SBJ Unpacks: RedBird's Cardinale has reservations about NBA Vegas pursuit

RedBird Capital founder and managing partner Gerry Cardinale revealed at SBJ’s Intercollegiate Athletics Forum, presented by Learfield, that he has been working behind the scenes on potentially bringing Sin City its next pro sports team.

“We’re looking at bringing an NBA expansion team here in partnership with LeBron [James] and Fenway Sports Group,” Cardinale said.

James previously indicated an interest in owning an NBA expansion team in the city. Though industry insiders have generally expected RedBird and Fenway would be a part of those efforts -- RedBird, James and his business partner, Maverick Carter, are investors in FSG -- their involvement had not previously been confirmed.

While onstage, Cardinale also shared his perspective that much of the pro sports landscape is generally overvalued. That view even seemed to extend to his potential ownership of an NBA team.

“We started this project three years ago. The price talk on an NBA team three years ago was $3 billion. The price talk today on an NBA expansion team is $5.5 to $6 billion. I’m not sure I can make that work,” said Cardinale, who also suggested Mark Cuban’s decision to sell the Mavericks may be related to potential concerns over continued economic growth. “Maybe we’re hitting that inflection point, and it may mean that, if we want to see a continued linear progression in these valuations, maybe it’s a different type of capital [that needs to come in]. Maybe I’m evolved out of existence, and maybe now I’m handing the baton over to a sovereign [wealth fund] or to a lower cost-of-capital provider. It could be we’ve reached that point.”

NCAA President Charlie Baker called it the elephant in the room. It’s what everyone in college athletics wants to know. How is the NCAA going to support athletes, especially those at the 100-or-so highest-resourced schools in Division I?

Baker, the former Massachusetts governor who is nine months into his job leading the NCAA, characterized his potentially landmark proposal yesterday as a “conversation starter” that he hopes will create a forward-looking model for the richest 100 schools, based on their annual athletic budgets.

“It’s what I would describe as an amalgamation of a bunch of thoughts, observations and approaches to this,” Baker said. “This is a conversation we need to have and it’s one the folks in Division I want to have. … We need to be able to anticipate where conversations are going and get to a place where we're talking about stuff that’s coming and not just reacting to other people’s agendas.”

Baker’s proposal, which he shared with NCAA membership yesterday and talked about in more detail today, suggests creating a separate power division -- he called it a subdivision. It would have different NIL rules and directly compensate athletes via a trust fund that would pay a minimum of $30,000 a year, but could pay more if the school wanted.

“That’s a permissive standard that establishes a minimum for you to be in this so-called subdivision,” Baker said. “People could do more. Now, the membership may say they don't want the subdivision, in which case everybody has the ability to do whatever they think makes sense.”

The proposal, however, stops short of providing revenue sharing from media rights contracts or defining athletes as employees.

“I don't think you can go down that road without creating really significant discrepancies around Title IX, which is a success,” Baker said. “We should not turn it into something else. The second thing is schools fund their sports through a whole variety of means and mechanisms. And if some of them want to include that as part of the way they do it, fine. If some of them want to do it through donor contributions, fine. If some of them want to do it through some other mechanism, fine. The point here is let's figure out what we consider to be a permissive standard across DI to actually make it happen.”

Schools would have the flexibility to opt in or out of the higher subdivision.

Baker addressed a room full of college sports stakeholders this morning at the Intercollegiate Athletics Forum presented by Learfield in Las Vegas. 

He acknowledged that the formation of the Autonomy Five conferences in 2014 already established the framework for the biggest schools and conferences to make their own rules and standards. But the newest proposal would go even further.

“Let's say it's the hundred schools we're talking about,” Baker said. “Those hundred schools have a wide variety of programming, investments, revenue sources. I mean, this is not a monolith at all. That's the reason why we sort of framed it the way we framed it … set a minimum. Now, the membership may say they don't want the subdivision, in which case everybody has the ability to do whatever they think makes sense. But this is an attempt to create a way to do what everybody says they would like to do, which is more for student athletes than they do now in a way that is holistic and supports them.”

