FBI Arrests NBA Players, Coaches in Sports Gambling Scheme | Bloomberg Business of Sports
Summary
Illegal Sports Betting Scheme: The podcast discusses a major illegal sports betting scheme involving over 30 individuals, including current and former NBA players and coaches, arrested for using non-public information to place bets.
NBA's Investigation: The NBA is cooperating with federal prosecutors in the investigation, which highlights the league's potential oversight failures in identifying illicit activities within its ranks.
Organized Crime Involvement: The schemes extended beyond the NBA, involving organized crime families and sophisticated technology to rig poker games, indicating a deep-rooted issue in sports gambling.
Impact on NBA's Integrity: The revelations raise questions about the integrity of the NBA's internal investigations and whether past cases, like the Kawhi Leonard salary cap circumvention, need reevaluation.
Private Equity in Sports: The podcast also covers Carile's new partnership with Oracle Red Bull Racing, marking a significant move of private equity into sports sponsorship, highlighting the growing intersection of finance and sports.
Formula 1's Growing Appeal: The partnership underscores Formula 1's expanding global appeal and its ability to attract diverse sponsors, including financial giants like Carile, aiming to reach a broader audience.
Market Expansion Strategies: Carile's sponsorship reflects a strategic shift towards engaging a wider demographic, including high-net-worth individuals, as private equity seeks to broaden its market base.
Transcript
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Our colleague Danny Burgerer from Bloomberg television got a chance to sit down with Carlilele CEO Harvey Schwarz and Oracle Red Bull Racing Team Principal Lauron Mecky's about their new partnership and the Oracle Red Bull Racing Team's recent success. >> We'll hear a portion of Danny's conversation with Schwarz and Mecky's from the sidelines of the Formula 1 Grand Prix in Austin, Texas. >> All that and more is on the way on the Bloomberg business of sports. But first, we've got news this week of a major illegal sports betting scheme going on in the NBA. >> That's right, Michael. More than 30 people across 11 states were arrested in connection to a sprawling gambling scheme that involved current and former NBA players and coaches. >> That's right, Vanessa. Miami Heat guard Terry Rosier and Portland Trailblazer head coach Chanty Bilips were among those arrested as part of two separate criminal gambling schemes. Now, according to the allegations, one scheme involved using non-public information about players and teams to make bets, and the other involved a nationwide scheme that allegedly used special technology to rig poker games. >> Both of these schemes went far and beyond the NBA and involved organized crime families. On Thursday, FBI Director Cash Patel held a press conference announcing the bust alongside several federal officials, including interim US Attorney for the Eastern District of New York, Joseph Nosella, who detailed the schemes. >> Between December 2022 and March 2024, these defendants perpetrated a screen a scheme to defraud by betting on inside non-public information about NBA athletes and teams. The non-public information included when specific players would be sitting out future games or when they would pull themselves out early for purported injuries or illnesses. >> That is US Attorney Joseph Nella in an FBI presser on the massive illegal gambling scheme of allegations involving both former and current NBA players. >> For more on what we know about the scheme, we welcome Bloomberg senior reporter Miles Miller. Miles Miller, welcome to the Bloomberg business of sports. I wish it was on a happier note, but this is very serious and you know it's serious when the House Minority Leader Hakee Jeff says that this is a case that is stunning and should shake NBA fans. Tell us about it. >> Yeah, so this is a criminal indictment that charges that NBA players, current and retired, were involved in two separate schemes. You've got the one scheme uh that involves NBA players uh being invol involved in sports betting uh and basically you wouldn't say throwing a game, but removing yourself from a game early so that another party is able to make money off of that. In this instance, uh, we're told by Brooklyn prosecutors that the M Miami Heat guard, Terry Rosier, was one of the people who was responsible for this. And it goes back to a game he played when he was on his former team >> back in 2023. >> Exactly. And um he went out um saying that his ankle was hurting, his foot was hurting. But prosecutors say in this case, the truth of the matter uh was that, you know, he knew someone was placing a bet uh that would go a certain way and the only way to facilitate that happening would be for him to leave the game. Um you you may be thinking, why are federal prosecutors in Brooklyn interested in this? And you know, the reason is this goes back to uh 2023. We're going back to the case involving Jonte Porter. know uh the reason why he is so central to this case is because he had said that he had a gambling addiction and that was the reason why he had gotten involved in some of these illegal sports betting schemes and then what happens you know you know a good thing is going on so you bring your friends into it um and that is what prosecutors are alleging the reason why these NBA players were involved was because you know they have a central link in in in one NBA player >> it's really it's really unbelievable all the moving parts to this story and like you had mentioned this incident that happened with Terry Rosier in 2023. He was under investigation at the time in 2023 and the NBA found that there was what their conclusion was nothing illicit had happened at the time but now it comes back around. When you found out this new information, was there any indication that it was this big and there were so many moving parts to this? >> Yeah, you should have seen I mean you see the the I mean if you saw the press conference you saw how many people were involved in the case, right? Um, this was a wide-ranging case that started in 2019. So, they've been working on this case for quite some time. To your question about this, it it boggles the mind that the M that the uh NBA says that they closed their investigation and they found no wrongdoing. When you see very clearly the wrongdoing that was found by federal prosecutors here, the one thing that's important to note is that federal prosecutors have said that the NBA is cooperating in this case. But how is it that you hire an external law firm and you have folks look into this? I mean, they had a an there was an independent firm um that looks into sports betting irregularities and found the bet and found the specific amount of money tied to it. So, how the NBA was able was not able to find this is beyond me. >> Does that then bring up the conversation of do they now have to look at every investigation that the NBA has taken place of now? Now we're talking, we're talking about the Kawhi Leonard and Clippers investigation that's going on right now about cap circumvention. Do they then have to look at all the things the NBA has said that they've investigated and come up with no conclusion? >> You know, the US attorney, I think, was was very clear. This is an ongoing investigation. And I thought what the FBI director said was really interesting. Um, that this is a a major scandal and and and historic when it comes to the to the NBA. this is not the last we'll hear of this investigation because it's very clear that if the NBA's let to do their own investigations into this and it leads to nothing and then you've got all of these feds standing up there and saying we found something and it involves uh in one instance the four of the five crime families in New York you know talking about organized crime the mafia in New York >> there is much more to this and it didn't just it's not just these three players that are named here um they're going to continue doing this investigation And it is clear that an FBI agent's retiring. You're going to have people retiring from the Eastern District who worked on these cases. They'll probably go join the NBA. They'll probably go join some of these law firms to start looking into these sports books and figuring out just what's happening as it relates to players and how players are using the sports books. >> Miles, is this only the beginning? Are we just scratching the surface of the impact of sports gambling on major sports? I I got to believe that the NFL, Major League Baseball, they too have had quote unquote reports that, you know, maybe this player was taking himself out of games or they were doing some I mean referees, etc., you know, is is is there more coming? >> Oh, there's certainly more coming. Um and certainly from the Eastern District, right? Um I think it was important to note that this happened in Brooklyn uh because of the prior case. Uh and all it shows me is that is that it's going to continue to happen. Um, you know, we we asked about college basketball uh and college sports and they said college sports wasn't involved in this, but that's not to say that this kind of scheme uh won't happen when it comes to college sports. He said that the sports books are the victims in this case, but it's going to be incumbent on these sports books to figure out who's making these uh these uh these wagers uh and and figure out if there's any corruption happening when these wages are happening. Uh, one more thing that's interesting, the the the Waterfront Commission was involved in this. The Waterfront Commission is one of the oldest law enforcement uh, agencies in the country. Uh, really focused on on the mob. They're involved in this investigation into NBA players uh, who are who are doing bets or who are involved in bets where they take themselves out of games or go sick or, you know, can throw a game. That is something that should not be overlooked. And this is more than just prop bets in the game. I mean, this the allegations of that are bad enough. This goes now into the underground poker games where you've got X-ray machines that