David Rubenstein Talks Economics of Modern Sports

SPEAKER_1 (0:02)

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SPEAKER_2 (0:07)

This is indeed a joy on many levels. First of all, he actually in the index mentions the Boston Red Sox. One citation, page 61, it was a fluke. David Rubenstein joins us now. The new book Inside the Owner's Box, Conversations on Power and Leadership in Sports. David, I've got to take a moment here. You dedicate this book to the wonderful Robert Barnett.

He represents me and my family. He represents you. It was tragic to lose Bob Barnett. What did Bob Barnett mean to Washington and to Baltimore?

David Rubenstein (0:38)

Well, Bob Barnett was a friend of mine from law school. I've known him, knew him for about 50 years, and Bob developed a practice where he represented former presidents of the United States, senators, secretaries of state in getting book deals or media deals, and therefore he represented me for many years in every book that I ever wrote, and many other people much more prominent than me. So when he died about a year ago from a tragic cancer, it really was a real loss for people in Washington, DC.

SPEAKER_2 (1:06)

Wonderful. Inside the Owner's Box, our team I hear is steeled. We have Orioles fans on our team, Paul.

SPEAKER_4 (1:12)

I know that, absolutely. Exactly right. So David, in your book, you interview owners of major league sports teams across the sports spectrum.

Robert Kraft of The Patriots, Ted Leonsis of the Washington Capitals and The Wizards, and my Lawrenceville classmate Joe Tsai of the Brooklyn Nets. What's some of the commonalities, David, that you found in your discussions with some of these owners here?

David Rubenstein (1:37)

Well, very few owners actually as children expected to be owners. I never expect to be an owner.

Young people probably want to be athletes, not owners. But eventually, when they get older, they realize their athletic skills are not as great as they once wanted them to be. And then, the owners that actually become owners, the people that become owners, they're really more obsessed with winning than they are with making money. I interviewed owners and I wrote a book, in part because when I was becoming an owner, I was looking for books on what it was like to be an owner, and there were relatively few owner books that I could find. And so, I thought if I could interview other owners, I would get a sense of why they became owners, and I would give my own story about why I became an owner of the Baltimore Orioles, my hometown baseball team.

SPEAKER_4 (2:20)

David, you know, there once was a time when owning a major sports franchise was the game for millionaires, and then it became the game for billionaires. And now we've got institutional money coming into the ownership. I think about the Los Angeles Dodgers, I think about the NFL allowing private equity to own minority stakes, and of course corporate ownership of the English Premier League teams.

Where does this go from here, do you think?

David Rubenstein (2:45)

Well, the reason this is happening is in part because the values of franchises are going up so much that very few individuals can buy a team. So for example, NFL franchises which are now worth $10 billion plus, very few individuals can write a check that can buy a team for $10 billion. Therefore, you need to get outside money. The NFL now allows teams to buy, certain private equity firms to buy up to 10%.

Other leagues allow sovereign wealth funds to invest in minority stakes. We haven't gone to the point yet where a private equity firm or sovereign wealth fund can own a major American franchise in control. But that could happen down the road. Who knows?

SPEAKER_2 (3:25)

David Rubenstein, Inside the Owner's Box, folks, this is the Sports Book of the Year. It is absolutely piercing.

Let me give you one example. I had a great dad who was a man of spirituality. He was of limited financial means. He had a small dry goods business, but he was really a person who was a spiritual leader. He was head of all synagogues of Massachusetts for 12 years. He never watched TV.

And then his kid, Robert Kraft, went on to win six Super Bowls. I mean, a guy like Kraft, I mean, what he did to pick up the, I think it was the Boston Patriots then. Give us a vignette into Robert Kraft, David, and what you learned from him.

David Rubenstein (4:06)

Well, Robert Kraft was born in Boston. He went to college at Columbia. He actually played football at Columbia University.

And later, retained his love of football, but he built a business in the packaging business, and basically that was his life. And then an opportunity came along to buy a stadium a football team was played in, and later he bought the team itself. And then he won six Super Bowls. He's now been to 11 Super Bowls. And I think in the recent era, nobody's been to as many Super Bowls, and nobody's won as many Super Bowls. And Bob Kraft loves the game of football, and now he also owns the Revolution, which is the men's soccer team in Boston. So he's given a great deal to the professional sports world. And obviously he had a very famous quarterback named Tom Brady. He drafted in the sixth round, but later became, I guess, the greatest quarterback of all time.