Steve Feuerstein (00:02.674)
What a distinct, distinct pleasure to have Kurt Battenhausen, someone I would like, I usually don't do elaborate introductions, but I am gonna do one today. If you think of software under the hood, behind the scenes, and again, I have to be careful here because he's both in front of the camera, but he really is under the hood in a way. He's the engine behind the automobile that helps you understand valuations. And if you ever wanna understand,

Every time you're sitting at the table and folk are talking about how is that team valued at 10 billion, 8 billion, 2 billion? Why did it get, how can it have such a valuation? How did we derive the valuation? Kurt Badenhausen, who's now at Sportico, I believe over 23 years served at Forbes, was the co-architect of the entire system of analysis at Forbes, understanding literally how do you look at a team and attempt to tell the world at large what its present day valuation is?

Kurt, what a pleasure it is to have you on the Transaction Room.

Kurt (01:02.934)
Well, thanks so much for having me, Steve.

Steve Feuerstein (01:05.474)
You know, I spoke to you about six years ago and a lot has evolved in our industry. When I spoke to you, I had told, if I had asked you, your kids using chat GPT, you'd look at me like I was an alien. And if we talked about valuations reaching $10 billion for the Dallas Cowboys, you might think that I had a very good night last night. And how could I possibly believe that a team in such a short period of time would reach the valuation?

of $10 billion. You started with this back in the 90s. First and foremost, what gave you the idea that probably one of the most engaged discussions for any member of the media and for the fan at large, and certainly team owners and prospective buyers, was your system of analysis at Forbes. What was the impetus where you understood there was a gap in the market and you needed to fill it?

Kurt (01:59.758)
Yeah, well, six years ago, if you told me the Cowboys were 10 billion, either you had a big night or you were hanging out with Jerry Jones because he's been saying for more than six years his teams were 10 billion dollars. wasn't until this year that Sportico and Forbes as well finally agreed with Jerry. But the Cowboys are really playing a different game than everybody else in terms of their business.

But in terms of valuing sports teams, it goes back to a place called Financial World, actually. Pre-Forbes, my longtime partner in crime, Mike Gozanian, had launched this idea of valuing sports teams at Financial World. And at the time, it was unheard of. Nobody knew what the idea of valuing a sports team, nobody even understood what that meant. They thought what the player contracts are worth. I mean, it just...

It just didn't exist. And nobody really paid attention to the business of sports at large. The occasional player contract would get some news. Maybe a team sale would get some news. But most of this stuff all flew under the radar. And here we are today. have outlets like Sportico, Boardroom, Front Office Sports, CNBC, The Wall Street Journal, New York Times are all pumping more resources into covering the business of sports because it's become very big business. Back in the mid-19...

Steve Feuerstein (03:22.434)
Who's biggest stakeholder, Kurt, who's the biggest stakeholder, just to interject momentarily? Who's the biggest stakeholder to gain from valuations?

Kurt (03:32.465)
in terms of the teams themselves are really the biggest stakeholders. You think about the buy-in for some of these franchises. mean, particularly think about the NFL because ownership tenures have been so long. The average ownership tenure in the NFL is over 40 years. So you have teams that bought in in the 1920s for Chicago Bears. I mean, it costs $100 to get into the NFL. That's $6 billion club now.

All these clubs that paid to get part of the AFL bought in, whether it was the Chiefs or the Jets, the Raiders, these franchises cost $50,000. Now the average franchise in the NFL, we're pushing $6 billion for the average. So it's been an incredible asset increase. But the fastest growth, if you think about over the last 12 years and...

since the last time we talk is really NBA. That's where the story has really changed. And in terms of these franchises that were sell, we had this, all these franchises sold 2010, 2012. You about a half dozen franchises sold, Philadelphia 76ers, Milwaukee Bucks, Sacramento Kings. And they all sold, you know, kind of a very narrow range, two and a half, three times revenue.

Most of they sold for all between you know, 300 million dollars 500 million dollars and now you look at What the NBA is right now? Now they're selling for ten times revenue twelve times revenue And it was twofold Steve Ballmer came in paid two billion dollars Which really reset the market? But and at the time people thought he was crazy You know the guy's one of the richest people in the world you should

Steve Feuerstein (05:01.612)
7X.

Steve Feuerstein (05:05.868)
Yeah.

Kurt (05:21.612)
You should learn to trust him, I suppose. And the richest sports team owner in the world right now. And then the new media deal. And that's when people are like, really woke up to the NBA and thought, this league can be like the NFL, where you're getting a massive revenue check, whether you're in New York or you're in Memphis. And that's the beauty of the NFL.

and why every single NFL team is so valuable because of that central league check. and now the new TV deals, the money's only gonna get bigger. a lot has changed. Those are the stakeholders that are really cashing in. But if you think back to the last time we talked and where we are now, betting totally, since we talked, betting has been legalized and in individual states and more and more coming on every year.

that data has become incredibly valuable. So when you think about Sport Radar, Genius Sports, those companies are incredibly valuable because they have all the data and the analytics that are feeding these algorithms and these betting companies. So the proliferation of different aspects of the sports ecosystem have just exploded over the last 10, 15 years.

Steve Feuerstein (06:46.282)
An example of any team in the big four that has gone down.

Kurt (06:51.822)
No, no, no, nothing goes down. No, they never go down. The first time a team sells for less than Sportico or Forbes Values, the club too will be maybe not a first, but almost a first too. The escalation in franchise values, honestly, has had bankers shaking their head, guys who have been doing this for 25, 30 years and you know.

