In this next segment, we'll talk about League leadership, largely about commissioners.

We'll talk about ownership, and then we'll talk some about integration strategies which become important in terms of, of the media and the facilities as well. But we'll touch on that here initially in this, in this segment. So this is Kenesaw Mountain Landis the first commissioner of Major League Baseball. Now, before this guy in 1919, there wasn't such a role. He was brought in, because there was a great feeling that there was a lack of trust in terms of the integrity of baseball, in terms of the actual game being played fairly. What had happened was there was a huge scandal and this is sort of reflective of what's going on today globally in terms of soccer and cricket that it was felt that the players in the World Series had fixed the game. And so, fans wanted someone to come in, and here's Landis who was a federal judge, to come in and bring integrity back to the game. So this was the idea of the initial commissioner, not business-wise, but to bring back confidence to the game. So, and he also has kind of that, that look of this is a guy we can trust. You know, the, the gray, kind of swashbuckling kind of hair in the light. So, League Commissioners, let's, let's think about this I said that the initial thought was not about, about money, but certainly, these commissioners now have a little bit of money on their mind in terms of the amount that they earn. And this a good spot to, to pause as well, certainly the, the, the people that work for them in some sense, the, the players make tremendous salaries, and we'll talk about those a bit later on. But, this was kind of brought to light when people became aware of the salary that Roger Goodell had made in the last published period was right at $29 million. So it's interesting to look at his salary compared to those $100 billion companies that we talked about earlier, and to see that his numbers, bigger than Jamie Dimon's who runs J.P. Morgan, one of the $100 million, $100

billion companies, $2 million less than the number earned by the CEO of IBM. So, it's striking, at least something to be aware of, how highly compensated these individuals are? But part of what you should be aware of, too, is the difficult task they have. And, some of the biggest issues that have faced society have been dealt with by sport. And I alluded to the whole issue of match fixing, which is an issue that's permeating the world, and also you think about drug testing, and you think of performance, performance-enhancing drugs and the place that it has in, in the society. In American sports and across the globe, I'll point out in a moment, the idea of racial justice has been one that's been important in sport. The commissioner during the time of the integration of Major League Baseball in 1947, AB Happy Chandler, there to your left. Was instrumental in, in some sense, allowing Branch Rickey, featured there with Jackie Robinson, to sign to actually become the first African American to play Major League Baseball. And when I say that, that sport has this broader societal impact and that commissioners can play a role in making change take place beyond sport. It was not until the mid-1950s that the famous case, the United States Brown versus Board of Education actually allowed the rest of society to legally integrate. So, in many ways, sport is pointed to as leading the way. we've got the same sort of issue taking place in Europe today. I mean, here on the left we have Sepp Blatter, the leader of global soccer, who's been confronted with this issue of racism on the soccer pitch. here, you have Mario Balotelli, who's been kind of the face of this kind of problem, where in Italy and other locations some of the most rudest racial acts have occurred, in terms of throwing bananas on the field, making ape noises, and the like. And so, here we are a full, half decade after the integration of Major League Baseball with Jackie Robinson. Where a sport is leading the way in dealing with an issue, in a part of the world, where race issues are relatively

new in terms of being dealt with in the same way the United States had to deal with it in the, in the 1940s and 1950s. So sport and the idea of being a leader of a sport takes on a bigger burden than just making sure the league and the teams are profitable. Today, the biggest union in the United States is a higher level kind of issue, so it's not so much about getting the best players on the field of play. And there's rarely any kind of debate about the idea of is the right player out there? And because, in that sense, the team owners and the coaches are driven to win and as we talked about the revenues are increased with greater success on the field. the two examples that I, that I have here is, is first the, the, previous commissioner of the National Football League on that photo on the left. He's the guy in the red tie on the, on the right, Paul Tagliabue. he was in office when what's called the Rooney Rule went in place. And, and this was, the sport of football saying you know we still have a problem. The problem that exists now is, we don't have enough people of color that are actually in leadership positions on the field of play as head coaches. So the Rooney Rule mandated that at least one person of color be interviewed for every opening. And the rule had a tremendous effect, there have been some revisions recently, but in terms of providing opportunity for people that weren't present in terms of leadership positions in the sport of football. Now, baseball has a unique kind of problem and that you see Commissioner Bud Selig there on the right. Baseball's problem the difference with baseball is the, they're certainly concerned bout leadership positions, but there's a decline of African-Americans on the field of play. and, and it is some debate about what the height was. At, at one point, there may have been as many as 19% of the players in Major League Baseball that were African-American. And this, this distinction became a little bit grey and, and record keeping sometimes was promoted as maybe being close to 30%, and included in the number

