Inside the Multi-Billion Dollar Sports Industry
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Summary
In this episode of Valuetainment, I sit down with Thomas J. Penn Jr., a former lawyer, former executive, former president of the LAFC, and former general manager, and my favorite guy to watch on ESPN when he would analyze who should go to what team with the salary cap. And I would be glued to him doing all the stuff that he would do on ESPN. And now we have established a relationship together, and I wanted to have him on the show as a guest.
Transcript
00:00:00.000
Pat Riley was the last one in Miami to assemble the big three down there with a true recruiting focus.
00:00:07.340
He went in and sold him and pitched him, but he had to get Wade to recommit.
00:00:14.020
But now it's much more player-to-player driven.
00:00:17.220
LeBron bringing Anthony Davis, that was the key to transitioning the Lakers from worst to first.
00:00:23.240
We think LeBron's getting paid what he's worth.
00:00:25.280
The short answer is for sure LeBron is underpaid.
00:00:28.860
I personally hate the fact that you can celebrate a long-term extension.
00:00:39.260
And then he can James Harden his way out of here in a year or two.
00:00:43.340
And it's a disturbing trend in the NBA for sure.
00:00:46.980
Could Jordan do what LeBron is doing today to the league back in their era?
00:00:51.480
LeBron could disrupt things and impact business for a little bit, but the league will go on.
00:00:56.960
LeBron has been different because wherever he's gone, it has followed.
00:01:01.740
You know, Jordan was in one place and it all came to him.
00:01:03.980
So my guest today is a former lawyer, former executive, former president of the LAFC, and former general manager.
00:01:15.260
And my favorite guy to watch on ESPN when he would analyze who should go to what team with the salary cap.
00:01:24.320
And I would be glued him doing all the stuff that he would do.
00:01:27.440
And now we've established a relationship together.
00:01:29.240
And I just wanted to have him on Valuetainment as a guest.
00:01:32.220
So Tom, thank you so much for being a guest on Valuetainment.
00:01:34.420
My pleasure. Good to see you. Man, you look good.
00:01:37.640
Good to see you. I told you I'm trying to look like a GM.
00:01:40.340
Today I look like a GM and you look like the agent of one of the players.
00:01:46.700
Well, you know, hey, I'll take whatever I can get.
00:01:51.320
How do you go from a criminal defense attorney handling cases, including murder, armed robbery, and other serious felonies to wanting to become a GM?
00:02:01.340
How does an attorney go to wanting to become a GM and an executive?
00:02:06.140
That's when you start wanting to become a GM and you go do what you can do first.
00:02:13.240
Yeah, I was in law school and knew I didn't want to go work for a big law firm.
00:02:18.380
And so I wanted to do something sports related.
00:02:25.780
That was my interest and still have the box of rejection letters upstairs in my attic space.
00:02:33.560
And, you know, it was back when you sent a real letter and got a real letter in return.
00:02:37.640
And then I went to work as a criminal defense lawyer.
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He was a really accomplished criminal defense attorney.
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And I took a position as a part-time public defender.
00:02:48.600
And that gave me a caseload of like four cases every week.
00:02:59.100
And yeah, stuff is interesting as first degree murder and, you know, got not guilty in that,
00:03:13.780
And then eventually got lucky and found my way into the NBA.
00:03:18.980
Are you guys, are you similar in temperament or no?
00:03:26.920
And just a total stud as a criminal defense attorney.
00:03:35.080
And that was interesting for me because I came in with the exact same name.
00:03:44.980
So I came in not only in his shadow or adjacent to him.
00:03:51.500
So they kind of called me the third around there, which was odd because, you know,
00:04:09.020
He gave me the flexibility to build my sports start by pursuing becoming an agent and, you
00:04:17.000
know, just being entrepreneurial in spirit, but having the safety net of a good career
00:04:28.320
Let me ask you, what helped you out in transitioning from being a criminal defense attorney?
00:04:37.280
What helped you out from there to being an agent, to being a GM or assistant GM working
00:04:45.600
What strength did this give you to, you know, go into these other jobs that you had?
00:04:49.660
Well, I went to law school just to have the core education, not knowing what it would lead
00:04:57.700
My only regret maybe was not doing an MBA while I was there.
00:05:01.780
But I felt like having the law degree gave a basis for whatever happened.
00:05:08.200
But first, starting in criminal defense, you know, that is like, there's nothing like being
00:05:14.940
on trial and representing somebody sitting right next to you with his or her life on the
00:05:20.980
And you're having to perform in front of a jury live.
00:05:36.300
So all those sorts of skills were being honed at that part of my career.
00:05:42.640
And you've got to work your tail off and be prepared, you know?
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You've got to make these decisions on trial and then be persuasive.
00:05:51.660
So all that kind of wraps together to take you to the next level or take me to the next
00:05:59.360
As far as the transition to sports, the advantage for me was I had the time to try to make that
00:06:06.320
So two of those six years, I was solely focused on just trying cases, winning, building that
00:06:15.060
Then I got into a two-year run where I was trying to build the sports business.
00:06:18.540
And I had the flexibility to do that, to fail, took me an extra year to do what I wanted
00:06:24.940
to do in the first six months, which was get a sponsor to sponsor a trip over to Europe.
00:06:29.900
So I had enough time to do all that and then ultimately come out of it on the other side
00:06:37.740
Is the sponsor, was that Upper Deck that sponsored you to go to Europe?