they're alleging here have been used to read carts. I mean, and and the mafia family's made millions off of this according to what the officials are saying. >> Yeah, I've got them in my bag. I I should have brought them with me. The um the the court documents here. um literally t that you you see you you can see through the table and they had cameras under the table so you so because what that X- basically you're you're playing on an X-ray machine and you could see you know what cards were being dealt um they're watching hand signals they've got surveillance in the room they've got manipulated card machines all of this happening on Washington uh Washington Street down uh in in uh in the west side of Manhattan and on Lexington Avenue not far from where we are. Um, so it's really interesting that the that organized crime, and they say Italian organized crime, that's what they're calling it, is still alive and well in New York. And how are they, you know, able to to make their money by running these rigged games. And in some of the cases, you see people um saying, "Hey, listen. What you did was wrong. You know, you took my money." And that kind of thing. And these people who are who are losing tens of millions of dollars, you know, what do they do? What's the first thing they do? They call the FBI and they say, "Hey, listen. and I was taken and here's who did it and here's how I how it all came together and all the uh text messages are right there plain as day showing how the scheme worked >> and and Vanessa during that press conference they were saying one person got taken for $1.5 million in a poker game and they were like hey wait a minute what's going on here and then when you didn't pay according to the allegations the crime family they got tough >> they they became the crime family right yeah So I Miles, can you just connect the dots there on how that organized crime and the poker games relate to this NBA investigation as well? >> Right. The easiest way to to explain it is that Damon Jones, a former NBA player, is connected in both schemes. He was connected to the scheme that involved um you know non-public information and players um going out on injuries or illnesses, pulling themselves from games, and he was involved in the um in the the card situation where you could see cards on X-ray machines and all of that kind of stuff. He's the link between the NBA um and organized crime in this instance. He's the one who um was the connector of those dots. In addition to that, um, when it comes to the card games, you know, they would use these NBA players, um, to get, you know, high quality folks in. Oh, you've got this NBA player who's going to be, you know, sitting in the game or a face card, right? Oh, you know, I I'll get to take a picture with him and I'll get to spend time, you know, maybe I'll have a drink with him. Uh and then also trying to use these NBA players um to uh basically uh enforce when when you know when they lose all this money to say, "Hey, you know, you need to pay these guys back. It's not all right." And you know, if you have a big celebrity telling you to do that, you know, you're going to find any way to do it so that you're you know, you're not in any more trouble. Our thanks to Bloomberg senior reporter Miles Miller for joining us. Up next, we stick with the NBA and some controversy surrounding Clipper star Kawine Leonard. For Damian Sassau and Vanessa Pomo, I'm Michael Bar. You are listening to the Bloomberg business of sports from Bloomberg radio around the world. >> This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg business of sports where we explore the big money issues in the world of sports. I'm Michael Bar. >> I'm Damian Sasau. >> And I'm Vanessa Pommo. >> On top of the illegal gambling probe we learned about this week, there's also some controversy brewing in LA with Clipper star Kawawaii Leonard. >> The NBA is investigating whether the Clippers were able to work around the league salary cap to get extra money to Leonard. >> Oh dear. Joining us now to talk about it is Bloomberg News Global Sports Business reporter Ira Budway. Ira, welcome back to the Bloomberg business of sports. >> Good to be here. >> You said in your article, NBA Commissioner Adam Silver has a Steve Balmer problem. Explain that. >> Well, the league has recently launched an investigation into the into Balmer and the Clippers over allegations that they have circumvented or tried to circumvent the salary cap. Uh, and that is a big deal in in the NBA. It's kind of as as uh Commissioner Silver once called it, a cardinal sin. Uh, and so he's gonna have to get to the bottom of this, but it's a very tricky situation when you're dealing with disciplining owners in any sports league. Uh, because you work for the owners as a commissioner. So, uh, he's in he's in a bit of a pickle. >> I mean, it's interesting because he came into the league, Adam Silver, I mean, when he came into the league and was, you know, started as commissioner, he essentially came in and bas fired one of the owners, banned them for life, banned Donald Sterling for life, which is the team that Steve Bonner then buys. But he did that pretty swiftly and without any issues, right? Kind of seemed like everyone was on his side. Donald certainly was in the wrong. But this is very different. Do you think this is probably the hardest thing he's had to deal with in trying to make a decision on this if he is found guilty? >> I mean, it is very different and and we should be clear that Sterling got in trouble for making racist comments that were recorded, which is a lot different than trying to get around the salary cap. Um, but I think, you know, it's interesting going back to that moment 11 years ago when silver banned Sterling for life, which led to Sterling having to sell the Clippers and the buyer was Steve Balmer. Uh, that was interesting because at the time, even though nobody thought Sterling was in the right or really should own this team, it was a question whether Silver had the authority to force him to sell. And he was just three months into his tenure. And he figured out a way to make it happen. And it was pretty bold. First he did the lifetime ban and then they switched the ownership to Sterling's wife and then event that led to the sale. So he managed to force a sale without sort of forcing this question in front of the owners of whether that was allowed. Now he's got a thing where Balmer is the wealthiest owner in the league. Um and he's been very active. He's a huge fan. He's front row. He's, you know, always loud. Uh he's very wellknown. Former CEO of Microsoft. He just spent two billion dollars of his own money to build a new arena for the Clippers, the Inuit it dome that's supposed to host the All-Star game in February. So, it's a very tricky thing because salary cap circumvention is a big deal because if if teams are doing it, then your salary cap kind of doesn't really exist. >> Well, Ira, we're talking about the integrity of the league here, right? And so, you know, you're bringing us back to the Sterling Still in 2014. I want to bring you back to 1999. I want to bring you back to the Joe Smith fiasco because that to my knowledge is the last time we had sour capser convention and the penalty if I remember on the Timberwolves was absolutely massive. I mean I think they took four or five first rounders. If they do that in today's day and age which I'm not suggesting they would but there is precedent there. I mean that could just pummel the team for a decade >> as the David Stern era. >> Yeah. So I mean like so is that is that really what's at risk here? I mean that is a mass I mean this the Clippers are one of the most if forgive me if I'm wrong I don't know the number but valuable franchises in the NBA right I mean top 10 for sure >> so I mean what would that do to that I mean it's got to be not a good thing yeah I mean silver has broad liberty he broad liberty to penalize the Clippers and there are a set of penalties outlined in the bylaws in the collective bargaining agreement that include stripping draft picks and Joe Smith you're right they they took away five first rounders Timberwolves got some of those back later But um but yeah, they can do a lot and and also he has Silver has liberty under the NBA rules to punish owners just for doing things that act contrary to the interest of the league. So it really depends what this investigation discovers. So right now they've got WCTEL looking into it. If they come back and they show very strong evidence that Balmer was aware of this, that that the Clippers somehow directed this and this is a a side contract or an endorsement contract with Kawhi Leonard that's under question. Um, that if the Clippers were involved, uh, then yeah, I think the punishment could be pretty severe, right? Because you have to disincentivize this behavior. So, you could be talking about lost draft picks, you could be talking about millions of dollars in fines, uh, and you could be talking about voided contracts. So there's a lot of ways that they can go. It it could really damage the Clippers. >> So let me ask you this. Back in 1999, did David Stern consult with other owners about that penalty that was I mean I don't know the answer, right? And and and because my question is Silver works for the 30 NBA teams, not just the Clippers, right? So there are 29 other owners out there, all of whom might want to see Bomber get, you know, the max penalty while others might not because it might have an impact on, you know, their own, you know, value, franchise valuation. So, you know, my question is, do you think that Silver would at least take counsel from some of the other team owners with whom he works for? >> Yeah. You know, it's a very tricky question. I think right now he's probably saying, "Let's let this investigation play out, right?" He needs that to say we we we commit we paid for this independent investigation. We want to see what it says. What is the evidence uh beyond what's been publicly presented by Pablo Tori in his podcast? Um, and can we corroborate that? and can we figure out what's really going on here? But yeah, it's a it what's interesting is the other owners are also torn, I think, right? Because on the one