The NBA

0:00 By the way, I'm excited for this episode. I got this CO2 detector to tell me how many parts per million are in here when I close the door in the studio. I'm kinda scared of what it's gonna get up to based on what my Peloton was the other day. That's awesome. It may be the case that I actually get dumber toward the end of episodes, which obviously is bad for a podcast that ends in grading, but I w I wanna see if that's the case. That's amazing. Welcome to Season 7, Episode 4 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I'm the co-founder of Pioneer Square Labs, a startup studio and venture firm in Seattle. And I'm David Rosenthal and I am an independent angel investor and startup advisor based in San Francisco.

0:55 And we are your hosts. Today our tech focus podcast takes a turn to cover a different powerhouse business. The National Basketball Association. And whether you have been following the playoffs in the COVID bubble at Disney's wide world of sports or not. There is no better time for an absolutely exhaustive deep dive on the history and strategy of the NBA than

1:18 than the week of the finals. So how did David and I get here? Well, our original plan was to cover the business of the Jordan brand and And halfway in we realize that the story of Jordan is really a part of the Nike story, and we want to cover that another time. But as we dug in, we realized that there's actually a great story in the NBA itself, and it's one that's very relevant through an acquired lens, how it built itself from very much the underdog of major American sports, started fifty years later than the others, and now it's the

1:48 second most popular sport in the world globally after soccer, or as many of you call it football. And it has done so using a playbook that is very much in the acquired wheelhouse. Yeah, spoiler alert, it is uh quite appropriate that the NBA is uh Playing in the Disney bubble right now because there's so so much that we've covered about Disney on these shows over the years is gonna echo here with the MBA. Indeed. So with that said, today we are bringing you a story of a business at its inflection point, making huge bets for the future compared to other major sports leagues. The average team valuation has grown a staggering six X in the last decade, which talk about an amazing investment return just on its own. And today we will try and understand all the factors that have made that so. Yeah, these teams used to trade for like

2:41 twenty million bucks and now I think every single MBA team is worth more than a billion dollars. Yep, all all triggered by Steve Ballmer's two billion dollar purchase of the Clippers, what, five ish years ago? Yeah, it's covered on was that like episode thirty four of Acquired or something like that. If you know the number, that is very impressive. But yes, quite, quite early. So as always, if you love acquired and you want to hone your own craft of company building, you should join the community of acquired limited partners. You'll get access to the LP show, the bread and butter of the LP program, where we dive deeper into the fundamentals of company building and investing, in addition to our monthly LP calls, where we talk with all of you directly, and of course our book club and our Zoom calls with the authors. So uh exciting announcement on that front. Our next book club will be

3:29 reading Brotopia by Emily Chang of Bloomberg TV fame, and Emily has graciously agreed to join us and all of our LPs for a discussion on the book. next month. So LPs keep an eye out in your email for The announcement on that. So excited. So if you aren't a limited partner, you can click the link in the show notes or go to acquire dot fm slash LP and all new listeners get a seven day free. Trial.

3:55 All right listeners. Now is a great time to talk about a new partner of ours here on Acquired, Lagora. The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chat bot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do.

4:28 operate with obsessive customer focus. They embedded inside a massive law firm. For months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Legor's Bethere is interesting, since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work.

4:59 And this means that the pie can grow even as each individual task takes less time. And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and deliver of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Ligora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries. And crazily, they went from one million

5:48 to a hundred million in ARR. In about. Eighteen months. truly insane numbers. And that is the real test.

5:56 Plenty of things demo well, but the question is whether a busy associate actually reach for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com slash acquired. And just tell him that Ben and David sent you. Now into the episode on the NBA. Time indeed. All right, so one caveat before we dive into the history of the caveat, David, all the time. Oh I know the c well, we okay, but this is an important one. Listeners, if you have ever met Ben or me in person, it will become immediately obvious that we

6:35 didn't really play basketball growing up and we are uh casual fans. Did you really? Just wasn't wasn't pretty. Oh yeah. Like rec league uh I think I scored um Ten points, one season. Oh, nice. Like total game or total. Well, actually, I had the best basketball end of my career ever. I played seventh grade J V basketball and I was a total scrub on the bench. And in the last game of the season they like the sc scrubs got to play at the end of the game. I was like, all right, I'm doing this. So I just like launched up a a three pointer with two hands. And it went in and switched and I was like, done, I'm never playing basketball again. Like I'm going out on top. That's amazing. I did in middle school transition uh as part of my duties as being the light and sound person for the theater shows, which Uh part of the responsibility is there were I did run the scoreboard at Basketball Games Inmodest. Oh nice. Yeah. That's uh

7:30 Pretty experienced in basketball technicalities. show is not gonna be about the history or analysis of the game itself there would be there are much, much better sources for that than acquired But it is gonna be about the business history and analysis of basketball in the MBA from uh, you know, one man during a snowy Massachusetts winter in eighteen ninety one to now the second largest sport in the world consumed last year by an estimated one billion people. I was kind of hoping you would only go back to the start of the league and not actually the start of

8:06 basketball at all so I can like go back earlier than you, but uh nope. Fantastic. All right. So what are we talking about? James Nate Smith, Canadian American. Yep. Who was he? Well he was a a Canadian American. and who found himself teaching at the Young Men's Christian Association Training School. what would become both the YMCA and Springfield College specifically, in Springfield, Massachusetts, during the winter of eighteen ninety one, and he was the phys ed teacher there. He was trying to

8:41 Find ways to keep his gym class active during these cold, dark Harrowing New England winters. And so he goes through kind of all the existing like indoor games and things he can do in a gymnasium. He doesn't really like any of them. And he's like, Yeah, maybe I'll just come up with my own. So he writes down some basic rules. The crux of this little game he invents is that he takes a peach basket and he nails it to an elevated track that is running around his uh his gymnasium there in in Springfield. And he

9:13 Kind of invents basketball. And I say kind of because This peach basket that he nailed up to the track. Uh first I don't know if there were one or two. I think there might have only been one. I'm not sure. But he didn't take the bottom out of it. So it's literally a basket with a bottom so when the balls and by balls I mean soccer balls that they were playing with went into the basket they had to stop the game and somebody to go climb up there and get the ball out of the basket. That's awesome. Uh isn't that awesome? A couple other things about this game that uh that he invents. Uh there's no dribbling So it's kinda like ultimate frisbee with a soccer ball. When once you touched the ball and you had possession of it, you had to stop. You couldn't

9:57 Move. The only way you could move was by passing the ball. There was also no set number of players on either side. So it's just like hey, how many kids are in class today? Great. We're gonna divide you up and uh put you into this game. And on half court ball, that sounds like uh that'd be a crowded space. But nonetheless There's some magic to this little game. And

10:19 People like it and it ends up spreading like wildfire through Y MCAs and other Christian organizations in the US and Canada and then very quickly internationally too. So we're gonna come back to the game in a minute, but before nineteen hundred, like only four or five years after eighteen ninety one when Na Smith invents this, the game lands in China through the YMCA organizations there. Actually still today, the oldest existing basketball court in the world is located in China at a former YMCA there. Which also how crazy is that there are Y M C A is

10:57 in China before nineteen hundred. I know. Like God amazing. Like it's like crazy to even think about that. This is like our very first playbook theme of the episode, all the way at the very front of history and facts here. What an amazing distribution channel. I mean, we talk a lot about uh what's more important, the product or the distribution. And this is one where

11:19 the product had found product market fit for a variety of reasons, one of which was it didn't take that much equipment and it wasn't it wasn't full contact. So people could get easily get on board with the idea of this is good, it's healthy, but it it you know, it's it won't injure you. But distribution is the reason why, you know, it it permeated China and permeated the whole world so quickly. That missionary zeal. Also on on the contact point, it's important to note too. It's not just men that are playing this. So women start playing basketball right at the beginning, too. And it actually becomes just as popular with women. It becomes I think pretty quickly the largest women's high school sport in America. Oh wow. Yeah. And then is is played in colleges. Unlike, you know, the other major American sports has a long history of both sexes playing. I gotta give one anecdote. I wasn't gonna bust this out, but this is uh just a great quote from an Atlantic article that we will link in the show notes.

12:17 Some of the first groups that embrace basketball in China were college students, Western minded scholars, and most importantly, members of the Communist Party who love the sport for its cohesive power. During the long march, the Red Army storied year-long retreat in the 1930s to evade the nationalist army, communist soldiers and officers played basketball to lift their spirits and solidarity. It goes on to say that the party continued to support the sport after it took power in 1949 to the During the Cultural Revolution, Mao declared war against almost all Western bourgeois affections, from classical music to novels, but he never wavered in his s support of basketball. So it's just so crazy to me that like in China amidst this revolution, you know, for the fifty years after this, that basketball sort of thrived even though f the freaking NBA hadn't even been started yet. Well, hey, who's the uh number one ambassador to North Korea these days. Dennis Rapman. Uh but no, it's a I mean we're gonna talk much more about basketball in China later in the episode.

13:19 Yeah, it really is this amazing story of product market fit plus distribution. And on the on the product market fit, they do eventually, uh within the first ten years or so of of the game, most of the kinks, the the basic kinks get worked out of the game. So in the late eighteen nineties um some Yale students, of course those, you know, uh plucky Yale students, uh there's a loophole in the rules. They decide they think they can advance the ball themselves by passing it to themselves. And thus the dribble is born. Shocking that the I students thought that they could you know, find a loophole in the rules that they could exploit to advantage themselves. And then the the number of players, the five players on each team, get standardized because American football was the big collegiate sport at the time. And at the time American football was played with ten players. And so football teams in the winter, once it got too cold to play football outside, they just come in and play basketball and so you just divide the team in half and

14:18 Boom, there you go. Five on five. That's how it happened. Well, speaking of, do you know what uh James Naismith is also credited with inventing? Ooh, I don't know that. Am I actually gonna get one that David Rosenthal has not? I think you are, I think. We'll see. We'll see. He is also the inventor of the football helmet. No way,

14:36 Yep. Dude. What a guy. Quite the gym teacher. Man.

14:41 Wow. What an illustrious career. So Basketball ends up really taking off around the world pretty quickly, as we've said, and in America, especially in high schools and

14:52 colleges becomes the winter sport in the American collegiate uh sports landscape. But interestingly, unlike certainly unlike baseball, uh And football had its fits and starts with professional leagues, but certainly started much earlier than professional basketball leagues. Professional basketball leagues don't really take hold, but what does is professional basketball. Teams. I didn't know this till starting the research, but the Celtics, the original Celtics, actually started as a barnstorming squad uh in Boston. What does that even mean? So it was like a traveling team. They travel around the country and play other teams in kind of exhibition games around the country and of course two other teams that start right around the same time, we're in like the twenties, thirties here, are the Harlem Globetrotters.

15:41 Uh who actually are from Chicago. They don't move to Harlem itself until the sixties. Yeah, it was like a branding thing. I did know that they pre-dated the NBA and that they were not originally started as this like goofy exhibition team, but like No, they were probably the best professional team in America and they were legit and played legit like real games. And then a team that actually was from Harlem was the New York Renaissance Five or the Rens. So both the Globetrotters and the Rens were all black teams and were wildly popular. I mean, both of them would play like two hundred games a year across the country and then eventually around the world just uh exhibiting, you know, great professional basketball. And no league. Like we made it all the way through two world wars in America before we had the semblance of a professional basketball league. Yeah. I mean that's That's kinda how things were until right after World War Two. In fact, exactly two years to the day after D Day, on June 6th, 1946, the Basketball Association of America is founded in New York City.

16:49 by drumroll. The owners of a bunch of ice hockey arenas in the Northeastern and Midwestern United States and Canada who wanted to make more money from their arenas on the nights when there weren't Hockey games happening. This is just an amazing full circle thing where, you know, now the Ice hockey owners are trying to get sort of the off nights of the N VA owners arenas so that they can, you know, make it make a little bit of money for the ice hockey teams that are playing. And of course that sport's getting more and more popular now goes Seattle Kraken, but like what a incredible reversal that That's why they started the let's let's monetize these off nights for the hockey teams. I I didn't even think about this growing up. You know, I I think now

17:36 More so these teams have their hockey and basketball teams. Sometimes they share an arena, sometimes they often they have their own arenas. But growing up, of course, all like hockey and basketball teams shared an arena and I never thought about it. That's why basketball and what would become the NBA was like a subsidiary of what would become the NHL. But I am certain that any basketball arena that was around when you were a child was more built to be a basketball arena than I than I did. Yeah, probably. Oh man, the spectrum in Philly. That place was a dump. Uh back when arenas had real names. Yeah. This is a pretty big deal, though, because

18:12 Th there had been some other early attempts at professional basketball leagues, but none of them worked. And one of the big reasons that none of them worked is none of them had good venues, either in terms of the cities that the teams would play in, but more importantly, like the arenas. Like there weren't they didn't have access to big enough arenas where they could attract large enough fan bases to support economically the teams and and the league. The American Hockey League was the the league that founded this. They take the current Commissioner of the A H L Maurice Poteloff and they say, Hey man, we're gonna give you some extra job responsibilities. So like go set this thing up. Um, you know, make us some money on the off nights. And this is really you know we're gonna talk about this here and amazing how much, uh wonderful how much things have changed. They also were like, Hey, make sure that no black people play in this league. You know, this is nineteen forty six when this was set up. Uh Jackie Robinson

19:09 wouldn't break the color barrier in baseball until the next year in nineteen forty seven. I mean A Full stop. That's like Awful, terrible, racist, wrong, all of these things. But two, it's just like

19:22 Stupid because the globe trouters and the wrens like here you've got these examples of professional basketball teams that have the best talent, that make the most money, and are by far the most exciting, you know brand of basketball available anywhere. Right. And these guys are letting racism get in the the way of good business sense. Yeah. They're like, nah, we don't want any of that. That's crazy. So nonetheless. On uh the next year. Actually no that same year. The first

19:52 professional basketball game in what would become the NBA takes place. in Canada, appropriately, given Nasmith's origins, in Toronto, where the Toronto Husky's hosted the New York Knickerbockers at Maple Leaf Gardens. in uh what would become the first NBA game in history on November first, nineteen forty six. And and one of these teams uh has a storied franchise afterwards and the other one makes it what, a year? Yeah, the Huskies were a one or a two season team. Yeah, I don't think they lasted very long. And in fact the whole league is You know, kinda doing

20:26 Okay, it's this promotional side thing for the hockey league. So a couple years later in nineteen forty-nine, they decide they need to they need some more cities, they need some more teams. They merge with a rival league called the National Basketball League, the NBL. And Together they changed this merge the name of this merge league to the National Basketball Association. And thus the NBA is officially christened in August nineteen forty nine.

20:53 And in uh more typical boneheaded owner fashion in this this time. It takes them five years to come up with the idea for a shot clock. So like unlike the Globe Trotters and the Rens, where they're playing real basketball in the NBA at this time, whatever team was leading in the fourth quarter would just like Sit there and hold on to the ball as long as possible. Whereas now it's like, why even watch it until the fourth quarter and that's when the game really starts. It's like crazy to think about the strategy being try and be You know, the one in the lead by the time there's twelve minutes remaining, so you can run the clock. So they take some five years to come up with that idea, then another three years to test it and actually

21:34 implemented it and decide it's a good idea across the league. And then as I said, in nineteen forty seven, Jackie Robinson breaks the color line in baseball and wins the first rookie of the year award that year. And Clearly this is a great thing and lots of black players come into the major league baseball, but it takes the NBA owners another three years after that to even sign the first black player in nineteen fifty, which was Harold Hunter with the Washington Capitals. And the capitals cut him in training camp that year. Uh several other black players did end up joining the league and playing that year, but like Come on. Not off to a great start. No, not off to a great start. Do do you know who the uh the first uh non white player in the league was? It was actually not a black person. Yes, I don't have his name written down, but it was a Japanese American player, I think, right? Yeah, Wataru Misaka.

