In episode 36 of the "Acquired" podcast, hosts Ben Gilbert and David Rosenthal shift from their usual tech focus to explore the sports world, specifically Steve Ballmer's $2 billion acquisition of the Los Angeles Clippers in 2014. Despite not being avid NBA followers, they dissect the deal's nuances, Ballmer's aggressive bid, and the Clippers' troubled history under previous owner Donald Sterling. The episode delves into the implications of the purchase, the innovative potential of NBA franchises, and the evolving business models in sports broadcasting. The hosts also touch on the Clippers' performance and future prospects, as well as the broader context of sports franchise ownership as a unique asset class for billionaires.
"Today's episode, David and I are venturing away from technology into the world of sports. We'll be talking about Steve Ballmer's 2014 purchase of the Los Angeles Clippers."
The quote sets the stage for the episode's content, highlighting the hosts' venture into sports analysis, specifically the acquisition of the Los Angeles Clippers by Steve Ballmer.
"We can definitely apply the acquired methodology to it and get some good discussion in."
This quote emphasizes the hosts' confidence in applying their analytical framework to different types of acquisitions, including those outside of their usual focus on technology.
"Pilot is the one team for all of your company's accounting, tax and bookkeeping needs."
The quote explains Pilot's role in providing comprehensive accounting services to companies, which is relevant to the podcast's startup-focused audience.
"The Clippers actually have the worst winning percentage of any team in any major American sport."
This quote highlights the Clippers' historically poor performance under Donald Sterling's ownership, setting the context for the significance of the team's eventual sale.
"The NBA issues a lifetime ban of Donald Sterling from the game and finds him two and a half million dollars."
The quote details the NBA's decisive actions against Donald Sterling, illustrating the league's stance on racism and its impact on the team's ownership.
"So when you own an NBA franchise, it's truly that a franchise. I mean, you can imagine it's like owning a McDonald's where, yes, you've poured all this money into this thing and you own this asset, but there's actually a corporate governance structure above you that can force a lot of decisions with, in this case, a three quarters vote."
This quote explains the concept of owning an NBA team as a franchise where despite being an owner, there's a higher authority that can dictate major decisions, such as forcing a sale.
"You have a terrible situation going on."
This quote refers to the circumstances leading to the Clippers' sale, highlighting the distress involved in the situation.
"So Bomber comes in with a bid of 2 billion."
This quote states the amount Steve Balmer bid for the Clippers, indicating his aggressive approach and the high value placed on the franchise despite its history.
"The Clippers are up to number six, but still at 2 billion, the same mark, the same price that Bomber paid for them three years ago."
This quote provides information on the Clippers' valuation increase and position among NBA franchises, indicating stability in their value over time.
"As part of the deal, Shelley Sterling gets the titles of owner emeritus and Clippers number one fan, as well as ten tickets in section 101 or 111 for all Clippers games."
This quote details some of the unique terms included in the Clippers' sale, emphasizing the unconventional nature of the transaction.
"They are in the playoffs again this year. It's their 6th straight year going to the playoffs after only doing it four times in 25 years in California."
This quote summarizes the Clippers' recent performance improvements, contrasting with their past record.
"The NBA has the youngest audience of any of the major sports in America and has almost half of its viewers under 35."
This quote highlights the NBA's demographic advantage and potential for continued growth, emphasizing its appeal to a younger audience.
"NBA teams on average, I mean, this is kind of eyeballing. I should crunch the numbers, but it looked like the valuations of these teams are about ten x their revenues and about 15 x their operating income."
This quote discusses the high valuation multiples for NBA teams, which indicate the market's confidence in their long-term stability and profitability.
"All of that was managed with Statsig."
This quote emphasizes the effectiveness of Statsig in managing the evolution of a product, highlighting its role in overseeing the development and implementation of new features.
"You could argue it's asset... from a technical perspective... they are depreciating assets."
This quote discusses the technical financial perspective of sports teams as assets, focusing on the depreciation of player contracts.
"I'm still calling it a business line because I think all the future growth is being able to turn that flywheel of the franchise."
Here, the speaker expresses their view of sports teams as a business line with growth potential, rather than just depreciating assets.
"He's ridiculously involved... much more so than I think most owners are... he's much more involved than another owner would."
This quote comments on Steve Ballmer's unusually high level of involvement in the operations of the Clippers, which is atypical for team owners.
