Brett Johnson, Ipswich Town, Rhode Island FC, & Phoenix Rising Co-Owner: ‘The US Needs to be More than a Retirement League’ (Ep32)

Getting Leon O'Messi to come in has been a coup. He is going to retire in a couple years. A lot of casual fans will go and pay $1,000 to watch him play. It doesn't change the narrative of viewing MLS as a retirement league. You start to get the five best players in the world that are coming to MLS right now that are leaving Premier League, leaving Italy, Spain, etc. That's a different equation, but you're not getting it. Because the reality is you can't afford to pay them. You can do a one-off on Messi with they try to sign to bring a Holland, you name it right now. What's the king's ransom that MLS would have to give those players to even consider in their prime coming to MLS and play? In short, I always wanted to be in English football. I've been approached originally by Peter Kenyon to potentially partner up on Newcastle. And for no fault of anyone to be put and get that deal done. We ultimately decided if we could do something we wanted to do with a club that had the Grobby toss of an ever switching. The reason why we loved it so much was one of the greatest clubs certainly in the history of English football was sitting two leagues below where we really felt it should be. Hello and welcome to the Business of Sport, a show that takes you behind the scenes with the industry's leading owners, operators and athletes. This week we're delighted to welcome Brett Johnson to the show. Brett is one of the co-owners of Ipswich in the Premier League and Phoenix Rising and Rhode Island in the US. The rise of Ipswich since his group takeover is nothing short of ownership dreamland, seeing the club achieve back-to-back promotions from League 1 to the Premier League. But this is only the most recent success for Brett and football. The joy of speaking to owners on the show is getting the access to the people behind the numbers and strategies who really are our owners. He has been a key driver of development in the US building infrastructure brand and talent in the league under the MLS, the USL. Phoenix Rising has seen huge successes over the past decade under his stewardship from rebrand to new stadium to Didier-Drogba and his new team-road island is set to do great things both on the pitch and in the community. Sports ownership is one of the most opaque parts of the sports industry. This conversation draws back the curtain and owners like Brett are what the game needs. This was a pleasure to record, so we're very excited to welcome Brett Johnson to the business of sport. But first, I'm very excited to introduce today's partner. At the business of sport, we are very passionate about promoting the best service providers across multiple fields that cross over with the sports industry and tindle investment management sit at the top of that list. Believe it or not, the world of sports and the world of investment have a lot in common. 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As an investment boutique, Tindle is solely focused on providing genuine high-conviction, high-performance investment management. What they do is tailored to meet each client's personal circumstances and specific objectives and requirements. Unshackled by big company bureaucracy, they offer clients direct access to their highly experienced investment team, individual, active investment management for individual people. If you want to learn more about Tindle, you can do so by visiting T-Y-N-D-A-L-L-I-M dot-Co dot UK. Or you can reach out directly to us and we will make a personalised introduction to their brilliant team. But for now, on with the show. Brett, thank you so much for joining us. Welcome to the Business of Sport. It's an honor, thank you, gentlemen. Now, one of the most important and interesting things to dive into with ownership is understanding the reasons behind why people are buying a lot of these assets. So we'd love to understand what it was that got you into owning multiple football teams. Yeah, it began a decade ago and it was fairly modest. I was sitting on my couch watching Major League Soccer Championship match. Galaxy, I think, was playing the Dynamite. I was watching the game and as the league does every single year during that cup game, Don Garber, the commissioner, talks about the expansion of Major League Soccer. And as a lot of your listeners are sure aware, but I'll just state what again is the obvious. Major League Soccer doesn't have promotion relegation. If you want to join the league, you've got to kind of put the case forward on and off the pitch in terms of the market, in terms of the ownership group. And you pay a franchise fee. You can effectively buy your way into the league. And so as Don Garber was talking about their expansion plans of the league, he rattled off five or six cities and he failed to list Phoenix, Arizona. And Phoenix is at certain times the fastest growing city in America. It's the fifth biggest city in the United States. And it's got demographics that really lend itself well to the beautiful game. I mean, an incredible number of Hispanics, a lot of whom were from Mexico and about as passionate of populous as you're going to find for football. And so in short, I turned to my wife and I said, look, I'm going to raise money. I'm going to buy an MLS franchise and I want to call it Phoenix Rising. I had the name already figured out. Long, long story short, I realized there was a league there called United Soccer League, USL. And at that time, USL was the pathway to Major League Soccer. If you look at Orlando, Orlando City was promoted effectively up from USL. And there were some other examples of that as well, Cincinnati, Nashville. So at the time, USL was the pathway to Major League Soccer. And I ended up finding out that there was a team there called Arizona United. And I bought a stake in that team. And then eventually brought in a new group of partners. And one of the partners brought in Didier Drug would have come join us. Join our ownership group, finished up his career with us. And as I say, we kind of literally and figuratively put football on the map in that market and then certainly raised the profile of USL. Can I just dive in on a couple of elements, raising money for a new soccer team? I don't suppose is that easy. How was that fundraising for that initial capital to buy the first team? So initially it was actually quite easy, relatively speaking. The team was playing in Scottsdale, Arizona, which is a great part of the Phoenix market. We were playing in a baseball stadium in the heart of Scottsdale. On an honest Saturday night, on a bad night, we would sell 5,000 tickets, which was quite a good result at the time. The real sort of curve ball, if you will, came where between seasons, we ended up losing our lease in that baseball stadium. And we had to pivot. And the only place I could find was an hour outside of Scottsdale. Phoenix just to put it in perspective is a massive, massive geography. It's interesting because the Maricopa County where Phoenix sits is the same geographical size as the state of Rhode Island where I do a lot of work today. So we moved an hour outside of sort of our core fan base and the wheel just kind of came off. But prior to deporting Scottsdale, I hired Frankie Oliver of Ipswich fame. One of Ipswich's incredible players, especially given the history of that club. And Frankie Oliver was one of the better managers in North America. One of the supporters shield, one of the MLS cups. You know, it coached, Beckham had coached, landed Donovan. So it was quite a coup getting Frankie Oliver on board. And then I got Diplo, the EDM artist, I got Pete Wentz. So I had this incredible ownership group coming together. Everything was flying. And a big part of my pitch was, look, we're in the best market. We effectively