00:06:46.560
It was a group of free agents from mostly the Chicago area.
00:06:54.180
I mean, I just kept, it was title sponsorship of the team and the tour.
00:06:59.720
And that was when the internet was coming online and websites.
00:07:02.900
And I had like this little 3D virtual experience in an arena because I had a cousin who could build
00:07:13.420
So I just threw all that at a sponsor to see what they liked.
00:07:16.560
And I ended up finding my way to Upper Deck Trading Card Company.
00:07:26.000
He was looking to extend outside of football into basketball.
00:07:31.540
And I found my way in front of him and he had a little budget.
00:07:34.700
So we became the Upper Deck All-Stars and did two tours.
00:07:38.380
And that's what made it all work because I couldn't afford to underwrite it myself.
00:07:42.280
So any crazy players at the time that you were working with?
00:07:51.520
He was a very good, talented point guard who ended up playing for the Toronto Raptors and
00:07:56.400
And a couple other players, most of which ended up earning a living in Europe.
00:08:02.580
And I was just trying to kind of get things started and learn the business.
00:08:07.340
And over the course of that period of time, I also read the collective bargaining agreement
00:08:13.700
And I got educated on how those rules worked and I could talk that talk a little bit.
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I read it cover to cover and I outlined it like a law school textbook.
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You know, it's all legalese and it's legal jargon, right?
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And then it's written in collective bargaining form.
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It was three or 400 pages, but written in an outline form, you know, with and it was
00:08:44.120
just having a legal background makes it easier because that's a document constructed by lawyers
00:08:49.740
And then they take that and condense it to a 20 page memo that they do now.
00:08:55.660
It's easier to understand, but you still get kind of crossed up and you really don't get
00:09:00.620
that until you get in and start doing that work, which is what happened with me at the
00:09:07.960
I had sort of done enough work that I had something to offer.
00:09:12.440
It's like, look, you may not be where you're going, but you should angle towards it.
00:09:18.420
You should do stuff on your own to be educated in that area.
00:09:22.340
So when whatever you're looking for, the universe presents it to you, you can respond.
00:09:27.920
Did you ever become an agent in the States in MBA or no, you went to straight being an assistant
00:09:35.700
So you had to go through the players association.
00:09:39.060
You know, you pay a pretty strong fee at the time and you get officially registered.
00:09:42.820
So I do have my little card still where I was an agent.
00:09:46.360
Although I never really built that business to where I was an active NBA agent with clients.
00:09:52.420
You know, I did a few small deals here and there, but it was nothing significant at all.
00:09:58.040
And I then was in that business long enough to know I didn't really want to be an agent.
00:10:03.120
One of my best players that I had, the biggest success story, out of nowhere, he just fired me.
00:10:12.680
But I got the letter by FedEx and it kind of broke my heart.
00:10:16.720
And, you know, that was one of those things where it's like, wow, this is a very transactional business.
00:10:25.920
My daughter is a freshman volleyball player at Boston College, right?
00:10:45.260
She was visiting from Boston College or something.
00:10:51.840
So the agent part, is it one of those things where it's the 80-20 rule and the 1% make it
00:11:00.260
and 80% get flushed out as agents and only 20% stick around?
00:11:04.580
And out of the 20%, you have one like a Rich Paul that's pretty much got a monopoly in the league.
00:11:12.820
I mean, historically, there's just a small handful of power agents that control the market
00:11:18.880
because so much of that is who else do you represent?
00:11:22.760
And those players and families get drawn to those big power agents.
00:11:30.180
You know, back in the day with David Falk and Arne Teller, those sorts of agents,
00:11:37.260
they would just be this gravitational pull for all the real talent.
00:11:44.180
And I was drawn to Europe as an opportunity because there was more room to just hustle
00:11:52.680
Cracking into the true NBA market was really hard because there's so few of those talented
00:12:00.680
There are only 30 get drafted in the first round, right?
00:12:06.220
And all the power agents, of course, are on them, you know, from day one.
00:12:12.040
Is the comp 10% or is it, what is the number on it?
00:12:14.780
So back then, the comp in Europe would be 10% of the contract up front paid by the team
00:12:25.460
So if a guy signed for $100,000, you'd get $10,000 up front, right?
00:12:29.560
In the NBA, if a guy signs for $100,000, it's not that.
00:12:37.280
And then that gets negotiated down by competition.
00:12:41.360
And then that's paid over time by the player as he gets paid.
00:12:46.520
So it's just a more difficult situation if you're trying to start out there because you've
00:12:55.580
Well, it's become a lot of money on these bigger deals.
00:12:58.980
But with smaller deals, it's not a lot of money.
00:13:00.960
And then you're trying to collect it from your own player, your own talent over time
00:13:08.840
But even if I signed a $500,000,000 contract, you get 4%.
00:13:12.520
Let's just say they push it down to $2,000,000, 2.5%.
00:13:20.920
And I'm not going to get paid that over a five-year period.
00:13:23.520
So it's really $500,000, your income over a five-year period.
00:13:30.100
Yeah, and that's if, as, and when you get it, right?
00:13:36.660
Are you still committed to getting that contract that you got?
