Darren Rovell breaks down the Lakers sale: Walter's insurance problems, the casino economy, and why Whatnot is 90% gambling

Speaker 2: Critical infrastructure for the AI era. Unlock seamless real time experiences and new value with Cisco. We've been keeping our next guest waiting for far too long today. Rovell, coming back on the show. How are you doing?

Speaker 5: Welcome back. Victor and well.

Speaker 2: Big day. Take us through, the story, how you're processing it, what this means. Set up the story of the Los Angeles Lakers changing hands again.

Speaker 6: Yeah. Just as just a surprise, obviously. Teams just don't change like this. You know, I don't think, hold on. I gotta get off my center stage. There we go. I don't want anything to follow me. Give me a second here.

Speaker 2: There we go.

Speaker 6: I'm a pro.

Speaker 2: That one's a

Speaker 7: There we go.

Speaker 2: I don't want to Okay.

Speaker 6: You know, Mark Mark Walter clearly did not say, oh, I could get in now and I could make $2,000,000,000 quick. Yeah. I mean, is amazing that in 2014, was saying, my god, Bomber bought this team for $2,000,000,000 and now that is the profit Yeah. That Mark Walter is making, just from getting out of here. I will tell you this because I know your show well. Yeah. I have never understood Guggenheim's insurance business. Yep. It's one of those things where I could never follow the buckets. It's buckets upon buckets upon buckets and this going to this and this going. I would say it's purposely obfuscatory.

Speaker 2: And

Speaker 6: so the fact that there are third party loans apparently where they can't they don't understand it and that the report that at least Bloomberg had that he had to, you know, get loans quickly to perhaps make them kosher. Yeah. Does make a lot of sense given my previous work with trying to investigate exactly how Guggenheim works.

Speaker 2: Yeah. So so a little bit of motivation for the early sale.

Speaker 6: Yeah. For sure. And the other motivation for the early sale, you would think, is the NBA in general. The NBA is a hell of a lot more progressive than Major League Baseball, not to suggest that he would have lost the Dodgers. But when you have the bomber situation, that investigation, that's in LA. You have I wrote on Twitter today kind of the this world where people are gonna become rich really quickly, but they also could become poor really quickly. We've seen that before, but I think that in the degenerate, you know, I think we wake up every morning and we're more in a casino than ever before.

Speaker 2: And

Speaker 6: that that means that you're gonna hear people buying teams for massive values and you're gonna see a higher percentage of those people be poor in two seconds. Oh. So while I don't while while while I don't think the assets of sports teams and the assets in general, obviously the macro economy is important, falling, I do see individual people falling and Sure. Replacement people have to come in more than ever before.

Speaker 2: Yeah. I mean, we saw that just a few weeks ago, situational awareness, a fund a hedge fund that scaled from $250,000,000 to almost $50,000,000,000, round tripped very, very quickly in dramatic fashion. Fortunes are won and lost extremely quickly in the modern

Speaker 1: Yeah. Modern era. Very basic question. But but what are what are the kind of groups that can own an NBA team? Yes. I thought it had to be individuals. Obviously, you could they can bring in partners on it. There can be, you know, a bunch of, you know, co owners, but then I

Speaker 8: was They looking it up

Speaker 6: recently and like announced. Announced

Speaker 1: owns the Knicks like

Speaker 6: Any anyone now, I mean, you know, they've recently even allowed, you know, Blue Owl has a home court ventures fund

Speaker 2: Okay.

Speaker 6: You know, which became when Blue when Blue Owl had their whole, you know, we're not giving any distributions and we're locking everything up, of course, people would say, well, you own 5% of a bunch of NBA teams, which wasn't convenient at the time. But, yep, I mean, pretty much anyone can own anything now, even the NFL now opening up, you know. But I listen, the Yankees and and their Apollo deal yesterday, I think sports leagues are willing to have pretty much anyone as owners Mhmm. As long as the value continues to go up.

Speaker 2: Does that we

Speaker 1: could see a hyperscaler just end up buying a sports team just as basically a part of their treasury? It seems like a relatively stable asset. They get some potentially some halo effect from it.