of African-Americans, often were black Latino. So Dominicans, Venezuelans, Puerto Ricans, others were lumped in and it wasn't until recently. That there's been a dissection of this and a realization that, well, maybe it was a high of 19%, but whatever it is, we're now down to a low of 7 or 8%. And, and that's problematic for the business and it's problematic for social reasons. So Commissioner Bud Selig has formed a task force to seek to increase the number of African-Americans playing the game. You can certainly debate whether or not that's something of value for modern society, but it's the kind of issue that sport is having the opportunity to deal with that other businesses have not had such a visible opportunity to confront. So, let's switch over from that leadership level to the ownership level and think about why people want to own these teams. What's the reason behind it, why do corporations own, and why PE, why is private equity, why are enterprises that manage people's money, private equity, investing in teams? And what are challenges that these individuals and entities confront. So first, financial gain you know the best way to think about sports franchises and you, you can certainly think about this in the US, think about this with global soccer. And I, and I think also in the Indian Premier League in terms of, of Cricket is, you can probably make money off of that franchise if you can afford to get in and hold it for a long period of time. Now, the numbers that you hear, as we talked about in the last session, the Los Angeles Dodgers for $2.1 billion. Now, in the 1980s, you could buy a Major League franchise for $10 million. Certainly, a lot of more people could contemplate the idea of purchasing, purchasing the franchise and holding on to it. And in the cash flow for these businesses, it's very difficult to be profitable on a year-to-year basis, although, we've seen the Green Bay Packer numbers where there is profit to be made. But it's almost universally the case that you can be successful if you are ever able to sell the asset if you've held it for long enough.

So this is, this is the kind of reasoning this is why the super rich of the world, we'll talk about some of these people, are buying these franchises. It's, it's an asset. for you and I most of us to think about paying $2.1 billion for a franchise is something that's impossible, but if you are managing large sums of money, if you have money parked in one place, oh well, is it just as good to park that money in a franchise, in an asset that has been proven to be financially successful? other issues come into play as well. and we'll talk about some of these along the way and we'll talk about them them in, in some depth as we go forward here, too. So are there other reasons to own? I mean, apart from the money-making reasons. I mean, the, the, the last slide we, we've talked about this idea of holding the asset, tax benefits, other benefits that come to play. certainly it, it, it's the world's toy chest. If you can afford to buy a sports franchise, you become part of an elite group. You have really a product that very few people have. You have the opportunity to have success, to be competitive in maybe a way that if you're financially successful, is something that has driven you all along anyway. And then here's a way to be highly visible in terms of the levels of success that you might be able to have. So who are some of these people around the world that own these teams? And why do they do it? First, let's, let's kind of, let's go around this graphic and talk about, identify who these people are, and many of you are saying, I know who that is. Others are saying, I don't know who that is. So the first upper left-hand corner, Grandhi Rao. He is the owner of the Delhi Daredevils in the IPL, the Indian Premiere League. next to him some of you may recognize the Bollywood star Shilpa Shetty. She is, along with her business partner and husband, a portion owner of the Rajasthan Royals. And they paid for that interest, 15.4 million back in 2009, that's for 11%