00:13:45.860
If you got him the full $10,000,000 deal and he fired you the day after you got it,
00:13:58.020
You know, so then you're, if you just play that out a little bit, if you're getting fired
00:14:03.320
by a player who's in the club and then you get in a fight with them to try to go collect
00:14:08.340
what you're legally do, but then your reputation gets hurt.
00:14:12.000
It's just a, it's a, it's a tough business for sure.
00:14:15.720
Um, and as I say, I, I realized I wasn't meant for it, made for it, didn't want to do that.
00:14:22.020
But what it gave me was an avenue to become active in the sports world and then relevant
00:14:30.900
And, and, and for you becoming a GM, I mean, assistant GM at first with Jerry West for
00:14:38.180
those seven years, which Jerry West to me, he's just a qualified genius is who he is.
00:14:44.420
When the, when the Lakers lost him, there's a couple of people when the Lakers lost that
00:14:56.380
What was it like working with Jerry for those seven years at Memphis Grizzlies?
00:15:01.640
Yeah, the, the, the path in was through Vancouver, right?
00:15:05.700
We bought the Vancouver Grizzlies and then we moved them to Memphis.
00:15:08.980
So there were two years without Jerry and then five with Jerry.
00:15:13.000
Jerry then came into Memphis as the president of basketball.
00:15:19.420
I mean, at that time, Patrick, there was, you play that game where you're like, who would
00:15:24.580
If there was anybody you could have lunch with and people would say, Oprah, or, you
00:15:27.820
know, lately, you know, you'd say Obama, whatever it would be in my window there.
00:15:35.300
Cause I wanted to learn something that was relevant to what I wanted to do.
00:15:40.020
Well, all of a sudden he was, his office was like four feet from mine and his doors always
00:15:47.960
He just would, would, uh, allow and ask for help.
00:15:51.520
And we worked very closely together with a, with a team of people.
00:15:55.100
And it was just unbelievable, quite the experience and, uh, you know, a lot of fun to work with.
00:16:02.060
Um, he had true stardust sprinkled on him still at that age.
00:16:08.900
He, he, you know, what was interesting with Jerry was to see grown men in their sixties,
00:16:15.120
just like fangirl out on him when they'd see him at a restaurant because they had seen him
00:16:23.700
They had this familiarity with him as he, you know, he's one of those rare athletes that
00:16:28.620
transformed himself into being just as successful in the second phase in a different way.
00:16:37.500
I just knew him as this iconic executive, sort of what you're reacting to.
00:16:41.420
But Jerry, uh, was a, is a special person, you know, totally unique and was a lot of fun
00:16:50.640
I kind of watched him closely to see how he recruited.
00:16:54.800
I watched how Cupcheck recruited Dwight Howard.
00:16:58.080
He brought him in, took him in one of the rooms.
00:17:07.000
And then, you know, you kind of saw that didn't work out with Howard's personality because
00:17:11.360
he didn't want that kind of pressure to be compared to the shadows of the guys.
00:17:18.160
Well, we were recruiting a different caliber of athlete.
00:17:21.200
We were doing a build from, you know, one of the worst teams in the league.
00:17:24.460
So in a way it was drafting talent and then retaining talent and then getting guys on the,
00:17:33.780
But it wasn't those kinds of superstars where you're recruiting.
00:17:42.100
A lot of those conversations happen very directly with agents.
00:17:46.160
So that was where it was a, you know, I mentioned Arn Tellem as an example.
00:17:50.780
So Arn was a very close friend to Jerry's, Arn representing Kobe Bryant and a number of
00:17:56.200
the other key acquisitions through the years for the Lakers.
00:18:00.660
And they were, I was surprised at just how close they were personally.
00:18:06.860
You know, I always envisioned that that'd be more of a contentious relationship.
00:18:13.360
But what you learned, what I learned from Jerry was just the importance of deep,
00:18:17.280
deep longstanding relationships with the power agents because so many of those guys control
00:18:23.080
so much of the talent and they can really help fulfill what you're trying to accomplish.
00:18:27.620
So that was part of the art, part of the science of what you'd call recruiting or talent procurement
00:18:37.820
So he sold through having strong relationships with agents because if he got the agents,
00:18:44.600
So it's half the battle of recruiting players and having a good relationship with players
00:19:06.800
And in the modern era, I think it's a little more peer and player to player driven.
00:19:11.620
So you see more and more the way that LeBron as a player combined with Maverick Carter and
00:19:19.280
his agency that LeBron is an owner of, they're able to assemble the current Lakers roster in
00:19:24.820
a way where they're doing a lot of maneuvering and manipulating and the straight up recruiting.
00:19:30.000
You know, the straight up recruiting is technically illegal if it comes from any member of an
00:19:38.500
You can't tamper with current players on other rosters.
00:19:42.580
Well, a loophole in that has been player to player where the players, we can't restrict
00:19:50.520
So over the last 10 years or so, that's really taken form.
00:19:55.480
You know, even going back to Pat Riley was the last one in Miami to really assemble the
00:20:01.560
big three down there with a true recruiting focus.
00:20:07.320
He had Wade, but he had to get Wade to recommit.
00:20:13.400
But the other secret of that success was he got them all to take like 5 million less than
00:20:23.400
And I think even Bosh was getting the most money out of the three.
