FIFA is printing money from the World Cup. What about the host cities?

Alex Lasry:
... and I think for a lot of other host countries, you need to build the infrastructure. You need to spend time building the infrastructure and doing the transportation routes and security routes. They’ve never done this before. We do this every weekend. We put on a sold out event every weekend, F1, Super Bowl. Filling a stadium is not new for us, but we can now spend resources on showing New York New Jersey in the greatest light so that people are saying, “Yep, New York New Jersey, everything I’ve heard about, it’s that and more.”

Liz Hoffman:
Welcome back to Compound Interest from Semafor Business. I’m Liz Hoffman, Semafor’s business and finance editor, joined as always by my colleague Rohan Goswami. Hey, Rohan.

Rohan Goswami:
Hi, Liz. Normally you ask me a question, but I’m going to flip it on you this time. Are you a soccer fan?

Liz Hoffman:
I’m not a soccer fan.

Rohan Goswami:
Okay.

Liz Hoffman:
I’m generally a sports fan. I started my career as a sports reporter, but never got into soccer.

Rohan Goswami:
Did you really?

Liz Hoffman:
I did. And by my count, I have written two stories in my entire career about soccer, both of which involved insurance money. So that’s the extent of my-

Rohan Goswami:
Yeah, I remember these stories.

Liz Hoffman:
... professional interests.

Rohan Goswami:
I’m not a massive soccer fan either, but working from Semafor’s offices over the last few weeks, it’s been impossible to avoid the hoards of Europeans mostly that have descended upon New York for the World Cup. And there’s a lot of discourse and dialogue about whether this is actually good for New York and good for the New York Metro area, but there’s no doubt that you’re seeing it. And it’s been amazing being in our offices and being in New York and seeing how much the World Cup frenzy has really consumed people and animated the entire city in a really beautiful way actually.

Liz Hoffman:
Yeah. I remember when New York was announced as one of the host cities back in 2022, and at the time I was thinking, “Why?” New York was in rough shape coming out of the pandemic. And more broadly as a business reporter, I’ve always been skeptical of economic benefits of these big events, Olympics, World Cups, conventions.

Rohan Goswami:
Of any sporting. Of any sporting event.

Liz Hoffman:
Yeah, totally. It can put cities on the map, but New York and a lot of other cities that are hosting World Cup games, Los Angeles, Mexico City, already on the map.

Rohan Goswami:
And this has been also a big issue, not just for everyday people, but for politicians who are really pissed off seeing FIFA making billions of dollars off of the World Cup as they pay hundreds of millions of dollars in transport costs, in security. There’s been a lot of funny commentary online about the advertising and the general business practices of FIFA. Our colleague Max got to interview the president of FIFA on stage at Semafor World Economy a few months ago, but we haven’t really yet gotten a proper accounting of how this actually helps New York and helps New Jersey. And our guest today is Alex Lasry. He’s the guy who actually put this all together. He’s the CEO of the New York New Jersey World Cup Host Committee, and he’s going to join us, and hopefully we’ll get to talk to him about the actual economics, the business of this sporting event, which is, every four years, the largest, certainly most economically lucrative sporting franchise ever, globally.

Liz Hoffman:
Yeah, he is the guy who I assume has had a recurring nightmare over the past year of someone getting a flat tire in the Lincoln Tunnel. But we’re a few weeks in. We’ll get into some of the controversy. It seems to me to be going pretty well, but what we really, I think, want to do is get at the money and the logistics of what is a giant business for FIFA-

Rohan Goswami:
Oh my god. Yeah.

Liz Hoffman:
... if for nobody else, that is wrapped in the guise of a feel-good, global, kumbaya gathering. And Alex has spent his career at the intersection of money and politics. He started at Goldman Sachs in government affairs. He was in the Obama White House as a liaison to the business community. He helped Milwaukee get the Democratic National Convention a few years ago, has done some development there around the Milwaukee Bucks, which his family owns.

Rohan Goswami:
Owned, past tense. They used-

Liz Hoffman:
Owned, sorry.

Rohan Goswami:
Formerly owned, yes.

Liz Hoffman:
He’s a child of the financial world. His dad-

Rohan Goswami:
Yes.

Liz Hoffman:
... Mark Lasry runs one of the biggest investment funds in the world, Avenue Capital. And so we really want to get at how this thing makes money, who pays for what, and get inside the mechanics of that a little bit with the caveat that this is really a FIFA show. And we’ve seen a lot of pushback from various stakeholders about who benefits here.

Rohan Goswami:
But also I do want to get into him about, we’ve been on a great run on this show of former sports team owners. We had Mark Cuban on earlier in the season. We’ll have Alex on shortly. So it’ll be great to get his perspective, to your point, as a finance guy on what sports looks like five years from now, 10 years from now with all this money flooding in.

Liz Hoffman:
Yeah, it is obviously an asset class on the rise, and the 800 pound gorilla in the world is FIFA. So this’ll be a fun window and all of that.

Rohan Goswami:
Let’s take a quick break and when we come back, we’ll pick it up with Alex.