Steve Feuerstein (06:53.12)
Nothing, doesn't happen.

Kurt (07:17.368)
There was a very kind of consistent way that these teams sold and there was a narrow range. might have, you go back to, think back to when the Red Sox sold. John Henry ultimately ended up with the team. He did not have the highest bid. That was from one of the Dolan brothers, actually had the highest bid for the Red Sox. But John Henry had an in with Bud Selig and Major League Baseball, so they accepted his bid.

But you look at those bids, they were all like a really narrow range, like 20 million apart. And then you think about what Steve Ballmer paid. He paid $2 billion. The next bid was 1.6. The third bid was 1.2. Matt Ishby had bought the Phoenix Suns for $4 billion. The second bid, we call the cover bid, was probably around 3.1. So it's pretty wild. People want these assets.

and Steve Ballmer and Matt Ashby are the same way. They wanted the teams and they just said, I'm going to pay this and maybe it seems like an overpay right now. But if I'm going to hold this asset for the next 20 years, next 25 years, it makes total sense. Go back to the Golden State.

Steve Feuerstein (08:29.836)
What is Bomber's investment, what is his investment worth today?

Kurt (08:33.614)
The Clippers are, I mean, we're going to value them next time we do it. I mean, they're opening the Intuit Dome this season. Totally transforms the revenue of this franchise. They were the third tenant in the Staples Center behind the LA Kings, the Los Angeles Lakers. And now they will control all of the revenues in their new building. They will have concerts. They will have other events.

They, they, we did an interview with the president of the team and asked what the difference is from a business standpoint between in staples and the Intuit Dome. And she said, what are the two furthest points apart that you could ever imagine? That is the difference in terms of what we are doing right here. So the clippers arguably are going to be once things are up and running.

They're arguably going to be a top five franchise and a five or six billion dollar franchise. So Great investment by Steve Ballmer. And if you think back again, we talk about narrowly missing out on a franchise Joe Laco outbid Larry Ellison who I believe recently was crowned briefly the richest person in the world at two hundred billion dollars But Larry Ellison didn't want to necessarily pay up for the Golden State Warriors got outbid by Joe Laco who has

considerably less money. And a lot of people looked at that and thought, overpay, overpay, $450 million. Now we're looking at the Warriors as the most valuable franchise in the NBA at over $8 billion. So these things historically have only gone up. And we've been talking about bubble, bubble, bubble in these transactions, the same way we've been talking about bubbles in value of local media rights.

But I think there's runway to go.

Steve Feuerstein (10:28.194)
For years. Yeah, yeah. You know, it's interesting you say that, by the way. I remember having a discussion with the former head of CBS Sports in 2020. And he said, there's just no way rights fees are increasing. Maybe it was 19, 19 or actually, you what, it was 2018. And he said, there's no way it's going up. And as you said, this bubble, when you put the emotive element and the reality that while there are investments for investment purposes, there's vanity acquisition.

And at the end of the day, if I'm beholden to a team that I love and passionate about, might've been there since my childhood. And maybe I was very academically oriented as a kid and people might've not looked at me as an athletic fella and I was kind of more the brainiac. And now I get my chance to flex the muscle of my economic purse and show them who's king of the mountain. Well, I get to acquire a team and say, well, fellas, where are you today? The jocks of the school when I went to high school or college, look at me today. I actually own the system.

So it's really interesting as an emotional acquisition, but at the same time, to your point, that emotive acquisition also seems quite sound economically. And what I want to do and pivot to is I have just a few thoughts in mind. And if you would, I thought just to make this a little less conventional and with you and knowing of your breadth of knowledge, I want to throw out to you a scale, zero to 10. And just tell me, when you look at the system of analysis, how would you rate

Zero being inconsequential, 10 being obviously fundamentally consequential, to an equation of looking at value, value of a team, value of any team in sports. So I'm gonna start, if it's okay with you, Kurt, and I'm gonna go right to the first one on the list. And it actually shocks people. And when you look at historical achievements of a team, how many championships have they won? Have they recently been crowned king of their league?

world champions, zero to 10, how critical is that variable in a valuation of a team?

Kurt (12:36.556)
Good question. It's a great question. And I would say it's hard to give one number because honestly, it varies pretty wild. I would say it varies so wildly from league to league. Prestige matters. But historically, I would say so. And I wrote it in with historical performance and brand.

Steve Feuerstein (12:41.674)
Okay, this is a Kornheiser Willpon.

Steve Feuerstein (12:51.008)
Okay, pick a league, pick any league. So let's go to, yeah, please.

Steve Feuerstein (13:05.506)
Uh-huh.

Kurt (13:06.24)
Again, the Knicks have an incredible brand. Haven't necessarily had the performance, but I equate the two together, brand and historical performance. I put it at a seven to eight if I was to average across leagues. Incredibly important because new owners come in and think that they can monetize that brand even better than the previous administration did. Always think they can do better.

Steve Feuerstein (13:21.771)
Okay.

Steve Feuerstein (13:31.806)
Immediately. Always think they can do better. Yeah. What about location, Physical geographic location. Big city versus small city.

population, population of a city.

Kurt (13:45.514)
nine. Nine for everywhere but the NFL. The NFL, the NFL, it's a it's a five. You're you're a billionaire, you buy you buy a franchise. Again, would you rather have New York or LA versus Jacksonville? Sure. But it's not it doesn't carry the same weight as the other leagues. Because billionaires show up for the auction of any NFL team. In the other leagues, historically,

Steve Feuerstein (13:49.375)
everywhere.

