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‘Baseball has somewhat forgotten about how to connect with younger audiences,’ Patricof CEO says

Patricof Co Founder & CEO Mark Patricof joins Yahoo Finance Live to discuss second-quarter earnings for Manchester United, the potential sale of the team, the Washington Commanders, and 2023 MLB Opening Day.

Video transcript

- Well, strong earnings out this morning from Manchester United with the team announcing they've sold a record-breaking 2.3 million tickets for their current season. But despite rumors of a potential takeover, the club failed to comment on any impending sale. Joining me now is Mark Patricof, founder and CEO of Patricof Co. Thank you for joining me this morning. Starting with my nemesis Manchester United-- I am an Arsenal fan.

MARK PATRICOF: I heard.

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- But I want to break down some of these Q2 earnings here. What do you think some of these potential-- not just the investors, but the potential buyers will be honing in on?

MARK PATRICOF: In a way, their earnings are indicative of just overall global popularization of sport, and certainly soccer after the World Cup. We know everybody loves soccer. Football for you go gunners. But it also tells you that these purchasers who are lining up to acquire assets like that are becoming a smaller and smaller group who can actually pull the trigger. So PIF owns Newcastle. They're worth about $800 billion. I think one of the bidders has been announced-- or potential bidders-- from Manchester is Sir Ratcliffe. He's worth I think it's $20, $25 billion. He's probably the second wealthiest person in the UK.

It's created a very small set of potential acquirers for these clubs unless-- what's historically happened in the UK is you see communities on their teams. And I wonder, over time, does that replicate itself in the US? And do you look at public offerings or sovereign funds that's really the only options to acquire assets that are worth 6, 7, 8 billion pounds. In your case, dollars if it's the Commanders or someone here.

- So then what are the expectations then for the potential? So you mentioned some of the bidders here?

MARK PATRICOF: Well, I think the expectations are that this is a prized asset. Scarcity value counts for a lot. I don't think whether earnings are up by a percent or down by a percent matter a whole amount. I mean, they're going to hold these assets for a long time. So the question really is, how high can the value go? And are there enough buyers, which correlates to-- the value's, ultimately, there's got to be a buyer. And it doesn't matter what the value is if no one can pay it. So it all kind of interconnects. And I think at the end of the day, these assets have proven to continue to accrue value for their shareholders. So the numbers go up.

- Well, then as we shift gears then and talk to US football, Washington Commanders obviously up for sale in the spotlight as well, looking for bids. Talk about that aspect because, obviously, this could be a record-breaking deal here.

MARK PATRICOF: Well, I think we're going to see almost every sale in the NFL be a record-breaking bid in the next 10, 15 years. I mean, between now and let's say 2033, you'll see 10, 15 teams trade. They're going to have to. Some of the owners who own the teams today can't afford to continue owning them for estate tax reasons and other so forth, just guaranteed contracts like Deshaun Watson and having the owners needing to put $250 million in escrow.

There's only so many people who can acquire these businesses. It's not different, frankly, than looking at the Premier League. So it really addresses an issue around, do private equity funds start playing in a more serious way the way Silver Lake owns a piece of the Garden, for example, or MSG? It starts to put a valuation on the business, which makes it easier then to bring in other bidders. And it's a pretty complicated process.

But when you think about it long term, I think the only two real options 10 years from now are either massive funds that have the kind of capital under management like a PIF or a Silver Lake, or, potentially, you see these as public assets, which, by the way, I think is interesting too because it provides some access for the community to have some say. And it addresses diversity. It addresses all the connections to the locally important aspects of what these clubs and teams mean.

- And do you get the sense that there's an appetite-- I know we're also going to talk a little bit of baseball. Is there an appetite to have more of these go public?

MARK PATRICOF: I think so. I was talking to somebody yesterday who's a minority owner in the Reds. And he said if the Reds, which I think are now valued about a billion one, which makes sense if the Yankees are worth 7 billion, plus or minus. He said if they put that company up on Nasdaq tomorrow, the shares be gone in 5 minutes by local people. So I think the passion and connection to these teams has in a way gotten lost. I mean, I don't know how you felt when you know the Lerners or the Glazers came in to the UK and started buying Premier League teams. There's something to be said for maintaining that connection. I mean, the NFL started with community-owned teams in a handful of markets primarily because they were industrial cities that had the capital to build and compete in the sports.

- And you raise a good point. I know for British football, it's very much everything is very much community based. And then, yes, it was tough to see some of these big billionaires coming who don't have the same love for the sport that we all grew up with.

MARK PATRICOF: I love that the Steinbrenners still own the Yankees. And you're wearing a red jacket. So I know if Arsenal-- a share in Arsenal is available, you might take advantage of that.

- You better believe it. And so just quickly, talking baseball, it's opening day. My Nats are also playing. Talk about some of the deals we're seeing there. We know that we're trying to also see increased pay for minor leaguers right now.

MARK PATRICOF: Yeah. Look, baseball is such an interesting sport. I mean, it always has been America's sport. I mean, the NFL in some respects has trumped that in terms of viewership. And baseball has somewhat forgotten about how to connect with younger audiences. But the truth is they're trying really hard. It's still an incredibly passionate, powerful fan base. They cut the spring training games because the new pitch count clock by 26 minutes. That's going to go a long way. I think baseball is not going anywhere as an important fixture in American sports. Happy to see the Yankees playing at 1 o'clock against the Giants. Yankee Stadium will be sold out. I'm sure the Nats will do the same at their home opener.

- We usually do. Always great to have you on. Mark Patricof there. Thank you so much for joining me this morning.