00:20:27.220
So they all took a haircut of 5 million that freed up 15 million a year to go get the next
00:20:33.140
You know, the Mike Millers of the world, the way they were out and really gave them the
00:20:42.300
So, but now it's much more, you know, James Harden goes to be with Durant and goes to
00:20:49.680
be with Kyrie because there's direct conversations happening as part of that whole exchange.
00:20:55.020
You know, when Chris Paul moves or maneuvers, he's talking direct with whoever he's going
00:21:00.980
And of course, LeBron bringing Anthony Davis represented by that same group.
00:21:06.120
You know, that was the core, the key to transitioning the Lakers from worst to first.
00:21:11.080
You think this is sustainable long-term because, you know, if you think about how the league
00:21:19.000
So if you go era, Michael and then go prior era, let's say, you know, well, I can't really
00:21:27.020
say, well, let's just say bird magic because they came in when they came in.
00:21:30.980
So Michael, then Kobe Shaq, and then you got LeBron today.
00:21:35.240
When Magic and Bird were running versus Michael versus LeBron and Kobe and today, could Magic
00:21:44.300
and Bird or even Jordan do what LeBron is doing today to the league back in their era?
00:21:53.900
The fact that, I mean, if I were to say to you right now, who is the most powerful figure
00:22:04.680
He has the most power that nobody has more power in the NBA than LeBron.
00:22:09.260
Now, his job is to stay healthy, relevant, do the things that he does.
00:22:14.940
So he's doing his part, but he's the most powerful guy.
00:22:17.200
But if I told you in 2000, the most powerful person in the NBA, would you have said Kobe
00:22:27.700
And if I was to tell you, let's go into 1991 when Jordan won his first, would you have
00:22:34.220
said the most powerful person in the NBA is Michael or would it be Jerry Buss?
00:22:37.700
Would it have been another Jerry or because it's changing based on who has the most power?
00:22:42.320
Well, I'd say first in any era right there is the commissioner.
00:22:47.440
I mean, the commissioner in each of those cases has tremendous power.
00:22:50.900
And because the commissioner represents the combined true power of the ownership, right?
00:23:04.900
I mean, if LeBron couldn't take the league down, LeBron could disrupt things and impact
00:23:18.140
But when you get into the most, I would have said Jordan, I mean, back in the day, as I
00:23:23.240
reflect on it, in the early 90s, when Jordan was in his heyday, he was, you know, massively
00:23:36.420
And, but he wasn't, and they, and he, he was the draw because he and Pippen were such a
00:23:45.280
They're able to flip all the other pieces around them and dominate and win six, effectively
00:23:51.620
six in a row because Jordan was gone for two of them.
00:23:55.800
So he was that dominant as a talent and as a draw.
00:23:59.100
LeBron is, it has been different because he's, wherever he's gone, it has followed, which
00:24:06.740
You know, Jordan was in one place and it all came to him.
00:24:09.620
This notion of LeBron just going from Cleveland to Miami, four straight in the finals, goes
00:24:16.800
right back to Cleveland where they were literally the worst and they get to first and they go
00:24:24.360
Then he does the same thing coming out here to LA, albeit it took a year.
00:24:32.480
That shows the, I don't know if back in that era, Jordan could have done that because it
00:24:40.740
You know, they're just, people wouldn't have been able to come with him the way they do
00:24:46.760
And also, I mean, David Stern was a different animal.
00:24:49.100
David Stern was a, he was feared and respected.
00:24:55.540
And I'm not saying Adam Silver doesn't have that kind of a personality, but Adam Silver
00:25:01.980
I just don't know if, if LeBron was to be playing in the eighties or nineties, could he
00:25:09.620
have gone around and told everybody, Hey, if it's not working out with the owner, leave
00:25:13.340
Hey, if it's not working out with the owner, leave the team.
00:25:15.140
Like right now, players are just coming out and saying, look, I don't like playing with
00:25:22.160
So if I'm a small market and if I'm getting ready to spend $2 billion to buy a team, say
00:25:27.880
two to $3 billion to buy any team in the NBA today, if I'm, if I'm a small market, what
00:25:34.160
makes Michael think he's going to be able to keep LaMelo ball for more than seven years
00:25:39.220
before he goes to Celtics or he goes to Miami or he goes to the Lakers or, you know, what
00:25:43.440
makes Milwaukee think they can keep Giannis for another four years?
00:25:47.460
They just signed a contract, but almost the smaller markets are being bullied more today,
00:26:01.020
I hate the fact that you can celebrate a long-term extension.
00:26:09.120
You make these incredible financial commitment, all fully guaranteed the second he signs it,
00:26:17.440
And then he can James Harden his way out of here in a year or two.
00:26:23.540
As soon as it got unpleasant, as soon as they weren't consulting him on every move or whatever,
00:26:29.300
you know, it just, he became a crabby, cantankerous and just, and Bogart his way right out of his deal.
00:26:39.120
And, you know, undercuts the trade value on his way out because everybody in the league knows what the deal is.
00:26:45.800
And it's, it's a, it's a disturbing trend in the NBA for sure.
00:26:51.940
You know, all it does to me is I wonder, let's just say if I'm about, about, about to own a sports team,
00:26:57.380
would I buy a small market or buying to a small market?
00:27:02.400
I would be very concerned about being a small market in today's league.
00:27:06.100
It would concern the hell out of me because, because today it's such a player's market
00:27:12.080
that players are essentially bullying everybody.
00:27:20.140
If we go back in the eighties, we could say, Jerry, the GM was bullying everybody on the bull.