Kurt (14:14.446)
more billionaires in your area, you're typically going to buy your local team. But we saw this with, mean, Josh Harris was in on the Denver Broncos, then he bought the Washington Commanders. mean, the NFL teams come up for sale so rarely that everybody's in the market. So again, it's not irrelevant. You want a better market because you can monetize. The reality is there's probably about eight or 10

NFL markets that you can really monetize. The rest, the delta between team number 11 in the NFL and team number 32 isn't much. And you look at the local revenues, there isn't much of a differentiation once you get past the New Yorks, the Patriots, the Rams, and a handful of other clubs.

Steve Feuerstein (14:54.188)
Thank you.

Steve Feuerstein (15:07.2)
Stadium, stadium present facility, size of stadium, potential to renovate, options of what's around the stadium, what's built, the fortification around the stadium. How big of a play does that have on valuation? Critical.

Kurt (15:21.056)
Nine, huge, huge, all of those things, all of those things come into play in different ways. Your opportunity, the Valley of the Los Angeles Rams in St. Louis, playing in the TWA Dome, can't remember what it they went through so many different names. And then where they are now in SoFi, second most valuable team in the NFL. They were probably second to lowest in the NFL.

playing in St. Louis and before they build a five and a half billion dollar stadium and mixed use development that around there that is

just a gigantic mixed-use development project that doesn't work in St. Louis and arguably doesn't work in any other city in the country.

Steve Feuerstein (16:08.908)
What about personality of the former owner, soon to be former, I've never thought about this before, but the soon to be former owner, does a name that might be controversial, does a Snyder, as you just talked about the commander sale, which was a very significant one, that sold for what, that was a four billion or a six billion? Six. So when you look at that sale of asset,

Kurt (16:30.626)
Commanders are six. Yeah.

Steve Feuerstein (16:34.87)
Does the perspective personality or the existing personality of the existing owner, and even though that individual is radically challenged, can that prove to be a magic, can the personality of the existing owner jack up the price of a team?

Kurt (16:54.566)
I think it can. mean, getting rid of the old owner in very rare instances. Snyder is an extreme example where sponsors, season ticket holders were so fed up that they had walked away. you saw the transformation with Josh Harris and his group coming in, fans showing up for training camp, sponsors. mean, were threatening to leave.

Steve Feuerstein (17:19.21)
I mean, FedEx certainly was, Nike certainly was. Left, they did lead right.

Kurt (17:21.102)
I mean, FedEx left ultimately, even though Harris took over. After Harris took over, FedEx ultimately did cut short their deal by two years. And so in rare situations, that can help. That new owner can help.

Steve Feuerstein (17:37.438)
By the way, just to opine about one quick point, not only did they leave, but they were probably seminal in ousting him.

Kurt (17:47.874)
Yeah, yeah, no. well, FedEx is one sponsor that led the charge to the name change. And I think, I'm not sure the sponsors, I would argue the push from the NFL was maybe a little stronger than from sponsors, ultimately, because of the investigations that were going on. And this could have been really ugly with all the

Steve Feuerstein (17:50.23)
They certainly led the charge.

Steve Feuerstein (17:56.865)
to the name frame.

Steve Feuerstein (18:08.181)
Agreed.

Kurt (18:17.13)
ugliness laid there. And then that kind of all got swept under the rug and they were sold and everybody said, okay, this is tidy. Let's move on. But a new owner can also bring a lot of energy and business to it. And I think back to somebody like Mark Cuban, who took over a franchise that was an incredible under performer on the business side and on court and by force of personality.

Steve Feuerstein (18:18.294)
Yeah, and that was the tipping point. You're right. You're right.

Kurt (18:46.934)
made them a much more attractive friend, helped to get a new arena that made them a more attractive spot too from where they were playing, but also spent money and said, we are going to make this a first class operation. And that makes a difference. We're saying that we're on a different field and he was a winner. We're seeing this in the NWSL right now and the WNBA. these are younger leagues.

Steve Feuerstein (19:01.762)
And by the way, he was a winner too.

Kurt (19:13.434)
who are going through a transformation between the old guard who did not want to spend money, did not want to lose too much money on these assets, to a new guard of owners that is coming in and saying, no, we're going to spend money, we're going to make this big time. And those owners that are spending and turning their clubs into first class operations with first class facilities, they have an advantage to bring in better players.

and to bring in sponsors and fans who are saying, wow, this is cool. This is a good game day experience. And they're losing more money than ever because they're spending money, but they're spending money to make money down the road and growing the value of their assets.

Steve Feuerstein (19:58.306)
You know, when you look at what is so counterintuitive, you know, all eyes on the NFL, obviously the $110 billion deal that Goodell exercised about three years ago, you one of the greatest media deals in the history of sports media, and he continues to find ways to slice and dice the media product of the NFL.

But if you were looking at it from an economic standpoint, or if you were looking at it from just being a kid in college or grad school, you said, well, how many games do they play? Well, they play 17. How many games do guys in the MLB play? They play 162. Look at the NBA and the numbers they play. How do we ultimately reconcile the fact?

that we've got tickets at gate, let's say eight, nine times a year for an NFL team. And if I'm Steinbrenner, I've got 81 times a year, I've got the chance to sell out a stadium, understood that it might not, well, actually the size of his stadium today is comparable to another NFL, a reasonably sized NFL stadium. How do we process that?

that there is literally the opportunity to have 10X on the number of games or 9X on the number of games. You would think you have more revenue opportunity, think you have more sponsorship opportunity. Shouldn't my team be priced higher than the lowest number of games plays per season?