have a pathway to MLS. But then ultimately when I'm playing in a baseball stadium, an hour outside of the core market, I literally couldn't give tickets away. And that's when I had to start to think about bringing in a lot of more connected Phoenicians on based in Los Angeles. And that's when I brought Bear Kay Bacchai and a handful of other Bear Kays partners with me in three lines. Yet Ipswich. But Bear Kay, Mark Deppner, those guys really came, if you will, literally and figuratively, to the rescue of Arizona United. And it really was Phoenix Rising. And we came up out of the ashes of where we were playing and built the stadium in a great location. As I said, Diddy A. Drago joined us and the rest is, you know, politely say his history, positive history. Tell us about the Diddy A. Drago story, because that must have been quite a coup at a time for a team outside of the MLS. I continue to put it down as one of the greatest feats. But Bear Kay Bacchai deserves the credit for it. Right after those guys invested, we were having a board meeting. And Bear Kay said he was going to get Diddy A. Drago to play for us. And I started to laugh. Like I thought he was joking. And I don't think it was exactly being rude. I didn't know him well. But now that the two of us are incredible partners with each other, we talk 10 times a day. But so now I know if he says something not to laugh, he means it. But he got Diddy A. Drago to fly in. He had relationship with Diddy A through Galatasaray, which is Bear Kay's. I think Bear Kay's uncle used to be the president of the club. But in short, Diddy A flew in and we toured him around for two days. He met the governor. We showed him where we were going to build the stadium. And I tell the story, Phoenix is in the desert. And it's like something out of a Western. We're standing on this dirt field with all this cactus. And one of these these tumbleweeds literally goes blowing by. And it looks like a soccer ball. And I see Diddy A's eyes track this tumbleweed go by. But basically, I immediately see Diddy A start looking at his watch. Because he's sitting in the middle of a dirt field. He's like, look, I'm Diddy A. Drago. What am I doing in the middle of a dirt field looking at it at the time? Division three sanctioned club that doesn't have a stadium. And I could just tell Diddy A was out. He was basically like, when's my next flight out of here? This is a joke. Two Bear Kay's credit and the rest of the ownership group. one day's later we built a beautiful stadium in that, on that desert, we sold out and never looked back. Did he come back two months later and saw what we had built and that changed everything. And he said, look, these guys are real, Phoenix is real. And this is a great ownership group to be a part of. And this is a great way to finish up my career. How long does it take to build a stadium? You mentioned two months. I should clarify. It was a modular stadium. But these modular stadiums, if you've ever been to these high-end golf events where they build these beautiful stands for a weekend. And so modular stadium is a very quick relatively speaking build. But we put in all the lights. We put in a beautiful grass field. We put in albeit it was a dirt, but it was a parking lot. But in 60 days, less than 60 days from scratch, there was a very, very nice stadium that was built. And again, just there was a real foundation from there to take the club up. And so that I'm confident gave Didier if you will be confidence to sit here and say, you know what, these guys are legit. I'm not just looking at a dirt field that's not going to go anywhere. Like this is a legit team. And these guys have aspirations to go to MLS. And I can help them do that. Can you tell us about the pathway between that MLS and USL? Because in a closed system, where does the opportunity come to become a franchise in the top league in the US, rather than a secondary one, albeit something that has immense value in its own right? So all credit to MLS at that time, 10 years ago, if you wanted to buy a franchise, it was about 60 million US dollars. The current price that I'm hearing in the market is $600 million. The San Diego franchise, I believe, paid 500 in my understanding is the current discussion is $600 million. And so I say this with the utmost respect as the exponential increase in franchise fees for MLS, I started to really understand and appreciate what I'll call the economics of United Soccer League. And that's a big part of the genesis behind my Rhode Island project is I started to covet opportunities to really focus on United Soccer League in markets that were not large enough to justify a $600 million franchise fee. And that's before you build a stadium that's before candidly you now try to field a team that in one way or another would even remotely compete with Leon Elmessi and the guys down in Miami. So again, I like to focus on what I refer to as the sustainability of football and sustainability means being able to have a franchise that's profitable from a host of different measures and it's not just for the equity appreciation fairies coming to your rescue if you will. I'm so blown away. You very happy said oh there's kind of less major cities maybe which you can still make money from them but it doesn't warrant the five six hundred million dollar buying. Does any warrant the five to six hundred million dollar buying? I'm aware that Miami is now worth whatever a billion of billion to you with MASSI but when MASSI leaves it's not worth a billion too. Yeah, I think that's about point. I mean, again, I don't want to be very careful whenever I talk about the beautiful game and specifically leagues like Major League Soccer. No one in MLS right now is complaining at all. What's been happening with that league is fantastic especially with the lead up with World Cup coming back here in 26. Again, I just if you put six hundred million dollars on on the table and you know look at Bill Fully who bought Bournemouth you know he he bill fully owns the NHL team in Las Vegas. He was given an option to launch MLS in that same market and at the time the the franchise fee I think was like three hundred million that he could have gotten into Vegas and he sat there and said you know what I think about by Bournemouth and look what he's done with that franchise since he's owned it and now he's bought a club in France. So again, I think it's different strokes for different folks. I mean, look if I had you know I don't know Steve Bomber like wealth and I could drop a billion dollars or two billion to buy an NBA team you can you know there's a plenty of individuals out there that will rationalize whatever amount of money it is because it's supply and demand but as I was sitting there there's only so many more cities in America that can truly justify what which is clearly billion dollars plus between stadium and franchise fee that kind of investment and for everything else I think there's USL I think there's a great opportunity to look at football as an asset class in secondary markets in quotes where you can build a stadium develop all this around in real estate and start to look at what I call the sustainability of the sport. So how in comparison to an MLS franchise how is a USL team financed and what would those numbers look like for you to make that a realistic proposition. So championship which is the second division USL championship which is where my Phoenix Rising team plays where my Rhode Island team plays believe that franchise fee right now is about 20 million US 20 million US to buy a championship team I believe now USL what I think makes it even more compelling is United Soccer League has a division one sanctioned women's league that's launching literally any day now there I think their first game is in August. So this is the same level as NWSL so division one sanction and that franchise