Liz Hoffman:
Alex Lasry, welcome to the show.

Alex Lasry:
Thanks so much for having me.

Liz Hoffman:
Let’s start with how does one get this job?

Alex Lasry:
I’m not really sure. I’ve had a background in sports and politics. So before, my family owned the Milwaukee Bucks, so I was out in Milwaukee helping run the team for 10, 11 years. I helped also bring the Democratic Convention to Milwaukee, so led that entire bid. So a good mix of sports, big events, politics, which is all of what this job needs.
I was then running travel and tourism for the Biden administration. And before that, I had also done stuff with the DGA when Governor Murphy was chair. When Kamala lost and it was clear I wasn’t going to be returning to government again, Tammy Murphy, who had just become the chair of the board, had reached out saying that they were looking for one CEO for the Host Committee and was wondering if I wanted to return home to help run it. And after talking with my wife, my family, it felt like a once in a lifetime opportunity to work on what is going to be the biggest sports and entertainment event the world has ever seen. And to be able to do it in New York and New Jersey where I grew up just felt like an opportunity I couldn’t pass up.

Liz Hoffman:
So we are not a sports show, we are a business show. So let’s actually get into the money a little bit. FIFA’s expected to get something like 10 billion of revenue from this. Big part of their four-year, their budget cycle. What are the costs and who pays them? Can you walk us through, this is the business model a little bit of the World Cup?

Alex Lasry:
Yeah, so I mean there’s a number of different kind of, I would say, organizations that help put on the World Cup. So the Host Committee is different than FIFA. So the Host Committee is its own body. We have our own board that I report to. We have a contract with FIFA that pretty much puts us under a lot of restrictions as if you were a subsidiary of FIFA, but you are technically independent. And so we are the local organizing committee. So our job is really under four pillars. We’re coordinating safety and security. We work on coordinating the mobility plan, all the fan fests and fan experiences, and then also we make sure the region’s getting the economic impact. FIFA really, I mean their model is they sell sponsorships. So Bank of America, Aramco, Coke, McDonald’s, Home Depot, you name them, all that money goes to FIFA.
Some of those are just 2026 World Cup. Some of them might be a 10-year deal that’ll span a few World Cups, Women’s World Cup, et cetera. They also get the general ticket sales. So I believe this is the first time FIFA has put that under their umbrella and is serving as the full body. So they get their ticket sales and then there’s obviously the TV deal with Fox, Telemundo, and some of the others in other countries. That’s pretty much the main revenue drivers for FIFA and for the World Cup. And FIFA’s costs then are everything that’s under their purview. So really everything inside the stadium, team travel and all of that.

Liz Hoffman:
I think they said their costs are somewhere in three to $4 billion range that FIFA is bearing. Is that right?

Alex Lasry:
That would make sense.

Rohan Goswami:
Which is a great margin business for them.

Liz Hoffman:
That is what we’ll get to. Yes.

Alex Lasry:
Look, the World Cup is their one big bite at the apple. And they do have a lot of events and games that they put on otherwise. We just saw Club World Cup, which was also a big success. But yes, I would say definitely very good margins if you’re looking at especially a mega event like this. Host Committee is really responsible for a lot of the local costs. So anything outside the stadium is on the Host Committee.
And so the fan festivals we help put on, we can sell sponsorship, but again, under the restrictions of FIFA. So if Bank of America’s the big FIFA partner, we are then blocked from selling a banking or finance partner. So you got to get creative, and we do... Any tickets that we buy, we have to buy from FIFA. So it’s not like when I was with the Bucks, you just have tickets and inventory and you can put them in a deal at really no cost to you. For us, you have to buy them at face value and then you can put them in a deal and hopefully structure it where you’re able to make it appealing for your partner.

Rohan Goswami:
The last time we had a World Cup was two decades ago. And one of your counterparts in LA described the setup this time around as, I think you said very, very, very one-sided. And it does, at least to our business minds, strike us as a little lopsided. Was there ever any conversations about negotiating a different, maybe more favorable structure for the cities and for you guys around revenue sharing?

Alex Lasry:
I wasn’t here for the bid or any of that when I started. I mean, we were a year and a half, two years away. So I can’t speak to how the bid and the negotiations work. I do know from my experience with bids in general is you negotiate the bid, and then as things have to start happening and you get into from theoretical and into practice, new negotiations start to change. And from my dealings with FIFA, we haven’t really had any real issues when we’ve needed some, I don’t want to say flexibility, but when we’ve said, “Hey, we’ve got a big partner here. How do we make sure that we can get this done?” We’re the only host city that I think got above, that got into double-digit sponsors and we actually fulfilled our entire allotment of 20. So because we were two regions, we got 20 partners.
I think every other host city got 10, but we not only got to our 10, we got to our 20. So we were able to get really creative. And again, I think one of the things I’ve really said is if you can’t sell the World Cup, you can’t sell. And this is the biggest sporting event in the world. It’s international. And one of the things that we really pitched our partners on was you’re getting a global marketing deal locally. That’s the big thing. You got people from all over the world coming here.