hand, they are Balmer's competitors. They are his rivals. They want to beat him. Caps circumvention is a form of cheating. They would be pissed about that in theory. On the other hand, they are Balmer's partners. They all share 130th of an interest in this league and they don't necessarily want the league to be damaged. And they also don't want a precedent where the commissioner has a free hand to punish owners because they're an owner too, right? And so as his partners in the business, they might like to see this go away with with a slap on the wrist. As his rivals on the court, they might like to see, you know, the full weight of the law brought down on on Balmer. So that is, I think, exactly the dynamic that Silver's going to have to navigate in this moment. I had forgotten until you had written it that the NBA salary cap has been in place since 1984. Now today it is at $155 million per franchise. Quite frankly I that's not much in today's league. >> Yeah. I mean I think if you look at how much money some of these owners have, right? Balmer estimated net worth 175 billion. So for him, you could look at the salary cap as a nuisance, right? He really wants the Clippers to win. He can only spend 155 million. You can go over that through various exceptions. You can pay the luxury tax and so on, but you're really limited in what you can spend. Uh and that is why the NBA has salary cap circumvention rules because they know that there these incentives are in place that Balmer and other owners might really want to spend more than they're allowed to win, right? And so yeah, that is the trick here is can you enforce your salary cap which is there for competitive balance and to control costs for the league and for owners. >> Ira, I'm curious like if this is really what are they looking for? What is harsh evidence here? Can they actually find it? Do they want to find it or is this going to be something like we've seen before that makes huge headlines but nothing really comes of it like when the Astros got caught sign stealing and they kind of just skated over it or >> Yeah. I mean it's really interesting. I do think the league wants to get to the bottom of it. What's at stake here is there's this company aspiration. It's now bankrupt. Its leader was brought up on federal charges for fraud in one of its co-founders. He's agreed to plead guilty. But this company Aspiration that did like climate finance um they did a deal with the Clippers to be a a partner in the in it dome and Balmer invested 50 million in them uh up front at in back in September of 2021 and then after that aspiration did a deal with Kawhi Leonard an endorsement deal for four years 28 million. What's fishy about that deal is Leonard never really did anything in public to to endorse Aspiration, right? Uh and so it looks like paytoplay potentially. >> And it said he had to stay a Clipper. >> Yeah. According to Pablo Tori, who broke this story on his podcast, the the contract allows him to not do anything. As long as he's on the Clippers, he gets paid. >> Um and so what is going to have to figure out here is why did Aspiration do that? That's the central mystery. >> Well, wasn't Kawhi Leonard a supermax to begin with? >> So, he was on a 4-year $176 million contract extension with the Clippers, which was an interesting choice. He signed that in 2021. He could have done a shorter deal. He could have to get to a bigger contract sooner. He could have done a bigger deal at that moment. So, it was sort of a middle path. Um but yeah, so he this side deal if it is in fact a side deal and that's what that's what we need to figure out. Is Aspiration doing this on behalf of the Clippers? Is it a way to pay Kawhai off the books or were they just doing a what looks like a really stupid endorsement deal? Right. On its face >> or a smart endorsement deal from the perspective of Kawhi Leonard. I mean, >> right, Kawhi Leonard. Yeah, why not take it? It's $28 million for what's looks like a no-show kind of arrangement, you know, over four years. But I think that's what we you got to solve here. Is there another explanation for why Aspiration is doing this deal? Now, this is a company that did do a lot of fraudulent stuff, including some some funny dealings with influencers and other celebrities. So, maybe there are other explanations here. It's also possible, and this is just me speculating, like that Aspiration wanted to do this for the Clippers without the Clippers knowing it, right? that they were like, "Oh, they would love it if we did a deal with Kawawaii and we paid him more than he's worth because that would, you know, but the Clippers never asked for any of this." What Balmer has said is, "I made the introduction, right? I was an investor in aspiration. Kawi Leonard's my player. I put the two together and they went off and made a deal that I didn't know about that the that I had no control over and I didn't know the terms." So, that's what that's what we got to sort through. >> Now, and I should add first of all that uh Mr. Balmer said that look I didn't do anything wrong. The Clippers are saying we didn't do anything wrong. >> And Kawhi Leonard saying >> saying the same thing. I didn't do anything wrong. And >> even Adam Silver when it came out in the press conference afterwards said, "Look, the burden of proof that something went wrong is on the league." I mean, I don't forgive me for using a it's like a Perry Mason case, you know? is like, okay, you got to prove that this actually happened, the the bad dealings. >> Yeah. So, he said basically the mere appearance of impropriety wouldn't be enough here. And so, that is really the question. It's kind of like what is the it's not a legal case in the sense of it's just up to the league enforcing its own rules. So, what are the how much evidence do they need? What do they what is the burden of proof? Is it beyond a reasonable doubt? Like this is all basically what Silver is going to have to look at what they come back with and make those choices. You know, it's not a court of law. It's it's a it's an NBA commissioner. >> Well, we've been talking a lot about what would happen to Steve Balmer in that decision. But if this is found to be true, what would happen to Kawhai? Like, is there something that would happen to him? >> Uh, I mean, theoretically, they could void his contract. I think, uh, I doubt that would be the outcome here. I think they'd want to punish the franchise and the owner. You know, that's just my guess. >> Our thanks to Ira Budwway for joining us. He's Bloomberg News global sports reporter. You can find his reporting on the terminal and online at bloomberg.com. >> Coming up, we turn to F1 and a new big money partnership between Carile and the Oracle Red Bull Racing Team. For Damian Sasau and Vanessa Bernomo, I'm Michael Bar. You are listening to the Bloomberg business of sports, Bloomberg radio around the world. This is Bloomberg Business of Sports from Bloomberg Radio. >> Thank you for joining us on the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barnes. >> I'm Damian Sassau. >> And I'm Vanessa Pommo. >> Carile recently announced a new partnership with Oracle Red Bull Racing, becoming its exclusive investment management partner. It is the first ever partnership between a Formula 1 racing team and a leading global private markets firm. >> And joining us now to talk more about the deal is Danny Burgerer. Danny, welcome to the Bloomberg business of sports. >> Thank you so much. >> Oh my good. Now, you had did an interview recently uh where you talked to Carile CEO and you also talked uh with the Oracle Red Bull Racing Team Principal. That's right. >> Tell us about that. Well, Carlilele for an undisclosed amount of money, but probably a very large sum of money has become a sponsor of Red Bull Racing. Typically, when you think about the sponsors, a lot of tech companies, Oracle, for example, is one of the main sponsors of Red Bull, uh, One Password, a lot of tech companies. Rarely do you get capital coming from financial giants like Carile, but Carile nonetheless signed this deal. They became a title sponsor of them. So, I went down to the F1 to interview both of them and basically ask one, why would you do this? Why would you spend so much money on something incredibly flashy and just generally to ask Red Bull, hey, what's going on with the team? How you thinking about 2026? And same goes for the Carile CEO, too. >> And Vanessa, you we're Danny did that interview and we have a clip of that. Let's give a listen to it. >> The last 30 years, you've seen a remarkable development of private markets. Private markets are really the primary source of capital for many companies. As that capital continues to grow, the market has just evolved to a place where wealth, retail, the breath of what we do globally is just evolved also. And this is just part of the natural evolution. While it might feel unique now, I think it's actually not revolutionary at all. It's really just quite evolutionary. >> And and why move that way with Red Bull specifically? >> That was pretty easy. Um everything about Oracle Red Bull Racing is about performance, execution, excellence. So that part was very easy to see and very easy to relate to as a firm. The sport F1 is also global and growing dramatically as we know as our private markets. And so that all aligned. What made this really special was when Laurent and I spent time together, the team spent time together, and there was almost like this sort of very uh I don't know, uniquely natural affinity where we all just became best friends really quickly. And uh and so, hey, it's got to be fun, too. But it is about performance excellence first and foremost. I was going to say, Lauron, given what Harvey is saying that the finance world in general has been more interested in sport, more interested in F1, have you been fielding a lot of calls before this partnership from Harvey's peers who wanted to get in like he did? >> You know, in reality, no. It felt uh it felt very natural straight away with Kai, with Harvey. uh you know it's this moment where you realize that the person you are talking with are are the best at what they do in the world and and you know we feel we are quite good at at what we do