Mark Attanasio on Market Volatility and Sports Investing
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Bloomberg Audio Studios. Podcasts. Radio. News. Welcome back to Bloomberg Markets. I'm Shanali Basik here with Romaine Bostic live at the Milken Institute Global. Now, we're joined here by Mark Adonacio. Of course, you might know him as a brewer's owner of the marquee. But if you also

Crescent Capital Group. So, steeped in credit markets. First, let's take a big step back. We were talking about how I think this might be the busiest milking I have been at in my career. It's because you had the Treasury Secretary here. You had Elon Musk here overnight. And a lot of talks about a volatile economic environment. How do you make sense of it all to your investors and to your colleagues across the industry? Well, volatility, and thanks again for having me on. It's always interesting to mark year to year.

how things are going. Last year, all the questions were about how do you deal with stability and what about lower interest rates? So we don't have challenges of stability anymore. You know, I think one of the things you do in certain times like this is you step back

And you kind of assess things. Because while there's a lot of day-to-day volatility, which affects you in the public markets, as private investors, and Preston's 80% private capital, and as you know, more loans than equity adjacent, you can just see how it all plays out.

So the secretary of the Treasury today was talking about this three-part plan, right, for lower taxes, less regulation, and addressing trade imbalances. And I was at a reception that he spoke at yesterday. He spoke a little more off the record, but I'll put it on the record now, about how that, you know, maybe you could even address that holistically and that it should all come together and work.

And, you know, it might. Now, Ronald Reagan, I believe, tried the same thing. And it's not so easy, especially now, because the world really is truly global. And we're sort of, you know, uncoupling that a little bit. But, you know, maybe this will all come together and work out well for the country. Clearly, things have swung too far in the other direction, you know, economically, in terms of trade imbalances, and it's getting addressed. Do you think that we're going to see a little bit more stability out of Washington as we get deeper into the year?

Well, I think you've already started to see that Washington pays attention to the markets as you had sharp moves, especially in the bond market, that raised some concerns. And, you know, I think the Treasury Secretary is quite measured, and I think he does have the presidency here, which is a good thing. And, of course, most of Wall Street is a fan of Jerome Powell. So the fact that whether he's going to stay on

As a Fed chair, at least for now, it's off the table as a constructive thing. But one issue I'm seeing, Scott Besson tends to move the markets, particularly the bond market. But you're seeing a rise upward in the 10-year yield over the last three days. In fact, as we sit here today, we're at 435.

So higher, regardless of all the rhetoric that has been passed around over the last couple of days. So what do you make of this higher-for-longer scenario in the bond market? And are you worried that the bond market is starting to shake off any relief that taxes might bring to the broader fiscal story of the United States?

Well, Sonali, higher for longer has been somewhat the theme for a long time now. And again, the bond market hyperventilates over 20 basis point moves. It wasn't that long ago that we were worried that higher for longer meant hundreds of basis point moves. I went to a private dinner that Jamie Dimon had, and the concern was that a 7% reference rate, that we'd have a lot of defaults. We're nowhere near that.

And all of this is very constructive for private lenders because it sets a high floor for us to earn a spread over. And I talked about this last year. So our investors enjoy having an embedded portfolio that continues to have high yields since most of it is floating rate.

If you mind, let's switch gears for a second here, because in addition to your world as an investor in credit markets, you are a very prominent sports investor. You got in a lot earlier than a lot of your private investment rivals have gotten in. We were talking about the Brewers. I'm actually curious, now that we're talking about so many off-the-record conversations, about how you think that the live golf situation is going to play out.

So that would count as a high inside fastball with me trying to hit.

Look, I've been constructive on this for a while, going back to when John Henry, first of all, I should say, who runs the CEO of Fenway, and they own Liverpool and the Red Sox and the Penguins. He did a brilliant job in structuring this, and he really focused on it. And so from my standpoint, which was now a couple of years ago, I felt like the best—

Athletes want to compete against the best. They always do. It's a reason Shohei Ohtani and a number of the Japanese players are coming to play in the major leagues now. Because, you know, you want to test yourself. And so I always felt there was a reason for the two sides to come together. I think that, you know, the Prince and Saudis would like to see...

something work out, although what they've done is quite impressive. And, you know, we now have a president who is an avid golfer and absolutely wants to see this work. So, you know, you have a lot of folks who want to see it work.

but it's still complex to put Humpty Dumpty back together a little bit, and that's complicated. As an investor, I like complicated situations because most people shy away from them, and that's where you can create value. Well, as an investor, particularly in sports, I mean, you have a lot of portfolio investors now

looking for an entry point into the world of sports, sports as an asset class, if you will. What happens for those folks, those folks that aren't the Mark Adonacios that can sort of buy the actual entire team? Are they going to have an opportunity to buy a slice of some of these teams or these leagues? Yeah, they will remain, and in a couple of ways, actually. Now there's a lot more liquidity in the secondary market, and at these valuations, very few people can, you know, Josh Harris can figure out

had to buy the Washington Commanders. But, you know, that $6.6 billion, kind of a big ticket for most folks. And so, but you can now buy pieces of teams. So both, I believe, the Dolphins and the Eagles put a valuation at $8 billion and sold pieces of it off

In those cases, the NFL has approved funds to do that. So high net worth individuals can get involved in funds, but there's also secondary opportunities. And now I believe like Morgan Stanley, for example, is coming up with an ETF for sports. If you look at the sports ecosystem broadly, it's $3 trillion. It's not just teams and leagues. It's media. It's betting. It's infrastructure and technology.

And then it's even companies that provide equipment to those industries. Now, how they're going to create an index, I'll be curious to see. That's what I'm curious about, too. And then you've got the whole fan issues, right? If you have a bad game or a bad season, does everyone just sell everything? Yeah.

You know, you see at least in collectibles, and this is just hitting me, you actually have the prices of collectible cards trade based on how the player does that year. That's not...

really the long-term value of the card. So obviously vintage cards, you don't have to worry about that with Babe Ruth. But Mike Trout's cards trade up and down depending on whether he's injured. It'll be interesting to see if that happens with sports investing. All right, Mark. Really appreciate it. We'll let you get back to it. Mark Adonastriou, the co-founder of Crescent Capital.

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