00:27:28.280
So the, the happy medium is kind of tough to be, it's almost like we go far one side, it's GM or ownership control.
00:27:35.300
Then we go too much of a player side, it's player control.
00:27:38.040
But we all know that LeBron's eventually going to own a sports team, you know?
00:27:41.800
So, so how do you manage that balance, the two between the player and the owners?
00:27:46.920
The reality today, I would not want to own a sports team today if it wasn't a small market.
00:27:57.100
In the NFL, they're all profitable because of the way they share revenues and because of the massive media.
00:28:04.900
So every single team in the NFL is profitable, no matter how bad they screw it up.
00:28:10.740
And then in the NBA with more revenue sharing now, the smaller markets have become, and with a subsidy from the league, effectively, the smaller markets have become much more healthy financially.
00:28:25.500
And then you do have some superstars who have maintained a significant presence in a small market.
00:28:32.460
I mean, Damian Lillard right now seems just fine in Portland.
00:28:39.760
And they're one of the best teams in the league because of his extreme talent.
00:28:43.600
And then, of course, you have the success of the Spurs for decades in one of the smallest markets in the league.
00:28:48.520
And the Utah Jazz right now are pretty darn good in a small market.
00:28:52.860
So all those rules in the league tend to give those small markets a fighting chance, except baseball.
00:29:02.980
Having been around Jerry and having been around a lot of different guys, then does that mean when you're putting a team together, what is your number one?
00:29:12.560
Is your number one putting a coach like Pop together that's going to keep the players for a while?
00:29:19.420
Is the number one getting a superstar like Giannis?
00:29:21.800
What is the number one to keep not necessarily the golden handcuffs, but to be able to get a team that's willing to be in a market like San Antonio, which, you know, it's not necessarily the craziest.
00:29:33.900
Outside of the Three River Stadium and the Alamo, you got nothing really going on over there.
00:29:39.080
I want the best player because you need the best player to establish any kind of competitiveness and greatness.
00:29:44.920
But if I want to start from scratch with this notion of what's most important, most important is committed ownership.
00:29:53.620
So you need deep pocketed, passionate ownership that's in it for the right reason, because over time, that's what sustains things and wins.
00:30:02.180
And you want a good head on that guy's shoulders or gal, whoever that owner is, somebody that will then go higher good management.
00:30:10.220
So in your San Antonio Spurs example, you had solid ownership that just got Popovich and R.C. Buford as this incredible tandem to lead basketball operations and to maintain this incredible level of success over the years, in spite of being in a small market.
00:30:28.300
It was just, you know, 20 years of exceptional work there.
00:30:37.600
So in that scenario, if you're giving me for one year the best owner, the best coach, or the best player, I'll take the best player.
00:30:54.540
If it's for one year, it's the best coach because he's going to have the most influence on performance.
00:31:02.760
So if you're first as player, what's your second?
00:31:06.440
Well, if it's a 10-year run, it's still best owner.
00:31:11.580
You got to have the best owner to give you the chance to make all those maneuvers and, you know, and to do all that.
00:31:36.380
Because the coach is only as good as his players.
00:31:40.820
I mean, you know, the great coaches pick the great talent to go coach.
00:31:47.020
Yes, there's this theory that you get an amazing coach and he's going to max out whatever talent he has, but that's only within a small band of a small percentage.
00:31:59.140
If you put Greg Popovich with the worst talent in the league, he may win them five more games.
00:32:07.700
So they go from 15 wins to 20 or 22, but he can't take a 15-win talent and get it to 500.
00:32:15.620
I wonder if he sees this, if he'll be offended by that.
00:32:19.240
You know I'd take him into the playoffs, even if you gave me a bunch of scrubs.
00:32:24.980
But so if that's the case, who would you put right now as the best coaches in the NBA?
00:32:33.560
Well, Pop is still, you know, over time as good as it gets.
00:32:38.760
What I look for in a coach is a master relationship expert and a tactician, you know, and a competitor and everything that goes with that.
00:32:50.880
Eric Spolster has quietly done just a remarkable job over the years down in Miami.
00:32:56.960
You know, a great guy, a very incredibly hard, incredible hard worker, managed that unusual transition to come in and succeed Pat Riley, who's one of the biggest personalities and most respected just NBA studs.
00:33:17.220
You know, just a, he's, Pat's revered by so many folks for what he's done in so many different places and just kind of who he is.
00:33:24.880
And Spolster has just done a remarkable job of navigating through all that.
00:33:32.660
So you put Spolster as second behind, interesting.
00:33:41.020
Yeah, I mean, listen, it's respect because even if you think about it, who the hell thought last year Miami was going to go to the finals and let alone win a couple?
00:33:47.320
You know, nobody thought they were going to go that far.
00:33:54.000
I'm curious to know what you'll say about this.
00:34:06.780
However, I also don't think the players are getting paid accordingly.
00:34:10.320
But accordingly, and this is what I mean by it, I am much for, like LeBron right now is making what, 39-6?
00:34:22.680
You got Westbrook making what he's making with 41.
00:34:25.520
You got four people at 41, Westbrook, Paul Harden, and Wall.
00:34:31.300
Okay, there's no way in the world LeBron's worth 39.