and and what we see with our partners is that we go and try to partners with companies that are the best at what they do and we had a lot more points of connections we were we had this this performance obsessions we have this datadriven approach uh in in our very different business uh but but together with that quest for perfections in everything we are doing. It felt like a very very natural connection. >> To be fair, Harvey, there have been some outspoken critics about the move for private capital to do sponsorships to get invested in sports. Uh Josh Easterly of Six Street said at a conference a couple weeks ago. It's representative to him that firms are more concentrated on fine-tuning their brand than on the returns themselves. What do you say to that criticism? >> Our business is exactly the way Lauron just described it. It's first and foremost always about performance. Performance drives everything. If you have performance, you have success. Um, again, you think about everything they do at Oracle Red Bull Racing, it's all oriented around success. When he references data, we think about data. It's different data, but these are organizations driven around performance excellence. If you don't have performance, you don't have success. In terms of the partnership here, yeah, this is important to be able to reach a global audience. You know, you mentioned sport before. There's a real desire in the world for people to come together around sport, and this is truly one of the fastest growing sports in the world. >> That's Bloomberg TV host Danny Burgerer speaking with Carile CEO Harvey Schwarz and Oracle Red Bull Racing's Laurent Mckis. >> Um Danny, I'm curious, in your interview, you talked to Carile about them being forward- facing and and how that was kind of different for them and this was a different like opportunity. And we've seen private equity come into sports a lot, but it's a different way, right? This is sponsorship. This isn't investment necessarily, equity. So, what did you gather from that part of the conversation? >> That that is just spot on because to your point, usually when we think about private equity and sports, it's that they want to make money out of it. This is literally the opposite, right? Like they're throwing money at it. >> And it's a very different car and a different industry in general because usually you think private capital, it's this exclusive club. It's hard to get into. You have the biggest institutions in the world, be it pensions or sovereign wealth funds, coming to them to buy their portfolios. Now, something has changed. They want to sell it. They don't want it to be a product that's bought. They want it to be a product that's sold. And they're trying to sell, okay, maybe not everyday people, but everyday people who have lots of money. They're trying to sell it to high net worth individuals. They're hoping that 401ks will open up to private equity, too. So all of a sudden they're realizing it's not enough that this sovereign wealth fund in the Middle East knows who we are. We need more everyday people to know who who we are. So when they're thinking about, okay, I've got extra money. Usually I just put that in ETFs. Maybe instead I go to my wealth advisor and try to get into a Carile fund. So all of a sudden, to your point, they're really front-facing. They're trying to show a more friendly and maybe more sporty uh face. And it's not just them doing it. Blue Owl, for example, they sponsor tennis players. They sponsor golf players. Apollo also sponsors golf players, too. So, you're seeing this become start to become a trend in the industry. >> Well, Danny, let's put some numbers around that. Oracle, who is Red Bull's main sponsor, $60 million a year, Vanessa, can you believe that? And they've got Honda, they've got Ford, Visa, and that's just that's just the tip of the surface. Now, you know, this is the business support. So, let's talk about it, right? The F1 just did a deal with Apple TV where they got their media rights up to $140 million a year over 5 years. So clearly there's something there, right? I mean I mean that that's a huge increase. It's a huge bump bump b up. But you know so Carlile David Rubenstein I mean these they know how to you know get around a deal table and they know what a good investment looks like. So they must see something here. No. >> I think it's kind of key that they did this deal after Christian her left. Christian her left not because of controversy but he left in a fog of controversy with accusations of sexual misconduct. And it'd be hard to imagine a scenario where even though that was investigated by the team and nothing came out of it, that you'd have a private capital giant like Carlile be comfortable with investing in the team. And in Laurent Mechis, you have a team principal. I was there. I saw the two interact. >> You kind of got the feeling they were almost friends even though they were were so different. I mean, Harvey Schwarz cutting his teeth on Wall Street at one point being floated as the next CEO of Goldman Sachs. Meanwhile, this French engineering nerd, it's not exactly a combo that you would expect, but the two of them really got along and they kind of love to say, "Look, completely different businesses, but we're obsessed with performance. We're obsessed with data." So, you have this feeling that Carile is being really deliberate in how it puts its brand out there. and they were really deliberate in choosing Red Bull, which I should say even though they're not leading the pack with F1 right now, they are getting closer with their driver Max Verstoppen kind of wearing down the gap between them and the McLaren drivers. >> You you just took the words out of my mouth. They are fourth in the constructors now this year, right? I mean, behind, you know, obviously McLaren, but Mercedes and Ferrari as well. And Versappen is now three in the drivers rankings, although that win in Austin obviously ranked them back up. He's now contesting again. think there's I think he has enough chance to maybe >> he does and obviously it was because of my interview with the team >> of course of course right absolutely gave him the inspiration >> without question so so I mean so again you know there is a lot of value there I guess is the point so Carle actually sees that Michael Barno >> yes you you are exactly right >> so when you're thinking about it and after talking with them do you see the link between formula 1 and private equity do you see the value in this sponsorship >> I think it's interesting because okay so people when they I I talked to people after the sponsorship and they said, "What a weird move from Carlile to go after F1. They want to reach more people. Isn't F aren't F1 fans just the typical billionaire class and people they already have?" F1 has changed so much. I myself am a huge F1 fan. I watch every single race and I am a woman in my 30s. I am maybe not what you typically picture for the F1 fan, but I am increasingly becoming what the F1 fan looks like after the success of Drive to Survive on Netflix. the F1 fans are more female. They are younger. So, it's a really interesting type of person that Carile is actually capturing here. And I think in that vein, they do see a unique opportunity because of the growing audience. And and Damon, you mentioned um Apple getting the rights to F1. There you go. A whole new audience too potentially coming in. It is a growing sport and a growing audience base, too. >> Well, Danny, I'll just give it to you right now. Riyad, Singapore, Abu Dhabi, Dubai. I mean I mean the list goes on. Baku, the list goes on and on. So for Carlilele to penetrate some of these international financial markets, um yeah, I I get it. You know, I see the benefit of it for sure. Now, let's just see if they could bring it to the track, right? Michael Bar. >> Oh my. See, you know what? I remember I'm old and and and and you you reminded me you said I'm a lady in my 30s. Well, you want to go how old it someone snowed on my head. I remember when Jackie Stewart and I know you're going to say, "Who the hell is that?" No, Jackie Stewart, man, one of the greatest racing drivers of all time. That's right. And he had a car that had six wheels on it. >> He really did. It was like two, four in the front and then there was the the two in the back. That's how far I go. Which brings me to how far has F1 changed since old man Bar would gotten into it? >> Well, do you want to talk about the car or the business? >> I mean, did Harvey Schwarz promise us a team kit? You know, Michael Bar could use a nice little team kit to wear to the office. >> I'm sure we could arrange that. They would be so thrilled if you wore a Red Bull hat that said Carile on the side. I think they would absolutely love that. No, the sport has changed so much. You could talk about the audience, the money behind it, with this, with other investments in there, with the type of audience, but also the cars themselves. They have changed so much and they change every year. And I think one thing that they've really concentrated on is the safety of the car. They now have these halos around it to make sure if the car rolls over, the driver is safe. Literally, every single aspect of this has changed. And I think one of the biggest changes again is the American audience. Uh we had again Austin, there's Miami, there's Vegas, which is an insane race and is literally the most American thing you could think of because of the spectacle behind it. But yeah, literally every aspect of the sport, it is changing and changing fast. >> Danny, you are a friend of the show and you can come back anytime you want. >> Michael, again, I I mean it. I'm honored. Thank you so much. >> Oh, thank you. >> Come back and help us, Danny. Please. >> Yes. >> Make some money. Yeah. Our thanks to Danny Burgerer for joining us. >> And that does it for this edition of the Bloomberg Business of Sports. For Damen Sassau and Vanessa Purdomo, I'm Michael Bar. Tune in again next week for the latest on the stories moving big old money in the world of sports. >> And don't forget to catch our podcast on all of your podcast platforms. >> You are listening to the Bloomberg business of sports from Bloomberg radio around the world.