Liz Hoffman:
The committee has said that the economic benefit to the region’s going to be somewhere around $3 billion, I think. Can you walk us through what that means? And I want to try to square that with some reporting around some of the crowds, specifically in Jersey, not quite materializing where local establishments thought they might, the hospitality of it all. What goes into that number?

Alex Lasry:
We’re protecting over $3 billion for the region, and it goes into our hotel stays, use of transit, people coming in. It goes into spending at local businesses. Really any kind of spending and impact is going to be really brought into that number. And that $3 billion is a lot of the hard dollars. It doesn’t even include the branding and prestige that you have. I think you’re looking at a real dichotomy from some of the cities that didn’t want to partake in the World Cup and missing out in the atmosphere and excitement. When you’re a city like New York or a region like New York, New Jersey, this is part of what you have to do to be the greatest region in the world. And you want to put on these events. And there is a real excitement and fun, and I think you are seeing a city like Chicago really missing out.
And I get all the costs that are associated with it. I’ve been a part of these conversations, but the fun and excitement and prestige that comes with hosting the World Cup is really hard to, for lack of a better term, put a price on.

Liz Hoffman:
But study after study have shown that big events, Olympics, World Cups, that most of them lose money and that the economic benefit is fairly short-lived and it replaces some economic activity that might otherwise be happening. I think famously in Paris, the hotels were full for the Olympics, but attendance at the Louvre was down a huge percentage that we are replacing one kind of tourism with another. First of all, how is it possible that these things on the whole don’t make money? There’s so much money in sports, there’s so much money in corporate advertising. How do these things run at deficits?

Alex Lasry:
So I think for us, what we really try to do and what we’ve been really intentional about is how are we going to drive that impact to the local businesses? And I think what makes the World Cup so unique compared to a Super Bowl or a Final Four or something is it’s not just a weekend. It’s six weeks, and the average stay is five to seven days. And you might be coming for one match at MetLife Stadium, but then you’re going to our fan festival for the other four or five days. And then quite frankly, it’s on the businesses and the city to be able to drive tourism and give people a reason to travel around and to do things. You can bring people to the region. We’ve always said the impact’s not going to just come because the game is here. You have to work to make sure that you’re not just driving people here, but this is also an opportunity to get first-time visitors.
I mean, I’ve spoken to a lot of people whose first time is in New York, New Jersey, and hopefully we are now showing them such a great time and an incredible atmosphere that this won’t be the last. And that’s how you drive sustained economic impact as a result of these. And it also, again, there’s a branding and prestige that goes with the city that you just can’t match. And if you’re New York, New Jersey, you need to be able to show that. It helps attract younger talent. It helps attract business and investment when you can show that, hey, this is what you get when you’re part of this region. You get a World Cup, you get an Olympics, you get a rugby championship. You get fun, exciting events. And I think you’re seeing that playing out all over the country.

Rohan Goswami:
We can get into the divide between how the economic benefits are playing out between New York, New Jersey. But Mikie Sherrill and Kathy Hochul have delightfully continued a very fine tradition of New York and New Jersey, not agreeing on anything. But what they did agree on very publicly was that it was really messed up that FIFA wasn’t willing to, this going back a few months, shoulder the cost for transportation, specifically around NJ Transit. There was a lot of controversy about the tickets being $150. The state had to step in and subsidize, with school buses, some of the shuttling from Manhattan to MetLife. At any point, did you go to FIFA and say, “Hey, look, it would be a huge PR win, if nothing else, if you guys stepped in and said, ‘Look, we’re making seven, eight billion here. We’re going to toss the states $50 million to get the fans there for free’“?

Alex Lasry:
Look, I think you can get into slippery slopes there when you’re having an organization paying for a public utility or a public transit system and how that works and everything. I think the bigger thing that we tried to make sure was how are we just creating a good fan experience? Whether it’s on its mobility, it’s in the fan village and making sure that our experience outside the stadium is rivaling what’s inside the stadium. Everyone on my staff has talked to at least 20 fans a game and asked them what is the fan experience like? And we’ve gotten rave reviews from our mobility plan. People for the England-Panama game, you had Brits who didn’t want to get on the coach buses. They wanted to get on the Yellow School buses. That’s part of an authentic, iconic US, New York, New Jersey experiences. That was what they wanted to get on.
For us on our mobility plan especially, getting 97% of people scanned in before the game and everyone offsite in under two and a half hours, sometimes under two hours. So everyone’s been working hand in hand and it’s doing great. And I think at the end of the day, this World Cup is going to be something that’s been not just profitable, but is going to be something that we say we want to do again and don’t want to wait another 30 years before we put this on.

Rohan Goswami:
So to be clear, your expectation is that the Host Committee will break even and make money on this based on the way things are trending now.

Alex Lasry:
Yeah. I mean, my expectation is that the Host Committee will break even. And again, our job is not to make 20, $30 million. We are not a for-profit institution. I can run the operation at a bit of a loss so long as the Host Committee is breaking even. And if we’re able to do that, and again, why we were so thankful for Governor Hochul for partnering with us to ensure that fans were able to have that affordable, accessible experience and way to get to the stadium.

