Gerry Cardinal has had a successful career: He spent two decades at Goldman Sachs, founded RedBird Capital, a nearly $10 billion private equity firm, and worked with the sports and entertainment industry. Celebrities formed lasting friendships, including George Steinbrenner, Ben Affleck and The Rock.
He has conducted many huge transactions, such as Redbird Capital’s acquisition of the famous Italian football club AC Milan for US$1.2 billion in 2022. But he has a piece of advice for those who want to own a team: “Sports are no longer a hobby for the rich.”
“Sports is a multibillion-dollar live entertainment industry, and you have to have the connections and interdisciplinary skills across a variety of activities to run the sports industry well,” he told Fortune.
Cardinal, a prolific investor in sports and media, believes the days when sports were used to satisfy the vanity of local tycoons are gone. Instead, international competition from the best global investors with massive capital means that even entertainment businesses like sports now require serious management.
Cardinal spent 20 years in Goldman Sachs’ commercial banking division, where he worked on a variety of transactions for a variety of clients, including those of two deep-pocketed teams, the New York Yankees and Dallas Cowboys. . Cardinal helped the Yankees establish the Yankee Entertainment and Sports Network (Yankee Entertainment and Sports Network) and provide financing for the team’s new stadium. He is an old acquaintance of Dallas Cowboys owner Jerry Jones, and they teamed up to form Legends Hospitality, a company focused on stadium operations. “My model of choice in the sports industry is still — and always has been — working with rights holders like teams or leagues and building end-value businesses around those rights,” Cardinal said.
At Redbird Capital, he had a knack for combining sports and entertainment. For example, Redbird Capital invested in LeBron James’ media company SpringHill Company and helped Michael B. Jordan and Ryan Reynolds invest in the F1 team Alpine Racing. Redbird Capital even partnered with The Rock to buy the Xtreme Football League.
In the past 15 years, a large amount of money has been invested in the football industry around the world, such as oil capital in the Middle East and other places, oligarchs in Russia and Eastern Europe, and various tycoons in Asia and the United States. Most investors manage the teams like a business, investing large sums of money to secure lucrative sponsors, build top-notch infrastructure such as stadiums and training grounds, and of course sign the best athletes, often out of pocket Record price. This has turned sports, once an entertainment activity, into a booming industry.
Cardinal credits his success with the help of another celebrity he knew: Billy Beane. He saw an opportunity to put into practice the “magic ball” theory made famous by Beane.
Cardinal brings the “magic ball” theory to Italy
Cardinal said: “Billy opened my eyes to the idea that even with the risks in the transfer market and relegation, someone who is creative and committed to building a company and who has an entrepreneurial mindset like me can Investors, investing in the potential of the European football industry.
The problem in the transfer market is that the clubs with the deepest pockets will outbid the competition, making Moneyball-style recruitment more difficult to execute. Cardinal did experience the risk of relegation after buying France’s Toulouse FC for $15 million in 2020, but the team returned to the French top league a season after being relegated.
Beane convinced Cardinal to continue investing in European football. Cardinal said: “Billy believes that the magic ball theory is very effective in the European football market.”
Bean rarely played football as a child, but a trip to London with his wife in 2003 made him interested in football. He had a chance encounter with French football executive Damien Comolli, a big believer in his Moneyball theory. Comolli was later employed by English club Liverpool FC, which is owned by John Henry’s Fenway Sports Group (FSG), which also owns the Boston Red Sox. Boston Red Sox). Beane’s influence worked: A longtime Beane fan, Henry even invited Beane to be the team’s general manager and offered him the highest salary in baseball history. After Beane declined his offer, Henry hired Theo Epstein, the analytics genius who would go on to lead the Red Sox and Cubs to historic championships. In 2017, Epstein entered Fortune’s list of the world’s greatest leaders and topped the list.
In October 2020, Fenway Sports Group prepared to go public through a special purpose entity, with Bain and Cardinal serving as co-chairmen of the special purpose entity. At the time, Bean and Henry were indeed expected to become professional partners, but ultimately that didn’t work out. But the connections built during that time led Cardinal and Fenway Sports Group to continue working together.
In March 2021, Redbird Capital acquired approximately 10% of Fenway Sports Group for US$735 million. Cardinal even invited several celebrities from his network, such as LeBron James, to receive an ownership stake. Cardinal’s plans in Milan are largely consistent with Fenway Sports Group’s approach to revitalizing the waning giant, Liverpool FC. After years of hard work, Liverpool FC achieved the results on the pitch that the owners expected. However, the owner’s plan appears to be working, with Liverpool FC winning the UEFA Champions League in 2019 and in 2020, the team won the English Premier League for the first time in 30 years.
With Fenway Sports Group’s strategy at Liverpool already so successful, Cardinal may be able to speed up the process of transforming Milan. Cardinal has incorporated Beane’s roster-building analysis into his own management philosophy and is trying to improve upon it. Cardinal told a Financial Times conference in 2023: “Gone are the days when coming up with data… was a competitive advantage. But the way we use data sets us apart from our competitors. “
Although Cardinal was a financial executive with a penchant for analysis, like his good friend Beane, he never lost sight of the importance of winning on the field. In fact, he believes that winning on the field is crucial to the team’s business success. “Performance on the field and performance off the field are intertwined like a Venn diagram,” Cardinal said. “They’re both critical to each other. That’s the lesson I’ve learned from investing in the sports industry for 30 years, and I think it’s This concept is effective.” (Fortune Chinese website)
Translation: Liu Jinlong
Reviewer: Wang Hao
Gerry Cardinale has done well in his career: two decades at Goldman Sachs, founding the nearly $10 billion private-equity firm RedBird Capital, and glittering friendships in sports and entertainment that run from George Steinbrenner to Ben Affleck to The Rock.