Kurt (21:20.782)
Yeah, no, it's a great question. And on the local level, you're the Yankees, you're the Dodgers, you're the Red Sox, you are going to make more money. Because to your point, can say if you can fill 40,000, you know, there aren't a lot of baseball teams that generate more than 40,000 fans a game, but the Yankees do the Dodgers do. I think the Phillies ended up over 40,000 this year. If you're the Yankees, you can generate more than $300 million a year in gate.

and luxury suite revenue and club seat revenue. But the NFL makes up for it on the TV side because nobody draws eyeballs on TV like the NFL. The Yankees and the Dodgers have massive local media contracts. But again, they're only drawing from one market where the NFL and the Cowboys, the Chiefs, the Steelers, they draw bigger audiences.

than everybody, but everybody splits the pie evenly. And so the if you look at what's happening on TV, 2024, excuse me, 2023, 93 of the hundred most watched programs on TV were NFL games. NFL. No, no, NFL, not sports. NFL. There's no NBA game on there. There's no Major League Baseball game on there. The other seven, three were college football. And four.

Steve Feuerstein (22:33.888)
NFL, NFL, right, right, right, NFL.

Kurt (22:47.918)
we're non-sports programming. So 96 of the 100 were sports, 93 of those 96 were NFL games. So college football is pretty quickly becoming the number two sport in this country when you think about TV. we're seeing it, the networks are recognizing this, the audiences that they can draw. And so that's why when you turn on your TV now Saturday night, you're going to see a prime time game.

on Fox, on ABC, on maybe NBC or CBS, because that's drawing the biggest eyeballs. Fox is now running games on Friday night. College football is incredible in terms of the audience that can draw right now. So people can't get enough. That's that's where we come down the difference. And just to move on, but to your point, the local revenue on the baseball side is incredible in the big markets.

But it's those smaller markets or the Oakland A's being an exception, the Sacramento, Las Vegas, Oakland A's, whatever we're calling them for the next few years. On the local level, that's why you have such a massive disparity in Major League Baseball valuations because the revenue is so different. They try to make it up in revenue sharing and the Yankees.

Steve Feuerstein (23:52.863)
I'm sorry, what team did you just say? You mean Las Vegas.

Kurt (24:15.022)
and Dodgers have to write an $80 million check every year to fund the lower revenue teams. But you can't keep up. You're playing a totally different game financially in Major League Baseball in those small markets.

Steve Feuerstein (24:27.906)
So type of sport, before I go back to your college point, and then we'll journey on our ratings, the type of sport as a valuation metric, zero to 10, would you have to call that a 10 by virtue of just the factors that it inherits? The overarching nature of a sport being football, 96 out of 100 top broadcasts in the United States per year are football games.

Therefore, can we conclude that it's axiomatic that if you're involved in football, you know that your valuation is going to be the highest on the planet today.

Kurt (25:06.382)
Yeah, I tend to not give out on my tough grader. I don't give out a lot of tens. I'll say nine the league the league is a massive driver on the revenue side because of what you can generate but also on the expense side every one of these leagues has a collective bargaining agreement and the beauty of the NFL is not just the revenue side of the equation but the expense side of the equation where you are capped on how much

Steve Feuerstein (25:13.035)
Okay.

Kurt (25:35.446)
money you can spend. Again, you can go over the cap in any given year because of signing bonuses and they get amortized over time. But over time, you are spending the same amount of money as just about every other NFL team. You look over a 10-year period, everybody spends the same amount of money, roughly. NBA also has a salary cap. But as we've seen,

Steve Feuerstein (26:00.418)
It's a soft cap.

Kurt (26:02.343)
It's a cap that you can blow through and you just have to pay an extra tax. So, you know, if you are the Golden State Warriors, you're paying a hundred plus million dollars a year. The Los Angeles Clippers, you're paying a hundred plus million dollars a year. The NFL system insulates the owners from themselves because they're all dying to win and want to spend money. I mean, can you imagine Jerry Jones in the NBA system?

Steve Feuerstein (26:05.952)
luxury yeah luxury next

Kurt (26:28.078)
He would just, he said, I don't care what my luxury tax bill is. And he would have the financial wherewithal to spend like the war years where he could absorb a $200 million luxury tax hit. And he would still be one of the most profitable.

Steve Feuerstein (26:41.783)
It's such an interesting point you make, Kurt. So question, would you call the NFL the sport of greatest parody?

Kurt (26:54.03)
Yeah, 100%. I mean, it's why they call it any given Sunday. I mean, because, you...

Steve Feuerstein (27:00.886)
What's its closest rival?

Kurt (27:05.678)
I'd say hockey. Because hockey is a similar hard cap. One player cannot dominate to the same extent that happens in the NBA, where one or two players can make such a big difference. Certain markets are hard to attract free agents, so that makes it even harder. So I think the NHL by far has the closest, the next best parity.

Steve Feuerstein (27:33.954)
You know, you said something about college.

Kurt (27:36.077)
MLB has pretty good parity. I would say MLB has pretty good parity, but you know going into the season you have six or seven teams that have zero chance of making the playoffs. Absolutely not and are potentially going to lose 100 games. You can think about the NFL every year. There's not a lot of years you start the year where like my team's got no shot. Every fan can look at the schedule and say, yeah, okay, yeah.

Things break right, we can win nine games.

Steve Feuerstein (28:10.082)
Fair insight.

Kurt (28:10.306)
That's parody. That's why they call it any given Sunday.