00:34:34.160
Okay, LeBron is, you know, when you got a Messi and some of the other soccer players making what they're making,
00:34:40.080
and I get it that soccer's got more viewership, it's more international, it's more bigger than the NBA,
00:34:48.260
But when a LeBron comes to your market, listen, everybody makes more money in that community.
00:34:53.340
When LeBron comes to your market, so is a player like him, where he is the face of the NBA,
00:34:59.860
you know, Michael last year, I don't know what he got paid his last year,
00:35:02.320
30 million or some astronomical number that he got paid, and most of his career he got underpaid.
00:35:07.560
What do you think LeBron's getting paid what he's worth right now?
00:35:09.880
Or do you think it's closer to an 80 to 100 million dollar a year player?
00:35:18.680
And while global football, you're right, the economics are different, but those, you know,
00:35:28.460
And that's because they can't lose a guy like Messi.
00:35:33.540
But, you know, the maximum salary, the short answer is for sure LeBron is underpaid, not
00:35:42.100
just because he's at 39 and other guys are at 41 or 42.
00:35:45.520
It's because he should be more like 100, let's say.
00:35:49.600
But the reason that happens is because of collective bargaining, because there's an economic system
00:35:56.900
in place designed to make all the boats rise and to make all those teams be competitive.
00:36:02.580
So the players get together and collectively bargain for these totally anti-American things.
00:36:07.880
I mean, in no other industry can some arbitrary system decide where you can go work via the
00:36:19.920
You can't leave our team unless we get a chance to pay you just as much.
00:36:23.540
Well, there's no other industry where that makes sense.
00:36:28.740
We're going to put a firm cap on the most money any player can make.
00:36:34.980
So, you know, they're all making about a million bucks now.
00:36:40.760
And LeBron, as a superstar, absolutely got squeezed and gets squeezed by having that maximum
00:36:50.700
So he is essentially helping a lot of the lower-level players that would typically be
00:36:56.660
a quarter-million-dollar-a-year player or a $400,000 player.
00:37:00.860
So when his comp went lower, theirs went a little higher.
00:37:04.200
Or if I pull off a Kyrie Irving and I say, guys, I don't feel like working the next two
00:37:09.240
weeks, does the team still have to pay him or no?
00:37:13.320
Well, if the player flat refuses to show up and work, there's progressive discipline that
00:37:21.380
occurs, but including suspension, you don't pay.
00:37:25.120
But these trade-offs that occur now more and more with the resting healthy guys just for
00:37:31.360
the sake of managing their minutes and, you know, this latest era of nobody plays 82 games
00:37:39.900
You know, that's that slippery slope where you continue to pay guys to not work.
00:37:44.640
And the league has tried to shut that down because, you know, we're all paying what we're
00:37:50.440
If we're allowed to go to a game, we as fans are paying that ticket price to go see the
00:38:00.460
So the solution for that, if I was running an account plan, is I would overpay a LeBron to
00:38:05.180
a hundred million dollar a year plan, but if a guy didn't play, you ain't getting paid
00:38:10.560
So, so it would be, Hey, Kyrie, you want to take nine games off?
00:38:16.400
You just lost 31 million divided by 82 games times nine games that you missed just because
00:38:24.040
It's easy with specific examples, but in collective bargaining, they just set the rules of
00:38:29.700
I'm sure you got a union watching out for every Kyrie Irving so that it doesn't happen
00:38:38.200
I just think a guy like LeBron, a guy like LeBron who brings whatever he brings to the
00:38:49.280
Now look, the argument would be that the system is so healthy and has worked so well.
00:38:53.600
And it's such a healthy league that LeBron's able to be LeBron on the rest of the stage
00:39:02.400
So that'd be the overall argument as far as how that a healthy NBA gives the platform
00:39:14.200
But if I did, I would say, hey guys, why don't we also protect the owners a little bit
00:39:20.000
We'll play you a little bit more, but also at the same time, you know, we also want to
00:39:28.640
You know, you got to be careful with these lawyers, Tom.
00:39:30.700
I mean, these lawyers, just very interesting people, these lawyers are.
00:39:43.280
You know, you refuse to take a position as a GM with 76ers.
00:39:47.480
And by the way, what year was that when you said you don't want the GM position at 76ers?
00:39:51.020
I'm not sure it went down exactly like that, but what year was that?
00:40:35.340
So you decided to go play Larry Allen, Elton Brand.
00:40:40.440
Yeah, Elton Brand, Drew Holliday, Andre Iguodawa.
00:40:45.960
Yeah, but that was a period of time where I interviewed with them, went through the whole
00:40:52.880
process, didn't happen, didn't work out, and, you know...
00:41:06.940
Look, I had done this sports summit in Aspen that brought together sports owners from
00:41:11.140
around the world, and then we did other best practice summits for college athletic directors
00:41:18.320
So that got me out of the silo of being in basketball operations and being a GM.
00:41:24.200
And it sort of broadened my entire look into other sports and into other jobs.
00:41:31.320
You know, being the president of a team, for example.
00:41:34.640
And then from that ecosystem in Aspen with the sports owners came the investors for LAFC.
00:41:40.900
And we were able to put together a really compelling group to come to Los Angeles and get a major
00:41:47.400
league expansion team and the chance to build a whole club from nothing.
00:41:54.320
You know, it was just in October of 2014, we were an idea and the LAFC.com was available
00:42:04.880
And we decided we'd kick off with that identity.