Rohan Goswami:
The shuttle program, you mean?

Alex Lasry:
Yeah, the bus shuttle program. And I think when you look at the experience that people have had in New York and New Jersey, I think people are seeing, wow, one, look at how well this region can put on an event. And I’ll say this, the competition for these events have just gotten bigger. This isn’t ’94 where it was like, we need to be in the US. There’s nowhere else to do this. Everyone else is really trying to get in on these events. We want to once again show whether it’s FIFA, the Olympics, you need to be here. You want to be here, and then that’ll make our negotiating position even that much stronger going forward.

Liz Hoffman:
It’s been fun to watch the Spanish team in Chattanooga and the Algerians in Lawrence, Kansas. But New York City is not a hidden gem. People know about it and most people will make their way here at some point in their lives. Isn’t there an argument that some of the real winners are the host cities that have really actually put themselves on the map by not even hosting games, but by hosting the teams themselves?

Alex Lasry:
Well, I think they are real winners, but I think our region has also been a real winner. I mean, again, I think we all think that everyone makes their way to New York City at a certain point, but that’s just not the case for a lot of people. And this is a great reason for people to come here and really experience it. And again, I think for someone who’s grown up in New York and who sometimes tries to avoid Times Square at all costs, it’s been incredible seeing people see Times Square for the first time and make you remember, oh yeah, there is nothing like Times Square around the world. There’s one city that can do a Times Square, and that is New York. And it’s that type of, I think, perspective that, again, I’ve really appreciated. And again, that’s something that people can, especially I think in this divided world and the divided politics that we have, to see people come here and actually experience and feel and see America for what it actually is. And to see that is again, not something you can necessarily put a dollar figure on.

Liz Hoffman:
What’s been your interaction with the mayor last couple of weeks? He’s a big soccer fan.

Alex Lasry:
Mamdani?

Liz Hoffman:
Yeah.

Alex Lasry:
Yeah. He’s been an incredible partner. And I think he’s seen this World Cup for the opportunity that it is, which is a chance to get people to see New York City and to really give them, again, a once-in-a-lifetime experience. It’s very helpful that he’s such a big football fan. He’s been to World Cups before, so I think he understands the excitement and what it means to have a World Cup. But the city has been an incredible partner, and I would say has really shown that, again, for anyone that wants to put on a big sports and entertainment event, anyone who wants to invest, I’ve only seen a willing partner in the city.

Rohan Goswami:
You’ve inadvertently in your answer... There’s a running joke on our show that I’m biased towards New York above all else, and it’s true. I am. But you have inadvertently hit on something that Mikie Sherrill in particular has expressed frustration before, which is we’re calling this New York New Jersey, and we’re talking a lot about the New York Metro area. They’re all taking place in Jersey. And there is a feeling, especially amongst some local Jersey businesses, that they have not shared in the economic benefits the way that some New York businesses have. Do you think that’s fair? Do you think that’s true? And what’s the plan to fix that?

Alex Lasry:
I think broadly, New Jersey businesses have benefited a ton. I mean, I think if you look at the Flag Cities events that have happened across New Jersey, I mean, you’ve had thousands of people over there. In Harrison, New Jersey, we’ve had tens of thousands of people at Sports Illustrated Stadium. And that means that people are coming to Harrison maybe to come watch a match, but then the stadium’s right next to the downtown in Harrison. And then that’s why we’ve also got watch parties all across the state, to try to really drive people and fans to different parts of New Jersey and to really experience it. That doesn’t mean every business is going to be sold out every time. That’s just not realistic. But I think when you’re looking at it on the whole, where our watch parties have been, where fans are, where the teams are staying, I think New Jersey’s done an incredible job.
And I think this is a huge opportunity for New Jersey to be able to show that we’re not just the state next to New York. New York City is New York City. I love New York, but I do think the fact that it’s the New York New Jersey Host Committee speaks to the fact that New Jersey has become its own destination, and we’ve really been trying to show that off.

Liz Hoffman:
Is a desire to drive fans to local businesses part of the reason there’s no tailgating? Because when you think about authentic American experiences that Europeans really should get a taste of, a parking lot tailgate feels very high on the list to me.

Alex Lasry:
I would say come to an American football game to get that authentic tailgating experience. For this, look, I’ve been to other UEFA finals and European or FIFA type of football matches, and the fan villages outside are pretty... That’s what it is. And I think as much as we want to make sure that this gives you an authentic American experience, we also want to have America see what an authentic football experience is like. And I think those fan experiences, you come to the fan village out in the side of MetLife Stadium, it’s lively. It’s great. And it’s why we want to come-

Liz Hoffman:
I was there. Yeah.

Alex Lasry:
... we want to come three hours before the game. I’ve always said, “Come. Get there early, make it a day. Don’t just try to time it perfectly. Make your whole experience a day.” And that fan village, they do a great job. The partners really invest in that.