FBI Arrests NBA Players, Coaches in Sports Gambling Scheme | Bloomberg Business of Sports
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This is the business of sports. >> Sports are the greatest unscripted show on earth. The next generation of players really grew up with tech and believe in tech. >> Your face is your ticket. Your face is your wallet. Your face is your access to a club. >> These are such iconic and important buildings for businesses, for fans. >> Co was one of the best things that ever happened to golf. >> The NFL is a bulletproof business. >> Racing's unique because there is absolutely no reason why we can't compete with the guys. >> Come on. Is pro pickle ball real? Are people really going to tune in to this? If you're playing Moneyball with a huge bag of money, you're going to be really, really good. >> Bloomberg Business of Sports from Bloomberg Radio. >> This is the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Bar. >> I'm Damen Sashau. >> And I'm Vanessa Pomo. >> Coming up on the show, we talk a little F1. Our colleague Danny Burgerer from Bloomberg television got a chance to sit down with Carlilele CEO Harvey Schwarz and Oracle Red Bull Racing Team Principal Lauron Mecky's about their new partnership and the Oracle Red Bull Racing Team's recent success. >> We'll hear a portion of Danny's conversation with Schwarz and Mecky's from the sidelines of the Formula 1 Grand Prix in Austin, Texas. >> All that and more is on the way on the Bloomberg business of sports. But first, we've got news this week of a major illegal sports betting scheme going on in the NBA. >> That's right, Michael. More than 30 people across 11 states were arrested in connection to a sprawling gambling scheme that involved current and former NBA players and coaches. >> That's right, Vanessa. Miami Heat guard Terry Rosier and Portland Trailblazer head coach Chanty Bilips were among those arrested as part of two separate criminal gambling schemes. Now, according to the allegations, one scheme involved using non-public information about players and teams to make bets, and the other involved a nationwide scheme that allegedly used special technology to rig poker games. >> Both of these schemes went far and beyond the NBA and involved organized crime families. On Thursday, FBI Director Cash Patel held a press conference announcing the bust alongside several federal officials, including interim US Attorney for the Eastern District of New York, Joseph Nosella, who detailed the schemes. >> Between December 2022 and March 2024, these defendants perpetrated a screen a scheme to defraud by betting on inside non-public information about NBA athletes and teams. The non-public information included when specific players would be sitting out future games or when they would pull themselves out early for purported injuries or illnesses. >> That is US Attorney Joseph Nella in an FBI presser on the massive illegal gambling scheme of allegations involving both former and current NBA players. >> For more on what we know about the scheme, we welcome Bloomberg senior reporter Miles Miller. Miles Miller, welcome to the Bloomberg business of sports. I wish it was on a happier note, but this is very serious and you know it's serious when the House Minority Leader Hakee Jeff says that this is a case that is stunning and should shake NBA fans. Tell us about it. >> Yeah, so this is a criminal indictment that charges that NBA players, current and retired, were involved in two separate schemes. You've got the one scheme uh that involves NBA players uh being invol involved in sports betting uh and basically you wouldn't say throwing a game, but removing yourself from a game early so that another party is able to make money off of that. In this instance, uh, we're told by Brooklyn prosecutors that the M Miami Heat guard, Terry Rosier, was one of the people who was responsible for this. And it goes back to a game he played when he was on his former team >> back in 2023. >> Exactly. And um he went out um saying that his ankle was hurting, his foot was hurting. But prosecutors say in this case, the truth of the matter uh was that, you know, he knew someone was placing a bet uh that would go a certain way and the only way to facilitate that happening would be for him to leave the game. Um you you may be thinking, why are federal prosecutors in Brooklyn interested in this? And you know, the reason is this goes back to uh 2023. We're going back to the case involving Jonte Porter. know uh the reason why he is so central to this case is because he had said that he had a gambling addiction and that was the reason why he had gotten involved in some of these illegal sports betting schemes and then what happens you know you know a good thing is going on so you bring your friends into it um and that is what prosecutors are alleging the reason why these NBA players were involved was because you know they have a central link in in in one NBA player >> it's really it's really unbelievable all the moving parts to this story and like you had mentioned this incident that happened with Terry Rosier in 2023. He was under investigation at the time in 2023 and the NBA found that there was what their conclusion was nothing illicit had happened at the time but now it comes back around. When you found out this new information, was there any indication that it was this big and there were so many moving parts to this? >> Yeah, you should have seen I mean you see the the I mean if you saw the press conference you saw how many people were involved in the case, right? Um, this was a wide-ranging case that started in 2019. So, they've been working on this case for quite some time. To your question about this, it it boggles the mind that the M that the uh NBA says that they closed their investigation and they found no wrongdoing. When you see very clearly the wrongdoing that was found by federal prosecutors here, the one thing that's important to note is that federal prosecutors have said that the NBA is cooperating in this case. But how is it that you hire an external law firm and you have folks look into this? I mean, they had a an there was an independent firm um that looks into sports betting irregularities and found the bet and found the specific amount of money tied to it. So, how the NBA was able was not able to find this is beyond me. >> Does that then bring up the conversation of do they now have to look at every investigation that the NBA has taken place of now? Now we're talking, we're talking about the Kawhi Leonard and Clippers investigation that's going on right now about cap circumvention. Do they then have to look at all the things the NBA has said that they've investigated and come up with no conclusion? >> You know, the US attorney, I think, was was very clear. This is an ongoing investigation. And I thought what the FBI director said was really interesting. Um, that this is a a major scandal and and and historic when it comes to the to the NBA. this is not the last we'll hear of this investigation because it's very clear that if the NBA's let to do their own investigations into this and it leads to nothing and then you've got all of these feds standing up there and saying we found something and it involves uh in one instance the four of the five crime families in New York you know talking about organized crime the mafia in New York >> there is much more to this and it didn't just it's not just these three players that are named here um they're going to continue doing this investigation And it is clear that an FBI agent's retiring. You're going to have people retiring from the Eastern District who worked on these cases. They'll probably go join the NBA. They'll probably go join some of these law firms to start looking into these sports books and figuring out just what's happening as it relates to players and how players are using the sports books. >> Miles, is this only the beginning? Are we just scratching the surface of the impact of sports gambling on major sports? I I got to believe that the NFL, Major League Baseball, they too have had quote unquote reports that, you know, maybe this player was taking himself out of games or they were doing some I mean referees, etc., you know, is is is there more coming? >> Oh, there's certainly more coming. Um and certainly from the Eastern District, right? Um I think it was important to note that this happened in Brooklyn uh because of the prior case. Uh and all it shows me is that is that it's going to continue to happen. Um, you know, we we asked about college basketball uh and college sports and they said college sports wasn't involved in this, but that's not to say that this kind of scheme uh won't happen when it comes to college sports. He said that the sports books are the victims in this case, but it's going to be incumbent on these sports books to figure out who's making these uh these uh these wagers uh and and figure out if there's any corruption happening when these wages are happening. Uh, one more thing that's interesting, the the the Waterfront Commission was involved in this. The Waterfront Commission is one of the oldest law enforcement uh, agencies in the country. Uh, really focused on on the mob. They're involved in this investigation into NBA players uh, who are who are doing bets or who are involved in bets where they take themselves out of games or go sick or, you know, can throw a game. That is something that should not be overlooked. And this is more than just prop bets in the game. I mean, this the allegations of that are bad enough. This goes now into the underground poker games where you've got X-ray machines that they're alleging here have been used to read carts. I mean, and and the mafia family's made millions off of this according to what the officials are saying. >> Yeah, I've got them in my bag. I I should have brought them with me. The um the the court documents here. um literally t that you you see you you can see through the table and they had cameras under the table so you so because what that X- basically you're you're playing on an X-ray machine and