Running one pro sports team is tough enough.
What kind of executive enjoys the challenge of running two teams in two different cities?
We sit down with double duty ceo scott o'neill.
Do you think public dollars should fund sports facilities?
Like it or not, he is standing up for taxpayers.
So many of these franchises are owned by billionaires who could build these things themselves.
The jacksonville jaguars are making london air home away from home.
The president explains why that makes perfect business sense.
The leadership have embraced this idea.
If it happens in sports, it is our business.
"lunch money" -- "sportfolio" starts right now.
I am rick horrow.
Welcome to "sportfolio." the nhl season is two weeks old and the nba season is two weeks away.
This means that josh is an extremely busy man.
Two years ago, he was only head of the private equity firm apollo global management.
Now he owns the philadelphia 76ers and the new jersey devils.
He still has his day job on wall street.
The stena alessi recently sat down with josh harris to discuss his investment in sports.
First it was the philadelphia 76ers.
Then, about re-hundred million dollars to the new jersey devils.
Josh harris seems to be stepping up sports teams like most guys buy cars.
I play sports.
I watch sports.
I am a fan and i enjoy it at the highest level.
He sees this as a business opportunity.
In my day job, we like to buy great franchises that are undervalued and in both of these situations, we happened on fantastic franchises.
After buying the 6ers, harris overhauled the roster and management.
It is hard to win.
You need to be incredibly competitive.
There are owners who want to win as poetically as you do.
From our point of view, we think it is going to create an edge for us.
We hope other people don't focus on it.
With his latest investment in the devils, harris is banking on more than just analytics.
He is betting on location.
This is a world-class arena.
If you look at the market here excluding new york, it is a large market with many businesses, millions of people.
That may have sealed the deal.
I think the devils are a winning hockey team and it will be exciting to be a part of it.
Financially, the arena was more important.
How much money is harris looking to make off the team?
The timeframe and return expectations aren't going to be as big as private equity returns.
The timeframe for me is probably a lot longer than private equity.
It is better than the one percent i can earn at jpmorgan.
I get to have fun and earn a decent return and hopefully make some money in the process.
As for the clients who worry harris is spending too much time on his team, he has an answer.
The way i run the devils and the 6ers is to bring in great management.
For harris, the view from the top looks pretty good.
As josh harris points out, the key to success is putting together the right team.
Leading harris's team is scott o'neill who previously ran the sports division at madison square garden.
O'neill stopped by our studios and i asked him how his experience meshes with his boss's vision.
He loves to invest.
I love to fix them.
His plan is consistent.
I distressed property buy -- buy distressed property.
Give them a structure to be successful.
Help them along the way.
That is pretty invigorating.
You have experience in that context because with the knicks, that has been a great turnaround.
You see the same similarities in philly with the sixers.
You have this amazing market, you have a really passionate fan base.
There are a lot of similarities.
In philadelphia, we are partners with comcast.
We are building partners.
They are terrific partners.
The experience is different so we focus a lot on the core business, tickets and sponsorship.
We have a terrific media relationship with comcast.
We have to focus on being a really partner friendly organization for sponsors and creating a world-class experience.
Now, another team for you.
How does that all happen?
When you work with guys like josh harris, they are in and around a lot of deals.
The philosophy being, if you can fix it, we can buy it.
That is a fun environment to work from.
It is pretty public that the devils were unlocked and josh and david got the call.
Voila, i all of a sudden have the best job in the world.
The rare and almost unique challenge of running two teams into cities, how do you plan to make it work?
People, people, people.
Find and attract the best talent in the world.
Develop them, retain them and have some fun along the way.
The formula is going to be similar here.
What is the fan experience like?
You're talking to a variety -- the verizons and the prudentials in the world, how do you create this experience for them?
Time allocation, long- distance management, mixed loyalties, those are all challenges relative to running two different assets.
I think of it differently.
In sports, we have such a fixed attention on that one team in the one city.
The great businesses around the world have 200 countries.
My job is to make sure we get the two right.
The flyers hit the devils.
The sixers have some issues with the rangers.
It is compounded by the fact you have two cities that don't care for each other.
How do you feel about that?
It is not easy.
The interesting part is that we are partners with the flyers management.
From a business end we are friends and we do business together.
It is incumbent upon us to make sure that in philadelphia, we are the sixers and we are pulling for them 100%. in new jersey, it is the devils and everything we can do around that.
It is not an easy situation but for us, if it were easy, everybody would be doing it.
That is important.
Josh harris told bloomberg one of the advantages of this purchase was the prudential center.
How do you survive and thrive in a competitive market?