He’s done huge deals, such as RedBird’s $1.2 billion acquisition of the storied Italian soccer club AC Milan in 2022. But he’s got a message for those who wish to try their hand at owning a team: “Sports now is no longer a hobby for rich guys.”
“Sports is a multibillion-dollar live event entertainment business, and you have to bring relationships and multidisciplinary skill sets across a range of activities to be able to get these things done,” he tells Fortune.
For Cardinale, a prolific investor in sports and media, the bygone era of sports as a vanity project for local magnates is gone. Instead, international competition from global investors of the highest order, each with their own vast troves of capital, mean that even fun things like sports now require serious management.
Cardinale spent 20 years at Goldman Sachs’ merchant bank working on all manner of deals with all kinds of clients, including the New York Yankees and Dallas Cowboys, two teams synonymous with big money. Cardinale helped the Yankees launch the Yankee Entertainment and Sports Network and finance their new stadium. He also has a long relationship with Cowboys owners Jerry Jones, with whom he partnered to start Legends Hospitality, a company that specializes in stadium hospitality. “My model in sports continues to be, and traditionally has been, partnering with a rights holder like a team or a league and building terminal value businesses around those rights,” Cardinale says.
At RedBird, he’s had a knack for merging the worlds of sports and entertainment. For instance, RedBird is an investor in LeBron James’ media firm SpringHill Company, and he helped Michael B. Jordan and Ryan Reynolds invest in Formula 1 team Alpine Racing. RedBird even partnered with The Rock to buy the Xtreme Football League.
Over the last 15 years, soccer has seen a ton of wealth pour into the sport from all over the world: oil money from the Middle East, oligarchics from Russia and Eastern Europe, and all manner of tycoons from Asia and, increasingly, America. And most of these investors have run their teams like businesses, investing hordes of money into securing lucrative sponsors, building world-class infrastructure like stadiums and training grounds, and naturally, signing the game’s best players, often at record-breaking prices. All this to turn what was once a game into a booming business.
Cardinale thinks he can do that with the help of another famous name in his rolodex—Billy Beane. He sees an opportunity for the “moneyball” approach made famous by Beane.
Cardinale brings moneyball to Italy
“Billy opened my eyes to the potential of a creative, company-building investor with an entrepreneurial mind like myself of actually investing in European football despite the risks around the transfer market and relegation,” Cardinale says.
The trouble with the transfer market is how the world’s wealthiest clubs can outspend all their competition, making moneyball-style recruitment even harder. While Cardinale did experience the risk of relegation firsthand after he bought the French club Toulouse FC in 2020 for $15 million, after it had been relegated, Toulouse won promotion back to the French top flight the following season.
It was Beane who managed to convince Cardinale to keep investing in European soccer. “Billy’s view is that moneyball is really quite well served in European football,” Cardinale says.
Beane didn’t grow up playing soccer, but a love for the game blossomed during a 2003 trip to London with his wife. He crossed paths with French soccer executive Damien Comolli, who was a great admirer of his moneyball philosophy. Comolli would eventually get hired by Liverpool F.C., the English soccer team owned by John Henry’s Fenway Sports Group (FSG), which also owns the Boston Red Sox. And here the web of Beane is at work: Henry had been a long-time admirer of Beane’s, even offering to make him the highest paid general manager in baseball history. When Beane turned him down, all Henry did was hire the data-crunching prodigy Theo Epstein, who went on to lead both the Red Sox and Cubs to historic championships. In 2017, Epstein topped the Fortune World’s Greatest Leaders list.
Beane and Henry did come close to consummating their professional relationship in October 2020 when FSG was slated to go public via a SPAC that Beane co-chaired with Cardinale. The deal ended up falling through. But from those connections Cardinale and FSG would continue working together.
In March 2021, RedBird invested $735 million to acquire about a 10% stake in FSG. Cardinale also brought with him a few of his A-list connections, with Lebron James also getting an ownership stake. Much of Cardinale’s plans at Milan echo FSG’s work with Liverpool in reviving a fallen giant. For Liverpool, it took several years before they achieved the on-field success ownership sought. However, the blueprint seems to have worked, with Liverpool winning a Champions League in 2019 and, in 2020, the club secured its first Premier League title in 30 years.
Now with the FSG’s success story at Liverpool already written, Cardinale might be able to speed up the process at Milan. Cardinale has already taken Beane’s roster-building analytics to heart, while trying to improve on them. “Gone are the days where showing up with data…was a competitive advantage,” Cardinale said at a Financial Times conference in 2023. “But the way we use data is differentiated.”
Despite being a finance executive with a penchant for analytics, Cardinale, like his friend Beane, doesn’t disregard the importance of winning on the field. In fact, he sees it as critical to his team’s business success. “On-the-field performance and off-the-field performance are a Venn diagram. They are critically important to each other,” Cardinale says. “That’s what 30 years of investing in sports has taught me, and I think it’s served us well.”
2024-04-13 14:51:56
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