22:28 in uh nineteen forty seven, forty eight, so a couple of years before that. Yeah Crazy. Another crazy thing that'll be a uh flash forward to today is in the first couple years of the league, in the f in the mid-nineteen forties, the league created a salary cap for the first time in a in sort of a hopes to create a little bit of a fair playing field among their very small number of teams. I think maybe maximum eight teams at this point. They just kept it for a single year because the the whoever the I I assume the Knickerbockers, but whoever the teams were in the largest geos basically said, uh uh, we're not doing this thing. Couldn't help themselves think violating Yeah, and it didn't come back until n the nineteen eighty four, eighty five season. So then we went like forty years with no salary cap. Brainchild of one David Stern.

23:14 So anyway, the leag bumps along for another few years. And then In nineteen fifty seven. The big moment happens. The Celtics draft Bill Russell and he becomes the first there have been other like superstars in the NBA before that, white superstars, but he becomes the first black superstar and the first like

23:33 real modern, I mean Bill Russell's a legend across so many dimensions of the game uh player in the NBA. And then the floodgates open after that. So Red Auerbach was the legendary coach of the Celtics. Red retired, I think during the like 66 NBA finals. And named This is back when Coaches still had like way more power within the the organizations than they do now. He named Russell the coach of the Celtics while retiring during the finals. So Russell becomes he be the player coach of the Celtics from 66 to 69. He becomes the first blackhead coach of any North American professional sports team and the first to win a championship later in his in his tenure. Just an amazing guy. He would I think President Obama would give him the presidential medal of freedom later in life. Did you know also he lives on Mercer Island these days in Washington? What?

24:25 Yeah crazy. Two miles from my house. That's wild. Here's another thing, like right during this era, speaking of the Celtics, that I sort of realized while I was digging through this. they were possibly the biggest dynasty in the history of sports. In that twelve year run from nineteen fifty seven to sixty nine, the Celtics only had two years where they were not the NBA champion and only one year where they weren't in the finals. There's a lot of talk about the Patriots in the NFL from two thousand to today, but they only played in half the Super Bowls those years.

24:57 And the I think the only comparable dynasty in major US sports is probably the Yankees in like the mid thirties to mid fifties, but still not nearly as dominant as the Celtics were in that era. And it sounds like I think you said in sixty six the coaching transition happened. So you know, still reigned Champion through multiple coaches. Well then, immediately after that would be the beginning of The Celtics. Lakers rivalry. Will Chamberlain wouldn't go to the Lakers until sixty eight, I believe. But in nineteen fifty nine, he was drafted and joined the league with the then Philadelphia Warriors, who moved to San Francisco. uh a couple years into Wilt's tenure there. And that just like like any listener who knows anything about Wilt Chamberlain knows like there's so many crazy stories about Wilt and he was

25:47 A character uh extraordinaire. If you don't know about Will Chamberlain, like Pause this episode. Go Google him now. Uh just only still the only player to ever score a hundred points, right? Scored a hundred points in a game, uh, had over fifty rebounds, I think multiple times. I think he also at least once, if not multiple times in his career, averaged over fifty points a game for the entire season. It's I mean so many stories. My favorite one though is uh so Wilt played college ball at the University of Kansas, but he wasn't super happy there and he wanted to leave and start playing professional early, but the NBA didn't allow it at the time. So he left after his junior year, joined the Globetrotters, and played for a year for the Globetrotters. Did you know this? No. This is amazing. And so during what were the Globe Trotters at that point? Uh they were still really big at this point. And were they doing like what they do today? They sell tickets, they come to town. It was more of a show than it was like an actual game. And uh and this is amazing. So during that season in nineteen fifty eight, when Wilt's with the Globe Trotters, they do a sold out tour of the Soviet Union. This is like the height of

26:54 The Cold War. They travel to the Soviet Union. They end up playing in front of Nikita Khrushchev in Moscow and Wilted like it's this, you know, crazy Harlem Clobe Shotters, like zany stuff. There's this part in the in their stick at the time where uh Uh, I forget the name of the captain of the team. He would pretend to like faint and pass out on the floor. And then Wilt was like so big and strong that he would go up and pretend like he was gonna help him up and instead, like literally throw him into the air, like wrestling style. So they did this For Nikki De Kruz to have in Moscow, like crazy. Unbelievable. What a global sport. Oh my God. Amazing. And just to paint a picture, too, of like when when Wilt came into the league. So I think that was like late 50s, but let's let's just rewind a couple of years. The league, I think it was the 53, 54 season, was only eight teams. It's worth walking through the eight just to sort of like know where they ended up today,'cause as we know, today the NBA is thirty teams and should be thirty one with Seattle. When is that expansion gonna happen, by the way? It's been uh a couple of years out for many years now. So they've got the New York Knicks, the Boston Celtics, the Philadelphia Warriors, which as you said would go to be at the San Francisco Warriors. Then the Oakland Warriors, then

28:06 Now back to the San Francisco Warriors. Yes. The uh Minneapolis Lakers, which is where the name Lake comes from. Like LA is not known for its lake. Minneapolis is, or there are thousand lakes. The Rochester Royals, who would then go on to become, I think, the Sacramento Royals, and then finally the Sacramento Kings, and the Fort Wayne Pistons, which as you can as y as you know, became the Detroit Pistons, but I always thought like, Oh, of course Detroit is the Pistons because Detroit is the you know, that's where they make all the cards. I found that in the research too. I was like why the Pistons in Fort Wayne. Fort Wayne, Indiana. Yeah. I mean it must have been that that that there were also, you know, car factories there. the Tri-Cities Blackhawks, who are now the Atlanta Hawks, but the the Tri-Cities were In Illinois.

28:54 I think they were originally the Buffalo Bisons, uh in Buffalo, New York, and then went to Illinois, where they were the Tri-City Blackhawks, and then eventually after sort of moving around a bunch, I think Milwaukee, St. Louis are now the Atlanta Hawks, but that they've had quite the traveling journey and finally the Syracuse Nationals, which do you know who that is today? Ooh. Is that Uh no, I don't know.

29:20 That is the Philadelphia Seventy Sixers. No way, I should know that. Yeah, so they they were I think they stayed the Nats, yeah, when they moved to Philly, but then eventually changed their name to the Seventy Sixers. Nice. Interesting. It's so funny. I mean, like these teams that we now think of, like they're all billion dollar plus franchises. We think of them as so established a bit like It was the Wild West back in these days, but Totally. And there were only eight of them. I mean and when you talk about the numerical, just to like paint some order of magnitude stuff for people, even in like

29:52 The eighties, I think like nineteen eighty three, the salary cap for a team was something like three and a half million dollars. Three point six million. Yep. Yeah. So like we're still twenty five years, thirty years before that There's eight teams, y you probably, you know, make more money cleaning your local gym than you than you do totally being the player. This is a a labor of love. Wilden Russell are in the league. We're now in the sixties.

30:18 You brought up economics. They're these big personalities. They've had great college careers. People love watching them. The NBA does start to gained some in popularity. I mean, it's still very much the underdog, like football, American football and baseball way, way, way bigger than professional basketball at this point in time. But they do during the sixties, early sixties, land a landmark Five year, four million dollar

30:47 With A B C And who at A B C gets put in charge? Wait, wait, wait, wait, what year is this? This is this is in the sixties. So Iger is probably still in like high school at this point in time. Who's the legendary

31:01 wide world of sports producer that I ended up working for. R The legend, Rune Arlage, gets put in charge at ABC of like, hey, take this sport and Do something interesting with it. And of course, Rune, you know, had the wide world of sports, Monday night football, the Olympics coverage. He was He was a genius, the brand also, um

31:25 Nightline, I believe, like not just sports, but he innovated so much, like the the evening kind of magazine news shows. Uh that he brought to TV. And we're still a decade before ESPN's even founded. Yeah, not till seventy nine. This is great. So Bill Simmons in his basketball book quotes David Halberstam in his basketball book, and and Simmons is like, I know you can't believe I'm quoting Halberstam here, but uh but I have to do it. That's this is Halberstam. He says, What ABC has to prove to a disbelieving national public, Arlich believed, was that this was not simply a bunch of tall, awkward goons throwing a ball through a hoop, but But a game of grace and power played at a fever of intensity. He was artist enough to understand and catch the artistry of the game. He used replays endlessly to show the ballet and to catch the intensity of the matchups. The athletes themselves were self-evidently proud, and they liked nothing better than to beat their opponents. particularly on national television. They were in those days obviously motivated more by pride than money.

32:24 Obviously, and the cameras readily caught their pride. Even with all the money floating around today, there are many, many NBA players that are still motivated much more by pride than money. Especially because as we'll get into, while they make astronomical sums and salary from playing more than any other sport in the world. the best of them make at least as much from all of their business outside of the court than they do on the court. So all that is huge for the NBA, but still by the kind of like mid sixties into the sixties, it's still about ten x smaller than baseball. And ABC is only broadcasting the MBA um once per week on

33:03 Saturdays, I think. David, let me come in here and and say just to catch folks up on the teams at this point. So we were eight teams. The ninth team then came in in sixty one. That's the Washington Wizards, but at the time was the Chicago Packers, which seems like it has an overlapping name with uh a city that is uh I don't know, pretty close to there and uh decent rival. So uh the the history of that's that's gonna be an interesting one. Then of course the the Chicago Bulls come in. I think sixty six to sixty eight is when they really went crazy and did f like an expansion of five teams all at once. So the Bulls, the Supersonics, which are now the Oklahoma City Thunder, uh uh the San Diego Rockets, who obviously became the Houston Rockets, the Milwaukee Bucks, and the Phoenix Suns. So that's sort of what the the NBA is looking like at this point toward the end of the decade of the sixties. Yeah, and they were expanding rapidly to um Compete with the upstart. A BA, which we'll get to in one sec, but before the ABA

33:57 An actually like super, super seminal and important event happens. In the NBA in nineteen sixty four, which I think really sets the stage for So much of what comes later. And the modern business and game today.

34:14 So Like we said, ABC and Rune Arledage were starting to popularize the league, but the players were making nothing, you know, in these days. And and baseball was still the national pastime. It was about 10x bigger than basketball at this point in terms of the reach of the professional leagues. And in nineteen sixty four, During the All Star game. uh these players kinda led by led by Chamberlain and and Russell They're not super happy with how they're being treated. They really want a pension

34:42 plan from the league for the players after they retire. It tells about the time. Like the top priority was like W we need a pension play. We need a pension. Yeah, because you can't play this that long. They're not making that much money and like Then what are they gonna do? Literally two hours before the broadcast of the All Star Game is supposed to start. And this is a big deal, like early in this ABC contract. Rune Arled is putting on this big of you know national television event, the NBA All Star Game. They threaten to walk out.

35:12 And not play the all star game. Unless Commissioner Walter Kennedy at the time had acquiesces to their demands and puts a pension agreement in place. So it becomes this huge showdown, like literally two hours before the event, ABC and Rune gets super pissed off and they tell the NBA, like, look, if you leave us hanging here, like we're done. This contract is over, like good luck ever being on national television again. So under this pressure, the league Buckles.

35:41 They agree to the pension deal. The All Star game gets played, but this is the first example in any sport of players really kind of, you know, the the the forerunner of what would become the players union, unionizing, organizing, and you know, making demands of of owners. And I think sets the stage for what the now the NBA players association, you know, all the force that it would become Today. be an early precursor to sort of tilting the

36:10 balance of power and the economics to that of a fair one, which is closer to where we are today, where the the players are able to actually shine and benefit from being the ones that are actually attracting all the attention. I mean to this point, and obviously we can argue about whether that's true enough today, but to this point it really hadn't been the players who were economically benefiting at all from this rising popular sport. No, totally. We'll we'll get much more into the economics, modern economics today, but after this, this is pretty incredible. The top players like Wilt and Russell start negotiating much harder for better contracts and more pay. And

36:51 In nineteen sixty eight, when Wilt signs with the Lakers, he signs a landmark five year deal for two hundred and fifty grand per year Which is a lot of money in nineteen sixty eight. I mean, I think inflation adjusted. It's like two million or so, so nowhere near the deals today. But here's the crazy part. So The top paid Major League Baseball player at the time.

37:16 was Willie Mays. Who made A hundred and twenty five thousand dollars. So Will is getting twice as much money as as the top baseball player in the world Even though the NBA is still Ted X.

37:31 Smaller. than major league baseball. Pretty incredible. I mean also just goes to show how much the baseball owners were screwing the players at the time. And how did that work out? Is it because the Lakers owners had a bunch of money, or why were they willing to spend so much more on a player when their viewership was way smaller? Well. Probably it worked out economically. A there was no salary cap, no revenue sharing, but

37:56 And Wilt was such a like cultural Icon. Like I'm sure that the Lakers in terms of you know ad sales, ticket sales, local TV deals, I think were starting at this point in time. They were able to monetize that at probably equal, if not more, than what they were paying Wilt. Yeah. Make sense. The other part of the reason, though, why I think the Lakers were willing to pay him so much and and other people would start making so much was, as we alluded to, in nineteen sixty seven

38:28 A new rival league? gets formed to the NBA. The American Basketball Association, the ABA And this is pretty awesome. The NFL had merged a couple years before with um The AFL, I think it was. And I think that became effectively the conferences, the AFC and the NFC. The AFC. I think that's right. Yep. And so these kind of plucky entrepreneurial guys who start the ABA, they go around to a bunch of people in a bunch of cities and say,

38:57 Hey, our business plan is we're gonna start a rival league to the NBA, do what the AFL did, and force them to buy us and merge with us, and we're just gonna go into all these cities that they're not in. I love that their pitch was an arbitrage. It was like Yeah, hey, they haven't expanded to all the cities where they should have. Uh we're gonna beat them to it, and uh you're basically buying in for the pop when we get acquired. And the timing was Totally right. Because The nineteen sixty seven

39:26 Draft. Uh, it was either sixty seven or sixty eight, but I think it was sixty seven when this was all starting. There was this incredible Once in a generation prospect coming out of UCLA. The doctor Blue Alsendor. Oh blue. Okay. Correct me if I'm wrong, but doesn't Doctor J play a huge role in this? Doctor J ends up playing a huge role in this, but this is of course Lou Alsindor, better known soon as Karim Abdul Jabar.

39:51 He ends up playing both leagues off of each other. He tells ABA, I think the Nets in the ABA had the first draft pick in the ABA and the Bucs had the first draft pick in the NBA. They both draft him first. And he tells each team, I'm gonna take one offer from each. It's gotta be best and final That's it. I'm taking it. The Bucs come in with a one point four million dollar deal. The Nets were lower. I think maybe like one point two or something. So he signs with the Bucs and then the Nets are like, Wait, wait, wait. You actually

40:25 meant that that it was like best in five like we'll do how about they offer him three point six million for a longer term contract. Remember, it was just like that same year that that Wilt got a two hundred fifty thousand dollar a year deal, which was crazy. Damn, this is like Uber fundraising. This is like uh like six months later, like a ten X valuation increase. I know, like literally the same day. And Kareem is like No, I meant it, man. Like Only one offer. And so he signs with the Bucs, he goes to the NBA, still the largest contract. At the time.