interest. Next to her certainly U.S. sports fans recognize Mark Cuban. He's a guy that made money off of an internet.com business. hit the billionaire level and decided that one of his big ventures would be in sports, and many people know that he's taken a dominant role in terms of his presence and which is not an unusual kind of direction that the modern day owner new sports has taken. the bottom left-hand corner, you gotta be a real sports fan to know who this is, this is George Halas, one of the original owners in the National Football League. And really, in, in more of the traditional kind of model that we used to contemplate and I have him there to reflect on it. That it used to be guys who were former players or who were former coaches or Halas played, coached, and then became owner of the Chicago Bears. And this was a some great families in sport were close to that model where or at least similar in terms of that either played the game or owned from the beginning. The Rooney family in Pittsburgh with the Steelers, and for years the O'Malley family with, with the dodgers and, and others around the country. The, the next party you see there has had a great deal of success with Manchester City, Sheikh Mansour bin Zayed. and they've also, in recent times, made an additional purchase and they've partnered with the New York Yankees to put together and acquire a new Major League Soccer franchise, the New York City franchise in the MLS. So we'll look to see the success of that, that club comes about. And, and finally and this is another source of investment in sports, we have Roman Abramovich. He's the 50th richest person in the world and he owns Chelsea in the EPL. So, these are the, the kinds of characters individuals that have moved into owning sports and with George Tallis's example people have historically have owned sport franchises. Now, all of these people have different priorities, different reasons about why they made these acquisitions as we said Alice just because that's what he did all his life. Others we're looking for some kind of

finical success. they were looking for the assets that came along with the club, and and for others, it was, I described just more of the this is the competition that I want to be involved in. So let me go through some examples of the types of owners, we gave you a kind of a highlight of, of who some of the owners are but, but an example of the types of owners in different kinds of settings. So it, it's, it's going to be the case that some people own individually, some as a group and in other formats. So we'll, we'll talk about those just briefly. So this is a, a photo of Dan Snyder, the owner of the Washington Redskins. The more traditional model. kind of an extension of the old George Halas model. The individual or the family ownership model. And he is a, an owner that is involved very actively in a day-to-day basis with, with the franchise. Becoming more and more difficult to find this kind of person, though. if typical franchise in the United States now might sell for close to a billion dollars. If not at the Dodgers number of couple billion dollars. There's not a lot of individuals that are able to do this. this is though, the model that's preferred in most of the leagues. What the commissioners prefer is to be able to look to an individual Like Snyder/g, and have them make a decision, not have them go back to a board of directors or to an ownership team. And to make a decision on the spot, which was traditionally the way the National Football League and other leagues operated. So here's an ownership group. These are the owners of the Los Angeles Dodgers. And kind of interesting too on the far right there you've got Magic Johnson who is also important to highlight, an African-American owner a rare occurrence in American sports of the franchise. but this was also a group that was funded by the Guggenheim Partnership. So this was an investment fund that was involved in, in funding this. So, but these are the key owners, and it's a group, and often just because of

the finances today, it's going to be hard to find individuals who you'll find combinations of people coming together to buy a team. The other model and this is illustrated by the Red Bulls of MLS, and you'll see this elsewhere. Some leagues allow corporate ownership, and you want to think about, why is it important for a corporation to do it? So, the Red Bulls have found ways to use the relationship and use the name in terms of extraordinary marketing. Other efforts have been made by corporate entities to, to do so. many in the U.S. will remember Disney purchased the, the Anaheim hockey franchise, the Mighty Ducks. And at the time, they all there was actually a movie franchise with the same name, so it was, it was pretty valuable for them. FOX has looked at the ownership and been involved in the ownership FOX broadcasting. because of that relationship you can think of in terms of broadcasting and sports and Comcast as well in terms of ownership of, of Philadelphia franchises. So corporate ownership, certainly is much easier financially, than individual ownership. and there's certainly some upsides that can take place as well. So for an investment in sport, this is another increasing activity we've got a, the photo here of Mikhail Prokhorov who is the owner of the New Jersey. Former New Jersey Nets, now the Brooklyn Nets. so a successful Russian business person who made an investment in one of the leading American sports. But we've also seen ownership by foreign corporate entities, Chivas in terms of their investment in MLS and Nintendo in Major League Baseball. We highlight there some of the issues some of the problems that you can have with foreign ownership. And that really is can you monetize the business in your home country. So Nintendo certainly had success monetizing major league baseball in Japan. Share this in terms of Major League Soccer in Mexico and Prokhorov is looking at ways. And certainly has begun to take greater