fee is 12 million dollars and so you can get you know 20 plus 12 32 you can own a division two men's soccer team and a women's franchise for 32 million and just to put in perspective NWSL my understanding now is they're currently asking a hundred million dollars for a NWSL expansion franchise so they're taking a very similar page in my opinion to MLS and so if you put those two together that's 700 million dollars if an ownership group wanted to try to get expansion franchises for those two and put it on a comparative scale you can buy two franchises from USL for 32 million you can buy you can build a modular stadium for five million dollars you can put it in a good location and you can look to have a training ground in some surrounding real estate and again I'm not trying to say any of this is easy it's just two very different approaches to the game of football in the United States the superpower of USL is it has the opportunity to be the best development league for young players in the world it's the place where you can give young players quality minutes in front of great crowds and and I I'll tell you from my experience with ibswitch and beyond the amount of town in the beautiful game is exceptional the amount of incredible players all over the world I'm going to look at this 16-year-old strike the other day in front of the Spanish kid so there is so much more supply of town that cannot get on the pitch that can't get quality minutes and especially in an environment wherein I love the construct of promotion and relegation but that also doesn't lend itself well to taking risks on young players you don't get rewarded for getting relegated but saying I started a handful of really young kids and these are going to be they're going to be legs out in a couple years your fan base which does not sit there and say we get it thanks so much we love seeing that 16-year-old that was not ready for it and so anyway it's a long way of saying that I think increasingly the stock of USL goes up because as multi-club ownership becomes more and more popular you have more and more ownership groups that have surplus of talent that need to get quality minutes and what better market than the United States in a good stadium a good training ground a good geography where if you can coordinate the technical side of it which you certainly can the stock is going to go up into the right so I think Barcelona will continue and you know the Premier League they'll continue to take the line share of it what I'm trying to say is I don't want to rely on the media rights fairies to come to the rescue and try to say to my ownership group yeah at some point there's going to be a massive television contractor I'll tell you later why I think there will be increased media rights but I think if you focus on the right payroll at the right age with the right ticket sales with the right merchandise with the right sponsorship with surrounding real estate that could also cash flow I think you create sustainable franchises and it's all about sustainability the railways too many clubs are losing too much money around the world that that's what I feel I'm trying to avoid if you will so I'm interested then in talent right it's a talent factory and I've seen you stay before you you firmly believe the US will win the World Cup and you look at soccer and I'm going to call it soccer now for the references to football but you look at its position in the US and its competition for ibles for audience and for participation how do you see the landscape of young talent when it comes down to them participating in soccer at a young age and choosing that as the sport of choice over the existing established institutional national ideals around some of those other American sports look world cup in 26 you will have you can almost chart six to eight years after the world cup is back in our shores you will see an incredible amount of town in this country we have a lot of town that will choose soccer over a lot of other American sports they will see on this stage in this country that there's nothing that compares to soccer in terms of you know what I can go and I can make a lot of money in this Greg and make as much money as an NFL player Major League Baseball player I'm an incredible athlete and I've got multiple choices in terms of a path I want to be these guys I think there'll be enough of that town I think there already is enough in a American town that with the right manager I think maybe we don't win in 26 I think we compete in 26 on our home like yeah everyone knows the US if it's we've got the town it's just a question of do we have the technical capability to put it all together so that instead of 11 really talented players it becomes one team that is just phenomenally efficient at putting games away you spoke about media rights I do have to just ask about that you know when I think about the business you spoke about kind of the costs of setting up a team you know buying away into the league traditionally media rights is the cash cow of most clubs in it you know helps them be mildly unprofitable not hugely unprofitable well said well said exactly right but we don't have such large enough. meteorites for USL. So can you just help me understand like what are the core revenue drivers that make USL teams profitable to you and a good business to you? Yeah so just to be clear we don't have great media rights and championship in the EFL. You don't have it in League 1. You don't have it in League 2. There's so many markets where you don't have media rights so it be mislead. By the way you don't have great media rights in Mage Lake Soccer. You know you've got a headline number of two billion dollars over 10 years behind a paywall on Apple that when you split it among 30 teams and then you have production costs and everything else you can start to do the math and start to recognize it's really not. Still at this point it's not the panacea in terms of the economic model for a lot of clubs. So again it's just a long way of my saying that I've never wanted to approach as I go to put my capital into my teams and I go to raise the capital. I don't want to sit there and say look the meteorites are going to come and save this thing. Like just just be patient. Look that has helped immensely with other leagues. The NBA is a perfect example. What's been happening with every single cycle. NBA is becoming you know a powerhouse. You know NFL is the blue chip. What's going on in Indian cricket is also the Premier League etc. So I continue to believe that those big big big once we'll soak up to your parade or you'll soak up the majority of those dollars. I believe you really need to focus on a model where you're keeping payroll relatively speaking modest and that payroll is good enough to sign talent that can get quality minutes. You can get good crowds that are paying a decent price for a ticket not an extortion at price. I don't know how the average family of four goes and affords an NFL game or a major league baseball game in the United States. When you factor in how many nights these guys are playing throughout a season just the parking in LA cost you $50 just parking. I mean it's so to do a baseball game right in LA probably cost you for a family of four $600 easily for that game. That's a lot of money. I mean that I could get I can get you a season ticket into my stadium in Rhode Island to watch great young players. So again when you put it on a scale it's just a different approach to to the market and I don't want to sit there and say at some point there's going to be this massive media rights deal for us. I think what's going to come to the rescue relative to media rights for us will be the adoption of promotion relegation. I think games of consequence in the United States is what's missing in this market and what I tell you is again with the utmost respect to Major