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42:48 So like we're in the middle of there's been sort of like three chapters modern basketball history undergoing like great eras of transformation. We're like deep in the first one right now in sort of this NBA versus ABA battle, and we're gonna get to classifying the type of power that the NBA has later. But this incredible example of counter positioning is happening with the ABA, because the ABA, of course, you know, it's almost think about it like the XFL, but they're not being like exhibitionist about it. Their pitch really is like the NBA should be bigger and it's not, and they're slow, so we're gonna go eat their lunch first, so they have to buy us. And they're willing to do a few things like the N XFL and change a few rules so that they can get more popular more quickly. And one of the counterpositioning things that they do is their rules let them sign college undergrads, which is actually how they get Dr. J or Julius Irving and and get him in the ABA because they just go get him sooner than the NBA's rules allow for.

43:50 It's not that their rules let them sign college undergrads. They just don't have any rules. So like they actually start going after high school players, too. And this is the origin of high school players going to the MBA or the ABA first. The other things the ABA does, remember, like you said, Ben, they're they're trying to get bought, but they're also like so they're trying to be flashy, but they're also trying to really innovate in the game and and and do interesting things. The NBA up until this point, it was like a big man center dominated game, you know, Bill Russell, Will Chamberlain Kareem in his own way, although he was part of a a more modern era. Um but that was like it was big, it was bruising. That's what the NBA was about. It wasn't fast. Like it's big and bruising today, but it's fast. Like the NBA is like the you know, think about it like the the tree style of like I'm gonna stand and I'm gonna move my arms around and I'm gonna block your shots, but I'm not I'm not driving the lane muscling through and knocking guys over. Yep. So the ABA

44:46 is actually the league that first invents and and implements the three point line and perimeter shooting and fast breaks. Well fast breaks have always been part of the game, but a much more finesse and skill oriented game and of course Doctor J is like perfectly suited to this. The other thing that the ABA does is they basically invent what would become All Star Weekend, which is now such a huge thing for the NBA. Uh so they invent the slam dunk contest, which Doctor J wins the inaugural dunk contest with a Dunk from the foul line that like, you know, sends

45:25 Everybody like Brun Arledge is loving every minute of this. Yeah, he wanted a television spectacle that he could put in slow mo. There is nothing better than slam dunk footage for that. Totally. And that it wasn't until after the merger, I think, that the three point contest would be added and some of the other stuff around All Star Weekend. But that was so innovative because it was the first Sports. Entertainment content that wasn't a game. It was ancillary content to the game, but it was just as, if not more, exciting and hype building and

45:57 Televisable. Yeah. And you could build hype for weeks before and weeks after. I mean, there's just like There's so much you can talk about leading up to the dunk competition. And flashing forward to today, the the NBA has tried to replicate the success of the slam dunk contest with like a bunch of different other types. And I I think there's the skills thing. The skills challenge. There was Tuball with the um with the WNBA. And they even change the way that the

46:22 game itself works in the last couple of years. They they have never been able to replicate the success of that thing that the ABA invented way back when, which is just this amazing perfect spectacle of a slam dunk competition. It was amazing. And so like nineteen seventies too. So Actually before the dunk contest in nineteen seventy one, the MBA Waves the white flag says, All right, fine, we give up. Let's just merge and do this thing. And they've both basically been gunning for the same cities at this point. The ABA had taken some sort of strange fringe towns, like they had the Virginia Squires, which was actually a regional team, which is where Doctor J played. Uh, but then the N NBA saw this sort of coming and went crazy. And I think in nineteen seventy they went and got Portland and Cleveland and

47:10 The Buffalo Braves, which is an another Buffalo team that moved that's now the LA Clippers. Oh, we covered that on our Clips episode. Yep. Yep, which oh my gosh, listening to that early episode. But this is really when there's sort of a tremendous amount of franchises that that were added really on both sides. Yeah. So After Four years they declare truce, they stop the war.

47:34 But Remember. The NBA Players Association and the Power. of the players and the union and the they had gotten In a surprise move, they sue to block the merger on antitrust grounds because of course as players, like they're making out great. They got the ABA and the NBA bidding against each other, players are shifting back and forth between leagues, getting these crazy contracts.

47:59 They sue to block the merger, it ends up going to the Supreme Court. Uh like the US Supreme Court. And eventually settles, but it takes five years to settle. That's when the ABA just starts going crazy with all these innovations in the dunk contest and things that they're doing. And and that lawsuit really makes you think like they were right. Like there was a competitive market for their talent. And It really makes you sort of think today, like, well, oh, how is it that the NBA has a monopoly on professional basketball in the United States and that's legal? It raises some interesting questions there.

48:32 As to What is the NBA and is it a company in itself or I'll spoil it a little bit and say it's not really clear whether it is in itself a single entity or a joint venture or just a contract between a bunch of privately owned organizations that sort of has a constitution and a bunch of bylaws, but they have been a different thing in in different legal contexts in different courts around the country over the years to kind of fit into whatever they need to be for that particular scenario. Of course. What are you talking about, Ben? They're an association. It's obvious. Not obvious. When they finally settle in seventy six and the merger goes through, the players, though, what drives them to settle

49:18 is they get a major concession. The NBA agrees to abolish the reserve clause. in contracts, which the reserve clause said that any player whose contract was expiring, and this was true across all professional sports in the US at the time, That the team that uh the player was playing for kept that player's rights for an extra year.

49:44 after their contract expires. So it basically prevented free agency from happening of like you'd get to the end of your contract. And you couldn't go negotiate with other teams because your team held your rights for a year. So if you wanted to go play for somebody else, you either had to demand a trade or sit out for a year. And there was actually during the interim when the merger was being disputed, there's a player Rick Barry, who jumped leagues. He was one of the first players to jump from the NBA to the ABA. And he thought that he would be able to dispute this reserve clause and be able to start playing right away.

50:23 It ended up being held up and he had to spend the first season as uh he played for Oakland as the Oakland's TV announcer before he could actually start playing in the in the games. Um so when the Mier agrees as part of the settlement to get rid of this, this is huge. So like now free agency It's opened up and this really Begins the modern era in baseball, the reserve clause would end up being abolished by a lawsuit from Kurt Flood. Um and I think that would happen later. I think that was nineteen eighty, maybe I want to say. Could be wrong on that. But once again, the NBA's kind of leading the way here. It's effectively like a non compete.

50:59 Look, you were a professional basketball player for me, you can't compete with me by being on another professional basketball team. Like we're separate organizations, therefore and this is where it's that like thing where the NBA, when they want the teams to be separate organizations, they are and when they want it to be one single entity that can sign a collective bargaining agreement, they also do that. Yeah. Yep. Yeah.

51:20 So the merger happens, four ABA teams end up getting absorbed into the NBA. Yeah. So this this to me is the really fascinating thing where between when the NBA waves the white flag in 71 and when they actually end up merging four years later, the leverage shifts entirely to the NBA. Like what the players association did by creating that lawsuit It was like the A ABA had so much momentum and so much cleverness and so much creativity. And it seems like they never really had a long term plan and they sort of started to fatigue. There was like deal fatigue that happened. And by the end of it, there's ABA teams folding, there's ABA teams not making payroll. There's ABA teams realizing that the strategy of like moving between three different cities in Virginia as a regional team is just a terrible strategy for a professional sports team and their costs are way too expensive. And so there's basically only four left with Denver, the Indiana Pacers, the New York Nets, and the San Antonio Spurs. that are really able to make it through in this merger.

52:22 Yeah. And most of the other teams Fold. Well, including but except for St. Louis. Did you find out about this, Ben? This is amazing. I don't know.

52:35 So Saint Louis had a team in the ABA. The owners strike this deal where instead of you know they were in dire financial straits like some of these other ABA teams, instead of having to pony up more money to keep the team afloat and join the NBA. They fold the franchise In exchange for Oh, is this the draft? Uh no, no, even better.

52:57 Two point two million dollar upfront payment from the NBA. And in perpetuity A one seventh. Share. of the TV money from the other four ABA teams that get pulled into the NBA in perpetuity. So this is crazy. So the ownership group of this St. Louis team, they get$2.2 million up front. And then they get

53:22 A cut of the TV contracts, I think the local T V contracts of these other four teams forever. So through two thousand nine They signed a perpetuity contract. Through two thousand nine, they had been paid over a hundred and fifty million dollars from this settlement, which is just crazy. Oh my god. So what in two thousand nine finally the NBA was like, Okay, we have to renegotiate this and like doesn't matter. I think it's still ongoing. The only reason through two thousand nine is uh Bill Simmons writes about this in his book and it was published in two thousand nine. That is so insane. Oh my God. Yeah. Also, that is some it's like the the owner of St. Louis like saw the writing on the wall and was like, You know what?

54:03 I'm gonna uh cut and run and sign a crazy deal for myself instead. This is like um We covered on the Clips episode the uh Donald Sterling's Estranged Wife when Bomber bought the Clippers got Something crazy like twenty courtside seats, six parking spots. And like I think the rights to have two championship rings if the Clippers ever win the championship in perpetuity forever.

54:31 Crazy. It's like I want all this stuff because my husband was a cracist and uh Steve Ballmer really wants to overpay for this team, so I can ask for basically anything I want. I mean, did he overpay? We'll get to that later. Yeah, it's a good point. A couple other points I want to make on this merger, because it was crazy by the time it actually closed how much leverage the NBA had. So th the the first biggest one was that it's not treated as a merger. So these new teams arriving, they actually have to pay the NBA for permission to enter the league. They have to pay three point two million dollars. Pay us to enter now. This is not like we're recognizing enterprise value that you have, like now you're just anyone with a team on the street who wants to to join our our league. This is just rude. Like this is not the way it happened in the NFL.

55:19 But they decided at the NBA we are not going to recognize any ABA records. So like any of the history that you guys created, sorry. Like that's uh those never happen. It's not valid history and facts. Yeah. Another crazy thing is the New York Nets, you might notice, but there's already the Nets. Yeah. The Nets Have to pay the New York Knicks. four point eight million in indemnity as compensation for invading their territory. Like

55:48 You guys as a whole have to pay two 3.2 million, but you specifically have to pay one of our teams almost five million nineteen seventy-six dollars. for the privilege and and compensate them for what you're about to do to them. On top of all this, the ABA team receive no television money at all during their first three seasons. And as we'll get to, that's an enormous NBA source of revenue. It's a huge component of it. Probably half, but we'll we'll we'll get there. And those four ABA teams Also got no votes related to the distribution of basically ticket sales or the alignment of those NBA divisions. So like they're just pulling all their control provisions and saying, Yeah, yeah, we're gonna vote on stuff as a league, you don't really get to vote. And so they're instantly brought in as these like crazy second class citizens

56:36 That I I think uh the Nets owner had this quote that said something like, The merger agreement killed the Nets as an NBA franchise. The merger agreement got us into the NBA, but it forced me to destroy the team by selling Irving to pay the bill. And that's the crazy thing is they actually Doctor J was playing for the Myth. For cash. They sell him to the Sixers for cash to be able to pay off these debts that they owe. It's just brutal. It's like Everyone basically sold their soul for the privilege to play in the NBA. It's kind of amazing.

57:08 What to if listeners like this want to do an episode on the Spurs someday,'cause it's kind of amazing that the Spurs overcome this. decades later it takes, but to be able to build the dynasty that they have. The Nets, frankly, never really recovered. And it's not like these other teams went on to become amazing dynasties. Like Indiana, of course, when Bird coached'em and they had Reggie Miller, like they had some great years in there. But you're right, other than the Spurs, it's not like we're looking at the the Lakers or something like that. Yeah, totally. So at the

57:40 End of all that as the dust settles, right when when the merge is officially happening just after is nineteen seventy nine. Which is a momentous year for two reasons. One, because that's the year that Bird and Magic enter the league. And two, of course, That's the year ESPN launches. Yeah, this is all the cherry on top of this sort of first incredible chapter of the NBA, where we finally have all the teams we know and love. We finally have the biggest rivalry and you know the biggest like two superstar players coming in. And on top of the ESPN thing, this is the first year they actually add The three pointer. That's right. That's right. That was MBA in these days took forever to uh

58:21 implement any good idea. So yeah, they finally add the three pointer, bird and magic, and with the SPN That means two things. One There's more just like real estate for showing televising more. NBA games nationally. And two, you know, ESPN launches with SportsCenter. You know, Sports Center covers all sports, of course, and like all sports have highlights and whatnot, but what sport is more tailor made for two minute highlights with enthusiastic anchors on SportsCenter than the NBA. It's just Perfect storm.

58:55 Totally. And I think one of my favorite things from our ESPN episode is like I don't think I realized that sports center was the very first thing that aired on ESPN. their most famous and perfect product is the thing that they started with from day one. And

59:09 the NBA would produce the perfect components to be a part of that. It's so interesting. doing this now having done that ESPN episode a few years ago,'cause I don't think we had that context that it was only just within those few years before then that the NBA at least finally became a product that would do so well. on this cable channel. I mean they would have been fine, you know, with football and baseball and highlights and everything else, but like especially during the winter, you know, those months when there is no football and baseball, the NBA is really what carried sports center and ESPN. So all that sets the stage for

59:44 What is The second major chapter. in the history of the modern MBA. And that is The year nineteen.

59:53 eighty four. Great year, of course,'cause that's the year I was born. So it makes sense that it would be in the Macintosh. That's right. That's right. Major year. But Two Things really too.

1:00:06 In nineteen eighty four. I think you can argue, I mean we'll try and make the argument here. You could argue maybe it's a it's hard, but I think they're both of kind of equal importance to the MBA and both of these two people are Maybe the most impactful people, individual people on sports and sports business. Ever.

1:00:26 It's a big claim. It is big claim. So first, in February of nineteen eighty four, the NBA finally, after forty almost forty years at this point, Gets It's first. more than not totally incompetent leader.

1:00:44 in David Stern becomes commissioner of the NBA. And we'll get into everything that Stern does, but uh you know, good and bad, but mostly incredibly good. He ends up becoming the longest serving commissioner of any professional sports league ever. He serves for thirty years until twenty fourteen, which is just incredible and presides over. So much that happens in the NBA. But then of course, this is gonna be the hard argument to make that he's as important, but we'll make it as the other person that joins the NBA in nineteen eighty four.

1:01:17 Which is of course with the I had forgotten this even from the last dance until doing the research. With the third pick of the nineteen eighty four draft. The third pick. Like are you serious? And is it uh Jordan's still miffed about that, right? I think he's still pretty pissed. Well cause okay, so the Rockets had the first pick. In the eighty four draft and they draft a lajuan. Which you know Obviously that's a bad decision, but like they needed a center.

1:01:45 The NBA was still like centers were still a big part of the game and all that, like Okay, and he's Himalajuan, like fine. With the second pick, the Trailblazers draft Sam Bowie. Like what line on them. Oh my gosh. ESPN has label this

1:02:07 literally the worst draft pick in sports history globally and for all time. Uh kind of also Besides Jordan, of course, which is who we're talking about, Charles Barclay and John Stockton are also in this same draft. And the Blazers pick Sam Bowie. Okay. All right. So we're gonna come back to MJ, which who of course the bulls drafted third in

1:02:33 June of nineteen eighty four. But okay, so first Stern. So how did Stern become the commissioner of the MBA? Well, he had been a lawyer in New York who originally did a lot of work with the NBA and a lot of work through the merger with the ABA in the 70s. And then he went in house and he was in house counsel at the NBA and And in March of eighty three. By the way, this story so far, his background is identical to the major league baseball commissioner. He was uh outside counsel, worked at a law firm, eventually went in house counsel with the MLB and rose up. Oh, no way. I didn't know that. I think this is actually a pretty did a standard path to commish. Didn't um Silver well, Silver of course was Stern's deputy, but I think he also started as a lawyer. Before joining the MBA. Yeah. Makes sense. So Stern's in house.