Steve Feuerstein (28:13.346)
That's a great, great, great insight. Right. Any given Sunday, and it is the greatest magnet, I think, for so many of us is it's the most exciting time of the year when we see football back on, whether it's college or pro. And speaking of college ball, with your 35 year legacy of valuing teams, will there be anything to value in college sport with the advent of private equity, albeit limited, but coming into college sports with NIL?

are we gonna see at some point something team valuation? Now again, I was just speaking to my CMO, Dave Wharton, saying, well, Dave, you gotta have something you can transact. So the concept of valuation that you spearheaded, what was so exciting about it was there was actually a prospective transaction and we saw other owners coming in and whether they were guided by the likes of our friend, Sal Gala-Teota, who's guiding teams on how to acquire and raising that capital.

and looking and pitching and putting in that bid, but there was an acquirer and there was a seller. So the question to you is, what is there to buy and sell for which there would be some form of ranking that Kurt Badenhausen and the experts and your colleagues at Sportico would be assessing and saying, there's a reason we're doing this.

Kurt (29:31.172)
yeah, no, it's a great point and evaluation is something, these college athletic departments and private equity people are thinking a lot about right now, when, when it comes to these schools. And I think we're far away from seeing a.

college program bought or sold. But in terms of valuation, I think it's happening because we're going to see investment and we're going to see investment in where it's carved out into a separate holding company where the economics of these clubs sit. So you are going to maintain your affiliation with the school because there's tons of value of being associated with the Alabama student body and

and USC and Michigan and on and on and on and that alumni base. But I think we will reach a point where we will create a holding company that houses revenue. And so again, is it going to be new revenue streams that are potentially created? Is the current TV contract going to sit in this new holding company?

There's there's so many different proposals out there right now and private equity firms are discussing with colleges. And we I think broke probably the first story about it last summer with Florida State talking to Sixth Street about ways that they can use Sixth Street capital to basically get out of the ACC and and to be a lifeline. And that lifeline is cash.

in terms of presenting better opportunities for the school and its football program. So we don't know how those are ultimately going to play out. But if you think about these athletic programs, they generate a certain amount of revenue. Sports teams are valued on multiples of revenue, professional sports teams. And so what is that multiple that you should be applying to college teams? I've heard anywhere, you know, I've heard three times revenue, five times revenue.

Kurt (31:40.046)
Texas, Oklahoma, excuse me, Ohio State, these are $200 million plus businesses. So where they were six times.

Steve Feuerstein (31:46.594)
So just to be clear for our viewers, so what you're saying is it's basically the David Bowie novelty when he was the first musician to actually license his future music sales. So basically what you're buying into is basically the future revenues of a particular college and how they're capable of maximizing, optimizing their revenue streams. And therefore that is what your, if I understand you, that's what you and your college would be colleagues at this point.

would be assessing as a prospective valuation.

Kurt (32:19.912)
I think that's how they're approaching this thing. You look at CB's...

Steve Feuerstein (32:22.274)
Could we ever see, according to what we heard secondhand about Casey Wasserman, founder and chairman of Wasserman Sports, that we might see, depending on the trajectory of the NCAA, actually college teams licensing their brand name for which players would be recruited in the open market?

to ostensibly start a minor league of NFL that you would no longer see college football or sport as we know it, but you could actually see, again, a third party acquirer of the brand name Michigan or USC or Clemson.

Kurt (32:57.902)
I don't know. That's certainly possible. I think that we will continue to see moves forward with the professionalization of college sports. So I think you will see the first step would be the 60 schools or whatever the number is. Maybe it's 40, maybe it's 80. don't know. You know, separate themselves from the NCAA and say, you know, we're done with the NCAA. We're just going to run football separately from all these other sports.

from the NCA because we don't need you and you're standing in our way. But ultimately, what you're talking about is very possible. mean, everything's on the table at this point. It's changing so quickly.

Steve Feuerstein (33:38.082)
Everything. You I call it the most disruptive period in the history of the business of sports. There's not an avenue of our industry, that is not being disrupted. I mean, all the way down to high school athletes having NIL rights in 33 states the last time we checked internally. And it's very interesting. You said it correctly. Never say never. Everything's on the table.

And the value, again, what's to me interesting is how do you get to evaluation on something that can be transacted? And again, I get the idea of banking it on and the benchmark being future revenues. And that's where these folk might make their money with the turnover of sale of rights down the line. I wanna go back to where we were before about that concept of valuation and what plays a critical role.

Does the commissioner, zero to 10, have any impact on a buyer's view? We know the impact that obviously the franchisees, owners have on voting and how the commissioner can steer that vote. But does the commissioner personality, the gravitas of that commissioner, the media persona, the reputation?

zero to 10 on a model that you guys might be construing and constructing. Does that have any impact on a valuation? Zero to 10?

Kurt (34:59.598)
Yes, yes, yes, 100%, 100%.

Kurt (35:08.11)
I'll say a five, four, four or five. It plays a factor. Adam Silver is a plus. People are buying in the NBA. They trust Adam Silver. They trust the relationship that he has with players, that he has with the media, his reputation. It adds what that percentage is. I don't know. Is it 1 %? it?

Steve Feuerstein (35:09.706)
Okay, that's what I, yeah, that sounds about right. Yeah, yeah.

Total.

Steve Feuerstein (35:30.23)
So guess it's stability in some ways, confidence, stability.

Kurt (35:35.502)
Yeah, mean, all the certainly the five major US sports leagues at this point have all had very long tenured commissioners. It's pretty incredible. That meant Garmer, Goodell, Manfred. And so, know, Manfred and Silver, the two new guys on the block, but they've both been around for a while at this point. And they're both, I think they're both past their 10 year anniversaries with their respective leaves. So it's pretty incredible.