Speaker 6: I think I think I think leagues will still be very careful as to who they, let in just because they're worried about information as a whole. Right? They don't want things to come out especially as long as a lot of these teams are gonna still be asking for public financing for their stadiums.

Speaker 2: Oh, yeah.

Speaker 6: So so I do I do think they they I know I'm contradicting my contradicting myself, but I do think there are some caveats and if they open it up to many people who are say invested in a fund who then have to have access to those financials, I don't think major sports leagues think that's interesting. So that's the only only thing that I think is is probably like prohibitive to all of that.

Speaker 2: Got it. So when you say information, mean financial details about how that particular team operates? Because there's been

Speaker 1: Yeah. But can't you can't you you could certainly raise from a number of people and just have it be a condition that they don't get any information. Right? Right?

Speaker 2: Yes. Yeah. But that would be hard if it's like For

Speaker 1: example, I know a bunch of people that would happily co invest with Kushner and Iger

Speaker 4: Oh. On the you have to

Speaker 1: tell me anything ever. I just wanna be effectively be able say Yep. Yeah, I'm I I own part of the Lakers.

Speaker 9: Sure.

Speaker 6: And that's the thing, by the way, minority ownership, it's ridiculous. I mean, I I can't believe people say, hey, I'm gonna put a 100,000,000 in and and I'm going to own like an infinitesimal part of a team. I mean, it's like, yes, there is a trophy value, but there are seemingly better investments. I will say obviously, I have been wrong at every stage of since covering this for thirty years, I've been wrong. If you wanna pull all the videos, you can see me on CNBC saying in 2011,

Speaker 9: $450,000,000

Speaker 2: for the

Speaker 9: Warriors, that is crazy. And then and then

Speaker 6: and then the next year the the Bucks sell and and I even said in 2014, bomber for $2,000,000,000. It's 12 time it was 12 times expected gross revenues and this deal is now 20 probably 20 with LeBron leaving, it's probably 22 to 23 times gross revenues.

Speaker 2: Yeah.

Speaker 6: 12,500,000,000 for next year.

Speaker 1: Yeah. Wow. It's crazy. Someone some under the numbers in the chat said, most of the leagues allow up to 30% institutional ownership Yeah. In individual teams. Yeah. Thank you.

Speaker 6: Yeah. I think that's gonna I think that will change a little bit more. Again, I mean, there's not there's there's been relatively little we we haven't seen like majority Abu Dhabi sovereign wealth funds coming into American sports. I know that the monumental Washington capitals and wizards, you know, small piece in there, but and it's obviously infiltrated European soccer football Yeah.

Speaker 7: A lot

Speaker 6: more than it has here.

Speaker 1: Well, And and for all the existing owners, no one is probably sitting there owning one of these assets and thinking like, no, I don't want to unlock large institutional buyers for these Like, of course, there's a massive incentive to allow these, like, much much bigger buyers to come in.

Speaker 2: Do you think For sure. Do do do you think the trophy asset thesis is still driving the market? Or is there something else going on? Because, I mean, I guess the trophies can just keep getting bigger and bigger as the pool of capital and the larger buyers come in and people are wealthier, so they need a bigger trophy. But it feels like there are other things afoot in The US economy changes to like the big the big like macro thesis around sports is usually like we're all on our phones and that means we're craving Experiential. Experiential. Right? And so I'm wondering if there's if there's some other way that we should be thinking about a deal like this outside of the typical, it's a trophy asset.

Speaker 6: Yeah. Well, you have a lot of people who are interested in ownership because they're rich and no one knows who the hell they are.

Speaker 2: Yeah.

Speaker 6: And that's obviously not the case with Kushner and and Iger. Yeah. You know, one of the things that's not a surprise is Kushner and Iger. I mean Yeah. Iger's been walking around forever and and and he obviously was at the helm of Disney, which owns ESPN, and he's had a first look at, you know, everything in sports over the years, and I just I just thought they were gonna get the Vegas team. I mean, were looking at Vegas a week ago.