1:03:26 And then in March of eighty three, while he's general counsel, the league signs a new collective bargaining agreement with the players association. And this is a landmark. Totally landmark deal. Like we said we're kinda gonna come back to the economics of the NBA that sets the stage for today. In this.

1:03:46 Agree, man. The NBA Agrees. Two That in aggregate.

1:03:52 It will pay the players. in any given year. fifty three percent of the total gross revenue. Revenue, not profit that the league In exchange for they finally, as you said Ben earlier, they get the salary cap

1:04:09 Back. They're worried about competitive parity between the big market and the small market teams. They want a salary cap. They also want to keep expenses from ballooning out of control. And this deal is like a major landmark because The remember the players have been getting so much influence. Now they're really They're still the players, they're still the labor in the league, but they're an actual like

1:04:30 partner. Like they are contractually gonna get in aggregate Over half. Of the revenue of the league, so the owners still own The teams. And they take the profits of each individual team

1:04:43 But they're really partners. Like the players are essentially equity partners now in the league. Yeah, it's it's fascinating. This trade, no matter which side you are, it's interesting because it's not an obvious deal that you should take for either side, which is how you know it's a good deal for both sides. Because from the league's perspective, it's it's not that we can pay up to fifty three percent. Our cogs now are fifty three percent. Fifty three percent just for the players. Right.

1:05:10 Staff, everything. We are now committing that we have the Spotify business model rather than the Netflix business model, where no matter how many dollars we take in, we are paying out You know, fifty three cents on the dollar for every single dollar. So That's scary. Like that massively Spotify music business model. Correct. Not the Spotify podcasting business model. Right. And that's scary'cause it caps the potential upside on your business or i unless you quote unquote make it up on volume. That's a foreshadow to today. But if you're on the player's side, you know, you're s you're agreeing to this Salary cap where

1:05:44 Sure, it's gonna bring parity and it'll make the game better, but gosh, like if I'm the Lebron of the era, like why would I want there to be a salary cap? Right. I I I tried to stay away. I guess I I don't want to directly say Lebron of the era equals MJ, because I don't want to make that comparison or uh have us quote. We already said in our caveat that we're we're not talking about the game here. We're talking about the business. So we won't wade into that debate. But yeah, it's it's just this fascinating deal. And like you said, David, it really, even though they're not equity partners, Yeah.

1:06:16 effectively because the future cash flows are so intrinsically tied and scale together. It feels a lot like being true equity partners in the business. Yep. And it's based on revenue, not profits. So like The owners can't Hide. It's not like they can You know, make up a bunch of, you know, accounting stuff and um costs and expense and whatnot. Like, it's not a good thing. Exactly. Exactly. You need to get John Malone in here. And this is kind of incredible when you said this earlier in the episode, Ben. So this salary cap

1:06:47 Is three point six million dollars Per team. And that's fifty three percent of the average gross league revenues. So if you do the math. That means that the average team in eighty three was making six point eight million dollars in revenue. So there were twenty-three teams in the league at that point. That meant the league as a whole was making about a hundred and fifty. Million and

1:07:12 Total revenue. So okay, so keep that in mind. So Stern. Negotiates this deal. And then in February of eighty four, he gets promoted, he becomes the commissioner of the league. But let's just let's just contextualize like the hundred and fifty million in revenue against like some startups. So it's making basically what like a pre IPO startup is making in revenue, except the NBA is actually profitable and not losing money.

1:07:38 So like that's that's the type of debatable. I think some teams are profitable, some teams are losing money, but yeah. Okay. So they're they're likely better than a breakeven business on the whole, but call it a breakeven business that effectively revenue wise looks like a late stage startup. Yep. So also in nineteen eighty three, right before Stern took over, they had negotiated a new T V deal with ABC that I believe was about twenty million a year in terms of payments. for national broadcast rates to the NBA as a whole. So now, five years later.

1:08:11 In December nineteen eighty nine, so five years after Stern takes over. Now granted He had MJ to market as like a pr a pretty good product to market. That deal expires. And he and the NBA negotiate A new two actually new four year TV deals with NBC and with Turner for eight hundred and seventy five million dollars. So that's over two hundred million dollars a year. Literally ten X the deal.

1:08:39 Yeah. had been negotiated the year before Stern took over. And and not only 10 X on the TV deal, if you just take that revenue, ignore All other revenue sources in the MPA, you know. Concessions, ticket sales, merchandise sales, everything else, advertising. Just the TV deal alone is fifty percent more annual revenue than the entire revenue of the league.

1:09:02 In nineteen eighty three, when Stern took over. Wow. So that's do you say two hundred million a year in T V revenue? Yep, I think it's like two twenty ish a million in the year. Yeah, so there we are. Player is getting a hundred and twenty million a year in revenue that they otherwise wouldn't have. Like like commissioner was a great thing for the players. Total great thing for the business, which ended up being a great thing for the players. So that was the first thing Stern does is he just like massively up levels. The business and the TV. deals that the NBA is doing. The second thing, you could argue whether this is good for the players or not. I mean, ultimately this is good for the players. So the eighties, the NBA

1:09:40 Uh just like most of the rest of American society. uh had a huge drug problem. Uh and this has been catalogued many other places uh in MBA history. The saddest and the the worst example of this was of course Len Bias, the hugely, hugely talented college basketball player drafted in the First pick of the eighty six draft, I believe, by the Boston Celtics. And two weeks after being drafted, he dies of a cocaine overdose.

1:10:11 Tragic and terrible. You know, what was happening in In the league at this time, like cocaine had just totally infiltrated the league and many other spectrum. In the last dance, yeah. Yeah. When he showed up in eighty four in Chicago, he was like, What the hell are like all these veterans, these drugged out dudes like who are loafing around the court and like

1:10:35 That is not MJ style, as uh as everyone knows. So Stern, this is a big problem. So Stern. puts in place a drug testing policy And Three strikes and you're out policy. So literally, you know, first offense, you get rehab and a warning. Second offense, you get a big fine. You do you get caught a third time with any kind of drugs in your system. You are literally lifetime ban from the NBA. So a few players actually do get

1:11:02 And Jordan and everything. really revitalizes and turns this around for the NBA. The third huge, huge thing that Stern does.

1:11:16 And by all accounts, this is really his vision. is he internationalizes the game. So like of course remember the game had been international and huge in China from back in the Naismith days, but he internationalizes the Naismith days. The Naismith days. Stern internationalizes not just basketball, but the NBA. So Obviously, you know, anybody who was alive at the time and probably most people who don't are gonna remember the 92 Dream Team in the Olympics. That was Stern. So like I didn't realize this until doing the research. You know, it was it was a lot of people that made that happen, but Stern was the one he was like, there's a big opportunity For the MBA

1:11:58 to go global, you know, not just in terms of recruiting players and developing talent, but also for consumers of the product. Uh had the Olympics before had just college players or like second rate. Amateur So Febru the international governing body for Basketball had only allowed amateur players to play in international competition. So that of course barred all the NBA player. So when Stern have to lobby them, hey, this is gonna be really good for the sport, you should let us do this. Totally. And it was great for the sport. And like that ninety-two dream team, I mean it was a big focus of the last dance and big part of Michael's career and everybody involved.

1:12:36 I mean that was huge, man. I remember watching that on T it was like the biggest event of nineteen ninety two was Professional players. Finally being allowed to play in the Olympics and like the s greatest team ever assembled. That was all Stern.

1:12:52 On the back of that, the MBA opened up offices in I think fourteen countries around the world to start Essentially two functions. One, talent development and recruitment. And of course we would see that we'll talk much more about that in a minute with the modern MBA. And international players. But also just uh selling the product.

1:13:13 And that's when the NBA itself and not just basketball really starts to become a global phenomenon. The fourth thing that Stern does is After the next Olympics in ninety six, The women had a big

1:13:26 Olympics year led by I think Rebecca Lobo at the time. And there had been talk around the NBA and some plans on the backburner for launching a women's league After the ninety six Olympics, Stern really champions, No, we need to make this happen. And so he pushes through launching the WMBA. in I believe it was ninety seven, I think, when it launched. And I didn't realize this either. For the first eight years of the WMBA's life, it was wholly owned by the MBA. Oh, huh.

1:13:56 So what, there weren't like individual team owners? Each team was owned either by the MBA as a collective organization or by it its NBA counterpart in the city it was in, if there was an MBA counterpart. In the city. Oh, and so the owner of the Cavs would have owned the uh the Cleveland W N BA team. Yep, like the the Storm was owned by the Sonics. So then after eight years they then spin it out and get into recruit independent owners for the teams. But that all happened in his tenure. And then of course he would also embrace technology and launch League Pass and streaming.

1:14:31 In ninety five. Which was yeah, pretty much after Amazon was founded. Yeah, seriously. Any one of those things would have been Huge. All of those things over his Thirty year career. Which is pretty amazing.

1:14:46 And and that's still what, another fifteen years before he retired? Like that was only in his the first half of his career. Yeah, almost twenty years before he retired. So that's Stern. On the flip side of that, though, like he's also responsible for a lot of the Very highly criticized. Oh yeah, the dress code. Yeah, like the'cause for listeners who don't know, at some point there was a dress code where the spoiling the story? Yeah, yeah, yeah. We're we're gonna get to that in a minute. Okay. He has definitely as Stern got older.

1:15:14 Like he probably should have hung it up maybe five to ten years before he did, but uh We'll get into that. MJ, I mean. We're not planning to say too much about MJ here because like Netflix did a pretty good documentary. Yeah, Netflix and ESPN kinda told the official story. What we will talk a little bit about, though, is Like

1:15:34 Ben what you were saying at the at the top of the show, part of our initial inspiration for doing this was wanting to tell the Jordan brand story. And realizing that that's really it's it's totally tied up in the Nike story and there's a better Yeah. But Jordan he

1:15:51 signs the Nike deal right after he's drafted I don't think this was talked about too much in the last dance, but Which is not the deal he wanted. What was the sneak company he wanted to sign with? I think it was Adidas that he wanted to sign with.

1:16:06 Yeah, you're right. It was Adidas and uh this is directly from the last dance. They asked him, Do you have a shoe company that you wanted to go with? and he confirmed that was Adidas. Considering the billions of dollars the Jordan brand has produced today at Nike. This is crazy. We're gonna we're gonna get into it. So it was his agent, I believe, who pushed him to say, before you make a decision, Talk to these guys out in Oregon, these Nike guys. Okay.

1:16:32 I don't remember. I think they were like fly out and meet Phil. Ah, that might have been well. We're definitely gonna tell this whole story on another episode someday. This probably stands For consideration as maybe

1:16:45 The best. non acquisition. deal of all time. We should totally do at some point, like we did our top 10 acquisitions episode, we should do a top 10, like non acquisition deals. Yeah. Yeah. Deal gets done in eighty four. I believe it was two point five million up front or something like that. And then a percentage of

1:17:06 I believe the profits from the Jordan brand over time. This is incredible. So Jordan, as of today has made over one and a half Billion dollars. Personally.

1:17:21 From the deal. And the Jordan brand within Nike Which obviously nobody could have seen at the time. is still going strong and last year generated over three billion dollars

1:17:35 In revenue. Thirty five years after they signed the deal. Unbelievable. And so as a result of that I'm not a hundred percent sure, but I think this is true. Last year. Jordan's earnings from the Nike deal. So Michael's earnings. Where

1:17:50 the single highest athlete endorsement, like single endorsement deal is In the world. last year and the dude retired sixteen years ago. My God. Isn't that incredible? Uh Nike It's the parent brand plus the Jordan brand.

1:18:10 Their market share of the performance basketball market. is eighty six percent. their market share of the lifestyle basketball market. Which is mostly our Jordan sal sales, is ninety six percent. And

1:18:27 Seventy seven percent of NBA players this season are sponsored by and are wearing either Nike or Jordan. Branded shoes. Totally crazy. So the legacy of this period, you know, and these two

1:18:41 Men we should mention he was like a pretty good basketball player, too. It wasn't just shoes. Go watch The Last Dance. It's amazing. Enjoy every minute of it. By the way, it wasn't Jordan, it was a a team accomplishment is what I gleaned from the documentary. It was really just it was uh it was kind of everybody in the team, front office and players. I think that was the big takeaway. Yeah. Right. Well, it does take a village, that's for sure, but uh that village's name Michael Jordan. So the legacy of these two dudes Jordan and Stern. Is that

1:19:15 today, and we're not done with the story yet, but I think it really just comes from what these two people did. NBA players and alumni are One. the highest paid athletes in the world as a group. Which a lot of which stems from that

1:19:30 nineteen eighty three collective bargaining agreement that Stern orchestrated with the players union. Two. have the largest social media followings and influence among American sports players by like a laughable, laughable margin. So soccer and soccer players uh football for all of our non-American friends. is actually bigger than than basketball players in terms of social following. But within the US it's like it's not even close. And we're gonna talk a bunch more about that in a minute. But then probably most importantly

1:20:01 I think the the last element of this is That The Current and former NBA athletes.

1:20:09 at a level and have become entrepreneurs and business people at a level that like just is completely eclipsed any other sport period in the world, both in their current playing careers and post-playing careers. So at the top of the list is Jordan himself.

1:20:28 As of today, he's worth two point one billion dollars. He is the wealthiest former athlete in the world. the fourth richest black person in America Astounding. below him, I mean it's a it's a wide gap between Jordan and the next, but There are a bunch of other people too, so

1:20:47 Kobe's estate. Sadly, Kobe tragically, rest in peace. But at the time of his death and his estate is worth six hundred million dollars. Uh much of which came from all of his business activities after his playing career.

1:21:02 magic and magic down enterprises. also worth six hundred million dollars. Nearly all of that came from after Magic's playing days. Through his business ventures and influence. And then interestingly after that, so there's another six hundred million dollar net worth former basketball player, a guy named Junior Bridgman. What? He played for the Bucs.

1:21:25 And the clips in the seventies and eighties. And he founded Bridgman Foods after retiring, which is one of the largest uh I think chilies and um Maybe one of these franchisees in America. He employs like 11,000 people. It's incredible. Wow. He's worth six hundred million dollars. LeBron is worth four hundred and eighty million dollars. Shaq is worth four hundred million dollars and is on the board of Papa John's, which is amazing. Had to put that in there. Amazing. And then another four hundred million dollar uh net worth former player, Vinny Johnson, who played for the Sonic Spurs and Pistons in the eighties. After he left the Pistons, he founded Piston Automotive Parts, which is one of the largest

1:22:08 Independent automotive parts manufacturers. In America. That's a big uh a big jump. Yeah, incredible. So these are all Black owned businesses, black entrepreneurs. all a legacy of the NBA and the amount of wealth that

1:22:22 These people were able to A generate during their playing days, but B also just have the Influence and ability to Yeah, and invest and take those assets and build bigger empires with them. Yeah. So literally nobody else from Any other major American export.

1:22:38 With the only exception is Roger Stauback, uh, the cat Dallas Cowboys quarterback. He built a big real estate company after his playing days. So he's also worth about half a billion dollars. But like Nobody else even comes close. Like I don't know if anybody else is even worth a hundred million dollars. I think Tiger's a billionaire. Individual sport. Uh Yeah.

1:22:57 So uh no other team sports. So football, NFL, nope. Except for Stalbach. Major League Baseball, nope. Hockey, nope. Like basketball's the only sport. Team sport that has produced these uh Incredible incredibly wealthy alumni.