Steve Feuerstein (35:45.844)
Look at Gary Bateman. Look at Bateman. Look at Garber in MLS. Goodell.

Steve Feuerstein (35:58.422)
Yep.

Kurt (36:06.219)
the stability in the commissioner's suite. But I think, is it a deterrent if the commissioner has a bad reputation? I'm not sure it's a deterrent, but I would say a very strong commissioner with a great reputation for working with media, corporate partners, and doing well in front of the camera.

I think that helps in a case. You talk to bankers, they say Adam Silver in the big chair helps. They have confidence in where Silver is going to take this league.

Steve Feuerstein (36:44.414)
Absolutely, absolutely. And obviously any commission that's made it through COVID successfully, if you could say such a thing, but handled it responsibly, made mature decisions, and then coupled that with your financial performance. What did you deliver to the franchisees, the owners? Those are kind of two schools of hard knocks that would certainly be my criteria if I were ever in the position to work with you, to acquire a team. But let's go to the revenue generators, corporate sponsorship.

0 to 10. How much they're generating revenue, how much you feel they're maxing out, what their bookable revenues are annually, what their trajectory is on the increase, how much does that play in your model?

Kurt (37:27.726)
It's a four. It sits behind TV and Gate. It's an increase in almost every league. Yeah, it definitely, actually in every league now. I'm thinking back to our pie charts where we break down revenue in...

Steve Feuerstein (37:30.336)
Ticket sales? Ticket sales?

Steve Feuerstein (37:38.324)
Behind gate, behind gate.

Steve Feuerstein (37:51.654)
Merchandising Kurt, I'm gonna jump in with another merchandising Does it have any factor a two is it there did you is it visible on your on your model in your model? Yep Well gets at so basically you guys will aggregate your revenues and you're not necessarily While you're you see the contributors these unique individual contributors your focal point is as a someone who's doing a mathematical model and projecting is really looking at that

Kurt (37:56.44)
Two, two surrounding air.

Yeah, it's a revenue. It's a revenue, but it's a small.

Steve Feuerstein (38:19.892)
Is it the lump sum of overall revenue?

Kurt (38:21.518)
We think, ultimately what we publish is one total number, but we've been doing the last couple years, which people seem to like, is how sports teams make their money. We break down the major sports leagues, and this is the check you're getting from the league. This is the check, this is how much you're making from local TV. We started doing it when the RSN model started melting with Major League Baseball and Diamond Sports went into bankruptcy.

in terms of the exposure that the different leagues had to what was happening. And you saw with Major League Baseball, more than 20 % of their revenue came from local TV. The NBA and NFL, excuse me, NBA and NHL were both next around 13, 14%. The NFL, of course, always wins. They only have about 2 % exposure to local media and actually most of that is radio. They only have a small part of their

revenue is local TV that's for preseason games, basically which are which there's a local TV component to it. So we break it down that way and then look at sponsorship for each of the major leagues. We look at merchandise, parking, concessions, and then other events. Other events are increasingly more important than they traditionally have been.

Steve Feuerstein (39:42.338)
That's where I wanted to go. Other events, meaning the multipurpose nature of your stadium, concerts, conventions, community events, whatever they can farm out the stadium for. Obviously Prudential Center, one of the biggest in the world for concert revenues. Where would that sit on the model zero to 10?

Kurt (40:01.486)
It's it's it's a three and going up I would say and I mean if you fold in mixed-use development I bump it up to a four again probably at this point and growing because owners are all looking at their buildings and thinking What else can I do? You Some some are some are capped based based on the footprint of where they are you're in the middle of a city but

Steve Feuerstein (40:15.682)
100%.

hotels, commercial space, and entertainment.

Kurt (40:27.95)
Almost all of them can do something. I think about what happened around Wrigley, which is sitting in the middle of the city, oldest, trying to think, oldest Fenway, can't remember, right? Fenway and Wrigley were built two years apart. One's 1912, one's 1914. And those are 100 year old buildings and what they were able to do, renovation of the building and then the...

Steve Feuerstein (40:39.498)
Anyway, I thought, yeah.

Kurt (40:55.15)
growth around the area that all is with the Ricketts family, all done investments in the Ricketts family and they control everything around there. And so everybody's thinking about that. They look at Atlanta, what the Braves have done with the battery around Truist Park has been incredibly successful, kicks off 60 plus million dollars a year in cash flow.

that's a nice stabilized business on top of what your baseball team is doing. So they're all thinking about it and not everybody can do what SoFi's doing and stand cranky. That doesn't work outside of LA.

Steve Feuerstein (41:36.278)
Well, first of all, if I remember correctly, their Panasonic Jumbotron is worth more than the vast majority of stadia in this country. Secondly, by the way, I was playing a role of political fact checker on your comment, Wrigley1914.

Kurt (41:43.982)
Hahaha

Kurt (41:52.238)
Okay, okay Fenway must be 1912 then so there you go.

Steve Feuerstein (41:54.526)
Okay, you got it. So when you look at the revenues, we're clear TV revenue. I imagine you put that as a separate bucket.

Kurt (42:04.302)
Yes, TV 100 % and the distinction being local versus national TV, which is a big difference, particularly what's happening right now with regional sports networks and companies deciding they want to get out of the business. AT &T got out of the business. Warner Brothers is getting out of the regional sports business. Diamond Sports is in bankruptcy.

Steve Feuerstein (42:23.244)
Yeah, right.