The next step is likely to be a vigorous conversation about Baker’s proposal at the NCAA Convention in January.

“Schools can make decisions on how they want to organize this,” Baker said. “I’m not going to tell anybody how to do this.”

More from Baker:

• On why he took the job of NCAA President: “I took this job because I believe in the positive power of college sports. I had lots of other things that I could have done and, frankly, would have been a lot easier. But this stuff really matters. And if we screw it up, I’ll not sure how much we’ll appreciate it for a long time. … We need to remember that this is a really valuable asset.”

• On making the NCAA more efficient at resolving issues: “We surveyed the staff when I got here and they love their teammates and they love the mission, but they think we’re not very good at getting stuff done. So, we created a big project management system so everybody knows what everybody is working on. We need to be more proactive about what’s coming so we can help the members with it.”

• On fan engagement: “One thing we haven’t done well and get to know our fans. We have millions of fans who come to our championships every year. So, we’re going build a giant database of our fans and work with our fans to communicate that information. I mean, I want 25 million fans in it. I think we can build the largest database of women’s sports fans in the world.”

National Football Foundation President & CEO Steve Hatchell and Pro Football Hall of Famer Ronnie Lott kicked off the second day of the Intercollegiate Athletics Forum, present by Learfield, discussing the state, as well as the future, of college football and the sport as a whole.

Even through the “chaos” on the surface on how college football is adapting to the challenges brought on by the transfer portal and NIL, Hatchell sees the positive things that are happening, which the NFF has to “promote aggressively.”

Hatchell: “This past year there were more young men playing high school football than there have been in the last 15 years. There are 772 colleges and universities playing football. That’s a lot of opportunities for guys to get degrees. ... There’s a lot of chaos on the surface, but we can’t get away from what is [under that] that says ‘this is still a hell of a game’ and we got to promote that.”

Lott shares in that, saying it’s an “exciting time” for the game. Lott: “To watch kids be kids ... watch them flourish and possibly make a couple of bucks, I think is real valuable. It gives kids the idea they could do more beyond the game of football.”

Hatchell: “The idea that we firmly believe is that football is a great platform. We don't care if you transfer. We don't care how much money you take -- you're going to graduate. That’s the mission we’re stepping off the curb with.”

Hatchell also called the addition of flag football to the 2028 Summer Olympics in L.A. “huge,” saying that the sport has to “keep charging.” Hatchell: “To have football exposure in the Olympics is fantastic.”

On CFP expansion:

• Lott: “The more, the better. We're talking about competition and we're talking about finding the best teams.”

• Hatchell: “I like it just because of access. I think four has been good, but I just think it gives greater access and more flexibility.”

Three of the top commissioners in college sports are still digesting the landmark proposal this week from NCAA President Charlie Baker and how it will impact their properties. SEC Commissioner Greg Sankey , ACC Commissioner Jim Phillips and Big 12 Commissioner Brett Yormark were speaking at SBJ’s Intercollegiate Athletics Forum a day after Baker’s proposal leaked, and just minutes after Baker spoke at the same event.

For Yormark, simply moving in this direction signified an early win for Baker, who took on the role just nine months ago.

“We hired Charlie to lead, and he’s leading,” Yormark said. “It’s directionally correct, but there’s devils in the details and it’s sparked a lot of conversations. The other part of it is, from a culture standpoint we’ve been very reactive, and this has been a proactive approach. I feel good that we’ll end up in the right place.”

Phillips agreed that Baker, who had no prior college athletics experience, needs to be more proactive than reactive in the role.

“It’s a starting point, you can go up and down on the thing,” Phillips said. “But it follows a really intentional time that Charlie did to go out and visit everyone. … I want to understand it more. It has to be vetted. For all of us, we’re always interested in making the student athlete experience better. … But it can’t be without making sure this thing is equitable.”