1:23:12 As one more measure of incredible wealth is owning a sports team. It's a line in billions where they say owning an NFL franchise or an NBA franchise is the closest thing we have to royalty in America. And I was doing an analysis on the whole list of NBA owners and They're all I'll actually bust the stat out now because I think it's interesting I'll open up my spreadsheet. The NBA owners today are are basically dominated by tech, private equity, and venture capital. So you have sixteen of the thirty teams owned by tech, PE, or VC, and only five of them actually are family money of sort of inherited wealth. Uh a lot of the others are entrepreneurs of different strokes, but they're exists one player who owns a team and that's Michael Jordan. And he's sort of in the same wealth conversation as those uh, you know

1:24:04 Uh I mean I think everyone else is a billionaire. Yep. So obviously well, anybody who owns a majority of an NBA team Is on paper. So Jordan, of course, owns I think he owns about eighty percent of the Charlotte Hornets. First former player in any league. to become a majority owner. And

1:24:23 As of this week, did you see the news, Ben? No. He is also now a NASCAR team owner. Interesting. He bought the team that uh Bubba Wallace drives for. Oh, fascinating. Well he had a nice little return here on uh on buying the hornets,'cause in twenty ten he bought majority control of the club and I think it went for a hundred and seventy five million and he just sold twenty percent of it that valued the company at one and a half billion. So he's uh he's gotten some nice appreciation over the last decade from uh from his basketball investment and has to use that cash somewhere. Yeah, totally.

1:25:01 All right, so let's get into chapter three of Building the modern day MBA after Jordan and still during the Stern era, but leading into the Silver Era. So when Jordan finally retired for the Second or third time with the Wizards into it was two thousand three, I think, when he finally retired for good.

1:25:22 There was definitely a bit of a hangover after that. So ratings dropped. While Jordan was in the league, T V ratings for the NBA rose Every single year he was in the league, which also I don't think any other professional athlete has had that happen. in their career, unless they were in the league for like two years or concurrently with Jordan. Ratings dropped. And scoring dropped.

1:25:43 And there is this uh narrative which A lot of people believe, but frankly was like really wrong and also crappy and kind of racist that the league was just filled with thugs and this was the whole like Alan Iverson thing and Is this when they had the brawl? Yeah, the malice at the palace. Malice at the palace with round our test the fans that instigated it were like

1:26:09 drunk, depressed, like off their rockers, saying terrible racist things, like And you know, the whole Allen Iverson and AI thing, I think this was actually my carve out maybe like a year or so ago, he wrote this great piece for the players tribune uh two years ago, I think, that we'll link to. Just about his experience and what it was like. being AI and like being labeled as a thug and what we're talking about is he dressed like lots of like hip hop artists and rappers did and like wore what he wanted to wear and had his personality and a lot of the media

1:26:44 Came down super hard on him about this. And he was like look like I love the game. Nobody played harder than me. Nobody worked harder than me, despite The practice line, you know? I was just trying to be me, like I just wanted to be me and it's kind of amazing that like

1:27:01 What that's turned into, fortunately, I think, is what so many NBA players exemplified best by LeBron are today. Like they are them. Like they are their personalities and they are influencers. But during the time, so we referred to Stern maybe staying a little bit too long. After the malice at the palace.

1:27:20 And dealing with Iverson and all of this stuff. Before the two thousand five, two thousand six NBA season, Stern. Institutes. What he He terms these are his words a liberal and

1:27:34 Easy going. dress code that mandates that players wear business casual attire when participating in team or league activities. The code also prohibits headgear of any kind, as well as chains, pendant, or medallions worn over the player's clothes. And the fact that that's all specifically called out is just like ridiculous. For someone that benefited the players in so many ways. uh that is proof that you've now stayed too long, sir. And he didn't get it. It's veiled racism. The amount of distance between him and the players is just so evident.

1:28:11 by him making those comments and describing it that it's like you just you live in a completely different world, dude. Yeah. Well I think I Iverson in his quote about it at the time, I think actually says it best. What he doesn't say that other players did say is like, yeah, this is racist, which is true. Iverson says his quote is, They're targeting my generation, the hip hop generation. Like that's what it is. This is like a kids get off my lawn kind of thing. Like you know, this is just the world was changing, right?

1:28:40 And you know, the MBA was, of course, at the forefront of it with these, you know. young, incredibly talented people. They were playing. How did the league recover from this to get where we are today, uh like being frankly a leader in social justice?

1:28:57 Well, a bunch of things happened, but specifically on the dress code, I believe it's still in effect today. I'm not sure about that. Whether it is or isn't, it doesn't matter because the players in this like brilliant move completely co opted. And I I think Dwayne Wade was really the first player to start doing this. And then he was followed quickly by LeBron. They embrace him. They're like, all right, great. You say we gotta dress up. We're gonna dress to the nines. And that's when, you know, it really transformed into this uh You know, every arrival at the arenas for MBA games and post game press conferences became this fashion show. And they said, Like, all right, great, like we're not gonna wear golf shirts and khakis, you know, hiked up to our navels. We're gonna like be fashion. Yeah, like you, David Stern. We're gonna be fashionable. We're gonna be on the cutting edge and like

1:29:48 Particularly although this would of course happen. later, but not that much later, with the rise of social media and particularly the rise of Instagram. Fashion. How they dressed. Players clothes, like

1:30:01 just played right into them being able to build these larger than life social media follows. Right, so bring us into act three then. Okay, so act three. Yeah. I think there are really three

1:30:14 aspects to what has become now the modern MBA. And Really all of them. We have to give credit, you know, like I said a minute ago to David Stern. laying the groundwork for the vision for these

1:30:27 So One I would say I'm gonna call this unique and compelling content. within the NBA, both on the court and off the court. Two.

1:30:36 is international players and the international game and fan base. And three is the wholesale embrace of technology in all of its forms. So what do those three pillars of a playbook remind you of? I feel like I've heard this somewhere before. Are you uh are you pitching me on the strategy for the NBA in the two thousands, or are you trying to tell me that you are gonna take Disney into the next twenty years? Yeah, and right around the same time, too. So of course, this is the Bob Iger three point plan for Disney when he becomes CEO in two thousand six. And it's right around the same time that all these same things start happening in the MBA. So first on international, you started

1:31:16 in the nineties and early two thousands, getting some of this happening with course Tony Kukoc and some of the other great uh uh Vlad Divack and some of the other great uh game players. Yep. Dirk Nowitzki for the Mavs, of course, becomes like huge superstar from Germany in the early two thousands, and then Steve Nash from Canada. Debatable whether that's international. But we'll give it to him. We'll give it to him. We'll give it to him. And then in 2002, you had literally the biggest international player. Although rewinding back to the beginning of the episode. Not the most unlikely of places. Yao Ming

1:31:58 Drafted. The first pick. By the rockets. in the two thousand two. NBA draft. The first international player

1:32:06 ever selected with the number one pick without first playing US college basketball. And yeah, I mean this was just like So huge. So Unfortunately, Gao's career was cut short by injuries. He only played eight seasons in the league, but he's still in the hall of fame.

1:32:21 An incredible Player. Oh, he's already in the hall. He's yeah, he was like first ballot. For sure. All he's already in the hall. So he brought

1:32:29 Of course. China to the NBA, but even more important, he brought the NBA to China. So the Rockets after they draft Yao become the most popular sports team in China. Like across any sport. Yeah. I mean, basketball is already at this point the biggest sport in China, and the Rockets become the most popular basketball team in China.

1:32:53 And on the back of this, basketball becomes as as we talked about the second most popular sport in the entire world after soccer. The Associated Press Estimates that today. Three hundred million people in China alone play basketball and And 600 million people watch it. So like literally, there's an America's worth of people who play basketball in China.

1:33:18 And two America's worth of people who watch it. That's insane. It's crazy. Regular reminder to anybody listening to this show that China is always bigger than you think it is. It's like uh whenever we were doing the Ten Sen Alibaba episodes, like I would always feel like our numbers were off by an order of magnitude. Yeah, I mean, I had to reread those numbers like six times to make sure they were right. And uh of course they're estimates, but that's how big this moment Was And and today, twenty five percent of the players on NBA rosters are international today.

1:33:52 And even more important than that Probably I'd say like half, maybe more than half of the next generation of stars are international. So of course there's Giannis, the MVP from the past two years. There's Joel Embiid with the Sixers, there's Jamal Murray, again, Canadian, you know, maybe, maybe not. But there's Yoke as well on the on the nuggets. Um And then of course there's there's Luca, right? Like I mean, we could be redoing An NBA episode in five years and talking about Lucas. MJ. Bold call for sure, but um

1:34:27 I can't think of a more promising Young player. in the leag right now then David, you said we weren't gonna make this about basketball. Don't expose that I don't know enough about uh players today to have an informed conversation with you here. I should this actually probably a good point to tell listeners. If we are talking about the calves from like two thousand five to two thousand eight. Like I can have a very informed conversation with you about every little m bit of minutia in the league.

1:34:56 Outside of that. I am not gonna have a player by player conversation with you. And of course, like I grew up fifteen minutes from where LeBron went to high school. I got to watch him play. It was unbelievable when the Cavs got the first pick and then we got to draft him. Like it was I mean, being in Cleveland at that time was just this absolutely unbelievable moment when he came back from the heat, uh and we and we won a championship just absolutely For a Cleveland fan to get to say that we won a championship. In any sport, it's just a special thing, but I should come clean on my uh

1:35:26 Good point. We'll we'll we'll tone down the uh the player talk and come back to the business. The net of all that, though, is so Forbes estimated That during the twenty seventeen, twenty eighteen season, there were literally One billion people. Around the globe. Who watched

1:35:46 Yeah. That season. And obviously the vast majority of those came from outside the US. You know, we're gonna talk about the NBA's business and business model in a minute, but right now they still trail the NFL. revenue US League. Like that's the crazy thing about this. You're talking about this incredible global appeal and this explosion and all this attention from you know every corner of the earth, and they don't make as much as the MLB or the NFL in the US. Totally.

1:36:17 So we're just talking about international now. We're gonna talk about technology and unique and compelling content in a minute, but I don't see any way that five, ten years from now, the NBA isn't significantly larger than Any other sports league except some of the professional soccer leagues just by virtue of this. Like you could debate its popularity in the US, but it

1:36:38 It it doesn't even matter, you know? Like there's so many more people around the world who watch it. Than do here. Baseball and and football, football especially. just has no appeal outside of the US. Like that's gonna be a challenging future for it. And they're trying. I mean, like there was a Seahawks game in London a couple of years ago, and I think they're doing these sort of one offs is very much a copycat game now of trying to figure out how to execute a global strategy as as good as the NBA. And David, your call I think is right. Like if you want to be a part of the popular sport

1:37:11 five, ten years from now that the world is talking about, you should invest your time in caring about basketball. Or you know, non American, but that's harder to do from the US at least. So okay, so that's international. Now let's talk about technology. So like we said in ninety five, ninety six the NBA launched their League Pass offering.

1:37:34 Interestingly not in house. So they went. A different route than baseball, of course, we covered the Bam covered the Bam Turn. So yeah, the MBA partner with Turner. So Turner still operates League. For the NBA.

1:37:50 But this is super interesting. And once again, like, man, the NFL is so screwed. So League. Pass. The MLB has MLB.tv, which is its own streaming service. It's powered by Bam Tech. They're kind of beholden to nobody. Disney's like they're they're in a good spot. You know, baseball as a whole is not in a good spot, but when it comes to technology, they're in a good spot. Did you know that average age

1:38:13 of a baseball fan Is Fifty nine. The average Wow.

1:38:22 Yeah, as that's not good. No, that's definitely not good. And the average age of the NBA fan. Forty three. Forty three. And more importantly than that, you may have more detailed stats than me on this, but I believe

1:38:35 Among Thirteen the thirteen to seventeen year old. Oh okay. You want me to hold this? No no no. So among thirteen to seventeen year olds. The NBA Is

1:38:46 fifty seven percent of their favorite sport. Compare that to the NFL, thirteen percent of them say that's their favorite sport. And in baseball, four percent of them say that's their favourite for it. Oh yet another reason why Five, ten years from now.

1:39:01 The picture's gonna look very different. Yep. Okay, so back to technology. So MLB, I bel uh they may have added more now, but I believe it's just the games. Here's what the NBA's doing that's interesting. They don't own their own technology, which is a bit of a liability for them. But it's not just games that they have on League Pass and MBA TV. They have

1:39:20 All sorts of other content too. Basically recreating Everything ESPN does in terms of content. highlights features behind the scenes, you know, NBA insider, all these things. plus games that you can stream

1:39:37 On Any device In any format. Yeah. Any country in the world.

1:39:43 with a direct to customer over the top. relationship. Now again, mediated by Turner. But still that's pretty powerful. So now it's like you know, the MLB like like we said, they're they're in a pr a pretty decent spot. I looked into I had no idea before doing this research. Do you know what the NFL's streaming

1:40:00 Solution is I have no idea. Uh ridiculous. So NFL Sunday ticket is a really expensive deal that they've cut with direct T V. Only available on direct TV, so if you have any other pay TV provider, you can't. Yeah, like how do I get an NFL Sunday ticket equivalent if I have cable? So here's what you do.

1:40:23 You go to Or if I have nothing and I just have Netflix. I believe it's called NFL Game Day, I wanna say. I may be butchering this, but Who cares? Uh you pay them, it's pretty cheap. I think it's ninety nine bucks a year. You get access to streaming Every NFL game.

1:40:42 Sounds great, really compelling, right? I'm in so far. There's one catch. You can only begin streaming the games After the games are over. Yeah.

1:40:53 What? Yeah, you can't stream them live. You can only you wanna watch a game live, you gotta watch it on broadcast television or on direct TV Sunday ticket. Like what how consumer hostile Is that. I can understand this in like two thousand one where the internet hasn't become prevalent enough since the last time you negotiated a deal, but like

1:41:15 You didn't carve out the right to stream your own games on the internet in the last deal that you cut with Like the network. Interesting. So I actually don't know. I'm speculating here. They may or may not have the right But the NFL so the NFL still is the highest revenue grossing

1:41:33 Like they make Ten point I think it's more like thirteen, fourteen billion dollars, something like that. Oh, I'm thinking of their T V deal. Yeah, the TV contract. So it's all the TV contract, and all their money is coming from these TV contracts, and that's why they have this direct TV deal and the broadcast deals. That's this is the thing. Like it doesn't matter. They they make thirteen billion dollars a year compared to the NBA's eight point eight, but they make six point eight million dollars a year on TV contracts alone nationally compared to the two point six six from the NBA. Right. So and the NFL of course still has the highest T V ratings. But this doesn't matter because like

1:42:15 Either the future and younger generations. Don't watch TV. aren't gonna consume sports on direct TV. They're gonna consume sports the way they consume the NBA, which is on any device at any time, in any location. In any format. And

1:42:31 The NBA and baseball are just like so much better positioned to this. So as this happens All of that T V revenue. over time is just gonna start to erode. And especially now that ESPN has started to and Disney have started to say, hey Yep. Streaming's the future. We're putting actually good content on streaming now. Disney Plus, ESPN Plus, like the writings on the wall here. It's just hard not to see the NFL being dethroned here.

1:42:56 On the technology front. The other interesting things the MBA has done is in July twenty nineteen The also announced a five year one point five billion dollar streaming deal with Tencent. in China to stream

1:43:11 NBA games in China. They also have a linear TV deal with China television. So that's super interesting. We'll come back to that. And then this is lesser in terms of revenue impact, but Video games and esports. So MBA two K Is I believe by a pretty significant margin, the most streamed

1:43:31 Sports. video game on Twitch so not not most streamed video game period, but Adaptation of a real world sport. The NBA two K franchises Heads and shoulders, I think, above anybody else. Uh FIFA is is up there, but um of American sports, certainly 2K is the biggest. And the NBA has actually promoted the two K League to be one of their four major brands. So they have the NBA, they have what used to be called the NBA D League, that is now the sponsored NBA G League by Gatorade.