League soccer if you're an American consumer you're far more interested in watching the foreign leagues or their games of consequence where teams are going up or going down then to mid-table MLS teams that are both going to make the playoffs because they all make the playoffs. Everyone gets a t-shirt every single season and there's no consequence. There's no consequence of putting a great team on this or a bad team on the pitch. You're all going to be fine. So can we because this is one of our favorite conversations and it's the jeopardy versus optimum asset value and whether both can actually exist. You know you've mentioned the buying of a new franchise at four to five hundred million you look at Newcastle one of the most historic clubs in this country playing Premier League football sold for less than that a few years ago. Now can you create an environment where the value is that high and yet there is still jeopardy because I'd imagine if you're buying a franchise at four to five hundred million and the opportunity to get relegated is on the table you're not going to be a very happy set of investors. You're not going to pay that money. Let's be honest. Yeah. No that's right and again that's a little bit of the corner that I think MLS is painting themselves in and again just to be clear no one in MLS is complaining about it. It's inflated dramatically inflated equity valuations. In my back yard in LA, L.A.F.C. incredible stadium, incredible city. They do great product on the pitch etc. It's worth well north of a billion dollars right now by a lot of estimates and I feel like that is inflated largely largely inflated. Flated obviously because there's no relegation risk. Yeah. But I also feel like long term 10 years from now with the absence of games and consequence in North America, I'm not sure we're getting global eyeballs to really focus on this. Like getting Leon on messy to come in has been a coup. That's fantastic. He's a lot of casual fans will go and pay a thousand dollars to watch him play. It doesn't change the narrative of really viewing MLS as a retirement leak. You know you're not sitting there saying it you start to get the five best players in the world that are coming to MLS right now that are leaving Premier League, leaving Italy, Spain, etc. That's a different equation but you're not getting them because the reality is you can't afford to pay them. You could do a one-off on messy. What's the next, what they try to sign to Brian Holland, you name it right now. What's the king's ransom that MLS would have to give those players to even consider in their prime coming to MLS and playing? Scarcity I feel like has driven a lot of value in some of the other US sports. If you looking at NBA franchises and NFL franchises, it was the opportunity to buy a very limited number of those assets. Do you feel if there's a prevalence of opportunity within USL? It actually could bring down maybe some of the fees within MLS because the people are looking at it going there's so much more value in this tier underneath where we can get a huge amount of what we want that actually it may start to recalibrate some of those huge numbers that are getting put through the top division. Good question. Look at some point I think there's sort of a law of economic gravity in terms of how many franchises you can have without relegation. So MLS is at 30 so maybe you can go to 32. That's the same number as the NFL has. I'm not sure you can go to 40 and again 40 teams and with no sort of relegation it's a ton to manage if you will. And again especially environment where are 80% of them going to make the playoffs? Like what's the purpose of tuning in? Everyone want to make the playoffs and who exactly who won the championship year in and year out? You're honestly not following it anywhere close to what the if I if I talk to my friends and extended network in the United States increasingly they are getting so passionate about the game but a lot of their time and attention is focused on they've got their premier premier league they've got their Bundesliga they got their Serie A American fans and they're really loving the passion of those different leagues. I'm not hearing that same level of passion where they're sitting there going oh my god did you see sporting KC the other day and what they did with Cincinnati it was incredible they just I'm sure it exists with some hardcore fans in those markets. No guy from London has called me up and saying I can't believe what I just saw the other day in MLS. I still don't understand just how does USL teams make money? Take ticket sponsorship merchandise or the primary but the big X factor going back to the earlier common terms of the development league is if you look at Louisville if you look at Orange County these are USL franchises. If you look at Oakland Phoenix rising they've all had such a Charleston battery just had a very successful sale of players that they own the rights to so what's happening is increasingly as a line item USL teams or signing owning the rights to and selling young players and they're getting add-on clauses with those there's an eight billion dollar plus market and that's before the Saudis it's really short to weigh in on it so all you need to do is scrape a rounding error of a rounding error of that every year every couple years with some young talent players so increasingly what I tell you if I was a really young talented player I would try to sign with a Louisville I would try to sign with the Orange County with the Rhode Island I try to get 20 goals get the Golden Boot Award and then all of a sudden the Ben Feeca's the I-X isn't a host of others are going to sit there and say you know what this kid did lights out this last season he's got the speed he's got the ability we're gonna and they did that they signed Winder from from Louisville Ben Feeca did I think it was a 1.3 million dollar purchase and I think Louisville's got a certain high percentage 20 30 percent add-on clause for his next sale that's real money that's fantastic drop to the bottom line change your profitability money and you're gonna see USL rinse and repeat that all day long on a relative basis it's not big money for MLS on a relative basis in terms of the literally and figuratively the league they're playing it with the USL it's a game changer so add that on top of a modest payroll and just to put in perspective USL payroll million dollars million and a half dollars for the entire squad that's what message getting in 24 hours down in Miami so the entire squad of the pay million dollar payroll a month a total total total like the the average USL championship club and I will round up the average is 1.5 million for the entire player's playing squad you're you're talking about 80,000 to a hundred thousand dollars hours plus room and board for these players at this point but by the way that's for a 21 year old kid that's not a bad contract to have and getting good quality minutes it's not about their contract right now it's about the level of quality competition the venues that they're playing in weekend wake out that gives them a platform to then go to a bigger stage and that bigger stage could be MLS it could be anywhere in Europe but increasingly having a million and a half payroll for the entire team you can find ways to cash for it with ticket sales merchandise sponsorships and then some increase in trading revenue and then a dot promotion relegation get a media rights deal to come in of consequence in this league and then again it adds up so it's all about multiple revenue streams that give you a pathway to profitability or sustainability is that like to call tickets merchandise sponsorships for an average USL team is that like 5 million is that like 20 million what what it all comes down to in a big reason why I spent so much time effort to build a world class stadium