you could see you know what cards were being dealt um they're watching hand signals they've got surveillance in the room they've got manipulated card machines all of this happening on Washington uh Washington Street down uh in in uh in the west side of Manhattan and on Lexington Avenue not far from where we are. Um, so it's really interesting that the that organized crime, and they say Italian organized crime, that's what they're calling it, is still alive and well in New York. And how are they, you know, able to to make their money by running these rigged games. And in some of the cases, you see people um saying, "Hey, listen. What you did was wrong. You know, you took my money." And that kind of thing. And these people who are who are losing tens of millions of dollars, you know, what do they do? What's the first thing they do? They call the FBI and they say, "Hey, listen. and I was taken and here's who did it and here's how I how it all came together and all the uh text messages are right there plain as day showing how the scheme worked >> and and Vanessa during that press conference they were saying one person got taken for $1.5 million in a poker game and they were like hey wait a minute what's going on here and then when you didn't pay according to the allegations the crime family they got tough >> they they became the crime family right yeah So I Miles, can you just connect the dots there on how that organized crime and the poker games relate to this NBA investigation as well? >> Right. The easiest way to to explain it is that Damon Jones, a former NBA player, is connected in both schemes. He was connected to the scheme that involved um you know non-public information and players um going out on injuries or illnesses, pulling themselves from games, and he was involved in the um in the the card situation where you could see cards on X-ray machines and all of that kind of stuff. He's the link between the NBA um and organized crime in this instance. He's the one who um was the connector of those dots. In addition to that, um, when it comes to the card games, you know, they would use these NBA players, um, to get, you know, high quality folks in. Oh, you've got this NBA player who's going to be, you know, sitting in the game or a face card, right? Oh, you know, I I'll get to take a picture with him and I'll get to spend time, you know, maybe I'll have a drink with him. Uh and then also trying to use these NBA players um to uh basically uh enforce when when you know when they lose all this money to say, "Hey, you know, you need to pay these guys back. It's not all right." And you know, if you have a big celebrity telling you to do that, you know, you're going to find any way to do it so that you're you know, you're not in any more trouble. Our thanks to Bloomberg senior reporter Miles Miller for joining us. Up next, we stick with the NBA and some controversy surrounding Clipper star Kawine Leonard. For Damian Sassau and Vanessa Pomo, I'm Michael Bar. You are listening to the Bloomberg business of sports from Bloomberg radio around the world. >> This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg business of sports where we explore the big money issues in the world of sports. I'm Michael Bar. >> I'm Damian Sasau. >> And I'm Vanessa Pommo. >> On top of the illegal gambling probe we learned about this week, there's also some controversy brewing in LA with Clipper star Kawawaii Leonard. >> The NBA is investigating whether the Clippers were able to work around the league salary cap to get extra money to Leonard. >> Oh dear. Joining us now to talk about it is Bloomberg News Global Sports Business reporter Ira Budway. Ira, welcome back to the Bloomberg business of sports. >> Good to be here. >> You said in your article, NBA Commissioner Adam Silver has a Steve Balmer problem. Explain that. >> Well, the league has recently launched an investigation into the into Balmer and the Clippers over allegations that they have circumvented or tried to circumvent the salary cap. Uh, and that is a big deal in in the NBA. It's kind of as as uh Commissioner Silver once called it, a cardinal sin. Uh, and so he's gonna have to get to the bottom of this, but it's a very tricky situation when you're dealing with disciplining owners in any sports league. Uh, because you work for the owners as a commissioner. So, uh, he's in he's in a bit of a pickle. >> I mean, it's interesting because he came into the league, Adam Silver, I mean, when he came into the league and was, you know, started as commissioner, he essentially came in and bas fired one of the owners, banned them for life, banned Donald Sterling for life, which is the team that Steve Bonner then buys. But he did that pretty swiftly and without any issues, right? Kind of seemed like everyone was on his side. Donald certainly was in the wrong. But this is very different. Do you think this is probably the hardest thing he's had to deal with in trying to make a decision on this if he is found guilty? >> I mean, it is very different and and we should be clear that Sterling got in trouble for making racist comments that were recorded, which is a lot different than trying to get around the salary cap. Um, but I think, you know, it's interesting going back to that moment 11 years ago when silver banned Sterling for life, which led to Sterling having to sell the Clippers and the buyer was Steve Balmer. Uh, that was interesting because at the time, even though nobody thought Sterling was in the right or really should own this team, it was a question whether Silver had the authority to force him to sell. And he was just three months into his tenure. And he figured out a way to make it happen. And it was pretty bold. First he did the lifetime ban and then they switched the ownership to Sterling's wife and then event that led to the sale. So he managed to force a sale without sort of forcing this question in front of the owners of whether that was allowed. Now he's got a thing where Balmer is the wealthiest owner in the league. Um and he's been very active. He's a huge fan. He's front row. He's, you know, always loud. Uh he's very wellknown. Former CEO of Microsoft. He just spent two billion dollars of his own money to build a new arena for the Clippers, the Inuit it dome that's supposed to host the All-Star game in February. So, it's a very tricky thing because salary cap circumvention is a big deal because if if teams are doing it, then your salary cap kind of doesn't really exist. >> Well, Ira, we're talking about the integrity of the league here, right? And so, you know, you're bringing us back to the Sterling Still in 2014. I want to bring you back to 1999. I want to bring you back to the Joe Smith fiasco because that to my knowledge is the last time we had sour capser convention and the penalty if I remember on the Timberwolves was absolutely massive. I mean I think they took four or five first rounders. If they do that in today's day and age which I'm not suggesting they would but there is precedent there. I mean that could just pummel the team for a decade >> as the David Stern era. >> Yeah. So I mean like so is that is that really what's at risk here? I mean that is a mass I mean this the Clippers are one of the most if forgive me if I'm wrong I don't know the number but valuable franchises in the NBA right I mean top 10 for sure >> so I mean what would that do to that I mean it's got to be not a good thing yeah I mean silver has broad liberty he broad liberty to penalize the Clippers and there are a set of penalties outlined in the bylaws in the collective bargaining agreement that include stripping draft picks and Joe Smith you're right they they took away five first rounders Timberwolves got some of those back later But um but yeah, they can do a lot and and also he has Silver has liberty under the NBA rules to punish owners just for doing things that act contrary to the interest of the league. So it really depends what this investigation discovers. So right now they've got WCTEL looking into it. If they come back and they show very strong evidence that Balmer was aware of this, that that the Clippers somehow directed this and this is a a side contract or an endorsement contract with Kawhi Leonard that's under question. Um, that if the Clippers were involved, uh, then yeah, I think the punishment could be pretty severe, right? Because you have to disincentivize this behavior. So, you could be talking about lost draft picks, you could be talking about millions of dollars in fines, uh, and you could be talking about voided contracts. So there's a lot of ways that they can go. It it could really damage the Clippers. >> So let me ask you this. Back in 1999, did David Stern consult with other owners about that penalty that was I mean I don't know the answer, right? And and and because my question is Silver works for the 30 NBA teams, not just the Clippers, right? So there are 29 other owners out there, all of whom might want to see Bomber get, you know, the max penalty while others might not because it might have an impact on, you know, their own, you know, value, franchise valuation. So, you know, my question is, do you think that Silver would at least take counsel from some of the other team owners with whom he works for? >> Yeah. You know, it's a very tricky question. I think right now he's probably saying, "Let's let this investigation play out, right?" He needs that to say we we we commit we paid for this independent investigation. We want to see what it says. What is the evidence uh beyond what's been publicly presented by Pablo Tori in his podcast? Um, and can we corroborate that? and can we figure out what's really going on here? But yeah, it's a it what's interesting is the other owners are also torn, I think, right? Because on the one hand, they are Balmer's competitors. They are his rivals. They want to beat him. Caps circumvention is a form of cheating. They would be pissed about that in theory. On the other hand, they are Balmer's partners. They all share 130th of an interest in this league and they don't necessarily want the league