1:44:02 Uh the W NBA and now the two K League, which is You know, kind of crazy. Like you go to the uh the NBA's website, you see there are four big brands along the top, and one of them is the two K League. So then the the last piece of this, which ties into the Unique and compelling content piece. Is social media. And this is another one where like as far ahead as the NBA is in these other dimensions versus the other leagues in America.

1:44:28 I mean this is like it's not even a Contest. And David, to elaborate on what this is, I think I think you're squinting a little bit to call this sort of the like unique and compelling content because you're trying to put it into Igra's language. Exactly. If we didn't have the Disney vision that we wanted to co-opt here, which actually fits pretty darn well, this one should be called Empowering the Players. And and this is really like the thing that they've done that is a brilliant marketing strategy that has been a twenty year bet, thirty year bet, is to basically bet on the rise of influencers, which I think they were like 10 years early, but it is massively paying off now. That The other sports leagues do not invest in building the brands of the players. They're always subordinate to the teams and or maybe even though they don't invest. They actively discourage. Right.

1:45:18 And you look at what was your what number did you find on the LeBron social media following? I think the important thing to note here, this is w this is really, I think, where Stern stayed too long. This was, I think, part of his strategy of empowering the players, making them the stars. But then during the whole, you know, dress code and the thug era, like he missed the boat. Like this is what was happening was this was just the next generation of even more empowerment of the players and then with the coming of social media. But yeah, like despite the dress code. So LeBron is the NBA player with

1:45:53 By far. Most social media followers. He has a hundred and nineteen million followers across Twitter and Instagram. And s and Instagram alone something like seventy five million, right? So that's like I think it's like seventy three million on on Instagram. Yeah. So just to put that in perspective, that's more followers than Donald Trump. So uh whatever you think of him, no slouch on the uh social media Influencer department.

1:46:20 So LeBron, I mean, literally has more influence Than the president. In some sense. In some sense. Would that it would be uh even more. But um so that's that's LeBron. The MBA accounts, social media accounts themselves, like the official MBA accounts, they have

1:46:38 eighty million followers across Twitter and Instagram. Uh Steph Curry has forty five million. Kobe's accounts have thirty five million, the Air Jordan accounts have twenty five million, and a whole bunch of players have, you know, kinda twenty to forty million followers. And are these like how does this compare to like other celebrities? Like I sort of assume that all those people would have a lot, like high millions or something. Yep, I would assume too. I don't actually have a good sense of like

1:47:01 Taylor Swift and the like or Kanye, like how many followers did it. Alright, you you do that in real time. I'm gonna talk about the other leagues to just illustrate. what a delta there is here. Well, first baseball. Baseball is just like abysmal. It's not even worth talking about. The top influencer in baseball is a pitcher for the Mets named Marcus Stroman, who has about three point five million followers. The only reason he's the top influencer is because he's like apparently the only guy who actually posts anything. Bryce Harper has three million followers, but has only fifty posts across Instagram and Twitter as of a year or so ago. So

1:47:40 Okay, whatever. Football's a little better, but This is interesting. So if you search the query on Google, top football players on social media Literally All ten links on the first page of Google. Are about soccer players. The NFL isn't anywhere to be found.

1:47:57 I mean they it'cause'cause the N F L actively suppresses player voices instead of leaning into the idea. Go go build a brand. Totally. So like the top Follower counts in the NFL. Odell Beckham Jr. has the most with eighteen million. Uh Tom Brady, who should be like the LeBron of the NFL, he has nine million. Uh Cam Newton has five million. It's just like

1:48:22 Yeah, it's crazy. And so then this leads into Like you're saying, the bigger By the way, my homework here reveals like if you're thinking about like Taylor Swift and Kim Kardashian. you're past LeBron territory. It's like a hundred and forty million on Instagram alone and then a hundred and ninety million on Instagram alone. So like What what we're really saying here is the NBA players are participating in the social media revolution and reach. that caliber of entertainment celebrity is and none of the other leagues are participating in the same way.

1:48:52 Yeah. See nowhere is this better illustrated than the widely divergent reactions between the NFL and the NBA to the Black Lives Matter movement. Just Colin Kaepernick's treatment. In the

1:49:05 NFL. And Everything the the NBA probably should have done more sooner, but what they're doing now and in the bubble with Black Lives Matter all over the courts, the players talking about it in every interview all over their social media accounts.

1:49:21 And the league embracing that and amplifying it. It's just such a different Strategy. I don't know how the call went down to put Black Lives Matter on the court. I was pretty surprised to like tune into a playoff game doing research for this episode and see that the only branding on that court other than maybe the NBA logo is a massive Black Lives Matter. It's sort of like to say that you shouldn't I shouldn't be saying, Wow, they really have the courage of their convictions, but like that really

1:49:50 is what they're doing. And I think A lot of the times the NBA in their sort of leadership. It's almost like they haven't been the leader, but when their players are clearly reaching out for them to do something, they quickly follow suit. And I think an example is the the the protest game when the I think it was the Milwaukee Bucks decided to go back to the locker room and hey, we're not gonna play this game. It was like ten minutes or something before the NBA came out and said, we're canceling this, we're canceling the other playoff game.

1:50:18 And like we're gonna reschedule'em and we're not gonna like fight this at all. Th this is what we're doing. And it was like I don't know if that's their explicit strategy, but the idea of like let the players lead and we will follow on this stuff. But the fact that like we will follow, like we're not gonna fight on it, I I just think is it's the right thing for the league to be doing, it feels like their place. Totally. Well I this is what I think is really interesting from um business standpoint and is fun to talk about on on acquired.

1:50:47 I agree and totally think it's just the right thing like morally and in terms of being a leader or Even just like not a Laggard to do. But it's also good business and like it's really interesting strategy because

1:51:01 What does this mean? You could be like, Oh, okay, like social media I guess that means something? Uh, just as one small example, the NBA is the first US league to let the team sell advertising slots on players jerseys. So Every time LeBron post something on Instagram where he's in his Lakers jerseys that Wish has sponsored. Well, guess what? That's a new ad impression for Wish.

1:51:27 And LeBron has a hundred and twenty million followers, right? Like so Wish paid the Lakers thirty million bucks for that. Ad sponsorship. And and let's even pop up a level above that. Let's say like take a player like Luca, right? Like you know potentially the next great super superstar in the league or even or Giannis, who already is two time MVP in the league, you know, and is how old is Giannis? I think he's like twenty six, maybe I just want a whole diatribe about how I don't know. Okay. Ben doesn't know. That's the moral of the story. Anyway, they post something Kids in this

1:52:01 Thirteen to seventeen year old demographic follow him like Boom, what did the NBA just get? They just got a new fan for life who they're gonna monetize for decades. This is really good strategy to allow the players to have their own presence and amplify it like this. Yep, completely agree. I also want to say on the coronavirus shutdown I mark my calendar by March eleventh when the NBA canceled the rest of their season. I don't think they knew that they were playing this leadership role, but where we kind of have a lack of leadership in our society right now.

1:52:33 I definitely mark my calendar by March eleventh, the shutdown started because in a lot of ways the NBA Give the United States public permission. to say like, okay, this is serious enough right now where like look if the NBA's not playing

1:52:50 I'm changing my life. Yeah. I mean it was a wake up call for sure. there's definitely an amount of like societal leadership that they didn't ask for and they're not necessarily the best stewards of, but they seem to be doing a bang up job with the attention that they have. Not to mention they're the only sports team to responsibly implement a way to play their sport and run their business, I think profitably during this era in executing really well on the Disney bubble. Well at least

1:53:17 Safely. I mean um Every other Sports League. Professional and Collited I think that has not taken a bubble approach.

1:53:28 Has had coronavirus cases. Which duh. That pretty much brings us to the end of, you know, the modern day today. One last coda that we would be remiss if we didn't talk about is Really interesting drama that we'll see how plays out in the coming years. And that's

1:53:45 Back to China. And this tension between these two elements of right. Like on the one hand, you've got these two the three plus technology, but let's put technology aside for a minute. These two massive forces driving the MBA of internationalization and And Letting the players be the stars and have their own voices.

1:54:05 And China is right in the middle of this. David, have your own voices does not sound like a platform that the Chinese Communist Party would like. So last fall, as most listeners probably know, uh Daryl Morey, who's the GM of the Rockets. posted a tweet in support of the Hong Kong protests. Fight for freedom stand with Hong Kong. Yeah. Issue would be an understatement. So the season hadn't yet started. The NBA was scheduled to play two pre-season games in China. The Chinese government

1:54:38 Communist Party postponed those games. China Television dropped MBA programming. I don't know what happened with the ten cent streaming deal, but I believe that might have been paused or at least delayed as well. Hiccup there. So Adam Silver at the in the terms of economic impact estimated that the league lost four hundred million dollars in revenue as a result of this. But even more importantly, could have been like

1:55:04 Tens of billions of future revenue. We're still late. Oh, still maybe. Even more pointly though, like it put silver And the league in this kinda unwinnable situation of like

1:55:16 The either. Could Call out Mori. And the Chinese government wanted him to be fired for this tweet. Or they could support him and it was kinda like Either way, you're gonna win and you're gonna lose. Well, it is their their two strategies are directly at odds. Like, hey, we want to empower you to have your own voice and speak your mind and build your own brand, build your own following, and let the NBA trickle through your brand. Also, we wanna be huge in China. So what happens when you have this conflict of

1:55:46 somebody has some kind of uh disagreement with the Chinese government and they have their own voice. Your two guiding principles have just smashed up against each other. Yeah. So ultimately Silver in the NBA did side with Maury and the freedom of voices of NBA players and Coach. So I mean they apolog like Silver apologized twice and said he disagreed with the sentiment twice and Darrell Mori deleted the tweet.

1:56:15 But I guess they sided with him in the fact that they didn't fire him. Well, and also so that that happened initially and then After People were like Uh excuse me guys.

1:56:25 Sulfur did issue a statement saying, you know, there's Kinda trying to the diplomat here, but siding with Maury. He says, It is inevitable that people around the world, including from America and China, will have different viewpoints over different issues. It is not the role of the NBA to adjudicate those differences. However The NBA will not put itself in a position of regulating what players, employees, and team owners say or will not say on these issues. We simply could not operate that way. Which to me sounds like a pretty strong statement. No, value number one, priority number one is But we'll send a suggestion email to everyone tonight letting them know they should probably not do this again because Please think hard before you do this. All of us are at risk when you do that. Yep. Yep, totally. So the super interesting coda to all this, though, is

1:57:16 Guess who is currently the president of the Chinball Association, which Now the Chinese Basketball Association is a very interesting organization. It's the equivalent of both like USA basketball and the NBA. So it runs the international competition and the whole like development it's how China would do the NBA. It's the government. Exactly. And it's a professional league with teams uh and competition. The current President.

1:57:45 Uh The C BA. And Yao's last two years with the Rockets, who was the GM Daryl Morey. Wow. Oh, that's amazing. Isn't that amazing? So there's a lot.

1:58:00 more and probably years worth of more events and things to happen and evolve on this front. also gonna be very impacted by US China relations as a whole and what happens with TikTok and everything. But there is a lot of hope here that people believe like look, if anybody can broker Peace here.

1:58:19 It's Yao and the MBA and you know, not that Mori is involved. at this level, but Yao has a very, very close relationship, of course, with Silver and and with Stern before Stern passed away and and with the NBA as a whole. Should we go into power and into exploring the business model of the NBA today? Yeah, let's do it. All right listeners.

1:58:41 Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is uh no longer the hard part. Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like the risk Are real.

1:59:08 Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why Service Now built the AI control tower. Yep. AI control tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with Any AI, not just theirs. Every device on your network, every permission across every system. Every AI agent visible and secure in one place.

1:59:35 And ServiceNow can do this because they've spent more than twenty years building the operational backbone of the enterprise, the workflows, governance, approval, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security. ServiceNow already runs more than a hundred billion workflows annually and trillions of transactions for more than eighty five percent of the Fortune five hundred. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates. And in a future, that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is Who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out service now.com slash acquired and tell them that Ben and David sent you. Well, for folks who are new to the show, if this was an acquis episode, then we would be talking about acquisition category here and trying to define why they bought the company. That's not the case in this episode, and we can look no further than our uh friend of the show, Hamilton Helmer, and author of Seven Powers, to try and figure out

2:00:47 What gives the NBA power as a business? And to review, he's got these seven, as you can guess from the book, uh counter positioning, scale economies, switching cost, network economies, branding. process power or cornered resource. And we're gonna evaluate sort of which of those the NBA has and in what ways it it comes from those. And before we can do that, we should probably talk about where the NBA's revenue comes from and how much of it they do. And so we we talked earlier about the fact that this is an enterprise that grosses An enterprise might be the wrong word, but the NBA as an association grosses eight point eight billion a year in revenue. And David like just ludicrous thinking about some of the numbers that we were talking about earlier and and now we're in this sort of billion dollar category for the league. Like it's it's almost like looking at an Amazon stock chart where like all the growth happened in the last few years and it's like everything before that for the last

2:01:41 decades didn't matter. Right. It looks flat because it's you know, you're looking down from such a high mountaintop. The funny thing about exponential charts is it's you know, it's flat until it's vertical. Yeah. But where does this money come from? So David, I'll kick it over to you before we assign numbers to it to talk about the two unique structural things with the NBA in the collective bargaining agreement and in the salary cap. Yeah. So We already touched

2:02:08 On one of them, which is the revenue sharing with the players. So within the collective bargaining agreement, every five to ten years it gets renegotiated. But mostly since nineteen eighty three, right around fifty percent of the revenue has been contractually going to players. And then Phew man, there's like Bill Simmons or somebody should do a whole episode on this how the salary cap works and but in principle. How does it work?

2:02:36 In principle, there are caps on the amount of that a team can pay in total Salary costs. Yeah.

2:02:47 and that individual play can earn. So it's designed to both create some parity within the league. And Creep. Not parody, but like some degree of parity within a team. So it's not like LeBron is making ninety percent of the payroll of the Lakers. Right. And importantly to know this salary cap

2:03:07 because it's tied to that fifty percent. So that the leag sort of figures out, well, how much money are we gonna make? And then they back into okay, well what is fifty percent of that? And then what is what is that if we distribute it, you know, cut it by thirty. So this year the cap is set at right around 109 million dollars. And of course, as as you'd expect, some people are gonna want to go above that. How does that work? So you can go above that, but then you pay a luxury tax back to the league if you do go above that. There's somebody that's up at like a hundred and fifty million dollars in payroll. Yeah. So it's a soft cap. That's the takeaway here. But that leads into the other interesting aspect of the MBA is there is a revenue sharing agreement amongst the teams. So the luxury tax and the salary cap is related to this, but basically the way it works is with a lot of nuance is that Every team Pays into

2:03:57 the league. Roughly fifty percent. of their annual revenue. Of their basketball revenue. Of their basketball related revenue. Basketball related income. Basketball related income. Which basically covers all the major buckets that Ben's gonna go into. And so like for a team a big market team like the Lakers or the Warriors or the Knicks, that total revenue is obviously going to be much higher than the smaller market teams, but every team pays in fifty. Whatever their revenue is.