Sankey said he had yet to fully digest the proposal, but noted he was disappointed that the SEC’s ADs and presidents were not brought into the discussion sooner. 

“It was not sent to commissioners,” Sankey said. “It was forwarded to me by our legal counsel. … Why wasn’t our board brought into this conversation sooner?”

Meanwhile, the SEC, Big 12 and ACC all will look vastly different next year because of conference realignment, but Phillips said it’s just part of the business. 

“It’s really nothing new to the infrastructure,” he said. “Realignment and movement of schools to conferences has been around as long as college athletics has been in business. It’s tied to media deals, and when those deals are open it creates a bit of a free agency, and that’s what happened.” 

Yormark agreed, noting “very industry goes through consolidation” and he was in the role to “give us the best options.” 

All three panelists were asked about the new CFP leader, General Richard Clark . Sankey: "He has a learning curve, but between Zoom and in person (meetings), his acceleration of his own personal learning curve was significant. ... Bill ( Hancock ) served well and we will honor him and appreciate his work, but we should have somebody for this new reality, new expectations."

Phillips added of Clark: "He may have a learning curve, but he'll make up for that with his incredible leadership and experience."

Commissioners were careful not to overreact to the potentially landmark proposal floated by NCAA President Charlie Baker today that would create a separate power conference under the NCAA’s umbrella.

“I view this as a natural evolution,” MAC Commissioner Jon Steinbrecher said in what he admitted was a measured response to Baker’s letter to the NCAA membership. During the opening session of SBJ’s Intercollegiate Athletics Forum, presented by Learfield, commissioners shared their thoughts on permitting D-I schools for the first time to pay their athletes in ways that are not tied to educational resources.

Steinbrecher: “We’ve known in this enterprise that we have an issue at the upper end of the food chain and they have pressures on them because of the revenue they're generating, the salaries they're paying, a whole host of things. And so I think Charlie's putting a flag in the sand and saying, ‘OK, here's the issue. Let's do something about it.’”

Steinbrecher and other commissioners on the panel, including the Sun Belt’s Keith Gill, agreed that this is not the precursor to some sort of breakaway from NCAA governance. “I would suggest to you it's exactly the opposite,” Steinbrecher said. “It's taking the pressure valve off to doing something that allows whatever institutions need to do ... that perhaps take some of the pressure out of this system.”

Baker’s inclusion of the word “subdivision” in his proposal also raised some eyebrows at the event. What does that mean exactly, Mountain West Commissioner Gloria Nevarez asked. “Subdivision is a trigger word for a lot of folks,” Nevarez said. “It sounds very much like the current autonomy structure we have today, and I'm wondering if there's something in there already in our system that can be tailored to get to this spot where we can make rules at a different clip, at a different level.”

Gill was bullish on the prospects of keeping the existing FBS structure together. “I don't have a ‘sky is falling’ mentality,” he said. “This conversation has to be had. We've got to create a structure that's sustainable and doesn't have us in court every six months with a new case that has really crushing potential. ... I certainly think, with those of you who know me, I'll probably have some disagreement on the details, and certainly I might've written that memo a smidge differently. But I think the overall conversation is really important, and I think it's time that we had it.”

As college football readies for the CFP and the NFL enters the final stage of its season, hosts Andrew Marchand and John Ourand look into the biggest media stories in both sports. For college football, that includes the CFP, the end of the Pac-12 Conference and the final "SEC on CBS" telecast. With the NFL, Marchand and Ourand dissect the NFL’s decision to use flex scheduling for “Monday Night Football,” and they analyze Amazon’s record-setting viewership for the Seahawks-Cowboys game.

Marchand and Ourand devote a topic to the NBA’s ongoing media rights negotiations. Marchand looks into how MLB Network is treating MLB’s Winter Meetings. And Ourand explains why the DirecTV-Tegna carriage battle is so important to the sports media business.

