatever. MagicWrite can write in your voice using AI. And Canva Sheets makes spreadsheets people will actually like. Canva lets you bring your big ideas to life as fast as you can think of them. Put imagination to work at Canva.com. Josh Harris is a major figure in the investment world and the sports world. In the investment world, he was the co-founder of Apollo, one of the largest private credit and private equity firms in the world.

0:43As a sports owner, he recently bought the Washington Commanders for$6 billion, largest price ever paid for a major sports franchise in the United States. I had a chance to sit down with Josh Harris recently to talk about his combined life as an investor and sports team owner. Josh, for those who don't know, was a co-founder of Apollo, which is one of the largest private equity and private credit firms in the world. He is now the founder and managing director and CEO of a new firm based in Miami, 26 North. And as if that was not enough, you're also the lead partner in the Washington Commanders.

1:19Yep. You're also the lead partner managing director for the NBA Philadelphia 76ers. You're the co-managing partner for the New Jersey Devils and the National Hotsky League. Yep. And you're one of the managing partners for the Crystal Palace English Premier soccer team. And is that all? Anything today? You bought anything else today? Married with five kids. Okay. And which is harder? Five kids and being married or all the other things? It's all very rewarding. Okay. So let's talk about your new firm, 26 North. Where did you get that name from? So it's a funny story. I hired a branding agency and spent a lot of money.

2:00and then they came up with five horrible names, and I threw all those in the trash and named it myself. So when I left Apollo, I wasn't necessarily going to start another alternatives firm, but I realized that the big firms have built, Carlisle amongst them, Apollo, Blackstone, KKRTPG have built these incredible investing ecosystems, but many of them have gotten so big and become public companies, and they were sort of the beta of alts. They're so big that they need to get into very big areas, pools of capital. And what had been left a little bit behind was alpha, really being the alpha of alts.

2:42And so we decided that we could bring, I decided that I could create a firm that had big firm capabilities, that had all the trappings of a big firm. In our case, it's an integrated platform with debt and insurance, and it's an alpha creation team led by someone who left McKinsey. Incredible talent, and apply it against the middle market and the upper middle market, and deal with a lot more alignment where I'm the largest investor, and everyone who's joining is not necessarily getting paid as much cash. They might, but they're really going to benefit if the investors benefit. How much money have you raised and put into the firm so far?

3:21It's gone really well. Well, we're at 23 billion after 24 months, which is beyond my wildest expectation. We have 125 people, and it's an amazing culture, amazing people. People have really jumped on the bandwagon, and now I'm hard at work trying to create alpha. So in sports, you have to create memories and win for the city. And in alternatives investing, as you know, it's about returns. It's about alpha for retirees and pensioners. So I think that's what we're doing. To raise that kind of money, you had to go out and, I guess, ask people for money. So how did you do that with all the sports teams?

3:59I spent a lot of time flying around. I mean, literally, I have a mobile office. It's a plane. So you've already announced two deals, one just recently and one about a week or so ago. What was so attractive about those deals? Private equity is going through a bit of a transition where multiple values have peaked and they're on their way down. And so some of the returns haven't been as good. And so we're benefiting from that. And so to a certain extent, we're buying really good businesses at much better pricing than others have in the past. So we're able to buy really good businesses, one in the fitness area, and one creates electrical systems for data centers and stadiums.

4:37And we're buying them at seven times. So unlike the 60 times cash flow, we're paying seven times cash flow. And that might compare to the industry that's paying 10 or 11 times cash flow. So our strategy is to buy good businesses and kind of find those opportunities that are misvalued for some reason or another. So as you make investments now, are you worried about geopolitical events around the world, what's going on in Israel, Gaza, Ukraine, Russia, China, Taiwan, or you don't pay that much attention to that? Look, you have to pay attention to that. I mean, obviously, right now we have a market at all-time highs, and we have an economy that is cranking.

5:15inflation, the Federal Reserve has done a good job of finding that, they call it Goldilocks, not too hot, not too cold. Inflation is coming down, but unemployment is low. And so things are pretty good and pricing is aggressive for the most part. The markets are at all-time peak, PE multiples are very close. So you've got to be cognizant that a geopolitical event can knock everything on its side. And so you have to just be careful, right? and you have to plan, okay, what happens if oil prices spike, right? That could be an outcome, for example. What happens if, you know, Israel were to, you know, attack Iran?

5:57So as we talk, we're getting close to the next presidential election. Yes, we are. Heard about that. Do you think it will make a difference to your investment approach if one party wins versus another party or one party controls the Congress versus somebody controlling the White House? How do you look at the election impacting your business? The way we look at it, that is, first of all, it's like a 50-50 election. I mean, you can go look at some betting sites, and it's a real toss-up, so it's really hard to predict. I think we have to be ready for every environment. Certainly, there are different strengths and weaknesses.