The one thing i do know, i wouldn't cross to rivers to do anything.
We have our base in new jersey.
It makes it pretty easy.
For us, it is about being new jersey's team and the world- class venue at the heart of new jersey.
You have a pretty good idea of management style but you also ran a public company.
What is the difference?
Private companies are more fun.
[laughter] less regulation, less reporting, fewer meetings.
That doesn't mean there is any less intensity around managing.
We are businesspeople for sure.
But it is nice to be back in a private side.
Scott o'neill clearly has his work cut out for him.
According to the latest franchise valuations, the devils ranked 19th out of 30 nhl teams.
The sixers stands 20th in the nba.
It will be interesting to see if those numbers improve in tandem under josh harris's ownership and o'neill's leadership.
Coming up, a man whose views on sports investment are quite public.
He believes that public subsidies have no place in sports.
Conversation with barry goldwater junior when we return on "sportfolio." ? welcome back to "sportfolio." we often discuss the financing of sports facilities on this program and the role of public- private partnerships in building stadiums and arenas.
Not all of those partnerships are happy ones.
The nhl's phoenix coyotes filed for bankruptcy in 2009. goldwater filed suit to ensure that documents related to any deal would be made public.
In 2012, the nhl found an investor willing to buy the team.
The city approved the new arena and midterms.
The goldwater institute went to court claiming the agreement was unconstitutional.
The judge ruled that it should stand but the sale fell through.
In 2013, the coyotes were sold to renaissance sports entertainment.
The goldwater institute decided not to challenge the arena management deal saying it was much fairer to local taxpayers.
The group released a statement saying, the long painful experience illustrates why local governments should avoid the temptation to subsidize five enterprises such as sports teams.
Barry goldwater junior sits on the board of the institute named for his family.
He joins us from phoenix to discuss the issue of public funding for private sports businesses.
The bottom line, phoenix still has hockey and the taxpayers are still on the hook for millions.
What can we look -- learn?
We can bite off more than we can chew.
We ought to take a hard look at what value are the taxpayers getting back in return for these giant stadiums that are built, that they have to support?
The city of glendale is only 250,000 people.
They built a stadium for hockey that cost over $300 million.
They spent over $100 million just to keep the thing alive.
That is a big burden to put on the backs of taxpayers.
It is not right and the taxpayers are getting very little back in return.
Let's talk about the events that are in these facilities.
In about two years, glendale hosts its second super bowl.
Every estimate is in the 200 million to 500 million range.
If there is not public money in these buildings, how does the super bowl come to town?
The super bowl doesn't come to town.
The city will continue to live and prosper.
Football, hockey, sports do not make a metropolitan area.
It is the people that live there that make it.
In some respects, it is a burden to put on the backs of taxpayers when they have to fork over millions and millions of dollars for a franchise that is owned by billionaire's who have the ability to build the stadiums themselves.
Why should taxpayers foot the bill and pay $200 or $300 to take their families to see again?
There is something wrong in that.
Taxpayers are not getting value back for these franchises.
It is a lot of hooplah with the super bowl.
But it is not going to make or break a city.
Let's defined what taxes or subsidies are acceptable if there are any.
These days, public-private partnerships involve increment financing and not direct sales or property taxes that burden locals.
With the institute moved to stop these indirect subsidies or are these ok?
You have to divine -- defined what indirect subsidies are.
The institution has a gift clause.
It prohibits private money -- public money, public money from being invested in private enterprise.
A lot of municipalities will provide subsidies, tax treatments, zoning to attract industry.
Football, factories or what have you.
That is not the strength of that city.
It is putting that on the back of the taxpayers.
The city ought to attract industry because it has a good skilled workforce, good education facilities and good good government, lower taxes, lower regulations, those other things industry should be looking at.
Not subsidies in the area of sports where so many of these franchises are owned by billionaire's who could build themselves.
Them would argue that sports is a little different.
Unlike other businesses, there is a limited supply of pro sports franchises.
There is no shortage of cities that want to pay for them.
If they are off the table from your estimation, and city or state governments, how do they build these facilities to attract or retain teams?
Get the owners to build them.
If i go into business, i have to rent myself a facility.
I don't look to the government to run it for me.
I provide a value to my community just as much as football, but on a smaller scale.
If the football owners want to come to phoenix because the sunshine is so great down here and the fans are so great, then build it themselves.
One more quick question.
You have been a congressman for more than 20 years.
What is harder, sports or politics?
[laughter] politics is a lot more fun too.
Coming up, an nfl team working with city government to spruce up its stadium.
At the same time, it is exploring new business opportunities far from home.