in Rhode Island it all comes down to the quality of the stadium and location and Louisville and Colorado Springs in the USL have brand new stadiums, the value of their franchises have gone up exponentially. their revenues have gone up exponentially. Consumers will pay to watch football in a great football-specific soccer-specific stadium. So if you look at Louisville, it has an incredible 11,000-seat stadium. You go and watch Louisville match. It's as nice a stadium to watch a soccer match as you will find in the world. So between that stadium, their revenues, I don't know, I would tell you, their revenues I'm sure are somewhere north of $10 million for their men's team. Not a massive number, but again, if you look at what I'm sure a league one club is doing in England, kind of comparable, but again, league one's not getting diminimous media rights deals, if you will. Same thing here with you, but the ticket sales, sponsorship, merchandise sales, on a relative basis with a modest payroll in a great stadium, you can figure out how to make this profitable. - Okay, so you have that 10 million revenue generation, just say, kind of which spitballing numbers, but I'm trying to get a kind of. - Yeah, directionally. Again, a good USL championship team in a good stadium should be doing north of $10 million between sponsorship, merchandise, and tickets sales. - And the cost base for that is. - Again, you should be able to have a cost base below that 10 million dollar figure. Million and a half payroll, you've got your technical staff on top of it, you've got your front office as well, but it's, you should certainly be able to run a team profitable when you get to that level of revenue. But you don't get to that level of revenue playing in a bad stadium or a baseball stadium. There are clearly a lot of clubs in USL that still need to figure out their stadium solution. But I'll give a great example. New Mexico is playing in a converted baseball stadium. They're getting 14,000 fans per game. New Mexico, wait till they figure out their stadium deal. And they will figure it out one way or the other. New Mexico, you know, I think we'll figure out their stadium deal. And it's gonna transform the overall valuation. It'll transform the revenue of that and they will be profitable. On that, on 14,000 fans coming weekend and weekend at a good ticket price. And by the way, good ticket prices still a massive discount versus most MLS and other major sports in this country. - When we get to that kind of end number though, and I'm sorry, I don't mean to be negative or sitting on just so intrigued. Like you kind of then turn out a million to five million in profit and it's like, great. I mean, it's a rare profitable sports team. So that's awesome. But how many do you need to have them to have like meaningful cash flow? And if a business ultimately is the value of its future cash flow. - By the way, I tell you almost without exception, every club in the world with the exception of the big boys would be thrilled to have that the numbers you just quoted in terms of cash flow, free cash flow. Almost every minor league club in the world would gladly take that. And I guarantee you, if you ask someone to analyze it, how many clubs are actually generating in the world? The number will be very, very, very, very low. So the reality, this is not a USL. I'm sure this is a global issue. And everyone sits here, everyone looks at buying clubs all over the world and they're all gonna get promoted. They're all gonna develop players. And you're all gonna get massive. It's not, the music at some point is gonna stop. It's not sustainable. There's way too many clubs losing way too much money. And again, all I'm trying to say is from USL, from where I sit, right side stadium with the right players, meaning good young players that you can sign, give them quality minutes. Right front office, right average ticket price, merchandise sale, sponsorship, and then add some player trading revenue. And then at some point, God willing, get some media rights deal. And I develop a lot of real estate. My ownership group owns all the real estate around the stadium. We're building 700 multi-family units. We're gonna do it in a construct where that cash flow is gonna be very creative. So it's another massive, massive driver of returns. - So it's a real estate player as well as a sporting player. So you go on top of the-- - Sports in the US, as far as I'm concerned, is a real estate player. Look at Atlanta Braves with Sun Trust Park. Look at my backyard here, LA Live. You can look at countless, countless examples. At the end of the day, sports and real estate go hand in hand, especially in the United States. And increasingly look at Chelsea's trying to do it. A deal obviously with their stadium and surrounded real estate. Every single one of them, if you look at it, they're all gonna try to figure out if they have a real estate player. They might not, but if they hope they do. - So I'm looking at this wrong in terms of the ones, two million at the end of the day, dropping into the bottom line. The big picture is the real estate player and what can be done there. In Rhode Island, it's a big part of the picture. Again, it was a very important part of my partners in my business plan when we went into Rhode Island. There was a baseball team that was there as playing in a baseball park that had completely run down. It was in a bad location. 80 years ago, when they built it, it might have been a great location. My partner and I went in and said, "Look, we want to bring professional soccer. We own the rights to bring professional soccer with USL into Rhode Island." But we need this location. It was Prime River Frontland right off the highway. We won an RFP and secured that. We got the financing done. And we signed a long-term lease with the city to develop real estate surrounding it. So it was imperative to me, and I always said all along, the real estate is essential. Because in the absence of the real estate, it becomes just that much more to pencil out. The real estate really is the X factor in the whole business plan. - So you have all of this involvement in the US. You start building out the franchises. You start creating value for yourself in multiple assets. When did you first start looking outside of the US? When did you first have a look at European football as a real investment opportunity? - I mean, I stayed all the time. I feel like if you're in this sport, you gotta be in England. The Premier League in particular, our English football in general, is the best in the world. I lived in London for five years. I probably should have preface it with that. So a big part of my passion for the game was having a front row seat as I describe it to the religion by which the world reveres the other football. And being in London for five years, I had a front row seat to the Premier League. And I came back to the States with the thesis that over time, Americans would really start to appreciate what I'll call the beauty of a zero, zero draw. You can come away from a game and be like, that was incredible. No one scored, but that was about as good a game as I've ever seen. That being said, more often than not, what I'm finding is just that it's incredible the talent that you're seeing and some of the goals that are being scored. It's my way of saying that I figured out that Americans at some point would appreciate the other football. And then additionally, that Americans would start to develop a real talent for the game. The women have always been fantastic. And increasingly, look at the quality of Americans that are playing in England and beyond and compare that to a decade ago. The entire US men's national team, basically, are all applying their trade overseas. And that's a very, very good sign for the sport. So you are now one of the key owners in an EPSWitch ownership