6:32If you have a candidate that is more regulatory-oriented, that might affect certain industries like energy or health care differently. The antitrust policy could be different. that could affect acquisitions. So you have to think about all that and just be prepared for it. I think that if there's no clear outcome, it could create some volatility. That may be a buying opportunity. So I think we think about all of it and we plan for all of it, but then we get ready to pivot one way or another and we make sure the stuff we're doing now is very robust, that it maybe has less leverage, that it's more sustainable under any scenario that could come out.

7:12So do you get involved in the campaign? You're not a donor, you're not a supporter, you just stay out of it? You get involved with politics. In many cases, I have fans that are, you know, on both sides of the aisle, right? So it becomes controversial, and sports are supposed to bring people together. And so I keep my opinions to myself, really. I stay out of politics, and I'm pretty, I don't get involved, even though, I mean, obviously, I care. I care about the world. but it's like my ability to create impact is through these platforms, and so that sort of keeps me out of politics. Let's go back to your youth.

7:43You were born in this area, and you grew up in Bethesda? Grew up in Chevy Chase. Chevy Chase, Bethesda, Chevy Chase area, which is, for those who don't know, it's close to Bethesda. It's close, okay. So you went to high school, and then you went to here, and then you went to Penn. Right. And while you said you weren't a great academic or something, you graduated summa cum laude, so you must have been pretty good. Yes, I got better as I went along. So my dad had gone to Penn, and also I was a wrestler, and they had a wrestling team, and so I started talking to the coach. And so I kind of got into Penn, even though I probably was an aspirational candidate for Penn.

8:22That was my highest shot. But you could wrestle at Penn? I did. Then what did you do right after graduation? I went to Drexel, which was a storied investment bank. that was Michael Milken and Drexel was... I always, like, in my career, I always followed... I always went to, aspirationally, what I felt was where I could get the best experience with the smartest people. So I was there 1986 to 1988. It was killing it. And then I applied to one business school, Harvard, and I said, look, if I'm blessed to get into Harvard... You know, I read the book, like, what you don't learn at Harvard Business School?

8:56And I was like, if I can get into this place, I'll go. And I went. And then what did you do? So then I, you know, it's interesting. I felt that private equity was, I wanted to be involved with companies versus just being at a bank. And private equity seemed like the way to get the most responsibility. It was where all the smartest people were going. And I joined this five-year-old young firm called Blackstone. I went there and three months into it, you know, Drexel went out of business. and I got a call from Mark Rowan, who had been the star associate at Drexel, who I had worked with, and he said, look, we're starting up this firm.

9:34And initially I was like, eh, I'm good. You guys just went out of business. But I decided to follow him and Leon Black, and I joined Apollo, which had 12 people at that point. All right, so you helped to start that firm. You're one of the co-founders, and you were there for how many years before you left? 32 years. Okay, and you were the head of private equity? Yes, I started off, I mean literally there was only 12 people, so we all were just doing... But at the end you were leading the private equity effort? So I was leading private equity and then I was running the firm. So the firm went public.

10:07What happens in the investing business is you get kicked upstairs. And so ultimately, you know, it became the three of us formed an executive committee and we were running the firm and I was running the firm day to day. So when you joined the firm, how many people did Apollo have? Twelve. And now it has a market cap of$80 billion? Yeah,$70 to$80 billion, depending on the day. So it's, you know, I'm very proud of it. I mean, I'm still a very large shareholder. And, you know, it was a great thing to have created. And now to be able to have a second act, which is 26 North, but also with sports, with the commanders, you know, and I sort of think what I do here in Washington is a very big deal, even though Apollo has been a very big deal.

10:53So this is, you know, you know, really important. At GSK, we believe that to get ahead of disease, you need to understand its root cause. And that's why we combine our deep understanding of immune science with cutting edge technology. It helps us to create targeted therapies that match the right treatment to the right patient, transforming the lives of millions. By uniting science, technology and talent, we work tirelessly to get ahead of disease together. Visit GSK.com to discover more. To my legacy. When you bought the Washington Commanders, people were aghast at the price you paid. It was$6 billion.

11:32No team in the United States had ever been sold for that. I'm not sure any team in the world had ever been sold for$6 billion. Were you shocked at the price that you had to pay? And did you have any second thoughts about it? Or now that other teams seem to be valued it even higher than that as they sell off pieces to private equity firms. Do you think you got a bargain? So at the time, I would have preferred to pay less. We had, and so I joke that my credentials as a value investor were shattered. We paid the highest price in the history of the world for a sports team, but that was quickly surpassed.