The “American Dream,” the “Land of Opportunity.” We’ve all heard these phrases. And to varying degrees, all of us have  lived  them. I have featured numerous stories over the years in my Sports Doing Good newsletter that speak to individuals who have come from very difficult circumstances to find safety and that dream/opportunity in the United States. Their determination and courage, along with important strategic assistance along their path, helped them on the road to fulfilling their potential.

Inherent with opportunity is  accessibility . For what is opportunity when individuals are inadvertently or purposefully excluded from the resources, people, places, and things that are essential in taking advantage of those opportunities? We have identified an area where accessibility is constricting, to the point that many of those who could benefit the most, do not have any truly realized accessibility, and that is youth sports.

The lack of accessibility in sports is certainly NOT “sports doing good.” However, recently I included two stories in the newsletter --  “American kids are facing an epidemic of loneliness. Overhauling youth sports could help fix that,”  and  “Investing in Utah’s young athletes could encourage a future of economic growth”  -- that speak to the importance of sports for young people’s intellectual, social and physical development, as well as the economic upside of creating a better system in and around sports.

The goal of youth sports should not only be to produce one elite player. It should also be to produce 100 great players. And 5,000 good players. And 25,000 kids who just like playing the sport. Democratization, not consolidation, of resources and efforts is what is needed. I hope to see all who can affect change to do that in ways that others recognize and are then inspired to do their part as well.

For sure, some work is being done to better understand and address this predicament we are in, led by folks like the Aspen Institute and its Project Play initiative, along with non-profits like Up2Us Sports (increasing access to qualified coaches), Good Sports (increasing access to good equipment) and love.futbol (increasing access to places to play.) But I would like to make a call to the professional leagues to do more, and here is why.

Companies across some of our biggest industries spend a fair percentage of their revenues on research and development. Pharmaceutical companies are known to spend anywhere from 15% to 25% of their multibillion-dollar revenue on R&D. Apple Computer and other top technology and software companies? Upward of 20% of total revenue. Of course, every industry is different but even taking a conservative estimate of 5%, the NFL, which brought in about $18 billion in revenue in 2022, should spend $900 million on R&D. I am happy to be corrected if I am wrong, but I don’t think the NFL spends anywhere near $900 million annually on its “research and development.” NFL Play 60 is the League’s national youth health and wellness campaign to encourage kids to get physically active for at least 60 minutes a day. According to the League, since 2007, the NFL has committed $352 million to the program, which is amazing. However, an average of $23 million per year is not $900 million per year, even taking into account the extra money spent by each NFL team on its community efforts.

What about the NBA? About $10 billion in revenue, so we are talking about $500 million in R&D. These are admittedly “back of the envelope” estimates and the nature of businesses like software, pharma, and pro team sports differ greatly, but it is safe to say that leagues can do more to help fix what ails youth sports in this country. It is worth asking and challenging the powers that be to think more strategically about the value chain that leads to the existence of their leagues. The development we see in pro sports is in essence captured by youth, high school and college sports programs. They are covering those costs, not the pro leagues. While we do see some sharing in professional baseball with team funding of minor league operations, and in MLS with the creation of academies for young players, major direct funding of youth sports programs does not seem to be widespread. Again, I want to be wrong and invite those in that world to prove me so.

I understand also that government involvement in problem areas is not everyone’s first thought on how to address large-scale problems. But it should not be dismissed outright, either. Many of the greatest advances we have seen in the aforementioned technology and pharmaceutical sectors were spurred by government funding and assistance. Does the U.S. need a Department of Sports somewhere in the government? Maybe. Several countries around the world do have such a role (usually a Minister of Sport). If not that, I would like to see a coming together of the major professional leagues to develop a comprehensive strategy to make sports more accessible in every way. We are at a critical time when it comes to mental health and the health of youth sports, and our industry can be a leader in the fight to have healthy kids, a healthy business, and a healthy society.

Sarbjit “Sab” Singh ( sabdeportes@yahoo.com ) is a sport management professor at Farmingdale State College and Columbia University and publisher of  Sports Doing Good .

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