group. That kind of process was that one of the first clubs that you got your eyes on, were you actually having a look within the environment more broadly at Premier League clubs, at championship clubs, EPSWitch will leave one when you bought into them if I'm correct. My partners and I looked high and low because we were interested in England. And I've been approached originally. I've talked about this before. I was approached by Peter Kenyon to potentially partner up on Newcastle. And for a lot of reasons, and this happens for no fault of anyone's, but for a lot of reasons, we couldn't get that deal done. But it gave me a real taste and desire to try to figure out a different opportunity in England. And we looked at a handful of other ones. A lot of which were publicly on the market, including Sunderland. But ultimately, what I really wanted to find was an opportunity where we could try to negotiate in good faith a deal. A lot of times what happens is you work on a Newcastle or a Sunderland deal and someone come in at the 11th hour it'll get retreated on you. So anyway, I felt very blessed that we had an opportunity to work with the owner at the time, Marker Sevens and we worked in good faith and we were able to get a deal done despite COVID and a host of other things. So in short, I always wanted to be in English football. We ultimately decided if we could do something, we wanted to do it with a club that had the grobby toss of an ever switching. The reason why we loved it so much was one of the greatest clubs certainly in the history of English football that was sitting two leagues below where we really felt it should be. And I guess this is the beauty of an open league from an investment perspective as well, where you can buy an asset that is a historic club in league one for a small price. And you have managed to achieve with the success of it which over the last two years, whatever you invested with dream of when they buy something and then see it expand and explode into now a Premier League team. The enterprise character of the Premier League is what I think a lot of people buy into when they buy low league teams. You've had it within two years. Did that really appeal when you first got the opportunity to buy the club that it could be something that you could bring back to restore, as you just mentioned, to its kind of former glory? Yeah, I mean, I think the disproportionate amount of the credit goes to Mark Ashton, our ability to recognize and bring Mark Ashton in a CEO of the club. He deserves a disproportionate amount of credit, especially because he had the eye to recognize the talent that is Karen McKenna. But in short, yeah, it's exactly what every other ownership group would love to emulate. And I think promotion and relegation, it's interesting because I think in summer specs, it's one of the most American concepts, if you will, the Darwinian nature of kind of win and go up, losing, go down. And yet it's not adopted in America, if you will. But I like where we are, obviously, we're saying it was complete humility to be an understatement. But now the real challenge is obviously, as hard as it is to get into the Premier League, the reality is the real challenge is obviously what it's going to take to stay in the Premier League. How do you buy a football club? Like, do you transfer all the cash up front? There are like snowflakes. Every single one is different. Very few transactions would be sort of formulaic, if you will. But at the end of the day, you've got to find the meeting of the mind, where there's the right balancing act between the motivation of a seller and then, you know, being able to kind of pencil the rest of it together with the buying group. So buying a historic club like Ipswich is very different than launching a USL or an MLS franchise in the States. And I think why so many Americans, that particular foreigners are really interested in football at the moment, meaning England and other more. It's because it's incredible, which you can look at some of these assets, the history of these clubs, the stadiums, the fan base, you know, and you can really buy the right assets at a great value. And if you invest the right on and off the pitch, you can really make some special things happen. And there's a lot of examples well beyond Ipswich in terms of that happening right now. Do you plan to use the different clubs within your ownership group to benefit each other? And what I mean by that is, you can develop some young Ipswich talent out in Rhode Island. Maybe you create the pathways that we've seen previously. I hope so. I, right now the clubs are all completely independent of each other. The only common denominator with my clubs would be myself. Phoenix is completely separate from Rhode Island, which is completely separate from Ipswich. I'm bullish on, I'll just speak specifically about Rhode Island. I'm very bullish about what Rhode Island offers in terms of clubs that have a surplus of talent that would want to give them quality minutes in a good world class stadium, in a world class market and the benefit of Rhode Island. It's an hour away from Boston and from Boston. You can get to almost any of these capitals very quickly. So geography as history or destiny. I really like where Rhode Island sits. Well, when we look at the P dominance in, in Venture State, you obviously see enterprise values of teams just go through the roof. And I'm seeing all of my P buddies go, I like soccer. I like soccer. And I'm just looking at going, why should he is going to keep going up? And so my question to you is, is there an awesome type where enterprise value of football team in the Premier League does start to plateau? Well, will we just see this continuing as financial increase with the increasing supply of capital? I'm such a bullish and so optimistic. And I think that private equity, and I would say by extension, a high net worth family office, sort of sort of institutional interest writ large and soccer as an asset class sports as an asset class. In the 10 years that I've been at this, that's been the biggest sea change. Is the amount of capital that really wants to get into it. And in buying large, I think a lot of that capital is very, very smart. And I think a lot of that capital will figure out ways to grow the pie that it's not finite. And it's not, oh no, we bought it in a market peak. And again, that's where I think the guys at Clear Lake are, or I'm sure if you kind of pull back the curtain, I imagine they're fairly calm and fairly sanguine and they're in it for the, they're in it for the long game. And I think that's again, they're not looking to kind of exit next year. They're likely not looking to exit anytime soon. And if you have a long enough tail, increasingly what everyone's trying to recognize for a lot of reasons, but sports is for better or worse. It is about as important for so many people as it gets. It is, these assets are showing grain. And so if you continue to invest in them, your loyalty and your ability to expand the fanbase, I think is very, very high. And I think a lot of ways, it's a long way of saying I think there are tons of additional ways to monetize positively these assets. And I think we're, you continue to use a baseball analogy. I think we're still very much in the early innings of a, of a long full run of smart capital coming into some of these phenomenal assets and really doing special things. So we've told you about how, what about the why? I mean, I, I do try to express that, you know, from my vote of motivation, I really try to not make this ego driven. I really am very focused on return on investment. I'm very focused on doing making an impact on this. I'm very proud of what we're doing in Rhode Island. We're taking an area in a city that was on the wrong side of a lot of things, you know, baseball club moving out hospital moving