to be damaged. And they also don't want a precedent where the commissioner has a free hand to punish owners because they're an owner too, right? And so as his partners in the business, they might like to see this go away with with a slap on the wrist. As his rivals on the court, they might like to see, you know, the full weight of the law brought down on on Balmer. So that is, I think, exactly the dynamic that Silver's going to have to navigate in this moment. I had forgotten until you had written it that the NBA salary cap has been in place since 1984. Now today it is at $155 million per franchise. Quite frankly I that's not much in today's league. >> Yeah. I mean I think if you look at how much money some of these owners have, right? Balmer estimated net worth 175 billion. So for him, you could look at the salary cap as a nuisance, right? He really wants the Clippers to win. He can only spend 155 million. You can go over that through various exceptions. You can pay the luxury tax and so on, but you're really limited in what you can spend. Uh and that is why the NBA has salary cap circumvention rules because they know that there these incentives are in place that Balmer and other owners might really want to spend more than they're allowed to win, right? And so yeah, that is the trick here is can you enforce your salary cap which is there for competitive balance and to control costs for the league and for owners. >> Ira, I'm curious like if this is really what are they looking for? What is harsh evidence here? Can they actually find it? Do they want to find it or is this going to be something like we've seen before that makes huge headlines but nothing really comes of it like when the Astros got caught sign stealing and they kind of just skated over it or >> Yeah. I mean it's really interesting. I do think the league wants to get to the bottom of it. What's at stake here is there's this company aspiration. It's now bankrupt. Its leader was brought up on federal charges for fraud in one of its co-founders. He's agreed to plead guilty. But this company Aspiration that did like climate finance um they did a deal with the Clippers to be a a partner in the in it dome and Balmer invested 50 million in them uh up front at in back in September of 2021 and then after that aspiration did a deal with Kawhi Leonard an endorsement deal for four years 28 million. What's fishy about that deal is Leonard never really did anything in public to to endorse Aspiration, right? Uh and so it looks like paytoplay potentially. >> And it said he had to stay a Clipper. >> Yeah. According to Pablo Tori, who broke this story on his podcast, the the contract allows him to not do anything. As long as he's on the Clippers, he gets paid. >> Um and so what is going to have to figure out here is why did Aspiration do that? That's the central mystery. >> Well, wasn't Kawhi Leonard a supermax to begin with? >> So, he was on a 4-year $176 million contract extension with the Clippers, which was an interesting choice. He signed that in 2021. He could have done a shorter deal. He could have to get to a bigger contract sooner. He could have done a bigger deal at that moment. So, it was sort of a middle path. Um but yeah, so he this side deal if it is in fact a side deal and that's what that's what we need to figure out. Is Aspiration doing this on behalf of the Clippers? Is it a way to pay Kawhai off the books or were they just doing a what looks like a really stupid endorsement deal? Right. On its face >> or a smart endorsement deal from the perspective of Kawhi Leonard. I mean, >> right, Kawhi Leonard. Yeah, why not take it? It's $28 million for what's looks like a no-show kind of arrangement, you know, over four years. But I think that's what we you got to solve here. Is there another explanation for why Aspiration is doing this deal? Now, this is a company that did do a lot of fraudulent stuff, including some some funny dealings with influencers and other celebrities. So, maybe there are other explanations here. It's also possible, and this is just me speculating, like that Aspiration wanted to do this for the Clippers without the Clippers knowing it, right? that they were like, "Oh, they would love it if we did a deal with Kawawaii and we paid him more than he's worth because that would, you know, but the Clippers never asked for any of this." What Balmer has said is, "I made the introduction, right? I was an investor in aspiration. Kawi Leonard's my player. I put the two together and they went off and made a deal that I didn't know about that the that I had no control over and I didn't know the terms." So, that's what that's what we got to sort through. >> Now, and I should add first of all that uh Mr. Balmer said that look I didn't do anything wrong. The Clippers are saying we didn't do anything wrong. >> And Kawhi Leonard saying >> saying the same thing. I didn't do anything wrong. And >> even Adam Silver when it came out in the press conference afterwards said, "Look, the burden of proof that something went wrong is on the league." I mean, I don't forgive me for using a it's like a Perry Mason case, you know? is like, okay, you got to prove that this actually happened, the the bad dealings. >> Yeah. So, he said basically the mere appearance of impropriety wouldn't be enough here. And so, that is really the question. It's kind of like what is the it's not a legal case in the sense of it's just up to the league enforcing its own rules. So, what are the how much evidence do they need? What do they what is the burden of proof? Is it beyond a reasonable doubt? Like this is all basically what Silver is going to have to look at what they come back with and make those choices. You know, it's not a court of law. It's it's a it's an NBA commissioner. >> Well, we've been talking a lot about what would happen to Steve Balmer in that decision. But if this is found to be true, what would happen to Kawhai? Like, is there something that would happen to him? >> Uh, I mean, theoretically, they could void his contract. I think, uh, I doubt that would be the outcome here. I think they'd want to punish the franchise and the owner. You know, that's just my guess. >> Our thanks to Ira Budwway for joining us. He's Bloomberg News global sports reporter. You can find his reporting on the terminal and online at bloomberg.com. >> Coming up, we turn to F1 and a new big money partnership between Carile and the Oracle Red Bull Racing Team. For Damian Sasau and Vanessa Bernomo, I'm Michael Bar. You are listening to the Bloomberg business of sports, Bloomberg radio around the world. This is Bloomberg Business of Sports from Bloomberg Radio. >> Thank you for joining us on the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. I'm Michael Barnes. >> I'm Damian Sassau. >> And I'm Vanessa Pommo. >> Carile recently announced a new partnership with Oracle Red Bull Racing, becoming its exclusive investment management partner. It is the first ever partnership between a Formula 1 racing team and a leading global private markets firm. >> And joining us now to talk more about the deal is Danny Burgerer. Danny, welcome to the Bloomberg business of sports. >> Thank you so much. >> Oh my good. Now, you had did an interview recently uh where you talked to Carile CEO and you also talked uh with the Oracle Red Bull Racing Team Principal. That's right. >> Tell us about that. Well, Carlilele for an undisclosed amount of money, but probably a very large sum of money has become a sponsor of Red Bull Racing. Typically, when you think about the sponsors, a lot of tech companies, Oracle, for example, is one of the main sponsors of Red Bull, uh, One Password, a lot of tech companies. Rarely do you get capital coming from financial giants like Carile, but Carile nonetheless signed this deal. They became a title sponsor of them. So, I went down to the F1 to interview both of them and basically ask one, why would you do this? Why would you spend so much money on something incredibly flashy and just generally to ask Red Bull, hey, what's going on with the team? How you thinking about 2026? And same goes for the Carile CEO, too. >> And Vanessa, you we're Danny did that interview and we have a clip of that. Let's give a listen to it. >> The last 30 years, you've seen a remarkable development of private markets. Private markets are really the primary source of capital for many companies. As that capital continues to grow, the market has just evolved to a place where wealth, retail, the breath of what we do globally is just evolved also. And this is just part of the natural evolution. While it might feel unique now, I think it's actually not revolutionary at all. It's really just quite evolutionary. >> And and why move that way with Red Bull specifically? >> That was pretty easy. Um everything about Oracle Red Bull Racing is about performance, execution, excellence. So that part was very easy to see and very easy to relate to as a firm. The sport F1 is also global and growing dramatically as we know as our private markets. And so that all aligned. What made this really special was when Laurent and I spent time together, the team spent time together, and there was almost like this sort of very uh I don't know, uniquely natural affinity where we all just became best friends really quickly. And uh and so, hey, it's got to be fun, too. But it is about performance excellence first and foremost. I was going to say, Lauron, given what Harvey is saying that the finance world in general has been more interested in sport, more interested in F1, have you been fielding a lot of calls before this partnership from Harvey's peers who wanted to get in like he did? >> You know, in reality, no. It felt uh it felt very natural straight away with Kai, with Harvey. uh you know it's this moment where you realize that the person you are talking with are are the best at what they do in the world and and you know we feel we are quite good at at what we do and and what we see with our partners is that we go and try to partners with companies that are the best at what they do and we had a lot more