Speaker 2: Yeah.

Speaker 6: So, you know, that just shows you how quick this is, you know, and and Kushner and, you know, obviously what he's been doing, and always, know, hey, every day you gotta throw in a Trump connection somewhere.

Speaker 2: Sure. So

Speaker 6: so the what I'm interested in though, and I'm known

Speaker 1: But but you said you said so so I haven't been following the the Vegas team at all Mhmm. Or anything in the NBA.

Speaker 6: The opportunity that there'll be a Vegas team.

Speaker 1: No. But but but my question was like, is it is it possible that they always wanted the Lakers and they wanted and and these were this was going on in the background and and they just were using that the the Vegas Not

Speaker 6: not not what I was told. They they wanted a great team. They and and this happened over the last hundred hours.

Speaker 2: What is the shape of Las Vegas sports these days? I I I know, like, teams have relocated there, and there's f one and but is there like an indigenous fan base that's strong enough? Is the indigenous fan base

Speaker 6: They can't believe how big it is. Listen, was I was I was there Yeah. The day that they announced the Vegas Golden Knights. Yeah. Obviously, their first year going to the Stanley Cup helped.

Speaker 2: Yep.

Speaker 6: I mean, that crowd is probably in the top five best crowds in hockey. Wow. Everyone go you know, people go there for road trips

Speaker 3: Yeah.

Speaker 6: Like they go when when teams play, you know, the Raiders. You know, the Raiders stadium, Allegiant Stadium is is amazing, is great. They've won. You know, Vegas is very hard to win at and people laugh at me when I say this, but, you know, eating has become the next act and it becomes eating versus Cirque du Soleil. It used to be eating and then show. Now eating is actually an activity. And so you're competing with eating over the last five years because of the chef the chef brands and everything else else that's out there. Yeah. And so, I think they think, know, the the a's are really gonna make a lot of sense and and and listen, if you look at the Knights and you look at, where the raiders are, I mean, ten years ago you were concerned about gambling. Now now, Kalshi has you, gambling on, what flights are late.

Speaker 2: Yeah.

Speaker 6: You know? We've gone we've gone from from oh my god. I when I asked Gary Betman, that day when they said they were moving to Vegas, he said, oh, no. We're gonna have, the odds will be off the board of the two closest casinos to t mobile arena. We're concerned.

Speaker 2: Woah. And,

Speaker 6: you know, and and now you look today and you look at the prediction markets and Yeah. We're we're we're literally betting on toad races every two seconds.

Speaker 2: Alright. Is prediction are predicting Is toad

Speaker 1: racing is toad racing a thing?

Speaker 2: I mean, there's

Speaker 4: No. It will be though.

Speaker 2: I showed you that crazy Russian live streaming site where people play fake sports. Like, there'll be two guys sitting in a chair

Speaker 6: and they're You playing can bet on you can actually there you can bet on how many cars will go through a traffic light.

Speaker 2: I've seen those.

Speaker 6: Yeah. Until it turns red. I mean, listen, prediction markets are the the dopamine that is going on, whether it's gambling, whether it's opening packs, collectibles, obviously, I'm close to. Yeah. You know, my son who's 12 is on a free to play app and he's looking at whether, you know, Giannis is gonna sneeze during a game. And by the way, I I I don't say don't play that. I say, yeah, play that. Play that and make you use your fake money and when you lose 14 times in a row, that's a learning experience and if you had real money, you'd be screwed. Yeah. But but I don't know. I mean, it's the prediction markets are the craziest thing that I've ever had to watch in my entire, you know, reporting gambling life.

Speaker 2: Are prediction markets net good for sports? In terms of the businesses of like the Lakers, there's more points of entry and so you wind up buying tickets and going in person or does it not affect or does it pull people away because No.

Speaker 6: I I think until people run out of money. Yeah. You know, people people people run out of money. These are these are it's very very addictive. Yeah. And it's, you know, and it's and it's it's difficult to avoid because again, we need to be on dopamine. We are a degenerate nation and this is this is in a way the perfect and most horrible product.