00:42:07.560
And then, you know, everything happened from there where we just basically, you know, created
00:42:22.960
So, yeah, I was the sort of first person hired, but we had been in pursuit of the team.
00:42:28.040
So we had put together the group to acquire the team.
00:42:31.020
And so I had assembled the ownership group along with Henry Nguyen was an investor from Vietnam
00:42:38.160
And then Peter Guber, who owns the Warriors and the Dodgers and is an iconic Hollywood
00:42:44.760
figure, was big in music and giant in film, chairman of Sony.
00:42:50.380
And then he's reinvented himself as just a really, really well-respected sports owner.
00:42:56.700
So Peter became our executive chairman and was this linchpin partner that made the whole
00:43:02.700
And we were awarded the expansion franchise in Major League Soccer and, you know, had
00:43:08.680
made a financial commitment to build a brand new stadium.
00:43:12.020
And there hadn't been an outdoor stadium built in Los Angeles since Dodger Stadium in 1962.
00:43:18.460
So it wasn't an easy thing to do, but we were able to incrementally do it.
00:43:23.360
We built Bank of California Stadium, which is just this absolutely spectacular venue right
00:43:29.360
in the heart of the city, really an unbelievable experience.
00:43:34.800
You know, one of the, I say it's the best fan experience in sports in America.
00:43:41.380
It's just an incredible experience because the fans sing the entire time.
00:43:46.200
It's this just joyous, super passionate atmosphere that you don't find even in college.
00:43:52.000
College football is similar with the band and the rhythm of a student section.
00:43:56.540
But the LAFC game is like amazing because it's just so organic and you got regular people
00:44:03.120
coming together, singing and cheering and drinking beer and throwing beer when we score goals.
00:44:10.480
How big do you think it's going to, how big do you think soccer is going to get in the
00:44:13.280
You think it's eventually going to get to the point where we'll win a World Cup in the next
00:44:24.340
So the part about winning the World Cup is a tactical question about whether we can get
00:44:30.400
a pipeline and a system of talent development that's on par with what's in the rest of the
00:44:38.380
Our competitive advantage in a way is we're such a big country with so much talent.
00:44:43.380
Our disadvantage is we're such a big country with so much other opportunity.
00:44:48.980
And it's really hard to train players in Los Angeles the way they'll train in Texas, the
00:44:54.800
way they'll train in the Philadelphia, New York area, for example.
00:44:58.800
Those are just, those are like separate countries when it comes to the whole approach, the whole
00:45:07.140
Whereas Germany and they were able to come up with their whole system and then just take
1.00
00:45:14.180
all the talent, put it into that one sport and build it into that juggernaut that the
00:45:23.720
There's a lot of effort and conversation around it.
00:45:26.380
And as soon as we start getting our best athletes, physical athletes drawn to that sport where
00:45:34.020
they can stay in that sport, that's what's important with MLS's development is there's
00:45:37.680
now a clear professional path forward in that sport that can be appealing where they can
00:45:45.800
So that's as it relates to the national team, as it relates to just the trajectory of
00:45:51.200
I don't know that it eclipses something like American football or the NBA, but there's a
00:46:00.120
And the media attention can be massive in America.
00:46:10.240
The NBA is not anywhere near football, global football when it comes to relevance.
00:46:28.000
And Carlos Ville, I just pulled up his salary, 2018, $4.5 million, what he was making.
00:46:34.280
So some of these guys starting to make some checks, which is good for the younger guys.
00:46:37.940
Would in this case, would it be the same as building a 10-year legacy on a team, meaning
00:46:42.480
you need a good owner, then you need the right GM, then you need a player, then you need
00:46:46.900
the right coach, what would need to happen for America to commit to winning a World Cup?
00:46:52.780
Do we need to go recruit the biggest, best coaches and trainers and bring them in and
00:46:57.480
teach other coaches in the U.S. how to coach other kids?
00:47:01.160
So all of a sudden, there's a 90-day camp of coaches in the U.S. from Texas, from Philadelphia,
00:47:06.780
from Florida, from California, come go through a camp of how to train their guys.
00:47:11.380
Well, I don't have that answer, or we would have done it.
00:47:14.740
You know, they've tried different things in America.
00:47:17.620
So with a national team, it's a different experience.
00:47:25.400
Maybe if they're at a World Cup and they go the whole way.
00:47:30.880
You bring them together in windows of like one, two, and four weeks.
00:47:36.620
Or maybe for a long summer competition, it's six weeks.
00:47:39.740
It's just – and then they continue to play on their professional teams the whole time.
00:47:44.300
So they just take a break in the soccer schedule.
00:47:47.580
The best players go play for their national teams for two weeks, and then they come back,
00:47:57.100
So the U.S. went out and got Jürgen Klinsmann from the German national team from that way of life,
00:48:04.440
thinking they could replicate that way, and that didn't work.
00:48:07.260
They've had homegrown coaches like Bob Bradley, who's the coach at LAFC.
00:48:12.040
He had a ton of success in building a team that went well, but then that ended quickly, right?
00:48:18.240
So it's just – it's a different – it's a completely different animal.
00:48:21.440
And if I had an answer to your question as to how to systematize the nation, our nation,
00:48:27.700
with our size and our challenges, I'd be in a different role, making a lot more money.
