Money to Burn

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

SPEAKER_2 (0:08)

You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

Carol Massar (0:16)

Well, our next guest is the author of many books, several New York Times bestsellers, books about Goldman Sachs, The Fall of Bear Stearns. He's written about the Duke Lacrosse scandal. He's written about his friends. He's written about General Electric, eight books in 22 years.

Tim Stenovec (0:29)

He was a Wall Street M&A investment banker for 17 years, then financial journalist writing for a who's who of business journalism and more, including Businessweek. He was also a contributor to Bloomberg TV.

Carol Massar (0:39)

Yes, and at one time even anchored with me, as I always like to remind everybody. His latest book, it is the eighth one, just out this week, Money to Burn, The Unvarnished Truth About Leon Black, Apollo and the Rise of a New Wall Street. So lovely to have back with us.

SPEAKER_1 (0:55)

Bill Cohen, how are you?

William Cohan (0:56)

I'm great.

Carol Massar (0:57)

Thank you for having me. Well, it's great to have you here. We're going to get into the book, but I got to ask you, because we have been doing the power players and talking a lot about sports today.

And we think about Apollo, who has been certainly doubling down when it comes to sports, 2.6 billion financing for the New York Yankees.

William Cohan (1:16)

They hated.

Carol Massar (1:17)

I'm sorry. I'm a Red Sox fan. Go ahead.

William Cohan (1:19)

Keep going.

Carol Massar (1:20)

Then you have things like Mark Walters at Guggenheim, like that whole.

William Cohan (1:24)

And Josh Harris, of course, who owns the Commanders and the Sixers.

SPEAKER_2 (1:28)

So there's a New Jersey.

Carol Massar (1:29)

I think about Wall Street. I think about sports, games, strategy, like risk and so on and so forth. Money in sports though, in general, whether it's college professional, good thing or bad thing in your view.

William Cohan (1:41)

Well, it would be tense if you're an investor in sports teams. It's been the greatest thing since sliced bread because the asset values keep going up and up and up.

Look at Mark Walther, for instance. Obviously, he's in some sort of financial distress. We're not really quite sure the extent of it or what it fully involves yet. He buys the Lakers last year for $10 billion, which I think was the highest price ever paid at that time for a sports team, and sells it in distress for a weekend for $12.5 billion. So even when it's a distress sale and he needs to sell it, he pockets $2.5 billion on the whole arrangement in less than a year. So there you go.

Tim Stenovec (2:22)

Is it all supply and demand? Is that what it is?

William Cohan (2:25)

Well, of course. I mean, they're not making any more of it. It's like waterfront property, but actually it's a lot more valuable than waterfront property because there are a lot of coastlines around. And the other thing that's been happening, of course, is this creeping willingness in part of the leagues to allow private equity investors.

First, you know, like commanders, for instance, Josh's team is all private equity guys. You know, the Lakers is Bob Iger and Josh Kushner. I don't know where they got the 12 and a half billion. I'd still like to know where they're getting it. Last time I checked, Bob Iger didn't have 12 and a half billion lying around. So okay, but they're allowing private equity money into buying sports teams, which is I think is the way the leagues have decided and the owners have decided that they have a chance of like actually getting their investment out. I mean, it's one thing. I mean, how does Bob Iger and Josh Kushner get their money out of the Lakers when they pay 12 and a half billion dollars for it up front?

Tim Stenovec (3:32)

Well maybe they sell a little piece of it to another entity or I don't know.

William Cohan (3:38)

I mean, look, there were, for instance, rough numbers like the Celtics were bought in 2002 for around $320 million, which I think was the largest price paid for that time for professional league.

Carol Massar (3:53)

Sounds so quaint right now.

William Cohan (3:54)

It sounds so quaint. And then last year they sold the team for basically $7 billion. So $320 to $7 billion, okay.

I can work with that. That's in terms of returns and multiples, fine. But if you pay $12.5 billion, I mean, they made 20 times their money on that investment. How are you going to make 20 times your money if you pay $12.5 billion?