12:06But, you know, I had a long-run vision that the NFL was the dominant, was a dominant sport in the world, that the media rights would continue to appreciate as global audiences flooded in. I felt that there would be upward pressure on values. I also was aware that the NFL was considering letting in private equity alternative forms of capital. So for all those reasons, I felt that people would look back on it and say it was a good deal. And it's proven as such. I mean, obviously, you mentioned that the current values, a couple rumors out there that numbers starting with$8 billion will be invested for teams, and I think those are true rumors.

12:51So the team you inherited wasn't doing that well, I think it's fair to say. The team is now 4-1. 4-1. Let's go. And you have a star quarterback. You drafted the Heisman Trophy winner for last year. He's done extremely well. So what's the greatest thrill? Buying a team in your own hometown, being there to cheer the players on? Do you go into the locker rooms and tell them, win one for the Gipper or something like that? You try to avoid that. I've heard every speech. But, look, I think for me personally, the elation that you feel. I mean, obviously, I've been very blessed to be involved with a lot of successes in the business world.

13:30but the elation you feel being part of a crowd when the team wins, being amongst the fans, that's really something special. It's a shared experience. It's a community. And it's amazing to be involved with. I'd say of all the things, obviously owning a team in your hometown is incredible. When you started buying these teams, you started buying the 76ers first. Yep. and you paid a price that seemed reasonably high for people at that time 280 million 280 million Wow okay 280 million today these NFL these NBA franchises are four or five billion or more right so what did people say to you when you were at Apollo you're running the private equity business and you say by the way guys I'm gonna go buy a basketball team did your partner say why are you doing that and did your investors say you shouldn't be doing that?

14:23My partners at Apollo were sort of like, just don't let this interfere with your day job. They were very supportive of it at that time. You know, our investors, you know, I think initially there were, they scratched their head, but what happened was they realized that it wasn't interfering with my day job, how focused I was. Apollo continued to flourish. And they realized that there's a synergy, right? You learn a lot about life in sports. You learn a lot about being a steward and culture and people and so over time you know as I went on this journey everyone was supportive. Hey well I thought you made a commitment at the time that you would attend every home game or every game so how did you manage to do that?

15:08Yeah so there are 82 basketball games I never made it I certainly when you own I've never missed a football game so since I've owned the team so keep going home or away there's less of those but look I think if you If you are the managing partner of a team, and really for me it's these two teams, because I have partners that handle the other teams and I'm more of an investor, I'd say that you have to be present. You have to be accountable to the city. People want to see you there. The players notice if you're there. And people want to make sure that you're aware, you're present, you're watching.

15:49They don't want you to be overly involved, or at least I don't think you should be. And so you've got to be at a lot of games. And for me, some people play golf, some people play tennis. I work, and I go to sports, and I hang out with my family. So now you have a football team, a basketball team, a hockey team, a soccer team. Are you done, or are you thinking about a baseball team or something else? I'm pretty good right now. I'm focused on winning in Washington and winning in Philly and basketball, winning in Washington football, and then letting my partners in London and in Newark, David Blitzer and Stephen Parrish, you know, win in New Jersey and London.

16:28I go to two or three. I do go to a few football matches, European football matches. I love it, but mostly watching on TV and then go to as many hockey games as I can. But right now I've got my focus on these two teams and my business and my family. When you own a sports team, and let's suppose the team isn't going to win that game, can't win every game, and do you think you can leave early? Or the owner, you know, people are watching you. I always wonder, can you leave early or do you have to wait until the bitter end? I don't think you can leave early. I think you have to stay there. Look, I think win or lose, you're part of the fabric of the team, right?

17:02And you're there with the players. I mean, listen, you really have to leave early, but I'm saying as a rule, you're there, right? You're there, win or lose, you're not going to win every game. And so if you leave, right, then what's the message in that, right? So I think you're there until the end, you know, and you're there after the game, you know, with them. And then you leave, you know, once win or lose. It's a lot funner when you win, believe me. I mean, you go on Instagram, you watch the Commander's locker room. They have some of it when we win. I mean, it's insane how excited everyone is.

17:36And when they lose, you know, people aren't very happy. So I think that, but you just have to be there as part of that fabric. And by the way, everyone does it differently. That's the way I do it. And the Washington Commanders have been playing in a stadium that was built by two previous owners two times ago. I guess it was under Jack Kent Cook. Yep. So are you going to have a new stadium sometime soon and where you want to put it? Yeah, so we're committed to doing that. I mean, obviously, we just put$80 million in the old stadium because it really needed some work, and it needs more work, and we're fixing things as fast as we can.

18:10but at the end of the day, a modern stadium and where the premium is situated and how the Wi-Fi is set up and where the field is relative to the seats and a lot of different things, you can only go so far with an older stadium. So we'd like to build a new stadium. Obviously, you need support of whatever jurisdiction you build it in. The first part of that is a community dialogue, and we're having those dialogues in D.C. We're having those dialogues in Maryland and where we play. And so we're focused on building a new stadium. We're in the first part of those dialogues, and we've got to get the communities and the politicians rallied behind us.