out, losing jobs. Now we're completely cleaning up prime, prime real estate that's been lying thalous since literally industrial revolution. We're creating an incredible amount of jobs. And we're bringing a sport to a community that needs it and that doesn't have to typically Rhode Islanders if they want to go watch soccer or baseball or American football. They're leaving the state of Rhode Island. They don't have a sport and an entertainment base. And so we're starting to build out there. Look, if you get to where some of these billionaires are, what's left for you to do? And so I think owning a trophy asset and kind of sitting there saying, look, bomber kind of change their trajectory and things when he bought the clippers. If anyone was looking at that time, people are talking about maybe they'll go for $800 million in bomber just through two billion down on the table and said, I'm, let's done this whole debate is done. I'm buying it for $2 billion and I'm going to set there and say, how did he pay that much money for this? And about a day later after he closes it, everyone was like, you know what? I think he got that for a steal. So it's, I mean, anyways, you look at Cuban with the maps actually. That's one of the most pressing boys out. Absolutely. And another pression move right now to sell on majority stake and he still controls the asset. He's taking a lot of money off the table. He can recycle into a lot of things. You know, when you think about the structure of different funds, you know, P has whole periods of three to five years with which they want to return liquidity to our piece. Do we suddenly see this mass sale in five years when all the P funds like shit, we want the quality back now? Yeah, I suspect a fair number of the documents on those investments probably do highlight that, you know, sports are a long term hold in that while P is traditionally a five to seven that investors should potentially be prepared for much longer timeframes on there. I would suspect again, I don't think any P firm and investors LPs in those funds are going to want to hurt themselves by kind of having a forced mandate to say we have to sell this point because the easiest way to take advantage of that on the opposite side would just be waiting for that trigger date and say, OK, now they really have to sell. And look, it's a lot of these Arctose and other funds are buying and minority stakes. I'm really, really confident that they're saying to their investors, look, we're buying illiquid minority shares in these clubs. They're not an inherent market that exists for us to trade out of this anytime soon. So just, you know, it's going to continue to go up into the right. You look seed inflation, a seed of basket of public stocks more often than not. So just being this for a long hole and put a small allocation of your overall balance sheet into sports as an asset class and we're the best choice for you. Rhode Island is, is that different to how you've invested previously this exclusive EU and your group rather than a consortium? I've, I've aggregated an incredible group of investors, not surprising a lot of whom are either from or around or connected to the state of Rhode Island. But a lot of family offices that want to get into sports as an asset class like the, if you will, the optionality of the real estate that comes with it. And then I say to investors are prospects investors all the time, you invest in the right sports assets like a Rhode Island, you and your family and your friends will find more joy and more utility. With these clubs of sociality and with these clubs that almost anything you can do, there's countless places where you could put your money. And I, and again, I can empirically show so many examples with LPs that have come in to this with me in these different platforms where day in and day out weekend and week out they have so much fun. And I guess maybe knocking on wood more often than not, Phoenix won a championship in November, back to back promotions with Ipswich, Rhode Island starting to hit stride with our inaugural season, not easy to put a team together from scratch competing against very established teams. But anyway, I know the joy that they get and I see how they watch our games, I see how they follow our signings, etc. And that's a lot of joy utility we had with that relative to a lot of other choices in terms of where you can put your capital. But at the end of the day, I'm looking for return on investment. I'm looking to take the equity valuation of this drive cash flow so that over and in the construct of my run out project, I wrapped it in a very, very tax efficient construct that the team is structured in a way where investors in America that have capital gains and put it into the team after a 10 year hold. All the appreciation would be tax free on that club and so I don't need to go down the rabbit hole right now, but I spend a lot of time thinking about how to make this is a tax advantage that God willing, we do well. The investors are going to do well, the community do well. And then the stadium itself, a lot of reasons why billionaires get into NFL and by extension if they can. Is that the stadium throws off a lot of depreciation and that's a very efficient means for especially for high net worth investors if they can get take advantage of it. If you're going through the leagues and you're buying something at a very good price and then a couple of years later, you hit the top level of competition. Is there a temptation that when you're looking at the biggest value on investment and there's a market for buyers now to buy these assets, would you not look to sell it rather than risk dropping down a league where another hundred million is wiped off the valuation literally overnight because you're not participating. Yeah, I mean, investing timings everything is part of the calculus and especially if you look at the capital that's coming into it increasingly as you said, you know, just going to answer generically rather than specifically public, but if you if you look at that for sure, the mandate at the end of the day is not that your LPs are going to just feel great because you want a trophy. They're going to feel great ultimately because you did did well by their investment at the end of the day, you can't you can't you can't turn there and sit there and say look, we won the league four years in a row. If you will, but the reality is we lost an incredible amount of money and we're going to need more capital and you're going to get either diluted or you're going to get ratcheted down on this next value. So the reality is that it is a business and people are looking for returns and investment and more often than not there have been a lot of examples where people have come into sport into soccer specifically and you know look what happened to sondaline and can lead the owner that preceded us with the switch. Very publicly clear how much money they've lost so there's not happy endings at the end of all this there's a lot of examples of very smart money that had the best of intentions that it didn't work out so the big, big asterisk relative to everything we get to do in this space is it's a business at the end of the day and as I say it's not for the pain of heart and you got to figure out. How to win on and off the pitch and and hope the ball literally effectively bounces right more often than not. That would be the most epic investor update they wouldn't we won the league but lost your investment to do a quick fire Brad was. What's the hardest element of your role today? Well, I wouldn't, I don't describe it as hard. I spend a lot of time both raising capital and then putting this stuff together, like trying to put the team together, trying to put the stadium together. I'm blessed with great partners across the different endeavors that I have. So I don't want