Rohan Goswami:
We’re going to take a quick break, and when we come back, we’ll pick it up with Alex. Obviously, New York New Jersey, the metro area did not really incur any development costs the way that other Olympics have or other World Cups have, but it does raise a question, for me anyways, which is I imagine your perspective is a little different than the average person’s on why municipalities and towns and states should pay for stadiums. I assume that to be the case since you owned the Bucks for quite some time. Can you walk us through what the argument is from the owner’s perspective of why that’s a fair ask?

Alex Lasry:
I think when you’re looking at these, they are also public uses. And I think when you’re looking at how are you trying to now compete with other cities and states for talent, for economic impact, for business investment, one of the ways that you’re now competing with people from not sitting on their couch, from not just being on social media is events in real life, and these sporting events, concerts. One of the things that we were very intentional on with the Bucks and said when we were asking for public funds to create that public-private partnership for Fiserv Forum was this isn’t just a home for the Milwaukee Bucks. This isn’t going to be just a home for the Marquette Golden Eagles. This is going to be a space that we’re looking to activate two, 300 days a year and create a public plaza for gatherings for public uses.
I think anyone would say, if you look at downtown Milwaukee right now, it is unrecognizable from what it was when we first bought the team. I think when you’re looking at the stadium as the centerpiece as for an economic district or economic development, it really does drive a lot of impact around it as well. They aren’t just stadium deserts anymore. And I think it’s important when you’re talking about these and you’re seeing it now a lot of these stadiums where it’s not just a stadium and a bunch of parking. You’re now seeing stadiums with mixed use development, bars, restaurants, hotels, other entertainment venues. And that’s driving, I think, a lot of what the impact of these things are.

Rohan Goswami:
But to press you a little bit there, if the economics on these deals are so good, as private equity has now been allowed to sweep into the leagues, institutions that have far deeper pockets than any individual family or consortium of families could ever hope to have, if the economics are so good, why wouldn’t these firms want to own the upside there?

Alex Lasry:
It depends on the city and the region. In some, it’s not as profitable. I mean building a stadium in New York, probably a lot more profitable than building a stadium in Cincinnati. It’s just different. And so again, I think when you’re talking about do we want sports teams in just big markets and just where the ability to sell naming rights on a stadium is going to be 20, $30 million and you can sell the first five rows. Generally the first five rows and suites are going to pay for the building. But again, in a city like a Milwaukee, a Cincinnati, a smaller market, those sponsorship dollars are just less. They just are, and the cost of these buildings are going up. And so I think the question that everyone has to decide is do we want to be able to have... Is having them in a smaller market, what’s the benefit to that versus privately funded stadiums in all the larger markets?
And I think that’s, again, up to cities, states. I’m not an elected official, but I personally believe that the benefit is there. I use this example all the time. When we first bought the Bucks, we played in London our first year. We played against the Knicks. We beat the Knicks by, I think, 20 points that year. Everyone was rooting for the Knicks. We played in France six, seven years later against Charlotte Hornets who had two players from France, Tony Parker and Nic Batum, on that team. Everyone was rooting for the Bucks. Giannis with Milwaukee across his chest, everyone was talking about, “I want to come to Milwaukee.” Milwaukee is on the map.
I don’t know if you can always put a dollar on it, but there is something to the fact that fans saw Milwaukee and wanted to now go there. And now that they’re there, I think everyone would say, “Milwaukee, one of the most...” I remember when we got the Democratic convention, the things that we were seeing was Milwaukee, one of the most underrated cities in the country, America’s best kept secret. And that is something that, especially as sports are becoming bigger, especially as these are becoming the few in-real-life events that people are attending. And now with the reach of social media, we still see the clips of a hundred thousand people in the Deer District during the NBA finals. And that type of marketing and branding, you can’t get any other way.

Liz Hoffman:
What advice do you have for Jimmy Dolan, who was until two weeks ago, the most hated man in New York City? Might still be.

Alex Lasry:
Enjoy the championship. There is nothing like... And I remember when we won the championship, I took the trophy everywhere. We’d go to brunch and I’d put it on the bar and just go sit with some friends and let people take photos. For us, we really tried. The trophy’s for the fans. The championship’s for the fans. Without the fans, you’ve got nothing. The fans are the stockholders. The fans are the clients of this. And I would bring the trophy all over Wisconsin and let people hold it, take pictures. I remember, I think I was out at some dive bar at 02:00 in the morning one time. We just had the trophy and put it on a table and let people take photos. And that’s the fun. That’s the fun of winning a championship and being part of the city. I know we always tried to not take it too seriously.
Go have fun. That’s what sports and entertainment is. It’s supposed to be fun. It’s supposed to be exciting. Let the fans be a part of it. Let them enjoy in it and revel in it. It’s also something, I also would say, these windows close quick. Everyone always tries to say, “We’re going to be champions. We’re going to have a 10, 12-year title.” These things close a lot quicker than you think, especially in how these salary cap environments work now. Enjoy it. Let it be the fun that it’s supposed to be. What’s the point of owning a team if you’re not going to have fun?