00:48:33.600
I'd be curious to know what country used the model that worked, that they went from nobody to somebody.
00:48:39.680
Because when you typically think about it, who do you think about?
00:48:51.580
But how about the country that was irrelevant that came and won, and how did they do it?
00:48:56.200
But, you know, Beckham obviously came and he played, which was big when he came out.
00:48:59.980
And then Zlatan came out, and I went and watched Zlatan play.
00:49:02.960
It was ridiculous watching how folks in LA were reacting to Zlatan play.
00:49:08.760
And the whole controversy between Zlatan and Vea, I think that was needed for the MLS, believe it or not.
00:49:17.120
Do you think a Messi or Ronaldo will eventually play in the MLS?
00:49:21.920
I think Ronaldo will sunset his career here just to transition to the rest of his life.
00:49:37.080
Messi's more just about expressing his art, playing his tail off, you know, being compensated for it.
00:49:44.660
He's less diverse, dynamic in terms of his interest level.
00:49:55.300
Were you ever a baseball card or basketball card guy or not really?
00:50:04.120
I recently sold a couple Gretzky cards for $2 million.
00:50:12.460
And the only reason I brought up cards is because you got upper deck to sponsor you when you're going to Europe.
00:50:20.520
What do you think about these crazy things going on with cards right now?
00:50:23.360
Dirk's card sold on his birthday for $4.6 million.
00:50:27.140
It's lunatics like you willing to trade in this money.
00:50:35.120
You really sold two Gretzky cards for that kind of money?
00:50:38.640
Two Gretzky cards for one of them I sold for $1.29 million.
00:50:52.520
Yeah, it was all over the news and it was pretty intense.
00:50:55.040
And were those originals that you had from the beginning or did you buy them?
00:50:58.660
I bought them for $540,000, both of them, 18 months prior to me selling it.
00:51:06.600
So, I bought it for $540,000, 18 months later, sold it for $2,010,000.
00:51:15.160
I don't know if you saw what a guy named Beeple just did last week when he sold an NFT.
00:51:20.260
Are you familiar with NFT market or not really?
00:51:27.440
He designs something new every day for 5,000 days, okay?
00:51:40.500
Collage of it, which means take the 5,000 pictures and you turn it into one collage.
00:51:45.980
He puts it on Christie's auction, which you may be familiar with Christie's auction.
00:51:53.760
The auction starts on February 26th with the first bid at $100.
00:52:26.660
I'm going to show it to you just to see your reaction.
00:52:50.240
A guy that's a fan of his content and what he creates.
00:52:53.940
Now, you got to realize this guy named Mike Winkleman is known in the market.
00:52:59.600
But he, you know, to sell an art that you can't hang up anywhere, and if anybody else
00:53:10.180
You just get to say you own that token for $69 million.
00:53:16.080
So, but for yourself, you went from that into a complete different business yourself,
00:53:22.100
Why don't you tell everybody what you're doing?
00:53:23.520
I know it's a pretty good-sized industry, and you guys have been able to get the accounts
00:53:27.880
I think, what is it, NBA, MLS, and the Dodgers?
00:53:33.920
Yeah, so this is a company called Co-Protect, where we're doing branded disposable face masks
00:53:40.400
and other PPE, so we took the boring blue medical mask and commercialized it with all
00:53:46.880
sorts of fashion on a disposable mask, and yeah, the signature stuff in sports is big.
00:53:52.600
We're doing all of March Madness, so when you watch any of the games in the tournament
00:53:57.540
this month, you're going to see all, there's 750,000 masks out there that we did with all
00:54:04.860
The NBA, Major League Baseball, Major League Soccer, Team USA, we've got some big news coming
00:54:13.220
in global football, you know, go down the list, a bunch of PGA tour events, a number of big
00:54:20.460
colleges, all that sort of stuff, so we're just dominant in sports.
00:54:24.540
We're the leaders in branded protective equipment.
00:54:32.680
Yeah, it's a pretty big industry you're a part of.
00:54:35.480
Well, Tom, it's been a blast talking to you, appreciate you for coming on, obviously a different
00:54:39.920
direction of a conversation, but a lot to learn about the business side of the NBA and how
00:54:45.780
a person like you went from working with your dad as an attorney to going to an agent in
00:54:52.660
Europe, and then from there going to working with Vancouver, Memphis, and then a bunch of
00:54:58.140
different experiences in ESPN, and then MLS, and now doing what you're doing.
00:55:09.340
I'm going to probably sell a lot of cards, and I'll tell you about it.
00:55:11.740
If you want to buy a couple, I got a few if you want to buy some.
00:55:21.860
For those of you guys that watched the entire interview, I don't know if you know this
00:55:24.580
or not, everything we talked about in this interview has to do with business, whether
00:55:28.120
it's recruiting, who you get first, timing, sequencing, money, dollar negotiation, career
00:55:34.120
path, what direction you go to, people you meet, and how you go from being a guy, working
00:55:39.020
under your father, eventually becoming a president of LAFC, that Magic Johnson's involved,
00:55:45.680
So I hope you stuck around for the entire thing, and if you enjoyed this interview, and you learned
00:55:50.040
a lot from the business of the NBA, you're going to enjoy my interview I did with Stephen
00:55:55.820
If you've not watched it, click over here to watch the interview with Stephen A. I think
00:55:59.640
if you like this one, you will get a kick out of that as well.