Kurt (42:32.878)
It's a really tricky situation because a lot of these clubs, they're looking at 80 % haircuts to their local TV rights. And so that's hard because a lot of Major League Baseball income statements were built on with that local TV component being 25, 30 % of your revenue. And so that's hard.

Steve Feuerstein (42:53.57)
Yeah, by the way, the Dodgers, what was their local deal? I think it was like a 30 year. I mean, they also the length of the deal they entered 25. Yeah.

Kurt (43:00.11)
25 years, $8.35 billion. It's incredible. It's incredible.

Steve Feuerstein (43:04.93)
What a deal, what a deal. mean, that local deal. People very rarely remember what or don't think about the consequence. We hear about the magnus opus of the commissioners, but we rarely understand what goes on in that local level. By the way, it begs the question, you raise something really interesting. I spent about 15 years overseas and there's no question why I was overseas in different countries. You saw the advent, I saw the advent, experienced the advent of cable television.

your regional satellite television. What about in your model when you look at a league that has a commissioner that has the foresight that is building an identity that transcends our borders in America or North America rather? How big of a factor is that potential to maximize and market overseas?

Kurt (43:49.09)
Yeah. Cute.

Huge, nine. Nine. Nine if you're an NBA owner.

Steve Feuerstein (43:59.712)
And just to be clear for the viewers, when we say nine, this is a nonlinear model. just to be clear, the nine that we're giving them could still be very unequal in their weights as to how we really contribute to the model. It's wickedly important, but at the end of the day, it might be a differential of hundreds of millions or more.

Kurt (44:04.472)
Hahaha.

Kurt (44:18.894)
Yeah, I'm exaggerating with the NBA probably, but if you talk to anybody who's buying into an NBA franchise and is looking to own this for the next 30 years, they look at the international opportunity as through the roof. Because the game transcends overseas, it is still such a small portion of NBA revenue. It's less than 10 % of league revenue right now.

Steve Feuerstein (44:45.21)
And by the way, that's for that league. What about all the other laggers who are not yet even on the map?

Kurt (44:52.642)
Yeah, I think they see opportunity there. I think they are all more hard pressed to capitalize on it. They're all trying. The NFL has been trying for years to help with the game. I think the cap on the upper... There's more of a cap on the opportunity outside the United States for the NFL, Major League Baseball, hockey.

Major League Soccer. mean, very hard for Major League Soccer to compete outside the United States. But I think the NBA, you reach a point where you can, if you can figure out a way to monetize it properly, and that's sponsorship, TV, and merchandise. Because Adam Silver will tell you, 99 % of NBA fans will never step foot in an NBA arena. So you need to reach that 99%.

and a lot of them are outside the United States and they're not necessarily spending enough money with you right now. So if you can figure out a way and people are consuming the NBA outside the United States in huge, to a huge degree, but they're just not monetizing it currently.

Steve Feuerstein (46:06.178)
Kurt never more acute than what we saw when the Darrell Morey debacle over one tweet when he was overseas and LeBron was in Shanghai. And we saw the Chinese government where I spent 13 years literally say to the NBA and Adam Silver, we got 4 billion invested in you. And right now we're taking you off the air. And they terminated the NBA from the, I mean, the social media sphere, cybersphere was temporarily, you know,

Kurt (46:12.952)
Yeah. Yep.

Steve Feuerstein (46:33.926)
NBA was a persona non grata or a league non grata. So yeah, four billion dollars. And by the way, the the the if you will, the the the eggshells that he walked on to not compromise that deal. I know for a guy who is such a moral compass. I mean, that was a that was a tough position he was put into for another for another discussion on how that was handled by the NBA. But it just shows you the value of particularly one market, China, NBA.

and what dependence there is or what belief there is about the growing nature of it. I have two more just for the purpose of today and I'm gonna yield to you on what we missed. Start player impact. Let's go to the Caitlin effect. If I owned the Indiana Fever right today and I'm pre-Caitlin Clark, post-Caitlin Clark, and I'm about to do a deal selling the team to a consortium of buyers.

And I didn't know who Caitlin Clark was at the, didn't know I was getting her. And one year later, we're still negotiating. She's now on my squad. What would that do percentage wise to the buying price that I might be asking for the year before Caitlin, the year before she came on our team and the reality of what she's done in her first season.

Kurt (47:51.47)
At 100%.

Steve Feuerstein (47:53.698)
100 % growth and so if I'm asking for a hundred bucks, I might be asking for 200 the day later.

Kurt (47:58.478)
Correct, but she's in a very unusual situation. It's rare a player can drive that level of impact because in theory you're investing, that player might be gone. They might decide as a free agent, I don't like it here, I'm gone in three years. And so very tricky to invest knowing that you might, that player, one, there's a shelf life on every single player's career. And two, that player,

because we do have more movement amongst players in all the sports leagues right now that they might not be in for the long haul. But she is such an exception. I think the only thing comparable, I think, before that, the two comps that jump out to me, one would be LeBron James, the impact that he had when he got to Cleveland. But a more established league, hard to...

Steve Feuerstein (48:50.165)
Mm.

Kurt (48:55.758)
hard to create that much impact. But the guy who really would be most comparable, I think, to Caitlin would be Lionel Messi showing up at Inter Miami. You think about the value of that franchise also, 100%.

Steve Feuerstein (49:08.77)
Well, Beckham bought it for 15 million, right? And today, according to you guys, what's the number? So, I'm off by 10. So today, Inter Miami is valued over a billion. So when I was preparing for the show, and I'd been watching that when Beckham bought that, and I was saying to myself, just keep an eye on that team. I mean, it's gonna be interplanetary. He's already over a billion in a matter of, what, a handful of years?