2:04:24 And then that gets redistributed out to the rest of the teams equally. So this is the kind of along with the salary cap. The second mechanism that ensures Some semblance of parody. within the league and allows teams like the Maverick, well not that Dallas is a small market, but like the Spurs. Spurs are a great example. Or the Bucs or you know relatively smaller market teams. to remain competitive with the Lakers and the Warriors and

2:04:52 Well, I'm not even gonna say the next because that's ridiculous, but the the Celtics. Yeah, it's interesting. I mean it's this very different philosophy where it's it basically say,'Cause keep in mind, all these owners are running their own individual fiefdoms. They have no ownership in other people's teams, they have no ownership in the league. And so it really is this sort of prisoner's dilemma situation. And also every owner is this fierce capitalist. I mean, all these people are, you know, private equity and tech billionaires. Literally Tamoth is one of the co-owners of the warriors. So uh the the situation is, well, how do I maximize my own personal wealth? And over the years, they've decided that the way to do that is by creating the most competitive situation possible across the whole league. And by doing this Really?

2:05:38 unbelievably large revenue share. Like the fact that half of all of their basketball related income uh revenue goes to be re spread around to everyone else. I mean Imagine any business where you you Facebook and Twitter directly direct competitors. Yeah, it's ludicrous. Yeah, it's literally the same analogy if like Facebook and Twitter said, Hey, you know, it'd be better for both of us if the social media ecosystem had more parity So we're gonna share our revenue like this. Yeah, it's wild. It cuts at this continued question of like, what is the NBA?

2:06:12 Are the teams competitors or not? And the answer is gray. It is just a big merassy gray area. But the strategy for them of paying revenue into a big pool and redistributing around has worked tremendously well. And so well, how does that break down? Well, of this eight point eight billion that they make per year, the most widely publicized number that we know for sure is that the league, having uh being an association and having contractual relationships with all the teams, has negotiated a bulk deal, half with approximately half with ESPN and half with TNT to pull in about two point six billion dollars a year to broadcast the games on uh on ESPN and TNT. And that's it. That's for the national TV rights. Exactly. So that leaves the local TV rights for any given team, which I think there's about a thousand games across all the teams that are not sold as part of the national package, 82 games they all play each other. So I think there's about one to two hundred million that each team makes on their own just from that, depending on what market they're in, um, just from that local TV contract.

2:07:20 Best estimates are that's roughly equivalent, but you know, basically think about five billion of that eight point eight probably comes from from these TV contracts at both the national collectively negotiated level and the individual summed with the individual team. level. Now what's really interesting that we don't know is whether the league pass revenue is part of that with the Turner deal or if it's separate.

2:07:44 Yeah. That's a great question. Well, let's keep going and then we can kind of know by process of elimination. So another thing that we know for sure is that A little over a billion a year is made from

2:07:56 uh licensing and merchandising. And again, this much like the national TV deal, the league has contractual rights with all the team and they enter into these licensing agreements on behalf of all the teams and they share equally among all the teams. So whether, you know, you're the Lakers selling LeBron jerseys or, you know, you're the Bucs selling your your bench players jerseys, like all of those get paid into the same pool, which I also found was fascinating. And that deal is with Nike. Yes. Well, so the Nike deal alone is worth one hundred and twenty five million dollars a year, but all the other licensing that they do in total i it sums to about a billion dollars a year.

2:08:41 Hats, you know, whatever, other merchandise. Yeah, and fun fact on the Nike deal, when then the NBA started the patch program, which uh the the patch sponsor like wish for the Lakers that everybody gets to have on there, in addition to that the Jersey sponsor gets to have a logo. So you have the sort of paid sponsor on one side and Nike on the other. For the Nike one, every team has the Nike swoosh except for the Charlotte Hornets, formerly the Charlotte Bobcats, because Jordan is the owner, so it has the Jordan logo on it. And I think that is just like frickin' perfect. So on point. Yeah.

2:09:15 It's also worth knowing this jersey patch program brings in anywhere from 10 to 30 million dollars per team per year. And so for anybody who's got an ad budget and you're thinking about CPMs, it's just really fascinating for me to think about, like, would you pay 15 million bucks, 20 million bucks to have that real estate? And I I really wonder like How does the NBA message what that real estate is worth? And I think individual teams sell that, not the NBA. at large and so those are sold by individual teams. Yeah, in the same way that the individual teams are allowed to, you know, sell the rights their arena, or I guess whoever owns the arena is allowed to sell the rights to the arena, it's sort of negotiated that way. That of course leaves one more huge pillar, which is tickets. That our best estimates are one to two billion dollars a year. Obviously got crushed this year from uh ending the season early and then playing the whole thing in a bubble with no fans, but that's sort of the three major pillars of NBA revenue. There's another additional five hundred million dollars a year that comes in from China, largely from streaming, and that pillar will will only grow in in future years. The other

2:10:23 one that will certainly grow very quickly is when the national TV deal that's$2.6 billion a year expires in twenty twenty four or five, best estimates are that will at least double. And so when we compare this to the NFL that generates thirteen billion compared to the the NBA's eight point eight, or major league baseball that generates about 10 billion a year, it is A little staggering how broad the reach of the NBA is, but how behind they are in monetization. But I think all the themes that we've talked about to this point put them in this really nice place to lean hard into the value capture here in the next several years. Yeah. And also

2:11:01 probably start increasing their monetization rates for media rates deals, both streaming and linear television outside the US. Like there's obviously China, which is its whole thing, but There's Europe, there's Africa, there's the rest of Asia. Like the NBA is hugely popular in all of these places. Well, actually before now naming the powers, I want to talk about another spreadsheet that I made, which was basically analyzing the names of all of the arenas. Cause it's always really bothered me that like we switched from you know, really great names like

2:11:34 You know, the garden or uh and I know this is an NBA the Coliseum to now like I hesitate to even say any of them out loud. And and that one's like not that offensive for some reason to me. But you look at uh

2:11:52 Ficeur forum. Or the A A T T Center or Talking Stick Resort Arena. That one always cracks me up. Is that the Suns? Uh yes. And do you know what the Talking Stier is? Is it a casino? Yeah.

2:12:08 So here's here's kind of a funny thing. So you look at all thirenas and Almost all of them can be categorized as a bank. So you've got Barclays Capital One, Chase, Fi Serve, Golden One, Rocket Mortgage, Scotiabank, I think I said that right, T D Garden, like you know, goes on. Uh an airline. So you have American Airlines Arena, you have American Airlines Center, American Airlines shelled out twice for arena naming rights. Is that is that right? Miami and Dallas?

2:12:41 I think so. Like I should have done my research before, but I'm like clicking through these Wikipedia pages now in real time to to verify that. That's just insane that that is true. So a bank, an airline, an insurance company, uh cable or telecom. And my last category here is sugar water, because you got Pepsi Center and Smoothie King Center. So the vast, vast majority of these These arenas are named after pure commodities that have no way to compete in their business other than to differentiate on brand. And so what they have to do is pour these brand dollars in to making their

2:13:15 actuarial tables in the case of insurance companies or interest rates appear somehow differentiated to consumers than their competitors. And so this seems to be the popular way to do it. And I think the only NBA arenas that are not one of these pure commodities are Pyramid schemes and casinos. Amazing. W in which category do you put Oracle?

2:13:42 Hay Depends if uh this Tic Tac deal goes through or not. Yeah. Yeah. No, I think uh Oracle Arena, I suppose, is one of the ones. It well it depends. Is cloud hosting a uh a pure commodity? I think that probably stands out as um probably a third exception. But we'll we'll have to see over time.

2:14:02 Great analysis. That's my analysis of why all of these Arenas have such freaking uninspiring names. All right, so power. So like why is the NBA a good business? Uh and specifically why is it so freaking profitable and why will it continue to get more profitable as time goes on? So David, give me your give me your step. Yeah. Oh boy. This is interesting. So they're

2:14:23 A few dimensions to look at this. One, I think this is actually outside of power itself and is more just like Being a first or a best mover. Execution wise on a

2:14:37 market with international expansion, like a huge amount of the value creation in the MBA has been international expansion over the past decade plus and they've just executed on that way better than the other American sports leagues. But I don't

2:14:57 Power in Hamilton's sense. So If you think about power like You could think about it in two dimensions. The less interesting one is power versus other forms of basketball, of which there's the NCAA and, you know, the Chinese Basketball Association and plenty of others. And I think the

2:15:18 Power there is cornered resource where they have the best. Play that play in the league. So if you want to see The premier Marquis. Players. You gotta watch the NBA. So that's that's my number one, but I have it at a much more fundamental level. Like there exists an asset called

2:15:36 Professional basketball or or called the game of basketball. Like it's a product with product market fit with fans because it's a thing that's fun to watch. And They seem to have a monopoly on it. They they have cornered that resource in America. They are the only people who can deliver that product at a professional level to consumers.

2:15:55 Yep. Now there is the N Cou A. Which is A competitor to that. But it's nuanced, right? It's like more of a Co opetition, right? Right. Also on the I'm gonna go on the record, they are professionals, we should be paying them Like, hundred percent. Oh my god, I'm with this I I cut this from the script'cause this episode is already too long, but

2:16:15 One of the things I found from the early days of this this episode is longer than the NBA playoffs. Yeah, seriously. Uh like I found out the history of the N C double A. So Uh Teddy Roosevelt was actually the one he didn't create it, but he pressured the he in like nineteen oh five I'm dead serious here. pressured colleges to create the N Cou A to regulate football because too many people were like

2:16:43 getting hurt and dying playing football. So that's the origins of it. But like yeah, it's become like In my mindless like the most awful, corrupt, like worst organization out there. Like it's so ridiculous. Like these College athletes are professional athletes, full stop. Like they're being monetized, their labor is being exploited. Like when are we gonna find one of these disagree on? Because we're just like straight up in the same boat over and over and over again on these. But I don't love it.

2:17:10 Um wait, okay, so my question on b before we move on to other power. So on cornered resource, like Why can't something like the ABA happen today? to threaten the NBA and force a buyout. Oh, interesting. Certainly in one part of it is just cornered.

2:17:27 resource on real estate. Like With the exception of Seattle, like uh and maybe one or two others, like what cities in North American like Vancouver probably like sh could also just be served by Seattle, could support and deserve an NBA team and uh a professional basketball team and don't already have one that's served by the NBA. As a competitor league, you'd have to be mostly going into cities that they're already existing MBA teams in and

2:17:54 That's an uphill battle. Right. Right, and you'd have to fight them in a counter positioned way. Like you'd have to do something. You'd have to be like the XFL and be like we're providing this sport that's like the existing league would have to destroy themselves trying to match us and they wouldn't do that to their massive revenue line. Ooh, that just makes me think, by the way.

2:18:14 There is a massive counter positioning opportunity for a new professional baseball league right now. Baseball but over and a half hour. Yeah. Well and there's a model for this, which is Indian Premier League, which like you and probably many listeners have never watched an IPL game, but like probably a lot of our listeners have. I have it's Awesome. Like I love IPL. It's so compelling. They took cricket, which was like deadder than baseball.

2:18:42 And Like added Like insane fireworks and like crazy crowds and crazy rules and like it's Actually, like in terms of global viewership, IPL is on par with the NBA. Wow.

2:18:55 Yeah. Also streamed free on Twitch. Ah. Interesting.

2:19:03 Anyway, that's a digression. I have another interesting lens to look at power though. that I think this episode has brought out, which is What about relative to the other sports leagues? Like what's what's MBA's real competition? It's the NFL Major League Baseball.

2:19:19 Uh Premier League Soccer. Indian Premier League Increasingly the MLS. Yep, increasingly the MLS. What, if any power does the NBA have relative to that competition? Mm.

2:19:34 I'm not sure it has Uh Tonight. But One thing that

2:19:38 thinking about this strategy of making the players the stars That Could be start to introduce and probably I think already has started to introduce a an element of a network economy. Power.

2:19:52 Where If your players Have much larger and much more engaged social media followings. And our you know.

2:20:02 Relatively. Happy and evangelizing the sport. Then they're gonna be winning and converting fans and especially younger fans at a higher rate than leagues that Don't have that. And so as time goes by, and I think you're seeing this with the MBA, and you end up in a situation where like

2:20:21 young people in America Wha what'd you say, fifty seven percent? Their favorite league is the NBA. Yep. That's insane. And what, four percent for baseball and yep.

2:20:31 Thirteen percent for the NFL. Let's see if he nailed that. Uh you nailed that exactly. Good memory. Wow. That is like the biggest thing. If I'm the N N F L or the or MLB, like I am terrified right now. Like I'm basically looking at game over and

2:20:48 Ten, twenty years. And so what are they really competing for? They're competing like ultimately things come down to dollars. Obviously they're competing for attention share, but like Are The NBA and the call it N F L going after the same

2:21:03 contract dollars for the broadcast rights? I think they actually are because If you look at it this way, there's an arbitrage opportunity available for the network to go and buy the rights to broadcast something at some price because they feel that they can get more advertising dollars out of those rights than anybody else because of some way that they're uniquely positioned. And so They have a certain amount of money to spend securing rights and they're gonna seek the Which is a fixed pool. Right. And that is the biggest source of revenue for any of these leagues.

2:21:35 Right. I mean it's w one way or another, all of these revenue streams are attention based revenue streams. Either advertising or ticket sales or what like Your Monetizing the attention of consumers, both US and global.

2:21:52 That's a fixed pool. And the amount of dollars that are willing to s you know sponsor that attention is also a fixed pool. So like yeah, it's very much a competition between the leagues. The only other big one that I had was scale economies for a bunch of reasons, but you can't compete with the NBA without first getting to scale.

2:22:14 between starting your business and getting to NBA scale in order to negotiate the types of contracts that they have, in order to attract the types of players they have. Like It's just really hard to imagine what the laddering up strategy is there. And the fact that they have scale enables them to do the sort of like collective bargaining and group negotiating that they do as a league that uh just I can't imagine being an upstart fighting against that. Totally. The only leag that has a chance is is the CBA, the Chinese basketball association, right? Like

2:22:46 You know. Six hundred million basketball fans in China. before last fall, I think probably the strategy of the C BA Set by both Yao and the party. was partner with the MBA

2:23:02 And Yao had actually talked about I think I think Yao and Adam Silver had talked about like they'd love a future where Uh champion of the CPA is playing the winner of the NBA finals every year in a global championship. But now like is that

2:23:18 What they want, or do they actually want to try and build the C B A up into its own Big competitor. Yeah, it's a good question. Question. Do you wanna go to Playbook? Yeah, let's move on to playbook.

2:23:29 So I the way I wanna frame playbook,'cause there's a lot of directions we could go here, is Let's say I bought any given NBA franchise in twenty ten, and I now have had a 6x return in ten years on my investment. What is it that the NBA did And what seeds did they plant over the last thirty? that have led to this

2:23:51 Dramatic increase in value. Like what's what's the playbook they executed to do that? I mean to me it's it's the three things we kept harping on that are Basically. With some fudging on the first one, the Disney playbook of

2:24:06 Content. I e Let the players be the stars. Internationalization and Technology. Yep.

