David Rubenstein, Co-Founder of The Carlyle Group, on the Business of Sports, Investing and Leadership

The Bid - An Investing Podcast from BlackRock

Host Oscar Pulido interviews David Rubenstein about his transition from private equity at The Carlyle Group to owning the Baltimore Orioles.

Key takeaways

• David Rubenstein viewed the purchase of the Baltimore Orioles primarily as a philanthropic effort to revitalize his hometown.
• Unlike private equity, which focuses on short-term exits, sports ownership often involves much longer holding periods spanning decades.
• Success in sports is measured by community pride and winning championships rather than just profit margins.
• The value of sports franchises has increased significantly due to lucrative television contracts and expanding global audiences.
• Artificial Intelligence is expected to permeate the sports industry through advanced analytics and decision-making tools.

Main topics

• Sports ownership as a civic tool
• Private equity vs. passion investing
• The evolution of sports franchise values

Notable quotes

Winning is everything. Making money, it's nice.

Conclusion

The episode illustrates how passion-driven investments can drive commu

Transcript preview

Speaker 2 (0:04) Sports teams have become some of the world's most valuable assets. Over the past two decades, franchise values have soared, institutional investors have entered the market, and ownership has evolved from a passion project into a sophisticated business. But owning a team isn't like owning any other company. The product is emotional. Success isn't measured just in profits, but in championships, civic pride, and the connection between a city and its fans. Welcome to The Bit, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Polito. Today's guest has spent decades thinking about long-term investing and value creation. David Rubenstein is the co-founder and co-chairman of the Carlyle Group, one of the world's largest private equity investment firms. Over the course of his career, he's helped shape the modern private equity industry, interviewed presidents, CEOs, and global leaders, and become one of the most recognized voices on leadership and investing. More recently, he took on a very different role, leading the ownership group that purchased his hometown Baltimore Orioles. His latest book, Inside the Owner's Box, draws on that experience, as well as conversations with some of the most successful owners in sports to explore what sports ownership can teach us about leadership, investing, and building institutions that last. Speaker 2 (1:31) David, thank you so much for joining us on The Bid. Speaker 1 (1:33) My pleasure. Thank you very much for having me. Speaker 2 (1:35) Well, David, when people hear your name, I think it's fair to say they think of the Carlisle Group. They think about the private equity industry that you have helped create. Most people don't realize that you're also a owner of a sports franchise. And that's really the topic of conversation that we want to have here today, which is about investing in the sports industry. I want to ask you, when you went about buying a sports team, how did you consider this as an investment opportunity? Were you looking at it as an entertainment business, a media business, or something entirely different? Speaker 1 (2:10) Well, I did it for a reason that's unrelated to investment. I'm from Baltimore. I felt over the years I've been financially successful. I've given away a great deal of money. I was an original signer of the Giving Pledge, and I've tried to give away enormous amounts of my net worth. But most of that has probably been the universities my family has been associated with or to the Washington, D.C. area where I've lived for the last 40-some years. I really didn't do as much for Baltimore as I thought I should. I grew up there. My parents grew up there. My parents are married there. They raised me there. They're buried there. I'm going to be buried there. And I thought, what have I really done for Baltimore? And I'd been involved in Johns Hopkins and been on their boards, but I hadn't given staggering sums there. So I viewed it more as a philanthropic gesture. I didn't want to lose money. But I viewed it as a way to give back to Baltimore for the good fortune I've had from coming from Baltimore. Speaker 2 (2:58) And you mentioned Baltimore. And in fact, the sports team that you are the owner of are the Baltimore Orioles, which is a major league baseball team. You made that investment back in 2024. And as mentioned, most people know you from the private equity industry. So they know that you know how to evaluate an investment. But what made this opportunity different from every other investment you've ever considered? Speaker 1 (3:20) Well, in the private equity world, you're trying to make money and you're always looking at certain rates of return. You know your investors are looking for double-digit rates of return and so forth. In this particular case, I didn't really focus on that quite the same way. I didn't want to lose money, as I mentioned, but I really viewed it as a civic gesture, and therefore I wanted people to come along with me who were involved in helping Baltimore grow to be a more significant city, helping Baltimore to be revitalized, and they might like baseball too. And so the combination of factors. Now, the world has changed. And it was the case many years ago that people made sports investments because they really loved the sports. There's no doubt today that a lot of people are attracted to it because the profitability seems to be pretty high if you get lucky and you get it at the right time. Speaker 2 (4:05) And when you talk about the civic gesture, maybe say a little bit more about that. I'm familiar with the Baltimore Orioles, and I know Camden Yard sits right in. Baltimore Harbor. It's central to the community of Baltimore. But talk a little bit more about the importance that sports teams have to their local cities. Speaker 1 (4:21) When I grew up in Baltimore, it was the ninth biggest city in the United States in the 1950s and 60s. Now it's not even top 20 in terms of population. It's lost enormous population, had a lot of crime issues, a lot of drug related issues, a lot of problems in the city, and they've lost their corporate headquarters, more or less, a very few large corporate headquarters. So the city's tax base is going way down, and therefore the city doesn't have the kind of resources that other cities might have. I should point out that in the entire United States, there are only two cities in the country that are not in a county. One is Baltimore and one is St. Louis, which means when you move out of Baltimore City or St. Louis, none of the tax revenues that you might give to a surrounding county go back to the city. In this particular case, I thought that Baltimore... could be revitalized a bit if I bought the team and put more money into it and help the city. And that way, we try to revitalize the downtown area where the stadium is built. The stadium is called Camden Yards. And when it opened in the early 90s, it was revolutionary for baseball because it was a downtown stadium arena, which hadn't been built that way in recent years. In recent years, you built things in the suburbs. And this one was designed to look like an old park, Wrigley. or Fenway Park, and it captured the imagination of fans. Enormous number of people came out to the games, but also people who began building stadiums from 1991 on all wanted to have a model like Camden Yards. And even Speaker 2 (5:41) if people don't follow baseball or not familiar with it, globally, sports are very relevant. And Speaker 1 (5:46) I Speaker 2 (5:46) think people can relate to the fact of going to an arena or a stadium, a site that is the home of their sports team. And as you mentioned, Camden Yards has been around since the early 90s. I must profess that having been there recently, we were talking about that a little bit beforehand, and it looks like what I remember when I went for the first time 20 or 25 years ago. So it seems like you've already been making some investments there. Speaker 1 (6:07) Well, the state of Maryland actually owns Camden Yards, a