Liz Hoffman:
I’ve never seen private investment move into an industry and it get more fun and more magnanimous. So when you think about what private equity and the rise of sports as an asset class, regardless of who owns it, this is clearly going to be professionalized and financialized and commercialized to the gills. Any words of warning there?

Alex Lasry:
I mean, look, at the end of the day, if you become a product that becomes too stale and you become too professionalized and it becomes too monotonous, that’s when fans are going to go look for something else and new things are going to pop up. The thing that I’ve tried to look at with this World Cup, and it’s again, why we say go talk to 20 fans, again, there’s nothing else that matters than the fan experience. If fans don’t have a good time, your revenue model doesn’t work. And this is one of the industries, almost more than anything else, that there is a pretty direct feedback pretty quickly. They’re called fans, fanatics for a reason. There is almost an irrational passion about it. In Wisconsin, way would always say it’s God, breathing, Packers, and there’s just that irrationality about sports. And I would always just try to say, “Do not lose touch with the fans.” Short-term revenue gains are not worth the long-term fan decrease that might happen.
And that would always be my only piece of advice to anyone is be willing to take maybe not make as much on the revenue side if it’s going to create a better fan experience because those loyal fans, it’s easy to sell tickets when you’re winning. There’s no problems there. It’s what happens when you’re 45 and 38. That’s when you’re grinding to sell tickets and you want to keep those fan experience, you want to keep those loyal fans. So to me, my thing would always be the short-term dollar isn’t worth the long-term fan depreciation. At the end of the day, this is sports entertainment. It’s fun. This isn’t life and death. And the more fun you’re having, people feel that. It’s why the conversation leading into the World Cup, it was all, who’s paying for this? Blah, blah, blah, blah, blah. Chicago I think was trying to take a bit of a victory lap on, see, we told FIFA no.
Now that everyone’s having fun and the games are starting, it’s, oh yeah, this is what we’re missing and this is what you’re missing out on. And it’s why, again, we want to create a great fan experience inside or outside the stadium. So at the end of the day, fan experience is everything and the fans should be the most important thing. And I’d hope no one, whether you’re coming in as private equity or you’re a family-run sports team, make it about the fans.

Liz Hoffman:
It’s funny, I lived in Chicago when they were bidding for the Olympics and I think it was the 16 Olympics. I mean, there’s a lot of enthusiasm. People were really bummed when they got bounced I think in the second round of bids there. And to watch them sit this out is... Because it’s a great city and actually has a lot more room. And I don’t know, I’m surprised that they did not play here.

Rohan Goswami:
You are a lover of Chicago.

Liz Hoffman:
I love Chicago. I spent my early 20s in Chicago, so I’ll always love it.

Alex Lasry:
Chicago not being part... It’s a detriment to the World Cup not having Chicago as a part of it. And I think it’s also in a lot of ways a miss for Chicago not being a part of this. I think it’s great to see cities like Kansas City stepping up. And I think you’re seeing even where the base camps are, the teams being there, that’s been awesome and great to see. I think also what teams are seeing are some of our high school facilities are better than some European professional facilities.

Rohan Goswami:
Yeah. The wonder at American high schools really cute and endearing.

Alex Lasry:
And again, I think that’s something that we sometimes, again, take for granted. There is a reason America’s the greatest country in the world and it’s because you look at some of these things that we take, whether it’s a Buc-ee’s or a Cracker Barrel or a ranch dressing-

Rohan Goswami:
Or just suburbia.

Liz Hoffman:
Buc-ee’s is amazing.

Rohan Goswami:
Yeah. Just suburbia.

Liz Hoffman:
Yeah.

Rohan Goswami:
You forget, oh yeah, it’s pretty good here. This is a pretty great country. It’s a pretty good place to live. And if you get outside of some of the divisive politics that we’re always looking at and you actually just talk to people, America’s got some pretty great people here.

Liz Hoffman:
Not to sprinkle any bad juju on this, but what is the logistical nightmare that has kept you up at night? I’m sure you have a binder on your desk and you flip to whatever insane scenario planning you’ve done. What’s the one that kills you?

Alex Lasry:
It’s the things you can’t control. I think all the things that we can control and even some of the things you can’t, we know how to plan for them. It’s then just executing. And I think that’s what we’ve really been trying to do. I think for a lot of other host countries, you need to build the infrastructure. You need to spend time building the infrastructure and doing the transportation routes and security routes. They’ve never done this before. We do this every weekend. We put on a sold out event every weekend, F1, Super Bowl. Filling a stadium is not new for us, but we can now spend resources on showing New York New Jersey in the greatest light so that people are saying, “Yep, New York New Jersey, everything I’ve heard about, it’s that and more.” And that’s what we’re trying to do. Same thing with America. Everything, yep, it’s that and more.
It’s been 30 years since we’ve hosted an Olympics, a World Cup. It shouldn’t be that long before America’s hosting these things again. And that’s what I think we need to be able to show is that this is the place you want to be and we shouldn’t be waiting that long to host these big events.

Liz Hoffman:
Is there any great story in your pocket? I don’t know, you’ve been at a lot of these games, you’ve been traveling the country. Any great content that we don’t want to leave it on the cutting room floor.