Speaker 2: Yeah. Interesting. Yeah. We talked to the head former head of the CFTC yesterday about it, about where the regulation might go, whether you're going to get some of those gambling addiction warnings applied to prediction And

Speaker 6: what what about what about Cauchy and Polymarket's market cap and, you know, what if you're Andrei and Harjot, sorry. How how are you predict, you know, if you're raising at a $50,000,000,000 valuation, but you know, at some point you have to believe that with the sports books and you get a complete proctology exam if you're related to the sports books and then if you're a cashier calling market, you get a free pass to do anything. You'd think that that would have to come to an end at some point, but and is that end when Trump is out of office?

Speaker 2: Yeah. Who knows?

Speaker 1: Breakdown, what's what's your updated view on whatnot?

Speaker 2: Oh, yeah.

Speaker 1: We had Grant on the show. I believe it was on Friday. The business is growing like crazy. It seems like there's a lot of like traditional online commerce happening in this live format. You know, he gave an example of a guy selling fish, doing quite well selling fish. Yes, I

Speaker 6: love that example. That was crazy. Was live fish.

Speaker 1: And that's like, you know, the example that people always would give with China is like you can go on these Chinese live streaming apps and buy like mangoes and kiwis and fruit and all this stuff. And we hadn't haven't really seen that at scale in The US yet, but but if you were gonna put a number on it, what percentage of the activity on whatnot or what percentage of the volume on whatnot is like closer to gambling than commerce?

Speaker 6: 90%. I mean I mean, I I you know, it is so much breaking, that I'm surprised that they don't have an insurance policy against breaking by selling, you know, normal memorabilia. Right? I mean that Mhmm. They're if if in a and this is it's not as close to prediction markets, but if a bunch of attorneys general, you know, decide that they're gonna go after breaking, you know, whatnot's gonna go all the way down. And breaking breaks

Speaker 3: breaks down breaking for us.

Speaker 6: It's like Breaking your It's

Speaker 1: like I buy you're sitting there with a pack of cards, you're about to open it, I can buy it for $10 and it's possible you pull a card that's worth a 100. Is that is that how it works? And then people just

Speaker 6: that by three. You put in you put in 300 to win 3,000 or you put in Mhmm. 700 and then potentially you could get nothing

Speaker 2: Mhmm.

Speaker 6: Which is which then becomes a lottery rule issue. And whatnot has done a lot more recently to try to curtail it, but it's very hard to say that it's not gambling. Mhmm. And so I I think they should be doing a lot more regular traditional eBay type memorabilia sales. Yeah. I didn't believe in them in the beginning I confused the smallness of their transactions that the average transaction I think was like $15 Mhmm. That they wouldn't be able to get a critical mass.

Speaker 2: Mhmm.

Speaker 6: And to their credit, they certainly have gotten that. People enjoy watching the shows, know, they enjoy being a part of it, but again, as they get bigger, I'm surprised that they're not investing more in traditional commerce almost as an insurance policy.

Speaker 1: Mhmm. Well figure out if they're gambling on fish. Maybe? Because it's like

Speaker 2: might have caviar inside, you don't know how much caviar is inside. This is a real thing with fish.

Speaker 6: By by the way by the way, if anyone wants to have a great time, you should go to Oklahoma Okay. Where you can fish for paddlefish, which is pretty much a fish when you pull it out of the water. It looks like it was on the Simpsons.

Speaker 2: Okay.

Speaker 6: And and you can fish all you want, but you must give Oklahoma the fish. They will then clean out the caviar and then hand you back the fish. Oh, interesting. American paddlefish.

Speaker 2: American paddlefish. Well, thank you so much for the tip and thanks for coming on

Speaker 1: the see you.

Speaker 2: We'll talk to you soon. Have a good rest of your day. Let me tell you about MongoDB. What's the only faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that powers it. Our next guest is Patrick Whitesell. He's the founder of WTSL, here with us with his first appearance joining in just a minute or two. There are some other posts in the timeline.