"He employed a similar strategy to the one that he employed at Microsoft for M&A in making an over the top bid for Skype to just end all negotiations."
The speaker draws a parallel between Ballmer's aggressive acquisition strategy at Microsoft and his approach to purchasing the Clippers, characterized by making a significantly higher bid than competitors.
"Bomber is a very, I wouldn't say that his judgment is bad, but he takes a very different stylistic approach to being an aggressive acquirer."
The quote contrasts Ballmer's acquisition style with Zuckerberg's, highlighting Ballmer's more public and enthusiastic approach.
"He just oozes enthusiasm, and that's what he's bringing to the Clippers."
This quote encapsulates Ballmer's infectious passion and how it translates into his management of the Clippers.
"Balmer gave Doc kind of all of that power as coach and president."
The quote explains the unique organizational structure of the Clippers under Ballmer's ownership, with Doc Rivers holding significant power in both coaching and management roles.
"There is business model innovation that is happening in sports right now."
This quote identifies the ongoing transformation within the sports industry, where traditional models are evolving to incorporate new revenue streams and customer relationships.
"The ability for Major League baseball charges... for this incredible product where you can stream any game at any time, anywhere in the world."
The quote highlights the successful implementation of direct-to-consumer streaming services by Major League Baseball, setting an example for other sports leagues.
"The leagues... are starting to realize that they can cut ESPN right out of that and make both the advertising money, 100% of it. And the subscription money."
This quote discusses how sports leagues are beginning to bypass traditional broadcasters like ESPN by offering their own streaming services directly to consumers, capturing both advertising and subscription revenues.
"The NBA's broadcast rights are getting more valuable."
The speaker notes the increasing value of NBA broadcast rights, likely due to the unique position of live sports in an era of cord-cutting and on-demand entertainment.
"I hope these other sports, and managers and coaches in other sports at all levels can look at the NBA and say there is so much value and power in not feeling like we have to stick to tradition in the way it's always been done, in how these games are played, and that fans will react super positively and love new innovations."
This quote highlights the potential influence of the NBA's innovative approach on other sports, suggesting that breaking from tradition could lead to positive fan engagement and potentially better strategies.
"They really turned the NFL into a family sport. It's not the thing that dad does and drinks beer on the weekend with buddies at the game. It's a thing that they've really turned it into a family product where you have people over and the whole family gets into it."
This quote emphasizes the NFL's strategic shift towards making football a more inclusive and family-oriented experience, which has broadened its appeal.
"The NFL has a huge liability on their hands that I don't see any way out of it with the concussion issues."
This quote points to the ongoing challenges the NFL faces with concussion-related health issues, which could impact the league's future.
"The NBA is more the stock that I would buy right now."
This quote suggests that from an innovation and growth perspective, the NBA is currently more attractive than the NFL.
"The test of a management team and the company is how you react to that. And do you either give up and start heckling your players like Donald Sterling? That's one end of the spectrum. Or do you support your employees and your staff and your team and make the decisions sometimes hard to continue to do your best to put the team out there that's going to win and do that really thoughtfully and strategically."
This quote compares the challenges faced by NBA teams to those of tech companies, emphasizing the importance of supportive and strategic management in the face of change.
"Was this a good decision for Steve Ballmer to acquire the Clippers? And I think that the guy had $20 billion and the rest of his life in front of him. And I had another friend bring up this idea that it's incredibly rare that an opportunity like this comes on the market."
This quote discusses the personal aspects of Steve Ballmer's decision to acquire the Clippers, considering the unique opportunity and the potential for enjoyment it offers.
"Instagram Stories now has more than 200 million Dau, which is more than all of Snapchat."
This quote highlights the milestone reached by Instagram Stories, overtaking Snapchat in terms of daily active users.
"One reason that the Starbucks IPO is so successful that we didn't really touch on in grading. It is because they delivered on a consistent basis financially for many quarters after the offering."
This quote attributes Starbucks' successful IPO to its ability to consistently deliver financial growth, setting a benchmark for evaluating other similar businesses.
"It's called pop race in the it's by Jack Hamilton, who's a professor at UVA, and he interviews folks. It's only six episodes. It's a short series, but it's great."
This quote introduces the podcast 'Pop Race,' which delves into the cultural significance of 60s music and its broader societal implications, including its influence on the tech industry.
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