PEU Sports Interviews

CNBC interviewed the CEO of Sportscorp regarding private equity money flooding sports.

Yahoo Finance interviewed Carlyle co-founder David Rubenstein.  Asked about the impact of private equity investment in sports.  His answer:  "Well, drive up prices."  Just as they've done in housing, healthcare, pharmaceuticals and nearly everything they touch.

Rubenstein is the lead owner for the Baltimore Orioles and Carlyle holds a stake in the Seattle Reign.  A longtime Baltimore sports writer sent a letter to Mr. Rubenstein.  The author hopes for a better hand from lead owner Rubenstein relative to the prior team owner:

Over my three decades in dealing with the emissaries of Peter G. Angelos, this was not considered a bug but far more of a feature ­– pettiness, anger and retribution.

Private equity underwriters (PEU) typically take a steamroller to people expressing legitimate concerns.  Winning the game of financial profit maximization, obtaining public subsidies (direct and indirect) and cultivating political influence (which produced "policy making billionaires") usually requires a signature focus that excludes listening to real people.  

The Baltimore sports writer can appeal to other new Orioles owners, three of whom made their fortune with Ares Management.  However, the threesome may be busy as Ares is close to striking a deal to buy a portion of the Miami Dolphins.

 

The Sportscorp CEO noted the other announced deal for Tom Gores to buy a stake in the Los Angeles Charges is not a PEU deal.  It is however with a PEU founder.

Platinum Equity - A Global Private Equity Firm Founded by Tom Gores (on Forbes billionaire list)

So what can people expect?  Platinum Equity bought the NBA's Detroit Pistons in 2011.  The Pistons:

have been the league’s worst franchise for 15 years or so.

Gores bought out Platinum Equity's stake in the Pistons in 2015.   The City of Detroit provided $34.5 million in subsidy for the Pistons to move into a new facility.  Check out the name on the Pistons' home court.

Platinum Equity, another PEU arms length agreement.

Carlyle's Rubenstein located his firm in Washington, D.C. in 1987 to access Uncle Sam's wallet and intermittently non-lobby to keep his PEU preferred "carried interest" taxation.  He's predicting more tax cuts regardless of who wins the White House in November.

The PEU boys love a public subsidy but hate paying taxes.  So why is all this going on?  Because politicians Red and Blue love PEU and increasingly, more are one.  Professional sports is the newest PEU love and as Mr. Rubenstein said prices are going up.