steps to be successful with the NBA in Russia. So here's just a listing of some of the global investment in English football. And if you look at this, I think i one way in, in the time the slide is up, to think about this, is just to look at the different countries that are there. I'll look at the different countries that have invested. So you see, the US has a pretty dominant space, there. You see Russia in there, again, several times. but you also see Egypt, India, Malaysia, Hong Kong Spain, Thailand. So, so it's a pretty broad, broad based. Of uh,successful individuals in different countries that have said this is place we should invest. And this is a very good example of thinking about sports and this, this whole flat world kind of setting that you have many options and you certainly think about that in terms of the U.S. owner. And if you look at the names of some of the U.S. owners. They also own franchises in the United States. so, so that's the trend too, but this is also. If you think about horizontal integration, at least in terms of, you have teams, you have enterprises that are in the same business. So can you apply the knowledge that you have from success in one sports franchise to another, and that certainly in the thinking of many of the U.S. owners that are listed there. Well one of the problems though, and our friend here, Donald Trump. Is the big reminder, is that something seems to go wrong when rich people become owners of sports franchises. When they move away from their day to day business, what kinds of problems might they have? And Donald Trump was owner in one of those leagues that I showed initially that failed the United States Football League. And part of the failure of that league has been pretty highly publicized over the years. And it was a dispute with, with Trump and some other owners about steps that that league should take to be successful.

And it was a spring football league. Football is generally played in the United States In the fall, and into the winter. But this is a spring football league that did not compete head to head with the National Football League, and had some level of success. So in Trump's mind, that was an important issue, but the debate, that came up. was whether or not the team, the league, should move to play in the fall, to directly compete with the National Football League. And many point to that moment being the, the point where there was kind of, a business failure on the part of the USFL to leave what was a blue ocean kind of, clear. Opportunity in the spring to go and compete directly with the National Football League. So we've talked about some of these ownership issues, you know, why would you take those steps? So in the move from spring to fall, is it just ego alone? That you want to say you can compete with the true leader in a sport. So the, the, the kind of losing track for what it takes to be successful in business is something we sometimes see in ownership. Spending too much per player, the ideas, as we'll talk about, a bit later on, of having to put salary caps in place to control spending by owners. To put in rules of financial fair play, where people who have been successful in business otherwise, why would they step out of line thinking that they spinned beyond reason in some sense? That they can be more successful on the field, and they forget about the business side of success. So, in terms of a business, as I've said, if you've got the wealth, holding onto the franchise for a long period of time is, in most of the successful established leagues, is going to bring about financial success for you. Here, Jerry Jones makes kind of an interesting comment that has stuck with me, the idea that it's a great business but this whole idea of having to win games gets in the way. So, the ego, the idea of being competitive. I think Jones kind of highlights this here.

The owner of the Dallas Cowboys, in that the idea of having to win sometimes gets in the way of traditional business logic. So, finally, I want to touch on these integration strategies, and things to think about. I, I highlighted this sum, where we looked at the ownership, by US owners, in European Soccer. The idea that you understand how the business operates, so you want to go further with it. We'll talk about vertical integration and a couple of other sectors. But it is the idea that you just don't own the team. But you own facilities, you own the broadcast enterprise. So in, in a sense that you're going to control the dollars and increase your revenue by being involved in other business. So that's a piece to begin to think about, if you don't think about greater global success. so why are owners doing this when they're always looking for additional revenue streams? And, as I said, we'll highlight this some more in future modules. But I want to make sure that you begin to think about this. That you think about what can you do beyond be successful on the field of play. What can you do beyond these initial Popularity issues. What other steps can you take to expand your business? So finally, I want to go back to this we looked at this in the first session and really just want to go back to success. And we didn't have it the first time we listed these, but I've highlighted for you in red the idea of globalization. That you can make all this money in the first column, that you can spend as little as you like. But the greatest place that remains for further success is globalization. So to recap and, and close out this session, we've looked at leadership, we've looked at ownership We've looked at this whole idea of integration, both vertical and horizontal. And we've begun to expand some of our thinking about how these franchises, and how these leagues can be successful globally. So in the next module, we'll focus on The

first key revenue driver that I want to highlight, and that's media rights.