points of connections we were we had this this performance obsessions we have this datadriven approach uh in in our very different business uh but but together with that quest for perfections in everything we are doing. It felt like a very very natural connection. >> To be fair, Harvey, there have been some outspoken critics about the move for private capital to do sponsorships to get invested in sports. Uh Josh Easterly of Six Street said at a conference a couple weeks ago. It's representative to him that firms are more concentrated on fine-tuning their brand than on the returns themselves. What do you say to that criticism? >> Our business is exactly the way Lauron just described it. It's first and foremost always about performance. Performance drives everything. If you have performance, you have success. Um, again, you think about everything they do at Oracle Red Bull Racing, it's all oriented around success. When he references data, we think about data. It's different data, but these are organizations driven around performance excellence. If you don't have performance, you don't have success. In terms of the partnership here, yeah, this is important to be able to reach a global audience. You know, you mentioned sport before. There's a real desire in the world for people to come together around sport, and this is truly one of the fastest growing sports in the world. >> That's Bloomberg TV host Danny Burgerer speaking with Carile CEO Harvey Schwarz and Oracle Red Bull Racing's Laurent Mckis. >> Um Danny, I'm curious, in your interview, you talked to Carile about them being forward- facing and and how that was kind of different for them and this was a different like opportunity. And we've seen private equity come into sports a lot, but it's a different way, right? This is sponsorship. This isn't investment necessarily, equity. So, what did you gather from that part of the conversation? >> That that is just spot on because to your point, usually when we think about private equity and sports, it's that they want to make money out of it. This is literally the opposite, right? Like they're throwing money at it. >> And it's a very different car and a different industry in general because usually you think private capital, it's this exclusive club. It's hard to get into. You have the biggest institutions in the world, be it pensions or sovereign wealth funds, coming to them to buy their portfolios. Now, something has changed. They want to sell it. They don't want it to be a product that's bought. They want it to be a product that's sold. And they're trying to sell, okay, maybe not everyday people, but everyday people who have lots of money. They're trying to sell it to high net worth individuals. They're hoping that 401ks will open up to private equity, too. So all of a sudden they're realizing it's not enough that this sovereign wealth fund in the Middle East knows who we are. We need more everyday people to know who who we are. So when they're thinking about, okay, I've got extra money. Usually I just put that in ETFs. Maybe instead I go to my wealth advisor and try to get into a Carile fund. So all of a sudden, to your point, they're really front-facing. They're trying to show a more friendly and maybe more sporty uh face. And it's not just them doing it. Blue Owl, for example, they sponsor tennis players. They sponsor golf players. Apollo also sponsors golf players, too. So, you're seeing this become start to become a trend in the industry. >> Well, Danny, let's put some numbers around that. Oracle, who is Red Bull's main sponsor, $60 million a year, Vanessa, can you believe that? And they've got Honda, they've got Ford, Visa, and that's just that's just the tip of the surface. Now, you know, this is the business support. So, let's talk about it, right? The F1 just did a deal with Apple TV where they got their media rights up to $140 million a year over 5 years. So clearly there's something there, right? I mean I mean that that's a huge increase. It's a huge bump bump b up. But you know so Carlile David Rubenstein I mean these they know how to you know get around a deal table and they know what a good investment looks like. So they must see something here. No. >> I think it's kind of key that they did this deal after Christian her left. Christian her left not because of controversy but he left in a fog of controversy with accusations of sexual misconduct. And it'd be hard to imagine a scenario where even though that was investigated by the team and nothing came out of it, that you'd have a private capital giant like Carlile be comfortable with investing in the team. And in Laurent Mechis, you have a team principal. I was there. I saw the two interact. >> You kind of got the feeling they were almost friends even though they were were so different. I mean, Harvey Schwarz cutting his teeth on Wall Street at one point being floated as the next CEO of Goldman Sachs. Meanwhile, this French engineering nerd, it's not exactly a combo that you would expect, but the two of them really got along and they kind of love to say, "Look, completely different businesses, but we're obsessed with performance. We're obsessed with data." So, you have this feeling that Carile is being really deliberate in how it puts its brand out there. and they were really deliberate in choosing Red Bull, which I should say even though they're not leading the pack with F1 right now, they are getting closer with their driver Max Verstoppen kind of wearing down the gap between them and the McLaren drivers. >> You you just took the words out of my mouth. They are fourth in the constructors now this year, right? I mean, behind, you know, obviously McLaren, but Mercedes and Ferrari as well. And Versappen is now three in the drivers rankings, although that win in Austin obviously ranked them back up. He's now contesting again. think there's I think he has enough chance to maybe >> he does and obviously it was because of my interview with the team >> of course of course right absolutely gave him the inspiration >> without question so so I mean so again you know there is a lot of value there I guess is the point so Carle actually sees that Michael Barno >> yes you you are exactly right >> so when you're thinking about it and after talking with them do you see the link between formula 1 and private equity do you see the value in this sponsorship >> I think it's interesting because okay so people when they I I talked to people after the sponsorship and they said, "What a weird move from Carlile to go after F1. They want to reach more people. Isn't F aren't F1 fans just the typical billionaire class and people they already have?" F1 has changed so much. I myself am a huge F1 fan. I watch every single race and I am a woman in my 30s. I am maybe not what you typically picture for the F1 fan, but I am increasingly becoming what the F1 fan looks like after the success of Drive to Survive on Netflix. the F1 fans are more female. They are younger. So, it's a really interesting type of person that Carile is actually capturing here. And I think in that vein, they do see a unique opportunity because of the growing audience. And and Damon, you mentioned um Apple getting the rights to F1. There you go. A whole new audience too potentially coming in. It is a growing sport and a growing audience base, too. >> Well, Danny, I'll just give it to you right now. Riyad, Singapore, Abu Dhabi, Dubai. I mean I mean the list goes on. Baku, the list goes on and on. So for Carlilele to penetrate some of these international financial markets, um yeah, I I get it. You know, I see the benefit of it for sure. Now, let's just see if they could bring it to the track, right? Michael Bar. >> Oh my. See, you know what? I remember I'm old and and and and you you reminded me you said I'm a lady in my 30s. Well, you want to go how old it someone snowed on my head. I remember when Jackie Stewart and I know you're going to say, "Who the hell is that?" No, Jackie Stewart, man, one of the greatest racing drivers of all time. That's right. And he had a car that had six wheels on it. >> He really did. It was like two, four in the front and then there was the the two in the back. That's how far I go. Which brings me to how far has F1 changed since old man Bar would gotten into it? >> Well, do you want to talk about the car or the business? >> I mean, did Harvey Schwarz promise us a team kit? You know, Michael Bar could use a nice little team kit to wear to the office. >> I'm sure we could arrange that. They would be so thrilled if you wore a Red Bull hat that said Carile on the side. I think they would absolutely love that. No, the sport has changed so much. You could talk about the audience, the money behind it, with this, with other investments in there, with the type of audience, but also the cars themselves. They have changed so much and they change every year. And I think one thing that they've really concentrated on is the safety of the car. They now have these halos around it to make sure if the car rolls over, the driver is safe. Literally, every single aspect of this has changed. And I think one of the biggest changes again is the American audience. Uh we had again Austin, there's Miami, there's Vegas, which is an insane race and is literally the most American thing you could think of because of the spectacle behind it. But yeah, literally every aspect of the sport, it is changing and changing fast. >> Danny, you are a friend of the show and you can come back anytime you want. >> Michael, again, I I mean it. I'm honored. Thank you so much. >> Oh, thank you. >> Come back and help us, Danny. Please. >> Yes. >> Make some money. Yeah. Our thanks to Danny Burgerer for joining us. >> And that does it for this edition of the Bloomberg Business of Sports. For Damen Sassau and Vanessa Purdomo, I'm Michael Bar. Tune in again next week for the latest on the stories moving big old money in the world of sports. >> And don't forget to catch our podcast on all of your podcast platforms. >> You are listening to the Bloomberg business of sports from Bloomberg radio around the world.