The jacksonville jaguars all this a win-win.
It is something really good for the community.
Here is our sportfolio stumper.
What was the first corporation to purchase rights to an nfl stadium?
They didn't consider naming more than one.
We are back with the answer when sportfolio returns.
? here is the answer to the stumper.
The first company to buy naming rights to an nfl stadium was the schaefer brewing company.
It cost them $150,000. it has been a tough year for the jacksonville jaguars.
Off the field, the organization has a lot to look forward to.
Not just the first pick in next yours in draft.
The jags have agreed to play a home game in london.
They make their first trip across the pond in two weeks.
Mark lamping for me by the jaguars are an ideal team to make this commitment.
The challenge with the jaguars is we really need to expand our brand and maybe do whatever we can internationally to bring more attention to the jaguars.
Let's talk london.
You are tasked with making four home games work in london for the next four years.
We have this unbelievable, strong safety net underneath us which is the nfl.
They do an unbelievable job in terms of operations.
The opportunities, we can generate a significant amount of revenue.
Higher ticket prices and higher capacity.
It gives us the opportunity to develop business relationships that we ordinarily might not have had.
London opens a lot of doors for us.
Perhaps most importantly, it is something really good for the community of jacksonville.
It increases the awareness of our community.
It is a community, it has so many great things to offer but does not get a huge piece of the florida tourism pie.
There is a surprising number of companies that are based in the u.k. that drilling operations in jacksonville.
We can support economic development to help the jaguars.
In terms of energizing the jaguars abroad, you find it a sport group, how is that going?
One of the things the nfl is trying to do is by sending a team that is relatively unknown, doesn't have a huge following, by virtue of them playing four consecutive years in london, can you increase awareness and the following?
If the nfl can prove that, it is going to influence their long- term strategy for the u.k. in terms of our fan club, we have gone from zero to over 15,000. how deep it is, we have yet to determine.
-- didn't have a timeline, but he and the commissioner understand that the expansion, relocation, at some point may make some sense.
You have publicly said it is not you but you are playing for the next four years.
Why invest the time and energy in the process if you're not somewhat interested in europe?
We are in a small market that has some challenges.
The leadership have embraced this idea of us moving one game a year to london because of what it will do for the franchise and what it could do for jacksonville as a community.
There is not a lot of teams that can do that.
Number two, we are really excited about playing a role and doing our part to help the nfl decide, what should the expansion plans be internationally?
They will continue to grow but the pace of their growth in the united states at some point in time is going to slow.
All of us want to continue to grow.
Jaguars owner but an english premier league team this summer.
The team could be planning a perfect -- permanent move to london.
They have committed $20 million to improve their stadium in jacksonville.
Enhancements in 2014 will include a fan zone with swimming pools and what is billed as the largest video in sports.
City council is considering a plan to fund the remainder of the $63 million proposal.
Still to come, will jay-z's new agency rock the world of sports?
A former nfl player offers perspective.
Stay with us as "sportfolio" rocks on.
Get "sportfolio" wherever you go on the bloomberg tv plus app for ipad.
? in just a few weeks, the baseball free-agent season begins.
All eyes will be on the new york yankees and jay-z. how will the music mogul fair when it comes to getting his sports clients top dollar?
Former nfl linebacker donnie jones shared his thoughts with bloomberg.
Rock nation sports is an agency where baseball players will be represented by jay-z's team.
They combine their efforts.
Caa much like william morris are all trying to find different ways to consolidate resources.
When i was in the league, my first agent was -- i wanted my agent to focus on football.
I wanted my marketing team to focus on brand building and television.
I think jay-z cosan team -- jay- z's team has an artist cachet.
You want to be a part of the athletic world.
Why not merge the two together?
Rock nation sports -- cano is one of jay-z's first clients.
He can provide direction and be part of the growing process of rock nation sports.
Many athletes are the startup mindset.
I have had the agent that has given me the escalation.
It is time to make the move.
What jay-z will have to do is make sure that he proves his concept.
What kind of contract can jay- z's team negotiate on their behalf?
That is the bottom line.
I probably would not want to be a part of jay-z's rock nation.
I might want to be part of a smaller shop that operates on a more intimate level where i feel as though i am number one.
You want to find a platform that make sense for you.
Something that you're able to build a relationship.
That would do it for this edition of "sportfolio." her thanks to josh harris, scott o'neill, barry ward -- every goldwater junior and mark lamping.
Thank you for watching.
For more "sportfolio" video and bloomberg coverage, be sure to visit bloomberg.com.
I am rick horrow.
Great to be with you.
See you next time.
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