Five for Friday

1. Creeps 2. Process 3. RECESS 4. Kyle Lowry's brother 5. Downtown Girls


Private equity’s reputation has taken a beating (and not just from TrueHoop’s ongoing series about Apollo Global). Layoffs and union-busting have always been part of the story. But over time so many other associations arise: the burning of the Amazon rain forest, training the operatives who killed Jamal Khashoggi, even the shocking bills that result from visiting an emergency room. The argument might be that’s the cost of making winning investments, but the companies they buy keep going out of business in ways that hurt everyone except the private equity investors.

Post-Jeffrey Epstein there’s a cavalcade of creepy personal stuff too. Ares Management, run by the billionaire behind the Atlanta Hawks, just reportedly let go its key finance executive because, according to SEC filings, he “engaged in inappropriate personal relationships and interactions with certain employees.” A recent Financial Times headline about one of the industry’s titans: “Leon Black rejects claims he raped and harassed Russian model.” 

All that is background when we learn from Dan Weil of Institutional Investor that the trend is toward your local team—and the whole NBA—being taken over by private equity investors because no one else can afford to keep team values climbing to the stratosphere:

Until recently, top sports leagues in the U.S. refused to allow private equity ownership of teams, fearing that would create an unwieldy and unstable ownership structure. 

“But now the leagues have finally come around, and that has opened the floodgates for private equity investment,” says Robert Caporale, co-chairman of sports investment bank Game Plan in Miami Beach, Florida.  

Several factors have led to private equity’s admission into the owners club, with minority stakes in multiple teams. For one, private equity investors represent potential buyers of stakes from the teams’ limited partners, who have seen their interests soar in value over the years. In addition, team values have ascended so high that very few people can buy them alone.

Who are these private equity investors? TrueHoop is here for you to dig into different aspects of this. We’re just getting started. 

For today, ask yourself: Why do private equity firms want to own sports teams? In that article linked above, the claim is it’s about giant returns and steady income. But Marc Lasry, whose Bucks won the title this summer, just said he expects to lose plenty of money this very season. Revenues have long been shaky. Adam Silver recently discussed giant losses to COVID and China. 

The NBA is decades into pulling one economic rabbit after another out of a hat. There was once a boom in taxpayer-funded stadium finance, then cable television’s explosion, then global rights, now gambling. But it’s no law that another giant boom is always around the corner. At the moment, the big bills are paid by the dying cable TV industry. 

And yet the article projects team valuations in the $5-10 billion range.

Likely some other lucrative model will emerge, but it’s not set in stone. In the meantime, recent growth has come from bringing in money—from gambling, private equity—once deemed problematic. Running out of safe ways to grow and then lowering standards to let in whatever money is around sounds more like a short-term cash grab than a long-term growth plan. 

Note the last sentence of the quote above: Even before this, the league had just about run out of billionaires rich enough to buy teams. I’m no expert on supply and demand, but of course valuations could go down. Of course shrewd investors know that. But they’re dying to rush into this game, our game. What’s their game?

With The Process in turmoil, remember

Is recess back?

Kyle Lowry’s life-changing older brother

One of my favorite facts is that a freakish number of the world’s fastest runners are the youngest of many siblings.

Why might that be? 

The thinking is that when they were tiny, there was a lot of fun to be had playing with the big kids … if you could keep up. An 18-month-old oldest child might want to hang out in one place. An 18-month-old with a pack of fun older kids around might kill themselves to figure out how to stick with the crew. Maybe some things develop—neurologically, muscularly, epigenetically—that convey little speed benefits later in life.

Something about this fact awoke in me when listening to this fantastic CJ McCollum Pull Up Podcast interview with Kyle Lowry

I have already written a love letter to Kyle Lowry’s game which is built around a deep and profound urge to do everything that might lead to a win (very little of which is scoring). His brilliant and profound drive turned a 6-footish prospect, who originally couldn’t even shoot, into a player whose effect on team winning rivals LeBron’s.

Something special is going on from the beginning of this podcast. McCollum introduces Lowry, citing his many accomplishments, and the first thing Lowry says is: You made me feel like I actually am somebody.

Before long he’s talking about his brother, who is five years older and included Kyle in everything. Eight-year-old Kyle Lowry played tackle football with 13-year-olds. That’s a big age gap in sports terms.

You’re probably already seeing where this is headed.

When his brother was 16, he would put 11-year-old Kyle on his team to play basketball on the street, “because that’s my brother.”

But Kyle knew from the beginning that most of the kids on the court, high-schoolers, simply didn’t want an 11-year-old there. His whole childhood, he had to play with sufficient fury that people who would ordinarily want him banned from the game would let him stick around. He never belonged, he always had to prove it. He never got to have a minute coasting. “If you’re just out there not doing nothing,” he tells McCollum, “those guys are going to push you to the side just because you’re 11 years old.”

“So me being that young,” he explains, “you gotta figure out how to affect the game.”

He did.

Downtown Girls Basketball

What is the point of basketball? What does it do?

And before you answer that, can we all agree that we are in a moment of global history when it seems everyone is too isolated, too angry, too suspicious, and spending too much time looking at screens?

Basketball could help with that.

The point of basketball is deep, and it’s personal, and it’s a lot of things we have been talking about at TrueHoop for decades. But on some level it’s about playing, having fun, and bringing people together—and that stuff makes it an MVP of this moment. Meet someone at a park! 

This Spinsters story about Downtown Girls Basketball reminds us that basketball is really just a game and games are for playing. The Downtown Girls Basketball league is basically the game of hoops without men, aggro competition, or people feeling judged. Some play in dresses. Players are advised not to foul … at all. Many have never played before. 

“Dissolve the embarrassment,” says Aria McManus, who founded the group with a group email in 2013, “and then you will be free to have fun.”

“It’s such a nice breath of fresh air to not be competitive in a social environment,” says another player. “That’s one time a week. You get to break that mold a little bit and feel what it’s like to not care.”

Some may be tempted to compare this model of basketball to some other ideas of the sport. They should be more competitive!

But 5-5 Jordan Ligons worked her ass off to earn a spot on a college team and is no stranger to competition. She’s the co-host of Spinsters, the reporter on this story, and someone who talks about how politics, playing time, and injuries beat up her love of the game so that she basically stopped playing. 

This approach—so full of love—delights her. It’s a way to get people together. This isn’t meant to be fun-loving basketball instead of competitive basketball. It’s fun-loving basketball instead of spending more time on Instagram or drinking. This is basketball as a way for strangers to get to do stuff together. “Our common ground,” says one, “is basketball.”

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