Alex Lasry:
Well, some of them-

Liz Hoffman:
A celebrity sighting, best random European encounter. What do you got?

Alex Lasry:
I mean, I had all my friends and family waiting outside David Beckham’s suite to try to grab a selfie with him. But I would say honestly, I mean, they keep the celebrity sightings and everything pretty tight. So that is what it is. I think it is interesting to actually see how celebrities try to get tickets to some of these games.

Rohan Goswami:
What do you mean?

Alex Lasry:
Just emails or texts come in from some of the random corners.

Rohan Goswami:
Can you say the person who you got a text from and you were just starstruck by them? Did Justin Timberlake text you?

Alex Lasry:
He didn’t. Hey, he I would’ve taken care of right away.

Rohan Goswami:
Out of your own pocket.

Alex Lasry:
Yeah, that would’ve been, I would have been like, “Justin, you’re good.” Honestly, I’ll say this. One of the things that I’ve known, especially from the NBA world, is how last minute a lot of this stuff comes in. And so the group stages have been what they are. There’s been a lot of celebrities there. They’ve been fun. It’s a lot of the brands bringing their people to the games. But I do know Jason Sudeikis was just sitting in the stands for, I think it was the England game. And people were just grabbing... He was just sitting in the stands, didn’t get a VIP ticket or anything. He didn’t come through us or I think through FIFA, just had a ticket and was sitting there enjoying the game.

Liz Hoffman:
It’s the Ted Lasso of modesty.

Alex Lasry:
Exactly. Exactly.

Liz Hoffman:
That’s very funny.

Rohan Goswami:
This actually does make me want to ask you something which has been like a bugbear for me, which is the US Open and obviously the Tennis US Open, not Shinnecock.

Liz Hoffman:
Oh my God, Rohan is so wound around the axle about US Open tickets. I’m excited for that.

Rohan Goswami:
I blame, as I generally do, the influencers. And I feel like the US Open, USTA made a concerted effort to court the influencers and give them pref access to seats and was even pulling some folks. And obviously that was part of their normal celebrity engagement. They don’t want a celebrity to have a bad time in the open. I think that’s really bad for the sport. To your point about engaging with the fans, I’m just a normal guy who likes tennis. This is my one thing that I really love and that I really freak out about. Did you guys do anything like that? Did you have folks keeping an eye out for the Jason Sudeikises of the world to pull them? What do you think of that generally? Because I think it’s terrible. That’s just my opinion.

Alex Lasry:
My view is these guys know who to reach out to and how to get what they would need. If he wants to just sit in the stands, that’s great. I think that’s awesome. Now I know the mayor sat in the stands for the game that he was at. And look, I will also say it’s more fun sitting in the stands. I remember one of my most fun times, we always had the four courtsides, but there was a game at the Bradley Center, Buck-Celtics, the loudest pop I’ve ever heard in a stadium was we had just scored. The Celtics tried to roll the ball and Delly stole it and laid it in at the buzzard and the half. Loudest I’ve ever heard of stadium in my life. My dad had taken all the tickets. And so I was in the stands, 20 rows up, hugging people and going crazy and you just became a fan again.
And in all honesty, for me, I think that’s great. You have to worry about securities concerns now, especially with everyone wanting to take a photo. So it is a little harder to just sit in the stands, but we’re not going to go and try to grab anybody if they reach out to us or anything. We will always do what we can, and we want to make sure everyone’s safe and that there are no issues. But sitting in the stands is super fun. And if you’re looking for that type of experience, go do it.

Liz Hoffman:
That said we would not have gotten the Alvarado-crashes-into-Michael-Bloomberg, which is one of my favorite things that has happened in sports.

Rohan Goswami:
That was incredible.

Liz Hoffman:
Yeah. Yeah.

Rohan Goswami:
That was truly incredible.

Liz Hoffman:
Truly incredible.

Alex Lasry:
Only in New York.

Liz Hoffman:
Only in New York.

Alex Lasry:
Only in New York.

Liz Hoffman:
Yeah. Yeah.

Alex Lasry:
That was really great.

Liz Hoffman:
Well, listen, that feels like a good place to leave it. Thanks so much for coming on. This is a lot of fun.

Rohan Goswami:
This was great.

Alex Lasry:
Thanks so much for having me.

Liz Hoffman:
All right, Rohan, what’d you think?

Rohan Goswami:
I think he’s got a really hard job, and I think it’s a job that very few people will want and you couldn’t pay me money for it because everyone knows. I mean, we were talking about this before the show, after the show, that FIFA sucks. In this situation, calling a spade a spade here, they’ve really off the fans. They’re making a ton of money off this thing. That being said, I thought he was a pretty good front man for the New York, New Jersey region. And I think his points were actually pretty fair around this has been a real unifying event. Like nothing I’ve really experienced in my time living in New York where everyone in the city is just so excited about it. Every time I go to a bar, the games are on. My friends all want to go to the bars and watch these games. And these are people who didn’t care about soccer at all four months ago.