2:24:13 I think that's I think that's a good way to sum it up. I have some others that are little offshoots from that that that we've discussed, but I think it's worth tying a a bow on them. I think they made very intentional decisions to attract young fans. And so that investment, like to the extent that anything is valued as the you know, discount of future cash flows. There's just a lot more years in the future in the average age of the NBA fan versus the average age of the lifespan of a human who likes the N M L B. So I think that like

2:24:42 literally the number of years of future cash flow that you can pull forward to today to do evaluation. Like they It it's it's kind of an easy it's an easy way to make the value go up, expand the number of years. The other big one, I think, is, and I can't figure out if this was intentional or not, but the NBA franchises have managed to attract a younger and much more sort of tech and business savvy. group of owners. I mentioned before that sixteen are are tech VC or PE people who made their money in those ways, um, and lots of entrepreneurs. Very few are tech inherited family money. The average age, and I know this is gonna sound old, but it's relatively young compared to other leagues, the average age of an owner is

2:25:29 is uh sixty five years old. It has people as young as let's see, who was who's the Grizzlies ol owner? Rabbit. Para who started ubiquity. Uh he's only forty two years old now and was thirty-five, I think, when he bought the team. And so you have this like catch up, get the acquired uh NBA franchise card. Totally. And so you have this like

2:25:56 For whatever reason, you when you compare it to like the NFL ownership groups that seemingly get passed down from generation to generation, that are a lot of sort of inherited wealth that are a lot of Steinbrenners or like Yeah yeah, exactly. Um, and a much more old you know, stodgy ownership group, there's sort of been this self fulfilling prophecy in the the NBA being willing to be more experimental because the commissioner has more a leash from the board of governors who is elected by the ownership group and the ownership group themselves have been entrepreneurs and are younger. You know, I think there's just a lot to following the incentives and the people who ultimately have control are the owners. And so a lot of the Even if they're the not the most sort of progressive group, a lot of the when you compare'em to other leagues, a lot of the things that the NBA has been able to do is because the owners are

2:26:48 Okay with it. Totally. So that was the only two additional playbook items I wanted to call out. Great. All right listeners.

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2:27:57 Take us into grading. All right, greeting. So for this one, it's interesting. You think when we're starting literally what was a hundred and thirty years in the past, we could render a grade on this one. But we talked about it beforehand. I think the more interesting thing, like yeah, look are we gonna are we gonna grade the MBA over its You know, existence? A, for sure, right? Like they went from the underdog to this incredible position. I think the more interesting

2:28:24 question is is do what we do with companies that we're looking at more real time of What are the scenarios where there's an A uh like middle of the road C, C minus, or an F over the next five years for execution for the MBA. Um, because I think it really is at a At a major crossroads here.

2:28:45 I can paint scenarios for for all of them. Does that sound good to you, Ben? Yeah, let's do it. Let's start with the F. How could this Not pay off.

2:28:55 I think the the Way that this really goes off the rails. Which was hard to see before doing the episode, but could be a real scenario is China becomes a a a disaster scenario here. And um

2:29:10 US China relations continue to deteriorate, which is outside of the NBA's hands, but You know, both it's so important. to the MBA. All of those basketball fans there.

2:29:23 And not just fans, but there hasn't been a lot of Chinese talent coming into the NBA after Yao, but there's so much latent talent there that especially now that Yao is running the CBA Is gonna get developed within China. Like, where's that talent gonna go? Is it gonna come to the NBA? Is it gonna go to the CBA? If that talent goes to the CBA, And China continues to crack down on the NBA and other American businesses.

2:29:51 Well that's the That's the only viable competitor scenario I see for the NBA being started and and maybe Overtaking the NBA over time. Yeah, and even if they don't necessarily attract a US audience, like they could attract other sort of non-US countries who become huge fans. They may do a great job, actually, of of marketing to the US and figure out a sort of like

2:30:13 TikTok like situation for it to be uh an amazing US product developed and owned in China. Well I think that's what's interesting about doing this episode I've I've come to realize is like yes, you know, just like with Facebook and social networks and lots of other the US audience of the NBA monetizes at a much higher rate than the international audience right now, but that's gonna continue changing over the time.

2:30:40 And just purely in terms of numbers? The US Doesn't really matter. If th a billion people watched the NBA last year, how many of those were Americans? Ten percent? Fifteen percent.

2:30:53 Like Right. It would hurt if that went away, but like The vast majority is non US. So if China captures that, like that's Terrible for the NBA. Yeah. It's worth calling out that the value of these teams effectively comes from three things. The future growth from international, the future growth from youth sort of the spending at the level that you expect them to spend and and continuing to be NBA fans. And then what we haven't talked about is

2:31:21 Beachfront property. where owning an NBA team is incredibly scarce. It's unlikely that they'd be competing for the same set of billionaires to buy the teams, but if you have thirty, forty, fifty m new pieces of beachfront property when there really only have been a hundred and fifty total in available to US you know, team purchasers. Right. Like the intrinsic value of these

2:31:47 NBA teams I mean the intrinsic value is whatever anyone's willing to pay for it. But you look at a team that's worth four or five billion dollars, like A lot of that comes from the fact that There is only one New York next. Yeah, it's like real estate. Well, I mean that's the Look no further than Bomber and the Clippers, right? Like

2:32:04 Bomber was hell bent and determined to own an NBA team. No matter what, he was gonna pay whatever it took. And him paying two billion dollars ended up actually being a momentum trade and making every other team, including his own, more valuable after he set the new high water mark. Yeah. Totally. Totally. Okay, so I think that's the other thought. Yeah, and and to specifically call it out, it's their strategy of um letting

2:32:31 anybody have their own voice being directly in conflict. Or at least proving to China that it could be in direct conflict in the future and they shouldn't put too many eggs in it and exist. Yeah. Yeah. Yeah. And then, you know, the next Giannis, the next Luca, the next Joel M B they're going to play in the C BA, not in the MBA. Yeah.

2:32:52 Yeah, I think that's a good thing to flag. The other one that I'm a little I I don't totally understand the profitability of each team. I know there's some of a handful of teams that aren't profitable, the vast majority are, and then there are some teams that are crazy profitable. I do wonder if there's some situation where Because you're paying the players so much and the uh the question is, is there like rising costs? on the team ownership side where it can cause some teams to sort of crumble and owners to not be willing to continue floating the teams. The good news is the NBA is actually in a better position than any other for that, with all the revenue sharing. Yeah, the revenue sharing and the collective baring agreement, right? Like

2:33:32 I don't know, I'm sure you could argue make arguments on both sides, but it feels to me like it's pretty fair with the players, right? Like it's based on revenue. So as revenue grows gets share between the owners and the players. The players get fifty percent. Great, like it's locked in. You know, it's not like I guess there's a risk that in the next round of negotiations the players have so much leverage they end up demanding seventy percent or something. They have all the Instagram followers, man. Right. They have the Instagram. Well, that MBA account has eighty million, so

2:33:59 Clearly the answer is the owners need to become influencers too, just like Cuban. So Yeah. Well, because a C scenario is boring, what's the A plus scenario? Okay. A plus scenario. They land the plane with China.

2:34:15 Yao and Adam Silver and LeBron. have a love fest and um At some bright date in the future there is a world championship. Yeah. And that one point five billion dollar

2:34:32 deal with Tencent for streaming in China and goes to fifteen billion dollar deal for streaming in China. That's one element Thank you The next element is you know, when we're talking about LeBron, we're talking about Steph, we're talking about the NBA accounts in there. And their influence or followings, like

2:34:51 They Up level again to Kim Kardashian, Kanye West, Taylor Swift territory. But you gotta feel like that's gonna happen, right? Like Both for them and for the next generation. Like I don't see that not happening. Yeah, I've been trying to figure out so like I just listened to this great podcast episode from twenty eighteen with Steph Curry on the Bill Simmons podcast, and Steph's talking about just how incredibly demanding the NBA schedule is.

2:35:19 and playing eighty two games and how hard it is on the body. Like People have talked about a seventy game season, um, to lighten the load on the players a little bit and increase longevity. I do wonder if not that, but something like that happens that enables the players to do more outside the game rather than solely being focused on the game so that they can be more personalities and less like players who have the opportunity to be personalities during the off season and then retirement. Like to truly get to Kanye level, you need to be able to like have some spare cycles to be Kanye.

2:35:53 You know what though? I I actually think this is This is gonna happen naturally. Like LeBron's probably gonna retire.

2:36:01 Within the next five years, right? Oh yeah. No sure. No doubt. Next time. He'll win another championship or two and Hang it up. Well like LeBron full time focused on LeBron and his businesses, like watch out. Like, you know, every successive generation we've seen this, like, well Jordan did it best, right? But then Kobe, Shaq, you know, these guys like post retirement, Charles, Barkley, they're like they're building their presence. But

2:36:29 LeBron staff, these guys when they retire You know, social media native coming up through like they're they're gonna take it to a whole nother level. Well, I think I think that's the right take. I think the last thing I would say is Based on valuations. a lot of this stuff has to go right in order to justify some of the prices that these owners have paid because if you look at the average MLB sort of price of a team, it's about five and a half X their revenue. Uh the NFL has a premium to that and it's about six and a third.

2:37:00 the NBA ranges anywhere from seven to fourteen times their revenue for the price of a team. So I would say the owners are as bullish as you are, David, on the the future of the league and of owning these assets. A plus is a little baked in at this point. Yeah. That's interesting, right? Like in and of itself. Is the A plus already priced in If so, like then you need a

2:37:24 You'd need a lot more than that to get a real A plus, but I mean this doesn't it just doesn't fit into the normal acquired paradigm of like Like there there is no A plus situation, frankly, of going and buying a team for four billion dollars now and figuring out what you could sell it for at some point. Like I know that that that team prices have six X'd in the last ten years, but like they were way underpriced before. And

2:37:47 Now they're That over here. Say you buy a team for four billion dollars. Are you gonna get forty billion dollars for that at some point? Like That does seem like a Did you think it's a good thing. Yeah, it's more like real estate.

2:38:08 You know what it's like? This is like Seattle Estate. Uh there was like it was vastly underpriced. Yeah, it's it matched it was a a tracker for Amazon stock for a while until everyone realized actually it's real estate, not a tech company. Yep. But but that appreciation happened because there was a from what, like probably two thousand nine, two thousand ten until what, twenty sixteen, twenty seventeen. People were still valuing Seattle real estate like

2:38:33 Pre back when Amazon Was Like five thousand people in one building. It was way underpriced then. Like and then the market corrected and now it's at a sane rate again. And it seems like the NBA teams will probably be that Let's revisit this in five years and figure out if we're gonna eat those words. Totally.

2:38:53 So Okay. That feels like a great place to wrap. Yep. Carve outs. Yeah.

2:38:58 Carve outs, let's do it. I have a very exciting one. on today's show, which is a new podcast called Just Raised that has been started by acquired listener and friend of the show, Joe Sweeney. So excited for it. It's already great. He's four episodes in and so proud of Joe for starting this. It's a podcast with founders who literally just raised their seed or series A, and they tell their stories about how they're raise, what the company is, what their needs are, what they're hiring for, what their story is.

2:39:34 And he's had some amazing founders. So the most recent episode is with Phil Libben and his new company, mm-hmm. But of course Phil has a long history of uh the original Evernote founder and CEO And just a Wildly entertaining human. Uh so go check it out. I remember this was a twinkle in Joe's eye on an L P call that we had a few months back and it's just there is nothing cooler for David and I than

2:40:01 Someone on an L P call or in the Slack or something, spitballing a project that they want to do and then seeing it come to life. We need to start doing this again. We didn't do it on the last one, but We had pitches that uh anybody could Pitch an idea or ask for feedback at the end of an L P call and

2:40:17 Joe piped up and said he had this idea for a podcast and So cool. See it out there in the wild. I love it. I love it. Mine is something from a couple of years ago that may not be relevant to you now because I don't think it's open now and uh

2:40:32 coronavirus era, but hopefully will in the future. And I I was thinking I must have done this as a carve out at some point. And when I realized I hadn't, I was like I have to talk about this in the show. So David, do you ever recall me telling you about Meow Wolf? No. Okay. You told me about a lot of things. Uh but uh but I don't recall this one. So this is a um an experience in Santa Fe. It is the craziest Like

2:40:58 Art exhibit full immersive experience. Disneyland Chuck E Cheese combination you could possibly Imagine. And the story goes Nolan Bushnell involved? Uh Close it is actually bankrolled by George R R Martin. So it started as like a little artist collective of these crazy experimental people who kept

2:41:21 making wilder and wilder sort of like art experiences in Santa Fe that you could like wander around in and when and it wasn't a business in any way. It's just sort of this like crazy group of artists and it functioned sort of leaderlessly. And then there's one guy who sort of rose up to become the leader and started structuring a little bit more and they started being able to raise money for their projects they were doing and they made pirate ships and they did all sorts of stuff. And they came up with this really crazy one for basically like a Alien invasion Like experience that's kind of a mystery and they said

2:41:55 But we wanna fill this whole empty space we found that's an abandoned bowling alley. they pitched a bunch of people and they eventually got George R R Martin to to fund it. And it is This just nutty experience that you go and walk. You can spend eight hours in here trying to figure out all the clues and to just like explore the whole thing like a like a horror experience or like a mystery that you escape room type thing. Kind of escape roomy. There's lots of people in it.

2:42:24 There's like like weird things happen, like you're you're in a house and it's a dining room, but actually then you realize the ceiling is warped and then you realize that like it seems like something might kind of be falling through the ceiling. And then you realize every once in a while that TV flickers and you're like why is that TV flickering? So you're like in the experience of a paranormal thing happening in this world. And there's no recognizable sign Mansion or Twilight Tower. Love it. The cool thing that you can do now, if this sort of sounds interesting to you, is there's a documentary that we'll link in the show notes that they made called Origin Story of uh Meow Wolf tracing them all the way from a group of sort of like crazy indie artists colony to really what their ambitions are at this point is to become the next Disney. And they've sort of like talked about this. They're like, we want to be a real

2:43:11 business. Like we want to start a billion dollar thing. We want to create all this really interesting IP and experiences. They at least I don't know if they still are with the COVID, but they were building out experiences in Vegas and I think maybe Denver, like second and third locations. For anybody who has been there, you are definitely nodding your head right now and being like, Oh my God, I forgot about that. That was such a cruel, crazy and it's it's really, frankly, hard to describe. You can kind of get a sense for it by going to their website because it's trippy. I could go on for a long time about this, but check out their website. Uh when it's they're in person you should do that. And if you're looking for kind of a fun documentary to watch to like get you excited to one day go, you should do that too. Amazing.

2:43:52 I think that about wraps it up for our NBA. Should we do more? I don't know if I could do more. It's late. And Yeah. This was such a blast to do. I hope uh listeners, I hope you enjoy it. We uh we love feedback. We love feedback and we love tech.

2:44:09 We love doing text but like all these Media episodes, Disney episodes, ESPN like Such a blast too. And fun to s like realize too, like just like the intersection of these worlds and totally how much media pioneered a lot of stuff that Is has shaped tech and

2:44:27 Now it's going back the other way with social media and everything. Really fun. Indeed. Well, if you aren't subscribed and you like what you hear, you totally should. And if you like this episode and you have a friend who loves the NBA or sports in general, or you just think you know someone who would geek out on the business of sports, you should absolutely share this episode with

2:44:48 said friend or co worker or just shout it from your local social media. Hilltop. You two can be like LeBron on Instagram and share the goodwill of acquired. As always, if you love acquired and you want to hone your own craft of company building, you should join the community of Acquired Limited Partners. You'll get access to the LP show where we dive deeper into company fundamentals and investing fundamentals, in addition to our monthly LP calls, where you too could be like Joe Sweeney and talk about a project that you have in mind and one day bring it to life. and get to meet so many other members of the acquired community directly. You'll get access to our book club where we will uh interview great folks like Hamilton Helmer or Will Thorndike or Emily Chang. And if you join here in the next few weeks, you'll get to hop on with uh with Emily when we all um have our book club review with her. If you aren't already a limited partner, click the link in the show notes. Super easy, or go to acquired.fm slash LP and start your seven day free trial.

2:45:43 Now. And lastly, if you want to talk all things tech news strategy or review this episode and correct us, you can do that in the acquired Slack at acquired.fm slash slack. And with that We will see you next time. We'll see you next time.

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