to try to say that it's all on me. But trying to get a stadium financed for an expansion team and expansion market for a minor league in the United States, that's a degree of difficulty that, you know, was probably above and beyond the average, if you will. And so I'm very proud that I've done that. And so what I get excited about is I see opportunities to kind of copy and paste that. So I'll start to further my involvement with other franchise opportunities with USL and try to help the league out and try to help other markets because I have a playbook that I think can be positively emulated. And so that'll start to keep me busy. And again, I have a vested interest to seeing USL become the strongest league in the world. And that's going to be because we have incredible ownership groups in great markets with great stadiums, training facilities. And I really can't, as I like to say, winning on and off the pitch. So I don't know if I answered your question. Other than saying, I feel so blessed with what I get to do, but every single day, I'm effectively outraising capital for these different ventures. But I get to rub elbows with incredible investors and increasingly where my focus today, certainly domestically, has all been sort of high net worth family offices. Increasingly, I see you'll start to see a shift of private equity start to look at opportunities I think in USL. Institutional capital starts to look at USL as an asset class because at some point, they're going to sit there and say potentially a premier league valuation is, you know, tougher to pencil out if you will. And maybe it's easier to get return at the lower level. And look at American baseball as a good example. A lot of institutional capital going into minor league baseball. What would your dream asset be to own? Great question. I love rectangular sports because now that I've got this stadium or island, so interesting. I don't know. I like the emerging markets of trying to build soccer in the United States. But look, I'd be lying if I said to him if I had a great opportunity to invest in an NFL team or an NBA team. I mean, I just think those assets just continue to go up into the right. What is the pre-mortem for why the USL would not work? It's a great question. I mean, again, I think if I look at where the league is today versus where it was 10 years ago, my overall confidence couldn't be higher. Like the quality of ownership group. And I mean, sort of the pocketed, connected, committed ownership group is light years from where it used to be. I, again, I think with World Cup coming back here in 26, there's kind of a blue ocean opportunity for USL to carve out a very, very strong foundation of where it sits and what it stands for. And I say it all the time. I think that the rising tide is going to lift all boats. I'm bullish on MLS. And I think it's really important. I think MLS is doing a great job. I think they'll continue to go up into the right. But that being said, where I put my money and where I believe others should strongly consider looking at putting their money, isn't USL in terms of return on investment. But in short, where you can go wrong is you have, you spend a lot of money, I guess, a venue that at the end of the day, you have to have the stadiums are the key. And you'll see in women's football, Kansas City current, the NW Self-Ratchized, the fact that they built that stadium. That's an X factor for that league. You angel cities and the San Diego waves that are playing. And I'll tell you, even some of the English clubs that are just tenants in their stadiums, that's not economically, that's not where you need to be. And the other day, the real X factor is, can you own the stadium? Can you monetize that stadium? Because if you can, then I think that the equity appreciation is really strong. If you were just a tenant and you're just clipping a modest, modest amount of the sponsorship or ticket sales, because again, you're paying the house, that's a very different economic model. You talk about the importance of entertainment. You talk about the importance of investment returns. So that in mind, if I say you can own only one team and it's an open or a closed league, which one do you choose? I think buying low and having the ability to sell high. If you have the ability to buy a club at a good level and ideally get it promoted up, then that reality is that's your answer. But again, if you look at, look, there's a big, big difference between where a clear league bought Chelsea versus where candidly the Saudis bought Newcastle. And they're both, so again, anecdotal in terms of why I think there's so much passion in terms of buying assets like that and trying to ultimately, and again, none of it's easy. You can spend as much money to have a team that doesn't perform as you can to a team that really, really does perform. The reality is sometimes it's really tough to get these assets to really click the right way. I always again try to say with complete humility that anything that I've been lucky to do is the credit goes to a lot of other people, not me. But I'm thrilled to be playing a part into it. And again, just continue to put my right foot after my left foot and hope more often than not things go right. And if they don't try to figure out what I have to do to make sure that they can to go right. You lived over here for five years. Who's your team? Well, so the gateway for me was Arsenal. A very close friend brought me to Highbury when I was 18 years old. So that was my gateway. And I'm still, I've got a weak spot for Arsenal because going to Highbury and seeing that firsthand. And on a related note, I just had the chance to meet David Dean not too long ago. And just fascinating hearing the stories from him. And I read his book, which I highly recommend. But listening to him and how the nucleus of the modern Premier League was founded. In many respects, there's parallels in terms of, again, I'm very, very careful. I'm not trying to say there's parallels between the Premier League and what's going on. But in the US, but there's parallels in terms of what you have to do to invest and take the leak up to another level. And how you have to work together as an ownership group to kind of start to recognize that there was David Dean and at that time, a host of others started to recognize that changes had to take place for a lot of reasons in English football. And we all owe a debt to them because that started to percolate across the rest of the world in terms of the modernization of the game and truly the growth in these assets. An amazing conversation with one of the most interesting owners we have had the pleasure of speaking to. The leak structures between US sport and European open systems is something that we talk about more and more regularly and that's because value is so often attributed to the security of a sports asset in this modern sports economy. But again, highlights to key questions of can you create the drama that is required to maintain interest in sports and maximize key value? I'm not so sure. I really hope you enjoyed the conversation. If you're keen to see more from today's show, you can do so by heading over to YouTube and typing in Business of Sports and we look forward to seeing you next week. At the Business of Sport, we are very passionate about promoting the best service providers across multiple fields that cross over with the sports industry and the Tindall Investment Management sit at the top of that list. Unfortunately, the investment industry frequently delivers one-size-fits-all wealth management. This might benefit those running investment portfolios, but it does not provide the bespoke solutions that their clients expect, and certainly not those professional sports people whose requirements differ significantly from most others. 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