Liz Hoffman:
We joke a lot around here that everything is sports, and sports is eating business and being financialized in these ways that we got into a little bit with him. I do think that the question of how the spoils get shared is only going to get more acute.

Rohan Goswami:
Worse and harder. Yeah.

Liz Hoffman:
And we joked at the top, but this is a 10 to $12 billion business for FIFA with margins, let me see if I can do this math, in the 60 to 70% range.

Rohan Goswami:
Software margins.

Liz Hoffman:
Software margins, and that a lot of the cost is being pushed to local cities, some of which may do a good job recouping it either in hard dollars or soft dollars, some of which obviously will not. The two big sporting events that are understood to have been good for the host cities are famous because they’re so rare. It’s the ‘84 Olympics in Los Angeles and the ’92 Olympics in Barcelona, both for their own reasons. Mostly, LA didn’t have to build anything. And that’s a little bit what Alex was talking about if you can save on infrastructure.
Barcelona is genuinely a great city that was not on the map because it was coming out of the Franco era. And so there are some unique circumstances that can turn these things from losers to winners. New York has been on the map. I think we’re doing a good job, but these are not cities. I [inaudible 00:40:37] about Chicago was fascinating. I think a total whiff for them.

Rohan Goswami:
Yes. I would say the one thing that I wish we’d press him a bit on more, and he was very careful to say that the Host Committee is making money and is going to break even. That’s not to say that the state of New Jersey is actually going to make money off this. We know they’re not. I mean, NJ Transit alone is running at a deficit or at cost here. These are not economic winners for the states. What’d you make of his comments on his advice for private equity in sports? That’s been a real thing that you focused on and I know you care about.

Liz Hoffman:
I loved his advice, but I’ve never heard less likely to be followed advice in my life.

Rohan Goswami:
Oh no.

Liz Hoffman:
Remember we had Mark Cuban on a couple months ago and he was saying at least in part this is why he sold the Mavs, that he could see this wave of commercialism coming down that was going to penny pinch him to death and just make the whole thing less fun.

Rohan Goswami:
He used to give away $20 seats. He used to love doing that. Yeah.

Liz Hoffman:
And he walked us through the math of why that was good, but also said that there’s no way he could have walked into an investment committee meeting and made that pitch successfully. Then there is a model where Alex said something like the fans are the stockholders.

Rohan Goswami:
The fans are the shareholders, which is a nice line.

Liz Hoffman:
And you say it metaphorically, but there’s actually an argument that that should be truer than it is. And as we’ve seen more and different kinds of financial investments work their way into the retail investing world, I think that someone is going to be smart and do that. And actually a corollary to it is what KKR has done, and I don’t spend a lot of time showering praise on private equity firms, but I do think they’ve done something very interesting and laudable, which is that they give equity in their portfolio companies to the employees of those companies. And they do it because it’s good business sense. It reduces turnover. It has a collective buy-in. And you could see an argument where fans would be interested in owning a slice of the Knicks. Obviously they’re a lot more expensive than they were six weeks ago.
I do think there’s a silver lining maybe to this financialization of sports that if the owners are smart, they will bring fans in as genuine shareholders and that could be an interesting outcome.

Rohan Goswami:
The problem is a lot of people can barely afford tickets to these events, let alone owning a part of the team. You look at how the Knicks tickets sold in the aftermarket. I mean, we didn’t get into this with him either, but the way that FIFA ran the ticket program was insane and so messed up and bad for the sport. And the opposite of what he was saying about your loyalty is to the fans. The fan experience is the number one thing. You are not really here to make every single dollar you can. You can leave some on the table for the fan experience. And I think FIFA generally has not done that.

Liz Hoffman:
FIFA has never left a dollar on any table that I’m aware of and had a very long running saga with the Justice Department for that reason too. We didn’t really get into it with him because it’s ultimately not his call.

Rohan Goswami:
It’s not his problem.

Liz Hoffman:
We talked about what was in his remit, which we’re two weeks out from the final. Things seem to be going pretty well. And as you say, it has been fun.

Rohan Goswami:
I’m knocking on wood for him.

Liz Hoffman:
And between the Knicks and the World Cup and the wedding of the century coming, what is it, two days from now, as we’re recording on July 1st, this is a hot New York summer. I’m into it.

Rohan Goswami:
Well, that’s it for us this week. Thanks for listening to Compound Interest from Semafor Business. Our show is usually produced by Josh Billinson, but it’s today produced by Emily Gross.

Liz Hoffman:
With special thanks to Anna Pizzino, Katherine Bilgore, Claire Einstein, Rachel Oppenheim, Tori Kuhr, Vilanna Wang, Ben Smith, Garett Wiley, Stephanie Chang, and Daniel Hoeft. Our engineer is Bob Mallory, and our theme music is by Steve Bone.

Rohan Goswami:
If you like Compound Interest, please follow us wherever you get your podcasts and don’t forget to review us.

Liz Hoffman:
And if you want more Semafor, you can always sign up for our email newsletters in your inbox at semafor.com.

Rohan Goswami:
Oh yeah.