Kurt (49:11.662)
Yeah, 25 I think was the number he got in for. So yeah, over a billion now.

Over a billion. Over a billion.

Steve Feuerstein (49:39.084)
Handful?

Kurt (49:39.263)
Yeah, I mean it took it took them forever to get inter Miami off the ground and launch

Steve Feuerstein (49:43.874)
Yeah, but since their first team, when was their first game? Four or five years ago? Four years ago? 2020, okay. So he bought it for 25 and he's up to over a billion. Where do you project that team will be in five to 10 years?

Kurt (49:49.262)
Yeah, I think 2020, 2020, think maybe was year one.

Kurt (49:58.286)
It's a it's that is a fascinating question. The team had a lot of momentum if they could get their stadium situation sorted out. So they are. Yes, so it is it is set. They're going to launch it for 2026. Stadium will open as well as the development around the area. So before Messi even joined the team, there was a lot of talk that

Steve Feuerstein (50:10.764)
Well, they built that one team with the municipality, that one venue with the municipality.

Kurt (50:28.536)
There's no reason this should be a top three MLS team. Once that stadium opens, you add a little mix of messy into the equation, arguably should be the most valuable team of all the momentum that Miami has right now in terms of a city. So much wealth moving into that area as a gateway into South America and Central America. Incredible opportunity. But we don't know with Inter Miami.

and MLS as a whole, we're moving towards, there's so much excitement headed towards the World Cup. And what we have to see is what does this league look like in 2027? After the World Cup and after Lionel Messi is done. And we don't know, we don't know. It's on MLS to capture and maintain that excitement and fan base. But we don't know what 2027 looks like.

Steve Feuerstein (51:10.574)
The hype has died down. Yeah.

Kurt (51:25.238)
for Major League Soccer or enter Miami.

Steve Feuerstein (51:26.338)
Okay, so the final question of the day, and I know that you must get this a lot, I would imagine, Kurt, you are hired by a company, a group, an individual, a high net worth, and all this individual here she wants, or this company wants, is the greatest return on investment over a seven to eight year threshold, and they can buy one team.

There's no opposition to the acquisition. They buy on your value. Your valuation guides them. The buyer is going to pay what you tell the public it's worth that one team and the seller will sell at your price. It's a win-win at the end of the day. You got one team. What are you buying?

Kurt (51:53.432)
Want him.

Kurt (52:12.046)
I'm buying a NBA team at the bottom of the financial table. I, those clubs at the bottom, talk about New Orleans, Memphis, Minnesota, even Utah, they're all sitting at the bottom. I think what we're looking at with the NBA over the next, and so they're all valued two and a half to $3 billion. I think those valuations have a lot.

runway to go based on what the NBA looks like in eight years in terms of the economic model. And so and they're going to be able to capture. You're also looking at expansion, almost certainly. And so each of those short term is going to get a expansion for the NBA is probably looking at least five billion dollars. I mean, that's it. That's a minimum price to teams. So that's 10 billion. Arguably could be six billion per club. So that

Steve Feuerstein (52:44.81)
Excellent. Excellent.

Kurt (53:08.558)
Split six billion, 12 billion, 30 ways. So you're looking at a $400 million check that goes straight into your pocket. Players don't see any of that. So, and you get that check whether you're buying the Memphis Grizzlies or the New York Knicks or Golden State Warriors for $8 billion. So I think who you're looking at a short term return on investment, that's your best bet.

Steve Feuerstein (53:26.9)
Yeah.

Steve Feuerstein (53:33.314)
So I'll tell you my long-term. I'm gonna buy the unknown, making it up as we speak, the New York Wickets, the soon-to-be cricket team, professional cricket team in the state of New York. One day someone will come up with the New York Wickets and we'll see within 20 to 30 years, a multi-billion dollar property in the cricket league here, the United States Cricket League, the USCL. And we'll come back in 20 to 30 to see if my projection is spot on.

Kurt (53:35.073)
Okay.

Kurt (53:40.152)
Okay.

Okay. Yeah. I like it.

Kurt (54:02.604)
I love it, I love it. I was thinking two in the box and I was thinking short term and long term. I love that prediction and couldn't agree more about cricket, the opportunity in this country.

Steve Feuerstein (54:03.618)
No, I gave you five to seven, by the way.

Steve Feuerstein (54:17.718)
Well, he's a young man, but he's the godfather of financial projections, along with his former partner at Forbes. Again, Kurt is at the Sportico today, but Mike, it's Ohanian, correct? Ohanian, excuse me. Of course, he was at Forbes, used to have the TV show, The Business of Sports. So I'm gonna do that again. That will be the one correction we make. So Kurt, the godfather of financial projections of team ownership, team sales, team valuations.

Kurt (54:31.082)
Ozanian who's at CNBC now and doing great things as Mike always does. That's right.

Yeah.

Steve Feuerstein (54:47.744)
with your former partner, Mike Ozanian, who's now over at CNBC. And Perk, of course, after illustrious career at Forbes is at the helm over at Sportico in all aspects of valuation. It was a pure pleasure to have you on the transaction report today.

Kurt (54:52.846)
That's right, that's right, doing great things over there.

Kurt (55:06.676)
great to join you, Steve. Enjoy the conversation.

Steve Feuerstein (55:08.736)
Yeah, that was a good one, Kurt. Thank you.

Kurt (55:11.159)
Yeah, thanks so much.