18:49And in the case of D.C., right, the most likely thing is RFK, obviously, where we all grew up going to football games. And that is currently owned by the federal government or is controlled by the federal government. So we've got to get that back to D.C., and then D.C. can decide what it wants to do. but that right now is what we're working on. What do you do for philanthropy? Do you have a foundation? What do you do? What are your areas of interest? Yeah, so I have a foundation. Obviously, what I'm interested in is, look, people paid it forward for me. My thing is three things. One is intergenerational wealth transfer, so going into communities in need, and then not just giving money away, but teaching, getting people jobs, getting people educated, or helping them get their own jobs and create enough money where they can then create a path for their own kids, for their own family.

19:44They can have pride in their own environment. We backed a company called Mosaic in Philly. It's a black-owned, black-led development firm. They build in tough areas. They build affordable housing and they put a supermarket into a food desert. They're also building here in the D.C. area. And then it's about the power of sports. So, like, you know, obviously sports changed my life. Wrestling changed my life. And I want everyone's kids to have the same opportunity my kids do, to play sports, to experience sports. So whether it's my personal foundation, where we back a lot of programs, Police Athletic League, after-school All-Stars, America scores.

20:22But, you know, the high schools no longer can afford sports programs. And so allowing kids to play sports and experience that and the discipline and the camaraderie that comes with that, you know, that's a big part of what we do. So how do you compare the thrill of making a great investment at say at Apollo or now at your new firm 26 North with winning a sports event or winning a championship? I used to feel a great sense of pride when I would exit an investment. I mean, I would sit there and I would think about it and I would think about what had happened and lives that have been changed and I would have a glow, right?

20:57But the euphoria of a big win, just the absolute high emotional state you get into, the immediacy of that is amazing. So the private equity world has a lot of big names and big egos, and the sports world has a lot of big names and big egos. Where are the egos bigger, in sports or in private equity? I would say that they're big in both places. But, you know, in terms of, look, I think sports is more public, right? The public gets to know the people bigger. I think private equity is, you know, it's more under wraps, if you will. So, like, when you're in a restaurant in Washington or Philadelphia, does anybody ever come up to you and say, you did a great deal at Apollo, congratulations?

21:43Or do they say, you ought to play this player or draft this player? Would you get more of that when you're about the sports than the private equity issue? Well, this is an incredible thing. So, Lionel Bacel has, you know, thousands of employees. We probably have 15 ,000, 20 ,000 employees. We had companies that had 67, I think we used to say we had 280 ,000 employees across our portfolio. And then we had millions of beneficiaries. And so you're touching a lot of lives as an investor, as an entrepreneur, building these firms. But on the other hand, no one cares about the price of polypropylene.

22:16No one cares. And everyone cares about the starting lineup of the Washington Commanders or the Sixers. and like you can't now people come up to me all the time and it's not about alternatives right it's about sports and so the impact on the public at large in terms of the psyche and you know the feeling in the city is so different suppose somebody's watching this and say I want to be like Josh Harris I want to own sports teams be a financial success what is the key to success is it wrestling as a young person or what is it that makes somebody into you how would What advice would you give to your own children or other people who want to be like you?

22:54Yeah, I think that it's about excellence. And so being whatever you do, A, you have to enjoy it. And I think it's about being all in. I think it's go big or go home. It's like an all in mentality where, you know, like I said, you know, you're only on earth for a little bit. So, you know, throw it on. I tell my kids that, you know, unfortunately, ages 16 to 30, right, those are your fun at, you know, I look back on those, and even though I'm obviously very blessed and I'm very grateful for my life, the maximum fun you have is in those years. Those are really fun times. But on the other hand, you're building your own narrative.

23:31You're building your story, right? And so you've got to bring it. It's got to be work hard and play hard. And so, yeah, there will be times where you have to stay up, and you can't go out with your friends, and you've got to get the A's. And so I think it's about excellence. It's about doing things you like. And then I think it's about making smart decisions. And I look at every decision I've made. When I decided to leave Blackstone to go to Apollo, that was a risk, right? And I felt that I weighed it like an investment. I treated my choices as an investment. I think who you marry is a critical decision.

24:04So, I mean, obviously, that's maybe the most important decision in your life. So these big decisions, you know, really take a step back. However you do it, write down the pluses and the minuses. think about it as risk return and investment and make wise choices. And you think you'll win a Super Bowl next year or this year? How long before you? No proclamations. All I can say is that I am going to put my all into making this an elite team, and we're going to create a lot of shots at winning a Super Bowl, and we're going to do our best. So if you get a call from Joe Embiid, your star player, and you get a simultaneous call from one of your children, and which call do you take first?

24:47I'll pick up my son really quick. Can I call you back? I'm on with you. I'll be right back.

24:54Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.